<PAGE>   1


================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                         -------------------------------

                                    FORM 10-Q


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

                  For the Quarterly Period Ended March 31, 1998

                                       OR

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

                        Commission File Number 000-21629


                            THE KROLL-O'GARA COMPANY
             (Exact name of registrant as specified in its charter)



                   Ohio                                          31-1470817
     (State or other jurisdiction of                          (I.R.S. Employer
              incorporation)                                 Identification No.)


                               9113 LeSaint Drive
                              Fairfield, Ohio 45014
                                 (513) 874-2112

               (Address, including zip code, and telephone number,
        including area code of registrant's principal executive offices)

   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 
                                         -----     -----

     The number of shares of common stock outstanding on May 8, 1998 was
16,890,750


================================================================================

<PAGE>   2

<TABLE>
<CAPTION>

                                      INDEX

                                     PART I
                              FINANCIAL INFORMATION
<S>       <C>                                                                                    <C>
Item 1.   Financial Statements

          Consolidated Balance Sheets (unaudited) as of March 31, 1998
              and December 31, 1997..............................................................1

          Consolidated Statements of Operations (unaudited) for the Three Months
              Ended March 31, 1998 and 1997......................................................3

          Consolidated Statement of Shareholders' Equity (unaudited) for the
              Three Months Ended March 31, 1998..................................................4

          Consolidated Statements of Cash Flows (unaudited) for the Three Months
              Ended March 31, 1998 and 1997......................................................5

          Notes to Consolidated Unaudited Financial Statements...................................6

Item 2.   Management's Discussion and Analysis of Financial Condition and
              Results of Operations.............................................................11

Item 3.   Quantitative and Qualitative Disclosures About Market Risk............................17

                                 PART II

                            OTHER INFORMATION

Item 1.   Legal Proceeding......................................................................18

Item 2.   Changes in Securities.................................................................18

Item 6.   Exhibits and Reports on Form 8-K......................................................19

Signatures......................................................................................20
</TABLE>



<PAGE>   3
<TABLE>
<CAPTION>
                                           THE KROLL-O'GARA COMPANY
                                         CONSOLIDATED BALANCE SHEETS
                                                    ASSETS
                                                 (unaudited)
                                            (dollars in thousands)

                                                                         March 31,          December 31,
                                                                           1998                 1997
                                                                      ----------------     ---------------
<S>                                                                           <C>                 <C>    
CURRENT ASSETS:
      Cash and equivalents                                                    $ 6,819             $ 6,899
      Marketable securities                                                         -                  23
      Trade accounts receivable, net of allowance for
           doubtful accounts of $2,666 and $2,516 at March 31,
           1998 and December 31, 1997, respectively                            38,225              37,649
      Unbilled revenues                                                         5,270               3,082
      Other receivables
           Advances to shareholders                                               173                 526
           Affiliates                                                             189                 366
           Employees                                                              401                  48
      Costs and estimated earnings in excess of
           billings on uncompleted contracts                                   14,856              12,078
      Inventories                                                              19,829              19,453
      Prepaid expenses                                                          4,601               6,455
      Deferred tax asset                                                          412                 412
                                                                      ----------------     ---------------
               Total current assets                                            90,775              86,991

PROPERTY, PLANT, AND EQUIPMENT, at cost
      Land                                                                      1,699               1,637
      Buildings and improvements                                                6,323               6,223
      Leasehold improvements                                                    5,270               5,243
      Furniture and fixtures                                                    4,821               4,630
      Machinery and equipment                                                  11,338              11,290
      Construction-in-progress                                                  1,160               1,037
                                                                      ----------------     ---------------
                                                                               30,611              30,060
      Less:  accumulated depreciation                                         (15,774)            (15,448)
                                                                      ----------------     ---------------
                                                                               14,837              14,612
                                                                      ----------------     ---------------

DATABASES, net of accumulated amortization of $20,316
      and $19,506 at March 31, 1998 and December 31,
      1997, respectively.                                                       8,217               8,336
COSTS IN EXCESS OF ASSETS ACQUIRED, net of
      accumulated amortization of $1,013 and $772 at
      March 31, 1998 and December 31, 1997, respectively                       17,739              17,852
OTHER ASSETS                                                                    7,321               6,180
                                                                      ----------------     ---------------
                                                                               33,277              32,368
                                                                      ----------------     ---------------
                                                                            $ 138,889           $ 133,971
                                                                      ================     ===============

</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.


                                       1
<PAGE>   4
<TABLE>
<CAPTION>
                                          THE KROLL-O'GARA COMPANY
                                         CONSOLIDATED BALANCE SHEETS
                                    LIABILITIES AND SHAREHOLDERS' EQUITY
                                                 (unaudited)
                                           (dollars in thousands)

                                                                          March 31,             December 31,
                                                                             1998                   1997
                                                                        ---------------        ---------------
<S>                                                                            <C>                      <C>  
CURRENT LIABILITIES:
     Revolving lines of credit                                                 $ 5,226                  $ 559
      Current portion of long-term debt                                          1,545                  3,201
      Shareholder payable                                                          307                    309
      Accounts payable-
           Trade                                                                30,492                 31,586
           Affiliates                                                              261                    875
      Billings in excess of costs and estimated
           earnings on uncompleted contracts                                       281                    320
      Accrued liabilities                                                       14,241                 13,929
      Income taxes currently payable                                             2,013                    845
      Customer deposits                                                          3,198                  3,840
                                                                        ---------------        ---------------
               Total current liabilities                                        57,564                 55,464

OTHER LONG-TERM LIABILITIES                                                      1,523                  1,533
DEFERRED INCOME TAXES                                                            2,057                  2,155
LONG-TERM DEBT, net of current portion                                          46,831                 46,864
                                                                        ---------------        ---------------
               Total liabilities                                               107,975                106,016

SHAREHOLDERS' EQUITY:
      Preferred stock, $.01 par value, 1,000,000 shares
           authorized, none issued                                                   -                      -
      Common stock, $.01 par value, 50,000,000
           shares authorized, 13,629,432, and 13,590,525 shares
           issued and outstanding in 1998 and 1997, respectively                   136                    136
      Additional paid-in-capital                                                51,201                 50,590
      Retained deficit                                                         (19,860)               (22,387)
      Accumulated other comprehensive income (loss)                               (563)                  (384)
                                                                        ---------------        ---------------
               Total shareholders' equity                                       30,914                 27,955
                                                                        ---------------        ---------------
                                                                             $ 138,889              $ 133,971
                                                                        ===============        ===============

</TABLE>


The accompanying notes are an integral part of these consolidated balance
sheets.

                                       2
<PAGE>   5
<TABLE>
<CAPTION>
                                    THE KROLL-O'GARA COMPANY
                              CONSOLIDATED STATEMENTS OF OPERATIONS
                                           (unaudited)
                          (dollars in thousands, except per share data)

                                                                        Three Months Ended
                                                                             March 31,
                                                                  --------------------------------
                                                                       1998             1997
                                                                  ---------------  ---------------

<S>                                                                     <C>              <C>     
NET SALES               Security Products & Services                    $ 30,217         $ 22,442
                        Investigations & Intelligence                     17,415           16,065
                        Voice & Data Communications                        4,826            2,732
                                                                  ---------------  ---------------
                                                                          52,458           41,239

COST OF SALES           Security Products & Services                      21,857           16,026
                        Investigations & Intelligence                      9,924            9,636
                        Voice & Data Communications                        3,900            2,173
                                                                  ---------------  ---------------
                                                                          35,681           27,835

GROSS PROFIT            Security Products & Services                       8,360            6,416
                        Investigations & Intelligence                      7,491            6,429
                        Voice & Data Communications                          926              559
                                                                  ---------------  ---------------
                                                                          16,777           13,404

OPERATING EXPENSES:
          Selling and marketing                                            3,701            3,162
          General and administrative                                       7,191            6,120
          Amortization of costs in excess of assets acquired                 241              164
                                                                  ---------------  ---------------
                 Operating income                                          5,644            3,958

OTHER INCOME (EXPENSE):
          Interest expense                                                (1,267)            (858)
          Other, net                                                        (116)            (266)
                                                                  ---------------  ---------------
                 Income before minority interest and
                        provision for income taxes                         4,261            2,834
Minority interest                                                              -                3
                                                                  ---------------  ---------------
                 Income before provision for income taxes                  4,261            2,831

Provision for income taxes                                                 1,734            1,302
                                                                  ---------------  ---------------

                 Net income                                              $ 2,527          $ 1,529
                                                                  ===============  ===============
Basic earnings  per share                                                $  0.19          $  0.12
                                                                  ===============  ===============
Basic weighted average shares outstanding                                 13,603           12,945
                                                                  ===============  ===============
Diluted  earnings per share                                              $  0.18          $  0.09
                                                                  ===============  ===============
Diluted weighted average shares outstanding                               14,118           13,721
                                                                  ===============  ===============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       3
<PAGE>   6
<TABLE>
<CAPTION>

                                                                THE KROLL-O'GARA COMPANY
                                                     CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                                        For the Three Months Ended March 31, 1998
                                                                       (unaudited)
                                                                      (in thousands)
                                                                                                                        Accumulated
                                                                                            Additional                     Other
                                                               Comprehensive    Common      Paid-in        Retained    Comprehensive
                                                  Shares          Income        Stock       Capital        Deficit     Income (Loss)
                                                ------------   -------------  ------------ -----------   ---------------------------
<S>                                                <C>                          <C>         <C>           <C>             <C>       
BALANCE, December 31, 1997                           13,590                      $ 136     $ 50,590      $ (22,387)      $ (384)    
Issuance of stock in conjunction with the                                                                                        
     acquisition of businesses                           29                          -          525              -            -     
Exercise of stock options                                10                          -           86              -            -     
Comprehensive income:
     Net income                                                    $ 2,527           -            -          2,527            -     
                                                               ------------
    Other comprehensive income, net of tax:
       Foreign currency translation
       adjustments, net of $68 tax benefit                -           (169)          -            -              -            -     
     Reclassification adjustment for gain on                                                                                        
       securities included in net income, net of                                                                                    
       $4 tax expense                                     -            (10)          -            -              -            -     
                                                               ------------
     Other comprehensive income                           -           (179)          -            -              -         (179)    
                                                               ------------
Comprehensive income                                               $ 2,348           -            -              -            -  
                                                               ============
                                                ------------                 ----------  -----------  -------------  -----------  
BALANCE, March 31, 1998                              13,629                      $ 136     $ 51,201      $ (19,860)      $ (563)    
                                                ============                 ==========  ===========  =============  ===========  

<CAPTION>

                                                
                                                
                                                     Total
                                                --------------
<S>                                                <C>     
BALANCE, December 31, 1997                        $ 27,955
Issuance of stock in conjunction with the                -
     acquisition of businesses                         525
Exercise of stock options                               86
Comprehensive income:
     Net income                                      2,527
                                                
    Other comprehensive income, net of tax:
       Foreign currency translation
       adjustments, net of $68 tax benefit               -
     Reclassification adjustment for gain on              
       securities included in net income, net of         
       $4 tax expense                                    -
     Other comprehensive income                       (179)
                                                
Comprehensive income                                     -
                                                -----------
BALANCE, March 31, 1998                           $ 30,914
                                                ===========

</TABLE>



                                       4
<PAGE>   7
<TABLE>
<CAPTION>



                                               THE KROLL O'GARA COMPANY
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (unaudited)
                                                (dollars in thousands)
                                                                                     March 31,           March 31,
                                                                                       1998                 1997
                                                                                 ---------------------------------------
<S>                                                                                        <C>                  <C>    
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                                                           $ 2,527              $ 1,529
      Adjustments to reconcile net income to net cash
            provided by (used in) operating activities-
           Depreciation and amortization                                                       326                  392
           Amortization of databases                                                           779                  726
           Amortization of costs in excess of assets acquired                                  241                  164
           Bad debt expense                                                                    529                  231
           Shareholder stock compensation                                                        -                   50
           (Gain) loss on sale of property and equipment                                        (9)                   6
           (Gain) loss on sale of marketable securities                                         (7)                   -
           Share in net (income)  loss of joint ventures                                         -                   21
      Change in assets and liabilities, net of effects of acquisitions-
           Receivables                                                                        (830)               1,707
           Unbilled revenues                                                                (2,120)                (106)
           Costs in excess of billings on uncompleted contracts                             (2,777)              (1,491)
           Inventories                                                                        (376)              (2,077)
           Prepaid expenses and other assets                                                   983               (3,049)
           Accounts payable and income taxes currently payable                                (598)               5,011
           Billings in excess of costs and estimated earnings on
               uncompleted contracts                                                           (39)                 191
           Customer deposits                                                                  (643)                (788)
           Deferred income taxes payable                                                       (98)                   -
           Accrued liabilities                                                                 308               (6,726)
           Long term liabilities                                                                (9)                 (13)
                                                                                 ---------------------------------------
               Net cash used in operating activities                                        (1,813)              (4,222)
                                                                                 ---------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of property, plant and equipment, net                                         (548)                (502)
      Proceeds from sale of property and equipment                                              10                    -
      Additions to databases                                                                  (661)              (1,671)
      Acquisitions, net of cash acquired                                                        16               (7,606)
      Sale of marketable securities                                                             20                    -
                                                                                 ---------------------------------------
               Net cash used in investing activities                                        (1,163)              (9,779)
                                                                                 ---------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Net borrowings (repayments) under revolving lines of credit                            4,668                1,664
      Proceeds from long-term debt                                                               -               15,881
      Payments of long-term debt                                                            (1,689)                   -
      Repayment of shareholder notes                                                             -                  (81)
      Proceeds from exercise of stock options                                                   86
      Foreign currency translation                                                             (78)                  37
                                                                                 ---------------------------------------
               Net cash provided by financing activities                                     2,987               17,501
                                                                                 ---------------------------------------
NET INCREASE IN CASH AND EQUIVALENTS                                                            11                3,500
Effects of foreign currency exchange rates on cash                                             (91)                 (42)
                                                                                 ---------------------------------------
CASH AND EQUIVALENTS, beginning of period                                                    6,899                4,761
                                                                                 ---------------------------------------
CASH AND EQUIVALENTS, end of period                                                        $ 6,819              $ 8,219
                                                                                 =======================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
      Cash Paid for Taxes                                                                  $   117              $   608 
                                                                                 =======================================
      Cash Paid for Interest                                                               $   360              $   280
                                                                                 =======================================
</TABLE>


                                       5
<PAGE>   8

                        THE KROLL-O'GARA COMPANY956152457

              NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

         The Kroll-O'Gara Company, an Ohio corporation, together with its
subsidiaries (collectively the "Company"), is a leading global provider of a
broad range of specialized products and services that are designed to provide
solutions to a variety of security needs. The Company's Security Products and
Services Group markets ballistic and blast protected vehicles to businesses,
individuals, and governments. It also offers security services such as training,
risk and crisis management services, and site security systems. The
Investigations and Intelligence Group offers business intelligence and
investigation services to clients worldwide. The Voice and Data Security Group
offers secure satellite communication equipment, satellite navigation systems,
and computer hardware and software security.

         In December 1997, a wholly owned subsidiary of The O'Gara Company
("O'Gara") was merged into Kroll Holdings, Inc.("Kroll"). At the time of the
merger, the Company's name was changed from The O'Gara Company to The
Kroll-O'Gara Company.

         Effective upon the consummation of the merger, each then issued
(included those issued under the Kroll Restricted Stock Plan) and outstanding 
share of Kroll common stock was converted into 62.52 shares of Common Stock of 
the Company or 6,098,561 shares of Company Common Stock in total. Outstanding
employee stock options were converted at the same exchange factor into options
to purchase 551,492 shares of Company Common Stock.

         The merger constituted a tax-free reorganization and has been accounted
for as a pooling of interests. Accordingly, all prior period consolidated
financial statements presented have been restated to include the combined
results of operations, financial position, and cash flows of Kroll as though it
had always been a part of the Company.

         On May 5, 1998, the Company completed a public offering of 3,200,000
shares of its Common Stock at $20.50 per share (the "Offering"), resulting in
net proceeds to the Company of $60.8 million. A portion of the net proceeds 
was used to pay off $14.8 million of indebtedness of the Company, with the 
balance available for potential acquisitions, working capital and other general
corporate purposes. In addition to the shares sold by the Company, certain
shareholders sold 1,860,000 shares of Common Stock in conjunction with the
Offering. The Offering follows the Company's initial public offering, which was
completed on November 15, 1996 and resulted in the issuance of 2,048,000 shares
of Common Stock.

         The consolidated financial statements include the accounts of O'Gara
and Kroll and all their majority-owned subsidiaries. All material intercompany
accounts and transactions are eliminated. Investments in 20% to 50% owned
entities are accounted for on the cost method. Affiliated entities are not
included in the accompanying consolidated financial statements, and include
entities that are directly or indirectly owned by current shareholders or former
shareholders of O'Gara Hess & Eisenhardt Armoring Company, but which are not
included in the O'Gara reorganizations and combination.

         The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for fair presentation have
been included. Operating results for the three month period ended March 31,
1998, are not necessarily indicative of the results that may be expected for the
year ended December 31, 1998. The accompanying financial statements should be
read in conjunction 



                                       6
<PAGE>   9

with the consolidated financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1997.

(2) REVENUE RECOGNITION

         Revenue related to contracts for security products (both government
and commercial) results principally from long-term, fixed price contracts and is
recognized using the percentage-of-completion method calculated utilizing the
cost-to-cost approach. The percent deemed to be complete is determined by
comparing the costs incurred to date with estimated total costs for each
contract. This method is used because management considers costs incurred to be
the best available measure of progress on these contracts. However, adjustments
to this measurement are made when management believes that costs incurred
materially exceed effort expended. Contract costs include all direct material
and labor costs, along with certain direct overhead costs related to contract
production.

         Provisions for any estimated total contract losses on uncompleted
contracts are recorded in the period in which it becomes known that such losses
will occur. Changes in estimated total contract costs will result in revisions
to contract revenue. These revisions are recognized when determined.

         Revenue from investigations and intelligence services and security
services is recognized as the services are performed. The Company records either
billed or unbilled accounts receivable based on a case-by-case invoicing
determination.

         Revenues related to voice and data security equipment is recognized as
equipment is shipped or as services are provided. Revenues and related direct
costs of brokered satellite time are recorded when payments are received from
customers.

(3)      ACQUISITION

         The Company completed the following acquisition during the first
quarter of 1998. This acquisition was accounted for as a purchase. The 
allocation of purchase price was based on estimates and may be revised at a
later date pending the completion of certain appraisals and other analyses.

         (a)      On March 16, 1998, the Company acquired all of the shares of 
                  Corplex, Inc. ("Corplex") a provider of investigative and
                  executive protection services based in New York, New York. The
                  purchase price consisted of 29,207 shares of Common Stock
                  (valued at approximately $0.5 million or $17.98 per share).
                  For accounting purposes, the acquisition was effective March
                  1, 1998, and the results of operations are included in the
                  consolidated results of the Company from that date forward.
                  The former shareholder of Corplex, who was employed by Corplex
                  prior to the acquisition, will continue in his formerly held
                  capacity. Cost in excess of assets acquired is expected to be
                  $0.4 million and will be amortized over 15 years.




                                       7
<PAGE>   10


      In connection with the acquisition of Corplex, assets were acquired and
      liabilities were assumed as follows (dollars in thousands):
<TABLE>

                                                 Corplex
                                           --------------------
FAIR VALUE OF ASSETS ACQUIRED INCLUDING:
<S>                                                 <C>
    Cash                                            $16
    Accounts receivable                              96
    Unbilled revenue                                 69
    Property, plant and equipment                     4
    Other non-current assets                         15
    Goodwill                                        384
                                           --------------------
                                                   $584
    Less:  Cash paid for net assets                   -
               Fair value of debt issued              -
               Fair value of stock issued          (525)
                                           --------------------
                                                    $59
                                           ====================
LIABILITIES ASSUMED INCLUDING:
    Liabilities assumed and acquisition             $46
    costs
    Debt                                             13
                                           --------------------
                                                    $59
                                           ====================
</TABLE>

(4) EARNINGS PER SHARE

         In 1997, the Company adopted Statement of Financial Accounting
Standards No. 128 "Earnings Per Share" (SFAS 128). In accordance with SFAS 128,
basic earnings per share are computed by dividing net income by the weighted
average number of shares of common stock outstanding during the year. Diluted
earnings per share are computed by dividing net income by the weighted average
number of shares of common stock and equivalents outstanding during the year.
Dilutive common stock equivalents represent shares issuable upon assumed
exercise of stock options and upon assumed issuance of restricted stock. The
following is a reconciliation of the numerator and denominator for basic and
diluted earnings per share for the three months ended March 31, 1998 and 1997
(in thousands except per share data):
<TABLE>
<CAPTION>

                                                                  THREE MONTHS ENDED MARCH 31, 1998
                                                 -----------------------------------------------------------
                                                                                                 
                                                                               Shares            Per Share
                                                 Income (Numerator)        (Denominator)           Amount 
                                                 --------------------    --------------------    -----------
<S>                                                     <C>                    <C>                 <C>  
      Basic EPS                                         $2,527                 13,603              $0.19
                                                                                                 ===========
      Effect of dilutive securities:
           Options                                           -                    515
                                                 --------------------    --------------------
      Diluted EPS                                       $2,527                 14,118              $0.18
                                                 ====================    ====================    ===========

<CAPTION>

                                                                  THREE MONTHS ENDED MARCH 31, 1997
                                                 ----------------------------------------------------------
                                                                                                 
                                                                               Shares            Per Share 
                                                 Income (Numerator)         (Denominator)          Amount  
                                                 --------------------    --------------------    -----------
<S>                                                     <C>                    <C>                 <C>  
      Basic EPS                                         $1,529                 12,945              $0.12
                                                                                                 ===========
      Effect of dilutive securities:
           Options                                           -                    180
           Restricted stock                              (268)                    596
                                                 --------------------    --------------------
      Diluted EPS                                       $1,261                 13,721              $0.09
                                                 ====================    ====================    ===========
</TABLE>


                                       8
<PAGE>   11

(5) NEW PRONOUNCEMENTS

         In 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"), which
established standards for reporting and displaying comprehensive income and its
components in a financial statement that is displayed with the same prominence
as other financial statements. The Company has chosen to disclose comprehensive
income, which encompasses net income and foreign currency translation
adjustments and unrealized holding gains of marketable securities, in the
Consolidated Statement of Shareholder's Equity. Prior years have been restated
to conform to the SFAS No. 130 requirements. The Accumulated Other Comprehensive
Income balance of $384 at March 31, 1998 consists entirely of foreign currency
translation adjustments.

         Total comprehensive income for the three-month period ended March 31,
1997 is as follows:
<TABLE>

<S>                                                              <C>    
Net income                                                       $1,529 
                                                            -------------
Other comprehensive income, net of tax:
         Foreign currency translation adjustments, net of         
              $3 tax benefit                                         (5)
                                                            -------------
Other comprehensive income                                           (5)
                                                            -------------
                  Comprehensive income                            $1,524
                                                            =============
</TABLE>

         In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures About Segments of an Enterprise and Related
Information" (SFAS 131), effective for fiscal years beginning after December 15,
1997. This statement requires disclosure for each segment in which the chief
operating decision maker organizes these segments within a company for making
operating decisions and assessing performance. Reportable segments are based on
products and services, geography, legal structure, management structure and any
manner in which management disaggregates a company. The Company intends to adopt
SFAS 131 during fiscal 1998. This statement, which requires expansion or
modification to existing disclosures, will have no impact on the Company's
reported financial position, results of operations or cash flows.

          In April 1998, the American Institute of Certified Public Accountants
released Statement of Position (SOP) 98-5 "Reporting on the Cost of Start-Up
Activities." The SOP requires costs of start-up activities, including
preoperating costs, organization costs and start-up costs to be expensed as
incurred. The company's current practice is to capitalize these expenses and
amortize them over periods ranging from one to five years. The Company is
required to adopt the provisions of this statement no late than the first
quarter of fiscal 1999. Included in the accompanying March 31, 1998 Consolidated
Balance Sheet is approximately $0.7 million of preoperating, organization and
start-up costs which would have been expensed had this statement already been
implemented.




                                       9
<PAGE>   12



(6) SUPPLEMENTAL CASH FLOW DISCLOSURE

         Cash and equivalents consist of all operating cash accounts and
investments with an original maturity of three months or less. Marketable
securities consist of available-for-sale commercial paper obligations which
matured in 1998. These securities are valued at current market value, which
approximates cost.
<TABLE>

Non-cash activity (dollars in thousands):
                                                                                         1998         1997
                                                                                         ----         ----
                <S>                                                                       <C>       <C>   
                  Fair value of stock issued in connection with
                  acquisition of ITI   ............................................         -          800
                  Notes issued in connection with acquisition
                  of ITI...........................................................         -       $1,232
                  Fair value of stock issued in connection
                  with acquisition of Next Destination.............................         -       $1,851
                  Notes issued in connection with acquisition
                  of Next Destination..............................................         -       $1,575
                  Fair value of stock issued in connection with
                  acquisition of Labbe.............................................         -       $3,431
                  Fair value of stock issued in connection with
                  acquisition of Corplex...........................................      $525         $525
</TABLE>

(7)   INVENTORIES

     Inventories are stated at the lower of cost or market using the first-in,
     first-out (FIFO) method and include the following (dollars in thousands):
<TABLE>
<CAPTION>

                               March 31,         December
                                  1998           31, 1997
                              -------------    -------------
                                       (Unaudited)
<S>                                 <C>              <C>   
Raw materials                       $9,971           $9,441
Vehicle costs and                    
work-in-process                      9,858           10,012
                              -------------    -------------
                                   $19,829          $19,453
                              =============    =============
</TABLE>

(8) DERIVATIVE FINANCIAL INSTRUMENTS

         Financial instruments in the form of foreign currency exchange
contracts are utilized by the Company to hedge its exposure to movements in
foreign currency exchange rates. The Company does not hold or issue derivative
financial instruments for trading purposes. Gains and losses on foreign exchange
contracts are deferred and amortized as an adjustment to the cumulative foreign
currency translation adjustment component of equity over the terms of the
agreements in accordance with hedge accounting standards. The fair value of
foreign currency exchange contracts is not recognized in the consolidated
financial statements since they are accounted for as hedges.

         The Company has entered into four foreign currency exchange contracts
to effectively hedge its exposure to certain foreign currency rate fluctuations
on a demand loan to a subsidiary which is denominated in the foreign currency.
By virtue of these contracts, the Company has fixed the total dollar amount
which they will receive under the aforementioned subsidiary loan through the
maturity dates of the contracts regardless of the fluctuations in the exchange
rate. The total notional amount of the contracts, which mature between January
1998 and July 1999, is $15.2 million. The company's cumulative foreign currency
translation adjustment component of shareholders' equity was increased by $0.7
million in the first quarter of 1998 as a result of these agreements.




                                       10
<PAGE>   13


ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

         The following discussion of results of operations and financial
condition is based upon and should be read in conjunction with the Company's
Consolidated Financial Statements and Notes. As a result of the acquisitions
made by the Company in 1997, financial results from period-to-period may lack
comparability. Additionally, prior to December 1, 1997, the Company reported
revenue under the categories Security Hardware Products, Security Systems
Integration and Security Services. Effective December 1, 1997, the Company
recategorized its groups as Security, Products and Services, Investigations and
Intelligence and Voice and Data Security,. Historical revenue amounts have been
reclassified to conform to the current categories.

GENERAL

         The Kroll-O'Gara Company is a leading global provider of a broad range
of specialized products and services that are designed to provide solutions to a
variety of security needs. The Company reports its revenue through three groups.
The Security Products and Services Group markets ballistic and blast protected
vehicles to businesses, individuals, and Governments. It also offers security
services such as training, risk and crisis management services, and site
security systems. The Investigations and Intelligence Group offers business
intelligence and investigation services to clients worldwide. The Voice and Data
Security Group offers secure satellite communication equipment, satellite
navigation systems, and computer hardware and software security.

         On May 5, 1998, the Company completed a public offering of 3,200,000
shares of its Common Stock at $20.50 per share (the "Offering"), resulting in
net proceeds to the Company of $60.8 million. A portion of the net proceeds was
used to pay off $14.8 million of the indebtedness of the Company, with the
balance available for potential acquisitions, working capital and other general
corporate purposes. In addition to the shares sold by the Company, certain
shareholders sold 1,860,000 shares of Common Stock in conjunction with the
Offering. The Offering follows the Company's initial public offering, which was
completed on November 15, 1996 and resulted in the issuance of 2,048,000 shares
of Common Stock.

         Merger. On December 1, 1997, a wholly owned subsidiary of the Company
merged (the "Merger") into Kroll Holdings, Inc ("KHI"). In the Merger, the
Company issued 6,098,561 shares of Common Stock and repaid an aggregate of $14.5
million in outstanding indebtedness of KHI. Approximately 550,000 additional
shares of Common Stock may be issued upon the exercise of options held by KHI
employees, which were assumed by the Company. Revenues of KHI comprise all of
those reported by the Company's Investigations and Intelligence Group as well as
certain revenues in its other two Groups.

         Acquisitions-1997. On February 5, 1997, the Company completed the
acquisition of all of the shares of Next Destination, Ltd ("Next Destination")
of Salisbury, the United Kingdom, a distributor of high technology products for
the global positioning satellite and satellite communication markets. The
purchase price consisted of 170,234 shares of Common Stock (valued at
approximately $1.9 million or $10.88 per share) and $1.6 million in
seller-provided financing, in the form of secured, three-year 6% notes. Next
Destination, which had been selling the portable satellite terminal offered by
the Company, reports revenue through the Company's Voice and Data Security
Group. For accounting purposes, the acquisition was effective February 1, 1997,
and the results of operations of Next Destination are included in the
consolidated results of operations of the Company from that date forward.

         On February 12, 1997, the Company completed the acquisition of all of
the shares of Labbe, S.A. ("Labbe") a leading armorer of commercial and private
vehicles headquartered in Lamballe, France. The purchase price consisted of
$10.7 million in cash and 376,597 shares of Common Stock (valued at
approximately $3.5 million or $9.29 per share). The acquisition of Labbe has
increased substantially the level of commercial revenue generated by the
Security Products and Services Group and enhanced the Company's competitive
position due to an expanded product line, which includes cash-in-transit
vehicles, 


                                       11
<PAGE>   14

and penetration into new markets, such as Europe and Africa. For accounting
purposes, the acquisition was effective January 1, 1997, and the results of
operations of Labbe are included in the consolidated results of operations of
the Company from that date forward.

          On March 24, 1997, the Company completed the acquisition of all the
shares of International Training, Inc. ("ITI"), a provider of advanced security
training headquartered near Washington, D.C. The purchase price consisted of
$0.5 million in cash, 68,086 shares of Common Stock (valued at approximately
$0.8 million or $11.89 per share) and $1.2 million in seller-provided financing
in the form of unsecured, two-year 10% notes. ITI, which reports revenue through
the Company's Security Products and Services Group, added a number of new
services, such as evasive and defensive driver training, terrorist surveillance
training, force protection consulting and advanced weapons training, not
previously available from the Company. For accounting purposes, the acquisition
was effective March 1, 1997, and the results of operations of ITI are included
in the consolidated results of operations of the Company from that date forward.

         Effective December 2, 1997, the Company acquired all of the shares of
ZAO IMEA ("IMEA"), as well as certain work in process of, and an agreement not
to compete in Russia by, Acorn Communications Group, Inc. ("Acorn"). IMEA and
Acorn had substantially common ownership prior to the acquisition. The purchase
price of $3.0 million consisted of $0.5 million in cash, 138,889 shares of
Common Stock (valued at approximately $2.4 million or $18.00 per share) and $0.1
million in cash payable over the six months commencing January 1, 1998. IMEA is
engaged in the business of selling cash-in-transit vehicles and other commercial
bank equipment, such as safes, money counters and counterfeit detectors,
throughout Russia; it reports revenue through the Company's Security Products
and Services Group. For accounting purposes, the acquisition was effective
December 1, 1997, and the results of operations of IMEA are included in the
consolidated results of operations of the Company from that date forward.

         Acquisitions-1998. On March 16, 1998, the Company acquired all of the
shares of Corplex, a provider of investigative and executive protection services
based in New York, New York. The purchase price consisted of 29,207 shares of
Common Stock (valued at approximately $0.5 million or $17.98 per share).
Corplex, which reports revenue through the Company's Investigations and
Intelligence Group, allows the Company to streamline its use of subcontract
investigators in the New York metropolitan area and to offer certain new
products, such as executive protection and electronic counter measure expertise,
that are natural extensions of existing service areas. For accounting purposes, 
the acquisition was effective March 1, 1998, and the results of operations of 
Corplex are included in the consolidated results of operations of the Company 
from that date forward.

         Potential Acquisitions/Mergers. On March 30, 1998, the Company
announced it had reached an agreement in principle to acquire all of the capital
stock of General Commercial Services Ltd. of Toronto, Canada, which operates
primarily through its wholly owned subsidiaries as Lindquist Avey Macdonald
Baskerville ("Lindquist Avey"). The purchase price will consist of a combination
of cash and shares of Common Stock, the specific terms of which have not been
determined. The transaction is expected to be consummated during June 1998,
conditioned on the satisfactory completion of due diligence, execution of
definitive agreements and other closing conditions. Lindquist Avey is a leading
international firm dedicated exclusively to forensic accounting and corporate
investigations.

         On March 31, 1998, the Company announced it had reached an agreement in
principle to acquire all of the capital stock of Kizorek, Inc. ("Kizorek") of
Naperville, Illinois, for 800,000 shares of Common Stock. Kizorek, which does
business as InPhoto Surveillance, is a leading claims investigation agency which
primarily provides video surveillance services to insurance companies,
corporations, and government agencies in connection with investigating
disability claims. The transaction is conditioned on the satisfactory completion
of due diligence, execution of definitive agreements and other closing
conditions. The transaction is expected to qualify for "pooling of interests"
accounting treatment.

                                       12
<PAGE>   15

FORWARD LOOKING STATEMENTS

         Forward-looking statements, within the meaning of Section 21E of the
Securities and Exchange Act of 1934, are made throughout this Management
Discussion and Analysis of Financial Conditions and Results of Operations. The
Company's results may differ materially from those in the forward-looking
statements. Forward-looking statements are based on management's current views
and assumptions, and involve risks and uncertainties that could significantly
affect expected results. For example, operating results may be affected by
external factors such as actions of competitors, changes in laws and
regulations, customer demand, effectiveness of programs, strategic relations,
fluctuations in the cost and availability of resources, and foreign economic
conditions, including currency rate fluctuations.

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, the items noted
as a percentage of net sales:
<TABLE>
<CAPTION>
                                             FOR THE THREE MONTHS ENDED
                                                       MARCH 31,
                                          -------------------------------
                                              1998               1997
                                              ----               ----
<S>                                            <C>                <C>  
Security Products and Services
   Military                                    21.6%              22.9%
   Commercial                                  36.0               31.5
Investigations and Intelligence                33.2               39.0
Voice and Data Communications                   9.2                6.6
                                          ----------        -----------
    Total net sales                           100.0%             100.0%
Cost of sales                                  68.0               67.5
                                          ----------        -----------
    Gross profit                               32.0               32.5
Operating expenses:
    Selling and marketing                       7.1                7.7
    General and administrative                 13.7               14.8
    Amortization  of costs  in  excess
     of assets acquired                         0.5                0.4
                                          ----------        -----------
Operating income                               10.8                9.6
Other income (expense):
    Interest expense                           (2.4)              (2.1)
    Other, net                                 (0.3)              (0.6)
                                          ----------        -----------
Income before provision for income
taxes                                           8.1                6.9
    Provision for income taxes                  3.3                3.2
                                          ----------        -----------
Net income                                      4.8%               3.7%
                                          ==========        ===========
</TABLE>

Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997

         NET SALES. Net sales for the three months ended March 31, 1998 were
$52.5 million, an increase of $11.3 million or 27%, from $41.2 million in the
same period in 1997.

         Security Products and Services Group. Net sales for the Security
Products and Services Group for the three months ended March 31, 1998 increased
$7.8 million, or 35%, to $30.2 million from $22.4 million for the same period in
1997. This increase includes net sales of commercial armoring products, which
increased $5.9 million or 45% from $13.0 million in 1997 to $18.9 million in
1998. The increase in commercial revenue was primarily due to continued growth 
in the Company's international armoring divisions. During 1996 and 1997, the
Company initiated start-up armoring operations in Mexico, Brazil, 


                                       13
<PAGE>   16

and the Philippines, and acquired Labbe and IMEA. The success of the Company's
expansion of its armoring operation into new markets accounted for the
substantial portion of the growth experienced in the Security Products and
Services Group. The Company will continue in its efforts to expand the
operations of its existing foreign subsidiaries along with evaluating new
acquisition opportunities and additional new markets.

         Also included in net sales for the Security Products and Services Group
are sales of military products and services, which increased $1.9 million, or
20%, to $11.3 million in 1998 from $9.4 million for the same period in 1997. The
primary reason for the increase was the inclusion of revenue from the Company's
Systems Technical Support ("STS") contract for engineering services signed with
the US Military in 1997. Revenue from military products was also favorably
effected by a slight increase in activity in connection with the Company's
contracts to armor the High Mobility Multi-Purpose Wheeled Vehicle ("HMMWV") for
the US Military. Management expects the level of military revenue to be
relatively consistent with the level experienced in the first quarter of 1998
for the foreseeable future.

         Investigations and Intelligence Group. Net sales for the Investigations
and Intelligence Group increased $1.3 million or 8% from $16.1 million in the
first quarter of 1997 to $17.4 million in the same period in 1998. Assuming 
the completion of the acquisitions of Lindquist Avey and InPhoto Surveillance,
both of which will report revenue through the Investigations and Intelligence
Group, management expects the level of revenue from the Investigations and
Intelligence Group to increase as a percentage of total sales during the second
half of 1998. In addition, management will continue to evaluate acquisition and
investment opportunities for the Investigations and Intelligence Group.

         Voice and Data Communications Group. Net sales for the Voice and Data
Communications Group increased $2.1 million, or 78%, from $2.7 million in 1997
to $4.8 million in 1998. The level of sales was positively impacted by the
inclusion, since the first quarter of 1997, of the Mini-M telephone for mobile,
marine and vehicle applications in the product line offered by Next Destination.
Additionally, the Company has initiated relationships with certain mobile
telephone and navigation equipment suppliers that have made product more readily
available, making it possible for a faster turnover and increased sales.
Management expects that these factors will continue to positively effect the
level of revenue in the Voice and Data Communication Group throughout 1998.

         COST OF SALES. Cost of sales for the three months ended March 31, 1998
increased $7.9 million or 28% to $35.7 million from $27.8 million in the same
period in 1997. The increase in cost of sales was due to the increased level of
business activity experienced in 1998. Gross profit as a percentage of net sales
was 32%, as compared with 32.5%for the same period in 1997. The overall decrease
in gross profit as a percent of sales is the result of slight decreases in the
percentage at the Security Products and Services and Voice and Data
Communications Groups, offset by an increase in the Investigations and
Intelligence Group.

         As a percentage of net sales, gross profit for each of the Security
Products and Services Group and the Voice and Data Communications Group
decreased approximately 1%. Gross profit as a percentage of net sales increased
approximately 3% (from 40% in 1997 to  43% in 1998) for the Investigations and
Intelligence Group, primarily due to the effect of certain cost-saving synergies
attributable to the Merger and to a more efficient use of subcontract services.

         Historically, the Company has experienced a higher gross profit percent
associated with revenue from its Investigations and Intelligence Group in
comparison with its other two Groups. Management expects the level of gross
profit as a percent of net sales to remain relatively consistent within each
Group. However, if revenue from the Investigations and Intelligence Group
increases as a percentage of total sales, consolidated gross profit as a
percentage of net sales may increase as well.



                                       14
<PAGE>   17

         Operating expenses. Operating expenses for the three months ended March
31, 1998 increased $1.7 million or 18% to $11.1 million, compared to $9.4
million for the same period in 1997. The increase is primarily attributable to
personnel and professional services required to administer the growth
experienced by the Company in 1997 and 1998.

         As a percent of net sales, operating expenses decreased from 23% in
1997 to 21% in 1998. As a result of investments made by the Company in
facilities and personnel in previous periods, the Company did not require an
additional commitment of fixed cost to achieve revenue growth in 1998. As sales
increase further, the Company will be required to commit additional amounts of
fixed cost to secure increased incremental revenue.

         Interest expense. Interest expense for the three months ended March 31,
1998 increased $0.4 million or 48% to $1.3 million, compared to $0.9 million in
the same period in 1997. This increase was the result of the financing necessary
to fund the acquisitions the Company made in 1997. With the completion of the
Offering, a significant portion of the Company's debt was paid off
(approximately $14.8 million). As a result, management believes that interest
expense will be lower in subsequent periods

         On May 30, 1997, the Company entered into an agreement with certain
institutional investors to issue and sell $35.0 million worth of Senior Notes.
This agreement contained a provision for a step down of the interest rate
charged on the outstanding amount if certain criteria were met. The Company 
has complied with the specified criteria and the step down of rates will 
commence in the second quarter of 1998. This will change the interest rate on 
the outstanding amount of Senior Notes from 9.56% to 8.56%, resulting in lower 
interest expense for the remainder of 1998 and subsequent periods.

         Provision for income taxes. The provision for income taxes was $1.7
million for the three months ended March 31, 1998 in comparison with $1.3
million for the same period in 1998. The effective tax rate for the first
quarter of 1998 was 41% compared to 46% in the same period of 1997. The
effective rate in the first quarter of 1997 was higher due to the fact that KHI
did not book tax benefit on certain foreign losses.


                                       15
<PAGE>   18


LIQUIDITY AND CAPITAL RESOURCES

         General. The Company historically has met its operating cash needs by
utilizing borrowings under its credit arrangements to supplement cash provided
by operations, excluding non-cash charges such as depreciation and amortization.

         Public Offering. On May 5, 1998, the Company issued and sold 3,200,000
shares of its Common Stock at $20.50 per share in the Offering. A portion of 
the net proceeds to the Company (approximately $60.8 million) was used to pay 
off certain indebtedness of the Company ($14.8 million). The remaining amounts 
are available for potential acquisitions, working capital and other general 
corporate purposes.

         Credit Facility. The Company will maintain its revolving credit
facility agreed to with KeyBank National Association in May 1997 and amended in
December 1997. This agreement provides for a revolving line of credit of $7.0
million and a letter of credit facility of approximately $7.7 million. The
revolving credit facility bears interest at the prime rate less 0.5%, or, at the
Company's option, the LIBOR rate plus 2%.

         On May 8, 1998, after a portion of the Offering proceeds was used for
repayment, there were no borrowings under the revolving credit agreement. The
remaining proceeds from the Offering along with the unused capacity on the
revolving line of credit will be sufficient to fund the working capital needs of
the Company for the foreseeable future.

         The Company will continue to pursue its strategy of acquiring security
related companies in an effort to consolidate its position in the risk 
mitigation industry. To that end, the Company will continue to review 
additional sources of working capital as they become necessary.

         Cash flows from operating activities. Net cash used in operating
activities was $1.8 million and $4.2 million for the three months ended March
31, 1998 and 1997, respectively. This change was primarily due to an increase in
net income and changes in Inventories, Prepaid Expenses and Accrued Liabilities,
offset by changes in Accounts Receivable, Unbilled Revenues and Costs in Excess
of Billings on Uncompleted Contracts.

         Cash flows from investing activities. Historically, the Company has
limited its capital expenditure requirements by leasing certain assets. Capital
expenditures totaled $0.5 million for the three months ended March 31, 1998, and
$0.5 million for the same period in 1997. Additions to databases totaled $0.7
million and $1.7 million for the three months ended March 31, 1998 and 1997,
respectively. 

         In addition to capital expenditures, 1997 investing activities included
the acquisitions of Labbe and ITI. While there were no outlays of cash for
acquisitions in the first quarter, management anticipates that cash outlays will
be required in connection with acquisitions during the remainder of 1998.

         Cash flows from financing activities. Net cash provided by financing
activities was $3.0 million and $17.5 million for the three months ended March
31, 1998 and 1997, respectively. The amount in 1997 reflects a term loan
executed as part of a credit agreement completed in the first quarter used to
finance the acquisitions of Labbe and ITI.

         Foreign operations. The Company attempts to mitigate the risks of doing
business in foreign countries by separately incorporating its operations in such
countries; maintaining reserves for credit losses; maintaining insurance on
equipment to protect against losses related to political risks and terrorism,
and using financial instruments to hedge the Company's risk from translation
gains and losses.

         The Company utilizes derivative financial instruments, in the form of
forward contracts, to hedge its exposure to foreign currency rate fluctuations.
At March 31, 1998 four such contracts were outstanding in connection with an
intercompany demand note with Labbe. These contracts are intended 


                                       16
<PAGE>   19

to hedge the Company's exposure to deterioration in the amount outstanding due
to changes in currency translation rates. The notional amount (together with
amortized premium) and the fair market value associated with these forward
contracts were $15.2 million and $0.9 million, respectively. These contracts
mature on July 15, 1998, January 15, 1999, July 15, 1999 and September 15, 1999,
respectively. Gains or losses on existing forward instruments are offset against
the translation effects reflected in shareholders' equity. The fair value of
forward contracts is not recognized in the consolidated financial statements
since they are accounted for as hedges. The Company does not hold or issue
derivative financial instruments for trading purposes.

         Year 2000 Issues. The Company has implemented a Year 2000 program to
insure that its computer systems and applications will function properly beyond
1999. The Company believes that it has allocated adequate resources for this
purpose and expects its Year 2000 date conversion program to be completed
successfully. In addition, the Company is selecting and implementing several new
software applications, all of which are believed to be Year 2000 compliant.
Although the ability of third parties with whom the Company transacts business
to address adequately their Year 2000 issues is outside the Company's control,
the Company is discussing with its vendors and customers the possibility of any
interface difficulties which may affect the Company. The Company currently does
not expect the costs necessary to address this matter to be material to its
financial condition or results of operations.

         Quarterly fluctuations. The Company's operations may fluctuate on a
quarterly basis as a result of the timing of contract costs and revenues of its
Security Products and Services Group, particularly from its military and
government contracts which are generally awarded on a periodic and/or sporadic
basis. The Company generally does not have long term contracts with its clients
in its Investigations and Intelligence Group and its ability to generate net
sales is dependent upon obtaining many new projects each year, most of which
are relatively short duration. Period-to-period comparisons within a given year 
or between years may not be meaningful or indicative of operating results over 
a full fiscal year.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not applicable.




                                       17
<PAGE>   20


PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The Company is involved in litigation from time to time in the ordinary
course of its business; however, the Company does not believe that there is any
pending litigation, individually or in aggregate, that is likely to have a
material adverse effect on its business or financial condition.

         The Company was a defendant in an action titled Douglas H. Cohen v.
Madison Square Garden, L.P. and Kroll Associates Inc., which was filed in the
United States District Court, Southern District of New York. In the first
quarter of 1998, all the parties involved signed a settlement agreement
dismissing the Company from the suit. There will be no settlement payment made
by the Company in connection with the agreement, and all legal fees will be paid
by the Company's former client.

ITEM 2.  CHANGES IN SECURITIES

         On March 13, 1998, the Company issued 29,207 shares of Common Stock to
the former shareholder of Corplex in connection with the acquisition of all of
the shares of Corplex.

         The share issuance described above was made without registration under
the Securities Act of 1933 in reliance on the exemption provided by Section 4(2)
of that Act.



                                       18
<PAGE>   21


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


               (a)    Exhibits

                      10.1     Supplemental Agreement Modifications to
                               acquire 738 additional armored HMMWVs
                               between United States Army Tank and
                               Automotive Armaments Command and O'Gara-Hess
                               & Eisenhardt Armoring Company, dated March
                               31, 1998 and April 13, 1998.

                      27       Financial Data Schedule (Edgar version only)

                      99       Prospectus dated April 30, 1998

               (b)    Reports on Form 8-K.

                               During the quarter ended March 31, 1997, the
                               Company filed no current reports on Form 8-K.


                                       19

<PAGE>   22



                                   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 as of the 15th day of May, 1998.

                                          THE KROLL-O'GARA COMPANY



                                          By   /s/ Nicholas P. Carpinello      
                                              ----------------------------------
                                              Nicholas P. Carpinello
                                              Controller and Treasurer





                                       20