UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


[ X ] Quarterly  report  pursuant to Section 13 or 15(d) of the  Securities
      Exchange Act of 1934

For the quarterly period ended April 30, 1997

                                       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 0-21105

                                GKN HOLDING CORP.
             (Exact name of registrant as specified in its charter)


Delaware                                                 13-3414302
---------------------------------                        -------------------
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                           Identification No.)

61 Broadway, New York, New York                          10006
----------------------------------------                 ------------
(Address of principal executive offices)                 (Zip Code)

(212)509-3800
----------------
(Registrant's telephone number, including area code)


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 the latest practicable date.

Class                                           Outstanding at May 30, 1997
--------------------------------                -----------------------------
Common Stock, $.0001 par value                  8,093,899 shares

                       Exhibit index on page 15


<PAGE>


                       GKN HOLDING CORP. AND SUBSIDIARIES
                                      Index




Part I - Financial Information                                           Page
                                                                         ----
Item 1.  Financial Statements

     Consolidated Statements of Financial Condition as of
     April 30, 1997 (Unaudited) and January 31, 1997                      3

     Consolidated Statements of Income for the three
     months ended April 30, 1997 and 1996 (Unaudited)                     4

     Consolidated  Statements  of Changes in  Stockholders'  
     Equity for the year ended January 31, 1997 and the 
     three months ended April 30, 1997 (Unaudited)                        5

     Consolidated Statements of Cash Flows for the three 
     months ended April 30, 1997 and 1996 (Unaudited)                     6

     Notes to Consolidated Financial Statements                           7

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                             9


Part II - Other Information

Item 2.   Changes in Securities                                          12

Item 6.   Exhibits and Reports on Form 8-K                               13




<PAGE>

Part I - FINANCIAL INFORMATION
Item 1.  Financial Statements

                       GKN HOLDING CORP. AND SUBSIDIARIES
                 Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>

                                                                                   April 30,    January 31,
                                                                                     1997          1997
                                                                                -------------   -----------
                                                                                 (Unaudited)
<S>                                                                              <C>            <C>   
Assets
Cash and cash equivalents ...................................................... $  8,936,000  $ 17,856,000
Receivable from brokers and dealers ............................................    2,436,000     9,357,000
Securities owned, at market value ..............................................   12,558,000    14,610,000
Securities owned, not readily marketable, at fair value ........................      639,000     1,365,000
Investments ....................................................................    2,689,000     2,692,000
Office furniture, equipment and leasehold improvements, net ....................    1,241,000     1,251,000
Goodwill, net ..................................................................    3,928,000     1,619,000
Loans receivable ...............................................................    2,819,000     1,451,000
Income taxes receivable ........................................................    1,457,000          --
Other assets ...................................................................    1,885,000     1,432,000
                                                                                 ------------  ------------

Total assets ................................................................... $ 38,588,000  $ 51,633,000
                                                                                 ============  ============

Liabilities and Stockholders' Equity
Liabilities:
 Securities sold, not yet purchased, at market value ........................... $  2,551,000  $  6,997,000
 Commissions payable ...........................................................    1,035,000     2,186,000
 Deferred compensation .........................................................      262,000     1,409,000
 Income taxes payable ..........................................................         --         238,000
 Deferred tax liability ........................................................         --         636,000
 Accrued expenses and other liabilities ........................................    2,869,000     4,403,000
                                                                                 ------------  ------------
                                                                                    6,717,000    15,869,000
 Liability subordinated to the claims of general creditors .....................      632,000       738,000
                                                                                 ------------  ------------
 Total liabilities .............................................................    7,349,000    16,607,000
                                                                                 ------------  ------------

Stockholders' equity:
 Preferred stock, $.10 par value; 1,200,000 and no shares
     authorized, issued, and outstanding .......................................    1,152,000          --
 Common stock, $.0001 par value; 35,000,000 shares
     authorized; 9,217,875 shares issued; 8,093,899 and
     8,225,512 shares outstanding ..............................................        1,000         1,000
 Additional paid-in capital ....................................................   19,249,000    19,931,000
 Retained earnings .............................................................   15,794,000    18,247,000
 Cumulative translation adjustment .............................................      (11,000)       (3,000)
                                                                                 ------------  ------------
                                                                                   36,185,000    38,176,000
 Less treasury stock, at cost; 1,123,976 and 992,363 shares ....................   (4,946,000)   (3,150,000)
                                                                                 ------------  ------------
 Total stockholders' equity ....................................................   31,239,000    35,026,000
                                                                                 ------------  ------------

Total liabilities and stockholders' equity ..................................... $ 38,588,000  $ 51,633,000
                                                                                 ============  ============
</TABLE>


                See accompanying notes to consolidated financial
                                  statements.

                                       3

<PAGE>


                       GKN HOLDING CORP. AND SUBSIDIARIES
                        Consolidated Statements of Income
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                  Three Months Ended April 30,
                                                  -----------------------------
                                                        1997           1996
                                                    -------------    ----------
<S>                                                  <C>             <C>

Revenues:
   Commissions ...................................   $  8,104,000    $12,216,000
   Investment banking ............................        676,000      3,413,000
   Principal transactions ........................       (754,000)     2,477,000
   Interest ......................................        425,000        285,000
   Other .........................................         98,000          9,000
                                                     ------------    -----------
Total revenues ...................................      8,549,000     18,400,000
                                                     ------------    -----------

Expenses:
   Compensation and benefits .....................      7,754,000     10,691,000
   Communications ................................      1,225,000        840,000
   Brokerage, clearing and
      exchange fees ..............................        673,000        631,000
   Occupancy and equipment .......................        700,000        605,000
   Business development ..........................        654,000        273,000
   Professional fees .............................      1,028,000        812,000
   Other .........................................        656,000        553,000
                                                     ------------    -----------
Total expenses ...................................     12,690,000     14,405,000
                                                     ------------    -----------

Income before income taxes .......................     (4,141,000)     3,995,000

Income taxes .....................................     (1,688,000)     1,749,000
                                                     ------------    -----------

Net income .......................................   $ (2,453,000)   $ 2,246,000
                                                     ============    ===========

Earnings per common share ........................   $      (0.30)   $      0.40
                                                     ============    ===========

Weighted average common
   shares outstanding ............................      8,171,856      5,638,260
                                                     ============    ===========
</TABLE>

                See accompanying notes to consolidated financial
                                  statements.


                                       4

<PAGE>

                       GKN HOLDING CORP. AND SUBSIDIARIES
           Consolidated Statements of Changes in Stockholders' Equity
 For the Year Ended January 31, 1997 and the Three Months Ended April 30, 1997 
                                  (Unaudited)
<TABLE>
<CAPTION>

                                                 Additional                 Cumulative
                            Preferred   Common   Paid-in      Retained      Translation   Treasury      Unearned
                              Stock      Stock   Capital      Earnings      Adjustment    Stock         Compensation    Total
                           ----------   -------- ----------   ------------  ----------    ------------  ------------   ------------
<S>                        <C>          <C>      <C>          <C>           <C>           <C>            <C>         <C>
Balance at
   January 31, 1996 ...... $    --      $1,000   $ 3,487,000  $ 11,918,000  $      --     $ (630,000)   $       --   $ 14,776,000
Net income ...............      --          --            --     6,329,000         --             --            --      6,329,000
Stock issued .............      --          --    16,011,000            --         --             --            --     16,011,000
Warrants issued ..........      --          --         1,000            --         --             --            --          1,000
Stock options
   granted ...............      --          --        36,000            --         --             --            --         36,000
Notes receivable .........      --          --      (221,000)           --         --             --            --       (221,000)
Stock options exercised ..      --          --       617,000            --         --         95,000            --        712,000
Purchase of
   treasury stock ........      --          --            --            --         --     (2,615,000)           --     (2,615,000)
Translation adjustment ...      --          --            --            --      (3,000)         --              --         (3,000)
                        ------------ ----------  ------------ ------------  -----------  ------------  ------------  ------------

Balance at
   January 31, 1997 ......      --       1,000    19,931,000    18,247,000      (3,000)  (3,150,000)            --     35,026,000
Net income ...............      --          --            --    (2,453,000)        --           --              --     (2,453,000)
Stock issued for
   acquisition ........... 1,152,000        --       443,000           --          --       517,000             --      2,112,000
Stock options exercised ..      --          --       (23,000)          --          --        80,000             --         57,000
Stock issued
   under incentive
   compensation plans ....      --          --       541,000           --          --     1,193,000      (1,734,000)         --
Amortization of
   unearned
   compensation ..........      --          --            --           --          --           --           96,000        96,000
Purchase of
   treasury stock ........      --          --            --           --          --    (3,586,000)            --     (3,586,000)
Change in trans-
   lation adjustment .....      --          --            --           --       (8,000)         --              --         (8,000)
Other ....................      --          --        (5,000)          --          --           --              --         (5,000)
                         ------------ ----------  ----------- ------------  ----------- ------------   ------------   ------------
Balance at
   April 30, 1997 ........$1,152,000    $1,000  $ 20,887,000  $ 15,794,000    $(11,000) $(4,946,000)   $(1,638,000)  $ 31,239,000
                         ============ ========= ============  ============  ===========  ============  ============  ============
</TABLE>

                     See accompanying notes to consolidated
                             financial statements.


                                       5

<PAGE>


                       GKN HOLDING CORP. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                         Three Months Ended April 30,
                                                                           1997                 1996
                                                                     ---------------         ----------
<S>                                                                 <C>                    <C> 
Operating activities:
   Net income/(loss)                                                  $ (2,453,000)         $ 2,246,000
   Adjustments to reconcile net income to net
     cash provided by (used in) operating activities:
      Depreciation and amortization                                        163,000              131,000
      Deferred taxes and other                                            (537,000)            (342,000)
                                                                    --------------       --------------
                                                                        (2,827,000)           2,035,000
   (Increase) decrease in operating assets:
     Receivable from brokers and dealers                                 7,575,000           (5,108,000)
     Securities owned, at market value                                   2,219,000            2,460,000
     Securities owned, not readily marketable                              725,000              (37,000)
     Loans receivable                                                   (1,368,000)             674,000
     Income taxes receivable                                            (1,457,000)                   -
     Other assets                                                          127,000             (314,000)
  Increase (decrease) in operating liabilities:
     Securities sold, not yet purchased                                 (4,456,000)           2,152,000
     Commissions payable                                                (1,788,000)             657,000
     Deferred compensation                                              (1,148,000)             458,000
     Income taxes payable                                                 (229,000)           1,790,000
     Accrued expenses and other liabilities                             (2,359,000)          (1,500,000)
     Translation adjustment                                                 (9,000)             (18,000)
                                                                    ---------------        -------------
Net cash provided by (used in) operating activities                     (4,995,000)           3,249,000
                                                                     -------------         -------------

Investing activities:
 Purchase of office furniture, equipment
     and leasehold improvements                                            (51,000)            (162,000)
 Limited partnerships                                                        3,000              132,000
 Acquisition, net of cash acquired                                        (197,000)                   -
 Goodwill resulting from acquisition                                       (33,000)                   -
                                                                     --------------       --------------
Net cash used in investing activities                                     (278,000)             (30,000)
                                                                      -------------       --------------

Financing activities:
   Issuance of common shares                                                53,000                    -
   Purchase of treasury stock                                           (3,586,000)            (103,000)
   Repayment of subordinated debt                                         (114,000)             (66,000)
                                                                    --------------        --------------
Net cash provided by (used in) financing activities                     (3,647,000)            (169,000)
                                                                    --------------        -------------

Net change in cash and cash equivalents                                 (8,920,000)           3,050,000
Cash and cash equivalents at beginning of year                          17,856,000            7,873,000
                                                                     -------------        -------------
Cash and cash equivalents at end of period                           $   8,936,000          $10,923,000
                                                                     =============          ===========
</TABLE>

                See accompanying notes to consolidated financial
                                  statements.

                                       6

<PAGE>

                       GKN HOLDING CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


1.  Basis of Presentation

     The consolidated  financial  statements include the accounts of GKN Holding
Corp. and its subsidiaries (the Company). All significant  intercompany accounts
and transactions are eliminated in consolidation.  In the opinion of management,
the consolidated financial statements reflect all adjustments,  which are all of
a normal  recurring  nature,  necessary  for a fair  statement of the  Company's
financial  position and results of operations for the interim periods presented.
These consolidated  financial  statements should be read in conjunction with the
Company's consolidated financial statements and notes thereto for the year ended
January 31, 1997, in its annual report on Form 10-K.  Certain  reclassifications
have been made to the prior year amounts to conform to the current presentation.

     The  financial   statements  conform  with  generally  accepted  accounting
principles  (GAAP).  The preparation of financial  statements in conformity with
GAAP  requires the Company to make  estimates  and  assumptions  that affect the
reported amounts of assets and liabilities and disclosures of contingent  assets
and  liabilities at the date of the  consolidated  financial  statements and the
reported  amounts of revenues and expenses during the reporting  period.  Actual
results could vary from these estimates.

     The Company's  principal business  activities are affected by many factors,
including  general  economic  and  market   conditions,   which  can  result  in
substantial  fluctuations in the Company's  revenues and net income.  Therefore,
the results of  operations  for the three months  ended April 30, 1997,  are not
necessarily  indicative  of the  results  which may be  expected  for the entire
fiscal year.

2.  Acquisition

     On March 13, 1997,  the Company  acquired all of the  outstanding  stock of
Southeast  Research  Partners,  Inc.  ("Southeast")  for $520,000 cash,  160,000
shares of common stock, and 1,200,000  shares of Series A Preferred Stock.  This
preferred  stock was authorized by the Company's  Board of Directors on March 3,
1997. Southeast is a research and institutional  brokerage boutique,  located in
Boca Raton,  Florida,  which maintains  research  coverage  primarily focused on
small  and mid  capitalization  companies  located  in the  Southeastern  United
States.

3.  Net Capital Requirements

     GKN  Securities  Corp.  ("GKN"),   Southeast,   and  another   wholly-owned
subsidiary,  Shochet Securities,  Inc. (Shochet), are registered  broker-dealers
with the  Securities and Exchange  Commission  (the SEC) and member firms of the
National  Association  of  Securities  Dealers,   Inc.  (NASD).  As  such,  GKN,
Southeast, and Shochet are subject to the SEC's net capital rule, which requires
the maintenance of minimum net capital.

     GKN has  elected  to  compute  net  capital  using the  alternative  method
permitted by the net capital rule,  which requires that it maintain  minimum net
capital, as defined, to be greater than or equal to $250,000.  At April 30,1997,
GKN had net capital of $ 7,083,000.

     Southeast has elected to compute net capital  under the standard  aggregate
indebtedness  method  permitted by the net capital rule, which requires that the
ratio of  aggregate  indebtedness  to net  capital,  both as defined,  shall not
exceed 15 to 1. At April 30, 1997,  Southeast had net capital of $ 2,202,000 and
a net capital  requirement of $100,000.  Southeast's  net capital ratio at April
30, 1997, was 0.45 to 1.



                                       7

<PAGE>

     Shochet  has also  elected  to  compute  net  capital  under  the  standard
aggregate  indebtedness  method  permitted by the net capital rule. At April 30,
1997,  Shochet had net capital of $ 530,000  and a net  capital  requirement  of
$100,000. Shochet's net capital ratio at April 30, 1997, was 0.98 to 1.

4.   Earnings Per Share

     Weighted  average  common shares  outstanding  used in the  calculation  of
earnings per common share reflects common stock equivalents, consisting of stock
options and  warrants,  when their effect is dilutive.  The  difference  between
primary and fully diluted earnings per share is not material.  In March 1997 the
Financial  Accounting  Standards Board issued Statement of Financial  Accounting
Standards  No. 128,  Earnings per Share (SFAS 128),  effective  beginning in the
fiscal year ending January 31, 1998. This statement  changes the calculation and
presentation  of earnings  per common  share (EPS).  The new  presentation  will
consist of basic EPS, which includes no dilution and is computed by dividing net
income  by the  weighted-average  number of common  shares  outstanding  for the
period,  and diluted EPS, which is similar to the current fully diluted EPS. The
disclosed  EPS  for  the  current  quarter  would  be the  same  under  the  new
pronouncement; the common stock equivalents are anti-dilutive given the net loss
for the period.

5.  Supplemental Cash Flow Information
<TABLE>
<CAPTION>
                                                 Three Months Ended April 30,
                                                   1997              1996
                                                ------------       ---------
<S>                                             <C>             <C> 
Cash paid for:
Income taxes ................................    $   731,000     $1,551,000
Interest ....................................         17,000         17,000

Non-cash financing activities:
Treasury stock issued for Incentive
   Compensation Plan ........................    $ 3,586,000     $     --

Details of acquisition:
Fair value of assets acquired ...............    $ 1,479,000     $     --
Liabilities assumed .........................     (1,474,000)          --
Common stock issued in acquisition ..........     (  960,000)          --
Preferred stock issued in acquisition .......     (1,152,000)          --
Goodwill ....................................      2,304,000           --
                                                -------------          --
Net cash used for acquisition ...............        197,000           --
</TABLE>

6.    Commitments and Contingencies

     The National  Association of Securities  Dealers  Regulation,  Inc. (NASDR)
recently conducted an investigation of GKN Securities.  The NASDR staff informed
the Company a District Business Conduct Committee has authorized the filing of a
complaint against GKN Securities,  members of GKN Securities' senior management,
supervisory personnel,  and current and former brokers. The Company expects that
the complaint will allege that GKN Securities violated the anti-fraud provisions
of the  Securities  Exchange  Act and the fair pricing  provisions  of the NASDR
Conduct Rules by charging  excessive  markups in the sale of certain warrants it
underwrote  and for which it acted as a market  maker.  The Company  understands
that the NASDR  staff will allege that the  aggregate  amount of such  excessive
markups  was  approximately  $1.1  million.  The  Company  anticipates  that the
complaint  will seek monetary  restitution  from GKN Securities to its customers
and monetary and non-monetary  sanctions and other relief against GKN Securities
and  individuals.  The NASDR staff has not suggested to the Company that it will
seek  any  sanctions  that  would  restrict  the  business   activities  of  GKN
Securities.  Based upon the amounts provided for in the  consolidated  financial
statements,  the Company believes that the resolution of the NASDR investigation
will not have a material adverse effect on the Company's financial condition.

                                       8

<PAGE>

                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

Results of Operations

Three Months Ended April 30, 1997  vs. Three Months Ended April 30, 1996
------------------------------------------------------------------------

Earnings  per share of common  stock for the three  months ended April 30, 1997,
were $(0.30) as compared to $0.40 for the three months ended April 30, 1996. The
decrease in earnings was directly  attributable to the continued weakness in the
small cap market:  the Company  experienced lower trade volumes,  executed fewer
investment banking deals, and suffered losses in the investment account.

The  Company's  principal  business  activities  are  affected by many  factors,
including  general  economic  and  market   conditions,   which  can  result  in
substantial  fluctuations in the Company's  revenues and net income.  Therefore,
the results of operations for the quarter are not necessarily  indicative of the
results which may be expected for the entire fiscal year.

Revenues

Total  revenues  decreased by 54% to $8,549,000  for the first quarter of fiscal
1998,  mainly as a result of lower  commission  revenues and investment  banking
fees, and investment account losses.

Commission  revenues  decreased by  $4,112,000,  or 34%, for the first  quarter,
reflecting the weak market conditions in the small  capitalization  stock sector
during the period.  The Company  executed 18% fewer trades  during the period as
opposed to the same period in the prior year.

Investment  banking revenues  decreased by $2,737,000,  or 80%. During the first
quarter of fiscal 1998 the Company  raised $5.8  million for  corporate  clients
through  two private  placements.  In the same period in fiscal 1997 the Company
raised $32  million  for its  clients  through  two public  offerings  and three
private placements.

Principal  transactions  generated  losses of $754,000  in the first  quarter of
fiscal 1998, a 130% decrease from the fiscal 1997  quarter.  The lower  revenues
resulted from weakened market conditions for small capitalization  stocks during
the fiscal 1998 period.  Revenues generated through market making activities for
over-the-counter  equity securities  decreased  $1,994,000 to $(441,000) for the
quarter  while  revenues  from  the  Company's   investment   account  decreased
$1,237,000 to $(313,000).  The investment  account revenue decrease was directly
related to decreases in the prices of the shares underlying underwriter warrants
held by the Company, all of which were issued by investment banking clients.

Interest income increased $140,000 due to higher cash balances, a greater use of
margin loans by the Company's  customers,  and a renegotiated  interest  sharing
arrangement with the Company's clearing firm.

Expenses

Total expenses for the quarter in fiscal 1998 were  $12,690,000,  a 12% decrease
over the first quarter in fiscal 1997.  This decrease is tied to the decrease in
revenues; compensation expenses are directly correlated with actual results.

Compensation  and benefits expense  decreased 27% to $7,754,000.  These expenses
are  primarily  variable as  commissions  to brokers are paid as a percentage of
commission revenues generated and incentive  compensation is directly related to
net income. The expense decrease in fiscal 1998 is consistent with the decreases

                                       9

<PAGE>


in commission and investment banking revenues and the net loss for the period.

Communications  expense  increased  by  $385,000,  or 46%,  as a  result  of the
Company's expansion. The 328 registered  representatives employed by the Company
at April 30, 1997, represent a 26% increase from April 30, 1996. During the same
period total employees increased by 16% to 543.

Brokerage,  clearing and exchange  fees and  occupancy  and  equipment  expenses
increased by 7% and 16%, respectively. These increases were primarily due to the
March 1997 acquisition of Southeast Research Partners and the growth of existing
offices.

Business  development  expenses  increased  by 140% to $654,000 due to increased
promotional  activities and expenses  incurred directly related to the growth of
the Company.

Professional  fees  increased  by  $216,000,  or  27%,  mainly  as a  result  of
additional  reserves  taken  relating to the  potential  settlement  of the NASD
investigation.

Other expenses increased $103,000 primarily due to increased expenses associated
with the Company's growth.

Weighted average common shares outstanding

The average  number of common  shares and common stock  equivalents  outstanding
used in the  computation of earnings per common share was 8,171,856 in the first
quarter of fiscal 1998, compared with 5,638,260 in fiscal 1997. The 45% increase
in the weighted average in fiscal 1998 resulted mainly from the 2,875,000 shares
of common  stock issued in the  Company's  initial  public  offering on July 30,
1996.

Liquidity and Capital Resources

The Company's assets are highly liquid with the majority  consisting of cash and
cash   equivalents,   securities   inventories,   and  receivables   from  other
broker-dealers and the Company's clearing firm, all of which fluctuate depending
upon the levels of customer business and trading activity.  Approximately 62% of
the Company's  assets at April 30, 1997,  were highly liquid.  Receivables  from
broker-dealers  and  the  Company's  clearing  firm  turn  over  rapidly.  As  a
securities   dealer,  the  Company  may  carry  significant  levels  of  trading
inventories  to meet customer  needs.  The Company's  inventory of market making
securities  is readily  marketable;  however,  holding  large blocks of the same
security may limit  liquidity and prevent  realization  of full market value for
the  securities.   Securities  owned,  but  not  readily  marketable,  represent
underwriter warrants and the securities underlying such warrants.  The liquidity
of these  securities is limited.  A relatively small percentage of the Company's
total assets are fixed. The Company's total assets or the individual  components
of total assets may vary  significantly from period to period because of changes
relating to customer  demand,  economic and market  conditions,  and proprietary
trading strategies.

GKN, Southeast, and Shochet, the Company's operating broker-dealer subsidiaries,
are subject to the net capital rules of the NASD and the SEC. As such,  they and
the Company are  subject to certain  restrictions  on the use of capital and its
related  liquidity.  GKN's,  Southeast's,  and Shochet's  respective net capital
positions as of April 30, 1997, were $7,083,000,  $2,202,000 and $530,000, which
were  $6,833,000,  $2,102,000,  and $430,000 in excess of their  respective  net
capital requirements.

Prior to its initial  public  offering,  the  Company  financed  its  operations
through the private  placement of debt and equity  securities and cash flow from
operations.  The Company has not employed any  significant  leverage or debt. In
conjunction with the Company's November 1995 acquisition of Shochet, the Company


                                       10

<PAGE>

issued  the  seller a  subordinated  note  as  part of  the purchase  price,  of
which $632,000 was  outstanding  at April 30, 1997.  The Company  intends to use
debt  prudently  in the future  and to  arrange  for lines of credit in the near
future. On March 12,1997,  the Company authorized the repurchase of up to 10% of
the current outstanding shares, or approximately 825,000 shares. As of April 30,
1997, 385,000 shares had been repurchased. All repurchases were funded from cash
flow from operations.

The  Company's  overall  capital and funding needs are  continually  reviewed to
ensure that its capital  base can support the  estimated  needs of its  business
units.  These  reviews take into account  business  needs as well as  regulatory
capital requirements of the subsidiaries.  Based upon these reviews,  management
believes that the Company's capital structure is adequate for current operations
and reasonably foreseeable future needs.

Safe Harbor Cautionary Statement

The Company occasionally makes forward-looking  statements such as forecasts and
projections  of  expected  future  performance  or  statements  of its plans and
objectives.  When used in this  quarterly  report  and in future  filings by the
Company with the SEC, in the  Company's  press  releases and in oral  statements
made with the approval of an authorized  executive  officer of the Company,  the
words or phrases "will likely result," "the Company  expects," "will  continue,"
"is anticipated,"  "estimated,"  "project," or "outlook" or similar  expressions
(including  confirmations by an authorized  executive  officer of the Company of
any such  expressions  made by a third party with  respect to the  Company)  are
intended  to  identify  forward-looking  statements  within  the  meaning of the
Private Securities  Litigation Reform Act of 1995. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements, each
of which speak only as of the date made.  Such statements are subject to certain
risks and  uncertainties  that could cause actual  results to differ  materially
from historical earnings and those presently  anticipated or projected.  Factors
which could affect the Company's  results of operations and cause its results to
differ  from these  statements  include  the  volatility  and price level of the
securities markets; the volume, size and timing of securities transactions;  the
demand for  investment  banking  services;  the level and volatility of interest
rates;  the  availability  of credit;  legislation  affecting  the  business and
financial  communities;  and  the  economy  in  general.  For  a  more  complete
discussion of these and other factors, see the Company's  registration statement
filed on Form S-1, as amended (No. 333-05273).  The Company has no obligation to
publicly  release  the  result  of  any  revisions  which  may  be  made  to any
forward-looking  statements to reflect  anticipated or  unanticipated  events or
circumstances occurring after the date of such statements.


                                       11

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Part II - OTHER INFORMATION

Item 2.  Changes in Securities

         (c) During the period from February 1, 1997 through April 30, 1997, the
Company  issued  the  following   securities  without   registration  under  the
Securities Act of 1933, as amended ("Act"):

                  (1) On March 12, 1997, the Company granted options to purchase
an  aggregate  of 279,250  shares of Common  Stock to  employees  under its 1991
Employee  Incentive Plan at exercise prices of $6.00 per share. No consideration
will be  received by the Company  until the options are  exercised.  The options
vest March 12, 2000 (except for options to purchase  24,000 shares which vest in
three annual  installments  commencing on the first  anniversary  of the date of
grant) and have maximum terms of ten years.

                  (2) On March 12,  1997,  the Company  granted an  aggregate of
288,944  restricted  shares of Common  Stock to  employees  pursuant to its 1996
Incentive  Compensation  Plan at a value  of  $6.00  per  restricted  share.  No
consideration  was received by the Company.  The restricted  shares do not vest,
except in limited circumstances, until March 12, 2000.

                  (3) Effective  March 13, 1997, the Company issued an aggregate
of 160,000  shares Common Stock and 1,200,000  shares of the Company's  Series A
Preferred Stock to 15 persons in consideration of the acquisition of 100% of the
stock of  Southeast  Research  Partners,  Inc.,  a  research  and  institutional
brokerage  boutique.  Each share of Series A Preferred Stock is convertible into
shares of Common Stock at the rate of 0.16 shares of Common Stock for each share
of Series A Preferred  stock  subject to adjustment as provided in the Company's
Certificate of Designation of Series A Preferred Stock, dated March 4, 1997.

                  The  exemption   claimed  for  the   issuances   described  in
paragraphs  (1)  through  (3) above is  Section  4(2) of the Act.  Section  4(2)
exempts from  registration  a security sold in accordance  with its criteria for
private offerings.

                                       12
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Item 6.  Exhibits and Reports on Form 8-K

       (a)    Exhibits:

          3.1(b) - Certificate of Elimination of Series A Preferred Stock dated
                   January 14, 1997 (old)

          3.1(c) - Certificate of Designation of Series A Preferred Stock dated
                   March 4, 1997 (new)

          27     - Financial Data Schedule BD

       (b)    Reports on Form 8-K:

              None

                                       13

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                                   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.

                                                     GKN HOLDING CORP.


Date:  June 13, 1997                                 /s/ David M. Nussbaum
                                                     ---------------------
                                                     David M. Nussbaum
                                                     Chairman of the Board and
                                                     Chief Executive Officer



                                                     /s/ Peter R. Kent
                                                     -------------------------  
                                                     Peter R. Kent
                                                     Chief Operating Officer and
                                                     Chief Financial Officer




                                       14

<PAGE>

                       GKN HOLDING CORP. AND SUBSIDIARIES
                                  Exhibit Index



Number      Description


3.1(b)      Certificate of Elimination of Series A Preferred Stock dated 
            January 14, 1997      (old)

3.1(c)      Certificate of Designation of Series A Preferred Stock dated 
            March 4, 1997         (new)

27          Financial Data Schedule BD (4/30/97)




                                       15


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