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 September 30, 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  8,279,964  shares  of Common  Stock,  par  value  $0.01 per  share,
outstanding at November 14, 2000.


<PAGE>

STRATESEC INCORPORATED

Quarter ended September 30, 2000

Index

<TABLE>
<CAPTION>

                                                                                                              Page
<S>                                                                                                              <C>

Part I.  Financial information

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

         Balance Sheets as of December 31, 1999 and September 30, 2000
         (unaudited)..............................................................................................3

         Statements of Operations for the three months ended  September 30, 1999
         and 2000 and the nine months ended
         September 30, 1999 and 2000 (unaudited)..................................................................4

         Statements of Cash Flows for the nine months ended
         September 30, 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 6.   Exhibits and Reports on Form 8-K..................................................................12

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

</TABLE>

<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                                               STRATESEC INCORPORATED
                                                   BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                   December 31    September 30,
                                                                                       1999*          2000
                                                                                ---------------  --------------
                                                                                                   (Unaudited)
<S>                                                                             <C>             <C>

        ASSETS
Current assets:
   Cash and cash equivalents..................................................   $        2,831  $      228,523
   Accounts receivable, net of allowance for doubtful
     accounts of $675,000 in 1999 and 105,900 in 2000.........................        2,233,262       4,237,962
   Costs and estimated earnings in excess of billings of
     uncompleted contracts....................................................        2,865,886       3,608,966
   Inventory, net of allowance of 40,000 in 1999 and 2000.....................          245,903         904,510
   Prepaid expenses...........................................................            4,490          33,048
                                                                                 --------------  --------------
        Total currents assets.................................................        5,352,372       9,013,009
Property and equipment, net...................................................          546,520         525,413
Other assets  ................................................................           74,576          78,061
                                                                                 --------------  --------------
                                                                                 $    5,973,468  $    9,616,483
                                                                                 ==============  ==============

        LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Line of credit.............................................................   $      771,532  $    1,415,237
   Current maturities of capital lease obligations............................           72,860          65,000
   Accounts payable...........................................................        2,931,260       2,780,641
   Billings in excess of costs and estimated earnings on
     uncompleted contracts....................................................          234,338         393,603
   Accrued expenses and other.................................................          627,156         903,945
   Notes payable..............................................................
                                                                                 --------------  --------------
        Total current liabilities.............................................   $    4,637,146  $    5,558,426
                                                                                 --------------  --------------

Long-term liabilities:
   Capital lease obligations, less current maturities.........................           94,570          43,515

Shareholders' equity:
   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 and 8,630,043
     issued and
     8,279,964 outstanding in 2000............................................           68,902          86,300
   Treasury stock 252,000 shares in 1999 and
     350,079 shares in 2000...................................................        (409,564)       (612,814)
   Additional paid-in capital.................................................       22,315,957      24,908,964
   Accumulated deficit........................................................     (20,733,543)    (20,367,908)
                                                                                 -------------   --------------
     Total shareholders' equity...............................................        1,241,752       4,014,542
                                                                                 --------------  --------------
     Total liabilities & shareholders' equity.................................   $    5,973,468  $    9,616,483
                                                                                 ==============  ==============
* Derived from audited financial statements as of December 31, 1999.

</TABLE>

<PAGE>

                                               STRATESEC INCORPORATED
                                              STATEMENTS OF OPERATIONS
                                                     (Unaudited)
<TABLE>
<CAPTION>
                                                       Three Months Ended               Nine Months Ended
                                                          September 30,                   September 30,
                                                     1999             2000           1999             2000
                                                 --------------   -------------   -------------   -------------
<S>                                             <C>             <C>             <C>             <C>

Earned Revenue.................................  $   2,426,985   $   3,450,603   $   6,117,875   $  11,864,407
Cost of earned revenue.........................      1,745,593       2,006,213       4,330,578       7,618,787
                                                 -------------   -------------   -------------   -------------

  Gross profit.................................        681,392       1,444,390       1,787,297       4,245,620

Selling, general and administrative
   expenses....................................        880,065       1,324,993       2,488,542       3,568,809
                                                 -------------   -------------   -------------   -------------

  Operating income (loss)......................      (198,673)         119,397       (701,245)         676,811

Interest and financing fees....................       (37,052)       (116,156)       (153,340)       (317,053)
Interest and other income......................          1,182               -          14,422          5,878
                                                 -------------   -------------   -------------   -------------
  Net income (loss)............................  $   (234,543)   $       3,241   $   (840,163)   $     365,636
                                                  ============    ============    ============    ============

Net income (loss) per share--basic..............         (0.04)            0.00          (0.14)            0.05
                                                  =============   =============   =============   =============

Net income per share--diluted...................         (0.04)   $        0.00          (0.14)            0.04
                                                  =============    ============   =============   =============

Weighted average common shares
   Outstanding-basic...........................      5,978,440       8,019,260       5,978,440       8,019,260
                                                 =============   =============   =============   =============

Weighted average common shares
   Outstanding-diluted.........................             --       8,562,143              --       8,562,143
                                                 =============   =============   =============   =============
</TABLE>

<PAGE>

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

                                                                                       Nine Months Ended
                                                                                          September 30,
                                                                                     1999            2000
                                                                                --------------  --------------
<S>                                                                             <C>            <C>
Cash flows from operating activities:
   Net income (loss).........................................................   $    (840,163)  $      365,636
                                                                                --------------  --------------
Adjustments to reconcile net income (loss) to
   net cash used in operating activities:
   Provision for legal judgment................................................       1,900,000               -
   Depreciation and amortization.............................................          116,910         153,666
   Amortization of debt discount.............................................           35,697               -
Changes in operating assets and liabilities:
   Accounts receivable.......................................................         (55,219)     (2,004,700)
   Costs and estimated earnings in excess of
     billings on uncompleted contracts.......................................         (66,424)       (743,080)
   Inventory.................................................................        (234,673)       (658,607)
   Prepaid expenses..........................................................           66,571        (28,558)
   Other assets..............................................................               73         (3,485)
   Accounts payable..........................................................          306,870       (150,619)
   Billings in excess of costs and estimated
     earnings on uncompleted contracts.......................................         (12,672)         159,265
   Accrued expenses and other................................................        (347,800)         276,789
                                                                                --------------  --------------
       Total adjustments.....................................................        1,709,333     (2,999,330)
                                                                                --------------  --------------
       Net cash provided (used) by operating activities......................          869,170     (2,633,694)
                                                                                --------------  --------------
Cash flows from investing activities:
   Acquisition of plant and equipment........................................        (131,776)       (132,559)
                                                                                --------------  --------------
       Net cash provided (used) by investing activities......................        (131,776)       (132,559)
                                                                                --------------  --------------
Cash flows from financing activities:
   Proceeds from notes payable..................................................   (1,838,101)               -
   Principal payments on notes payable - shareholders...........................      930,000               -
   Proceeds from line of credit..............................................                -         643,705
   Proceeds from private placement of common stock...........................                -       2,610,405
   Principal payments on capital lease obligations...........................         (45,725)        (58,915)
   Purchase of treasury stock................................................        (210,220)       (203,250)
                                                                                --------------  --------------
     Net cash provided (used) by financing activities........................      (1,164,046)       2,991,945
                                                                                --------------  --------------
Net increase (decrease) in cash and cash equivalents.........................        (426,652)         225,692
Cash and cash equivalents at beginning of period.............................          442,582           2,831
                                                                                --------------  --------------
Cash and cash equivalents at end of period...................................   $       15,930  $      228,523
                                                                                ==============  ==============
Supplemental Disclosures of Cash Flow Information:
   Cash paid for:
     Interest expense........................................................   $      153,339  $      301,063
     Income tax..............................................................   $            -  $            -

</TABLE>


<PAGE>


                                            NOTES TO FINANCIAL STATEMENTS

1.  Basis of Presentation

         The  unaudited  balance  sheet as of September  30, 2000 and  unaudited
statement of  operations  and statement of cash flows for the three months ended
September  30,  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
September  30, 2000 and for the three and nine months ended  September  30, 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 and
nine months ended September 30, 2000 are not  necessarily  indicative of results
to be expected for the full year.

2.  Cost and Estimated Earnings on Uncompleted Contracts

         Cost and estimated  earnings on  uncompleted  contracts at December 31,
1999 and  September  30, 2000 which are expected to be collected  within year as
follows:

                                 December 31, 1999     September 30, 2000
                               -------------------     -------------------
Cost Incurred On Contracts     $        26,431,919      $     33,956,810
Estimated Earnings                       8,412,885            10,808,660
                               -------------------      ----------------
                                        34,844,804            44,765,470
Less Billings To Date                   32,213,256            41,550,107
                               -------------------      ----------------
                               $         2,631,548      $      3,215,363
                               ===================      ================



<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.

         During the quarter the Company experienced  improvement in results over
the same period in 1999, but had expected an even stronger  quarter in 2000. The
Company  has  experienced  some  delays  from  clients in  implementing  capital
expenditures for security, due to the slow down in economy. However, the Company
currently  has in excess of $20  million in  backlog  and  identified  follow on
business from existing clients as well as a strong bid and proposal log.

         The  Company  continues  to build its  infrastructure  and  broaden its
client base. The Company believes its annual revenues for year 2000 will be from
$16 to 18 million and should  reach from $25 to 30 million in year 2001,  versus
1999 revenues of $10.6  million and 1998  revenues of $6.6 million.  The Company
has added senior sales personnel in Texas, Georgia, Virginia and California. The
2000 revenue  results do not reflect the  relationships  and experience that the
expanded sales force  contribute.  In addition,  the move to the west coast will
add several million dollars to the existing revenue base of the Company.

         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:

<TABLE>
<CAPTION>
                                                               Three Months Ended         Nine Months Ended
                                                                  September 30,             September 30,
                                                          --------------------------  ------------------------
                                                               1999         2000          1999         2000
                                                          -------------  -----------  -----------  -----------
<S>                                                          <C>          <C>          <C>          <C>
Earned revenues...........................................      100.0%       100.0%       100.0%        100.0%
Cost of earned revenues...................................        71.9         58.1         70.8          64.2
                                                            ----------   ----------   ----------   -----------
   Gross profit...........................................        28.1         41.9         29.2          35.8
Selling general and administrative expenses...............        36.3         38.4         40.6          30.1
                                                            ----------   ----------   ----------   -----------
   Operating income (loss)................................       (8.2)          3.5       (11.4)           5.7
Interest and financing fees...............................       (1.5)        (3.4)        (2.5)         (2.7)
Interest and other income.................................         0.0          0.0          0.2           0.1
                                                            ----------   ----------   ----------   -----------

   Net income (loss)......................................      (9.7)%         0.1%      (13.7)%          3.1%
                                                            ==========   ==========   ==========   ===========
</TABLE>

Three Months Ended September 30, 2000 Compared With Three Months Ended September
30, 1999

         Revenues  increased  by 42% from $2.4 million in the three months ended
September 30, 1999 to $3.4 million in the three months ended September 30, 2000.
The increase was due primarily to revenue from new customers.  The customer base
increased to 70 accounts with revenue split evenly between 15 major accounts and
the other 50 small or new accounts.

         Cost of earned revenues increased from $1.7 million in the three months
ended September 30, 1999 to $2.0 million in the three months ended September 30,
2000,  primarily  due to the increase in revenues.  Gross margin  improved  from
28.1% in the 1999 period to 41.9% in 2000. The  improvement in margins  resulted
from  better  volume  discounts  on  material  prices as well as  higher  margin
contracts.

         Selling,  general and administrative expenses increased 50.6% from $0.8
million in the three  months  ended  September  30, 1999 to $1.3  million in the
three months ended September 30, 2000.

         Interest expense and financing fees increased from $0.03 million in the
three months ended September 30, 1999 to $0.10 million in the three months ended
September 30, 2000.  Interest expenses increased due to an increase in borrowing
resulting from the increase in revenues and costs.

         Net  income  improved  from a net loss of $0.2  million  in 1999 to net
income of $3.2 thousands in 2000.

Nine Months Ended  September 30, 2000 Compared With Nine Months Ended  September
30, 1999

         Revenues  increased  by 94% from $6.1  million in the nine months ended
September 30, 1999 to $11.9 million in the nine months ended September 30, 2000.
The increase was due primarily to revenue from new customers.

         Cost of earned revenues  increased from $4.3 million in the nine months
ended  September 30, 1999 to $7.6 million in the nine months ended September 30,
2000,  primarily due to the increase in revenues.  Gross margin  increased  from
29.2% in the 1999 period to 35.8% in 2000.  Gross margin  increases  were due to
better volume discounts on cost of material as well as higher margin contracts.

         Selling,  general  and  administrative  expenses  as  a  percentage  of
revenues  decreased  from 40.7% in the nine months ended  September  30, 1999 to
30.2% in the nine months ended  September  30, 2000.  The decrease was primarily
due to Company initiatives to reduce unnecessary  administrative overhead costs,
and due to the  increase in the revenue  base.  These  expenses  also  reflect a
significant increase in expenses related to increasing the sales force.

         Interest expense and financing fees remained at 2.5% of revenues in the
nine months ended  September 30, 1999 and in the nine months ended September 30,
2000.

         Net  income  improved  from a net loss of $0.84  million in 1999 to net
income of $0.37 million in 2000.

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.

         During the nine months ended  September  30, 2000,  approximately  $2.6
million  of cash  was used in  operating  activities.  This was a result  of net
income offset by increases in accounts receivables,  inventories,  and costs and
estimated  earnings in excess of billings on  uncompleted  contracts  due to the
increase in business during the period.

         As of  September  30,  2000,  the Company had cash of $0.2  million and
working   capital  of  $3.5   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.

<PAGE>

PART II.  OTHER INFORMATION

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


November 14, 2000

<PAGE>

<TABLE>
<CAPTION>
                                                    EXHIBIT 11
                                       Calculation of Weighted Average Shares
                                     Outstanding for Net Income (Loss) Per Share

                                                                                      Nine Months Ended
                                                                                         September 30,
                                                                                    1999               2000
                                                                                -------------    ---------------
<S>                                                                             <C>             <C>
Earnings:
Net Income (Loss)..........................................................     $   (840,163)    $      365,636
                                                                                =============    ==============

Shares:
Weighted Average Number of Common Shares
   Outstanding.............................................................         5,978,440         8,019,260
                                                                                -------------    --------------
Average Common Shares Outstanding and Equivalents..........................                 -         8,216,487
                                                                                =============    ==============

Net Income (Loss) Per Share-Basic..........................................     $      (0.14)    $         0.05
                                                                                =============    ==============
Net Income (Loss) Per Share-Diluted........................................     $           -    $         0.04
                                                                                =============    ==============
</TABLE>

* -- Calculation would be antidilutive for 1998.