UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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


For the quarterly period ended               September 30, 2002


Commission File Number:                      1-13427


                             STRATESEC INCORPORATED

           Delaware                                           22-2817302
---------------------------------                    ------------------------
---------------------------------                    ------------------------
    State of Incorporation                       IRS Employer Identification No.


                             14360 Sullyfield Circle
                                     Suite B
                            Chantilly, Virginia 20151
                                 (703) 961-5683


There were 8,392,550 shares of Common Stock, par value $0.01 per share,
outstanding at November 8, 2002.

Transitional Small Business Disclosure Format:  Yes [    ]  No [ X ]


<PAGE>


STRATESEC INCORPORATED
QUARTER ENDED SEPTEMBER 30, 2002
<TABLE>
<CAPTION>

INDEX
<S>      <C>                                                                                          <C>
PART I.  FINANCIAL INFORMATION                                                                            PAGE
         Item 1.  Financial Statements
                Balance Sheets as of September 30, 2002 (unaudited) and December 31, 2001.                   3

                Statements of Operations (unaudited) for the three and nine months ended
                September 30, 2002 and 2001.                                                                 4

                Statement of Shareholders Equity for the year ended December 31, 2001 and the
                nine months ended September 30, 2002                                                         5

                Statements of Cash Flows (unaudited) for the three and nine months ended
                September 30, 2002 and 2001.                                                              6 -7

         Notes to the Financial Statements - September 30, 2002 (unaudited)                             8 - 14

         Item 2.  Management's Discussion and analysis of Financial Condition and Results of
         Operations                                                                                    14 - 18

         Item 4.  Controls and Procedures                                                                   19

Part II.

         Item 5.  Other Information                                                                    19 - 20

         Item 6.  Exhibits and Form 8-k                                                                     20

Signatures                                                                                                  21

Certification of filing by officers                                                                    21 - 23

Exhibits

         Item 11.  Computation of Earnings per Share                                                        24

         Item 99.  Certification of filing by officers                                                      24

</TABLE>

<PAGE>


PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                             STRATESEC INCORPORATED
                                 BALANCE SHEETS
                                                                                    (Unaudited)
                                                                                 September 30, 2002       December 31, 2001
<S>                                                                             <C>                       <C>
       Assets
           Current Assets
                Cash                                                                    $     (2,677)              $   238,201
                Accounts receivable, net of allowance for doubtful
                   accounts of $317,714 in 2002 and $750,000 in 2001                          917,695                4,108,692
                Costs and estimated earnings in excess of billings on
                   uncompleted contracts                                                      307,233                  582,698
                Inventory, net of allowance of $584,302 in 2002 and
                   $400,000 and 2001                                                           26,890                  190,606
                Other current assets                                                                -                   70,728
                                                                                         ------------           --------------
                       Total current assets                                                 1,249,141                5,190,925

            Property and equipment, net                                                        23,604                  483,904
            Other assets                                                                       27,305                  121,764
                                                                                         ------------           --------------
            Total assets                                                                  $ 1,300,050              $ 5,796,593
                                                                                          ===========              ===========

       Liabilities and shareholders' deficit
            Current liabilities
                Accounts payable                                                          $ 1,620,414              $ 2,287,718
                Accrued expenses and other                                                    213,040                  304,961
                Income taxes payable                                                          955,954                  955,954
                Bank and other lines of credit                                              8,125,303                6,325,490
                Billings in excess of costs and estimated earnings on
                       uncompleted contracts                                                   91,831                  276,984
                Capital lease obligations                                                           -                   22,615
                                                                                        ----------  -            -------------
                       Total current liabilities                                           11,006,542               10,173,722
                                                                                           ----------               ----------

            Shareholders' deficit
                   Common stock, $0.01 par value per share; authorized
                       20,000,000 shares; 10,401,471 shares issued, 8,392,550
                       shares outstanding as of September
                       30, 2002 and 10,392,550 as of December 31, 2001                        104,015                  104,015
                   Treasury stock, 2,008,921 shares as of September
                       30, 2002 and 8,921 as of December 31, 2001                           (212,088)                 (18,533)
                   Additional paid-in capital                                              24,363,700               24,363,700
                   Accumulated deficit                                                   (33,962,119)             (28,826,311)
                                                                                         ------------             ------------
                         Total shareholders deficit                                       (9,706,492)              (4,377,129)
                                                                                          -----------              -----------
                           Total liabilities and shareholders' deficit                    $ 1,300,050            $   5,796,593
                                                                                          ===========            =============
</TABLE>


The accompanying notes are an integral part of these statements.


<PAGE>


                             STRATESEC INCORPORATED
                            STATEMENTS OF OPERATIONS
                       FOR THE PERIODS ENDED SEPTEMBER 30,
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                            Three Months Ended                         Nine Months Ended
                                                            ------------------                         -----------------
                                                        2002                  2001                 2002                 2001
                                                        ----                  ----                 ----                 ----
<S>                                              <C>                       <C>                  <C>                  <C>
Revenues                                                $    455,202           $ 1,694,650         $ 1,659,939            $7,844,776
Cost of revenues                                             316,248             1,025,430           1,347,929             5,130,539
                                                             -------             ---------           ---------             ---------
      Gross profit                                           138,954               669,220             312,010             2,714,237

Bad debt expense                                             298,904             (200,000)           1,274,043             2,000,000
Selling, general and administrative expenses               1,042,093             1,452,527           3,078,212             4,143,919
                                                           ---------             ---------           ---------             ---------
                                                           1,340,997             1,252,527           4,352,255             6,143,919

      Operating loss                                     (1,202,043)             (583,307)         (4,040,245)           (3,429,682)

Interest and financing fees                                (340,999)              (52,613)         (1,095,563)             (351,325)
Interest and other income                                          -               204,956                   -               210,295
                                                         --------- -               -------        ---------  -               -------
                                                           (340,999)               152,343         (1,095,563)             (141,030)
                                                           ---------               -------         -----------             ---------

      Net loss                                         $ (1,543,042)            $(430,964)        $(5,135,808)         $ (3,570,712)
                                                       =============            ==========        ============         =============

Net loss per share - basic                                $   (0.17)       $        (0.04)          $   (0.55)            $   (0.35)
                                                          ==========       ===============          ==========            ==========

Weighted average common shares outstanding - basic         9,485,722            10,279,964           9,485,722            10,279,964
                                                           =========            ==========           =========            ==========

</TABLE>


The accompanying notes are an integral part of these statements.


<PAGE>


                             STRATESEC INCORPORATED
                        STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>


                                    Common Stock              Treasury Stoc      Additional Paid-                 Total Shareholders
                              Shares         Amount        Shares        Amount      in-Capital       Deficit         Equity
<S>                        <C>           <C>           <C>           <C>          <C>              <C>          <C>

Balance January 1, 2001       10,280,043    $ 102,800          (79)        $ (164)    $24,279,914   $(21,330,410)   $ 3,052,140
Sale of common stock             121,428        1,215             -              -         83,786               -        85,001
Purchase of treasury stock             -            -       (8,842)       (18,369)              -               -      (18,369)

Net loss                               -            -             -              -              -     (7,495,901)   (7,495,901)
                                       -  --------  -             -              -              -     -----------   -----------
Balance December 31, 2001     10,401,471      104,015       (8,921)       (18,533)     24,363,700    (28,826,311)   (4,377,129)
Exchange of assets for
treasury stock                         -            -   (2,000,000)      (193,555)              -               -     (193,555)

Net loss (unaudited)                   -            -             -              -              -     (5,135,808)   (5,135,808)
                           -------------  --------- -             -  ---------   - -----        -     -----------   -----------
Balance September 30, 2002
(unaudited)                   10,401,471    $ 104,015   (2,008,921)    $ (212,088)    $24,363,700   $(33,962,119)  $(9,706,492)
                              ==========    =========   ===========    ===========    ===========   =============  ============
</TABLE>





The accompanying notes are an integral part of these statements.


<PAGE>


                             STRATESEC INCORPORATED
                            STATEMENTS OF CASH FLOWS
                      FOR THE PERIODS ENDED SEPTEMBER 30,
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                        Three Months Ended              Nine Months Ended
                                                                        ------------------             -----------------
                                                                       2002            2001            2002           2001
<S>                                                             <C>               <C>              <C>               <C>
Cash flows from operating activities:
       Net loss                                                    $ (1,543,042)    $  (430,964)    $(5,135,808)     $(3,570,712)
       Adjustments to reconcile net loss to net
           cash used in operating activities:

           Depreciation                                                   73,183          81,905         227,464          202,288
           Provision for bad debts                                       298,904               -       1,274,043        2,200,000
           Provision for inventory reserve                               184,302               -         184,302                -
           Loss on disposition of property                                     -               -          43,101                -

           Changes in operating assets and
               liabilities
               Accounts receivable                                       484,545     (2,779,693)       1,916,954      (2,065,445)
               Costs of estimated earnings in excess
                   of billings on uncompleted
                   Contracts                                            (53,463)       3,742,951         275,465        2,395,576
               Inventory                                                 (7,840)       (103,517)        (20,586)        (313,295)
               Other current assets                                       15,108       (744,776)          70,728        (367,517)
               Other assets                                                7,695         (2,100)          94,459            1,704
               Accounts payable                                          138,730       (769,061)       (667,304)        (546,563)
               Accrued expenses and other                               (95,867)       (117,830)        (91,921)        (161,826)
               Billings in excess of costs and
                   estimated earnings on
                   uncompleted contracts                                  39,585        (38,395)       (185,153)         (38,395)
                                                                          ------        --------       --------- -       --------

       Net cash used by operating activities                           (458,160)     (1,161,480)     (2,014,256)      (2,264,185)

Cash flows from investing activities
       Acquisition of property and equipment                                   -        (26,279)         (3,820)         (54,135)

Cash flows from financing activities
       Proceeds from line of credit                                    2,494,685       2,900,452       7,296,156        7,798,757
       Payments on line of credit                                    (2,112,308)     (2,298,437)     (5,496,343)      (6,116,114)
       Principal payments on capital lease obligations                         -         (7,811)        (22,615)         (33,032)
                                                                          ------        --------       --------- -       --------
       Net cash provided by financing activities                         382,377         594,204       1,777,198        1,649,611
                                                                         ------- -----   -------  -    ---------        ---------

Net increase (decrease) in cash                                         (75,783)       (593,555)       (240,878)        (668,709)
Cash at beginning of period                                               73,106         812,060         238,201          887,214
                                                                          ------        --------       --------- -       --------

Cash at end of period                                                 $  (2,677)      $  218,505      $  (2,677)         $218,505
                                                                      ==========      ==========      ==========         ========

Supplemental disclosures of cash flow information
       Interest paid                                                $    340,999        $      -      $1,095,563      $   219,762
                                                                    ============        ========      ==========      ===========
       In May 2002, certain non-cash assets and liabilities with
       a fair value of $193,555 were exchanged for 2 million
       shares of treasury stock.                                      $  193,555         $     -       $ 193,555          $     -
                                                                      ==========         =======       =========          =======
</TABLE>




The accompanying notes are an integral part of these statements.



<PAGE>


                          NOTES TO FINANCIAL STATEMENTS
                               September 30, 2002
                                   (unaudited)

1.       ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business
Stratesec Incorporated, (the "Company"), is incorporated under the laws of the
State of Delaware and provides comprehensive security solutions for large
commercial and government facilities.

Basis of Presentation
In the opinion of the Company, the unaudited financial statements at September
30, 2002 and for the three and nine months ended September 30, 2002 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, 2002 are not necessarily indicative of results to be
expected for the full year.

Use of Estimates
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions regarding certain types of
assets, liabilities, revenues, and expenses. Such estimates primarily relate to
unsettled transactions and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ from estimated amounts.

Concentrations of credit risk and fair value of financial instruments
---------------------------------------------------------------------
The Company's financial instruments that are exposed to concentrations of credit
risk consist primarily of cash, money market funds and trade accounts
receivable. The Company places its cash and money market funds with high credit
quality institutions. In general, such investments exceed the FDIC insurance
limit.

The Company provides credit to its clients in the normal course of business. The
Company routinely assesses the financial strength of its clients. The carrying
value of financial instruments potentially subject to valuation risk
(principally consisting of cash, accounts receivable and accounts payable)
approximates fair market value.

Revenue recognition
The Company derives its revenue principally from long-term contracts, which are
generally on a fixed-price basis. Revenue on fixed-price contracts includes
direct costs and allocated indirect costs incurred plus recognized profit.
Revenue is recognized under fixed-price contracts on the
percentage-of-completion basis. The percentage of completion of individual
contracts includes management's best estimate of the amounts expected to be
realized on the contracts. It is at least reasonably possible that the amounts
the Company will ultimately realize could differ materially in the near term
from the amounts estimated in arriving at the earned revenue and costs and
estimated earnings in excess of billings on uncompleted contracts.

Contract costs include all direct material, direct labor and direct subcontract
costs. Provisions for estimated losses on uncompleted contracts are made in the
period in which such losses are determined. Changes in job performance, job
conditions and estimated profitability, including those arising from contract
revisions and final contract settlements, may result in revisions to costs and
income and are recognized in the period in which the revisions occur.

The asset "costs and estimated earnings in excess of billings on uncompleted
contracts" represents revenue recognized in excess of amounts billed to clients.
The liability "billings in excess of costs and estimated earnings on uncompleted
contracts" represents billings in excess of revenue recognized.

Accounts receivable allowance
The accounts receivable allowance is the Company's estimate of receivables that
will not be collected. The allowance is based upon formulas that are reviewed
for adequacy regularly but generally remain a function of the age of the
receivables and specific information known about clients.

Inventory
Inventory consists of equipment and parts held for sale and is stated at the
lower of cost or market, with cost being determined by the first-in, first-out
method.

Property and equipment
Property and equipment is stated at cost less accumulated depreciation and
amortization. Depreciation and amortization of property and equipment is
computed using the straight-line method over the estimated useful lives of three
to ten years. Amortization of leasehold improvements is computed using the
straight-line method over the shorter of the estimated useful lives of the
assets or the term of the related lease.

Income taxes
The income tax provision includes federal and state income taxes both currently
payable and changes in deferred taxes due to differences between financial
reporting and tax bases of assets and liabilities. Deferred tax assets and
liabilities are measured using the enacted tax rates and laws that are expected
to be in effect when the differences are expected to reverse.

Loss per share
The Company has adopted SFAS No. 128, "Earnings per Share" (EPS), which requires
public companies to present basic earnings per share and, if applicable, diluted
earnings per share. Basic EPS is based on weighted-average number of shares
outstanding without consideration of common stock equivalents. Diluted EPS is
based on the weighted-average number of common and common equivalent shares
outstanding. When dilutive, 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 year.

Stock options and warrants have not been included in the calculation of dilutive
earnings per share as their inclusion would be antidilutive.

Going Concern
The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplates continuation of the Company as a going concern.
However, the Company has sustained substantial operating losses in recent years.
In addition, the Company has used substantial amounts of working capital in its
operations, financed primarily through borrowing from its line-of-credit with a
financing company. Further, at September 30, 2002, current liabilities exceed
current assets by $9,757,401, and total liabilities exceed total assets by
$9,706,492.

In view of these matters, realization of a major portion of the assets in the
accompanying balance sheets is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financing requirements, and the success of its future operations.


3.       PROPERTY AND EQUIPMENT
Property and equipment consist of the following:

                                               September 30, 2002
                                                  (unaudited)  December 31, 2001

Office furniture and equipment                       $ 8,856    $  327,618
Computer equipment                                    98,999       411,469
Leasehold improvements                                     -       227,439
Vehicles                                               7,715       159,251
Computer software                                          -        65,519
Leased equipment                                     174,892       342,360
                                                     -------       -------
                                                     290,462     1,533,656
Less accumulated depreciation and amortization     (266,858)   (1,049,752)
                                                   ---------   -----------
Net property and equipment                          $ 23,604     $ 483,904
                                                    ========     =========

Depreciation and amortization expense on property and equipment (including
equipment under capital leases) was $227,464 for the nine months ended September
30, 2002 and $257,535 for the year ended December 31, 2001.



4.       LINE-OF-CREDIT
<TABLE>
<CAPTION>
                                                                                  September 30,
                                                                                 2002 (unaudited)   December 31, 2001
<S>                                                                                <C>                 <C>
Line-of-credit with financing company (maximum amount equal to 80% of eligible
accounts receivable), due on demand, with interest (computed as a discount on
amounts factored and the duration that the factored amount is unpaid) due
monthly. Discounts range from 2.5% - 4.5%. This line-of-credit is secured by
accounts receivable and inventory. At December 31, 2001 total borrowings
exceeded the allowable limit described above by $2,438,536.

During the second quarter 2002, the lender reduced the discount charged on
factored receivables and reduced the interest rate on the amounts over the
amount of receivables factored, $7,136,976 at September 30, 2002, to prime
rate plus 2%.                                                                          $ 8,125,303        $ 6,325,490
                                                                                       ===========        ===========
</TABLE>


Interest and discount fees related to the line-of-credit, which approximated
interest paid, aggregated $1,095,563 for the nine months ended September 30,
2002 and $1,148,563 for the year ended December 31, 2001.

The Company submits all accounts receivable receipts to the lender as required
by the terms of the agreement as the Company receives payments, the lender then
applies the payments first to interest, fees, and discounts. However, over the
last two years, the Company has consistently borrowed more than it has repaid.


5.       RELATED PARTY TRANSACTIONS

o    The Company entered into a one year lease, beginning March 24, 2002, with a
     company controlled by stockholder who is also a director. The lease calls
     for monthly payments of approximately $10,000 for rent and expenses for
     phone, internet, and other typical office services.

o    During 2001, the Company issued warrants for the purchase of 400,000 shares
     of its common stock to its financing company. These warrants expire on
     December 31, 2002. See note 5.

o    The Company  entered into a consulting  agreement  with its chairman  which
     provides for an annual consulting fee of $130,500 through March 31, 2003.

o    During 2002, the Company engaged KuwAm Corporation, a corporation of which
     the Chairman is a Managing Director, for corporate secretarial services at
     the rate of $2,500 per month.


6.       STOCK WARRANTS
During 2001, the Company issued to its financing company warrants to purchase
400,000 shares of common stock at a purchase price of $1 per share for the first
200,000 shares and $0.70 per share for the remaining 200,000 shares. The
weighted average fair value of these warrants granted during 2001 is estimated
at $0.85 on the date of the grant. These warrants are all outstanding at
September 30, 2002 and, if not exercised, expire on December 31, 2002.


7.       RETIREMENT PLAN
The Company maintains a defined contribution 401(k) profit sharing plan (the
"Plan") for all employees who have attained the age of 21 and completed three
months of service. Participants may make voluntary contributions to the Plan up
to the maximum amount allowable by law, but not to exceed 15% of their annual
compensation. The Company contributes an amount equal to 25% of the lesser of
each participant's voluntary contribution or 5% of his or her annual
compensation. Company contributions to the Plan vest to the participants ratably
over a two year period. During 2001, the Company discontinued contributions to
the plan. Company contributions to the Plan were $11,500 for the year ended
December 31, 2001.


8.       SIGNIFICANT CLIENTS
For the nine months ending September 30, 2002, contracts with one client
accounted for 11% of revenue. During the year ended December 31, 2001, contracts
with one client accounted for approximately 33 percent.


9.       INCOME TAXES PAYABLE
The Company presently owes the U.S. government approximately $812,000 in income
taxes which are accrued and appear in the liability section of the Balance
Sheet. The Company has not accrued approximately $450,000 in interest and
penalties. The Company believes that given its current circumstances, it is
probable that the Company will not have to pay the interest and penalties. The
Company has submitted an Offer-in-Compromise to the Internal Revenue Service to
settle the entire debt for $25,000. The Company feels that given its
circumstances, it is a reasonable offer and the IRS will accept it.

In addition, the Company owes the State of Virginia approximately $143,000 in
income taxes and $150,000 in sales taxes which are accrued and appear in the
liability section of the Balance Sheet. The sales tax arises from sales to the
Federal government that are sales tax exempt in the State of Virginia. The
Company intends to submit an Offer in Compromise to settle the entire debt for
$10,000. The Company feels that given its circumstances, it is a reasonable
offer and the state of Virginia will accept it.

Should the IRS or the State of Virginia not accept the Company's offer, there
would be a material adverse effect on the Company.


10.      LEASE COMMITMENTS

The following is a schedule by year of minimum future lease rentals as of
September 30, 2002.

       Year Ended December 31,                      Operating Lease
                 2002                                              $    94,793
                 2003                                                  178,933
                 2004                                                  100,168
                 2005                                                   48,450
                 Total                                                $422,344
                                                                      ========

The bulk of the Company's leases are for office space. The Company is presently
attempting to assign or sublet the office locations in Texas and California.
Should the Company be successful, the amount of lease commitments will decline
by approximately $120,000 between 2002 and 2005. In addition, the Company leases
vehicles to perform maintenance and installation services. If the Company is
successful in turning over the California operations, the vehicle lease amounts
will decrease by approximately $93,000 between 2002 and 2005.


11.      CONTINGENT LIABILITIES
During October 2002, the Company decided to dispose of the California operations
of the Company to reduce cash requirements. The Company is currently seeking an
acquirer to take over the California operations by the end of November 2002. The
Company does not anticipate any material costs involved in turning over the
California operations to another party. However, should the Company not be
successful in turning over the operations to an acquirer, there could be
material costs involved in closing the California operations.

As of October 31, 2002, the Company has approximately $645,000 in accounts
receivable outstanding relating to California customers. Should the Company not
be able to find an acquirer to take over the California operations, there could
be a material adverse effect on the Company's ability to collect these
receivables.

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 financial
statements and the related notes included elsewhere in this report as well as
the form 10-KSB for the year ended December 31, 2001 which is hereby
incorporated by reference.

OVERVIEW

The Company is a single-source provider of comprehensive, technology based
security solutions for medium and large commercial and government. 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 following plan addresses management's approach to improving the financial
condition of the Company.

During the third quarter 2002, revenues were adversely impacted due to an
inability to fund purchases of materials and work on projects. Although the
Company's lender has expressed its intent to fund the Company during the third
quarter 2002, the lender encountered an internal problem that prevented the
lender from fully funding the Company's operations. The Company estimates it has
had to forgo approximately $400,000 in revenue and $240,000 in gross margin
during the third quarter because it did not have sufficient working capital to
fund projects.

Revenues remained slow through the first half of 2002, averaging slightly under
$200,000 per month. This was below the $300,000 to $500,000 per month that the
Company expected. The reduction was due to a slower restart than anticipated in
the Company's Texas office and continued delays in contract awards. Due to the
continued lack of significant business from the Texas office, on July 31, 2002
the Company decided to discontinue installation operations in Texas. The Company
maintains its Texas office to continue consulting work with a small senior
staff.

The Company has shifted the focus of its Virginia office to concentrate on U.S.
Government business. The Company is aggressively pursuing the expected
significant increase in Federal security projects during the current Government
fiscal year, which began October 2002.

The Company is aggressively pursuing business while simultaneously looking at
paring costs to our current level of business. The Company has decided to
dispose of the California offices. The Company expects to be cash flow neutral
by the end 4th quarter of 2002.

As of the end of October 2002 excluding the California operations, the Company
has a backlog of $725,000, $2.8 million in outstanding proposals and has
identified $4.3 million in near-term targets on which it expects to submit
proposals.

In order to lower costs and focus on the Company's primary business of physical
security consulting, design, and installation, the Company has narrowed its
focus to representing or providing software security products and services to a
very select set of products.

Critical Accounting Policies and Estimates

The financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America, which requires the Company
to make certain estimates and assumptions. A summary of significant accounting
policies is disclosed in Note 1 to the financial statements which are included
in the Company's annual report on Form 10-KSB for the year ended December 31,
2001. The following section is a summary of certain aspects of those accounting
policies that may require subjective or complex judgments and are most important
to the portrayal of Company's financial condition and results of operations. The
Company believes that there is a low probability that the use of different
estimates or assumptions in making these judgments would result in materially
different amounts being reported in the financial statements.

Revenue Recognition

The Company derives its revenue principally from long-term contracts, which are
generally on a fixed-price basis. Revenue on fixed-price contracts includes
direct costs and allocated indirect costs incurred plus recognized profit.
Revenue is recognized under fixed-price contracts on the
percentage-of-completion basis. The percentage of completion of individual
contracts includes management's best estimate of the amounts expected to be
realized on the contracts. It is at least reasonably possible that the amounts
the Company will ultimately realize could differ materially in the near term
from the amounts estimated in arriving at the earned revenue and costs and
estimated earnings in excess of billings on uncompleted contracts.

Contract costs include all direct material, direct labor and direct subcontract
costs. Provisions for estimated losses on uncompleted contracts are made in the
period in which such losses are determined. Changes in job performance, job
conditions and estimated profitability, including those arising from contract
revisions and final contract settlements, may result in revisions to costs and
income and are recognized in the period in which the revisions occur.

The asset "costs and estimated earnings in excess of billings on uncompleted
contracts" represents revenue recognized in excess of amounts billed to clients.
The liability "billings in excess of costs and estimated earnings on uncompleted
contracts" represents billings in excess of revenue recognized.

RESULTS OF OPERATIONS

The following describes the Company's results of operations for the three and
nine-month periods ended September 30, 2002 and 2001, as required by the SEC's
regulations. The Company believes, however, that information for sequential
quarterly periods is more meaningful in light of recent trends in its business
and has also has included such information in the tables and discussion that
follows.
<TABLE>
<CAPTION>

-------------------------------------- ------------------- ------------------ ------------------- -------------------
            Quarter Ended                   9/30/02             6/30/02            3/31/02             12/31/01
            -------------                   -------             -------            -------             --------
-------------------------------------- ------------------- ------------------ ------------------- -------------------
<S>                                    <C>                   <C>               <C>                <C>
Revenue                                        $  455,202           $557,814            $646,922          $1,232,554
-------------------------------------- ------------------- ------------------ ------------------- -------------------
Revenue  decrease as a percentage  as         19%                 14%                48%                 28%
compared to the previous quarter
-------------------------------------- ------------------- ------------------ ------------------- -------------------
</TABLE>

Revenue decreased for both the three and nine month periods ended September 30,
2002 as compared to the prior year. Revenue decreased in the third quarter 2002
as compared to the second quarter 2002. Although the Company's lender has
expressed its intent to fund the Company during the third quarter 2002, the
lender encountered an internal problem that prevented the lender from fully
funding the Company's operations. As stated above, the Company believes that it
has had to forgo approximately $400,000 in revenue that it would have recognized
in the third quarter 2002 had the funds been available. The Company has
continued to suffer from the adverse economic conditions and the lack of capital
spending in the commercial sector.

<TABLE>
<CAPTION>

------------------------------- ------------------- ------------------- ------------------- ---------------------
        Quarter Ended                9/30/02             6/30/02             3/31/02              12/31/01
        -------------                -------             -------             -------              --------
------------------------------- ------------------- ------------------- ------------------- ---------------------
<S>                              <C>                <C>                  <C>                <C>
Revenue                                   $455,202            $557,814            $646,922           $ 1,232,554
------------------------------- ------------------- ------------------- ------------------- ---------------------
Cost of Revenue                            316,248             447,850             583,831             1,735,449
------------------------------- ------------------- ------------------- ------------------- ---------------------
Gross Profit                              $138,954            $109,964            $ 63,091            $(502,895)
------------------------------- ------------------- ------------------- ------------------- ---------------------
Gross Profit %                                 31%                 20%                 10%                 (41)%
------------------------------- ------------------- ------------------- ------------------- ---------------------
</TABLE>

Cost of revenue decreased for the three and nine months ended September 30, 2002
as compared to the periods ended September 30, 2001, primarily due to the
decrease in revenue. The Company has continued to experience an increase in
gross profit margin as it has controlled costs. The Company believes gross
margin percentages will continue in this historical gross margin range of 30%.
<TABLE>
<CAPTION>


------------------------- ---------------------- ----------------------- ---------------------- ---------------------
     Quarter Ended               9/30/02                6/30/02                 3/31/02               12/31/01
     -------------               -------                -------                 -------               --------
------------------------- ---------------------- ----------------------- ---------------------- ---------------------
<S>                       <C>                    <C>                     <C>                    <C>
Gross accounts                      $ 1,235,409              $2,384,822             $5,017,787            $4,858,692
receivable
------------------------- ---------------------- ----------------------- ---------------------- ---------------------
Allowance $                             317,714                 683,680                750,000               750,000
------------------------- ---------------------- ----------------------- ---------------------- ---------------------
Allowance %                                 26%                     29%                    15%                   16%
------------------------- ---------------------- ----------------------- ---------------------- ---------------------
Average aged Accounts
Receivable                                  130                     167                    150                   113
------------------------- ---------------------- ----------------------- ---------------------- ---------------------
Bad debt expense                     $  298,904              $  975,139                $     -            $1,878,922
------------------------- ---------------------- ----------------------- ---------------------- ---------------------
</TABLE>

Bad debts for the third quarter 2002 increased as compared to the same period in
2001. The bad debt amount for the third quarter 2001 was a $200,000 income
adjustment to the reserve allowance as a result of a change in management's
estimation of the allowance. Bad debts for the nine months ended September 30,
2002 were down substantially as compared to the same period in 2001.

Bad debts for the third quarter 2002 include approximately $141,000 for a
customer that is dependent upon WorldCom Inc. for payment and $168,000 increased
general accounts receivable reserves. The bad debt expense in the second quarter
2002 reflects a write off of $715,000 for WorldCom Inc. and other receivables;
and the remainder of $260,000 is a general increase in reserves. WorldCom Inc.
filed for Chapter 11 bankruptcy in July 2002.
<TABLE>
<CAPTION>

------------------------- ---------------------- ----------------------- ---------------------- ---------------------
     Quarter Ended               9/30/02                6/30/02                 3/31/02               12/31/01
     -------------               -------                -------                 -------               --------
------------------------- ---------------------- ----------------------- ---------------------- ---------------------
<S>                       <C>                    <C>                     <C>                    <C>
Selling, General, and               $ 1,042,093               $ 965,277             $1,070,842            $1,035,394
Administrative expenses
------------------------- ---------------------- ----------------------- ---------------------- ---------------------
Interest expense                     $  340,999               $ 416,251              $ 338,313             $ 797,238
------------------------- ---------------------- ----------------------- ---------------------- ---------------------
Net borrowings                       $  382,377               $ 222,386             $1,195,050            $2,311,292
------------------------- ---------------------- ----------------------- ---------------------- ---------------------
</TABLE>

Selling, general and administrative expenses have decreased substantially as
compared to the prior year's quarter and year-to-date figures as the Company was
reducing staff and other expenses. Selling, general and administrative expenses
have stayed roughly the same for the last four quarters as management has cut
all unnecessary expenses as of the fourth quarter 2001.

Interest expense and financing fees increased significantly as compared to the
prior year for both the three and nine month periods ending September 30, 2002
and 2001. The fourth quarter 2001 includes a large back interest accrual due to
a higher rate effective July 1, 2001. The increase was due to the increased use
of line of credit and an increased rate of interest effective until the end of
the second quarter 2002. At the end of the second quarter 2002, the interest
rate and financing fees rate have decreased. However, the Company continues to
be a net borrower every quarter.


LIQUIDITY AND CAPITAL RESOURCES

The Company's principal capital requirements are increased working capital
needed to support operations. The Company currently is funding its working
capital requirements with cash generated by operations, a receivables factoring
facility and a line of credit with a finance company. The Company is seeking to
control costs and increase new business. If it is unable to obtain working
capital, control costs or increase new business, its ability to continue as a
going concern is in doubt.

The Company's lender has shown a great deal of flexibility in working with the
Company in meeting the Company's continuing working capital needs. Although the
Company's lender has expressed its intent to fund the Company during the third
quarter 2002, the lender encountered an internal problem that prevented the
lender from fully funding the Company's operations. Due to this issue, the
Company estimates it has had to forgo $400,000 in revenue and approximately
$240,000 in gross margin during the third quarter 2002. Should the lender be
unwilling or unable to fund the Company, there could be material adverse
consequences to the ongoing operations of the business because it would not have
sufficient working capital to fund projects and operations of the business. The
Company has limited options to obtain working capital from sources other than
the current finance company due to the low level of cash being generated from
operations and the high level of debt owed to the finance company as compared to
the assets of the Company.

Forward-Looking Statements

This Form 10-QSB 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-KSB that address 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 those actual results or
developments may differ materially from those projected in such statements.


ITEM 4. CONTROLS AND PROCEDURES
The Chief Executive Officer and the Chief Financial Officer of the company (its
principal executive officer and principal financial officer, respectively) have
concluded, based on their evaluation as of a date within 90 days prior to the
date of the filing of this report, that the company's disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the company in the reports filed or submitted by it under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms, and include controls and
procedures designed to ensure that information required to be disclosed by the
company in such reports is accumulated and communicated to the company's
management, including the Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.

There were no significant changes in the company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
such evaluation.


PART II. OTHER INFORMATION
ITEM 5.  Other Information

A.       Delisting of Securities from American Stock Exchange

Stratesec, Incorporated received notice on July 18, 2002, from the American
Stock Exchange staff that the Company no longer complies with the Exchange's
continued listing guidelines due to recurring losses and stockholders' equity
and that its securities are, therefore, subject to being delisted from the
Exchange. The Company fails to meet the following listing standards as
established by the American Stock Exchange:

o    Stockholders'  equity of less than $6 million and it has  sustained  losses
     from continuing operations in its five most recent fiscal years.

o    The opinion of the Company's  prior  auditors,  Argy,  Wiltse and Robinson,
     LLP, that the Company's  recurring  losses from  operations and net capital
     deficiencies  raises  substantial  doubt  about the  Company's  ability  to
     continue as a going concern.

On October 9, 2002 the Company withdrew its appeal of the delisting. The
American stock exchange delisted the Company and the Company has since began
trading on the on the OTC Bulletin Board (OTCBB). The Company believes that the
exchange on which the Company's shares are traded does not affect the intrinsic
value of the Company's business.

B. During October 2002, the Company decided to dispose of the California
operations of the Company to reduce cash requirements. The Company is currently
seeking an acquirer to take over the California operations by the end of
November 2002. The Company does not anticipate any material costs involved in
turning over the California operations to another party. However, should the
Company not be successful in turning over the operations to another party, there
could be material costs involved in closing the California operations.
As of October 31, 2002, the Company has approximately $645,000 in accounts
receivable outstanding relating to California customers. Should the Company not
be able to find someone to take over the California operations, there could be a
material adverse effect on the Company's ability to collect these receivables.
The California operations consist of two offices in Sacramento and Pleasanton.
Its direct revenues and expenses, not including charges for corporate overhead
or marginal costs such as insurance and interest and other items not directly
attributable to the California operations are as follows (all numbers in
thousands and are approximate):

<TABLE>
<CAPTION>

--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
   For the Period       Nine Months           Q3 2002             Q2 2002            Q1 2002           Year Ended
   --------------       ------------          -------             -------            -------           -----------
                        Ended 9/30/02                                                                   12/31/01
                        -------------                                                                   --------
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
<S>                   <C>                 <C>                <C>                <C>                 <C>
Revenue                         $   920             $   324            $   234             $   362          $   2,239
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Net Income (Loss)              $  (866)            $  (350)           $  (307)            $  (209)           $    386
                               ========            ========           ========            ========           ========
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a. Exhibits
11.      Calculation of Net Income per Share
99.      Other exhibits
a)       Certifications of filing by officers
b)       Certifications of filing by officers

         b. The 8-k filed July 19, 2002 stating that the Company has retained
         Reznick, Fedder & Silverman, a Professional Corporation, to serve as
         its principal independent accounting firm to audit its financial
         statements for the year ended December 31, 2002 is hereby incorporated
         by reference.








SIGNATURES

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
President and Chief Executive Officer


/s/ RICHARD ROOMBERG
-------------------------
Richard Roomberg
Executive Vice President, Chief Operating Officer,
  and Chief Financial Officer

November 14, 2002


CERTIFICATION

I, Barry McDaniel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of STRATESEC Incorporated;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)  all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

6.   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  November 14, 2002

/s/ BARRY MCDANIEL
----------------------------------
Barry McDaniel
President and Chief Executive Officer

<PAGE>

I, Richard Roomberg, certify that:

1. I have reviewed this quarterly report on Form 10-Q of STRATESEC Incorporated;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)  all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

6.   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  November 14, 2002

/s/ RICHARD ROOMBERG
----------------------------------
Richard Roomberg
Executive Vice President and Chief Financial Officer