SECURITIES AND EXCHANGE COMMISSION

                     WASHINGTON, D.C. 20549

                          FORM 10-QSB

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

           For the quarterly period ended September 30, 2001

                    Commission File Number:  1-13427


                         STRATESEC INCORPORATED

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

                          7544 Fullerton Court
                      Springfield, Virginia  22153
                             (703) 912-8704


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 10,279,964 shares of Common Stock, par value $0.01 per share,
outstanding at November 9, 2001.


<PAGE>




                                        2

STRATESEC INCORPORATED

Quarter ended September 30, 2001

Index

<TABLE>
<CAPTION>

                                                                                                              Page
<S>                                                                                                         <C>
Part I.  Financial information

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

         Balance Sheets as of December 31, 2000 and September 30, 2001
         (unaudited)..............................................................................................3

         Statements of Operations for the three months ended September 30, 2000
         and 2001 and the nine months ended
         September 30, 2000 and 2001 (unaudited)..................................................................4

         Statements of Cash Flows for the nine months ended
         September 30, 2000 and 2001 (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,
                                                                                       2000*          2001
                                                                                 --------------  --------------
                                                                                                   (Unaudited)
<S>                                                                              <C>             <C>
        ASSETS
Current assets:
   Cash and cash equivalents..................................................   $      887,214  $      218,505
   Accounts receivable, net of allowance for doubtful
     accounts of $350,000 in 2000 and $545,000 in 2001........................        3,925,536       3,790,981
   Costs and estimated earnings in excess of billings of
     uncompleted contracts....................................................        4,615,240       2,219,664
   Inventory, net of allowance of $70,000 in 2000 and 2001....................          370,882         684,177
   Other receivables..........................................................           28,124         408,421
   Prepaid expenses...........................................................           45,150          32,370
                                                                                 --------------  --------------
        Total currents assets.................................................        9,872,146       7,354,118
Property and equipment, net...................................................          675,913         527,760
Note Receivable from Stockholder..............................................          327,277         327,277
Other assets  ................................................................          124,068         122,364
                                                                                 --------------  --------------
                                                                                 $   10,999,404  $    8,331,519
                                                                                 ==============  ==============

        LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable...........................................................   $    3,120,396  $    2,573,833
   Accrued expenses and other.................................................        1,020,746         858,920
   Income taxes payable.......................................................        1,245,000       1,245,000
   Bank and other lines of credit.............................................        2,331,555       4,014,198
   Billings in excess of costs and estimated earnings on
     uncompleted contracts....................................................          137,309          98,914
   Capital lease obligations..................................................           69,642          59,226
                                                                                 --------------  --------------
        Total current liabilities.............................................   $    7,924,648  $    8,850,091
                                                                                 --------------  --------------

Long-term liabilities:
   Capital lease obligations, less current maturities.........................           22,616            --

Shareholders' equity:
   Common stock, $0.01 par value per share; authorized
     20,000,000 shares; 10,280,043 issued and 10,279,964
     outstanding shares in 2000 and 2001......................................          102,800         102,800
   Treasury stock 79 shares in 2001...........................................            (164)           (164)
   Additional paid-in capital.................................................       24,279,914      24,279,914
   Accumulated deficit........................................................     (21,330,410)    (24,901,122)
                                                                                 -------------   --------------
     Total shareholders' equity...............................................        3,052,140       (518,572)
                                                                                 --------------  --------------
     Total liabilities & shareholders' equity.................................   $   10,999,404  $    8,331,519
                                                                                 ==============  ==============
</TABLE>

* Derived from audited financial statements as of December 31, 2000.


<PAGE>



                                               STRATESEC INCORPORATED
                                              STATEMENTS OF OPERATIONS
                                                     (Unaudited)

<TABLE>
<CAPTION>

                                                       Three Months Ended               Nine Months Ended
                                                          September 30,                   September 30,
                                                     2000             2001           2000             2001
                                                 -------------   -------------   -------------   -------------
<S>                                              <C>             <C>             <C>             <C>
Earned Revenue.................................  $   7,812,346   $   1,694,650   $  18,665,550   $   7,844,776
Cost of earned revenue.........................      5,127,337       1,025,430      11,661,441       5,130,539
                                                 -------------   -------------   -------------   -------------

  Gross profit.................................      2,685,009         669,220       7,004,109       2,714,237

Reserve-bad debt expense.......................        281,171       (200,000)         281,171       2,000,000
Selling, general and administrative
   expenses....................................      2,502,588       1,452,527       5,044,706       4,143,919
                                                 -------------   -------------   -------------   -------------

  Operating income (loss)......................       (98,750)       (583,307)       1,678,232     (3,429,682)

Interest and financing fees....................      (120,145)        (52,613)       (321,097)       (351,325)
Interest and other income......................         45,615         204,956          74,266         210,295
                                                 -------------   -------------   -------------   -------------
  Net income (loss)............................  $   (173,280)   $   (430,961)   $   1,431,401   $ (3,570,712)
                                                 =============    ============    ============    ============

Net income (loss) per share--basic.............. $      (0.02)   $      (0.04)   $        0.14   $      (0.35)
                                                 =============    ============    ============    ============

Net income per share--diluted...................             --   $          --   $        0.14              --
                                                  =============    ============    ============   =============

Weighted average common shares
   Outstanding-basic...........................     10,279,131      10,279,964       9,941,397      10,279,964
                                                 =============   =============   =============   =============

Weighted average common shares
   Outstanding-diluted.........................             --              --      10,198,783              --
                                                 =============   =============   =============   =============
</TABLE>



<PAGE>



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

                                                                                       Nine Months Ended
                                                                                          September 30,
                                                                                     2000            2001
                                                                                --------------  --------------
<S>                                                                             <C>             <C>
Cash flows from operating activities:
   Net income (loss).........................................................   $    1,431,401  $  (3,570,712)
                                                                                --------------  --------------
Adjustments to reconcile net income (loss) to
   net cash used in operating activities:
   Depreciation and amortization.............................................          206,688         202,288
   Bad debt expense..........................................................          281,171       2,200,000
Changes in operating assets and liabilities:
   Accounts receivable.......................................................      (3,049,586)     (2,065,445)
   Costs and estimated earnings in excess of
     billings on uncompleted contracts.......................................        (878,368)       2,395,576
   Inventory.................................................................        (739,792)       (313,295)
   Other receivables.........................................................               --       (380,297)
   Other current assets......................................................         (23,702)          12,780
   Other assets..............................................................          (3,485)           1,704
   Accounts payable..........................................................        (203,756)       (546,563)
   Accrued expenses and other................................................          404,353       (161,826)
   Income taxes payable......................................................          750,000              --
   Billings in excess of costs and estimated
     earnings on uncompleted contracts.......................................      (2,952,086)        (38,395)
                                                                                --------------  --------------
       Total adjustments.....................................................      (6,208,563)       1,306,527
                                                                                --------------  --------------
       Net cash provided (used) by operating activities......................      (4,777,162)     (2,264,185)
                                                                                --------------  --------------
Cash flows from investing activities:
   Acquisition of plant and equipment........................................        (147,163)        (54,135)
                                                                                --------------  --------------
       Net cash provided (used) by investing activities......................        (147,163)        (54,135)
                                                                                --------------  --------------
Cash flows from financing activities:
   Proceeds from line of credit..............................................        1,082,560       1,682,643
   Proceeds from private placement of common stock...........................        2,610,405              --
   Dividends paid............................................................      (1,277,069)              --
   Principal payments on capital lease obligations...........................         (58,915)        (33,032)
   Purchase of treasury stock................................................        (203,250)              --
                                                                                --------------  --------------
     Net cash provided (used) by financing activities........................        2,153,731       1,649,611
                                                                                --------------  --------------
Net increase (decrease) in cash and cash equivalents.........................      (2,770,594)       (668,709)
Cash and cash equivalents at beginning of period.............................        3,084,443         887,214
                                                                                --------------  --------------
Cash and cash equivalents at end of period...................................   $      313,849  $      218,505
                                                                                ==============  ==============
Supplemental Disclosures of Cash Flow Information:
   Cash paid for:
     Interest expense........................................................   $      305,024  $      219,762
     Income tax..............................................................   $           --  $           --
</TABLE>



<PAGE>



                       NOTES TO FINANCIAL STATEMENTS

1.  Basis of Presentation

         The unaudited balance sheet as of September 30, 2001 and unaudited
statement of operations and statement of cash flows for the nine months ended
September 30, 2000 and 2001 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, 2000 filed with the Securities and Exchange
Commission on March 30, 2001.

         In the opinion of the Company, the unaudited financial statements at
September 30, 2001 and for the three and nine months ended September 30, 2000
and 2001 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, 2001 are not necessarily indicative of results
to be expected for the full year.

         On November 30, 2000, the Company acquired Security Systems
Integration, Inc. (SSI) in a business combination accounted for as a pooling of
interests. In the transaction, SSI merged with a wholly owned subsidiary of the
Company, which then merged into the Company. The Company exchanged 1,650,000 in
newly issued shares and 350,000 in treasury shares of its common stock for all
of the outstanding stock of SSI.

2.  Cost and Estimated Earnings on Uncompleted Contracts and Billings in Excess
    of Costs and Estimated Earnings on Uncompleted Contracts

         Cost and estimated earnings in excess of billings on uncompleted
contracts, as well as the related billings in excess of costs and estimated
earnings on uncompleted contracts, represent revenue recognized on long-term
fixed-price contracts based on the percentage-of-completion method less the
related billings to date. Revenue recognized in excess of billing is included in
the asset balance and billings in excess of recognized revenue is included in
the liability balance.






<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 Company attributes its recent poor financial results to continuing
poor economic conditions, particularly the reduction in capital expenditures by
business. Additionally, the Company's government business continued to be
significantly lower than the previous year as a result of a change in mission of
the Company's principal government customer. The Customer moved to a research
and development mission instead of a system procurement mission. As a result of
the continuing reduction in capital spending by the commercial customers and the
need to replace the principal government customer, the Company's revenue was
less than 25% of the revenue of the third quarter in 2000. The Company was able
to improve gross margins to 39% by using its credit facility to purchase
material directly from the manufacturer at significant discounts to the prices
charged by distributors. The Company can continue to generate gross margins in
excess of 35% so long as the bank provides a sufficient line to allow purchases
of material from the manufacturer. The Company was also able to invoice its
customers for $200,000 of the amounts reserved in the previous quarter. The
Company will continue to recover the amounts reserved for bad debt.

         During the third quarter selling, general and administrative expenses
before extraordinary items was $384,000 per month. The Company incurred
additional expenses during the quarter as it continued to terminate employees.
In addition, the Company expanded its presence in California to begin replacing
the lost revenue from its existing customer base. The expansion in California
was funded through overhead expenses for two months in the quarter at a rate of
$40,000 per month until sufficient revenue in the region could be generated to
cover the expansion. In addition, a one-time expense of $300,000 was booked to
record consulting fees associated with the government business.

         The Company is continuing to reduce overhead costs to adjust to the
level of revenue. The revenue stabilized in the third quarter and based on the
events of September 11, the Company expects revenue to begin to increase during
the fourth quarter. The Company's goal is to reduce overhead costs sufficiently
to be break-even at a monthly revenue rate of $600,000 and then control the
costs to insure profitability as the Company's revenue increases beyond $600,000
per month.

         The Company is also continuing to search for additional working capital
to allow it to address old debt and to provide capital required to support
growth. The Company's sales force have identified a significant number of sales
opportunities that are expected to be awarded in the fourth quarter of 2001 and
the first quarter of 2002. If the working capital is in place to allow the
Company to close these opportunities and efficiently execute the projects, the
Company expects to return to profitability as the revenue increases beyond
$600,000 per month.

         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 direct 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,
                                                            ------------------------  ------------------------
                                                               2000         2001          2000         2001
                                                            -----------  -----------  -----------  -----------
<S>                                                         <C>          <C>          <C>          <C>
Earned revenues...........................................      100.0%       100.0%       100.0%        100.0%
Cost of earned revenues...................................        65.6         60.5         62.5          65.4
                                                            ----------   ----------   ----------   -----------
   Gross profit...........................................        34.4         39.5         37.5          34.6
Reserve for bad debt......................................         3.6       (11.8)          1.5          25.5
Selling general and administrative expenses...............        32.0         85.7         27.0          52.8
                                                            ----------   ----------   ----------   -----------
   Operating income (loss)................................       (1.3)       (34.4)          9.0        (43.7)
Interest and financing fees...............................       (1.5)        (3.1)        (1.7)         (4.5)
Interest and other income.................................         0.6         12.1          0.4           2.7
                                                            ----------   ----------   ----------   -----------

   Net income (loss)......................................      (2.2)%      (25.4)%         7.7%       (45.5)%
                                                            ==========   ==========   ==========   ===========
</TABLE>


Three Months Ended September 30, 2001 Compared With Three Months Ended
September 30, 2000

         Revenues decreased by 78% from $7.8 million in the three months ended
September 30, 2000 to $1.7 million in the three months ended September 30, 2001.
The decrease was due primarily to capital spending reductions by existing
customers and the lack of working capital to execute existing contracts.

         Cost of earned revenues decreased from $5.1 million in the three months
ended September 30, 2000 to $1.0 million in the three months ended September 30,
2001, primarily due to the decrease in revenues. Gross margin increased from
34.3% in the 2000 period to 39.4% in 2001. Third quarter revenue had a larger
proportionate number of price-competitive contracts than the historical average.
As the ratio of non-competitive contracts to price-competitive contracts moves
back to the norm, margins should increase. In addition, the lack of sufficient
working capital caused inefficiencies in the execution of contracts. [Margin
seems to have improved yet discussion explains why it is low]

         Selling, general and administrative expenses decreased 42% from $2.50
million in the three months ended September 30, 2000 to $1.45 million in the
three months ended September 30, 2001. The decrease was primarily due to costs
associated with the reduction of the workforce.

         Interest expense and financing fees decreased from $0.12 million in the
three months ended September 30, 2000 to $0.05 million in the three months ended
September 30, 2001.

         Net income decreased from a net loss of $0.1 million in 2000 to net
income of $6.4 million in 2001. The decrease was due to the decrease in revenue
and gross margins.

Nine Months Ended September 30, 2001 Compared With Nine Months Ended
September 30, 2000

         Revenues decreased by 58% from $18.7 million in the nine months ended
September 30, 2000 to $7.8 million in the nine months ended September 30, 2001.
The decrease was due primarily to capital spending reductions by existing
customers and lack of working capital to execute existing contracts.

         Cost of earned revenues decreased from $11.7 million in the nine months
ended September 30, 2000 to $5.1 million in the nine months ended September 30,
2001, primarily due to the decrease in revenues. Gross margin decreased from
37.6% in the 2000 period to 35.0% in 2001. The lack of sufficient working
capital caused inefficience in the execution of contracts.

         Selling, general and administrative expenses decreased from $5.0
million in the nine months ended September 30, 2000 to $4.1 million in the nine
months ended September 30, 2001. The decrease was primarily due to cost
associated with reduction of the workforce.

         Interest expense and financing fees increased from $0.32 million in the
nine months ended September 30, 2000 to $0.30 million in the nine months ended
September 30, 2001. The growth in interest was due to increased use of line of
credit as compared to 2000 when private equity funds were used.

         Net income decreased from a net income of $1.4 million in 2000 to net
loss of $3.6 million in 2001. The decrease was due to the decrease in revenue
and gross margins.

Liquidity and Capital Resources

         The Company's principal capital requirements are increased working
capital needed to support its business and reduce outstanding accounts payable.
The Company currently is funding its working capital requirements with cash
generated by operations and a receivables factoring facility with a financial
institution. During the three months ended September 30, 2001, operations used
cash of $2.3 million, primarily due to the Company's loss. As of September 1,
2001 the Company had $0.2 million in unrestricted cash. During the quarter the
Company used its credit line as well as extending payables with vendors to
provide the working capital required. As a result of extending payables, the
Company has moved to a cash basis with several major vendors which will
constrain revenue recognition until additional working capital is in place. The
cash balances going forward will be reduced by the need to immediately fund the
acquisition of material from vendors until outstanding payables can be reduced
as a result of obtaining additional working capital. The Company is seeking
additional financing to reduce outstanding aged accounts payable and to provide
the working capital to fund the increase in sales projected for the fourth
quarter of 2001. In addition, the Company has contracted with F&H Financial to
renegotiate amounts owned to vendors and expects working capital requirements to
be reduced as a result.

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

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, 2001