SECURITIES AND EXCHANGE COMMISSION

                      WASHINGTON, D.C. 20549

                            FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
OF 1934.

               For the quarterly period ended March 31, 2000

                      Commission File Number:  1-13427



                            STRATESEC INCORPORATED

State of Incorporation:  Delaware             I.R.S. Employer I.D.:  22-2817302

                              105 Carpenter Drive
                           Sterling, Virginia 20164
                                (703) 709-8686


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter periods that the registrant was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past ninety days.

                                    Yes      X                No
                                         ------------


There were shares of Common Stock, par value $0.01 per share, outstanding at May
, 2000.


<PAGE>




                                        2

STRATESEC INCORPORATED

Quarter ended March 31, 2000

Index

                                                                         Page

Part I.  Financial information

     Item 1.  Financial Statements...........................................3

         Balance Sheets as of December 31, 1999 and March 31, 2000
         (unaudited).........................................................3

         Statements of Operations for the three months ended
         March 31, 1999 and 2000 (unaudited).................................4

         Statements of Cash Flows for the three months ended
         March 31, 1999 and 2000 (unaudited).................................5

         Notes to Financial Statements.......................................6

     Item 2.  Management's Discussion and Analysis of

               Financial Condition and Results of Operations.................7

Part II.  Other information

     Item 1.  Legal Proceedings.............................................11

     Item 4.  Submission of Matters to a Vote of Security Holders...........11

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

     Signature..............................................................13


<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                                               STRATESEC INCORPORATED
                                                   BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                   December 31,       March 31,
                                                                                       1999*          2000
                                                                                 --------------  ---------------
                                                                                                   (Unaudited)
<S>                                                                              <C>             <C>
        ASSETS
Current assets:
   Cash and cash equivalents..................................................   $        2,831  $      453,264
   Accounts receivable, net of allowance for doubtful
     accounts of $675,000 in 1999 and 2000....................................        2,233,262       3,937,008
   Costs and estimated earnings in excess of billings on
     uncompleted contracts....................................................        2,865,886       3,015,515
   Inventory, net of allowance of 40,000 in 1999 and 2000.....................          245,903         412,981
   Prepaid expenses...........................................................            4,490           3,143
                                                                                 --------------  --------------
        Total currents assets.................................................        5,352,372       7,821,911
Property and equipment, net...................................................          546,520         570,441
Other assets  ................................................................           74,576          75,126
                                                                                 --------------  --------------
                                                                                 $    5,973,468  $    8,467,478
                                                                                 ==============  ==============

        LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Line of credit.............................................................   $      771,532  $    1,105,417
   Current maturities of capital lease obligations............................           72,860          80,000
   Accounts payable...........................................................        2,931,260       2,375,723
   Billings in excess of costs and estimated earnings on
     uncompleted contracts....................................................          234,338         324,397
   Accrued expenses and other.................................................          627,156         621,776
   Notes payable..............................................................               --              --
                                                                                 --------------  --------------
        Total current liabilities.............................................   $    4,637,146  $    4,507,313

Long-term liabilities:
   Capital lease obligations, less current maturities.........................           94,570          66,429

Shareholders' equity (deficiency):
   Common stock, $0.01 par value per share; authorized
     20,000,000 shares; 6,890,189 issued and 6,638,189
     outstanding shares in 1999 and8,628,377 issued and
     8,326,377 outstanding in 2000............................................           68,902          86,284
   Treasury stock 252,000 shares in 1999 and
     302,000 shares in 2000...................................................        (409,564)       (484,564)
   Additional paid-in capital.................................................       22,315,957      24,905,857
   Accumulated deficit........................................................     (20,733,543)    (20,613,841)
                                                                                 -------------   -------------
     Total shareholders' equity...............................................        1,241,752       3,893,736
                                                                                 --------------  --------------
     Total liabilities & shareholders' equity.................................   $    5,973,468  $    8,467,478
                                                                                 ==============  ==============
</TABLE>



* Derived from audited financial statements as of December 31, 1999.


<PAGE>



                                               STRATESEC INCORPORATED
                                              STATEMENTS OF OPERATIONS

                                                     (Unaudited)

                                                     Three Months Ended
                                                            March 31,

                                                     1999             2000
                                                 -------------   -------------
Earned Revenues................................  $   1,510,597   $   3,667,030
Cost of earned revenue.........................      1,181,397       2,231,988
                                                 -------------   -------------

  Gross profit.................................        329,200       1,435,042

Selling, general and administrative
   expenses....................................        578,022       1,230,443
                                                 -------------   -------------

  Operating income (loss)......................      (248,822)         204,599

Interest and financing fees....................       (55,989)        (85,370)
Interest and other income......................         12,165             473
                                                 -------------   -------------

  Net income (loss)............................  $   (292,646)   $     119,702
                                                  ===========     ============

Net income (loss) per share--basic.............         (0.05)            0.02
                                                  ============    =============

Net income per share--diluted..................            N/a   $        0.02
                                                  =============    ============

Weighted average common shares
   Outstanding-basic...........................      5,983,457       7,240,861
                                                 =============   =============

Weighted average common shares
   Outstanding-diluted.........................            n/a       7,547,893
                                                 =============   =============




<PAGE>




                                       12

                      STRATESEC INCORPORATED
                     STATEMENTS OF CASH FLOWS
                            (Unaudited)
<TABLE>
<CAPTION>

                                                                                     Three Months Ended
                                                                                            March 31,
                                                                                     1999            2000
                                                                                --------------  -------------
<S>                                                                             <C>             <C>
Cash flows from operating activities:
   Net income (loss).........................................................   $    (292,646)  $      119,702
                                                                                -------------   -------------
Adjustments to reconcile net income (loss) to
   net cash used in operating activities:
     Depreciation and amortization...........................................           36,673          41,361
     Amortization of debt discount...........................................           11,899
Changes in operating assets and liabilities:

   Restricted cash...........................................................        1,900,000
   Accounts receivable.......................................................        (288,729)     (1,153,746)
Costs and estimated earnings in excess of
     billings on uncompleted contracts.......................................           19,615       (149,629)
Inventory....................................................................        (159,410)       (167,078)
   Prepaid expenses..........................................................            3,136           1,347
   Other assets..............................................................               --           (550)
   Accounts payable..........................................................        (288,857)       (555,537)
   Billings in excess of costs and estimated
     earnings on uncompleted contracts.......................................         (12,672)          90,059
   Accrued expenses and other................................................         (70,559)          (5,380)
                                                                                -------------   --------------
       Total adjustments.....................................................        1,151,096     (1,899,153)
                                                                                --------------  --------------
       Net cash from (used in) operating activities..........................          858,450     (1,779,451)

Cash flows from investing activities:

   Acquisition of plant and equipment........................................          (9,511)        (65,282)
                                                                                -------------   -------------
   Net cash provided (used) by investing activities..........................          (9,511)        (65,282)
                                                                                -------------   -------------

Cash flows from financing activities:

   Proceeds from line of credit..............................................               --         333,885
   Proceeds from private placement of common stock...........................                        2,057,282
   Principal payments on debentures..........................................        (920,000)              --
   Principal payments on capital lease obligations...........................         (11,228)        (21,001)
   Purchase of treasury stock................................................        (195,177)        (75,000)
                                                                                -------------   -------------
   Net cash provided by (used in) financing activities.......................      (1,126,405)       2,295,166
                                                                                --------------  --------------
Net (decrease) in cash and cash equivalents..................................        (277,466)         450,433
Cash and cash equivalents at beginning of period.............................          442,582           2,831
                                                                                --------------  --------------
Cash and cash equivalents at end of period...................................   $      165,116  $      453,264
                                                                                ==============  ==============

Supplemental Disclosures of Cash Flow Information:
   Cash paid for:
     Interest expense........................................................   $       55,989  $       85,370
     Income taxes............................................................   $           --  $           --

Supplemental Schedule of Non-cash Financing and
   Investing Activities:

     Sale of common stock by receipt of note receivable......................   $           --  $      550,000

</TABLE>



                        NOTES TO FINANCIAL STATEMENTS

1.  Basis of Presentation

         The  unaudited  balance  sheet  as of  March  31,  2000  and  unaudited
statement of  operations  and statement of cash flows for the three months ended
March  31,  1999  and  2000  are  condensed  financial  statements  prepared  in
accordance  with the  rules  and  regulations  of the  Securities  and  Exchange
Commission.  Accordingly,  they omit  certain  information  included in complete
financial  statements  and  should  be read in  conjunction  with the  financial
statements  and notes  included in the Company's  Annual Report on Form 10-K for
the year  ended  December  31,  1999  filed  with the  Securities  and  Exchange
Commission on March 30, 2000.

         In the opinion of the Company,  the unaudited  financial  statements at
March 31, 2000 and for the three  months  ended March 31, 1999 and 2000  include
all adjustments, consisting only of normal recurring adjustments necessary for a
fair  presentation of the financial  position and results of operations for such
periods. Results of operations for the three months ended March 31, 2000 are not
necessarily indicative of results to be expected for the full year.

2.  Costs and Estimated Earnings on Uncompleted Contracts

         Costs and estimated  earnings on uncompleted  contracts at December 31,
1999 and March 31, 2000 which are expected to be  collected  within one year are
as follows:

                                             December 31,   March 31,
                                                 1999          2000
                                          -------------  --------------
Costs incurred on contracts............  $   26,431,919  $   28,663,907
Estimated earnings......................      8,412,885       9,191,515
                                           ------------  --------------
                                             34,844,804      37,855,422
Less billings to date...................     32,213,256      35,164,304
                                           ------------  --------------
                                         $    2,631,548  $    2,691,118
                                         ==============  ==============




<PAGE>



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

         This discussion and analysis of the Company's  financial  condition and
historical  results  of  operations  should  be read  in  conjunction  with  the
condensed financial  statements and the related notes included elsewhere in this
report.

Overview

         The   Company   is   a   single-source   provider   of   comprehensive,
technology-based   security  solutions  for  medium  and  large  commercial  and
government  facilities  in the United  States and abroad.  The Company  offers a
broad  range  of  services,   including:   (i)  consulting  and  planning;  (ii)
engineering  and design;  (iii) systems  integration;  and (iv)  maintenance and
technical support.

         The first quarter of 2000  continued the  improvements  in new business
development.  By the end of the first  quarter  the  company  had $20 million in
backlog and follow-on projects  identified with existing  customers.  During the
first quarter the  Company's  strategy of adding large  commercial  clients with
many facilities  began to significantly  expand the recurring  revenue base from
existing  customers.  The Company  received over $5 million in new awards during
the quarter. In addition, the Company added 10 new customers during the quarter.
There were no customers lost during the quarter. The Company's focused marketing
efforts to provide high quality integrated  security systems to major commercial
accounts  will allow the  companies  to grow  revenue and profits  over the long
term.

         The Company derives its revenues primarily from long-term,  fixed-price
contracts.  Earnings are  recognized  based upon the Company's  estimates of the
cost and percentage of completion of individual contracts. Earned revenues equal
the project's  total contract  amount  multiplied by the proportion  that direct
project  costs  incurred on a project bear to  estimated  total  project  costs.
Project costs include direct labor and benefits,  direct  material,  subcontract
costs, project related travel and other direct expenses.

         Clients  are  invoiced  based upon  negotiated  payment  terms for each
individual contract. Terms usually include a 25% down payment and the balance as
stages of the work are  completed.  Maintenance  contracts  are billed either in
advance,  monthly,  or quarterly.  As a result, the Company records as an asset,
costs and estimated earnings in excess of billings, and as a liability, billings
in excess of costs and estimated earnings.


<PAGE>



Results of Operations

         The  following  table sets  forth the  percentages  of earned  revenues
represented  by  certain  items   reflected  in  the  Company's   statements  of
operations:

                                                   Three Months Ended
                                                        March 31,
                                                   1999         2000
                                                  ---------  ----------
Earned revenues...................................  100.0%       100.0%
Cost of earned revenues...........................    78.2         60.9
                                                  --------   ----------
   Gross profit...................................    21.8         39.1
Selling general and administrative expenses.......    38.3         33.5
                                                  --------   ----------
   Operating income (loss)........................  (16.5)          5.6
Interest and financing fees.......................   (3.7)        (2.3)
Interest and other income.........................     0.8          0.0
                                                  --------   ----------

   Net income (loss).............................. (19.4)%         3.3%
                                                  ------     ---------

Three Months Ended March 31, 2000 Compared With Three Months Ended March 31,
1999

         Revenues  increased by 142% from $1.5 million in the three months ended
March 31, 1999 to $3.7 million in the three  months  ended March 31,  1999.  The
increase was due primarily to revenue of new  customers  and  increased  revenue
from existing customers. The increase in revenue was primarily due to the growth
of large commercial accounts such as MCI Worldcom and Nokia.

         Cost of earned revenues  increased from $12 million in the three months
ended March 31, 1999 to $2.2  million in the three  months ended March 31, 2000,
primarily due to the increase in revenues.  Gross margin increased from 21.8% in
the 1999 period to 39.1% in 2000.  Margins improved due to improved pricing from
key vendors on several large projects and higher rates for labor.

         Selling,  general and  administrative  expenses increased 113% from $.6
million in the three  months  ended March 31, 1999 to $1.2  million in the three
months  ended  March  31,  2000.  The  increase  was  primarily  due to  Company
initiatives  to  increase  business  development,  and to manage  the  increased
business.  The  growth in  selling,  general  and  administrative  expenses  was
proportionately less than the growth in revenues thereby decreasing the expenses
as a percentage of revenues.

         Interest expense and financing fees increased from $0.06 million in the
three  months  ended March 31, 1999 to $0.1  million in the three  months  ended
March 31, 2000.  The growth in Interest and Financing  Fees was  proportionately
less than the growth in revenue  thereby  decreasing  the Interest and Financing
Fees as a percentage of revenue.

         Net loss improved from a net loss of $0.3 million in 1999 to net income
of $0.1 million in 2000.  The  improvement  was due to improved  gross  margins,
constrained  growth  in  selling,   general  and  administrative   expenses  and
dramatically improved revenue.

Liquidity and Capital Resources

         In October 1997, the Company  completed its initial public  offering of
Common  Stock,  which  resulted in net proceeds to the Company of  approximately
$9.7 million  after payment of offering  expenses by the Company.  In the fourth
quarter of 1997, the Company  received  proceeds of  approximately  $0.7 million
upon the  exercise of warrants to  purchase  269,382  shares of Common  Stock by
employees.  In October  1997,  the Company used  proceeds of the initial  public
offering to repay $3.4 million of outstanding notes payable.

         During April 1998,  the Board of Directors  approved the issuance of up
to $2.0 million of  convertible  subordinated  debentures to provide  additional
working capital.  As of May 13, 1998, the Company had issued and sold $1,450,000
of  debentures.  The Company sold an  additional  $400,000 of  debentures  as of
August  25,  1998.  The  debentures  had an  interest  rate of 10%,  were due on
December 31, 1999 and were convertible into Common Stock of the Company at $8.50
per share. In addition,  the holders were issued 100 warrants for each $1,000 of
investment with an exercise price of $2.50 and a term of three years.  The value
of the warrants of $71,394 was determined based upon the Black Scholes Valuation
Model and was recorded as additional paid-in capital.

         During February 1999, the $1.9 million the Company was required to post
as  collateral  for a bond pending its appeal of a lawsuit was released when the
trial  court's  judgment was  reversed.  In February  1999,  the Company  repaid
$920,000 of the outstanding debentures.

         During  September  1999 all of the holders of the  company's 10% senior
notes  totaling  $930,000 due December 31, 1999,  have agreed to exchange  their
notes for the Company's common stock valued at $1.50 per share. Additionally, to
support the  significant  increase  in  business,  the board  approved a private
placement of 500,000 shares at $1.50 per share, which was subsequently increased
to 1,204,855 shares. The board also approved the sale of up to 21% equity in the
Company to a  minority  partner.  Netcom  Solutions  International  subsequently
purchased  approximately 8% or 700,000 shares of the Company at $1.50 per share.
As of March 23, 2000, all of these transactions had been completed.  In summary,
$930,000 of debt was  converted  to equity,  $1.8  million  was  received by the
private  placement and $1.05  million in the form of cash and a short-term  note
was received from the sale of a minority interest.

         As of March 31, 2000,  the Company had cash of $0.4 million and working
capital of $0.7  million.  The  Company is pursuing  obtaining  financing/credit
facilities  to increase  working  capital to fund a  significant  ramp up of new
business.

         This Form 10-Q  includes  certain  statements  that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act. All statements,  other than statements of historical fact, included in this
Form 10-Q that addresses  activities,  events,  or developments that the Company
expects,  projects,  believes,  or anticipates  will or may occur in the future,
including matters having to do with existing or future contracts,  the Company's
ability to fund its operations and repay debt,  business  strategies,  expansion
and growth of operations and other such matters, are forward-looking statements.
These  statements  are based on certain  assumptions  and  analyses  made by our
management in light of its experience  and its perception of historical  trends,
current conditions,  expected future developments, and other factors it believes
are appropriate in the  circumstances.  These statements are subject to a number
of assumptions, risks and uncertainties, including general economic and business
conditions,  the business  opportunities (or lack thereof) that may be presented
to  and  pursued  by the  Company,  the  Company's  performance  on its  current
contracts and its success in obtaining new contracts,  the Company's  ability to
attract and retain  qualified  employees,  and other factors,  many of which are
beyond the  Company's  control.  You are  cautioned  that these  forward-looking
statements are not guarantees of future  performance  and that actual results or
developments may differ materially from those projected in such statements.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

         [Any new or pending?]

Item 2.  Changes in Securities and Use of Proceeds.

         In the  fourth  quarter  of 1999 and the  first  quarter  of 2000,  the
Company completed a private placement of 1,204,855 shares of its common stock to
a limited  number of  sophisticated  and/or  accredited  investors at a price of
$1.50 per share for aggregate cash proceeds of $1,807,282.  In the first quarter
of 2000 the company  sold  700,000  shares of its common stock to a company at a
price of $1.50 per share for aggregate proceeds of $1,050,000 consisting of cash
of $500,000  and a note  payable of  $550,000.  Each of these  transactions  was
exempt from the  registration  requirements  of the  Securities Act of 1933 (the
"Act") pursuant to section 4(2) of the Act because they did not involve a public
offering of securities.

Item 6.  Exhibits and Reports on Form 8-K

a.       Exhibits

         11.1     Calculation of Net Income (Loss) Per Share

         27.1     Financial Data Schedule

b.       Reports on Form 8-K.

         None

Signature

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

STRATESEC INCORPORATED


 /s/BARRY MCDANIEL

Barry McDaniel
Chief Operating Officer

May     , 2000