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, 1998

                    Commission File Number:  1-13427



                          STRATESEC INCORPORATED
                    (formerly Securacom, 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  6,103,522  shares  of Common  Stock,  par  value  $0.01 per  share,
outstanding at May 13, 1998.


<PAGE>



STRATESEC INCORPORATED

Quarter ended March 31, 1998

Index
--------------------------------------------------------------------------------

                                                                            Page

Part I.  Financial information

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

      Balance Sheets as of December 31, 1997 and March 31, 1998
      (unaudited)..........................................................  3

      Statements of Operations for the three months ended
      March 31, 1997 and 1998 (unaudited)..................................  4

      Statements of Cash Flows for the three months ended
      March 31, 1997 and 1998 (unaudited)..................................  5

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

   Item 2.  Management's Discussion and Analysis of
             Financial Condition and Results of Operations.................  8

Part II.  Other information

   Item 2.  Changes in Securities and Use of Proceeds...................... 11

   Item 6.   Exhibits and Reports on Form 8-K.............................. 11

   Signature............................................................... 12

                                                         2

<PAGE>



PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                             STRATESEC INCORPORATED
                                BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                   December 31,     March 31,
                                                                                       1997*          1998
                                                                                                   (Unaudited)
        ASSETS
<S>                                                                              <C>             <C>
Current assets:
   Cash and cash equivalents..................................................   $      998,312  $      412,461
   Cash-restricted............................................................        2,063,539       2,063,539
   Accounts receivable, net of allowance for doubtful
     accounts of $49,000 in 1997 and 1998.....................................        3,330,542       2,355,265
   Costs and estimated earnings in excess of billings on
     uncompleted contracts....................................................        2,108,134       2,409,581
   Inventory..................................................................          598,415         598,415
   Prepaid expenses and other.................................................          140,870         150,681
                                                                                 --------------  --------------
        Total currents assets.................................................        9,239,812       7,989,942
Plant and equipment, net......................................................          740,156         490,496
Other assets..................................................................          128,414         134,985
                                                                                 --------------  --------------
                                                                                 $   10,108,382  $    8,615,423
                                                                                 ==============  ==============

        LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities:
   Current maturities of capital lease obligations............................   $       51,100  $       62,464
   Accounts payable...........................................................        1,997,014       1,715,778
   Billings in excess of costs and estimated earnings on
     uncompleted contracts....................................................           69,734          96,193
   Accrued expenses and other.................................................        2,938,789       2,565,695
                                                                                 --------------  --------------
        Total current liabilities.............................................   $    5,056,637  $    4,440,130

Long-term liabilities:
   Capital lease obligations, less current maturities.........................          196,285         222,270

Stockholders' equity (deficiency):
   Common stock, $0.01 par value per share; authorized
     20,000,000 shares; issued and outstanding
     6,103,502 shares in 1997 and 1998........................................           61,035          61,035
   Additional paid-in capital.................................................       21,072,430      21,072,430
   Accumulated deficit........................................................      (16,278,005)    (17,180,442)
                                                                                 --------------  --------------
                                                                                      4,855,460       3,953,023
                                                                                 --------------  --------------
                                                                                 $   10,108,382  $    8,615,423
                                                                                 ==============  ==============
</TABLE>

*    Derived from audited financial statements as of December 31, 1997.

      The accompanying notes are an integral part of these statements.


                                                         3

<PAGE>


                                STRATESEC INCORPORATED
                               STATEMENTS OF OPERATIONS
                                       (Unaudited)

<TABLE>
<CAPTION>

                                                                                Three Months Ended
                                                                                        March 31,
                                                                                  1997           1998
                                                                            --------------   --------------
<S>                                                                         <C>              <C>
Earned revenues...........................................................  $    3,297,899   $    1,320,414
Cost of earned revenues...................................................       2,326,223        1,106,363
                                                                            --------------   --------------

   Gross profit...........................................................         971,676          214,051

Selling, general and administrative
   expenses...............................................................         645,656        1,073,039
                                                                            --------------   --------------

Operating income (loss)...................................................         326,020         (858,988)

Loss on sale of plant and equipment.......................................              --          (37,839)
Interest and financing fees...............................................        (127,276)         (12,808)
Interest and other income.................................................           7,399            7,198
                                                                            --------------   --------------

   Net income (loss)......................................................  $      206,143   $     (902,437)
                                                                            ==============   ==============

Weighted average common shares
   outstanding............................................................       5,105,000        6,103,522
                                                                            ==============   ==============

Net income (loss) per share - basic and diluted                             $          .04   $         (.15)
                                                                            ==============   ==============
</TABLE>


       The accompanying notes are an integral part of these statements.


                                                         4

<PAGE>



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

                                                                                      Three Months Ended
                                                                                           March 31,
                                                                                    1997             1998
                                                                              ---------------  ----------------
<S>                                                                           <C>              <C>
Cash flows from operating activities:
   Net income (loss).......................................................   $       206,143  $       (902,437)
                                                                              ---------------  ----------------
Adjustments to reconcile net income (loss) to net
   cash used in operating activities:
     Depreciation and amortization.........................................            30,689            39,636
     Loss of sale of plant and equipment...................................                --            37,839
     Amortization of debt discount.........................................            10,500
Changes in operating assets and liabilities:
   Accounts receivable.....................................................          (533,400)          975,277
   Costs and estimated earnings in excess of
     billings on uncompleted contracts.....................................          (777,107)         (301,447)
   Prepaid expenses and other..............................................             9,494            (9,811)
   Other assets............................................................           (57,951)           (6,571)
   Accounts payable........................................................           183,129          (281,236)
   Billings in excess of costs and estimated earnings
     on uncompleted contracts..............................................           400,729            26,459
   Accrued expenses and other..............................................            54,524          (373,094)
                                                                              ---------------  ----------------
       Total adjustments...................................................          (679,393)          107,052
                                                                              ---------------  ----------------
       Net cash from operating activities..................................          (473,250)         (795,385)
                                                                              ---------------  ----------------

Cash flows from investing activities:
   Investment in SSIH, Ltd.................................................          (700,000)               --
   Sale of plant and equipment.............................................                --           240,000
   Acquisition of plant and equipment......................................                --           (18,425)
                                                                              ---------------  ----------------
   Net cash used by investing activities...................................          (700,000)          221,575
                                                                              ---------------  ----------------

Cash flows from financing activities:
   Proceeds from notes payable.............................................           700,000                --
   Principal payments of capital lease obligations                                     (5,351)          (12,041)
                                                                              ---------------  ----------------
   Net cash provided by financing activities...............................           694,649           (12,041)
                                                                              ---------------  ----------------
Net (decrease) in cash and cash equivalents................................          (478,601)         (585,851)
Cash and cash equivalents at beginning of period                                      609,342           998,312
                                                                              ---------------  ----------------
Cash and cash equivalents at end of period.................................   $       130,741  $        412,461
                                                                              ===============  ================
</TABLE>




     The accompanying notes are an integral part of these statements.


                                                         5

<PAGE>



                           NOTES TO FINANCIAL STATEMENTS

1.  Basis of Presentation

         The  unaudited  balance  sheet as of March 31,  1998 and the  unaudited
statements of operations and statements of cash flows for the three months ended
March 31, 1997 and 1998 are condensed  financial  statements 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  contained in a Form 10-K which the Company filed with the  Securities and
Exchange Commission on March 31, 1998.

         In the opinion of the Company,  the unaudited  financial  statements at
March 31, 1998 and for the three months  ended March 31, 1997 and 1998,  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, 1998 are not
necessarily indicative of results to be expected for the full year.

2.  Net Income (Loss) Per Share

         The Company  has adopted  SFAS No.  128,  "Earnings  Per Share,"  which
requires  public   companies  to  present  basic  earnings  per  share  and,  if
applicable,  diluted  earnings  per  share.  Basic EPS is based on the  weighted
average  number of common shares  outstanding  without  consideration  of common
stock  equivalents.  Diluted earnings per share is based on the weighted average
number of common and common equivalent shares outstanding. The calculation takes
into  account the shares that may be issued upon  exercise of stock  options and
warrants,  reduced by the shares that may be repurchased with the funds received
from the exercise, based on the average price during the period. For 1998, stock
options  and  warrants  have not been  included  in the  calculation  of diluted
earnings per share as their inclusion would be antidilutive.

3.  Costs and Estimated Earnings on Uncompleted Contracts

         Costs and estimated  earnings on uncompleted  contracts at December 31,
1997 and March 31, 1998 which are expected to be  collected  within one year are
as follows;

                                                December 31,      March 31,
                                                    1997             1998
                                              ---------------  ---------------

Costs incurred on contracts................   $    14,229,410  $    15,335,669
Estimated earnings.........................         3,473,560        3,683,209
                                              ---------------  ---------------
                                                   17,702,970       19,018,878
Less billings to date......................        15,664,570       16,705,220
                                              ---------------  ---------------
                                              $     2,038,400  $     2,313,658
                                              ===============  ===============




                                                         6

<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 thereto 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 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% downpayment 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.

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,
                                                          1997          1998
                                                       -----------  -----------

Earned Revenues.....................................         100.0%      100.0%
Cost of earned revenues.............................          70.4        83.8
                                                       -----------  ----------
   Gross profit.....................................          29.6        16.2
Selling, general and administrative expenses........          19.6        81.3
                                                       -----------  ----------
   Operating income (loss)..........................          10.0       (65.1)
Loss on sale of plant and equipment.................            --        (2.9)
Interest and financing fees.........................          (3.9)       (1.0)
Interest and other income...........................           0.2         0.6
                                                       -----------  ----------

   Net income (loss)................................           6.3%      (68.4)%
                                                       ===========  ==========




                                                         7

<PAGE>



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

         Revenues decreased by 60.0% from $3.3 million in the three months ended
March 31, 1997 to $1.3 million in the three  months  ended March 31,  1998.  The
decrease was due primarily to a decline in work completed on existing  projects.
Revenues from the World Trade Center  project  declined from $1.9 million in the
1997  period  to $0.5  in the  1998  period.  In  addition,  revenues  from  the
Metropolitan Washington Airport Authority declined from $0.7 million in the 1997
period to $0.4  million in the 1998 period.  The revenue from MCI also  declined
$0.1 for the comparable periods.

         Cost of earned revenues decreased from $2.3 million in the three months
ended March 31, 1997 to $1.1  million in the three  months ended March 31, 1998,
primarily due to decrease in revenues.  Gross margin decreased from 29.6% in the
1997  period to 16.2% in the 1998  period as the margins on both the World Trade
Center project and Metropolitan  Washington Airport Authority projects are lower
than in the previous year.

         Selling,  general and  administrative  expenses increased by 66.2% from
$0.6 million in the three  months  ended March 31, 1997,  to $1.1 million in the
three months ended March 31, 1998.  Overhead salaries  increased by $0.2 million
from the previous  year's period as project staff worked less on jobs due to the
decreased  revenues,  professional fees increased by $0.1 million for recruiting
fees for the new corporate  officers and office  expenses  increased $0.1 due to
increased office space.

         Interest  expense and financing fees decreased  89.9% from $0.1 million
in the three  months  ended March 31, 1997 to $0.01  million in the three months
ended  March 31, 1998 due to a decrease in  outstanding  indebtedness  resulting
from the repayment of the subordinated debentures in October 1997.

         Net income  decreased  from a net  income of $0.2  million in the three
months  ended March 31, 1997 to a net loss of $0.9  million in the three  months
ended  March 31,  1998.  This  decrease in net income was  primarily  due to the
significant  decrease in  revenues  and the  increase  in  selling,  general and
administrative expenses.

Liquidity and Capital Resources

         Prior to the Offering in October 1997, the Company's primary sources of
cash were the proceeds  from private  placements  of Common Stock and notes from
1992 through 1995 and of subordinated debentures and warrants during 1995, 1996,
and the first three months of 1997.  During each of those years,  the  Company's
operations  had  negative  cash flows as the  Company  increased  its  marketing
efforts,  opened new offices and hired additional  staff to support  anticipated
growth.  The net use of cash from  operations in 1994,  1995,  and 1996 was $1.9
million,  $1.9 million and $1.6 million.  For the year ended  December 31, 1997,
the use of cash from operations was $7.4 million, primarily due to the operating
loss, the  restriction of $1.9 million in cash as collateral for the appeal bond
posted in litigation,  and a reduction in accounts payable. For the three months
ended March 31, 1998, the Company had negative cash flow from operations of $0.8
million as a result of its operating loss.

         From 1992 through 1995,  members of a private  investor group purchased
an aggregate of 3.6 million  shares of Common Stock at a total purchase price of
$8.3 million,  generating net proceeds to the Company of $8.0 million,  and $0.5
million  aggregate  principal  amount of 10% demand  notes,  generating an equal
amount of net proceeds to the Company.  The demand notes were  converted in 1995
into 103,000 shares of Common Stock.

                                                         8

<PAGE>



         In  addition,  from 1995 through  March 31,  1997,  members of the same
investor  group  purchased  $3.4  million  aggregate  principal  amount  of  10%
subordinated  debentures,  together with warrants to purchase  478,580 shares of
Common Stock at an exercise price of $7.00 per share, generating net proceeds to
the Company of $3.2  million.  In 1996,  an  additional  $0.2 million was raised
through the exercise of warrants by members of the Board of Directors.

         In October 1997, the Company completed the Offering,  which resulted in
net  proceeds to the Company of  approximately  $9.7  million  after  payment of
offering expenses by the Company. Following the Offering, the Company's interest
in a partnership was redeemed at its cost of $0.7 million plus interest of $0.02
million.  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 Offering to repay $3.4 million of outstanding notes payable.

         As of March 31, 1998, the Company has $0.4 million in unrestricted cash
and working capital of $3.6 million. Of that amount, $2.1 million is in the form
of restricted  cash.  This cash is restricted to serve as collateral  for a bond
posted by the Company  pending  appeal of a $1.9  million  judgment  against the
Company.

         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 debentures have an interest rate of 10%, are due on December
31,  1999 and are  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  Company  has in the past  experienced  cash  flow  shortages.  The
Company believes that the $1.5 million  unrestricted  portion of working capital
and the  subordinated  debenture  financing  is  sufficient  to meet its current
operating needs.



                                                         9

<PAGE>



PART II.  OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

         The Company's  Registration  Statement on Form S-1 (File No. 333-26439)
relating to the initial  public  offering  (the  "Offering")  of an aggregate of
2,208,000  shares (the "Shares") of its Common Stock, par value $0.01 per share,
was declared  effective by the Securities and Exchange  Commission on October 1,
1997. Of the 2,208,000  shares of Common Stock registered under the Registration
Statement,  1,400,000  were  sold by the  Company  and  808,000  were  sold by a
stockholder of the Company that owns more than 10% of the Company's  outstanding
Common Stock (the "Selling Stockholder"). The 808,000 shares sold by the Selling
Stockholder  included  288,000  shares sold upon  exercise of an  over-allotment
option granted to the underwriters of the Offering. The managing underwriters of
the Offering were Cruttenden Roth Incorporated and Scott & Stringfellow, Inc.

         The Offering  commenced on October 1, 1997,  and the sale of the Shares
was  completed on October 7, 1997.  The Shares were sold at a price of $8.50 per
share,  for aggregate  proceeds of $11,900,000 and $6,868,000 to the Company and
the Selling Stockholder,  respectively.  After deducting  underwriting discounts
and  commissions  of $0.7225  per share and a $408,000  non-accountable  expense
allowance paid to the Representatives (of which $297,500 was paid by the Company
and  $110,500  was paid by the Selling  Stockholder),  the  Selling  Stockholder
received net  proceeds of  $6,173,720  and the Company  received net proceeds of
$10,591,000 less expenses incurred in connection with the Offering, all of which
were paid by the  Company.  On October 7, 1997,  the Company  also issued to the
Representatives, at a purchase price of $0.001 per warrant, warrants to purchase
up to an aggregate of 140,000 shares of Common Stock.

Expenses incurred in connection with the Offering were:

                                                       (A)          (B)
  Underwriting discounts and commissions                        1,011,500
   Other expenses................................   113,000     1,040,000

Through  December 31, 1997,  the use of net proceeds of $9.7 million has been as
follows:

                                                      (A)          (B)
  Repayment of indebtedness......................               3,350,000
  Working capital................................               6,385,500

     (A) Direct or indirect payments to directors or officers of the issuer.
     (B) Direct or indirect payments to others.

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


                                                        10

<PAGE>



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/ LARRY M. WEAVER
-----------------------------------------------------

Larry M. Weaver
Executive Vice President,
Chief Operating Officer and
Chief Financial Officer

May 14, 1998

                                                        11