UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For Quarter Ended ~~August~~November 3130, 2004

Commission File Number 0-1738

GENERAL KINETICS INCORPORATED

(Exact Name of Registrant as Specified in its Charter)

Virginia

54-0594435

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)


10688-D Crestwood Drive, Manassas, VA		20109
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, including Area Code 703-331-8033

Indicate by checkmark 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 ¨

~~Yes~~Indicate by checkmark whether the Registrant is an accelerated filer (as defined in Rule x12b-2 Noof ¨the Exchange Act). Yes ¨ No x

~~Indicate~~The bynumber ~~checkmark~~of ~~whether~~shares ~~the~~of Registrant’s isCommon anStock ~~accelerated~~outstanding ~~filer (~~as ~~defined in Rule 12b-2~~ of January ~~the~~10, ~~Exchange~~2005 ~~Act).~~7,118,925 Shares

Yes ¨ No x

The number of shares of Registrant’s Common Stock outstanding as of October 11, 2004 7,118,925 Shares

INDEX

		Page No.
Cautionary Statement		3
Part I - Financial Information
Item 1 - Financial Statements
Balance Sheets - August 31, 2004 (unaudited) and May 31, 2004		5
Balance Sheets - November 30, 2004 and May 31, 2004		5
Statements of Operations (unaudited)- Three Months Ended August 31, 2004 and August 31, 2003		6
Statements of Operations - Six Months and Three Months Ended November 30, 2004 and November 30, 2003		6
Statements of Cash Flows (unaudited) - Three Months Ended August 31, 2004 and August 31, 2003		7
Statements of Cash Flows - Six Months Ended November 30, 2004 and November 30, 2003		7
Notes to Condensed Financial Statements		8
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		1011
Item 3 - Quantitative and Qualitative Disclosures About Market Risk		16
Item 3 – Quantitative and Qualitative Disclosures About Market Risk		18
Item 4 - Controls and Procedures		1618
Part II - Other Information
Item 3 - Defaults Upon Senior Securities		1719
Item 6 - Exhibits and Reports on Form 8-K		17
Item 6 - Exhibits		19

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q constitute “forward-looking statements”. In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or the negatives thereof, variations thereon or similar terminology. The forward-looking statements contained in this Quarterly Report are generally located in the material set forth under the headings “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but may be found in other locations as well. These forward-looking statements generally relate to plans and objectives for future operations and are based upon management’s reasonable estimates of future results or trends. Although the Company believes that the plans and objectives reflected in or suggested by such forward-looking statements are reasonable, such plans or objectives may not be achieved. Actual results may differ from projected results due, but not limited, to unforeseen developments, including developments relating to the following:

• the risk that the Company ~~may~~will not be able to ~~obtain~~manufacture and complete ~~sufficient~~the ~~new~~order ~~orders~~backlog as scheduled and on budget in order to maintain a positive cash flow;

•	the risk that the Company may not be able to obtain sufficient new orders to maintain positive cash flow;

•	the risk that the Company may not maintain its present financing facility or obtain additional financing, if necessary;

• the risk that it will not be able to repay, restructure or refinance in full the approximately $87.844 million principal amount of its outstanding convertible debentures which matured on August 14, 2004;

•	the risk that the Company may not be able to continue the necessary development of its operations, including maintaining or increasing sales and production levels, on a profitable basis;

•	the risk the Company may in the future have to comply with more stringent environmental laws or regulations or more vigorous enforcement policies of regulatory agencies, and that such compliance could require substantial expenditures by the Company;

•	the risk that U.S. defense spending may be substantially reduced; and

•	the risk that the Company’s Common Stock will not continue to be quoted on the NASD Over The Counter Bulletin Board.

You should read this Quarterly Report completely and with the understanding that actual future results may be materially different ~~from what the Company expects. All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on the Company’s behalf are expressly qualified in their~~ ~~entirety by the foregoing factors. These forward-looking statements~~

from what the Company expects. All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on the Company’s behalf are expressly qualified in their entirety by the foregoing factors. These forward-looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances in which the forward-looking statement is based.

PART I FINANCIAL INFORMATION

Item 1 –- Financial Statements

The unaudited financial statements of General Kinetics Incorporated (“GKI” or the “Company”) set forth below have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations. Revenues, expenses, assets and liabilities vary during the year and generally accepted accounting principles require the Company to make estimates and assumptions in preparing the interim financial statements. The Company has made its best effort in establishing good faith estimates and assumptions. However, actual results may differ. The Company believes that the disclosures made are adequate to make the information presented not misleading. The information as of May 31, 2004 is derived from our audited financial statements.

In the opinion of management of the Company, the accompanying financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of results for the periods presented. These financial statements should be read in conjunction with the audited financial statements for the fiscal years ended May 31, 2004 and 2003 set forth in the Company’s annual report on Form 10-K, as amended, for the fiscal year ended May 31, 2004.

General Kinetics Incorporated

Balance Sheets

~~August~~November 3130, 2004 and

May 31, 2004

	August 31,2004			May 31, 2004
	November 30,2004			May 31, 2004
	(Unaudited)			(Audited)
Assets
Current Assets:
Cash and cash equivalents	$	68176,~~000~~100		$	670,000
Marketable securities		50,~~100~~900			48,100
Accounts receivable, net of allowance of $22,900		~~913~~585,~~100~~000			764,800
Inventories, net		~~867~~995,700			677,600
Prepaid expenses and other		4051,~~200~~700			31,600
Total Current Assets		1,~~939~~859,~~100~~400			2,192,100
Property, plant and equipment		2,~~251~~265,~~000~~500			2,066,000
Less: Accumulated depreciation		(1,~~925~~947,~~300~~100	)		(1,903,700	)
		325,700			162,300
		318,400			162,300
Other Assets		2240,~~200~~100			50,500
Total Assets	$	2,~~287~~217,~~000~~900		$	2,404,900
Liabilities and Stockholders’ Deficit
Current Liabilities:
Advances from Factor	$	—15,600		$	214,200
Current maturities of long-term debt		87,~~835~~475,000			8,819,900
Current maturities of capital leases		4849,~~100~~000			22,200
Accounts payable, trade		~~515~~595,~~600~~300			572,400
Accrued expenses and other payables		~~665~~585,~~300~~800			568,700
Deferred gain on sale of building		104,100			104,100
Total Current Liabilities		108,~~168~~824,~~100~~800			10,301,500
Long-Term Liabilities:
Capital leases - less current maturities		~~166~~152,~~000~~600			38,700
Other long-term liabilities		~~231~~239,~~100~~500			240,700
Deferred gain on sale of building		~~390~~364,300			416,300
Total Long-Term Liabilities		~~787~~756,400			695,700
Total Liabilities		109,~~955~~581,~~500~~200			10,997,200
Stockholders’ Deficit:
Common Stock, $0.25 par value, 50,000,000 shares authorized, 7,645,557 shares issued, 7,118,925 shares outstanding		1,911,500			1,911,500
Additional contributed capital		7,337,300			7,337,300
Accumulated deficit		(1716,~~467~~161,~~100~~900	)		(17,390,900	)
		(8,218,300	)		(8,142,100	)
		(6,913,100	)		(8,142,100	)
Less: Treasury Stock, at cost (526,632 shares)		(450,200	)		(450,200	)
Total Stockholders’ Deficit		(87,~~668~~363,~~500~~300	)		(8,592,300	)
Total Liabilities and Stockholders’ Deficit	$	2,~~287~~217,~~000~~900		$	2,404,900

The accompanying notes are an integral part of the financial statements.

Page 5

General Kinetics Incorporated

Statements of Operations

(Unaudited)


	Six Months Ended						Three Months Ended
	November 30, 2004			November 30, 2003			November 30, 2004			November 30, 2003
Net Sales	$	3,788,000		$	3,093,800		$	2,066,300		$	1,471,100
Cost of Sales		3,150,300			2,445,000			1,737,700			1,147,100

Gross Profit		637,700			648,800			328,600			324,000

Selling, General & Administrative		695,700			596,100			358,100			287,500

Total Operating Expenses		695,700			596,100			358,100			287,500

Operating (Loss) Income		(58,000	)		52,700			(29,500	)		36,500

Other Income (Expense):
Interest Expense		(59,400	)		(97,100	)		(11,700	)		(47,300	)
Gain on Settlement of Debt		1,346,400			—			1,346,400			—

Total Other Income (Expense)		1,287,000			(97,100	)		1,334,700			(47,300	)

Net Income (loss)		1,229,000			(44,400	)		1,305,200			(10,800	)

Basic and Diluted Earnings ( Loss) per Share:
Basic Loss per Share	$	0.17		$	(0.01	)	$	0.18		$	(0.00	)
Weighted Average Number of Common Shares Outstanding		7,118,925			7,118,925			7,118,925			7,118,925

	Three Months Ended
	August 31,2004			August 31,2003
Net Sales	$	1,721,700		$	1,622,700
Cost of Sales		1,412,700			1,297,900
Gross Profit		309,000			324,800
Selling, General & Administrative		337,500			308,600
Total Operating Expenses		337,500			308,600
Operating (Loss) Income		(28,500	)		16,200
Interest Expense		(47,700	)		(49,700	)
Net Loss		(76,200	)		(33,500	)
Basic and Diluted Loss per Share:
Basic Loss per Share		($0.01	)		($0.00	)
Weighted Average Number of Common Shares Outstanding		7,118,925			7,118,925

The accompanying notes are an integral part of the financial statements.

Page 6

General Kinetics Incorporated

Statements of Cash Flows

(Unaudited)


	Six Months Ended
	November 30, 2004			November 30, 2003
Cash Flows From Operating Activities:
Net income (loss)	$	1,229,000		$	(44,400	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Deferred gain on sale of building		(52,000	)		—
Unrealized (gain) on marketable securities		(2,800	)		(6,000	)
Depreciation and amortization		43,400			52,800
Amortization of bond discount		15,100			33,100
(Gain) on settlement of debt		(1,346,400	)		—
(Increase) Decrease in Assets:
Accounts receivable		179,800			(16,900	)
Inventories		(318,100	)		64,900
Prepaid expenses		(20,100	)		(23,000	)
Other assets		10,400			(18,800	)
Increase (Decrease) in Liabilities:
Accounts payable - Trade		22,900			70,000
Accrued expenses		30,700			70,200
Other long term liabilities		(1,200	)		(1,200	)

Net cash (used in) provided by Operating Activities		(209,300	)		180,700

Cash Flows from Investing Activities:
Acquisition of property, plant and equipment		(36,500	)		(3,500	)

Net cash used in Investing Activities		(36,500	)		(3,500	)

Cash Flows from Financing Activities:
Advances from Factor		769,400			537,300
Repayments of advances from Factor		(968,000	)		(437,900	)
Principal payments under capital lease		(22,300	)		(10,100	)
Repayments on long term debt		(27,200	)		(50,400	)

Net cash (used in) provided by Financing Activities		(248,100	)		38,900

Net (decrease) increase in cash and cash equivalents		(493,900	)		216,100

Cash and Cash Equivalents: Beginning of Period		670,000			114,000

Cash and Cash Equivalents: End of Period	$	176,100		$	330,100

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	21,500		$	14,600
Income Taxes	$	410		$	—
Noncash investing and financing activity:
Purchase of property, plant and equipment via capital lease	$	163,000		$	—

	Three Months Ended
	August 31,2004			August 31,2003
Cash Flows from Operating Activities:
Net loss	$	(76,200	)	$	(33,500	)
Adjustments to reconcile net (loss) to net cash (used in) provided by operating activities:
Deferred (gain) on sale of building		(26,000	)		—
Unrealized (gain) on marketable securities		(2,000	)		(3,100	)
Depreciation and amortization		21,600			28,200
Amortization of bond discount		15,100			15,100
(Increase) Decrease in Assets:
Accounts receivable		(148,300	)		(49,800	)
Inventories		(190,100	)		217,000
Prepaid expenses and other		(8,600	)		18,600
Other assets		28,300			(9,500	)
Increase (Decrease) in Liabilities:
Accounts payable, trade		(56,800	)		59,700
Accrued expenses and other payables		96,600			42,200
Other long-term liabilities		(9,600	)		(9,600	)
Net cash (used in) provided by Operating Activities		(356,000	)		275,300
Cash Flows from Investing Activities:
Acquisition of property, plant and equipment		(22,000	)		—
Net cash used in Investing Activities		(22,000	)		—
Cash Flows from Financing Activities:
Advances from Factor		292,200			338,600
Repayments of advances from Factor		(506,400	)		(286,300	)
Principal payments under capital leases		(9,800	)		(4,900	)
Repayments on long term debt		—			(23,600	)
Net cash (used in) provided by Financing Activities		(224,000	)		23,800
Net (decrease) increase in cash and cash equivalents		(602,000	)		299,100
Cash and Cash Equivalents: Beginning of Period		670,000			114,000
Cash and Cash Equivalents: End of Period	$	68,000		$	413,100
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	9,800		$	42,100
Noncash investing and financing activity:
Purchase of property, plant and equipment via capital lease	$	163,000		$	—

The accompanying notes are an integral part of the financial statements.

Page 7

GENERAL KINETICS INCORPORATED AND SUBSIDIARIES

Notes to Condensed Financial Statements

(Unaudited)

Note 1 - Basis of Presentation

The unaudited condensed financial statements at ~~August~~November 3130, 2004, and for the three months and six months ended ~~August~~November 3130, 2004 and ~~August~~November 3130, 2003, respectively, include the accounts of General Kinetics Incorporated (“GKI” or the “Company”).

The financial information included herein is unaudited. In addition, the financial information does not include all disclosures required under generally accepted accounting principles in that certain note information included in the Company’s Annual Report has been omitted; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary to a fair presentation of the results of the interim periods.

The results of operations for the ~~three~~six-month period ended ~~August~~ 31November 30, 2004 are not necessarily indicative of the results to be expected for the full year.

Note 2 - Earnings Per Share

Earnings per share is based on the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings. Due to the net loss in the ~~quarters~~quarter ~~ended~~and ~~August~~six ~~31,~~months ~~2004~~ended ~~and~~November ~~August 31~~30, 2003, diluted earnings per share is the same as basic earnings per share for those periods. ~~Outstanding~~Because ~~options~~the ofconvertible ~~545,277~~debentures ~~shares~~ceased atto ~~August~~be 31convertible on June 15, 2004 ~~and 503~~,~~277~~ ~~shares~~there atwere ~~August~~no ~~31,~~dilutive ~~2003~~instruments ~~have~~for ~~been~~the ~~excluded~~three ~~from~~months ~~the~~and six months ended November 30, 2004, and diluted earnings per share ~~calculation~~is ~~due~~the tosame ~~the~~as ~~net~~basic earnings ~~loss~~per inshare for those periods.

Note 3 - Notes Payable

At August 31, 2004, convertible debentures initially issued to clients of Gutzwiller & Partner, AG, now known as Rabo Investment Management Ltd., were outstanding in an aggregate principal amount of approximately $8.8 million. Such debentures matured on August 14, 2004, are convertible into common stock at a conversion price of $0.50 per share, and bear interest at 1% per annum, which is payable annually. Shares issuable upon conversion are also subject to certain rights to registration under the Securities Act of 1933, as amended.

OnNote ~~March~~3 ~~12,~~- ~~2003,~~Notes ~~Manassas~~Payable Partners LLC, a Delaware limited liability company of which Larry Heimendinger, Chairman of the Board of Directors of the Company, is the managing member, purchased from third parties, at a significant discount, a portion of the outstanding convertible debentures in an aggregate principal amount of $5,800,000.

~~The~~At ~~Company’s~~November ~~cash~~30, ~~flow~~2004, ~~capital~~convertible ~~resources,~~debentures ~~and~~initially ~~overall~~issued ~~financial~~to ~~condition~~clients ~~will~~of ~~not~~Gutzwiller ~~be sufficient~~& toPartner, ~~repay~~AG, ornow ~~refinance~~known inas ~~full~~Rabo Investment Management Ltd., (the ~~approximately~~“Manager”), ~~$8.8~~were ~~million~~outstanding in an aggregate principal amount of ~~outstanding~~approximately ~~convertible~~$7.44 ~~debentures~~million. ~~which~~Such debentures matured on August 14, 2004., ~~The~~and ~~Company~~were ~~has~~stated ~~reached~~to ~~agreement~~be inconvertible ~~principle~~into ~~with~~common ~~holders~~stock ofat ~~approximately~~a conversion price of $10.~~7 million~~50 ~~principal~~per ~~amount~~share, ofand ~~such~~to ~~debentures~~bear ~~for~~interest ~~the~~at ~~purchase~~1% ofper ~~these~~annum, ~~debentures~~payable atannually. aShares ~~total~~issuable ~~price~~upon ~~(including~~conversion ~~interest)~~were ~~equal~~also subject to 3%certain ofrights to registration under the ~~principal~~Securities ~~amount.~~Act Atof ~~present~~1933, ~~the~~as ~~Company~~amended. isIn ina ~~discussion~~filing with ~~certain~~the ~~other~~Securities ~~debenture~~and ~~holders, but has~~Exchange ~~decided~~Commission ondated noNovember ~~specific~~29, ~~plans~~2004, ~~with~~the ~~respect~~Manager toindicated ~~the~~that ~~repayment~~it orterminated ~~refinancing~~its ofbusiness ~~the~~activities ~~debentures.~~on ~~The~~December ~~Company~~31, is2002 ~~continuing~~and, toas ~~review~~part ~~the~~of ~~situation~~that ~~and~~process, ~~consider~~distributed to its ~~potential~~clients ~~alternatives.~~GKI ~~There~~debentures ~~can~~in bethe noaggregate ~~assurances,~~principal ~~however,~~amount ~~that~~of $7,300,000 which the ~~Company~~Manager ~~will~~held ~~be able~~on tobehalf ~~come~~of tosuch ~~agreement~~clients. ~~with~~The ~~the~~Manager ~~other~~continues ~~debenture~~to ~~holders~~hold ~~with~~debentures ~~respect~~in tothe ~~repayment~~aggregate orprincipal ~~refinancing~~amount of ~~the debentures~~$490,000.

On March 12, 2003, Manassas Partners LLC, a Delaware limited liability company of which Larry Heimendinger, Chairman of the Board of Directors of the Company, is the managing member, purchased from third parties, at a significant discount, a portion of the outstanding debentures in an aggregate principal amount of $5,800,000.

In October 2004, the Company purchased $1.36 million aggregate principal amount of debentures from certain debenture holders for a total price (including interest totaling $27,200) equal to 3% of the principal amount. The Company has paid $27,200 of the purchase price, and is in the process of completing final payment of the remaining $13,600 due to the debenture holders. As a result, the Company recognized a gain on the settlement of debt of $1,346,400 in the accompanying financial statements.

The Company’s cash flow, capital resources, and overall financial condition will not be sufficient to repay or refinance in full the approximately $7.44 million principal amount of outstanding debentures which matured on August 14, 2004. The Company has reached agreement in principle with holders of approximately $160,000 principal amount of such debentures for the purchase of these debentures at a total price (including accrued interest) equal to 3% of the principal

amount. The Company is in the process of completing payment for such debentures. At present, the Company is in discussion with certain other debenture holders, but has decided on no specific plans with respect to the repayment or refinancing of the debentures. The Company is continuing to review the situation and consider its potential alternatives. There can be no assurance, however, that the Company will be able to come to agreement with the other debenture holders with respect to repayment or refinancing of the debentures.

Note 4 - Income Taxes

The Company’s estimated effective tax rate for fiscal 2005 is 0%. This estimated effective tax rate is lower than the statutory rate due to the existence of net operating loss carryforwards.

910

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

Three Months Ended ~~August~~November 3130, 2004, Compared to Three Months Ended ~~August~~November 3130, 2003

Net sales for the quarter ended ~~August~~November 3130, 2004 were approximately $12.71 million compared to net sales of approximately $1.65 million for the quarter ended ~~August~~November 3130, 2003. ~~Net~~The increase in sales ~~increased~~was due primarily to an increase in ~~demand~~orders inunder a large blanket contract with a prime contractor to the ~~first~~U.S. ~~quarter~~Navy, in addition to an overall increase of ~~fiscal~~orders ~~2005~~from ascustomers ~~compared~~involved in projects related to the ~~first~~U.S. ~~quarter~~Navy ofcompared to the prior fiscal year.

The gross margin percentage decreased from 2022.0% for the quarter ended ~~August~~November 3130, 2003 to 1715.9% for the quarter ended ~~August~~November 3130, 2004. The primary ~~reasons~~reason for the decrease in the gross profit percentage ~~were~~was the mix of jobs for the quarter ended ~~August~~November 3130, 2004 as compared to the corresponding quarter of the prior fiscal year. The Company operates as a job shop, making a mix of build-to-print cabinets and parts, standard cabinets, and special orders, all with variable quantities depending on the current contracts. Therefore, the mix of orders and margins associated with those orders can vary significantly between quarters. ~~The~~ ~~Company~~During ~~continues~~November to2004, ~~address~~a significant ~~production~~volume ~~planning~~of ~~through~~work, ~~plant~~both ~~supervision~~in manufacturing flow and ~~regular~~in ~~updating~~dollar ofvolume, ~~scheduling~~was ~~and~~scheduled ~~planning~~for ~~procedures~~completion. ~~The~~While ~~Company~~a isgreat ~~trying~~deal toof ~~stabilize~~ the ~~level~~manufacturing offlow ~~shipments~~was atcompleted, ait ~~profitable~~was ~~level~~not ~~through~~timely ~~these~~enough ~~changes.~~nor ~~During the~~complete ~~first~~enough ~~quarter~~to ofcomplete ~~fiscal~~assembly ~~2005~~and shipping, resulting ~~the~~in ~~Company~~a ~~acquired~~significant ashortfall ~~new~~compared ~~vertical~~to ~~machining~~the ~~center~~plans ~~under~~for ashipments ~~capital~~and ~~lease~~revenue. ~~which~~Difficulties ~~the~~in ~~Company~~systems ~~expects~~used to ~~use~~schedule work and track work in progress were found to ~~increase~~be major contributors to the ~~production~~failure ofto ~~parts~~complete ~~made~~and ship work on time, and actions have been taken and new procedures put in ~~house~~place in ~~the~~an ~~machine~~effort ~~shop~~to prevent or reduce similar issues in future quarters.

Selling, general &and administrative costs were approximately $~~337~~358,~~500~~100 for the quarter ended ~~August~~ 31November 30, 2004 as compared to approximately $~~308~~287,~~600~~500 for the quarter ended November ~~August 31~~30, 2003. The ~~lower~~increase ~~cost in the prior year~~ was principally due to ~~cost~~increased ~~reduction~~administrative ~~measures~~costs ~~during~~associated with the ~~first~~increased ~~quarter~~sales ofand ~~that~~backlog, ~~year~~and because cost reduction measures, including temporary salary decreases, ~~that~~ were put ~~into~~in place byduring ~~management~~the insecond quarter ~~response~~of the prior fiscal year due to the reduced backlog ~~and~~during ~~shipping~~that ~~levels~~period.

For the quarter ended ~~August~~November 3130, 2004, the Company had an operating loss of $2829,500 compared to operating income of $1636,~~200~~500 for the corresponding quarter of the prior year. The decrease in operating income was due principally to the decrease in gross margins and the increase in selling, general &and administrative costs discussed above.

~~Interest~~11 expense decreased from $49,700 in the first quarter of fiscal 2004 to $47,700 in the first quarter of fiscal 2005. The decrease was due to a decrease in mortgage interest expense compared to the corresponding quarter of the prior fiscal year because of the sale of the Company’s building in Johnstown, Pennsylvania.

Interest expense decreased from $47,300 in the second quarter of fiscal 2004 to $11,700 in the second quarter of fiscal 2005. The decrease was due to a decrease in mortgage interest expense compared to the corresponding quarter of the prior fiscal year because of the sale of the Company’s building in Johnstown, Pennsylvania.

There was a gain on the settlement of debt of $1,346,400 for the quarter ended November 30, 2004. In October 2004, the Company purchased $1.36 million aggregate principal amount of debentures from certain debenture holders for a total price (including interest) equal to 3% of the principal amount. The Company has paid $27,200 of the purchase price, and is in the process of completing final payment of the remaining $13,600 due to the debenture holders. As a result, the Company recognized a gain on the settlement of debt of $1,346,400 in the accompanying financial statements.

The Company’s estimated effective tax rate for fiscal 2005 is 0%. This estimated effective tax rate is lower than the statutory rate due to the existence of net operating loss carryforwards.

11Six Months Ended November 30, 2004, Compared to Six Months Ended November 30, 2003

Net sales for the six months ended November 30, 2004 were approximately $3.8 million compared to net sales of approximately $3.1 million for the six months ended November 30, 2003. The increase in sales was primarily due to an increase in orders under a large blanket contract with a prime contractor to the U.S. Navy, in addition to an overall increase of orders from customers involved in projects related to the U.S. Navy compared to the prior fiscal year.

The gross margin percentage decreased from 21.0% for the six months ended November 30, 2003 to 16.8% for the six months ended November 30, 2004. The primary reason for the decrease in the gross profit percentage was the mix of jobs for the six months ended November 30, 2004 as compared to the corresponding six months of the prior fiscal year. The Company operates as a job shop, making a mix of build-to-print cabinets and parts, standard cabinets, and special orders, all with variable quantities depending on the current contracts. Therefore, the mix of orders and margins associated with those orders can vary significantly between quarters. During November 2004, a significant volume of work, both in manufacturing flow and in dollar volume, was scheduled for completion. While a great deal of the manufacturing flow was completed, it was not timely enough nor complete enough to complete assembly and shipping, resulting in a significant shortfall compared to the plans for shipments and revenue. Defects in systems used to schedule work and track work in progress were

found to be major contributors to the failure to complete and ship work on time, and corrective actions have been taken and new procedures put in place to attempt to prevent similar issues in future quarters.

Selling, general and administrative costs were approximately $695,700 for the six months ended November 30, 2004 as compared to approximately $596,100 for the six months ended November 30, 2003. The increase was principally due to increased costs administrative associated with the increased sales and backlog, and because cost reduction measures, including temporary salary decreases, were put in place during the second quarter of the prior fiscal year due to the reduced backlog during that period.

For the six months ended November 30, 2004, the Company had an operating loss of $58,000 compared to operating income of $52,700 for the corresponding six months of the prior year. The decrease in operating income was due principally to the decrease in gross margins and the increase is selling, general and administrative costs discussed above.

Interest expense decreased from $97,100 in the first six months of fiscal 2004 to $59,400 in the corresponding period of fiscal 2005. The decrease was due to a decrease in mortgage interest expense compared to the corresponding quarter of the prior fiscal year because of the sale of the Company’s building in Johnstown, Pennsylvania.

There was a gain on the settlement of debt of $1,346,400 for the six months ended November 30, 2004. In October 2004, the Company purchased $1.36 million aggregate principal amount of debentures from certain debenture holders for a total price (including interest) equal to 3% of the principal amount. The Company has paid $27,200 of the purchase price, and is in the process of completing final payment of the remaining $13,600 due to the debenture holders. As a result, the Company recognized a gain on the settlement of debt of $1,346,400 in the accompanying financial statements.

The Company’s estimated effective tax rate for fiscal 2005 is 0%. This estimated effective tax rate is lower than the statutory rate due to the existence of net operating loss carryforwards.

Liquidity and Capital Resources

The Company relies upon internally generated funds and accounts receivable factoring to finance its operations. During the ~~quarter~~six months ended ~~August~~November 3130, 2004 the Company incurred operating losses of $58,000 and in the fiscal years ended May 31, 2004 and 2003, the Company incurred net losses of approximately $~~76,200, $~~527,300 and $131,400, respectively. In order to generate the working capital required for operations, the Company must continue to generate orders, increase its gross margins, and effectively manage operating expenses during the remainder of fiscal 2005.

The Company must continue to market electronic enclosure products to government and commercial markets, enter into contracts which the Company can complete with favorable profit margins, ship the orders in a timely manner, and control operating costs in order to recover from the Company’s liquidity problems and seek to operate profitably for the remainder of fiscal 2005.

The Company ~~has~~had ~~received~~ significant ~~new~~amounts ~~orders~~payable ~~during the first quarter of fiscal 2005 and the last few months of fiscal 2004, and the shippable backlog at August 31, 2004 is $3.6 million as compared~~ to ~~$1.5~~trade ~~million~~creditors at ~~August~~November 3130, ~~2003. The Company must produce and ship this backlog of orders on schedule and on budget to generate positive~~ ~~cash flow and operate profitably in fiscal 2005~~2004. The Company must also maintain or increase the current level of backlog to provide positive cash flow over the next twelve month period. However, there is no assurance the Company will be successful in its efforts to obtain an adequate level of new contracts to maintain positive cash flow or profitable operations.

AsThe ofCompany ~~August~~has ~~31,~~received ~~2004,~~significant ~~the~~new ~~Company~~orders ~~had~~during ~~cash~~the ~~and~~first ~~marketable~~half ~~securities~~of fiscal ~~totaling $118~~2005,~~100.~~ ~~The~~and ~~Company~~the ~~has~~shippable ~~taken~~backlog ~~and~~at November 30, 2004 is ~~continuing~~$4.3 tomillion ~~take~~as ~~steps~~compared to ~~address~~$2.3 ~~production planning~~million ~~through~~at ~~changes~~November ~~and~~30, ~~additions~~2003. toThe ~~plant~~Company ~~supervision,~~must ~~regularly~~produce ~~updating~~and ~~scheduling~~ship ~~and~~this ~~planning~~backlog ~~procedures,~~of ~~and~~orders ~~adding~~on ~~new~~schedule ~~production~~and ~~machinery.~~on ~~The~~budget ~~Company~~to isgenerate ~~trying~~positive tocash ~~stabilize~~flow ~~the~~and operate ~~level~~profitably ofin ~~shipments~~fiscal at2005. aThe ~~profitable~~Company ~~level~~must ~~through~~also ~~these changes.~~maintain ~~During~~or increase the ~~first~~current ~~half~~level of ~~fiscal~~backlog ~~2004,~~to ~~management~~provide ~~implemented~~positive ~~cost~~cash ~~reductions,~~flow ~~including~~over ~~salary~~the ~~reductions,~~next intwelve ~~response~~month toperiod. ~~reduced~~However, ~~sales~~there ~~and~~is ~~order~~no ~~backlog.~~assurance ~~The~~the ~~salary~~Company ~~reductions~~will ~~ended~~be ~~during~~successful ~~the~~in ~~quarter~~its ~~ended~~efforts to ~~February~~obtain ~~29,~~an ~~2004~~adequate inlevel ~~response~~of new contracts to ~~the~~ ~~increase~~maintain inpositive ~~backlog~~cash ~~and~~flow ~~production~~or ~~requirements~~profitable operations.

~~Management~~As ~~believes~~of ~~that the~~November ~~Company can meet its operating cash requirements~~30, ~~excluding the repayment of the debentures referred to below~~2004, ~~through~~ the ~~current~~Company ~~fiscal~~had ~~year with~~ cash ~~on hand~~ and ~~borrowings~~marketable ~~from~~securities ~~the~~totaling ~~factoring~~$227,000. ofThe ~~accounts~~Company ~~receivable~~has iftaken ~~they~~and ~~can~~is ~~maintain~~continuing ~~or increase~~to ~~the~~take ~~current~~steps ~~level~~to ofaddress ~~backlog,~~production ~~and~~planning ~~ship~~through ~~the~~changes ~~scheduled backlog on time~~ and ~~within~~additions ~~budget.~~to ~~However~~plant supervision, ~~there~~regularly isupdating noscheduling ~~assurance~~and ~~the~~planning ~~Company~~procedures, ~~will~~and beadding ~~successful~~new inproduction ~~pursuing its plans or in obtaining additional financing to meet those cash requirements~~machinery. The Company ~~must~~is ~~maintain~~trying orto ~~increase~~stabilize ~~its~~the ~~current~~ level of ~~sales,~~shipments ~~consistently~~at ~~make~~a ~~timely~~profitable ~~shipments~~level ~~and~~through ~~produce~~these ~~its~~changes.

12The production and shipping delays during November discussed above have further tightened the cash flow situation for the third quarter. However, management believes that the Company can meet its operating cash requirements, excluding the repayment of the debentures referred to below, through the current fiscal year with cash on hand and borrowings from the factoring of accounts receivable if the Company can maintain or increase the current level of backlog, and ship the scheduled backlog on time and within budget. However, there is no assurance the Company will be successful in pursuing its plans or in obtaining additional financing to meet those cash requirements. The Company must maintain or increase its current level of sales, consistently make timely shipments and produce its products at adequate profit margins, or the Company will continue to face liquidity problems and may be left without sufficient cash to meet its ongoing requirements.

~~products~~The ataccompanying ~~adequate~~financial ~~profit~~statements ~~margins,~~have orbeen prepared assuming that the Company will continue toas ~~face~~a ~~liquidity~~going ~~problems~~concern. The Company has sustained operating losses in the last three fiscal years, and ~~may~~the beCompany ~~left~~has ~~without~~significant ~~sufficient~~short-term cash commitments, the funding of which is limited to ~~meet~~cash ~~its~~flow ~~ongoing~~from operations and the factoring of certain accounts receivable, if ~~requirements~~available. The Company is also attempting to restructure or repurchase at a discount $7.44 million aggregate principal amount of outstanding convertible debentures (discussed below) which matured on August 14, 2004. These losses and commitments raise significant doubt about the Company’s ability to continue as a going concern. The financial statements do not contain any adjustments that might result from the outcome of these uncertainties. The Company’s auditors gave a going concern opinion for those three years.

~~The~~During ~~accompanying~~the ~~financial~~quarter ~~statements~~ended ~~have~~August ~~been prepared~~31, ~~assuming~~2003, ~~that~~ the Company ~~will~~entered ~~continue~~into as a ~~going~~factoring ~~concern~~agreement with Key Capital Factoring (“Key”) that provides for advances of up to 85% of specified accounts receivable. The Company ~~has~~expects ~~sustained~~to ~~operating~~draw ~~losses~~on in the ~~last~~Key ~~three~~facility during fiscal ~~years,~~2005 ~~and~~as necessary ~~the~~to ~~Company~~help ~~has~~alleviate ~~significant~~liquidity ~~short-term~~problems, ~~cash~~although, ~~commitments~~as discussed above, the ~~funding~~Company ofwill ~~which~~also isneed ~~limited~~ to ~~cash~~control ~~flow~~expenses, ~~from operations~~maintain ~~and~~ the ~~factoring~~sales ofbacklog ~~certain~~at ~~accounts~~appropriate ~~receivable~~levels, ifand ~~available.~~keep ~~The~~shipment ~~Company~~levels isin ~~attempting~~line towith ~~restructure~~booked ororders ~~repurchase~~in atorder ato ~~discount~~meet these $8requirements.8 ~~million~~The inCompany ~~convertible~~factored ~~debentures~~accounts ~~(discussed~~receivable ~~below)~~during ~~which~~the ~~matured~~quarter onended ~~August~~November 1430, 2004., ~~These losses~~ and ~~commitments~~there ~~raise~~were ~~significant~~outstanding ~~doubt~~advances ~~about~~due ~~the~~to ~~Company’s~~Key ~~ability~~of to$15,600 ~~continue~~at asNovember a30, ~~going concern~~2004. ~~The~~Key ~~financial~~may ~~statements~~cancel dothe ~~not~~agreement ~~contain~~at any ~~adjustment~~time ~~that~~with ~~might~~20 ~~result~~days ~~from~~prior notice to the ~~outcome of these uncertainties~~Company.

~~During~~The ~~the~~Company ~~quarter~~has ~~ended~~outstanding ~~August~~debentures ~~31,~~originally issued ~~2003,~~to ~~the~~clients ~~Company~~of ~~entered~~Gutzwiller ~~into~~& aPartner, ~~factoring~~AG, ~~agreement~~now ~~with Key~~known ~~Capital~~as ~~Factoring~~Rabo Investment Management Ltd. (the “~~Key~~Manager”), ~~that~~totaling ~~provides~~approximately ~~for~~$7.44 ~~advances~~million. ofThe updebentures tomatured ~~85%~~on ofAugust ~~specified~~14, ~~accounts~~2004, ~~receivable.~~and ~~The~~were ~~Company~~stated ~~expects~~ to ~~draw~~be onconvertible ~~the~~into ~~Key~~common stock ~~facility~~at ~~during~~a ~~fiscal~~conversion ~~2005~~price asof ~~necessary~~$0.50 toper ~~help~~share, ~~alleviate~~and ~~liquidity~~to ~~problems,~~bear ~~although,~~interest ~~as discussed~~at ~~above~~1% per annum, ~~the~~payable ~~Company~~annually. ~~will~~The ~~also~~debentures ~~need~~ceased to ~~control~~be ~~expenses~~convertible on June 14, ~~maintain~~2004. ~~the~~In ~~sales~~a ~~backlog~~filing atwith ~~appropriate~~the ~~levels,~~Securities and ~~keep~~Exchange ~~shipment~~Commission ~~levels~~dated inNovember ~~line~~29, ~~with~~2004, ~~booked~~the Manager ~~orders~~indicated inthat ~~order~~it toterminated ~~meet~~its ~~these~~business ~~requirements.~~activities ~~The~~on ~~Company~~December ~~factored~~31, ~~accounts~~2002 ~~receivable during~~and, ~~the~~as ~~quarter,~~part ~~but~~of ~~there~~that ~~were~~process, nodistributed ~~outstanding~~to ~~advances~~its ~~due~~clients toGKI ~~Key~~debentures atin ~~August~~the ~~31,~~aggregate ~~2004.~~principal ~~Key~~amount ~~may~~of ~~cancel~~$7,300,000 which the ~~agreement~~Manager atheld ~~any~~on ~~time~~behalf ~~with~~of 20such clients. ~~days~~The ~~prior~~Manager ~~notice~~continues to hold debentures in the ~~Company~~aggregate principal amount of $490,000.

~~The~~On March 12, 2003, Manassas Partners LLC, a Delaware limited liability company of which Larry Heimendinger, Chairman of the Board of Directors of the Company, ~~had~~is ~~significant~~the ~~amounts~~managing ~~payable~~member, topurchased ~~trade~~from ~~creditors~~third parties, at ~~August~~a significant 31discount, ~~2004~~a portion of the Company’s outstanding debentures in an aggregate principal amount of $5.8 million.

~~The~~15 Company has outstanding debentures originally issued to clients of Gutzwiller & Partner, AG, now known as Rabo Investment Management Ltd. (the “Manager”), totaling approximately $8.8 million. The debentures matured on August 14, 2004, are convertible into common stock at a conversion price of $0.50 per share, and bear interest at 1% per annum payable annually. In a filing with the Securities and Exchange Commission dated November 9, 2001, the Manager indicated that it may be deemed to be the beneficial owner of debentures having an aggregate principal amount of $7,885,000, including debentures in the principal amount of $585,000 which were purchased by the Manager as to which the Manager was the economic beneficial owner and held sole voting and dispositive power, and debentures in a principal amount of $7,300,000 held in client accounts managed by the Manager on behalf of various clients who held beneficial economic ownership thereof for which the Manager held voting and dispositive power.

On March 12, 2003, Manassas Partners LLC, a Delaware limited liability company of which Larry Heimendinger, Chairman of the Board of Directors of

In October 2004, the Company, ispurchased ~~the~~$1.36 ~~managing~~million ~~member,~~aggregate ~~purchased~~principal amount of debentures from ~~third~~certain ~~parties,~~debenture holders atfor a ~~significant~~total ~~discount,~~price a(including ~~portion~~interest) equal to 3% of the principal amount. The Company’s has paid $~~8.8~~27,200 ~~million~~of ~~outstanding convertible~~the ~~debentures~~purchase price, and is in anthe ~~aggregate~~process ~~principal~~of ~~amount~~completing final payment of $513,600 due to the debenture holders.8 ~~million~~The Company recognized a gain on the settlement of debt of $1,346,400 in the accompanying financial statements.

The Company’s cash flow, capital resources, and overall financial condition will not be sufficient to repay or refinance in full the approximately $87.844 million principal amount of outstanding ~~convertible~~ debentures which matured on August 14, 2004. The Company has reached agreement in principle with holders of approximately $~~1.7~~160,000 ~~million~~ principal amount of such debentures for the purchase of these debentures at a total price (including interest) equal to 3% of the principal amount. The Company is in the process of completing payment for such debentures. At present, the Company is in discussion with certain other debenture holders, but has decided on no specific plans with respect to the repayment or refinancing of the debentures. The Company is continuing to review the situation and consider its potential alternatives. There can be no assurances, however, that the Company will be able to come to agreement with the other debenture holders with respect to repayment or refinancing of the debentures. No payment has otherwise been made in respect of interest on the outstanding debentures for the periods ending August 14, 2003 and 2004.

Analysis of Cash Flows

Operating activities used $~~356~~209,~~000~~300 in cash in the first ~~quarter~~half of fiscal 2005. This reflects the net ~~loss~~income of $761,~~200~~229,000 and $~~288~~3,~~500~~700 in net non-cash items, offset by $95,600 in cash used from changes in working capital items ~~offset~~and bya $81,~~700~~346,400 ingain ~~net~~on ~~non-cash~~settlement ~~expenses~~of debt. The cash used from changes in working capital items in the first ~~quarter~~half of fiscal 2005 includes an increase in inventories of $~~190~~318,100 ~~and~~offset anby ~~increase~~a decrease in accounts receivable of $~~148~~179,~~300~~800.

Investing activities used $2236,~~000~~500 in the first ~~quarter~~half of fiscal 2005, which consists primarily of the acquisition of property, plant and equipment.

Financing activities used $~~224~~248,~~000~~100 in the first ~~quarter~~half of fiscal 2005. These activities consisted primarily of the repayment of advances from the factoring of accounts receivable and $27,200 of cash used from the settlement of debt.

Noncash investing and financing activities consisted of the acquisition of a new vertical ~~milling~~machining ~~machine~~center ~~via~~under a capital lease

Inflation

Management believes that inflation did not have a material effect on the operations, financial position or cash flows of the Company during the first quarter of fiscal 2005.

Contractual Obligations and Commercial Commitments

The Company’s commitments through August 31, 2009 are comprised of the following at August 31, 2004 (in thousands):

	Through August 31,
	2005		2006		2007		2008		2009		Total
Convertible debentures	$	8,795	$	0	$	0	$	0	$	0	$	8,795
Other notes payable		40		0		0		0		0		40
Capital leases		60		60		45		34		15		214
Operating leases		198		183		183		181		135		880
Total	$	9,093	$	243	$	228	$	215	$	150	$	9,929

Critical Accounting Policies

The Company’s significant accounting policies are more fully described in Note 2 to the financial statements in our 2004 Annual Report on Form 10-K, as amended. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying financial statements and related notes. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Company does not believe there is a great likelihood that materially different amounts would be reported related to the accounting policies described below; however, application of these accounting policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.

Work in process inventory represents actual production costs, including manufacturing overhead incurred to date, reduced by amounts identified with revenue recognized on units delivered as well as reserves for amounts in excess of estimated net realizable value. The costs attributable to units delivered are based on the estimated average costs of all units expected to be produced under multi-unit orders. Estimated costs to complete are based on historical experience and knowledge of building similar products. On an on-going basis, the Company evaluates the estimates of total costs to complete a multi-unit order. Work in process is reduced by charging any amounts in excess of estimated net realizable value to cost of sales as soon as they become known. Interim inventories are determined by application of estimated gross profit margins to sales.

15The Company provides an allowance for uncollectible receivables based on experience with customers and individual review of any past due accounts. Although it is reasonably possible that management’s estimate could change in the near future, management is not aware of any events that would result in a change to its estimate which would be material to the Company’s financial position or its results of operations. At November 30, 2004, the Company had an allowance for doubtful accounts of $22,900.

The Company provides an allowance for uncollectible receivables based on experience with customers and individual review of any past due accounts. Although it is reasonably possible that management’s estimate could change in the near future, management is not aware of any events that would result in a change to its estimate which would be material to the Company’s financial position or its results of operations. At August 31, 2004, the Company had an allowance for doubtful accounts of $22,900.

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

Market Risk - The Company is exposed to market risk from adverse changes in interest rates.

Interest Rate Risks - The Company is exposed to risk from changes in interest rates as a result of its borrowing activities. At ~~August~~November 3130, 2004, the Company had total debt of $98.95 million. Of the $8.5 million, ~~all~~$7.44 million are debentures that matured on August 14, 2004 and had a stated rate of ~~which~~interest of 1%, and the remaining debt all has a fixed rate of interest.

Item 4 - Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the Company’s ~~first~~second quarter of fiscal 2005, the Company conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the Company’s ~~first~~second quarter of fiscal 2005. There has been no change in the Company’s internal control over financial reporting that has occurred during the Company’s ~~first~~second quarter of fiscal 2005 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

1618

PART II OTHER INFORMATION

Item 3 - Defaults Upon Senior Securities

Information is incorporated by reference to “Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Liquidity and Capital Resources.”

Item 6 - Exhibits

31.1		Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the Chief Executive Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of the Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

31.1 Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

1731.2 Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of the Chief Executive Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of the Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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 KINETICS INCORPORATED

Date: October 15, 2004		/s/ Larry M. Heimendinger
Date: January 14, 2005	/s/ Larry M. Heimendinger
	Chairman of the Board	~~Chairman of the Board~~
	(Principal Executive Officer)	~~(Principal Executive Officer)~~
Date: October 15, 2004		/s/ Sandy B. Sewitch
Date: January 14, 2005	/s/ Sandy B. Sewitch
	Chief Financial Officer	~~Chief Financial Officer~~
		(Principal Accounting Officer andPrincipal Financial Officer)
	(Principal Accounting Officer and
	Principal Financial Officer)

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Filing Compare · GENERAL KINETICS INC