SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                For the quarterly period ended September 30, 1999

                         Commission File Number: 1-13427



                             STRATESEC INCORPORATED

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

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


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


                                    Yes      X                No


There  were  5,866,522  shares  of Common  Stock,  par  value  $0.01 per  share,
outstanding at November 10, 1999.


<PAGE>



STRATESEC INCORPORATED

Quarter ended September 30, 1999

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


                                                                            Page

Part I.  Financial information

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

         Balance Sheets as of December 31, 1998 and September 30, 1999
         (unaudited)..........................................................3

         Statements of Operations for the three months ended
         September 30, 1998 and 1999 and the nine months ended
         September 30, 1998 and 1999 (unaudited)..............................4

         Statements of Cash Flows for the nine months ended
         September 30, 1998 and 1999 (unaudited)..............................5

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

     Item 2.  Management's Discussion and Analysis of
               Financial Condition and Results of Operations..................7

Part II.  Other information

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

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

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

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

                                                         2

<PAGE>



PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements



                             STRATESEC INCORPORATED
                                 BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                   December 31,  September 30,
                                                                                       1998*          1999
                                                                                                   (Unaudited)
<S>                                                                             <C>             <C>

        ASSETS
Current assets:
   Cash and cash equivalents..................................................   $      442,582  $       15,930
   Cash-restricted............................................................        1,900,000              --
   Accounts receivable, net of allowance for doubtful
     accounts of $303,000 in 1998 and 1999....................................        1,297,176       1,352,395
   Costs and estimated earnings in excess of billings on
     uncompleted contracts....................................................        1,440,485       1,506,909
   Inventory..................................................................           57,058         291,731
   Prepaid expenses and other.................................................          171,404         104,833
                                                                                 --------------  --------------
        Total currents assets.................................................        5,308,705       3,271,799
Plant and equipment, net......................................................          460,932         475,797
Other assets..................................................................           58,099          58,026
                                                                                 --------------  --------------
                                                                                 $    5,827,736  $    3,805,621
                                                                                 ==============  ==============

        LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities:
   Current maturities of capital lease obligations............................   $       68,672  $       70,136
   Accounts payable...........................................................        1,455,840       1,762,710
   Billings in excess of costs and estimated earnings on
     uncompleted contracts....................................................          102,132          89,460
   Accrued expenses and other.................................................        1,008,955         661,155
   Notes payable..............................................................        1,802,404              --
                                                                                 --------------  --------------
        Total current liabilities.............................................   $    4,438,003  $    2,583,461

Long-term liabilities:
   Capital lease obligations, less current maturities.........................          167,430         120,241

Shareholders' equity (deficiency):
   Common stock, $0.01 par value per share; authorized
     20,000,000  shares;  issued 6,103,502 and 5,973,522  outstanding  shares in
     1998 and 5,878,522 shares
     outstanding in 1999......................................................           61,035          61,035
   Treasury stock.............................................................         (181,851)       (392,071)
   Additional paid-in capital.................................................       21,143,824      22,073,824
   Accumulated deficit........................................................      (19,800,705)    (20,640,867)
                                                                                 --------------  --------------
     Total shareholders' equity...............................................        1,222,303       1,101,920
                                                                                 --------------  --------------
     Total liabilities & shareholders' equity.................................   $    5,827,736  $    3,805,621
                                                                                 ==============  ==============
*    Derived from audited financial statements as of December 31, 1998.

          The  accompanying notes are an integral part of these statements.
</TABLE>


                                                         3

<PAGE>



                             STRATESEC INCORPORATED
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                       Three Months Ended               Nine Months Ended
                                                          September 30,                   September 30,
                                                     1998             1999           1998             1999
                                                 -------------   -------------   -------------   -------------
<S>                                             <C>             <C>             <C>             <C>


Earned Revenue.................................  $   1,435,416   $   2,426,985   $   4,127,916   $   6,117,875
Provision for contract adjustment..............             --              --       2,491,156              --
Cost of earned revenue.........................      1,044,236       1,745,593       3,281,477       4,330,578
                                                 -------------   -------------   -------------   -------------

Gross profit...................................        391,180         681,391      (1,644,717)      1,787,297

Selling, general and administrative
   expenses....................................      1,045,527         880,065       3,129,059       2,488,542
                                                 -------------   -------------   -------------   -------------

Operating loss.................................       (654,347)       (198,674)     (4,773,776)       (701,245)

Loss on sale of plant and equipment............             --              --         (37,839)             --
Interest and financing fees....................        (69,787)        (37,052)       (118,891)       (153,339)
Interest and other income......................         27,469           1,182          93,448          14,422
                                                 -------------   -------------   -------------   -------------

Net income (loss)..............................       (696,665)       (234,544)     (4,837,058)       (840,162)
                                                 =============   =============   =============   =============

Net income (loss) per share--basic
   and diluted.................................          (0.11)          (0.04)          (0.79)          (0.14)
                                                 =============   =============   =============   =============

Weighted average common shares
   outstanding.................................      6,103,522       5,978,440       6,103,522       5,978,440
                                                 =============   =============   =============   =============




       The accompanying notes are an integral part of these statements.
</TABLE>



                                                         4

<PAGE>



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


                                                                                        Nine Months Ended
                                                                                          September 30,
                                                                                     1998            1999
                                                                                --------------  --------------
<S>                                                                             <C>             <C>

Cash flows from operating activities:
   Net income (loss).........................................................    $   (4,837,058) $     (840,162)
                                                                                 --------------  --------------
Adjustments to reconcile net income (loss) to
   net cash used in operating activities:
     Provision for legal judgment............................................                --       1,900,000
     Depreciation and amortization...........................................           106,570         116,911
     Loss of sale of plant and equipment.....................................            39,162              --
     Amortization of debt discount...........................................            11,899          35,697
     Cash restriction........................................................           123,491              --
Changes in operating assets and liabilities:
   Accounts receivable.......................................................         2,029,385         (55,219)
   Inventory (Material Stores on Site).......................................           357,728        (234,673)
Costs and estimated earnings in excess of
     billings on uncompleted contracts.......................................           809,671         (66,424)
   Prepaid expenses and other................................................            13,647          66,571
   Other assets..............................................................           (11,462)             73
   Accounts payable..........................................................          (992,546)        306,870
   Billings in excess of costs and estimated
     earnings on uncompleted contracts.......................................           191,991         (12,672)
   Accrued expenses and other................................................          (180,918)       (347,800)
                                                                                 --------------  --------------
       Total adjustments.....................................................         2,498,626       1,709,332
                                                                                 --------------  --------------
       Net cash from (used in) operating activities..........................        (2,338,432)        869,170
                                                                                 --------------  --------------

Cash flows from investing activities:
   Sale of plant and equipment...............................................           240,000              --
   Acquisition of plant and equipment........................................           (59,254)       (131,776)
                                                                                 --------------  --------------
   Net cash used by investing activities.....................................           180,746        (131,776)
                                                                                 --------------  --------------

Cash flows from financing activities:
   Proceeds from notes payable...............................................         1,850,000      (1,838,101)
   Purchase of treasury stock................................................                --        (210,220)
   Principal payments on notes payable--shareholders..........................               --        (930,000)
   Principal payments of capital lease
     obligations.............................................................           (44,454)        (45,725)
                                                                                 --------------  --------------
   Net cash provided by (used in) financing activities.......................         1,805,546      (1,164,046)
                                                                                 --------------  --------------
Net (decrease) in cash and cash equivalents..................................         (352,140)       (426,652)
Cash and cash equivalents at beginning of period.............................          998,312         442,582
                                                                                 --------------  --------------
Cash and cash equivalents at end of period...................................    $      646,172  $       15,930
                                                                                 ==============  ==============


       The accompanying notes are an integral part of these statements.
</TABLE>


                                                         5

<PAGE>



                          NOTES TO FINANCIAL STATEMENTS

1.  Basis of Presentation

         The  unaudited  balance  sheet as of September  30, 1999 and  unaudited
statements of operations for the three months ended  September 30, 1998 and 1999
and the nine  months  ended  September  30,  1998  and  1999  and the  unaudited
statements  of cash flows for the nine months ended  September 30, 1998 and 1999
are condensed  financial  statements  prepared in accordance  with the rules and
regulations of the Securities and Exchange  Commission.  Accordingly,  they omit
certain information included in complete financial statements and should be read
in conjunction with the financial statements and notes included in the Company's
Annual  Report on Form 10-K for the year ended  December 31, 1998 filed with the
Securities and Exchange Commission on March 30, 1999.

         In the opinion of the Company,  the unaudited  financial  statements at
September  30, 1999 and for the three and nine months ended  September  30, 1998
and  1999,  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, 1999 are not  necessarily  indicative of results
to be expected for the full year.

2.  Costs and Estimated Earnings on Uncompleted Contracts

         Costs and estimated  earnings on uncompleted  contracts at December 31,
1998 and September  30, 1999 which are expected to be collected  within one year
are as follows:

<TABLE>
<CAPTION>

                                                                                  December 31,   September 30,
                                                                                      1998             1999
                                                                                ---------------  ---------------
<S>                                                                             <C>             <C>


Costs incurred on contracts..................................................    $    18,988,832  $    23,319,410
Estimated earnings...........................................................          5,289,572        7,050,742
                                                                                 ---------------  ---------------
                                                                                      24,278,404       30,370,152
Less billings to date........................................................         22,940,051       28,952,703
                                                                                 ---------------  ---------------
                                                                                 $     1,338,353  $     1,417,449
                                                                                 ===============  ===============
</TABLE>




                                                         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 included elsewhere in this
report.

Overview

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

         During the third quarter,  the Company's business continued to grow and
at the end of the quarter,  the Company had approximately $14 million in backlog
and follow on projects,  as well as a strong bid and proposal  log.  Many of the
Company's existing clients are major corporate accounts with multiple facilities
throughout the United States. The Company expects these accounts to be long-term
relationships  that will generate  significant  revenues each year.  The Company
continues  to  increase  business  with  existing  clients as well as expand and
diversify its client base.  Clients currently include Alltel,  Dallas/Fort Worth
Technologies,  MCI/Worldcom, Koch Industries,  Hewlett-Packard, Winn Dixie, EDS,
Dallas   Semiconductor,   Eastman  Kodak,   FINA  Inc.,   Nokia  and  Washington
Metropolitan Transit Authority.

         During the third quarter, the holders of the Company's 10% senior notes
totaling $930,000 due December 31, 1999, exchanged their notes for the Company's
common  stock valued at $1.50 per share.  Additionally,  the  Company's  largest
shareholder,  the KuwAm  Group,  agreed to  purchase  or  privately  place up to
500,000  newly issued  shares of Stratesec  common stock at the same price.  The
effect  of  these  transactions  is not  significantly  dilutive,  substantially
strengthens  the  balance  sheet,  leaves  the  Company  debt  free,  and better
positions  the  Company to support  its  continuing  growth and  improvement  in
operating results.

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

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



                                                         7

<PAGE>



Results of Operations

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

<TABLE>
<CAPTION>

                                                               Three Months Ended         Nine Months Ended
                                                                  September 30,             September 30,
                                                               1998         1999          1998         1999
<S>                                                        <C>          <C>          <C>          <C>

Earned revenues...........................................       100.0%       100.0%       100.0%       100.0%
Provision for contract adjustment.........................         0.0          0.0         60.3          0.0
Cost of earned revenues...................................        72.7         71.9         79.5         70.8
                                                            ----------   ----------   ----------   ----------
   Gross profit...........................................        27.3         28.1        (39.8)        29.2
Selling general and administrative expenses...............        72.8         36.3         75.8         40.7
                                                            ----------   ----------   ----------   ----------
   Operating income (loss)................................       (45.5)        (8.2)      (115.6)       (11.5)
Loss on sale of plant and equipment.......................         0.0          0.0         (0.9)         0.0
Interest and financing fees...............................        (4.9)        (1.5)        (2.9)        (2.5)
Interest and other income.................................         1.9          0.0          2.3          0.2
                                                            ----------   ----------   ----------   ----------

   Net income (loss)......................................      (48.5)%       (9.8)%     (117.2)%      (13.7)%
                                                            ---------    ---------    ---------    ---------
</TABLE>


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

         Revenues  increased  by 69% from $1.4 million in the three months ended
September 30, 1998 to $2.4 million in the three months ended September 30, 1999.
The increase was due primarily to revenue from new customers.

         Cost of earned revenues increased from $1.0 million in the three months
ended September 30, 1998 to $1.7 million in the three months ended September 30,
1999,  primarily  due to the increase in revenues.  Gross margin  improved  from
27.3% in the 1998 period to 28.1% in 1999.

         Selling,  general and  administrative  expenses decreased by 15.8% from
$1.0 million in the three months ended September 30, 1998 to $0.8 million in the
three months ended September 30, 1999.

         Interest expense and financing fees decreased from $0.07 million in the
three months ended September 30, 1998 to $0.03 million in the three months ended
September 30, 1999.

         Net loss  improved  from a net loss of $0.7 million in 1998 to net loss
of $0.2 million in 1999.

Nine Months Ended  September 30, 1999 Compared With Nine Months Ended  September
30, 1998.

         Revenues  increased  by 48% from $4.1  million in the nine months ended
September 30, 1998 to $6.1 million in the nine months ended  September 30, 1999.
The increase was due primarily to revenue from new customers.

         Cost of earned revenues  increased from $3.3 million in the nine months
ended  September 30, 1998 to $4.3 million in the nine months ended September 30,
1999,  primarily due to the increase in revenues.  Gross margin  increased  from
(39.8)% in the 1998 period to 29.2% in 1999.


                                                         8

<PAGE>



         Selling,  general and  administrative  expenses decreased 20% from $3.1
million in the nine months ended September 30, 1998, to $2.5 million in the nine
months ended  September  30, 1999.  The  decrease was  primarily  due to Company
initiatives to reduce unnecessary administrative overhead costs.

         Interest  expense and  financing  fees  remained at $0.1 million in the
nine months ended  September 30, 1998 and in the nine months ended September 30,
1999.

         Net loss  improved  from a net loss of $4.8 million in 1998 to net loss
of $0.8 million in 1999.

Liquidity and Capital Resources

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

         During April 1998,  the Board of Directors  approved the issuance of up
to $2.0 million of  convertible  subordinated  debentures to provide  additional
working capital.  As of May 13, 1998, the Company had issued and sold $1,450,000
of  debentures.  The Company sold an  additional  $400,000 of  debentures  as of
August  25,  1998.  The  debentures  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 value
of the warrants of $71,394 was determined based upon the Black Scholes Valuation
Model and was recorded as additional paid-in capital.  All 185,000 warrants were
outstanding at December 30, 1998.

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

         During  September  1999 all of the holders of the  company's 10% senior
notes  totaling  $930,000 due December 31, 1999,  have agreed to exchange  their
notes for the  Company's  common stock valued at $1.50 per share.  Additionally,
the Company's  largest  shareholder,  the KuwAm group, has agreed to purchase or
privately  place up to 500,000 newly issued shares of Stratesec  common stock at
the same price, $1.50 per share.

         As of  September  30, 1999,  the Company had cash of $0.01  million and
working   capital  of  $0.7   million.   The  Company  is   pursuing   obtaining
financing/credit  facilities to increase  working  capital to fund a significant
ramp up of new business.

Forward-Looking Statements

         This Form 10-Q  includes  certain  statements  that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act. All statements,  other than statements of historical fact, included in this
Form 10-Q that addresses  activities,  events,  or developments that the Company
expects,  projects,  believes,  or anticipates  will or may occur in the future,
including

                                                         9

<PAGE>



matters having to do with existing or future contracts, the Company's ability to
fund its operations and repay debt, business strategies, expansion and growth of
operations  and other such  matters,  are  forward-  looking  statements.  These
statements are based on certain  assumptions and analyses made by our management
in light of its  experience  and its  perception of historical  trends,  current
conditions,  expected  future  developments,  and other  factors it believes are
appropriate in the  circumstances.  These  statements are subject to a number of
assumptions,  risks and  uncertainties,  including general economic and business
conditions,  the business  opportunities (or lack thereof) that may be presented
to  and  pursued  by the  Company,  the  Company's  performance  on its  current
contracts and its success in obtaining new contracts,  the Company's  ability to
attract and retain  qualified  employees,  and other factors,  many of which are
beyond the  Company's  control.  You are  cautioned  that these  forward-looking
statements are not guarantees of future  performance  and that actual results or
developments may differ materially from those projected in such statements.

Year 2000 Update

         The Company  evaluated its internal  operating systems and software for
Year  2000  compliance.  Based  on  this  analysis,  the  Company  replaced  its
accounting  system to ensure Year 2000 compliance.  The cost of this replacement
was $25,000.  The Company replaced  several obsolete  computers and upgraded the
software on its remaining computers at an estimated cost of $20,000. The Company
has reviewed its computers and remaining  systems and does not foresee incurring
any additional costs to make them Year 2000 compliant.

         The Company has  installed  and  maintained  an  assortment of security
systems for its  customers.  To address the issue of Year 2000  compliance,  the
Company has  surveyed  its  suppliers  for a status of all software and hardware
purchased on behalf of its customers.  The Company has  communicated the results
to its customers and based on the status reports, it has made recommendations on
how to resolve any Year 2000 problems and issues.  The Company has evaluated the
cost required to upgrade security systems installed by the Company for Year 2000
compliance  and  has  proposed  solutions  for its  customers.  Based  on  these
evaluations  and  solutions,  the  Company  has begun to upgrade  several of its
customers'  systems as they have requested.  The Company expects to complete the
upgrades for its existing  customers by the fourth quarter of 1999. It should be
noted that the Company does not manufacture its own system components,  but uses
components  by  other  vendors;   therefore,   there  is  no  internal  software
development  cost  associated  with the  upgrades  for its  customers'  security
systems.

         Since  the  Company  has  tested  its  internal  systems  for Year 2000
compliance,  the Company does not feel that a contingency  plan is necessary for
internal  operations.  The risk associated with the Company's customers' upgrade
is contingent  upon its completing  their Year 2000 compliance and providing the
Company with the  documentation  and  equipment  necessary to complete Year 2000
upgrades for its customers  prior to the end of 1999. The Company has identified
alternative  vendors  to  allow it to meet any  customer  requirements  that are
deemed  critical.  In addition,  the Company's  customers can  supplement  their
automated  systems with guard services if the security  system  upgrades are not
complete by the end of 1999.

         If the Company's  suppliers were unable to provide the Company with the
equipment and information  necessary to upgrade the security  systems,  it could
result in the Company's inability to provide electronic security to customers in
accord  with  current  contract  terms.  This could lead to  termination  of the
contract  which would  result in  significant  loss of revenue for the  Company.
Based

                                                        10

<PAGE>



upon the  responses of our vendors on the  surveys,  the Company does not expect
this to occur and does not have a contingency plan for this responsibility.


                                                        11

<PAGE>



PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

         Although the Company is a defendant in certain  suits  arising from the
normal conduct of its business,  management does not believe that the resolution
of  this  litigation  will  have a  material  adverse  effect  on the  Company's
financial  position,  results of  operations,  or cash  flows.  This  litigation
includes SecuraComm Consulting, Inc. v. Securacom, Incorporated. In this action,
filed in the U.S. District Court for the district of New Jersey in October 1995,
the plaintiff,  a consulting  company,  sought injunctive relief and damages for
alleged  confusion  in the  marketplace  and lost  business  resulting  from the
Company's alleged  infringement of plaintiff's claimed service mark. In November
1997,  the court ruled in favor of the  plaintiff  and enjoined the Company from
using the name "Securacom,  Incorporated"  and awarded the plaintiff  damages in
the amount of $1,900,000.  The Company appealed the decision and it was reversed
in January 1999.


Item 6.  Exhibits and Reports on Form 8-K

a.       Exhibits

         11.1     Calculation of Net Income (Loss) Per Share

         27.1     Financial Data Schedule

b. Reports on Form 8-K.

         None

Signature

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

STRATESEC INCORPORATED


 /s/BARRY MCDANIEL
-----------------------------------------------------

Barry McDaniel
Chief Operating Officer


November 15, 1999

                                                        12