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GKI ANNOUNCES NEW CONTRACTS AND THIRD QUARTER RESULTS

 GKI ANNOUNCES NEW CONTRACTS AND THIRD QUARTER RESULTS
 HERNDON, Va., April 14 /PRNewswire/ -- General Kinetics


Incorporated (GKI) (AMEX: GKI), a designer, producer and marketer of high-end, digital secure facsimile equipment and precision enclosures headquartered in Herndon, made the following announcements:
 The company today is reporting a $1.2 million net loss for the third quarter ended Feb. 29, 1992, on revenues of approximately $5.2 million. The delay in shipments from the second quarter to the third quarter and the problems incurred in the conversion of the company's secure facsimile production process resulted in the temporary reduction in the gross profit margins on machines shipped from the Secure Communication Division, which the company believes should not reoccur. Shipments from the Electronic Enclosure Division were up approximately 9 percent, but lower margins on certain major contracts resulted in gross profit remaining constant. Management anticipates that follow-on work to these contracts will enable the company to take advantage of the up-front engineering costs already incurred and thereby obtain acceptable higher profit margins.
 The company has determined that it is currently not in compliance with certain financial covenants under loan agreements with two of its principal lenders. The company is currently engaged in discussions with these banks and is seeking to obtain a temporary waiver of the covenants or an agreement to restructure the debt. There can be no assurance that the company will be able to reach appropriate agreements with the banks. In the absence of satisfactory renegotiation with the banks or the inability of the company to place alternative financing, the operations of the company would be adversely affected. In accordance with Generally Accepted Accounting Principals (GAAP), the company has reclassified the loans, which amount to approximately $3.6 million, as current demand notes payable. However, the company is current on all required principal and interest payments to the banks.
 GKI also announced that its Electronic Enclosure Division has been awarded a multi-year contract to supply enclosures and associated equipment to Westinghouse Corporation. The initial release under the contract is for approximately $2.7 million and includes three option years that, if exercised, will increase the total contract value to approximately $5.8 million.
 President and Chairman of the Board of the company, David A. Shaw, stated: "This reaffirms our longstanding relationship with Westinghouse and should help provide the basis for growth in the Electronic Enclosure Division, which with this new contract has a backlog of approximately $30 million."
 GKI also announced the signing of a major, original equipment manufacturers and Technical License Agreement with CRYPTO AG located in Zug, Switzerland. CRYPTO AG is a leading, worldwide supplier of secure communications equipment. The agreement is for a period of six and one-half years and can be extended by mutual agreement of both parties. The minimum contract value to GKI is based upon required purchases and non-recurring engineering reimbursement payments by CRYPTO AG is approximately $6,650,000.
 David A. Shaw, president of GKI, stated, "GKI's relationship with CRYPTO AG helps reaffirm GKI's reputation as a worldwide, quality player in the secure communications equipment marketplace."
 GKI has abandoned its previously announced public offering of common stock and has formally withdrawn its Form S-1 Registration Statement previously filed with the Securities and Exchange Commission. GKI is currently attempting to raise from $2 million to $4 million by the private placement of debt and/or equity in order to meet short term working capital needs. Although various prospective investors have shown interest in the company, there can be no assurance that the company will be able to consummate a transaction for such private debt or equity in a timely fashion and on acceptable terms, and the inability to do so will likely have a material adverse effect on the operations of the company.
 GKI announced a "rightsizing adjustment" for both its Electronic Enclosure Division with manufacturing operations in Johnstown, Pa., and Orlando, Fla., and in its Secure Communications Division located in Herndon. This readjustment (which includes a reduction of approximately 20 percent of the labor force) results from the implementation of an on-going strategy announced originally in November 1990, to improve operating efficiencies within both divisions, and as a measure to partially address the company's immediate working capital needs.
 GKI's CRYPTEK Secure Communications Division, located in Herndon, is a leader in the design and production of secure facsimile machines and related equipment. GKI also manufactures precision machined and fabricated electronic enclosures at its operations in Johnstown and Orlando.
 -0- 4/14/92
 /CONTACT: David A. Shaw, president, General Kinetics Incorporated, 703-478-9444/
 (GKI) CO: General Kinetics Incorporated ST: Virginia IN: CPR SU: ERN


MH -- DC038 -- 8374 04/14/92 17:12 EDT
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Date:Apr 14, 1992
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