UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-Q

(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 1998

                               OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to __________________

                         Commission file number 0-2977

                        General Magnaplate Corporation
            -----------------------------------------------------
           (Exact name of registrant as specified in its charter)

               New Jersey                                22-1641813
     -------------------------------                 ------------------
     (State or other jurisdiction of                    IRS Employer
     incorporation or organization)                  Identification No.

     1331 U.S. Route 1, Linden, New Jersey                     07036
     -------------------------------------                   ---------
     (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code: (908) 862-6200
                                                    --------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                             Yes [ X ]   No [   ]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of February 10, 1999:

   Common Stock, No Par Value                                4,786,294
   --------------------------                            -----------------
            (Class)                                      (Number of Shares)


<PAGE>

                               INDEX OF DOCUMENTS

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                  Accountants' Report
                  Balance Sheet - End of Current Quarter
                  Balance Sheet - End of Prior Fiscal Year
                  Statement of Income
                  Statement of Changes in Financial Position
                  Notes to Consolidated Financial Statements

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               POSITION AND RESULTS OF OPERATIONS

PART II - OTHER INFORMATION

ITEM 1 - LEGAL  PROCEEDINGS  -  Although  the  Company  may from time to time be
involved in routine litigation incidental to its business, none of these actions
are  expected,  individually  or in the  aggregate,  to have a material  adverse
impact  upon the  company  or its  results  of  operations. 

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS - Not Applicable

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES - Not Applicable

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -

         Minutes of Annual  Meeting  of  Shareholders  Enclosed  

ITEM 5 - OTHER INFORMATION - Press Release

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

                  (a)  Exhibit 27 - Financial Data Schedule
                  (b)  None


<PAGE>
 











                         GENERAL MAGNAPLATE CORPORATION

                                       AND

                            WHOLLY-OWNED SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                                SIX MONTHS ENDED
                           DECEMBER 31, 1998 AND 1997


<PAGE>

                         GENERAL MAGNAPLATE CORPORATION

                                       AND

                            WHOLLY-OWNED SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                               

Accountants' Review Report                                     

Consolidated Financial Statements:


 Consolidated Statements of Income                             
 Consolidated Statements of Comprehensive Income               
 Consolidated Statement of Changes in Stockholders' Equity     
 Consolidated Statements of Cash Flows                         
 Notes to Consolidated Financial Statements                    

Supplementary Information                                      


<PAGE>
MAURIELLO, FRANKLIN & LOBRACE

          A Professional Corporation
         Certified Public Accountants

                                    45 Springfield Avenue, Springfield, NJ 07081
                                    Telephone (973) 379-5400 Fax (973) 379-3696

                           ACCOUNTANTS' REVIEW REPORT

To The Board of Directors of
  General Magnaplate Corporation:

         We have reviewed the accompanying  balance sheet of General  Magnaplate
Corporation  and Wholly-  Owned  Subsidiaries  as of  December  31, 1998 and the
related  consolidated  statement of changes in stockholders'  equity for the six
months  ended  December  31, 1998 and the  related  consolidated  statements  of
income,  comprehensive  income, and cash flows for the six months ended December
31, 1998 and 1997.  These  financial  statements are the  responsibility  of the
management of General Magnaplate Corporation.

         We conducted our review in accordance with standards established by the
American  Institution  of  Certified  Public  Accountants.  A review of  interim
financial statements consists primarily of applying analytical review procedures
to financial data and making inquiries of persons  responsible for financial and
accounting  matters.  It is  substantially  less  in  scope  than  an  audit  in
accordance with generally accepted auditing standards, the objective of which is
the  expression  of an opinion  regarding the  financial  statements  taken as a
whole. Accordingly, we do not express such an opinion.

         Based on our  review,  we are not aware of any  material  modifications
that should be made to the accompanying  financial  statements for them to be in
conformity with generally accepted accounting principles.

         Our review was made for the  purpose of  expressing  limited  assurance
that there are no material  modifications  that should be made to the  financial
statements  in  order  for  them to be in  conformity  with  generally  accepted
accounting  principles.  The supplementary  information for the six months ended
December  31,  1998  and  1997  included  in  the   accompanying   supplementary
information is presented for supplementary  analysis purposes.  Such information
has been  subjected  to the inquiry  and  analytical  procedures  applied in the
review of the basic financial  statements,  and we are not aware of any material
modifications that should be made thereto.

         The  balance  sheet for the year ended June 30, 1998 was audited by us,
and we  expressed  an  unqualified  opinion on it in our report dated August 10,
1998. We have not  performed any auditing  procedures on the balance sheet since
August 10, 1998.

January 27, 1999

                                              /s/ Mauriello, Franklin & Lo Brace
                                              ----------------------------------
                                                  Mauriello, Franklin & Lo Brace

<PAGE>
<TABLE>
<CAPTION>
                               GENERAL MAGNAPLATE CORPORATION

                                             AND

                                  WHOLLY-OWNED SUBSIDIARIES

                                 CONSOLIDATED BALANCE SHEETS

                                                             December 31,         June 30,
         ASSETS                                                  1998               1998
         ------                                              -----------        -----------
<S>                                                          <C>                <C>        
Current assets:

  Cash and cash equivalents .........................        $   848,257        $ 1,301,317
  Marketable securities (Note 1) ....................          3,045,709          3,136,420
  Accounts receivable--trade, net of
    allowance for doubtful accounts of
    $105,000 (June 30, 1998-$93,000) ................          1,386,011          1,326,070
  Inventories (Note 1) ..............................            377,949            355,285
  Prepaid expenses ..................................            168,657            190,817
  Other current assets ..............................            179,366            169,229
  Note receivable--related party partnership (Note 8)            195,000                  0 
                                                             -----------        -----------

      Total current assets ..........................        $ 6,200,949        $ 6,479,138

Property, plant, and equipment, at
  cost, net of accumulated
  depreciation (Notes 1 and 2) ......................          6,280,406          6,331,313

Cash surrender value of officers' life
  insurance .........................................            934,733            874,811

Note receivable-officer (Note 8) ....................            482,815            490,686

Note receivable-related party partnership (Note 8) ..                  0            195,000

Other assets (Note 3) ...............................            672,307            609,453
                                                             -----------        -----------

    Total assets ....................................        $14,571,210        $14,980,401
                                                             ===========        ===========

</TABLE>
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
                                  GENERAL MAGNAPLATE CORPORATION

                                                AND

                                     WHOLLY-OWNED SUBSIDIARIES

                                    CONSOLIDATED BALANCE SHEETS

                                                                December 31,           June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY                                1998                 1998
------------------------------------                            ------------         ------------
<S>                                                             <C>                  <C>         
Current liabilities:

  Current maturity of long-term debt .......................    $     28,492         $     29,841
  Accounts payable .........................................         169,477              434,915
  Accrued liabilities (Note 6) .............................         316,170              426,234
  Corporate income taxes payable ...........................               0               40,743
                                                                ------------         ------------

    Total current liabilities ..............................    $    514,139         $    931,733
                                                                ------------         ------------
Long-term liabilities:

  Rent security deposit ....................................    $      9,193         $      9,193
  Accrued deferred compensation (Note 7) ...................       1,406,965            1,319,864
  Long-term debt (Note 4) ..................................         379,892              412,800
                                                                ------------         ------------

    Total long-term liabilities ............................    $  1,796,050         $  1,741,857
                                                                ------------         ------------

    Total liabilities ......................................    $  2,310,189         $  2,673,590
                                                                ------------         ------------
Commitments and contingencies (Note 10)

Stockholders' equity:
  Common stock--no par value
    Authorized--20,000,000 shares
    Issued--4,918,794 shares of which 82,500 and 11,000
     shares are held as treasury stock .....................    $    223,180         $    223,180
  Retained earnings ........................................      12,671,182           12,338,744
  Accumulated other comprehensive income (loss) (Note 1)....        (222,130)            (189,388)
                                                                ------------         ------------

                                                                $ 12,672,232         $ 12,372,536
  Less--cost of 82,500 and 11,000 shares of treasury stock .        (411,211)             (65,725)
                                                                ------------         ------------

     Total stockholders' equity ............................    $ 12,261,021         $ 12,306,811
                                                                ------------         ------------

    Total liabilities and stockholders' equity .............    $ 14,571,210         $ 14,980,401
                                                                ============         ============
</TABLE>
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
                                     GENERAL MAGNAPLATE CORPORATION

                                                   AND

                                        WHOLLY-OWNED SUBSIDIARIES

                                    CONSOLIDATED STATEMENTS OF INCOME
 

                                            Six Months Ended                    Three Months Ended
                                              December  31,                        December  31,
                                       ----------------------------        ----------------------------
                                          1998              1997               1998             1997
                                       ----------        ----------        ----------        ----------
<S>                                    <C>               <C>               <C>               <C>       
Gross revenue:
  Sales .......................        $5,303,961        $5,382,442        $2,680,727        $2,701,582
  Royalty and license income ..           135,493           176,548            83,451           120,376
  Investment and other
    income, net (Note 1) ......           354,383           298,506           372,867           140,037
                                       ----------        ----------        ----------        ----------
                                       $5,793,837        $5,857,496        $3,137,045        $2,961,995
                                       ----------        ----------        ----------        ----------

Costs and expenses:

  Cost of sales ...............        $2,595,551        $2,297,792        $1,300,093        $1,121,578
  Selling and administration ..         1,923,850         2,088,337         1,019,469         1,067,129
  Depreciation and amortization           346,628           310,725           174,058           157,259
  Interest ....................            16,130             6,471             7,802             6,471
                                       ----------        ----------        ----------        ----------

                                       $4,882,159        $4,703,325        $2,501,422        $2,352,437
                                       ----------        ----------        ----------        ----------

Income before corporate
  income taxes ................        $  911,678        $1,154,171        $  635,623        $  609,558

Corporate income taxes
  (Notes 1 and 5) .............           335,700           426,500           234,600           226,900
                                       ----------        ----------        ----------        ----------

Net income ....................        $  575,978        $  727,671        $  401,023        $  382,658
                                       ==========        ==========        ==========        ==========

Earnings per share (Note 1) ...        $      .12        $      .15        $      .08        $      .08
                                       ==========        ==========        ==========        ==========

Weighted average shares
  outstanding .................         4,873,316         4,915,208         4,846,778         4,911,620
                                       ==========        ==========        ==========        ==========

</TABLE>
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
                         GENERAL MAGNAPLATE CORPORATION

                                       AND

                            WHOLLY-OWNED SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                   SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997



                                                        1998             1997
                                                    ---------         ---------
<S>                                                 <C>               <C>      
Net income .................................        $ 575,978         $ 727,671

Other comprehensive income, net of tax:
  Foreign exchange translation adjustment ..          (32,742)          (27,996)
                                                    ---------         ---------

Comprehensive income .......................        $ 543,236         $ 699,675
                                                    =========         =========





</TABLE>

                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
                                        GENERAL MAGNAPLATE CORPORATION

                                                      AND

                                           WHOLLY-OWNED SUBSIDIARIES

                                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                      SIX MONTHS ENDED DECEMBER 31, 1998



                                                                                  Foreign
                                                                                 Currency
                                          Common            Retained            Translation         Treasury
                                           Stock            Earnings             Adjustment           Stock
                                       -----------         -----------        -----------         -----------
<S>                                    <C>                 <C>                <C>                 <C>         
Balance,
  July 1, 1998 ................        $   223,180         $12,338,744        $  (189,388)        $   (65,725)

Add--net income for six months
  December 31, 1998 ...........                                575,978

Dividend paid ($.05 per share)                                (243,540)

Acquisition of 71,500 shares of
  treasury stock ..............                                                                     (345,486)

Foreign exchange translation
  adjustment ..................                 0                   0             (32,742)                 0 
                                       -----------         -----------        -----------         -----------

Balance,
  December 31, 1998 ...........        $   223,180         $12,671,182        $  (222,130)        $  (411,211)
                                       ===========         ===========        ===========         ===========



</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
                                  GENERAL MAGNAPLATE CORPORATION

                                               AND

                                    WHOLLY-OWNED SUBSIDIARIES

                              CONSOLIDATED STATEMENTS OF CASH FLOWS

                           SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997

                                                                      1998               1997
                                                                 -----------         -----------
<S>                                                              <C>                 <C> 
CASH FROM OPERATING ACTIVITIES:

  Net income ............................................        $   575,978         $   727,671
                                                                 -----------         -----------
  Adjustments to reconcile net income to net cash
   provided by operating activities:
     Reserve for unrealized gain ........................        $   (50,521)        $   (59,531)
     Depreciation and amortization ......................            346,628             310,725
     Deferred tax credits ...............................            (47,300)            (30,700)
     Accrued deferred compensation ......................             75,158              77,442
     Foreign currency translation adjustment ............            (32,742)            (27,996)
     Allowance for doubtful accounts ....................             42,907              27,565
     Increase  (decrease) in cash  resulting from changes
      in current assets and
      liabilities:
        Marketable securities ...........................            141,232            (233,927)
        Accounts receivable .............................           (102,848)            (30,782)
        Inventories .....................................            (22,664)                916
        Prepaid and other current assets ................             43,919              33,398
        Accounts payable and accrued liabilities ........           (375,502)           (125,078)
        Corporate income taxes payable ..................            (50,550)            (61,123)
                                                                 -----------         -----------
          Total adjustments .............................        $   (32,283)        $  (119,091)
                                                                 -----------         -----------
    Net cash provided by operating activities ...........        $   543,695         $   608,580
                                                                 -----------         -----------

CASH FROM INVESTING ACTIVITIES:

  Additions to property, plant, and equipment ...........        $  (287,545)        $(1,016,613)
  Additions to patent costs and other assets ............            (21,979)            (10,162)
  Collection (issuance) of note receivable--officer .....              7,402               6,176
  Additions to deferred compensation contracts ..........            (11,428)            (23,442)
  Increase in cash surrender value--life insurance ......            (59,922)            (54,025)
                                                                 -----------         -----------
    Net cash used in investing activities ...............        $  (373,472)        $(1,098,066)
                                                                 -----------         -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                  GENERAL MAGNAPLATE CORPORATION

                                               AND

                                    WHOLLY-OWNED SUBSIDIARIES

                              CONSOLIDATED STATEMENTS OF CASH FLOWS

                           SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997
                                           (continued)

                                                                      1998               1997
                                                                 -----------         -----------
<S>                                                              <C>                 <C>  
CASH FROM FINANCING ACTIVITIES:
  Principal payments - long-term debt ...................        $   (34,257)        $         0 
  Proceeds from broker loan .............................                  0             500,000
  Principal payments on broker loan .....................                  0             (13,439)
  Purchase of  treasury shares ..........................           (345,486)            (64,750)
  Dividends paid ........................................           (243,540)           (245,940)
                                                                 -----------         -----------

    Net cash provided by (used in) financing activities .        $  (623,283)        $   175,871
                                                                 -----------         -----------

NET DECREASE  IN CASH (Note 11) .........................        $  (453,060)        $  (313,615)
  Cash and cash equivalents, beginning of period ........          1,301,317           1,216,824
                                                                 -----------         -----------
  Cash and cash equivalents, end of period ..............        $   848,257         $   903,209
                                                                 ===========         ===========
</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION

                                       AND

                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1--Summary of Significant Accounting Policies

Principles of Consolidation

         The consolidated  financial  statements include the accounts of General
Magnaplate  Corporation  and  its  wholly-owned  subsidiaries;  accordingly  all
intercompany transactions and balances have been eliminated in consolidation.

Nature of Business

         The  Company  is in one  line  of  business.  It  provides  synergistic
coatings and other related services to commercial  customers' products from five
plants located in the United States and Canada.

  Included  in the  Company's  consolidated  balance  sheet at June 30, 1998 are
$1,336,000 of net assets of the Canadian operation.

         Marketable Securities

         All marketable  securities are  considered  trading  securities and are
valued at fair  market  value in  accordance  with SFAS No.  115.  Realized  and
unrealized  gains  and  losses  are  reported  in  current  period  income.  Net
unrealized  holding gains (losses) on trading securities of $104,470 and $59,530
were  reported in 1998 and 1997,  respectively.  Market value  exceeded  cost by
$165,189 at December 31, 1998 and by $60,719 at June 30, 1998.

Inventories

         Inventories  consist  principally  of  industrial  supplies and plating
solutions  which are valued at the lower of FIFO cost or market and are included
in Cost of Sales.

Depreciation and Amortization

         Property,  plant and equipment are stated at cost and  depreciation  is
provided  principally on a straight line basis using estimated  service lives of
3-5 years for  transportation  equipment,  5-10 years for factory  machinery and
office  equipment,  and 10-39 years for  buildings  and  building  improvements.
Expenditures for renewals and betterments are capitalized. Items of identifiable
property which are sold,  retired, or otherwise disposed of are removed from the
asset accounts, and any gains or losses thereon are reflected in income.

         Patents and  trademarks  are  amortized  on a straight  line basis over
periods not exceeding 10 years.
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION

                                       AND

                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1--Summary of Significant Accounting Policies (Continued)

Corporate Income Taxes

         Taxes are provided  based on income  reported for  financial  statement
purposes,  including  deferred  taxes  which  are  principally  provided  due to
temporary differences between financial and tax reporting of certain revenue and
expense items.

Company Earnings Per Share

         Earnings  per share of common  stock  have been  computed  based on the
weighted average number of shares outstanding during the reporting periods.

Statement of Cash Flows

         For purposes of the statement of cash flows, the Company  considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.

Foreign Currency Translation Adjustment

         Assets  and  liabilities  of the  subsidiary  operating  in Canada  are
translated  into U.S.  dollars  using the exchange rate in effect at the balance
sheet date. Results of operations are translated using the average exchange rate
prevailing  throughout the period.  The effects of exchange rate fluctuations on
translating  foreign  currency  assets and  liabilities  into U.S.  dollars  are
included as part of the Accumulated Other Comprehensive  Income (Loss) component
of shareholders'  equity, while gains and losses resulting from foreign currency
transactions are generally included in income.

Use of Estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure  of  contingent  assets  and  liabilities  at the  date of  financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION

                                       AND

                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2--Property, Plant and Equipment

Property, plant and equipment are as follows:
<TABLE>
<CAPTION>
                                                           December 31,         June 30,
                                                              1998                1998
                                                           -----------        -----------
<S>                                                        <C>                <C>        
Land ..............................................        $ 1,019,869        $ 1,030,025
Buildings .........................................          3,663,275          3,677,341
Building improvements .............................          3,756,744          3,670,396
Factory machinery .................................          4,200,942          3,995,672
Office equipment ..................................            687,180            674,261
Transportation equipment ..........................            308,666            309,251
                                                           -----------        -----------
Total .............................................        $13,636,676        $13,356,946
Less--accumulated depreciation ....................          7,356,270          7,025,633
                                                           -----------        -----------
Net ...............................................        $ 6,280,406        $ 6,331,313
                                                           ===========        ===========
</TABLE>
Note 3--Other Assets

         Other assets are as follows:   
<TABLE>
<CAPTION>
                                                           December 31,          June 30,
                                                               1998               1998
                                                           -----------        -----------
<S>                                                        <C>                <C>        
         Patents and trademarks, at cost, net of
              accumulated  amortization of $121,417
              and $113,241 ........................        $   134,939        $   120,925
         Deferred income taxes ....................            324,143            298,463
         Deferred compensation contracts ..........            208,769            185,398
         Mortgage financing costs .................              4,456              4,667
                                                           -----------        -----------

                                                           $   672,307        $   609,453
                                                           ===========        ===========
</TABLE>
Note 4--Long-Term Debt

         The  Company is indebted  to  Business  Development  Bank of Canada for
$457,925  borrowed  March  31,  1998  and  payable  in equal  monthly  principal
installments of $2,487 together with interest of 7.6% per annum  commencing June
23,  1998 with the final  payment due April 23,  2013.  The note is secured by a
first mortgage on real estate owned in Ajax, Ontario.

         Current  maturities  of the debt for the five years ended June 30, 2003
are as follows:  1999 - $29,841; 2000 - $29,841; 2001 - $29,841; 2002 - $29,841;
and 2003 - $29,841.
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION

                                       AND

                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5--Corporate Income Taxes

      Components of corporate income taxes are as follows:
<TABLE>
<CAPTION>
                                     Six Months Ended         Three Months Ended
                                       December 31,               December 31,
                               -----------------------      ---------------------
                                 1998           1997          1998         1997
                               --------       --------      ---------    --------
<S>                            <C>            <C>           <C>          <C> 
     Current:
       Federal                 $334,100       $398,700      $224,700     $208,500
       State                     48,900         58,500        32,800       33,100
       Foreign                        0              0             0            0 
                               --------       --------      ---------    --------                              
                               $383,000       $457,200      $257,500     $241,600
                               --------       --------      ---------    --------
                           
     Deferred:
       Federal                 $(37,400)      $(23,800)     $(18,100)    $(11,400)
       State                     (9,900)        (6,900)       (4,800)      (3,300)
       Foreign                        0              0             0            0 
                               --------       --------      ---------    --------

                               $(47,300)      $(30,700)    $ (22,900)     (14,700)
                               --------       --------      ---------    --------

     Total                     $335,700       $426,500      $234,600      226,900
                               ========       ========      ========     ========
</TABLE>
         A  reconciliation  of the provision for corporate income taxes compared
with amounts computed at the US statutory tax rate is as follows:
<TABLE>
<CAPTION>
                                                              Six Months Ended            Three Months Ended
                                                                December 31,                   December 31,
                                                          ------------------------       ----------------------
                                                            1998            1997          1998           1997
                                                          --------        --------       --------      -------- 
<S>                                                       <C>             <C>            <C>           <C>     
Based on U.S. statutory federal tax rate                  $310,000        $392,400       $216,142      $207,232

Increase (decrease) in taxes resulting from:
  State taxes, net of federal tax benefit                   25,700          34,000         18,440        19,612

  Non-deductible (reportable) expenses (income)                  0             100             18            56
                                                          --------        --------       --------      -------- 

     Total                                                $335,700        $426,500       $234,600      $226,900
                                                          ========        ========       ========      ========

     Effective tax rate                                       36.8%           37.0%          36.9%         37.2%
</TABLE>
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION

                                       AND

                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The Canadian  subsidiary  has available  unused tax benefits in the form of
operating  loss  carryforwards  of $168,000 to reduce  future  Canadian  taxable
income. These carryforwards principally expire in 1999. Due to their uncertainty
of  realization,  these tax benefits have been reflected net of a 100% valuation
allowance.

Note 6--Accrued Liabilities

         Accrued liabilities are as follows:

                                                      December 31,      June 30,
                                                         1998              1998
                                                       --------         --------
Compensation .................................         $224,938         $347,184
Payroll, sales, and property taxes ...........           58,117           29,168
401-k plan contribution ......................           31,450           20,040
Environmental and other costs ................            1,665           29,842
                                                       --------         --------

                                                       $316,170         $426,234
                                                       ========         ========

Note 7--Employee Benefits

         The  Company  maintains  a 401(k)  savings  plan which  covers all U.S.
employees.  The Company matches 50% of voluntary  pre-tax  employee  participant
contributions  up to 4% of  compensation  as  well  as  providing  discretionary
contributions  based on compensation for all employees.  Employer  discretionary
contributions, which are forfeited due to employee termination prior to the full
seven year vesting period, revert back to the Company.

Total expense under the plan was $29,680 in 1998 and $24,747 in 1997.

         Pursuant to employment  contracts and letter  agreements  with officers
and key employees,  the Company maintains  non-qualified  incentive compensation
plans which are based on the  realization of pre-tax income and royalty  income.
Total expense under these plans was $194,551 in 1998 and $262,524 in 1997.

         The Company is obligated to provide a non-qualified  retirement pension
to its chief executive  officer.  Such obligation  provides a monthly benefit of
$7,100 and is payable for a period of fifteen  years to the  officer,  or to his
wife in the event of his death.  The Company is accruing the obligation over the
active term of  employment  of the  officer.  The Company is also  accruing  and
funding deferred compensation  contracts with two other officers based on 10% of
annual compensation.  Total expense under these three obligations was $75,158 in
1998 and $77,442 in 1997.
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION

                                       AND

                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8--Related Party Transactions

The Company engaged in the following  related
party transactions:

                                                            Six Months Ended
                                                              December 31,
                                                      --------------------------
                                                        1998               1997
                                                      -------            -------

Was charged computer  consulting  services by
an outside director of the Company;                   $26,299            $29,492

                                       

Accrued   interest   income  on  an  original
installment  note  receivable of $235,000 due
from a limited  partnership  controlled  by a
stockholder of the Company  secured by a deed
of trust on the Texas real  estate.  The note
bears interest of 6.83% per annum collectible
annually for three years. Thereafter the note
shall  be   collected  in  (5)  equal  annual
principal   installments   of  $47,000   plus
interest of 6.83% per annum  commencing  July
1, 1999 with the final collection due July 1,
2003. The receivable balance was collected in
full on January 4, 1999.                              $ 6,660            $ 8,025

                                                               

Charged  interest  income on a mortgage  note
receivable   of   $550,000   from  its  chief
executive  officer on December 16, 1996.  The
note is being  repaid in (34)  equal  monthly
installments   of   $3,814   which   includes
interest   of  6.16%  per  annum   commencing
February  1,  1997  with  the  final  balloon
payment of $512,124  due  December  16, 1999.
The  receivable  balance at December 31, 1998
was  $498,319 and is secured by a real estate
first mortgage.                                       $15,481            $16,707


<PAGE>
                         GENERAL MAGNAPLATE CORPORATION

                                       AND

                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9--Fair Value of Financial Instruments

Cash and Cash Equivalents,  Accounts  Receivable,  Accounts Payable, and Accrued
Liabilities--The  carrying amount  approximates  fair value because of the short
maturity of these instruments.

Marketable  Securities--The carrying amount approximates fair value because such
securities are valued based on market quotes.

Notes Receivable - Related Parties--The  carrying amount approximates fair value
because of similar  rates on issues  offered  to the  Corporation  under some or
similar provisions.

Accrued   Deferred   Compensation  and  Long-Term   Debt--The   carrying  amount
approximates  fair value  because  such  liabilities  are being  valued based on
current market values.

Note 10--Commitments and Contingencies

         Concentrations of Credit Risk

         The Company's financial  instruments that are exposed to concentrations
of credit risk consist  primarily of its cash,  marketable  securities and trade
receivables.

         The  Company's  cash  and  marketable  securities  are in  high-quality
securities  placed  with a wide  array of  institutions  with  high  credit  and
investment  ratings.  This  investment  policy limits the Company's  exposure to
concentrations of credit risk.

         The trade  receivable  balances,  reflecting the Company's  diversified
sources of revenue,  are dispersed across many different  geographic areas. As a
consequence,  concentrations  of credit risk are limited.  The Company routinely
assesses the financial  strength of its customers and generally does not require
collateral to support its credit sales.

Lease Commitment

         The  Company  leases  warehouse  space in its New Jersey  facility to a
tenant under an operating  lease  expiring  December  31, 1999.  Minimum  future
rentals to be received on the lease as of June 30, 1998 are as follows:  1998-99
- $118,443; and 1999-00 - $60,844.
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION

                                       AND

                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11--Statement of Cash Flows

                                                      Six Months Ended
                                                         December 31,
                                                 ------------------------
                                                    1998            1997
                                                 ---------     ----------


Supplementary data:

  Interest expense paid                          $  16,130     $    6,471
  Income taxes paid                                433,550        518,324

<PAGE>
Item 2 - Management's  Discussion and Analysis of Financial  Position and Result
of Operation:
--------------------------------------------------------------------------------

Financial Condition
Liquidity and Capital Resources
Six-Months ended December 1998

         Cash and cash  equivalents  decreased  to $848,257 at December 31, 1998
from  $1,301,317  at June 30,  1998.  Of the  total  cash and cash  equivalents,
$543,695 net cash was provided by the operating activities, $373,472 was used in
investing activities and $623,283 was used by financing  activities.  During the
six months, the Registrant's  investment  activities were primarily comprised of
$309,524  for  additions  to  property,  plant and  equipment  and  patents  and
trademarks,  $11,428 used for additions to deferred  compensation  contracts and
$59,922 for additions to cash surrender  value-life  insurance.  The increase in
net cash used in financing  activities was  principally  from the acquisition of
treasury stock  ($345,486) and the payment of dividends ( $.05 per share paid on
October 9, 1998) of $ 243,540.

          Working  capital of $5,686,810  increased  $139,405 or 2.5% during the
six months ended  December 31, 1998 and the working  capital ratio  increased to
12.06 to 1 from 6.95 to 1 as of June 30,  1998.  The working  capital  increased
based on the net  effect  of the  increase  in the mark to  market  value of the
marketable  securities,  the paydown of Accounts Payable and accrued liabilities
and the repurchase of the Company's stock discussed above.

         Stockholders'  equity per share at December 31, 1998  increased $.04 to
$2.54 per share compared with $2.50 at June 30, 1998. The increase  reflects the
quarter's income, less the cost of cash dividends  ($243,540) and a reduction in
outstanding  shares through stock repurchases.  As previously  authorized by the
Board,  71,500  shares of GMCC stock were  purchased at the cost of $345,486 and
are  currently  being held in the treasury,  leaving the Company with  4,836,294
shares  outstanding  at December 31,  1998.  Under the  Registrant's  previously
announced buyback program, the Company is authorized to repurchase shares of its
common stock from time to time up to the total purchase price of $1,500,000.

         Management  believes  internal cash flow from operations and/or incomes
from  marketable  securities to be  sufficient to provide the capital  resources
necessary to support future operating  needs, and does not currently  anticipate
material capital  expenditures that will have significant  impact on future cash
flows.

       Quarter Ended--- December 31, 1998 compared with December 31, 1997

          Sales  decreased  this  quarter by 0.8% as  reflected  in the  current
period  sales of  $2,680,727,  a decrease of $20,855  from the same quarter last
year. Sales at the Wisconsin and Canadian facilities showed increases of $16,307
and $72,399  respectively.  The New Jersey, Texas, and California facilities had
lower sales this  quarter  compared  to the same  period last year.  The primary
reduction  in sales for the New Jersey  facility is directly  attributed  to the
slowdown in the  electronics  industry caused by the Asian economic crises and a
slight  decline from a general  industrial  slowdown.  The reduced sales for the
Texas facility  reflect  continued low levels of oil  exploration due to the low
price of crude oil. Oil drilling  manufacturers  represent a significant portion
of the customer base for the Texas  facility.  Reduced sales for the  California
facility reflect slowdowns in the airframe and electronics  industries served by
the plant,  caused both by the Asian  economic  crises,  which slowed  orders of
parts for  items  such as  aircraft,  and the  continued  decrease  in  military
contracting.
<PAGE>
         Royalty and  investment  and other  income for the second  quarter were
$83,451  and  $372,867  respectively,   compared  with  $120,376  and  $140,037,
respectively,  in last year's second quarter.  Although  royalty income is down,
last year's royalty income  includes the second and last  installment of $50,000
from Black and Decker for their  exclusive use of the  Magnaglide  service mark.
Exclusive of the Black and Decker  payment,  total  royalties  from  established
licensees  has  increased  18.5% or  $13,075  from the same  quarter  last year.
Investment  income increased 166.2% or $232,830,  reflecting the upward movement
in  investment  markets  during the three  months ended  December 31, 1998.  The
Company  maintains  an  investment  portfolio  to enhance  earnings  and provide
liquidity for future cash needs. The portfolio is composed of equity securities,
U.S.  Treasury  Securities  and  obligations  of U.S.  Government  agencies  and
government sponsored entities, and corporate debt.

          The Company has adopted  Statement of Financial  Accounting  Standards
No. 115,  "Accounting  for Certain  Investments in Debt and Equity  Securities,"
(SFAS 115).  Under SFAS 115,  securities  are  classified as securities  held to
maturity based on management's  intent and the Company's ability to hold them to
maturity.  Such securities are stated at cost, adjusted for unamortized purchase
premiums and discounts.  Securities that are bought and held principally for the
purpose of selling them in the near term are  classified as trading  securities,
which are  carried  at market  value.  Realized  gains and  losses and gains and
losses from marking the  portfolio  to market  value are included in  investment
income.  Securities  not  classified as  securities  held to maturity or trading
securities  are  classified as securities  available for sale, and are stated at
fair value.  Unrealized  gains and losses on  securities  available for sale are
excluded from results of operations, and are reported as a separate component of
stockholders' equity, net of taxes.  Securities classified as available for sale
include  securities  that may be sold in response to changes in interest  rates,
changes in prepayment risks, or other similar circumstances.

          Management determines the appropriate  classification of securities at
the time of  purchase.  At  December  31, 1998 all of the  Company's  investment
securities were classified as trading securities.

           The $232,830  increase in trading  income for this quarter versus the
1997 quarter is primarily  attributable to the mark to market adjustments to the
portfolio.  Although  the  Company's  portfolio  will  continue to be subject to
market changes,  management  believes the portfolio is well diversified and is a
prudent cash management tool for investing the Company's excess cash.

           Reflecting the factors discussed above,  gross revenue for the second
quarter of this year totaled  $3,137,045,  an increase of 5.9% or $175,050  from
the same quarter of last year.

          Total costs and expenses  were  $2,501,422 in the second  quarter,  an
increase of $148,985 or 6.3% from the same period last year.  Primary components
of costs and  expenses  included  costs of sales of  $1,300,093,  an increase of
$178,515  over  cost of sales of  $1,121,578  for the same  quarter  last  year,
selling and  administration  expense of  $1,019,469,  a decline of $47,660  from
selling and  administration  expenses of  $1,067,129 in the same quarter of last
year, and depreciation and  amortization  expenses of $ 174,058,  an increase of
$16,799 over  depreciation  and  amortization  expenses of $ 157,259 in the same
quarter of last year. The increase in the costs of sales reflects  increased raw
material costs as the Company expanded its operations.
<PAGE>
          Income  before  corporate  income  taxes was  $635,623  in this year's
second  quarter,  an increase of $26,065 or 4.3% from the  $609,558  achieved in
last year's second  quarter.  Corporate  income taxes and the effective tax rate
for the period were $234,600 and 36.9% respectively,  compared with $226,900 and
37.2% in the second quarter of last year.

          Based on the above,  net income in the second  quarter of this year of
$401,023  increased  $18,365 or 4.8% from the  $382,658  in the same period last
year.

          Earnings per share for the second quarter 1998 and 1997 were each $.08
per share.  During the quarter,  26,500 shares of GMCC stock were  purchased and
are being  held in the  treasury,  resulting  in a  weighted  average  of shares
outstanding of 4,846,778 compared with 4,911,620 for the same period last year.

Year 2000

          The  Company  has  recognized  the need to  ensure  that its  computer
systems will not be adversely  affected by the upcoming  calendar year 2000. The
Company has assessed how it may be impacted by Year 2000 and has  formulated and
commenced  implementation of a comprehensive plan to address known issues to its
computer  systems.  The plan,  as it relates  to  computer  systems,  involves a
combination of software modification,  upgrades and replacement.  The accounting
software has already been upgraded at this time. The company  estimates that the
cost of Year 2000 compliance  will not have a material  adverse effect on future
results of operations of the Company.  However,  the Company  cannot measure the
impact that the Year 2000 issue will have on its vendors,  suppliers,  customers
and other parties with which it conducts business.

Market Risk

          The  Company's  Canadian  operations  expose the Company to  potential
foreign  currency  exchange  risk on cash flows  related to sales,  expenses and
financing transactions.  The Company believes its exposure to currency rate risk
is not  material,  and the Company has not used currency  exchange  contracts to
address this risk.

        Six Months Ended December 31, 1998 compared with December 31, 1997:

          Gross revenue for this year's first six months of $5,793,837 decreased
1.1% or $63,659  over last year.  Sales and  Royalty  and  Licensee  income both
declined for the six months ended December 31, 1998 over the  comparable  period
of last year,  reflecting  the same factors  discussed  above for the  quarterly
comparison.  Over the six months  ended  December 31,  1998,  investment  income
increased  $55,877  partially  offsetting  the declines in Sales and Royalty and
other income. The investment income primarily reflects mark to market adjustment
to the portfolio.

          Total  costs  and  expenses  for the  current  six month  period  were
$4,882,159  an increase of $178,834 or 3.8% from last year.  As a percentage  of
gross revenue,  total costs and expenses  increased to 84.3% compared with 80.3%
in 1997.  Cost of Sales as a  percentage  of gross  revenue  for the six  months
increased  to 44.8% from 39.2%  during the  comparative  six month  period.  The
increase in Cost of Sales reflects the factors discussed above for the quarterly
period. Selling and administration  expenses decreased to 33.2% of gross revenue
in  the  latest  period  compared  with  35.7%  last  year.   Depreciation   and
amortization  increased to 6.0% of gross revenue this year compared with 5.3% in
1997.
<PAGE>
          As a result of the above,  gross income before  corporate income taxes
for the first six months of this year was  $911,678,  a decrease  of $242,493 or
21.0% from last year.

          Corporate  income taxes in this year's first six months were $335,700,
compared  to  $426,500  for the  comparable  period of last  year.  This  year's
effective tax rate was 36.8% compared with 37.0% last year.

          As a result of the above,  net income of  $575,978  declined  20.8% or
$151,693 from last year.  Earnings per share were $.12 this year,  compared with
$.15 a share last year, a decrease of $.03 or 20.0%. During the six month period
71,500 shares of common stock were purchased and are currently being held in the
treasury,  resulting in a weighted average this year of 4,873,316  compared with
4,915,208 in 1997.
<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                  GENERAL MAGNAPLATE CORPORATION
                                                  ------------------------------
                                                            (Registrant)

DATE   2/12/99


/s/Candida C. Aversenti
------------------------ 
Candida C. Aversenti
President

DATE   2/12/99

/s/Susan E. Neri
---------------- 
Susan E. Neri
Chief Accounting Officer

<PAGE>
[GRAPHIC COMPANY LOGO] 
magnaplate news

  Dedicated to the Future Needs of Mankind
       Through Surface Enhancement
-----------------------------

                                                      1331 U.S. Route #1
                                                      Linden, New Jersey 07036
                                                      908.862.6200
FOR IMMEDIATE RELEASE                                 Fax: 908.862.6110
February 10, 1999                                     http://www.magnaplate.com
                                                      e-mail:info@magnaplate.com



         General Magnaplate Corporation (NASDAQ: GMCC), announces an increase in
dividends of 20% over prior  dividends,  to $.06 per share. The record date will
be February 26, 1999 and the dividend will be payable to  stockholders  on March
12, 1999.


<PAGE>
                            GENERAL MAGNAPLATE CORP.
                         ANNUAL MEETING OF SHAREHOLDERS

                       NOVEMBER 4, 1998 2:00 P.M., E.S.T.

                     Will the meeting please come to order.

         Mrs.  Candida C.  Aversenti,  President of your Company,  is pleased to
welcome you to our Annual Meeting. Introduce Edmund V. Aversenti, Secretary. Mr.
Aversenti will act as Secretary of the Annual Meeting.

1.     PRESIDENT       I  would  like  to  introduce  to you  the  officers  and
                       directors of the Company who are present.

                                  INTRODUCTIONS

2.     PRESIDENT       When the  formal  portion of the  meeting  is  concluded,
                       anyone present  wishing to ask any questions will have an
                       opportunity to do so.

3.     PRESIDENT       Copies  of the  Annual  Report  have  been  mailed to all
                       shareholders  and extra copies are  available.  Notice of
                       the meeting was mailed to all shareholders of record,  as
                       well as the proxy  card and the proxy  statement.  I will
                       entertain  a motion to waive the reading of the notice of
                       the meeting,  the proxy  statement,  and the affidavit of
                       mailing.  Walter P. Alina makes  motion,  who seconds the
                       motion Edward A. Partenope.


       PRESIDENT       Will  all  those in favor of the  motion  so  signify  by
                       raising their hands (unanimous).  All opposed (none). The
                       motion  is  carried,  and a  reading  of  the  notice  of
                       meeting,  the  proxy  statement,  and  the  affidavit  of
                       mailing  are  waived,  and will be  attached to and filed
                       with the minutes of this meeting.

4.     PRESIDENT       The  shareholders  list,  prepared  and  certified by the
                       Registrar & Transfer Co.,  Cranford,  New Jersey, is here
                       and  available  during the meeting for  inspection by any
                       shareholder.  Mr. Aversenti,  our Secretary,  will please
                       report on the number of shares represented by proxy or by
                       shareholders present at the meeting in person.

        MR. AVERSENTI MAKES HIS REPORT.  TOTAL SHARES  REPRESENTED BY PROXY ARE:
4,460,899 (91.6 %). (including 200 shares ea Becker/Carver)


       PRESIDENT       I now declare that quorum is present and that the meeting
                       is open for the conduct of business.

5.     PRESIDENT       I will  entertain  a motion to waive the  reading  of the
                       minutes of the last annual  meeting of  shareholders.  S.
                       Thomas Aitken makes motion, Ann Dente seconds it.

       PRESIDENT       All  those in  favor  of the  motion  please  signify  by
                       raising their hands (unanimous).  All opposed (none). The
                       reading of the minutes has been waived.
<PAGE>
6.     PRESIDENT       The first order of business will be the election of seven
                       (7)  directors to serve until the 1999 Annual  Meeting of
                       Shareholders  and until their successors shall be elected
                       and shall qualify.

         PRESIDENT     I will entertain nominations for the Board of Directors. 

                       
         PRESIDENT     recognizes  Susan  Neri,  who  nominates  the  seven  (7)
                       candidates.  She then recognizes Jim Wallwork who seconds
                       the nominations.

         PRESIDENT     recognizes Walter P. Alina, who moves that nominations be
                       closed.  She then  recognizes  Larry Campbell who seconds
                       the motion.

         PRESIDENT     Will  all   those  in  favor  of  the   motion  to  close
                       nominations  signify by raising their hands  (unanimous).
                       All opposed (none).

                       Nominations are closed.

7.       PRESIDENT     I am  appointing  Valerie  Corigliano  and Jim  Becker as
                       Inspectors  of  Election  and ask that  they  review  the
                       shareholders  list and  determine  the  number of proxies
                       received.  I would also ask that all shareholders who are
                       present,  who  have  not  sent in a  proxy,  to  identify
                       themselves to the Inspectors of Election,  and if they do
                       not wish to vote in person, to advise them that there are
                       extra  proxies on hand which they may fill in and give to
                       the Inspectors of Election.


8.     PRESIDENT &     While awaiting report from the Inspectors of Election,  I
       CHAIRMAN        would like to discuss  certain  aspects of the  business,
                       etc.
 

                (DISCUSSION & OUTLOOK BY PRESIDENT AND CHAIRMAN)

9.     PRESIDENT       We now have the report from the Inspectors of Election on
                       the number of shares voting,  in person or by proxy, for,
                       or abstain, with respect to the election of the seven (7)
                       directors  nominated:  (incl  Becker/Carver  200  each by
                       proxy)
<PAGE>
 
No. of Shares Voting by PROXY                FOR                    ABSTAIN
--------------------------------------------------------------------------------

         S. Thomas Aitken                 4,456,708                   4,191

         Candida C. Aversenti             4,452,708                   8,191

         Edmund V. Aversenti, Jr.         4,452,708                   8,191

         Charles P. Covino                4,456,708                   4,191

         Harold F. Levin                  4,456,408                   4,491

         Edward A. Partenope, Jr.         4,456,708                   4,191

         James H. Wallwork                4,456,708                   4,191



No. of Shares Voting in PERSON               FOR                    ABSTAIN
--------------------------------------------------------------------------------

         S. Thomas Aitken

         Candida C. Aversenti

         Edmund V. Aversenti

         Charles P. Covino

         Harold F. Levin

         Edward A. Partenope, Jr.

         James H. Wallwork


 

         PRESIDENT         If there  are any  shareholders  present  who wish to
                           vote and who have not given a proxy to the Inspectors
                           of Election, would they please identify themselves by
                           name and the  number of shares  held and how they are
                           voting  so that the  number of shares so voted may be
                           added to the report of the Inspectors of Election.

         PRESIDENT         I declare  each of the seven (7)  nominees to be duly
                           elected as  Directors  of the  Corporation,  to serve
                           until  the  next  Annual   Meeting  and  until  their
                           successors shall be elected and shall qualify.

10.      PRESIDENT         The next order of  business  will be the vote for the
                           confirmation   of  the  selection  by  the  Board  of
                           Directors of Mauriello, Franklin & LoBrace, Certified
                           Public Accountants,  as independent  auditors for the
                           Corporation  for the current  fiscal year ending June
                           30, 1999.
<PAGE>
         PRESIDENT         I will entertain a motion for the confirmation of the
                           selection of the Corporation's independent auditors.

         PRESIDENT         recognizes  Susan  Neri who  makes  motion.  She then
                           recognizes S. Thomas Aitken, who seconds the motion.

11.      PRESIDENT         We also  have  the  report  from  the  Inspectors  of
                           Election on the number of shares  voting in person or
                           by proxy for,  against or abstain with respect to the
                           selection  by the Board of  Directors  of  Mauriello,
                           Franklin & LoBrace, Certified Public Accountants,  as
                           independent  auditors  for  the  Corporation  for the
                           current  fiscal year ending June 30, 1999. The report
                           is as follows:


                           FOR:  4,450,652   AGAINST: 2,444     ABSTAIN:   7,803
                                        

         PRESIDENT         If there  are any  shareholders  present  who wish to
                           vote and who have not given a proxy to the Inspectors
                           of Election, would they please identify themselves by
                           name and the  number of shares  held and how they are
                           voting  so that the  number  of  shares  voted may be
                           added to the report of the Inspectors of Election.

         PRESIDENT         I declare  confirmation of the action of the Board of
                           Directors in selecting Mauriello, Franklin & LoBrace,
                           Certified Public Accountants, as independent auditors
                           for the  Corporation  for  the  current  fiscal  year
                           ending June 30, 1999.

12.      PRESIDENT         The  next  order of  business  will be the vote on an
                           Amendment   to   the   Articles   of   Incorporation,
                           increasing the Authorized  Shares of Common Stock, No
                           Par Value to 20,000,000 shares from 5,000,000 shares.
                           I will  entertain  a motion to open this matter for a
                           vote.

         PRESIDENT         recognizes Harold F. Levin who makes motion. She then
                           recognizes Jim Wallwork who seconds the motion.

         PRESIDENT         We have the report from the Inspectors of Election on
                           the  number  of  shares  voting in person or by proxy
                           for,   against  or  abstain   with  respect  to  this
                           Amendment. The report is as follows:


                           FOR:  4,293,332   AGAINST: 151,620    ABSTAIN: 15,947

                           If there  are any  shareholders  present  who wish to
                           vote and who have not given a proxy to the Inspectors
                           of Election, would they please identify themselves by
                           name and the  number of shares  held and how they are
                           voting  so that the  number  of  shares  voted may be
                           added to the report of the Inspectors of Election.

         PRESIDENT         I  declare  that the  Amendment  to the  Articles  of
                           Incorporation has been adopted.
<PAGE>
13.                        PRESIDENT At this time I will be pleased to entertain
                           any questions which anyone present may wish to ask. I
                           would also like to point out that Mr. Joe  Franklin a
                           certified public  accountant and a member of the firm
                           of Mauriello,  Franklin & LoBrace,  our auditors,  is
                           also present and available for questions as well.

                                 ANY QUESTIONS?

14.                        PRESIDENT  Are there any further  matters to be acted
                           upon,  for,  if not,  this will  conclude  the Annual
                           Meeting of  Shareholders  and I will now  entertain a
                           motion to adjourn.  A motion to adjourn was then made
                           by S.  Thomas  Aitken ,  seconded  by Ann Dente,  and
                           unanimously carried.

15.                        PRESIDENT  The meeting is now  officially  adjourned.
                           May I remind  the  Directors  that we will be holding
                           our  Annual  Meeting of the Board of  Directors  very
                           shortly.

16.                        PRESIDENT  I wish to thank  all of you for  attending
                           the Annual Meeting of Shareholders.


                           IF ANY OTHER PROPOSALS COME UP:

                           FOR: 4,272,639   AGAINST:  140,586   ABSTAIN:  47,674