SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

--------------------------------------------------------------------------------
                                   FORM 10-KSB

         (Mark One)
  [X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
         OF 1934
         [FEE REQUIRED]
         For the fiscal year ended April 30, 1999

                                       OR

  [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                         COMMISSION FILE NUMBER 0-12873

                                  FIRECOM, INC.

--------------------------------------------------------------------------------
              (Exact name of Small Business Issuer in its charter)

              New York                                  13-2934531
              --------                                  ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

39-27 59th Street, Woodside, New York                    11377
-------------------------------------                    -----
(Address of principal executive offices)               (zip code)

Issuer's telephone number, including area code: (718) 899-6100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

                     COMMON STOCK, $.01 PAR VALUE PER SHARE
                     --------------------------------------
                                (Title of Class)


Indicate by check mark whether the Issuer (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 and (2) has been subject to such filing requirements for
the past 90 days.
                    YES   X   NO
                         ---     ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Issuer's knowledge, in definitive proxy or information statements by
reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB (x)

State issuer's revenues for its most recent fiscal year-$17,370,000

The aggregate market value of the voting stock held by non-affiliates of the
Issuer, based upon the average bid and asked prices for both the Registrant's
Common Stock and Class A Common Stock (as if converted), $.01 par value per
share, as of June 30, 1999 was $2,839,869.

As of June 30, 1999, the Registrant had 5,718,135 shares of Common Stock
outstanding, and 5,025,263 shares of Class A Common Stock outstanding.

Documents incorporated by Reference: None.



<PAGE>


                         SAFE HARBOR STATEMENT UNDER THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This form 10-KSB for the year ended April 30, 1999 contains certain
forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995, which can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "anticipate," "estimate," "should"
or "continue" or the negative thereof or other variations thereon or comparable
terminology. The matters set forth under the captions "Management Discussion and
Analysis of Financial Condition and Results of Operations - Cautionary
Statements" herein constitute cautionary statements identifying important
factors with respect to such forward-looking statements, including certain risks
and uncertainties, that could cause actual results to differ materially from
those in such forward-looking statements.



                                       2
<PAGE>


                                     PART I
                                     ------


ITEM 1. BUSINESS
----------------

GENERAL.
--------

Firecom, Inc. (the "Company") was formed as a New York corporation in March 1978
to acquire the business and operating assets of Fire Controls, Inc and
Commercial Radio-Sound Corp., which were engaged in the design and manufacture
of custom fire detection, communications and control systems for commercial
buildings and commercial audio-visual systems. The acquisition was completed in
May 1978.

Through its Fire Controls division, the Company designs, manufactures and
distributes, under the Firecom brand name, safety and security systems for high
rise office buildings, hotels, apartment buildings and other large commercial
buildings. This division also is a distributor of Life Safety and other
electronic building systems manufactured by other companies. Subsidiaries handle
the maintenance of systems sold by the Company and others.

The Company's principal executive office is located at 39-27 59th Street,
Woodside, New York 11377 and its telephone number is (718) 899-6100.

FIRE ALARM AND COMMUNICATIONS SYSTEMS
-------------------------------------

The fire alarm and communication systems or "life safety systems" designed,
assembled and sold by the Company have the following functions: (i) sensing and
reporting fires, (ii) sounding alarms in the event of a fire, (iii) notifying
the Fire Department of a fire through a "central station" connection, (iv)
controlling basic building functions to prevent the spread of fire and smoke,
and (v) allowing building-wide communication between fire fighters and building
occupants. The Company designs systems for both new and existing buildings. The
Company assembles the manual fire alarm station, floor warden stations, remote
data gathering panels and the main fire command station which is typically
located in the building's lobby. The Company purchases the sensing devices and
speakers used in the system from other manufacturers. Once the system has been
installed by independent electrical contractors, the Company tests and services
the system.

During the fiscal year ended April 30, 1999, revenues from the sale of fire
alarm, communication systems and other building systems constituted
approximately 62% of the Company's consolidated revenues.

FIRECOM LIFE SAFETY NET 2000 SYSTEM
-----------------------------------

The new Firecom LSN 2000 System represents what management believes to be the
latest state-of-the-art technology available in Life Safety equipment. The
Firecom LSN 2000 System integrates addressable and intelligent fire alarm
sensing devices such as smoke detectors, manual fire alarm stations and
sprinkler waterflow switches, and displays the status of these devices. This
Firecom system includes a communication system consisting of amplifiers and
loudspeakers for sounding alarms and paging from either a floor warden station
or a fire command station. The newly designed LSN 2000 fire alarm and
communication system is completely backward compatible to upgrade the older
Firecom 8500 System as well as designed to meet the needs of the national
market.

OTHER FIRE CONTROL AND COMMUNICATION SYSTEMS
--------------------------------------------

The Company designs, assembles and markets fire control systems other than the
Firecom LSN 2000 System and the Firecom 8500 System. The Company does not
manufacture the control unit for these systems. Additionally, the Company
distributes other electronic building systems and equipment under OEM agreements
for Uninterrupted Power Supplies.



                                       3
<PAGE>



SERVICE
-------

The Company's life safety systems are covered by a one-year warranty. In New
York City the Company offers service contracts covering such systems during and
after the warranty period. Several other companies compete with the Company for
the servicing business. The Company's subsidiaries handle maintenance services
for the Company `s products as well as products of other Life Safety equipment
manufacturers.

For the fiscal year ended April 30, 1999, revenues earned from servicing systems
constituted approximately 38% of the Company's consolidated revenues.

MARKETING
---------

The Company's fire alarm, communication and other building systems are sold in
the New York area through an in-house sales and marketing department. Much of
the Company's new business arises because building owners, electrical
contractors and professional engineers in the New York City area who are
familiar with the Company generally include the Company on project bidding
lists.

Firecom began marketing the LSN 2000 System in January of 1997 in New York City
and the rest of the country. The Company markets the LSN 2000 through a network
of regional managers, sales representatives and distributors.

The Company's service contracts are sold through an in-house sales and marketing
department.

CUSTOMERS AND SUPPLIERS
-----------------------

The principal customers for the Company's fire alarm and communications systems
are building owners and electrical contractors who install such systems.

The Company purchases parts for its systems from a variety of suppliers. The
Company believes that such parts or alternate parts are available from several
sources. The Company is not currently experiencing any material difficulty in
obtaining supplies.

REGULATIONS
-----------

The Company believes that it currently complies with all applicable building
codes, zoning ordinances, occupational safety and hazard standards and other
applicable federal, state and local ordinances and regulations.

COMPETITION
-----------

The Company's businesses are highly competitive, with the price of products and
warranty terms offered by competitors being very similar to those of the
Company. The Company believes that its products perform as well or better than
those of its competitors. Some of the Company's competitors offer a broader line
of products and are better financed than the Company. Additionally, the Company
faces competition in the servicing of systems which the Company sells.

PATENT AND TRADEMARKS
---------------------

The Company holds four patents on its fire alarm products. One covers the
parallel binary system and another upgrades the parallel system to a serial
system. The serial system collects data from all sensors (emergency, energy or
security) within the building, continuously monitoring and recording the data on
a hard copy printer. The serial system could be used in facilities other than
buildings, including oil refineries, mining facilities and cable TV stations,
for site security, to prevent off-the-wire theft of services and to monitor
interruptions in service. In addition, the system can monitor mechanical and
electrical systems on board naval and merchant vessels. The third patent on the



                                       4
<PAGE>



Company's multiplex system covers an integrated alarm, security building
management and communication system. This integrated system provides voice
communication to all emergency areas, monitors all fire alarms, security
functions--such as card access, door control, intrusion and surveillance--and
controls all lights, pumps and other building functions.

The Company has a patent pending on its LSN 2000 System.

The Company has several trademarks, including the name "Firecom" and "Technology
Protecting Life," that are registered with the United States Patent and
Trademark Office.

EMPLOYEES
---------

As of June 30, 1999, the Company employed approximately 125 full-time employees,
34 of whom are salaried and 91 of whom are paid on an hourly basis. The Company
has 13 employees who work outside of the Woodside, New York facility. The
majority of these employees are regional managers for its LSN2000 System and
research and development employees. The Company believes its relationship with
its employees is satisfactory. The Company suffered a strike with its union
personnel from July 1, 1999 through July 9, 1999, as part of an action with the
industry bargaining group. The new contract will run for three years. Management
does not believe the strike will have a material impact on sales or
profitability for the year-ended April 30, 2000.

BACKLOG
-------

As of April 30, 1999, the Company had a backlog for fire control and other
systems of approximately $2,420,000, substantially all of which it anticipates
completing in the current fiscal year. The backlog at April 30, 1998 was
approximately $2,742,000.


ITEM 2.  PROPERTY
-----------------

The Company owns property and a building in Woodside, New York where it
maintains manufacturing, sales, service and engineering operations. The
two-story building is fire resistant and approximately 15,000 square feet. The
underlying property is approximately one acre.

As a result of the accounting treatment of the original bargain purchase of the
Company, the value of the building and property is not reflected on the
Company's Balance Sheet. A 1999 independent appraisal indicated a current value
of the property of approximately $850,000. The Company leases various locations,
all under 5,000 square feet, with an aggregate annual rental charge of
approximately $102,000.


ITEM 3. LEGAL PROCEEDINGS
-------------------------

In the normal course of its operations, the Company has been named in various
legal actions seeking monetary damages. While the outcome of some of these
matters cannot be estimated with certainty, management does not expect, based
upon consultation with legal counsel, that they will have a material effect on
the Company's business.


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

None



                                       5
<PAGE>



                                     PART II
                                     -------


ITEM 5.  MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY
-------------------------------------------------------------------
         HOLDER MATTERS
         --------------

         All share information has been restated giving effect to the
distribution of Class A Common Stock (which is convertible on a share for share
basis to Common Stock) which took place on December 17, 1997, and treats the
Class A Common Stock as if converted to Common Stock. The only distinction
between the two classes is that the Common Stock has one (1) vote per share and
the Class A Common Stock has thirty (30) votes per share and generally cannot be
transferred without conversion into Common Stock (see Note 10 in the
accompanying "Notes to the Consolidated Financial Statements").

          (a) The Company's Common Stock is traded in the over-the-counter
market. The following table shows the high and low bid quotations for the
Company's Common Stock for the quarters indicated.

                                                            CLOSING BID

                                                         HIGH          LOW

Fiscal 1998:

     First quarter                                      $.563        $.531

     Second quarter                                      .547         .50

     Third quarter                                       .656         .547

     Fourth quarter                                      .656          .585

Fiscal 1999:

     First quarter                                      $.51          $.51

     Second quarter                                      .52           .46

     Third quarter                                       .565          .46

     Fourth quarter                                      .48           .43


 The above information was obtained from stock brokers and represent prices
between dealers and do not include retail markups, markdowns or commissions and
may not necessarily represent actual transactions.

          (b) As of June 30, 1999, there were 305 record holders of the
Company's Common Stock, and 407 record holders of the Company's Class A Common
Stock. The closing bid and asked prices for the Company's Common Stock on June
30, 1999 were $.46 and $.50 respectively.

          (c) The Company has not paid any cash dividends on its common stock to
date, and the Company does not contemplate the payment of cash dividends in the
foreseeable future. The Company's loan agreements prevent it from paying
dividends. The Company's future dividend policy will depend on the earnings,
capital requirements, financial condition and other factors considered relevant
by the Company's Board of Directors. On June 11, 1997, the Board declared



                                       6
<PAGE>


payable all cumulative dividends in arrears ($905,000) on the Company's Series A
Preferred Stock. This amount was paid on July 22, 1997. At that same time, all
of this Preferred Stock was exchanged for the Company's Common Stock.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-------------------------------------------------------------------
        AND RESULTS OF OPERATIONS
        -------------------------

RESULTS OF OPERATIONS
---------------------

          The following table sets forth items in the Consolidated Statements of
Income as a percentage of sales:

                                                       Relationship to Net Sales
                                                   For the Years Ended April 30,
                                                   -----------------------------

                                                              1999        1998
                                                              ----        ----

Net Sales                                                     100.0%      100.0%
Cost of Sales                                                  62.3        58.4
Selling, General and
  Administrative Expenses                                      21.9        30.0
Research & Development                                          4.0          4.8
                                                                ---          ---
Operating Income                                               11.8          6.8
Other Expense, net                                              0.2          0.7
Income Tax Expense                                              5.2          2.2
                                                                ---          ---
Net Income                                                      6.4          3.9
                                                                ---          ---


1999 FISCAL YEAR COMPARED TO 1998 FISCAL YEAR
---------------------------------------------

Consolidated sales for the Company's operations increased by approximately 23%.
The higher sales reflect the higher backlog of orders as of April 30, 1998
versus the same period in 1997 and the increase in subcontract work taken.

The backlog for our Life Safety and other systems totaled $2,420,000 at April
30, 1999, a decrease of $322,000 from the backlog of April 30, 1998. Due to
fluctuations in the Company's backlog for the year ended April 30, 1999,
management remains cautious about predicting revenue in the next fiscal year.
Orders continue to be booked for the Company's fire safety system being marketed
outside of New York City, and management is encouraged about future growth in
this product category.

Selling, general and administrative expenses for the year ended April 30, 1999
decreased approximately $416,000 as compared to the year ended April 30, 1998
primarily due to decreases in the bad debt expenses.

Research and development costs were $702,000 for the year ended April 30, 1999
as compared to $675,000 in the year ended April 30, 1998. These expenditures
primarily reflect the development of the LSN 2000 System and the Company's
commitment to provide its customers with state- of-the-art fire and life safety
systems.

Operating income for the 1999 fiscal year was $2,044,000 as compared to $960,000
for fiscal 1998. The increase in operating income of 113% resulted from the
increase in sales, partially offset by the decrease in gross profit percentage,
and a reduction of the selling, general and administrative expenses. The
decrease in gross profit percentage was primarily due to an increase in new
construction jobs and subcontracting, which have a lower gross profit percentage
than maintenance and service.



                                       7
<PAGE>


Significant changes in balance sheet items from April 30, 1998 to April 30, 1999
are highlighted as follows:

     1:   Cash decreased by $143,000 (3%) primarily due to cash payment on the
          purchase of the May family stock.

     2:   Accounts Receivable increased by $843,000 (30%) primarily due to
          increased sales.

     3:   Inventories increased by $411,000 (27%) primarily due to the material
          requirements for the LSN 2000 System.

     4:   Deferred tax asset, net of deferred tax liability, increased by
          $46,000 (8%) due to an increase in expenses that are not currently tax
          deductible.

     5:   Prepaid expenses and other current assets increased by $98,000, due to
          an increase in prepaid income taxes.

     6:   Intangible assets decreased due to the amortization of certain assets
          acquired from BRD Systems, Inc.

     7:   Notes Payable (both current and long-term) decreased $315,000 (18%)
          resulting from reductions in debt from scheduled payments and paying
          off the mortgage on the Company's real estate, partially offset by an
          increase in debt due to the purchase of the May family stock.

     8:   Line of Credit increased by $300,000 due to borrowing on the Revolving
          Loan.

     9:   Accounts payable, accrued expenses and other current liabilities
          increased by $767,000 (41%), reflect in increase in inventory
          purchases, subcontracting costs and deferred revenue.

     10:  Accrued compensation decreased $108,000 (31%) due to a decrease in
          value of stock appreciation rights.

     11.  Mandatory Redeemable Common Stock decreased $590,000 (100%) due to the
          purchase of the May family stock.

     12.  The increase in Stockholders Equity of $1,095,000 (22%) primarily is
          due to the Net Income after Taxes.

Interest expense for fiscal 1999 was $228,000, 1% less than fiscal 1998.


LIQUIDITY
---------

Net cash provided from operations was $605,000. After taking into account funds
used for the repayment of debt ($608,000) and capital expenditures ($132,000),
this resulted in a net decrease in cash of $135,000. The Company has a revolving
line of credit up to a maximum of $5,000,000 ($800,000 outstanding balance at
April 30, 1999). The line of credit is collateralized by substantially all of
the Company's assets excluding real estate, and is subject to certain covenants.
There are restrictions on the payment of dividends in the Company's loan
documents.


During the fiscal year ending April 30, 2000 ("Fiscal 2000"), the Company
intends to spend approximately $700,000 on research to develop new fire alarm
and communication systems. These R & D expenditures will be financed from the
Company's working capital and/or its line of credit.

On June 21, 1995, the Company signed a Stock Purchase Agreement to purchase
1,072,988 shares of the Company's $.01 par Value Common Stock held by certain
members of the May family (the "Shareholders") at $.45 per share. Terms of the
agreement provide for a cash payment in the amount of $174,448 and a five (5)
year note in the amount of $308,397, bearing interest at 12% per annum. Interest
is to be paid monthly. The principal is to be paid in five equal annual
installments of $61,679. The Company's obligation under the note is
collateralized by a pledge by the Company to the noteholder of 685,326 shares of
the Company's Common Stock.



                                       8
<PAGE>


On March 27, 1997, the Company signed a Purchase Agreement to purchase 1,166,662
shares of the Company's $.01 per value stock at $.70 per share and 1,500,004
warrants at $.525 per warrant held by Norwood Venture Corporation ("Norwood").
As part of the terms of purchase the Company issued to Norwood a six-year
subordinated promissory note in the amount of $1,283,332 bearing interest at 10%
per annum. Principal and interest totaling $71,755 is to be paid quarterly
commencing June 27, 1997 through March 27, 2003 (see Notes 6 & 9 in the
accompanying "Notes to the Consolidated Financial Statements").

In September 1998, the Company repurchased 536,494 shares of Common Stock and
536,494 shares of its Class A Common Stock (which were retired) at and agreed
upon price of $.575 per share. Pursuant to the agreement a cash payment in the
amount of $308,485 was paid and five, five-year notes, in the cumulative amount
of $308,485, bearing interest at 11.5% per annum were issued. Principal payments
on the notes will be made in five equal, cumulative installments of $61,697.
Interest on the notes is to be paid monthly. The notes are collateralized by the
repurchased shares of the Company's Common Stock which are held in escrow.

The Company's net working capital was approximately $6,706,000 at April 30,
1999. Management believes that it will be able to maintain adequate working
capital and cash balances to meet the needs of the Company.


INFLATION
---------

The impact of inflation on the Company's contracts is not material since the
Company's labor contracts are normally controlled by union contracts covering a
period of two or more years. The current union contract expires June 30, 2002.


COMPUTER ISSUES FOR THE YEAR 2000
---------------------------------

The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any computer program that
has date sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a temporary inability to process
transactions or engage in normal manufacturing or other business activities.

As a provider of life safety systems which are computer based, the Company is
aware of the potential problems the year 2000 could have on its computer systems
and programs. The Company has completed a review of its computer systems and
programs to determine which, if any, systems and programs are not capable of
recognizing the year 2000. The Company has concluded that all of its systems and
programs are year 2000 compliant.

The Company's internal and manufacturing software was upgraded in fiscal 1999 to
a version that the vendors have represented to be Year 2000 compliant. The
expense incurred by the Company to achieve compliance has not been material. The
Company intends to test that software during 1999.

The Company is in process of verifying whether our suppliers are Year 2000
compliant. The Company's bank and payroll service company have provided
assurances of their Year 2000 compliance. However, there can be no assurance
that all of the Company's vendors will achieve compliance on a timely basis. In
the event of any such noncompliance by vendors, an adverse effect to the
Company's operations and financial results could occur. The Company has not
developed any contingency plan to address the possibility of vendor-related Year
2000 problems.



                                       9
<PAGE>



CAUTIONARY STATEMENTS
---------------------

Information or statements provided by the Company from time to time contain
certain "forward-looking information" relating to such matters as liquidity,
projected sales and anticipated margins. The cautionary statements made herein
are being made pursuant to the Private Securities Litigation Reform Act of 1995
(the "Act") and with the intention of obtaining the benefits of the "safe
harbor" provisions of the Act for any such forward-looking information. The
Company cautions readers that any forward-looking information provided by the
Company is not a guarantee of future performance and that actual results may
differ materially from those in the forward-looking information as a result of
various factors, including but not limited to the acceptance in what is a new
market for the Company, the national market (historically, the vast majority of
the Company's revenues have been derived from the New York City market) of the
Company's newly-introduced line of safety products for the national market. The
principal manufacturers against whom the Company expects to compete in the
national market are generally better financed, have products accepted in the
market and have long-established distribution and servicing networks. The
Company's future growth is to a large extent dependent on being able to complete
successfully against these competitors.


ITEM 7. FINANCIAL STATEMENTS
----------------------------

The consolidated financial statements and independent auditors' report required
to be filed hereunder are indexed at Page F-1 and are incorporated herein by
reference.


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
-----------------------------------------------------

None.



                                      10
<PAGE>


                                    PART III
                                    --------
     ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
     ---------------------------------------------------------------------
                COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
                -------------------------------------------------

NAME                              AGE                           OFFICE
-------------------------------------------------------------------------------

Paul Mendez                       56               Chairman of the Board,
                                                   President and Director

Howard L. Kogen                   59               Chief Operating Officer
                                                   /Executive Vice President

Antoine J. Sayour                 49               Senior Vice President

Jeffrey Cohen                     42               Vice President-Finance

Peter Barotz                      70               Director

Orhan I. Sadik-Khan               69               Director

Ronald A. Levin                   56               Director

Hilary B. Miller                  48               Director

Harry B. Levine                   63               Director


Directors hold office for a period of two years from the Annual Meeting of
Shareholders at which they are elected or until their successors are duly
elected and qualified. At the 1998 Annual Meeting, Mr. Sadik-Khan, Mr. Ronald
Levin and Mr. Harry Levine were elected to serve until the 2000 Annual Meeting.
At the 1997 Annual Meeting, Mr. Mendez, Mr. Barotz and Mr. Miller were elected
to serve until the 1999 Annual Meeting.

Paul Mendez was elected a Director, Chairman of the Board and President on July
19, 1991. He is also employed as Vice President of Multiplex Electrical
Services, Inc., a company which is engaged in the business of manufacturing,
installing and servicing fire alarm systems in New York City.

Howard L. Kogen joined the Company as Vice President-Sales and Marketing in
March 1984. He was appointed Executive Vice President and Chief Operating
Officer in 1990.

Antoine J. Sayour joined the Company as Chief Engineer in 1984. He is now Senior
Vice President of the Company and President of the Fire Service Subsidiary.

Jeffrey Cohen joined the Company as Vice President-Finance in September 1997.
Prior to joining the Company, Mr. Cohen had been the Chief Financial Officer,
for more than eight years, of an apparel manufacturing company headquartered in
New Jersey.

Peter Barotz was elected a director of the Company in April 1993. Mr. Barotz,
for more than the last six years, has been engaged primarily as a private
investor. Mr. Barotz has also served as President of Panda Capital Corp.; a New
Rochelle, New York based business engaged in the export business.

Orhan Sadik-Khan was elected a director of the Company in April 1993. Mr.
Sadik-Khan serves as Chairman of New England Business Group and
Mideastonline.com. Mr. Sadik-Kahn is also a Director of Imagine Tile.

Ronald A. Levin, since 1991, has been a partner in the certified public
accounting firm of Levin, Bartlett & Co., Franklin Lakes, New Jersey.



                                      11
<PAGE>



Hilary B. Miller has been President of Stanger, Miller, Inc. since 1987. His
company is a private investment firm located in Greenwich, CT.

Harry B. Levine has served as President of Levine Securities, Inc. for more than
six years. His firm is a member of the New York Stock Exchange.

There are no family relationships between any director or officer and any other
director or officer.

The Board of Directors has no standing committees.

The Registrant is not aware of any Section 16(a) filing deficiencies.



ITEM 10. EXECUTIVE COMPENSATION
-------------------------------

The following table sets forth certain information with respect to cash
compensation paid or accrued by the Company, for services rendered to the
Company during the fiscal year ended April 30, 1999, to each of the executive
officers of the Company whose aggregate remuneration exceeded $100,000.

                           SUMMARY COMPENSATION TABLE

                                                                     Long-Term
                                       Annual Compensation         Compensation
Name and Principal               Fiscal                             Options/SAR
    Position                     Year      Salary       Bonus          Awards
--------------------------------------------------------------------------------

Paul Mendez                      1999      $200,000    $123,809        -0-
Chairman and                     1998       200,000      49,794        -0-
President                        1997       200,000     184,031        -0-


Howard L. Kogen                  1999      $145,000    $ 31,416        -0-
Chief Operating Officer/         1998       140,000      19,313        -0-
Executive Vice President         1997       138,000      47,186        -0-


Antoine J. Sayour                1999      $126,873    $ 21,465        -0-
Senior Vice President            1998       122,955      13,201        -0-
                                 1997       118,420      32,267        -0-


Jeffrey Cohen                    1999      $ 98,077    $ 15,000        -0-
Vice President-Finance           1998        52,135      15,000        -0-
                                 1997         -0-          -0-         -0-



                                      12
<PAGE>



AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
--------------------------------------------------------------
OPTION/SAR VALUES
-----------------


                                                 NUMBER OF
                                                 SECURITIES      VALUE OF
                                                 UNDERLYING      UNEXERCISED
                                                 UNEXERCISED     IN-THE-MONEY
                          SHARES                 OPTION/SAR'S    OPTIONS/SAR'S
                          ACQUIRED               AT FY-END (#)   AT FY-END ($)
                          ON          VALUE      EXERCISABLE/    EXERCISABLE/
NAME                      EXERCISE    REALIZED   UNEXERCISABLE   UNEXERCISABLE
----                     ----------  ---------- --------------- ---------------

Paul Mendez                 -0-         -0-       1,000,000/      $192,260/
                                                   -0                -0

Howard L. Kogen             -0-         -0-         373,600/      $ 95,316
                                                     26,400       $  4,884

Antoine J. Sayour           -0-         -0-         274,800/      $ 68,538/
                                                     25,200       $  4,662

Jeffrey Cohen               -0-         -0-          12,000/      $   -0-
                                                     68,000       $   -0-


STOCK OPTIONS
-------------

The Company adopted an Incentive and Non-Qualified Stock Option Plan (the
"Plan") which provided for the granting of not more than 1,700,000 shares of
Common Stock. The Plan is open to officers, directors and certain employees of
the Company and will expire on April 30, 2008. Subject to the provisions of the
Plan with respect to death, retirement and termination of employment, the
maximum period during which each Option may be exercised may be fixed by the
Board at the time each Option is granted but shall in no event exceed ten (10)
years. Options for an aggregate of 1,154,000 shares of Common Stock at exercise
prices ranging from $0.15 to $0.625 were outstanding under the Plan as of April
30, 1999.

Included in the aggregate outstanding were options to purchase 40,000 shares at
$.50 per share issued during the fiscal year ended April 30, 1999. No options
were exercised during the fiscal year. No options expired during the fiscal
year.

DIRECTORS' COMPENSATION AND SAR AWARDS
--------------------------------------

Directors of the Company who are not also executive officers of the Company
receive an annual retainer of $12,000 plus $1,000 for each Board meeting they
attend. In addition each director, other than Mr. Mendez, is granted the right
to receive a cash payment equal to the increase in value of 40,000 shares of the
Company's Common Stock from the date of their first election or appointment to
the Board, and payable upon, the earliest to occur of various qualifying events.
The Company may, at its sole option, defer payment for a maximum of 24 months
from the date of a valid notice of exercise of these rights. The Company
recorded a total liability of approximately $42,000 as of April 30, 1999 (versus
an accrual of $61,000 at April 30, 1998) in respect of these rights.

Concurrently with the execution of Mr. Mendez' Employment Agreement, and as
additional consideration thereunder, Mr. Mendez and the Company entered into a



                                      13
<PAGE>


stock appreciation rights agreement pursuant to which Mr. Mendez was granted the
right to receive, in cash, the appreciation value (the "Appreciation Rights")
with respect to 1,000,000 shares of Common Stock. The Appreciation Rights are
exercisable in pro rata installments over a five-year period and have initial
value prices ("base prices") as follows: 400,000 Appreciation Rights have a base
price of $.125 per share; 200,000 Appreciation Rights have a base price of $.25
per share; 200,000 Appreciation Rights have a base price of $.50 per share; and
200,000 Appreciation Rights have a base price of $.75 per share. The Company
recorded a total liability of approximately $192,000 as of April 30, 1999
(versus a liability of $281,000 at April 30, 1998) in respect of these rights.

EMPLOYMENT AGREEMENTS
---------------------

Mr. Mendez and the Company entered into an employment agreement (the "Mendez
Employment Agreement") which provides, among other things, that Mr. Mendez, in
consideration for his services as Chairman of the Board and Chief Executive
Officer of the Company, will be paid a base salary at the rate of $200,000 per
annum and incentive compensation equal to a percentage of the annual earnings,
before interest and taxes (as adjusted by the Board of Directors for certain
extraordinary and other non-recurring events and as more fully described in the
Mendez Employment Agreement)("Adjusted EBIT") of the Company. Generally, Mr.
Mendez will be entitled to receive an amount equal to 6% of Adjusted EBIT if the
Company's Adjusted EBIT for any fiscal year is between $500,000 and $1 million
and 8% of the Adjusted EBIT if the Company's Adjusted EBIT for any fiscal year
is greater than $1 million. In addition, Mr. Mendez is entitled to participate,
at no cost or expense to him, in all employee benefit programs maintained by the
Company to the extent that such programs are available generally to executive
officers, provided that the aggregate annual value to Mr. Mendez of such
benefits does not exceed $37,000. To the extent that the aggregate value of such
benefits does not exceed $37,000, Mr. Mendez may elect to receive the
differential in cash or applied to other fringe benefits of his selection.

The Mendez Employment Agreement also provides that Mr. Mendez' employment is
terminated by him for "Good Reason"(as defined below) or by the Company without
Mr. Mendez' consent and without Cause (as defined in the Mendez Employment
Agreement) and not due to death or disability of Mr. Mendez, Mr. Mendez shall be
entitled to receive (in addition to continuation of his executive benefits) his
base salary for the greater of two full years from the date of termination or
the remainder of the Mendez Employment Agreement and whatever incentive
compensation he would otherwise been entitled to receive for the fiscal year
during which his employment is terminated. Good Reason is defined as the
occurrence, without Mr. Mendez' prior consent of (i) a reduction in rank or an
assignment of duties materially inconsistent with Mr. Mendez' positions as
Chairman of the Board and Chief Executive Officer of the Company, without any
substantial failure of Mr. Mendez to perform such duties properly and
effectively; (ii) a reduction by the Company in Mr. Mendez' annual base salary
or a material reduction or elimination of his perquisites of office or a
substantial reduction or elimination of his aggregate available employee
benefits as in effect at December 31, 1992 or as the same may be increased from
time to time;(iii) a change in the location at which Mr. Mendez' services are to
be regularly performed to a location out of the 30-mile radius of the Empire
State Building, New York, New York, without a comparable change for other
executive officers of the Company, or any willful, material breach by the
Company of any provision of Mr. Mendez' Employment Agreement not cured within a
period of ten business days after receipt by the Company of written notice from
Mr. Mendez of his intention to resign for Good Reason because of such breach;
or(iv) the merger or consolidation of the Company with or into any other entity
as a result of which Mr. Mendez is reduced in rank or is assigned duties with
the surviving entity that are materially inconsistent with his then present
position(s) with the Company. In addition. the Mendez Employment Agreement
provides that in the event of termination of Mr. Mendez' employment thereunder
due to death or disability (as defined therein), the Company shall pay Mr.
Mendez (or his estate, as the case may be) his annual base salary for one year
following his termination of employment and whatever incentive compensation Mr.
Mendez would otherwise been entitled to receive for the fiscal year during which
his employment is terminated. The Mendez Employment Agreement expires on April
30, 2000.

The Mendez Employment Agreement acknowledges Mr. Mendez' beneficial ownership
and involvement in Multiplex and permits Mr. Mendez to devote reasonable periods
of time to the business of Multiplex, provided that his involvement with
Multiplex' business does not interfere with the performance of his duties and



                                      14
<PAGE>



obligations under the Mendez Employment Agreement and that Mr. Mendez at all
times complies with the guidelines for limiting conflicts of interest between
the Company and Multiplex as previously adopted by the Board of Directors of the
Company and accepted by Mr. Mendez.


The Company entered into an extension of an employment agreement with Mr. Kogen
effective May 1, 1999 and expiring April 30, 2000. In consideration of his
services as Executive Vice President and Chief Operating Officer of the Company,
(i) Mr. Kogen is to receive an annual salary of $155,000 effective May 1, 1999
and (ii) will receive a bonus based on the Operating Income of the Company. Mr.
Kogen's employment agreement also contains a six-month non-competition provision
following the term of the agreement or any extension thereof.

The Company entered into an extension of an employment agreement with Mr. Sayour
effective May 1, 1999 and expiring April 30, 2000. In consideration of his
services as Senior Vice President of the Company, (i) Mr. Sayour is to receive
an annual salary of $132,000 effective May 1, 1999 and (ii) will receive a bonus
based on the Operating Income of the Company. Mr. Sayour's employment agreement
also contains a six-month non-competition provision following the term of the
agreement or any extension thereof.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
------------------------------------------------------------
         MANAGEMENT.
         -----------

The following table sets forth certain information as of June 30, 1999 (except
for employee stock option information which is as of April 30, 1999) regarding
(i) the ownership of Common Stock of the Company by each person who is known to
the management of the Company to have been the beneficial owner of more than 5%
of the outstanding shares of the Company's Common Stock, (ii) the ownership
interests of each present director, (iii) the ownership interests of the Chief
Executive Officer and other executive officers of the Company whose total annual
salary and bonus exceeded $100,000 during the fiscal year ended April 30, 1999
and (iv) the ownership interests of all directors and executive officers of the
Company as a group.


<TABLE>
<CAPTION>

Title of        Name and Address       Position                Amount and Nature of    % of
of Class        of Beneficial Owner    With Company            Beneficial Ownership    Class
-----------------------------------------------------------------------------------------------

<S>             <C>                    <C>                     <C>                     <C>
Common Stock    Paul Mendez            Chairman of the Board     2,478,984(1)          43.4%
$.01 par value  39-27 59th Street      Chief Executive Officer
                Woodside, NY           and Director



                Ildar Idris            None                        353,334(1)           6.2%
                15 Horvath Strasse
                Grfeling 8032,
                West Germany

                Carol Mendez           None                      1,164,250             20.4%
                39-27 59th Street
                Woodside, NY

                Howard L. Kogen        Chief Operating Officer/    392,900(2)           6.9%
                                       Executive Vice President

                Antoine J. Sayour      Senior Vice                 295,100(3)           5.2%
                                       President

                Jeffrey Cohen          Vice President-Finance       12,000(4)            .2%



                                      15
<PAGE>


                Orhan I. Sadik-Khan    Director                           1(1)            0%


                Hilary B. Miller       Director                     12,000(5)            0.2%


                Ronald A. Levin        Director                        -0-                --


                Peter Barotz           Director                        -0-(1)             --

                Harry B. Levine        Director                        -0-               --


                All executive officers                           3,190,984(1)(2)(3)     55.8%
                and directors as                                             (4)(5)
                a group (6 persons)



Title of        Name and Address       Position                Amount and Nature of    % of
of Class        of Beneficial Owner    With Company            Beneficial Ownership    Class
--------------------------------------------------------------------------------------------------

Class A         Paul Mendez            Chairman of the Board   2,478,983(1)            49.3%
Common Stock    39-27 59th Street      Chief Executive Officer
$.01 par value  Woodside, NY           and Director



                Ildar Idris            None                      353,334(1)             7.0%
                15 Horvath Strasse
                Grfeling 8032,
                West Germany

                Carol Mendez           None                    1,164,250               23.2%
                39-27 59th Street
                Woodside, NY

                Howard L. Kogen        Chief Operating Officer/   19,300(2)             0.4%
                                       Executive Vice President

                Antoine J. Sayour      Senior Vice                20,300(3)             0.4%
                                       President

                Jeffrey Cohen          Vice President-Finance        -0-(4)               --

                Orhan I. Sadik-Khan    Director                      -0-(1)               --

                Hilary B. Miller       Director                   12,000(5)             0.2%

                Ronald A. Levin        Director                      -0-                 --



                                      16
<PAGE>


                Peter Barotz           Director                      -0-(1)              --

                Harry B. Levine        Director                      -0-                 --


                All executive officers                         2,530,583(1)(2)(3)      50.4%
                and directors as a                                         (4)(5)
                group (6 persons)
</TABLE>


(1) Pursuant to a voting agreement with certain shareholders of the Company,
Paul Mendez, Carol Mendez and the other parties thereto agreed that all shares
of Common Stock held by Naomi Pollack, Nathan Barotz, Celia Barotz and Lam
Investment Co. (the "Barotz Group"), Orhan Sadik-Khan, Dr. Ildar Idris, Karim
Sadik-Khan, Janette Sadik-Khan, Sadik-Kahn Family Trust (the"Sadik-Khan Group"),
Carol Mendez and Mr. Mendez shall be voted so that the Board of Directors of the
Company shall consist of six persons elected by the holders of the Common Stock
as follows: Mr. Sadik-Khan (or his designee), Mr. Barotz (or his designee), Mr.
Mendez and three persons designated by Mr. Mendez.

 (2) Includes 19,300 shares of Common Stock beneficially owned by Mr. Kogen with
his wife as joint tenants and 373,600 shares of Common Stock underlying
presently exercisable options.

(3) These shares include 20,300 shares of Common Stock beneficially owned by Mr.
Sayour with his wife as joint tenants and 274,800 of Common Stock underlying
presently exercisable options.

(4) Includes 12,000 shares of Common Stock underlying presently exercisable
options for Mr. Cohen.

(5) These shares include 2,000 shares of Common Stock and 2,000 shares of Class
A Common Stock which are owned by Mr. Miller's wife, as to which he disclaims
beneficial ownership.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

On June 21, 1995, the Company signed a Stock Purchase Agreement to purchase
1,072,988 shares of the Company's $.01 par Value Common Stock held by certain
members of the family of the late George May at $.45 per share. Terms of the
agreement provide for a cash payment in the amount of $174,448 and a five (5)
year note in the amount of $308,397 bearing interest at 12% per annum. Interest
is to be paid monthly. The principal is to be paid in five equal annual
installments of $61,679. The Company's obligation under the note is
collateralized by a pledge by the Company to the noteholder of 685,326 shares of
the Company's Common Stock.


This agreement was entered into because management believed it represented a
good value for the Company. Taking into consideration the Company's financial
condition and the thinly traded nature of the stock, management believes that
the price paid for the stock was reasonable. The Board of Directors secured a
fairness opinion from an independent investment banker supporting the fairness
of the transaction from the Company's point of view.

In September 1998, pursuant to an Option and Escrow Agreement, the Company
repurchased from the May family an additional 536,494 shares of Common Stock and
536,494 shares of its Class A Common Stock (which were retired) at an agreed
upon price of $.575 per share. A cash payment in the amount of $308,485 was paid
and five, five-year notes, in the cumulative amount of $308,485, bearing
interest at 11.5% per annum were issued. Principal payments on the notes will be
made in five equal, cumulative installments of $61,697. Interest on the notes is
to be paid monthly. The notes are collateralized by the repurchased shares of
the Company's Common Stock which are held in escrow.



                                      17
<PAGE>



Multiplex Electrical Services, Inc.("Multiplex"), which is owned by the family
of Paul Mendez, is one of 70 distributors of the LSN 2000. During the fiscal
year the Company had sales of approximately $184,000 to Multiplex. Sale of the
products to Multiplex was on the same terms as other distributors. The Company
also purchased approximately $55,000 of product and engineering services from
Multiplex. The Company believes the terms and conditions of such transactions
were fair and reasonable.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

(a)      Exhibits

          3(a) Certificate of Incorporation of the Company filed March 16, 1978.
               [incorporated by reference to Exhibit 3(a) to the Company's
               Registration Statement on Form S-18 (Commission File No.
               2-87583-NY), filed on October 31, 1983].

          3(b) Certificate of Amendment to the Certificate of Incorporation of
               the Company filed December 6, 1979 [incorporated by reference to
               Exhibit 3(b) to the Company's Registration Statement on Form S-18
               (Commission File No. 2-87583-NY), filed on October 31, 1983].

          3(c) Certificate of Amendment to the Certificate of Incorporation of
               the Company filed December 31, 1980 [incorporated by reference to
               Exhibit 3(c) to the Company's Registration Statement on Form S-18
               (Commission File No. 2-87583-NY), filed on October 31, 1983].

          3(d) Certificate of Amendment to the Certificate of Incorporation of
               the Company filed April 23, 1981 [incorporated by reference to
               Exhibit 3(d) to the Company's Registration Statement on Form S-18
               (Commission File No. 2-87583-NY), filed on October 31, 1983].

          3(e) Certificate of Amendment to the Certificate of Incorporation of
               the Company filed August 12, 1983 [incorporating by reference to
               Exhibit 3(e) to the Company's Registration Statement on Form S-18
               (Commission File No. 2-87583-NY), filed on October 31, 1983].

          3(f) Certificate of Amendment to the Certificate of Incorporation of
               the Company filed February 4, 1985 [incorporated by reference to
               Exhibit 3(f) to the Company's Annual Report on Form 10-K for the
               fiscal year ended April 30, 1985].

          3(g) Certificate of Amendment of the Certificate of Incorporation of
              the Company filed August 4, 1986 stating the Designation and
              Preference of the Company's Series A Preferred Stock [incorporated
              by reference to Exhibit 3 (g) to the Company's Annual Report on
              Form 10-K for the fiscal year ended April 30, 1987].

          3(h) Certificate of Amendment of the Certificate of Incorporation of
               the Company filed March 1987, limiting the director's liability
               in certain circumstances [incorporated by reference to Exhibit
               3(j) to the Company's Annual Report on Form 10-K for the fiscal
               year ended April 30, 1988].

          3(i) Certificate of Amendment of the Certificate of Incorporation of
               the Company filed June 5, 1991, changing the Designation and
               Preference of the Company's Series A Preferred Stock.
               [incorporated by reference to Exhibit 3(I) to the Company's
               Report on Form 8-K dated April 30, 1991].

          3(j) Certificate of Amendment to the Certificate of Incorporation



                                      18
<PAGE>


               ratified and adopted April 1, 1993 (incorporated by reference to
               Exhibit A to the Company's Proxy Statement for the Annual Meeting
               of Shareholders held on April 1, 1993)

          3(k) Certificate of Amendment to Certificate of Incorporation
               [incorporated by reference to Exhibit 3(I) to the Company's
               Report on Form 10-Q dated October 31, 1997].

          3(l) By-laws of the Company (incorporated by reference to Exhibit 3(f)
               to the Company's Registration Statement on Form S-18 (Commission
               File No. 2-87583-NY), filed on October 31, 1983].

          3(m) Amendment to the By-laws of the Company approved and adopted by
               the Company's Board of Directors on May 13, 1987 [incorporated by
               reference to Exhibit 3(i) to the Company's Annual Report on Form
               10-K for the fiscal year ended April 30, 1987].

          3(n) Amendment to the By-laws of the Company approved and adopted by
               the Company's Board of Directors on May 2, 1991 [incorporated by
               reference to Exhibit 3.1 to the Company's Report on Form 8-K
               dated May 3, 1991].

          4(a) Form of Common Stock Certificate [incorporated by reference to
               Exhibit 4 to Amendment No. 2 to the Company's Registration
               Statement on Form S-18 (Commission File No. 2-87583-NY) filed on
               January 16, 1984].

          10(a) Employment Agreement dated as of December 31, 1992 with Paul
               Mendez, and Amendment thereto dated March 28, 1995 [incorporated
               by reference to Exhibit 10(a) to the Company's Report on Form 8-K
               dated April 30, 1995].

          10(b) Stock Appreciation Rights Agreement dated as of December 31,
               1992 with Paul Mendez [incorporated by reference to Exhibit 10(b)
               to the Company's Report on Form 8-K dated April 30, 1993].

          10(c) Company's 1986 Incentive and Non-Qualified Stock Option Plan
               [incorporated by reference to Exhibit A to the Company's Proxy
               Statement for the Annual Meeting of Shareholders dated January 5,
               1987].

          10(d)Employment Agreement dated May 1, 1994 between the Company and
               Howard Kogen and [incorporated by reference to Exhibit 10(e) to
               the Company's Report on Form 8-K dated April 30, 1994].

          10(e)Employment Agreement dated May 1, 1994 between the Company and
               Antoine J. Sayour and [incorporated by reference to Exhibit 10(f)
               to the Company's Report on Form 8-K dated April 30, 1994].

          10(f)Stock Purchase Agreement dated June 21, 1995 between the Company
               and Helen May, etal and [incorporated by reference to Exhibit
               10(l) to the Company's Report on Form 10-K dated April 30, 1995].
               . 10(g)Option & Escrow Agreement dated July 14, 1995 between the
               Company and Helen May, etal and [incorporated by reference to
               Exhibit 10(m) to the Company's Report on Form 10-K dated April
               30, 1995].

          10(h) Purchase Agreement dated as of March 27, 1997 between Norwood
               Venture Corporation and The Company and related subordinated
               promissory note (incorporated by reference to Exhibit 2.1 and 4.1
               to the Company's Report on Form 8-K dated March 27, 1997].



                                      19
<PAGE>



          10(i) Loan Agreement dated as of April 29, 1999 among the Company.,
               FRCM Case Acme Inc., Fire Service Inc., BRD FRCM Service, Inc.
               and Fleet Bank, N.A.

          10(j) Security Agreement dated as of April 29, 1999 between the
               Company and Fleet Bank, N.A.

          22 SUBSIDIARIES OF THE COMPANY

(b)      Reports on Form 8-K- NONE


                                   SIGNATURES
                                   ----------

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                                     FIRECOM, INC.


                                                       s/s Paul Mendez
Date: July 27, 1999                                  By_________________________
                                                       Paul Mendez, Chairman of
                                                       the Board, President and
                                                       Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the date indicated.

Signature                     Title                                     Date

s/s Paul Mendez               Chairman of the Board,              July 27, 1999
-------------------------     President and Chief
Paul Mendez                   Executive Officer


s/s Jeffrey Cohen             Vice-President-Finance,             July 27, 1999
------------------------      Chief Financial Officer
Jeffrey Cohen                 and Principal Accounting Officer


s/s Peter Barotz              Director                            July 27, 1999
------------------------
Peter Barotz


s/s Hilary B. Miller          Director                            July 27, 1999
------------------------
Hilary B. Miller


s/s Ronald A. Levin           Director                            July 27, 1999
------------------------
Ronald A. Levin

s/s Orhan I. Sadik-Khan       Director                            July 27, 1999
------------------------
Orhan I. Sadik-Khan

s/s Harry B. Levine           Director                            July 27, 1999
--------------------
Harry B. Levine



                                      20

<PAGE>


                         FIRECOM, INC. AND SUBSIDIARIES



                                    CONTENTS



INDEPENDENT AUDITORS' REPORT                                                 F-2

CONSOLIDATED FINANCIAL STATEMENTS:

     CONSOLIDATED BALANCE SHEET                                              F-3

     CONSOLIDATED STATEMENTS OF INCOME                                       F-4

     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                         F-5

     CONSOLIDATED STATEMENTS OF CASH FLOWS                               F-6-F-7

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                          F-8-F-19


                                     F-1

<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders of
 Firecom, Inc. and Subsidiaries


We have audited the accompanying consolidated balance sheet of Firecom, Inc. and
Subsidiaries as of April 30, 1999, and the related consolidated statements of
income, stockholders' equity and cash flows for the years ended April 30, 1999
and 1998. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Firecom, Inc. and Subsidiaries as of April 30, 1999, and the consolidated
results of their operations and their cash flows for the years ended April 30,
1999 and 1998, in conformity with generally accepted accounting principles.






Roseland, New Jersey
June 17, 1999

                                     F-2
<PAGE>


                         FIRECOM, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                 April 30, 1999

                                     ASSETS

CURRENT ASSETS:
Cash and cash equivalents                            $ 4,061,000
Accounts receivable, less allowance for
 doubtful accounts of $400,000                         3,578,000
Inventories                                            1,912,000
Deferred tax asset                                       712,000
Prepaid expenses and other current assets                238,000
                                                     ------------

Total current assets                                                 10,501,000

PROPERTY, PLANT AND EQUIPMENT, net                                      613,000

INTANGIBLE ASSETS, less accumulated amortization
 of $83,000                                                              77,000
                                                                    -----------

                                                                    $11,191,000
                                                                    ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of notes payable                     $   358,000
Line of credit borrowing                                 800,000
Accounts payable                                       1,040,000
Accrued expenses and other current liabilities         1,597,000
                                                     -----------

Total current liabilities                                             3,795,000

LONG-TERM LIABILITIES:
Notes payable, less current portion                    1,063,000
Accrued compensation                                     235,000
Deferred tax liability                                    60,000
                                                     -----------

Total long-term liabilities                                           1,358,000

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock, par value $1,
 authorized 1,000,000 shares, none issued
Common Stock, par value $.01,
 authorized 30,000,000 shares,
 issued 7,281,424, outstanding 5,713,935                  73,000
Class A Common Stock, par value $.01,
 authorized 10,000,000 shares,
 issued 6,060,457, outstanding 5,029,463                  60,000
Capital in excess of par value                         2,781,000
Retained earnings                                      4,350,000
                                                     -----------

                                                       7,264,000
Less treasury stock, at cost, 1,567,489 shares
 of Common Stock and 1,030,994 shares of
 Class A Common Stock                                  1,226,000
                                                     -----------

Total stockholders' equity                                            6,038,000
                                                                   ------------

                                                                   $ 11,191,000
                                                                   ============


          See accompanying notes to consolidated financial statements

                                   F-3
<PAGE>


                         FIRECOM, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                       Years Ended April 30, 1999 and 1998


                                                        1999           1998
                                                    ------------   ------------
NET SALES:
  Product                                           $ 10,830,000   $  7,820,000
  Services                                             6,540,000      6,325,000
                                                    ------------   ------------

                                                      17,370,000     14,145,000
                                                    ------------   ------------
COST OF SALES:
  Product                                              6,899,000      4,604,000
  Services                                             3,924,000      3,689,000
                                                    ------------   ------------

                                                      10,823,000      8,293,000
                                                    ------------   ------------

GROSS PROFIT                                           6,547,000      5,852,000
                                                    ------------   ------------

OPERATING EXPENSES:
  Selling, general and administrative                  3,801,000      4,217,000
  Research and development                               702,000        675,000
                                                    ------------   ------------

    Total operating expenses                           4,503,000      4,892,000
                                                    ------------   ------------

INCOME FROM OPERATIONS                                 2,044,000        960,000
                                                    ------------   ------------

OTHER INCOME (EXPENSE):
  Interest income                                        189,000        115,000
  Interest expense                                      (228,000)      (231,000)
  Other                                                   (2,000)        15,000
                                                    ------------   ------------

                                                         (41,000)      (101,000)
                                                    ------------   ------------

INCOME BEFORE INCOME TAX EXPENSE                       2,003,000        859,000

INCOME TAX EXPENSE                                       899,000        305,000
                                                    ------------   ------------

NET INCOME                                          $  1,104,000   $    554,000
                                                    ============   ============

NET INCOME PER COMMON SHARE
  Basic                                             $       0.10   $       0.05
                                                    ============   ============

  Diluted                                           $       0.10   $       0.05
                                                    ============   ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES USED IN
 COMPUTING NET INCOME PER COMMON SHARE
  Basic                                               11,111,000     11,130,000
                                                    =============  =============

  Diluted                                             11,549,000     12,236,000
                                                    ============   ============


          See accompanying notes to consolidated financial statements

                                     F-4
<PAGE>


                         FIRECOM, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       Years Ended April 30, 1999 and 1998


<TABLE>
<CAPTION>
                                         Series A
                                      Preferred Stock             Common Stock         Class A Common Stock
                                   --------------------    ------------------------    ---------------------
                                   Shares      Amount        Shares      Amount          Shares    Amount
                                   ------   -----------    ---------- -------------    ---------- ----------

<S>                                 <C>     <C>             <C>          <C>           <C>        <C>
BALANCES, April 30, 1997            1,200   $ 1,437,000     5,412,338    $   54,000           --  $    --

SERIES A PREFERRED
 STOCK DIVIDEND

CONVERSION OF CLASS A
 COMMON STOCK TO
 COMMON STOCK                                                 200,925         2,000     (200,925)  (2,000)

CONVERSION OF SERIES A
 PREFERRED STOCK TO
 COMMON STOCK                      (1,200)   (1,437,000)    1,149,600        11,000

WARRANTS EXERCISED                                            377,250         4,000

STOCK DIVIDEND -
 ISSUANCE OF CLASS A
 COMMON STOCK                                                                          6,939,188   69,000

NET INCOME
                              -----------   -----------     ---------     ---------    ---------   ------

BALANCES, April 30, 1998               --            --     7,140,113        71,000    6,738,263   67,000

CONVERSION OF CLASS A
 COMMON STOCK TO
 COMMON STOCK                                                 141,311         2,000     (141,311)  (2,000)

PURCHASE OF MAY FAMILY
 STOCK PURSUANT TO
 OPTION AND ESCROW
 AGREEMENT (SEE NOTE 9)                                      (536,495)       (5,000)

EFFECT OF DISTRIBUTOR
 STOCK OPTIONS

NET INCOME
                              -----------    -----------    -----------   ---------    ---------   ------

BALANCES, April 30, 1999               --    $        --      7,281,424      73,000    6,060,457   60,000
                              ===========    ===========    ===========   =========    =========   ======

</TABLE>


<TABLE>
<CAPTION>
                              Capital in
                               Excess of     Retained          Treasury Stock
                               Par Value     Earnings       Shares        Amount         Total
                              -----------   -----------    ---------- -------------  -------------
<S>                           <C>             <C>           <C>         <C>           <C>

BALANCES, April 30, 1997      $   890,000     3,687,000     1,030,994   $(1,226,000)  $4,842,000

SERIES A PREFERRED
 STOCK DIVIDEND                                (905,000)                                (905,000)

CONVERSION OF CLASS A
 COMMON STOCK TO
 COMMON STOCK

CONVERSION OF SERIES A
 PREFERRED STOCK TO
 COMMON STOCK                   1,426,000

WARRANTS EXERCISED                448,000                                                452,000

STOCK DIVIDEND -
 ISSUANCE OF CLASS A
 COMMON STOCK                                   (69,000)    1,030,994

NET INCOME                                      554,000                                  554,000
                              -----------   -----------   -----------   -----------    ---------

BALANCES, April 30, 1998        2,764,000     3,267,000     2,061,988    (1,226,000)   4,943,000

CONVERSION OF CLASS A
 COMMON STOCK TO
 COMMON STOCK

PURCHASE OF MAY FAMILY
 STOCK PURSUANT TO
 OPTION AND ESCROW
 AGREEMENT (SEE NOTE 9)                         (21,000)      536,495                    (26,000)

EFFECT OF DISTRIBUTOR
 STOCK OPTIONS                     17,000                                                 17,000

NET INCOME                                    1,104,000                                1,104,000
                              -----------   -----------   -----------   -----------    ---------

BALANCES, April 30, 1999      $ 2,781,000   $ 4,350,000     2,598,483   $(1,226,000)  $6,038,000
                              ===========   ===========   ===========   ===========   ==========
</TABLE>

                                          F-5
<PAGE>


                         FIRECOM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       Years Ended April 30, 1999 and 1998

<TABLE>
<CAPTION>

                                                               1999               1998
                                                       -----------------  -----------------
<S>                                                    <C>                       <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                             $      1,104,000   $        554,000
Adjustments to reconcile net income to net cash
 provided by operating activities:
Depreciation and amortization                                   229,000            209,000
Provision for doubtful accounts                                 (55,000)           417,000
Amortization of loan fees                                                           22,000
Deferred income tax credit                                      (46,000)          (140,000)
Other miscellaneous credits                                     (15,000)
Distributor stock option expense                                 17,000
Increase (decrease) in cash attributable to
 changes in assets and liabilities:
Accounts receivable                                            (779,000)         1,254,000
Inventories                                                    (411,000)          (192,000)
Prepaid expenses and other current assets                       (98,000)           (58,000)
Accounts payable                                                284,000             64,000
Accrued expenses and other current liabilities                  483,000            214,000
Income taxes payable                                                              (102,000)
Accrued compensation                                           (108,000)            87,000
                                                       -----------------  -----------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                       605,000          2,329,000
                                                       -----------------  -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment                     (132,000)          (181,000)
Acquisition of business                                                           (150,000)
                                                       -----------------  -----------------

NET CASH USED IN INVESTING ACTIVITIES                          (132,000)          (331,000)
                                                       -----------------  -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of notes payable                                    (608,000)          (306,000)
Payments on line of credit borrowing                           (500,000)
Proceeds from line of credit borrowing                          800,000            500,000
Proceeds from sale of common stock                                                 452,000
Payment for preferred stock dividends                                             (905,000)
Payments on purchase of redeemable stock                       (308,000)
                                                       -----------------  -----------------

NET CASH USED IN FINANCING ACTIVITIES                          (616,000)          (259,000)
                                                       -----------------  -----------------

NET INCREASE (DECREASE) IN CASH  AND CASH EQUIVALENTS          (143,000)         1,739,000

CASH  AND CASH EQUIVALENTS:
Beginning of year                                             4,204,000          2,465,000
                                                       -----------------  -----------------

End of year                                            $      4,061,000   $      4,204,000
                                                       =================  =================
</TABLE>

                                     F-6
<PAGE>




                         FIRECOM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (CONTINUED)
                       Years Ended April 30, 1999 and 1998

<TABLE>
<CAPTION>

                                                                        1999               1998
                                                                  -----------------  -----------------
<S>                                                               <C>                <C>

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 Cash paid for interest during the year                           $        224,000   $        241,000
                                                                  =================  =================

 Cash paid for income taxes during the year                       $        964,000   $        630,000
                                                                  =================  =================

SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING AND
 FINANCING ACTIVITIES:

Note payable issued for acquisition of business                   $              -   $        135,000
                                                                  =================  =================

Issuance of Class A Common Stock dividend                         $              -   $         69,000
                                                                  =================  =================

Conversion of Series A Preferred Stock to Common Stock            $              -   $      1,437,000
                                                                  =================  =================

Conversion of Class A Common Stock to Common Stock                $          2,000   $          2,000
                                                                  =================  =================

Notes payable issued for the purchase of May Family
  stock, pursuant to Option
  and Escrow Agreement (See Note 9)                               $        308,000   $              -
                                                                  =================  =================
</TABLE>

                                     F-7
<PAGE>

                           FIRECOM, INC. AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -  NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

          NATURE OF BUSINESS - Firecom, Inc. and Subsidiaries (the "Company")
          operate in the building products industry including the design,
          manufacture and service of fire safety systems and products. The
          Company sells its products and services to a variety of end users
          (i.e., building owners and managers) and contractors, primarily in the
          New York metropolitan area. None of the Company's customers exceed 10%
          of consolidated net sales. The majority of the Company's employees are
          employed under a union contract.

          PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
          include the accounts of Firecom, Inc. and its wholly-owned
          subsidiaries, Fire Service, Inc., FRCM Case-Acme, Inc. and BRD FRCM
          Service, Inc. All intercompany balances and transactions have been
          eliminated in consolidation.

          FAIR VALUE OF FINANCIAL INSTRUMENTS - The fair value of the Company's
          assets and liabilities, which qualify as financial instruments under
          Statement of Financial Accounting Standards No. 107 "Disclosures about
          Fair Value of Financial Instruments," approximates the carrying
          amounts presented in the consolidated balance sheet.

          CASH EQUIVALENTS - Cash equivalents include all highly liquid
          instruments having a maturity of less than three months from the
          purchase date. Cash equivalents include certificates of deposit.

          INVENTORIES - Inventories, which include material, labor and overhead
          costs, are stated at the lower of cost or market, with cost determined
          on the first-in, first-out (FIFO) method.

          IMPAIRMENT OF LONG-LIVED ASSETS - The Company periodically assesses
          the recoverability of the carrying amounts of long-lived assets,
          including intangible assets. A loss is recognized when expected
          undiscounted future cash flows are less than the carrying amount of
          the asset. The impairment loss is the difference by which the carrying
          amount of the asset exceeds its fair value.

          PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are
          stated at cost and are being depreciated and amortized using the
          straight-line method over the estimated useful lives of the assets
          ranging from 5 to 15 years.

          INTANGIBLE ASSETS - Customer lists, software, drawings and design
          approvals are amortized using the straight-line method over the
          estimated useful lives of the assets ranging from three to five years.

          ADVERTISING COSTS - The Company expenses costs of advertising and
          promotion as incurred. Advertising expenses included in selling,
          general and administrative expenses for the years ended April 30, 1999
          and 1998 were approximately $182,000 and $156,000, respectively.

                                      F-8
<PAGE>



                           FIRECOM, INC. AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          INCOME TAXES - The Company complies with Statement of Financial
          Accounting Standards No. 109, "Accounting for Income Taxes," which
          requires an asset and liability approach to financial reporting of
          income taxes. Deferred income tax assets and liabilities are computed
          for differences between the financial statement and tax bases of
          assets and liabilities that will result in taxable or deductible
          amounts in the future, based on enacted tax laws and rates applicable
          to the periods in which the differences are expected to affect taxable
          income. Valuation allowances are established, when necessary, to
          reduce the deferred income tax assets to the amount expected to be
          realized.

          REVENUE RECOGNITION - Revenues related to manufacturing operations are
          recognized when goods are shipped. Revenues related to service
          contracts are recognized on a straight-line basis over the contract
          period.

          The Company uses the percentage-of-completion method of accounting to
          determine income on its fire safety system contracts. The
          percentage-of-completion is determined by relating the total costs
          incurred to date to management's estimate of total contract costs.
          Revisions in estimates and projected losses on contracts are
          recognized in the period in which they become known.

          EFFECT OF COMMON STOCK DIVIDEND - All earnings per share information
          and all share information in these notes have been restated giving
          effect to the distribution of Class A Common Stock (which is
          convertible on a share for share basis to Common Stock) which took
          place on December 17, 1997 (see Note 10). The only distinction between
          the two classes is that the Common Stock has one (1) vote per share
          and the Class A Common Stock has thirty (30) votes per share and
          generally cannot be transferred without conversion into Common Stock.
          Unless otherwise indicated, all references to Common Stock and Class A
          Common Stock throughout these notes are collectively referred to as
          Common Stock.

          NET INCOME PER COMMON SHARE - Statement of Financial Accounting
          Standards No. 128, "Earnings Per Share" requires dual presentation of
          basic and diluted income per share for all periods presented. Basic
          income per share excludes dilution and is computed by dividing income
          available to common stockholders by the weighted-average number of
          common shares outstanding during the period. Diluted income per share
          reflects the potential dilution that could occur if securities or
          other contracts to issue common stock were exercised or converted into
          common stock or resulted in the issuance of common stock that then
          shared in the income of the Company.



                                    F-9

<PAGE>

                           FIRECOM, INC. AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (CONTINUED).

           A reconciliation of the income, weighted-average shares and
           earnings per share (EPS) shares used in both calculations follows:


                                             YEAR ENDED APRIL 30, 1999

                                      INCOME          SHARES            EPS
                                      ------          ------            ---

Basic EPS
 Net income applicable to common
  shareholders                     $ 1,104,000     11,111,000        $   0.10

 Effect of stock options                              438,000
                                   -----------     ----------        --------

 Diluted EPS
   Net income applicable to common
    shareholders                   $ 1,104,000     11,549,000        $   0.10
                                   ===========     ==========        ========


                                             YEAR ENDED APRIL 30, 1998

                                      INCOME          SHARES            EPS
                                      ------          ------            ---

Basic EPS
 Net income applicable to common
  shareholders                     $   554,000     11,130,000        $   0.05

 Effect of stock options                            1,106,000
                                   -----------     ----------        --------

 Diluted EPS
   Net income applicable to common
    shareholders                   $   554,000     12,236,000        $   0.05
                                   ===========     ==========        ========


          Unexercised employee stock options to purchase 173,153 shares of the
          Company's Common Stock as of April 30, 1999 were not included in the
          computation of diluted EPS because the options' exercise prices were
          greater than the average market price of the Company's Common Stock.

                                      F-10

<PAGE>

                           FIRECOM, INC. AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (CONTINUED).

          USE OF ESTIMATES - The preparation of consolidated financial
          statements in conformity with generally accepted accounting principles
          requires management to make estimates and assumptions that affect the
          reported amounts of assets and liabilities and disclosure of
          contingent assets and liabilities at the date of the consolidated
          financial statements and the reported amounts of revenues and expenses
          during the reporting period. Actual results could differ from those
          estimates.


NOTE 2 -  ACQUISITION:

          In June 1997, the Company entered into an agreement to purchase
          various assets totaling $285,200, of which $150,000 was paid upon
          closing and the balance of $135,200 is payable, in the form of a note,
          quarterly through August 2000, with interest at 10% per annum.


NOTE 3 -  INVENTORIES:

          Inventories consist of the following at April 30, 1999:

              Raw materials and sub-assemblies         $  1,909,000
              Work-in-progress                                3,000
                                                       ------------
                                                       $  1,912,000
                                                       ============


NOTE 4 -  PROPERTY, PLANT AND EQUIPMENT:

          Property, plant and equipment consists of the following at April 30,
          1999:

            Leasehold improvements                             $    323,000
            Manchinery and equipment                                766,000
            Furniture and fixtures                                  530,000
                                                               ------------
                                                                  1,619,000
            Less accumulated depreciation and amortization        1,006,000
                                                               ------------
                                                               $    613,000
                                                               ============

          The Company owns its headquarters building located in Woodside, New
          York. The building is approximately 15,000 square feet. Because of
          purchase accounting, it is carried at no value on the books of the
          Company.

                                  F-11


<PAGE>

                           FIRECOM, INC. AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 -  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

          Accrued expenses and other current liabilities consist of the
          following at April 30, 1999:

           Vacation pay                         $  269,000
           Incentive compensation                  154,000
           Payroll                                 150,000
           Fringe benefits                         234,000
           Deferred revenues                       252,000
           Other                                   538,000
                                                ----------

                                                $1,597,000
                                                ==========


NOTE 6 -  NOTES PAYABLE:

          Notes payable consist of the following at April 30, 1999:


<TABLE>
<CAPTION>
                                                            Interest
                                                              Rate
                                                            --------

<S>                                                           <C>        <C>
Purchase Agreement, (See Note 9) in annual
installments of $61,679, plus interest, through
June 2000                                                      12%       $ 123,000

Note payable to Norwood Venture Corp., pursuant
to Stock Purchase Agreement, (See Note 9) in quarterly
installments of $71,755, including interest,
through March 2003                                             10%         937,000


Notes payable to May Family, pursuant to the Option and
Escrow Agreement, (see Note 9), in annual installments
of $61,697, plus interest, through September 2003,
collaterialized by shares of the Company's Common Stock
held in escrow                                                11.5%        308,000

Note payable to BRD Systems, Inc., pursuant to
acquisition of certain assets, in quarterly
installments of $9,586, including interest,
through August 2000                                            10%          53,000
                                                                         -----------

                                                                          1,421,000
Less current portion                                                        358,000
                                                                         -----------

                                                                         $1,063,000
                                                                         ===========
</TABLE>
                                        F-12
<PAGE>

                           FIRECOM, INC. AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - NOTES PAYABLE (CONTINUED):


          Aggregate future principal payments are as follows:

               Years ended April 30:
                                        2000           $  358,000
                                        2001              363,000
                                        2002              306,000
                                        2003              332,000
                                        2004               62,000
                                                       -----------
                                                       $1,421,000
                                                       ===========

          In April 1999, the Company refinanced its line of credit under an
          agreement witha new bank. Under the new line of credit, the Company
          may borrow up to $5,000,000, with interest, at the bank's agreed rate
          (4.94% at April 30, 1999) plus 1 3/4%. Borrowings under the line of
          credit are secured by substantially all of the Company's assets,
          excluding real estate and have been guaranteed by the Company. Any
          borrowings under the line of credit outstanding in April 2001, which
          have been drawn upon for acquisition purposes (as defined in the line
          of credit agreement), will be converted into a 5 year term note
          payable in monthly installments, plus interest. In April 2002, any
          borrowings outstanding that are not repaid in total, will be converted
          into a 4-year term note, payable in monthly installments, plus
          interest. Borrowings under the line of credit at April 30, 1999 were
          $800,000.

          The line of credit contains certain covenants.

NOTE 7 -  STOCK OPTIONS, STOCK APPRECIATION RIGHTS AND WARRANTS:

          STOCK OPTIONS - The Company maintains a stock option plan (the "Plan")
          which expires April 30, 2008. The Common Stock reserved for issuance
          under the Plan is 1,700,000 shares. Information relating to the stock
          options under the Plan during the years ended April 30, 1999 and 1998
          is as follows:


                                                        Number       Per Share
                                                      of Shares     Option Price
                                                      ---------     ------------

               Outstanding at April 30, 1997          1,013,340     $  .15-.375

               Granted                                  160,660           0.625
               Expired                                  (60,000)          0.375
                                                      ----------   -------------

               Outstanding at April 30, 1998          1,114,000        .15-.625

               Granted                                   40,000
                                                                           0.50
                                                      ----------   -------------

               Outstanding at April 30, 1999          1,154,000        .15-.625
                                                      ----------   -------------


               Exercisable at April 30, 1999            877,312     $  .15-.625
                                                      ==========   =============

          The weighted average exercise price of outstanding options, as of
          April 30, 1999 was $.31 an option.

                                         F-13

<PAGE>

                           FIRECOM, INC. AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - STOCK OPTIONS, STOCK APPRECIATION RIGHTS AND WARRANTS (CONTINUED):


          The Company has adopted the disclosure-only requirements of Statement
          of Financial Accounting Standards No. 123 (SFAS No. 123), "Accounting
          for Stock-Based Compensation" when accounting for equity transactions
          with employees. The Company applies Accounting Principles Board
          Opinion No. 25 and related interpretations in accounting for its
          plans. Had compensation cost for the plan been determined based on the
          fair value of the options at the grant dates, consistent with SFAS No.
          123, the Company's net income applicable to common shareholders and
          net income per share applicable to common shareholders would have been
          adjusted to the pro forma amounts indicated below:

                                                          Year Ended April 30,
                                                       -------------------------
                                                            1999         1998
                                                       ------------    --------
Net income applicable to common shareholders:
  As reported                                            $1,104,000    $554,000
  Pro forma                                               1,092,000     543,000

Net income per share applicable to common shareholders:
  Basic, as reported                                           0.10        0.05
  Diluted, as reported                                         0.10        0.05

  Basic, pro forma                                             0.10        0.05
  Diluted, pro forma                                           0.09        0.04

          The fair value of each option grant is estimated on the date of grant
          using the Black-Scholes Option Pricing Model with the following
          weighted average assumptions used for grants in 1999 and 1998
          respectively: risk-free interest rate of 5% and 6%, respectively; no
          dividend yield; expected lives of 10 years; and expected volatility of
          approximately 29% and 44%, respectively.

          STOCK APPRECIATION RIGHTS - The Company has stock appreciation rights
          agreements (SARs) with certain officers and directors, which grants
          them the right to receive in cash the excess of the fair market value
          (FMV) of a common share over the base price (as defined in the
          agreements). The following summarizes the SARs, which have been
          adjusted to reflect the stock dividend (see Notes 1 and 10), at
          April 30, 1999:

                     Rights          Rights            Base
                     Granted       Excercisable        Price          FMV
                  -------------  ---------------     ---------     ---------

            (A)      400,000          400,000         $ 0.125       $ 0.49
            (A)      200,000          200,000           0.25          0.49
            (A)      200,000          200,000           0.50          0.49
            (A)      200,000          200,000           0.75          0.49
            (B)       40,000           40,000           0.47          0.49
            (B)       40,000           40,000           0.60          0.49
            (B)      120,000          120,000           0.14          0.49

          (A)  These rights have been granted pursuant to an agreement with the
          Chairman of the Board of the Company and are exercisable in pro rata
          installments over a five-year period. All unexercised rights will
          expire in December 2002.

                                        F-14

<PAGE>

                          FIRECOM, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - STOCK OPTIONS, STOCK APPRECIATION RIGHTS AND WARRANTS (CONTINUED):

          (B)  These rights have been granted to directors upon their being
          elected to the Board of Directors.

          Selling, general and administrative expenses include a charge (credit)
          of approximately ($108,000) and $86,000 for the years ended April 30,
          1999 and 1998, respectively, for compensation as a result of the SARs.
          As of April 30, 1999, 40,000 rights have been exercised amounting to
          approximately $30,000 pursuant to the SARs. At April 30, 1999, the
          Company has accrued compensation of $235,000 as a result of the SARs.

          WARRANTS - In 1987, in connection with an acquisition, the Company
          issued warrants to purchase 1,000,000 shares of the Company's Common
          Stock at an exercise price of $.60 per share. The warrants were
          exercisable beginning July 31, 1987 for a period of ten years of which
          warrants to purchase 754,000 shares of Common Stock were exercised on
          July 22, 1997. Upon redemption of the Series A Preferred Stock (See
          Note 8) by the Company, a proportionate number of the warrants
          terminated.

          As a result of repaying the convertible notes on July 8, 1994, the
          rights to purchase 2,666,666 shares of Common Stock were converted
          into warrants with an exercise price of $.175 per share. The warrants
          were exercisable immediately with 166,666 expiring quarterly beginning
          June 1995 through March 1999. As of April 30, 1998, warrants to
          purchase 1,166,662 shares of Common Stock were exercised, of which all
          were repurchased by the Company along with the remaining unexercised
          1,500,004 warrants (See Note 9).


NOTE 8 -  SERIES A PREFERRED STOCK:

          The Series A Preferred Stock was issued to a company owned by certain
          directors of the Company and was redeemable at the Company's option
          for $1,197.50 per share plus accrued dividends.

          On June 11, 1997, the Board of Directors declared payable all of the
          cumulative dividends in arrears on the Series A Preferred Stock which
          approximated $905,000. These dividends were paid on July 22, 1997. In
          addition, 50% of the payment was used to exercise warrants which would
          have expired July 31, 1997 (See Note 7), for the purchase of 754,500
          shares of the Company's Common Stock.

          On July 22, 1997, the Company entered into a Stock Exchange Agreement
          for the exchange of all of the Series A Preferred Stock for an
          aggregate of 1,149,600 shares of the Company's Common Stock, pre-stock
          dividend.


NOTE 9 -  COMMON STOCK:

          On June 21, 1995, the Company signed a Stock Purchase Agreement to
          purchase 1,072,988 shares of the Company's $.01 par value Common Stock
          held by certain members of the May Family (the "Shareholders") at $.45
          per share. Terms of the Agreement provided for a cash payment in the
          amount of $174,448 and a five-year note in the amount of $308,397,
          bearing interest at 12% per annum. Interest is to be paid monthly. The
          principal is to be paid in five annual installments of $61,679. The
          Company's obligation under the note is collateralized by a pledge by
          the Company to the noteholder of 685,326 shares of the Company's
          Common Stock held in its treasury.

                                      F-15

<PAGE>
                             FIRECOM, INC. AND SUBSIDIARIES

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - COMMON STOCK (CONTINUED):

          At the same time, the Company and the Shareholders entered into an
          Option and Escrow Agreement relative to an aggregate of 1,072,988
          shares of the Company's Common Stock and Class A Common Stock (the
          "Option Shares"). Under the terms of this agreement, on September 1,
          1998, the Shareholders have the right, but not the obligation, to
          require the Company to purchase, in whole or in part, their Option
          Shares (the "Put Option") at a price of $.55 per share. The Put Option
          is conditional upon the Company meeting certain financial targets,
          which the Company has not met. Prior to the exercise of the Put
          Option, the Company had recorded on its balance sheet $590,000 of
          mandatory redeemable stock. The option date may be deferred at the
          option of the shareholder until September 1, 1998, provided, however,
          that the Company may waive the financial target requirement thirty
          (30) days prior to the option date. At any time under this agreement,
          the Company shall have the right, but not the obligation, to purchase
          all of the Option Shares, in whole or in part (the "Call Option")at a
          purchase price of $.625 per share. Payment for the Put Option or the
          Call Option shall be one-half (1/2) in cash and one-half (1/2) with
          five-year notes bearing interest at prime plus 3%. The notes issued
          upon purchase of the Option Shares will be collateralized by a pledge
          by the Company of shares of its Common Stock. The Shareholders
          delivered to the Company irrevocable proxies to permit Mr. Paul
          Mendez, Chairman of the Company, to vote the Option Shares until the
          expiration of this agreement.

          On March 27, 1997, the Company signed a Purchase Agreement to purchase
          1,166,662 shares of the Company's $.01 par value Common Stock at $.70
          per share and 1,500,004 warrants at $.525 per warrant held by Norwood
          Venture Corp. (See Note 7). The terms of the agreement provide for a
          cash payment in the amount of $320,833 and a six-year subordinated
          promissory note for $1,283,332, bearing interest at 10% per annum.
          Principal and interest totaling $71,755 is paid quarterly through
          March 2003. The note also contains certain financial covenants.

          In September 1998, pursuant to the Option and Escrow Agreement (the
          "Agreement"), the Company repurchased 536,494 shares of its Common
          Stock and 536,494 shares of its Class A Common Stock (which were
          retired) at an agreed upon price of $.575 per share. Pursuant to the
          agreement a cash payment of $308,485 was paid and the Company issued
          five, five-year notes, aggregating $308,485, bearing interest at 11.5%
          per annum were issued. Principal payments on the notes will be made in
          five installments aggregating $61,697. Interest on the notes is to be
          paid monthly. The notes are collateralized by the repurchased shares
          of the Company's Common Stock, which are held in escrow.


NOTE 10 - STOCK DIVIDEND:

          The Company approved an amendment of the Corporation's Certificate of
          Incorporation to (i) authorize new Class A Common Stock consisting of
          10,000,000 shares and having thirty (30) votes per share and (ii) to
          increase the aggregate number of shares of Common Stock the
          Corporation is authorized to issue from 10,000,000 to 30,000,000.

          The Company declared a stock dividend on its Common Stock, par value
          $.01 per share (the "Common Stock"), payable in shares of the newly
          authorized Class A Common Stock, par value $.01 per share (the "Class
          A Common Stock"), at the rate of one share of the Class A Common Stock
          for each share of the Common Stock issued at the close of business on
          December 5, 1997. The dividend shares were issued on December 17,
          1997.

          The Class A Common Stock, which was authorized by shareholders of the
          Company at an annual meeting held on November 18, 1997, entitles the
          holders to vote together with the holders of the Common Stock as a
          single class and to cast thirty (30) votes per share. Shares of the
          Class A Common Stock are non-transferable, but convertible at any time
          at the option of the holder into the Company's regular Common Stock.
          The Class A Common Stock participates in the earnings of the Company
          on the same basis as the Common Stock.

                                      F-16
<PAGE>

                         FIRECOM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - PENSION PLAN CONTRIBUTIONS:

          The Company makes contributions to a union-sponsored multi-employer
          defined contribution pension plan based on the wages paid to union
          employees covered under union contracts. Contributions to the
          multi-employer plan amounted to approximately $129,000 and $108,000 in
          1999 and 1998, respectively. The Company has no intention of
          withdrawing from the plan nor has the Company been informed that there
          is any intention to terminate the plan.


NOTE 12 - INCOME TAXES:

          The provision for income taxes consists of the following:


                                           Year Ended April 30,
                                       ------------------------------
                                           1999              1998
                                       ------------       -----------

              Current:
                Federal                 $ 562,000         $ 215,000
                State and City            383,000           230,000
                                        ---------         ---------
                                          945,000           445,000
                                        ---------         ---------
              Deferred:
                Federal                   (27,000)          (81,000)
                State and City            (19,000)          (59,000)
                                        ---------         ---------

                                          (46,000)         (140,000)
                                        ---------         ---------

                Total                   $ 899,000         $ 305,000
                                        =========         =========


          The following reconciles the Federal statutory rate to the effective
          income tax rate:


                                                                 1999      1998
                                                                ------    ------

            Computed tax expense at Federal statutory rate       34 %      34 %
            State and City provision, net of Federal tax         12        13
            Increasing research activities tax credit            (3)       (7)
            Other                                                 2        (4)
                                                                ------   ------

                                                                 45 %      36 %
                                                                =====     =====

                                         F-17
<PAGE>
                              FIRECOM INC. AND SUBSIDIARIES

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - INCOME TAXES (CONTINUED):

          The components of the Company's deferred tax asset and liability at
          April 30, 1999 are as follows:

                Allowance for doubtful accounts                   $ 185,000
                Stock appreciation rights                           108,000
                Accrued incentive compensation                       48,000
                Inventories                                         139,000
                Vacation and other fringe benefits                  194,000
                Other                                                38,000
                                                                  ----------
                Deferred tax asset                                  712,000

                Deferred tax liability, tax depreciation
                 in excess of book depreciation                      60,000
                                                                  ----------

                Net deferred tax asset                            $ 652,000
                                                                  ---------

          No valuation allowance was deemed necessary at April 30, 1999 as the
          Company believes that it is more likely than not that the deferred tax
          asset will be fully realized based on current projections of future
          taxable income.


NOTE 13 - COMMITMENTS AND CONTINGENCIES:

          The Company rents various warehouse facilities under noncancellable
          operating leases running through December 2003. The following are the
          aggregate future minimum rental payments, as of April 30, 1999:



                    Year ending April 30,
                            2000                                 $ 91,000
                            2001                                   62,000
                            2002                                   36,000
                            2003                                   27,000
                            2004                                   18,000
                                                                  --------

                                                                 $234,000
                                                                 ========

          Rent expense for the years ended April 30, 1999 and 1998 amounted to
          $94,000 and $59,000, respectively.

          The Company has certain employment agreements with key executives
          expiring through April 2000. Aggregate annual compensation under these
          agreements approximates $487,000.

                                        F-18
<PAGE>

                            FIRECOM, INC. AND SUBSIDIARIES

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - COMMITMENTS AND CONTINGENCIES (CONTINUED):

          In connection with the purchase of certain assets (See Note 2), the
          Company entered into a Consulting and Non-competition Agreement with
          the President of the company from whom the assets were acquired, and
          have continuing payment requirements of $25,000 per quarter through
          September 2000.

          In order to increase the distribution of its products and services on
          a national level, the Company has established a stock option plan for
          distributors of its products. The plan provides for the issuance of
          stock options to purchase the Company's common stock, at a
          pre-determined price ($.55, which approximated the fair market value
          of the common stock at the inception of the plan), provided that the
          distributor purchases a specified dollar amount of the Company's
          product over a three year period. Under the provisions of SFAS No.
          123, and using the fair value assumptions, as disclosed in Note 7, the
          Company has recorded a charge of approximately $17,000 to operations.

          Various lawsuits and claims arising in the ordinary course of business
          have been instituted against the Company. While the ultimate effects
          of such litigation cannot be determined at the present time, it is
          management's opinion, based on the advice of legal counsel, that any
          liabilities resulting from the actions would not have a material
          effect on the Company's financial position, results of operations or
          cash flows.


NOTE 14 - PURCHASE CONCENTRATIONS:

          For the year ended April 30, 1999 the Company had net purchases of 14%
          and 10% from two vendors, respectively. The loss of either of these
          two vendors would not materially hinder the operations of the Company.


NOTE 15 - CONCENTRATION OF CREDIT RISK:

          The Company's cash and cash equivalents, including certificates of
          deposit, of$4,061,000, are maintained in a financial institution, and
          at times exceed the Federal Deposit Insurance Corporation coverage of
          $100,000. Management regularly monitors the financial condition of the
          financial institution in order to keep the potential risk of loss to a
          minimum.

                                        F-19