FORM 10-K

                        SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      AND EXCHANGE ACT OF 1934

                     For the fiscal year ended March 31, 2002

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from ________ to ______


                          Commission File Number 0-18684


                           COMMAND SECURITY CORPORATION
               (Exact name of registrant as specified in its charter)

New York                                                 14-1626307
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                           Identification No.)

Lexington Park, Lagrangeville, New York                           12540
(Address of Principal executive offices)                       (Zip Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

                                Common Stock

         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 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

Yes |X| No |_|

         Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definite proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K

         As of June 14, 2002, the aggregate market value of the voting stock
held by non-affiliates of the registrant (3,259,915 shares), based on the
last sales price of $1.44 on that date, was approximately $4,694,277.

         As of June 14, 2002, the registrant had issued and outstanding
6,287,343 shares of common stock.


<PAGE>

                           Command Security Corporation

                            ANNUAL REPORT ON FORM 10-K
                      For the Fiscal Year Ended March 31, 2002

                              TABLE OF CONTENTS


                                     PART I

1.   Business

2.   Properties

3.   Legal Proceedings

4.   Submission of Matters to a Vote of Security Holders


                                   PART II

5.   Market for the Registrant's Common Stock and Related Stockholder Matters

6.   Selected Financial Data

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

7A.  Quantitative and Qualitative Disclosures about Market Risk

8.   Financial Statements and Supplementary Data

9.   Changes in and Disagreements with Accountants on Accounting and Financial
     Disclosures.


                                   PART III

10.  Directors and Executive Officers of the Registrant

11.  Executive Compensation

12.  Security Ownership of Certain Beneficial Owners and Management

13.  Certain Relationships and Related Transactions


                                   PART IV

14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K


<PAGE>


                                   PART I

                              ITEM 1. BUSINESS

         Command Security Corporation ("Company") is a corporation formed
under the laws of the State of New York on May 9, 1980. It principally
provides uniformed security services from its nineteen operating offices in
New York, Massachusetts, New Jersey, Illinois, California, Pennsylvania,
Connecticut and Florida to commercial, financial, industrial, aviation and
governmental clients in the United States.

         The Company provides its security services to a wide range of
industries which the Company has categorized into three groups - guard
services, aviation services and support services. The latter includes any
revenue from administrative service agreements and back office support to
police departments.

         The guard service division includes governmental and
quasi-governmental clients such as cities and statewide institutions and
industrial and commercial clients such as retail chains and health care
institutions. Guard services represented approximately 44% (or $37.2 million)
of the Company's revenue for the fiscal year ended March 2002. Security
services include providing uniformed guards for access control, theft
prevention, surveillance, vehicular and foot patrol and crowd control.

         Approximately 56% (or $46.7 million of the Company's revenue for the
fiscal year ended March 2002) was generated from the aviation services
division. This division provides uniformed guard services to airport and
airport related clients including boarding security and baggage handling
services in accordance with Air Transportation Association and Federal
Aviation Administration (FAA) standards. On February 17, 2002, all of our
contracts for pre-board screening at airports were assigned to the FAA.

         The support services division accounted for less than 1% (or $0.3
million) of the 2002 revenues and encompasses back office support to 3 police
departments and an administrative service client. The latter are where the
Company provides a computerized scheduling and information system and
programs, as well as accounts receivable financing. Accounts receivable
financing is secured by the administrative service company's clients accounts
receivable, customer lists, contracts, all other assets and the personal
guarantee of the owner(s) of the administrative service company. Neither the
sales revenue generated by the administrative service client nor the
associated expenses are accounted for within the Company's operations.
Financed receivables are included in the Company's accounts receivable
figures.

         The Company employs approximately 75 employees indirectly
attributable to guard and aviation services including supervisors and
dispatchers, another approximately 100 administrative employees, including
the executive staff, and approximately 3,400 hourly guards.

         Management believes there is heightened attention to security
matters due to the events of September 11 and the ongoing threat of criminal
and terrorist activities. As a result of such attention, management further
believes that the urban commercial centers served by the Company, including
New York, Los Angeles, Miami and Chicago, provide an opportunity for
increased market participation and growth.

Operations

         As a licensed watchguard and patrol agency, the Company's guard
services division furnishes guards to its security service customers to
protect people or property and to prevent the theft of property. In this
regard, the Company principally conducts business by providing guards and
other personnel who are, depending on the particular requirements of the
customer, uniformed or plain-clothed, armed or unarmed, and who patrol in
marked radio cars or stand duty on the premises at stationary posts such as
fire stations, reception areas or video monitors. The Company's guards
maintain contact with headquarters or supervisors via car radio or hand-held
radios. In addition to the more traditional tasks associated with access
control and theft prevention, guards respond to emergency situations and
report to appropriate authorities for fires, natural disasters, work
accidents and medical crises.

         The Company provides guard services to many of its industrial and
commercial customers on a 24-hour basis, 365 days per year. For these
customers, guards are on hand to provide plant security, access control,
personnel security checks and traffic and parking control and to protect
against fire, theft, sabotage and safety hazards. The remaining customers
include retail establishments, hospitals, governmental units and promoters of
special events. The services provided to these customers may require armed as
well as unarmed guards. The Company also provides specialized vehicle patrol
and inspection services and personal protection services to key executives
and high profile personalities from time to time.

<PAGE>

         The Company's aviation services division provides a variety of
uniformed services for domestic and international air carriers including
pre-board passenger screeners, checkpoint security supervisors, wheelchair
escorts, skycaps, baggage handlers and uniformed guards for cargo security
areas. In November 2001, the US Government made the decision to federalize
the pre-board screening process at US airports and in February 2002, the FAA
took over responsibility for pre-board screening functions. While the
Company's current contract with the FAA to provide these services has been
positive, both in terms of revenue and earnings, current law provides that
all current suppliers involved with pre-board screening, including Command,
will be eliminated by November 2002. Furthermore, under the terms of the FAA
contracts, our services can be terminated on 30 days notice. The termination
of these contracts will have a significant negative impact on the Company's
current revenues and earnings once the FAA has the infrastructure in place to
hire as direct employees all persons who would act as pre-board screeners.

         Under the law of negligence, the Company can be liable for acts or
omissions of its agents or employees performed or occurring in the course of
their employment. The nature of some of the services provided by the Company
(e.g. crowd control and armed guard services) potentially exposes it to risks
of liability for employee conduct. The Company currently maintains general
liability insurance in the amount of $5 million per occurrence and $10
million in the aggregate on a per project basis. The impact of September 11
tragedy meant that the previous umbrella coverage of $50 million is no longer
available to the Company. We retain the risk for the first $25,000 per
occurrence.

         To ensure that adequate protection requirements have been
established prior to commencing service to a customer, the Company evaluates
the customer's site and prepares a recommendation for any required changes to
existing security programs or services. Surveys typically include an
examination and evaluation of perimeter controls, lighting, personnel and
vehicle identification and control, visitor controls, electronic alarm
reporting systems, safety and emergency procedures, key controls and security
force manning levels. While surveys and recommendations are prepared by the
Company, the security plan and coverage requirements are determined by the
customer. Operational procedures and individual post orders are reviewed
and/or rewritten by the Company to meet the requirements of the security plan
and coverage determined by the customer.

         In order to provide a high level of service without incurring large
overhead expenses, the Company establishes offices close to its customers and
delegates responsibility and decision making to its local managers. The
Company emphasizes the role of its managers by assigning to each one
responsibility for service and encourages them to get involved with the sales
effort alongside the sales personnel. The Company believes that in most
situations the combination of both service responsibility and a significant
involvement in sales in a single individual results in better supervision and
quality control and greater responsiveness to customer needs.

         The Company generally renders its security guard services pursuant
to a standard form security services agreement which specifies the personnel
and/or equipment to be provided by the Company at designated locations and
the rates therefor, which typically are hourly rates per person. Rates vary
depending on base, overtime and holiday time worked, and the term of
engagement. The Company assumes responsibility for a variety of functions
including scheduling each customer site, paying all guards and providing
uniforms, training, equipment, supervision, fringe benefits and workers'
compensation insurance. These security services agreements also provide
customers with flexibility by permitting reduction or expansion of the guard
force on relatively short notice. The Company is responsible for preventing
the interruption of security services as a consequence of illness, vacations
or resignations. In most cases the customer also agrees not to hire any
security personnel used by the Company for at least one year after the
termination of the engagement. Each security services agreement may be
terminated by the customer, typically with no prior notice or short notice
(usually 30 days). In addition, the Company may terminate an agreement
immediately upon default by the customer in payment of monies due thereunder
or if there is filed by or against the customer a bankruptcy petition or if
any other act of bankruptcy occurs.

         The Company has its own proprietary computerized scheduling and
information system. The scheduling of guards, while time-consuming, is a most
important function of any guard company. Management believes the system
substantially reduces the time a manager must spend on scheduling daily guard
hours and allows the Company to fulfill customer needs by automatically
selecting those guards that fit the customer's requirements.

<PAGE>

Employee Recruitment and Training

         The Company believes that the quality of its guards is essential to
its ability to offer effective and reliable service, and it believes
diligence in their selection and training produces the level of performance
required to maintain customer satisfaction and internal growth.

         The Company's policy requires that all selected applicants for
Company guard positions undergo a detailed pre-employment interview and a
background investigation covering such areas as employment, education,
military service, medical history and, subject to applicable state laws,
criminal record. In certain cases the Company employs psychological testing
and, where permitted, uses pre-employment polygraph examinations. Personnel
are selected based upon physical fitness, maturity, experience, personality,
stability and reliability. Medical examinations and substance abuse testing
may also be performed. Prerequisites for all Company guards include a good
command of the English language and the ability to communicate well and write
a comprehensive and complete report. Preference is given to applicants with
previous experience, either as a military or a civilian security-police
officer.

         The Company trains accepted applicants in three phases:
Pre-assignment; On-the-job; and Refresher. The Company's training programs
can utilize current curricula and audio-visual materials. Pre-assignment
training explains the duties and powers of a security guard, report
preparation, emergency procedures, general orders, regulations, grounds for
discharge, uniforms, personal appearance and basic post responsibilities.
On-the-job assignment training covers specific duties as required by the post
and job orders. Ongoing refresher training is given on a periodic basis as
determined by the local area supervisor and manager.

         Command treats all employees and applicants for employment without
unlawful discrimination as to race, creed, color, national origin, sex, age,
disability, marital status or sexual orientation in all employment-related
decisions.

Significant Customers

         No individual client accounted for more than 10% of the Company's
gross revenue in 2002 or 2001, although in 2000 British Air accounted for
$6,027,000 or 10% of the Company's gross revenue. For the month of March
2002, the FAA accounted for approximately 48% of the Company's gross revenue
of approximately $4.4 million.

Competition

         Competition in the security service business is intense. It is based
primarily on price and the quality of service provided, the scope of services
performed, name recognition and the extent and quality of security guard
supervision, recruiting and training. As the Company has expanded its
operations it has had to compete more frequently against larger national
companies, such as Pinkerton's, Burns International Security Services, Wells
Fargo Guard Services (all now owned by Securitas) and The Wackenhut
Corporation, which generally have substantially greater financial resources,
personnel and facilities than the Company. These competitors also offer a
range of security and investigative services which are at least as extensive
as, and directly competitive with, those offered by the Company. In addition,
the Company competes with numerous regional and local organizations which
offer substantially all of the services provided by the Company. Although
management believes that, especially with respect to certain of its markets,
the Company enjoys a favorable competitive position because of its emphasis
on customer service, supervision and training and is able to compete on the
basis of the quality of its service, personal relationships with customers
and reputation, there can be no assurance that it will be able to maintain
its competitive position in the industry.

Government Regulation

         The Company is subject to city, county and state firearm and
occupational licensing laws that apply to security guards and private
investigators. In addition, many states have laws requiring training and
registration of security guards, regulating the use of badges and uniforms,
prescribing the use of identification cards or badges, and imposing minimum
bond, surety or insurance standards. The Company may be subjected to
penalties or fines as the result of licensing irregularities or the
misconduct of one of its guards from time to time in the ordinary course of
its business. Management believes the Company is in material compliance with
all applicable laws and regulations.

         In the light of the September 11 tragedy, the US Government passed a
bill in November 2001, outlining their proposal to federalize the pre-board
screening process at all US airports. The process of federalization has begun
and it is expected to be completed by their set deadline of November 2002.
The impact of federalization is discussed above in "Item 1. Business" and
"Operations". Also see "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations"

<PAGE>

Employees

         The Company employs approximately 75 employees indirectly
attributable to guard services including supervisors and dispatchers, another
approximately 100 administrative employees including the executive staff, and
approximately 3,400 hourly guards.

         The Company's business is labor intensive and, as a result, is
affected by the availability of qualified personnel and the cost of labor.
Although the security guard industry is characterized by high turnover, the
Company believes its experience compares favorably with that of the industry.
The Company has not experienced any material difficulty in employing suitable
numbers of qualified security guards, although, when labor has been in short
supply, it has been required to pay higher wages and incur overtime charges.

         Approximately 57% of the Company's employees hired for guard service
customers do not belong to a labor union. The Company's New York City
employees, and its employees at Los Angeles International Airport, who
together represent approximately 43% of the Company's employees for guard
service customers, work under collective bargaining agreements with the
following unions: Allied International Union; and Special & Superior Officers
Benevolent Association. Most of the Company's New York City and Chicago
competitors are also unionized. The Company has experienced no work stoppages
attributable to labor disputes. The Company believes that its relations with
its employees are satisfactory. Guards and other personnel supplied by the
Company to its customers are employees of the Company, even though they may
be stationed regularly at the customer's premises.

Service Marks

         The Company believes itself to be the owner of the service marks
"Command Security Corporation", "CSC" and "CSC Plus" design for security
guard, detective, private investigation services and security consulting
services. On February 22, 1994, the service mark assignment was recorded with
the U.S. Patent and Trademark Office, Registration No. 1,823,346. The prior
registration number was No. 1,662,089.

         The Company also believes itself to be the owner of the trademark
"Smartwheel" for the computer program for use in dispatching and tracking
small vehicles such as carts and wheelchairs at transportation terminals. The
trademark was acquired as part of United Security Group, Inc. acquisition. On
May 23, 1995 the trademark was registered with the U.S. Patent and Trademark
Office, Registration No. 1894956. In addition, the Company believes itself to
be the owner of the service marks "STAIRS" and "Smart Guard." The respective
registration dates and numbers are September 15, 1992; No. 1,715,363 and
December 19, 1992; No. 1,742,892.

<PAGE>


                             ITEM 2. PROPERTIES

         As of March 31, 2002, the Company owned and used in connection with
its business approximately 75 vehicles.

         As of March 31, 2002, the Company did not own any real property. It
occupies executive offices at Route 55, Lexington Park, Lagrangeville, New
York, of approximately 6,600 square feet with a base annual rental of
$108,900 under a five-year lease expiring September 30, 2003. The Company
also occupies the following offices:

<TABLE>

<CAPTION>

---------------------------------------------------------------------------------------------------------------------
Location                                                    When Opened       Square Footage      Base Annual Rent
---------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>               <C>                 <C>
Los Angeles International Airport
380 World Way, Box N-28
Los Angeles, CA                                             8/15/96                 647              $17,236
---------------------------------------------------------------------------------------------------------------------
5759 Rickenbacker Road
Commerce, CA                                                11/1/01               2,650              $25,440
---------------------------------------------------------------------------------------------------------------------
7841 Balboa Ave.
San Diego, CA                                                2/8/00                 395               $6,300
---------------------------------------------------------------------------------------------------------------------
8939 S Sepulveda Blvd., Suite 201
Los Angeles, CA                                              3/1/00               1,422              $23,016
---------------------------------------------------------------------------------------------------------------------
8939 S. Sepulveda Blvd., Suite 422
Los Angeles, CA                                             11/1/01                 575              $12,072
---------------------------------------------------------------------------------------------------------------------
1470, Barnum Avenue, Suite 304
Bridgeport, CT                                              11/1/00               1,500              $17,520
---------------------------------------------------------------------------------------------------------------------
55, Airport Road, Suite 203
Hartford, CT                                                 7/1/00               2,640              $33,000
---------------------------------------------------------------------------------------------------------------------
55, Airport Road, 1st Floor
Hartford, CT                                                7/15/01               1,078              $28,020
---------------------------------------------------------------------------------------------------------------------
2777 Summer Street, Suite 302
Stamford, CT                                                3/13/95                 915              $21,960
---------------------------------------------------------------------------------------------------------------------
8181 North West 36th St., Unit 21A
Miami, FL                                                    6/1/98                 300              $12,780
---------------------------------------------------------------------------------------------------------------------
800 Virginia Avenue, Suite 53
Ft. Pierce, FL                                               8/1/97                 400               $8,181
---------------------------------------------------------------------------------------------------------------------
1040 Bay View Drive, Suite 526
Ft. Lauderdale, FL                                           7/1/00                 400               $7,206
---------------------------------------------------------------------------------------------------------------------
Miami Int'l. Airport, Concourse A, 2nd Level
Miami, FL                                                    7/1/99                 189              $10,127
---------------------------------------------------------------------------------------------------------------------
10 West 35th Street, Suite 11F3-4
Chicago, IL                                                  3/1/99               1,059              $18,450
---------------------------------------------------------------------------------------------------------------------
21 Cummings Park, Suite 224
Woburn, MA                                                  3/15/99                 198               $4,055
---------------------------------------------------------------------------------------------------------------------
2222 Morris Avenue
Union, NJ                                                    2/1/98               2,250              $24,600
---------------------------------------------------------------------------------------------------------------------
The Poughkeepsie Plaza Mall
Poughkeepsie, NY                                             9/1/83                 920              $12,000
---------------------------------------------------------------------------------------------------------------------
331 Park Avenue South, 10th Floor
New York, NY                                                11/1/91               3,400              $60,300
---------------------------------------------------------------------------------------------------------------------
331 Park Avenue South, 11th Floor
New York, NY                                                 2/1/93               3,400              $60,300
---------------------------------------------------------------------------------------------------------------------
300 Hamilton Avenue, Suite 300
White Plains, NY                                            8/15/96               1,538              $28,453
---------------------------------------------------------------------------------------------------------------------
505 Main Street, Suite  2
Williamsville, NY                                            5/1/93                 680               $5,700
---------------------------------------------------------------------------------------------------------------------
JFK International Airport
175-01 Rockaway Boulevard, Jamaica, NY                       4/1/97               1,700              $72,000
---------------------------------------------------------------------------------------------------------------------
2144 Doubleday Avenue
Ballston Spa, NY                                             4/1/93                 800              $13,488
---------------------------------------------------------------------------------------------------------------------
52 Oswego Road
Baldwinsville, NY                                            6/1/98                 120               $1,500
---------------------------------------------------------------------------------------------------------------------
55 Park Avenue, Apartment 1NW
New York, NY                                                 5/1/98                 300               $8,400
---------------------------------------------------------------------------------------------------------------------
29 Bala Avenue, Suite 103
Bala Cynwyd, PA                                              3/1/02                 575              $12,650
---------------------------------------------------------------------------------------------------------------------
2 International Plaza, Suite 242
Philadelphia, PA                                             9/1/01               1,277              $29,376
---------------------------------------------------------------------------------------------------------------------

</TABLE>

The Company believes its properties are adequate for its current needs.


<PAGE>

                      ITEM 3. LEGAL PROCEEDINGS

         The nature of the Company's business subjects it to claims or
litigation alleging that it is liable for damages as a result of the conduct
of its employees or others. Except for such litigation incidental to its
business, other claims or actions that are not material and the lawsuits
described below, there are no pending legal proceedings to which the Company
is a party or to which any of its property is subject.

         In May, 1996, a complaint was filed in Queens County Civil Court by
three former employees alleging emotional distress, anguish, mental distress
and injury to their professional reputation due to retaliatory discharge and
related matters. Plaintiffs each seek $2 million for compensatory damages and
$2 million in punitive damages in addition to payment of overtime wages of
$25,000. The Company's customer, also a defendant and a former employer, has
engaged counsel representing all defendants. A final settlement was reached
in May 2002 at a cost to the Company of $238,000. Management is of the
opinion that this settlement is in the best interests of the company,
precluding additional costs and maintaining business relationships.

         The nature of the Company's business as a supplier of personnel
services lends itself to employment related claims on a regular basis. The
Company has been named in several employment related claims, including claims
of sexual harassment by current and former employees, some of which are
currently under investigation by Federal and State agencies, including the
New York State Division of Human Rights. At this time the Company is unable
to determine the impact on the financial position and results of operations
that these claims may have should the investigation conclude that they are
valid.


         ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Company held its Annual Meeting of Shareholders on November 30,
2001. Four of the Company's Directors were elected to two-year terms at the
Annual Meeting of Shareholders. The following sets forth the number of votes
cast for or withheld from each of the three directors.

Name                        For                 Against          Withheld

William C. Vassell          3,092,389           2,960            424,191
Gregory J. Miller           3,092,389           2,960            424,191
Peter J. Nekos              3,092,389           2,960            424,191
Carl E. Painter             3,094,389           2,960            424,191

         The following Directors continued in their term of office until
the Company's next Annual Meeting of Shareholders: Geoffrey P. Haslehurst,
Kenneth Allison and Graeme R. Halder.


                                   PART II

            ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
                              STOCKHOLDER MATTERS

         The Company's stock is quoted on the OTC Bulletin Board Service,
under the symbol "CMMD." The Company intends to continue to comply with all
capital reporting requirements of the Securities and Exchange Commission.

         The following table sets forth, for the calendar periods indicated,
the high and closing sales price for the Common Stock as reported by the
NASDAQ Stock Market, Inc. (pre-Oct. 2000) and the OTC Bulletin Board Service,
(post- Oct. 2000) for each full quarterly period within the two most recent
fiscal years.


Period (1)                                         Last Sales Price
                                                    High    Low

2001
First Quarter                                       1.000   0.625
Second Quarter                                      0.815   0.563
Third Quarter                                       0.844   0.500
Fourth Quarter                                      0.906   0.625

2002
First Quarter                                       0.880   0.700
Second Quarter                                      0.920   0.580
Third Quarter                                       0.820   0.430
Fourth Quarter                                      1.290   0.470

(1) Reflects fiscal years ended March 31 of the year indicated.

<PAGE>

         The above quotations do not include retail mark-ups, markdowns or
commissions and represent prices between dealers and not necessarily actual
transactions. The past performance of the Company's securities is not
necessarily indicative of future performance.

         As of June 14, 2002 there were approximately 170 holders of record
of the Company's common stock. Management believes there are approximately
1,000 beneficial holders of the Company's common stock.

         The last sales price of the Company's common stock on June 14, 2002,
was $1.44.

         The Company has never paid cash dividends on its common stock.
Payment of dividends on common stock, if any, will be within the discretion
of the Company's Board of Directors and will depend, among other factors, on
approval of its principle lender, earnings, capital requirements and the
operating and financial condition of the Company. At present, the Company's
anticipated capital requirements are such that it intends to follow a policy
of retaining earnings, if any, in order to finance, in part, the development
of its business.

<PAGE>

                         COMMAND SECURITY CORPORATION

                       ITEM 6. SELECTED FINANCIAL DATA

         The financial data included in this table have been derived from the
financial statements as of and for the years ended March 31, 2002, 2001,
2000, 1999, and 1998, which have been audited by independent certified public
accountants. The information should be read in conjunction with "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and
with the financial statements and related notes included in the Report.

<TABLE>
<CAPTION>

                                                                       Statement of Operations
                                                                          Years ended March 31
------------------------------------------- ---------------- -------------- --------------- ------------- ---------------
In $ Thousands                                   2002            2001            2000           1999           1998
------------------------------------------- ---------------- -------------- --------------- ------------- ---------------
<S>                                              <C>            <C>             <C>           <C>             <C>
Revenue                                             83,885         71,320          59,246        57,642          51,797
Gross Profit                                        13,529         11,531          10,003         9,716           7,340
Administrative service revenue                         277            274             554           913           1,451
Operating Income / (Loss)                            1,752            328             315           877          (2,915)
Net Income / (Loss)                                  2,376           (439)           (310)          (15)         (4,013)
Income /(Loss) per common share                       0.38          (0.08)          (0.07)        (0.02)          (0.62)
Weighted average number of
  common shares outstanding                      6,287,343      6,287,343       6,535,581     6,658,143       6,689,352
------------------------------------------- ---------------- -------------- --------------- ------------- ---------------
</TABLE>

All of the above statistics are in $ thousand except for Income / (Loss) per
common share and weighted average number of common shares outstanding which
are expressed in $ and number respectively.

<TABLE>
<CAPTION>

                                                              Balance Sheet Data as of  March 31
------------------------------------------- ---------------- -------------- --------------- ------------- ---------------
In $ Thousands                                       2002        2001            2000           1999           1998
------------------------------------------- ---------------- -------------- --------------- ------------- ---------------
<S>                                                  <C>            <C>             <C>           <C>             <C>
Working Capital / (deficiency)                        1,525          1,874             750           200          (1,123)
Total Assets                                         26,317         17,991          15,348        16,188          17,697
Short-term debt <F1>                                 13,570          8,489           7,717         7,558           7,994
Long-term debt <F2>                                     291          1,801             588           472             531
Stockholders' equity                                  4,087          1,712           2,191         3,119           3,134
------------------------------------------- ---------------- -------------- --------------- ------------- ---------------
<FN>

<F1> The Company's short-term debt includes the current maturities of
     long-term debt, obligations under capital leases and short term
     borrowings. See Notes 6, 7 and 15 of "Notes to the Financial
     Statements".

<F2> The Company's long-term debt includes the long-term portion of
     obligations under capital leases.

</FN>

</TABLE>

<PAGE>


     ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                          AND RESULTS OF OPERATIONS

                  For the three years ended March 31, 2002

      Management's discussion and Analysis should be read in conjunction
              with the Financial Statements and related notes.

      In this discussion, the words"Company", "we", "our" and "us" refer
                      to Command Security Corporation.

OVERVIEW

      Command Security Corporation is a provider of uniformed security
services from our nineteen operating offices throughout the United States.
Historically, we have grown by acquisition but the focus was changed in early
2001 to build our branch network by internal growth. This is to be achieved
through a team of business development managers who have been recruited and
trained to sell premium value-added services at strong margins.

      Following a deterioration in profitability in the first quarter of the
2002 fiscal year, we undertook a review of each division. This resulted in
the hiring of two new vice-presidents to manage the sales and operational
roles of our Guard division. In addition, we reduced the number of business
development managers from thirteen to seven to contain costs as well as
suspending the development of our administrative service programs. Finally, a
review of our National Accounts division (which provided nationwide security
services to ATM and retail customers) was completed. This resulted in
termination of these services on a national basis by the end of the 2002
fiscal year and the closure of our dispatch center. Although we had secured
volume increases earlier in the year, this had been at the expense of margin
and significant start up and ongoing costs of running the division had
adversely impacted profits. The closure has enabled us to eliminate these
costs and improve management focus on our core business.

      The federalization of pre-board screening by the Federal Aviation
Administration has had, and is expected to have, a significant impact on us.
Our screening contracts with the airlines were terminated in February 2002
and a new contract covering all screening was entered into with the FAA. We
will continue to provide pre-board screening at various airports until the
FAA actually implements the legislation and has hired and trained all
required federal employees to take over screening duties. We also provide
other services to our aviation clients, including security, baggage handling
and wheelchair escorts. These services have not been effected by the pending
federalization process and, to our knowledge, will not be affected in the
foreseeable future. We are exploring opportunities under the Aviation and
Transportation Security Act to participate in a pilot program for private
security companies to provide pre-board screening at selected airports post
federalization. We are also actively marketing our non-screening aviation
services to new and existing aviation clients.

RESULTS OF OPERATIONS

Earnings

      2002 was another challenging year for us following the resolution of
the stockholder derivative suit that had distracted management through the
start of the 2002 fiscal year. The problems in our National Accounts division
outlined above combined with the cost of developing an internal growth policy
had adversely impacted profits and cash in the early part of the 2002 fiscal
year, resulting in losses in the first 2 quarters. Management actions in
August 2001 have resulted in improvements in profits and cash availability.
Then, the tragedy of September 11 hit and we have seen significant turmoil in
our industry since this date, especially in our Aviation division. Our main
challenge currently is to manage the changes within the aviation security
industry. In November 2001, the US Government announced their decision to
federalize the pre-board screening process currently performed by private
security companies such as ourselves. This resulted in the Government taking
over these security contracts in February 2002. Volumes and rates have both
increased significantly post the September 11 tragedy, reflecting the
heightened focus on aviation security within the US. This has had a positive
impact on our results in the second half of the fiscal year. Overall, we
produced a strong result for 2002 achieving net income of $2,375,760
(inclusive of a $1.3 million reduction in valuation reserves for deferred tax
assets).

      Our results for 2001 were affected by the distraction and cost of the
stockholder derivative suit mentioned above which meant we suffered a loss of
$438,886 compared to a loss for 2000 of $309,710.

<PAGE>

Revenue

      Revenue for 2002 grew by $12,564,763 to $83,885,203. The major
components of this increase were $15,814,000 from additional accounts within
the commercial airline industry and a $716,000 increase in revenue from our
National Accounts division prior to its closure in March 2002. These
increases were offset by a reduction of $3,887,000 in our guard service
contract revenues. This was a combination of terminated accounts (some of
which were due to an aggressive policy of improving margins on under
performing contracts) offset by new business and rate reviews from current
customers. The increase in aviation revenue was a combination of additional
contracts at existing airports, new contracts at Philadelphia and La Guardia
airports. In addition, we secured increased volumes and rates on the FAA
contracts for pre-board screening from February 2002, which accounted for
around $6 million in revenue through March 2002.

      Revenue for 2001 increased to $71,320,440, a rise of $12,074,513
compared to $59,245,927 in 2000. The increase was primarily due to $8,227,000
from additional accounts within the commercial aviation industry, a $971,000
increase in revenue from the servicing of ATM sites through our network of
independent contractors (now closed) and $3,086,000 from additional guard
service contracts. The latter was a combination of new business and rate
reviews on current customers offset by terminated accounts whilst the
increase in aviation revenue was due to additional new contracts at existing
airports and growth on other contracts.

Gross Profit

      Gross profit increased by $1,997,693 in 2002 from $11,531,110 to
$13,528,803, which was 16.1% of revenue, slightly less than the 16.2%
achieved in 2001. Significant movements in the individual cost lines within
direct costs consisted of an improvement in the direct labor percentage,
offset by increased general liability insurance premiums and unemployment
insurance costs as well as a deterioration in the cost of independent
sub-contractors. This was largely reflective of the change in relative
volumes within these divisions.

      The gross profit in the previous year was up by $1,528,244 from
$10,002,866 to $11,531,110 which was 16.2% of revenue compared to 16.9% in
2000. Gross profit increased by approximately $2,039,000 as a result of the
rise in revenue. However, this increase was offset by an increase in the cost
of sales of $510,372. This rise was primarily due to higher payroll costs
($793,983 - mainly in the aviation division following the loss of the high
margin Tower Air contract), increased vehicle expenses ($153,479) and higher
sub-contractor costs ($366,426). These rises were offset by a reduced
insurance expense ($271,991 - the benefit of an improved experience on
historical losses both on worker's compensation and general liability), a
$310,000 accrual on a disputed administrative service client in 2000 which
did not recur in 2001 or 2002 and lower uniform charges ($139,964).

      One area of relative uncertainty within the gross profit calculation is
insurance, which is largely dependent upon the result of past actions. We
insure against general liability claims and lawsuits through a general
liability insurance policy with a third-party insurance carrier. Such
policies have limits of $5 million per occurrence and $10 million in the
aggregate on a per project basis. Previous to December 2001, we had limits of
$1 million per occurrence and $10 million in the aggregate. Prior to October
1, we also had an excess general liability insurance policy that covered
claims for an additional $50 million in the aggregate. The impact of the
September 11 tragedy meant that this umbrella cover was no longer available
to the company at the time of policy renewal (October 1, 2001). We retain the
risk for the first $25,000 per occurrence ($50,000 prior to October 1, 2000).
The general liability insurance reserve is based upon existing claims,
actuarial computations and the timing of reported claims. These are all
factored in to estimate losses incurred but not yet reported to the Company.

      We also have a worker's compensation insurance policy where the premium
is based on incurred losses as determined at the end of coverage plus the
basic insurance amounts. The worker's compensation basic premium is
determined by the insurance carrier and includes its overhead costs and
insurance premium. For the 2000 year, the charge for estimated losses was
based upon industry standard payouts. In 2001 and 2002, however, we have used
our own historical payout profile for which we now have an adequate history.
The impact on the charge in these 2 years was not significantly different
than the 2000 year as a result of this change.

<PAGE>

Administrative Service Revenue

         The Company provides payroll and billing services and accounts
receivable financing through contracts with administrative service clients
for a percentage of the revenue or gross profit generated from their
business. The Company owns the accounts receivable and, depending on the
individual contract, may be the employer of record of the guards who provide
the services to the customers of the administrative service client. Whenever
contracted as the employer of record, the legal liability for tax
withholdings including FICA and unemployment insurance taxes is borne by the
Company. Additionally, the Company is responsible for worker's compensation
and general liability claims for damages that result from the employees'
conduct and/or negligence. The administrative service client manages its
internal operations including sales and marketing of its guard contracts. The
Company currently only services one administrative service client, where we
are not the employer of record. The caption "Administrative Service Revenue"
represents the income earned on the Administrative Service Agreements as well
as income earned on back-office support to police departments for off-duty
police services.

         Administrative Service revenue increased by $2,375 to $276,652 for
2002, compared to $274,277 the previous year. Revenue declined by $279,919 in
2001 from $554,196 in 2000 to $274,277 due to the termination by mutual
consent of a significant service agreement in May 2000.

         Costs associated with the administrative service revenue are
primarily clerical and administrative in nature and are not readily
segregated from the Company's total general and administrative costs.

General and Administrative Expenses

      General and administrative expenses rose by $1,215,327 to $11,314,660
in 2002 from $10,099,333 the prior year. This increase was primarily due to
the cost of the sales force ($903,000), higher telephone charges due to an
upgrade in our communications infrastructure ($75,000) and the start up costs
on new contracts, primarily in the aviation division which impacted travel
and hotel costs ($129,000). These increases were partly offset by a reduction
in professional fees ($159,000), health insurance charges ($112,000) and the
cost of conferences ($68,000).

      General and administrative expenses rose by $1,897,094 to $10,099,333
in 2001 from $8,202,239 the prior year. This increase was primarily due to
higher office and administrative salaries of $1,046,047 which was a
consequence of additional personnel to manage the increased volumes and wage
increases and costs related to the employment contract of the current CFO.
Other cost increases were incurred on telephone ($141,901), commission
payments on new sales ($49,032), increased costs of health insurance
($68,866) and conferences and related travel expenses which were incurred to
promote new business ($168,156). Administrative auto expenses rose by $43,267
primarily as a result of additional vehicles and higher fuel charges and
professional fees increased by $104,857. Other general administrative costs,
including office supplies, dues and subscriptions, rent and utilities,
increased by approximately $275,000 due to the increased level of business in
fiscal 2001.

Amortization of Intangibles

         A charge of $156,746 in 2002 was $140,694 less than in 2001 due to
intangible assets from earlier acquisitions being fully amortized. The charge
for 2001 of $297,440 was a reduction of $879,008 over the 2000 charge of
$1,176,448 due mainly to the full amortization of earlier acquisitions,
including ISS International Service System, Inc. and McVey Security Inc.

Provision for Doubtful Accounts

         The provision for doubtful accounts rose by $57,375 to $581,679 in
2002 due to additional write-off's following a review of some older debts
which were not deemed to be recoverable. In addition, we suffered from some
Chapter 11 bankruptcies in the aviation industry.

         The provision for doubtful accounts decreased by $445,633 from
$969,937 in 2000 to $524,304 in 2001 due to the Tower Air write off in 2000
of $738,117. The increase in 2001, excluding the Tower Air write-off, was due
to a provision in 2001 against a previous administrative service client of
$100,982 and a provision of $140,213 relating to a debt due from a customer
in New York. The latter debt was settled during the 2002 fiscal year.

         We periodically evaluate the requirements for providing for credit
losses. A review of the creditworthiness of customers is undertaken as well
as prior payment performance, the age of the receivables and our overall
historical loss experience.

Bad Debt Recoveries

         There were no bad debt recoveries in 2002 or 2001, compared to a
recovery of $106,578 in 2000.

<PAGE>

Stockholder Derivative Suit Costs

         The stockholder derivative suit was settled in November 2000 and no
costs were therefore incurred in 2002. A consequence of this suit in earlier
years was additional professional fees and distraction from the management of
our business. Not all costs can be readily identified but the charge of
$431,445 in 2001 related to specific professional fees and settlement costs
that were a direct consequence of the shareholder suit. No corresponding
charges were separately identified in 2000.

Line of Credit Termination Fee

         A one-time charge of $125,000 was incurred during 2001 relating to a
fee payable to CIT Group Business/Credit Inc. following termination of the
revolving loan and security agreement in November 2000. No such termination
charge was incurred in either 2002 or 2000.

Interest Income

         Interest income decreased by $21,172 to $93,201 in 2002 from
$114,373 in 2001. This decrease was due to the repayment in June 2001 of part
of the Restricted Cash balance, which earns interest offset in part by
increased charges to administrative service clients. The income of $114,373
in 2001 was a reduction of $58,160 over the $172,533 earned in 2000. This
decrease was due to reduced activity on administrative service clients. The
income in 2000 had also benefited from collection of interest from an
administrative service client that terminated in May 2000.

Insurance Rebates

          No insurance rebates were received in 2002 compared to receipts of
$60,799 and $15,689 in 2001 and 2000 respectively.

Interest Expense

         The charge of $780,155 in 2002 was $176,197 less than that incurred
in 2001 due primarily to the 50% reduction in the Prime rate from March 2001
to March 2002 offset by higher average borrowings as a consequence of
increased revenue levels. We anticipate further reductions in borrowing costs
as interest rates remain at favorable levels and repayments of the term loan
accelerate.

         An interest expense of $956,352 in 2001 was $107,492 higher than
that incurred in 2000. This was primarily due to higher average rates
throughout the year and higher average borrowings on the combination of the
revolver and term loans. This was a consequence of the higher revenue levels
and the impact in the months following the switch from CIT to LaSalle due to
the change in location for submitted funds.

Equipment Dispositions

         The $10,344 gain on equipment dispositions represents proceeds from
the sale of older equipment and vehicles in excess of book value. This
compared with gains in 2001 and 2000 of $14,429 and $912 respectively.

Income Tax Benefit

         Due to increased revenue and earnings as a result of additional
accounts and changes in the airport security industry (following the
September 11 tragedy) along with the expected impact in fiscal 2003 of the
contract with the FAA to continue to provide pre-board screening, we have
determined that it is more likely than not that we will be able to utilize a
substantial part of our net operating loss carryovers for Federal and State
income tax purposes. We have, therefore, reduced our deferred tax asset
valuation allowance in fiscal 2002 by $1.3 million.

LIQUIDITY AND CAPITAL RESOURCES

         We pay our guard employees and those of our administrative service
clients on a weekly basis, while customers generally pay for services within
60 days of billing. In order to fund our payroll and operations, we have a
commercial revolving loan arrangement which up until November 2000 was with
CIT Group/Business Credit, Inc. ("CIT").

         In November 2000, we entered into a three-year agreement with
LaSalle Business Credit Inc., ("LaSalle") under a loan and security agreement
(the "agreement"). The original agreement provided for borrowings up to 85%
of eligible accounts receivable to a maximum of $15 million. LaSalle also
provided a term loan of $3 million, which was to be repaid in equal monthly
installments of $100,000 through June 2003. The outstanding balance under the
revolver and term loans could be made up of a combination of Prime loans and
LIBOR loans although the maximum outstanding LIBOR loans at any one time must
not exceed three. The revolving loans bore interest at prime on the prime
rate loans and LIBOR plus 2% on the LIBOR loans. The equivalent rates on the
term loans were prime and LIBOR plus 2.5%.

<PAGE>

         Due to the losses incurred earlier on in the year and the growth in
revenues over the 3rd quarter of the 2002 fiscal year, we required a $250,000
over advance in December 2001, which expired at the end of January 2002. A
consequence of this request was that an amendment to the original agreement
was made effective as of January 8, 2002. This resulted in a reduction in the
maximum amount of borrowings from eligible accounts receivable to $12 million
from $15 million previously. In addition, we no longer have the ability to
have part of the outstanding balance as LIBOR loans and the interest rates
from that date were increased to Prime plus 0.5% on the revolver loans and
Prime plus 0.75% on the term loans. The term loan provided by LaSalle, which
was previously to be repaid at $100,000 per month over 30 months is now to be
repaid at $150,000 per month from April 2002 onwards.

         On March 14, 2002, a second amendment was made to the agreement to
increase the eligible accounts receivable maximum borrowings back up to the
original $15 million. This was necessary to fund the continued increase in
revenues over the last quarter of the 2002 fiscal year.

         At the end of the 2002 fiscal year, we had borrowed $11,671,919
representing approximately 89% of our maximum borrowing capacity. Long-term
debt (including current maturities) decreased by $1,256,334 primarily due to
repayments on the LaSalle term loan in the 2002 fiscal year.

         Our capital lease obligations reduced by $52,831 from $277,043 in
2001 to $224,212 in 2002. We entered into new capital lease agreements during
the year for equipment purchases of $89,508 and the reduction was due to
repayments in excess of these additions. Total required principal repayments
on long term debt and capital lease obligations for the year to March 2003
are approximately $1,747,000 compared to $1,546,000 for the prior year.

         Our operations for 2002 resulted in an increase in operating profit
of $1,424,505 to $1,752,370 compared to $327,865 in 2001, primarily due to
revenue growth and effective cost controls. The 2001 result was slightly
higher than the operating profit achieved in 2000 of $315,016, primarily due
to increased revenues offset by the costs of the stockholder derivative suit
and the CIT termination fee. As a result of the term loan repayment
requirements to LaSalle, mostly offset by the operating profits, working
capital decreased by $349,199 from $1,874,303 in 2001 to $1,525,104 in 2002.
Accounts receivable has increased due to increased revenues primarily in the
latter part of fiscal 2002. We anticipate lower levels of receivables and
borrowing requirements after termination of the FAA contracts for pre-board
screening services towards the end of 2002. We experienced a cash overdraft
(defined as checks drawn in advance of future deposits) of $2,063,361
compared to $1,039,698 at 2001. Cash balances and book overdrafts can
fluctuate materially from day to day depending upon such factors as
collections, timing of billing and payroll dates and are covered by advances
from the revolving loan as checks are presented for payment.

         Due to the losses sustained in previous years we are not required to
pay any income taxes on our profit in fiscal 2002. We still have Federal and
State tax loss carryovers of $4.5 million and $4.8 million respectively to
offset future taxable income along with other benefits as a result of timing
differences for reporting expenses for tax purposes. We expect to pay minimal
income taxes for fiscal 2003.

         Effective July, 2000, we had suspended payment of preferred stock
dividends until we could re-establish sufficient reserves through future
earnings. With the profit achieved in the 2002 fiscal year, we are now able
to repay all dividends in arrears on our preferred stock. As of March 31,
2002, we owed our preferred stockholders $284,708, all of which were declared
as payable in April 2002 and have been paid subsequent to the year end.

        The Company's stock is quoted on the OTC Bulletin Board Service. We
comply with all applicable reporting requirements of the Securities and
Exchange Commission.

OUTLOOK

         This outlook section contains a number of forward-looking
statements, all of which are based upon current expectations. Actual results
may differ materially and are qualified by the section below entitled
"Forward Looking Statements".

We had a difficult 2002 fiscal year suffering losses in and the termination
of our National Accounts division and the volatility in the aviation security
industry post September 11. The earlier losses in fiscal 2002 culminated in
management changes and the suspension of development of non-core activities
such as the administrative service program in August 2001. We then had the
decision by the US Government to federalize the pre-board screening process
at US airports. We ended the year with annualized revenues in excess of $100
million due to the increased security focus, higher volumes and rates in
aviation security. We will, however, be losing this business over the next
several months based upon the Government set deadline to complete
federalization of pre-board screening by November 2002. Revenue from
pre-board screening for fiscal year ending 2002 is estimated to have been
$29.8 million. Our best estimate currently is that annual revenue post
federalization will drop back down to levels of

<PAGE>

approximately $70 million. The changes we made earlier in the 2002 fiscal
year mean we should continue to produce operating income post this event. We
are currently producing very strong levels of profitability, paying down the
revolver loan and generating significant cash availability.

         Our outlook on revenues remains largely dependent upon the success
of our new sales teams, which we have taken on in both of our main divisions
(guard and aviation). The continuing volatility in the airline security
industry presents many opportunities for us to secure new business at
acceptable margins. Within the guard division, the additional cash
availability will enable us to build the sales team back up to previous
levels.

         We expect margins to remain at around the 16% to 17% mark, although
this will be affected by the health of the economy. The relative weakness of
the economy and the levels of unemployment have a major impact on our ability
to recruit and retain the right quantity and quality of personnel to service
our contracts. This has a consequential impact on overtime and wage rates
generally. These rates are often dictated by the customer during the bid
process. The margin will also be affected by the mix of our business and on
our ability to sell and manage higher value services at improved margins.

         We do not envision any significant change in the level of branch
expenses. We have a network of branches that are generally not yet at
critical mass and can therefore benefit from additional revenue at the right
margin without incurring significantly more cost. We do not, therefore, see
the need to open many more branches during the fiscal year 2003 although we
do plan to increase the sales teams as cash availability and management
strength dictates. We believe that general and administrative costs should
generally remain at a similar level to that currently.

FORWARD LOOKING STATEMENTS

         Certain of the statements contained in this Management's Discussion
and Analysis of Financial Condition and Results of Operations section of the
Form 10K and in particular this report including those under the heading
"Outlook," contain forward-looking statements that are based on current
expectations, estimates, forecasts and projections about the industry in
which the Company operates, management's beliefs, and assumptions made by
management. In addition, other written or oral statements that constitute
forward-looking statements may be made by or on behalf of the Company. While
we believe these statements are accurate, our business is dependent upon
general economic conditions and various conditions specific to our industry.
Future trends and these factors could cause actual results to differ
materially from the forward-looking statements that have been made. These
statements are not guarantees of future performance and involve certain
risks, uncertainties and assumptions that are difficult to predict.
Therefore, the actual outcomes and results may differ materially from what is
expressed or forecast in such forward-looking statements. The Company
undertakes no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.

         As provided for under the Private Securities Litigation Reform Act
of 1995, the Company wishes to caution shareholders and investors that the
following important factors, among others, could cause the Company's actual
results and experience to differ materially from the anticipated results or
other expectations expressed in the Company's forward-looking statements in
this report.

Regulation

         Management's evaluation of the Company's present status and future
prospects is dependent upon the assumption that the Company's contracts with
the FAA will be terminated sometime before November 2002. Since the FAA
contracts are terminable by the FAA prior to November 2002, such early
termination would have an adverse impact on the Company's results of
operations and financial condition. An extension of these contracts beyond
November 2002 would have a beneficial effect.

         The Company's management further assumes that the current regulation
and federalization of pre-board screening services provided by the Company
will not be expanded into other areas such as general security and baggage
handling at aviation facilities. Such increased regulation or federalization
would have a material adverse impact on the Company's results of operations
and financial condition.

<PAGE>

Competition

         The Company's assumptions regarding projected results depend largely
upon the Company's ability to retain substantially all of the Company's
current clients (with the exception of the FAA as of November 2002).
Retention is affected by several factors including but not limited to,
regulatory limitations, the quality of the services provided by the Company,
the quality and pricing of comparable services offered by competitors,
continuity of Management and continuity of non-management personnel. There
are several major national competitors with resources far greater than those
of the Company which, therefore, have the ability to provide service, cost
and compensation incentives to clients and employees which could result in a
loss of such clients and/or employees.

Cost Management

         The Company's ability to realize its projections will be largely
dependent upon its ability to maintain margins, which in turn will be
determined in large part by management's control over costs. To a significant
extent, certain costs are not within the control of management and margins
may be adversely affected by such items as litigation expenses, fees incurred
in connection with extraordinary business transactions, inflation, labor
unrest, increased payroll and related costs.

Collection of Accounts Receivable

         Management has no reasonable basis to believe that default in
payment of accounts receivable by the Company's security guard customers or
administrative service clients will occur. However, any such default by a
significant client due to bankruptcy or otherwise, would have a material
adverse impact on the Company's liquidity, results of operations, and
financial condition.

Catastrophic Events

         The Company is exposed to potential claims for catastrophic events,
such as a hijacked airplane, based upon allegations that the Company failed
to perform its services in accordance with contractual or industry standards.
The Company's insurance coverage limits are currently $5 million per
occurrence and $10 million in the aggregate on a per project basis. The
former umbrella coverage of $50 million is no longer available to the Company
at commercially reasonable rates following September 11.

Officers and Directors Potential to Control Matters Requiring Stockholder
Approval

         Our executive officers, directors and 5% or greater stockholders
currently own beneficially 2,853,639 shares or approximately 45% (excluding
any shares issuable upon exercise of warrants) and at a future date have the
potential through the exercise of warrants and options, to beneficially own
approximately 7,916,710 shares or approximately 70% of the outstanding shares
of the Company's common stock. These stockholders, acting together would be
able to effectively control matters requiring approval by stockholders,
including the election or removal of directors and the approval of mergers or
other business combination transactions. This concentration of ownership
could have the effect of delaying or preventing a change in our control or
otherwise discouraging a potential acquirer from attempting to obtain control
of us, which in turn could have an adverse effect on the market price of our
common stock or prevent our stockholders from realizing a premium over the
market price for their shares of common stock.

         These are representative of the factors that could affect the
outcome of the forward-looking statements. In addition, such statements could
be affected by general industry and market conditions and growth rates,
general economic conditions, including interest rate fluctuations and other
factors. Additional detailed information concerning a number of factors that
could cause actual results to differ materially from the information
contained herein is readily available in the Company's most recent reports on
Forms 10-K, 10-Q and 8-K and any amendments thereto (all as filed with the
Securities and Exchange Commission from time to time).


     ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         During the fiscal year ended March 31, 2002, the Company did not
hold a portfolio of securities instruments for either trading or for other
purposes.

         The Company is exposed to market risk in connection with changes in
interest rates, primarily in connection with outstanding balances under its
revolving line of credit and term loan with LaSalle Business Credit, Inc.
Based on the Company's interest rate at March 31, 2002, and average
outstanding balances during the fiscal year then ended, a 1% change in the
prime lending rate would impact the Company's financial position and results
of operations by approximately $108,000 over the next fiscal year.


<PAGE>

             ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See ITEM 14, "EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K."


            ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                   ON ACCOUNTING AND FINANCIAL DISCLOSURE

         None.


                                   PART III

         ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The Company's by-laws require that the Board of Directors be divided
into two classes. The first class consists of directors Geoffrey P.
Haslehurst, Kenneth Allison and Graeme R. Halder. The second class consists
of William C. Vassell, Peter J. Nekos, Carl E. Painter and Gregory J. Miller.
The terms of the directors in the first class will expire at the annual
meeting of shareholders in 2002 or until their successors have been elected
and qualified. The terms of the directors in the second class will expire at
the annual meeting of shareholders in 2003 or until their successors are
elected and qualified. Each director's term is for two years. A classified
board makes it more difficult for shareholders to change the majority of
directors. Depending on the number of people in each class it could take two
(2) annual meetings to replace a majority of the Board. This provision is
applicable to every election of directors after the initial classification.

         The following table provides information concerning each person who
was an executive officer or director of the Company as of June 14, 2002.

Name                      Age      Title
----------------------    --      -------------------------------------
William C. Vassell        43      Chairman of the Board, President
                                  and Chief Executive Officer

Gregory J. Miller         42      Director

Peter J. Nekos            74      Director

Geoffrey P. Haslehurst    43      Director

Kenneth Allison           57      Director

Graeme R. Halder          39      Chief Financial Officer and Director

Carl E. Painter           56      Director

Martin Blake              48      Vice President Aviation Services

William Dunn              49      Corporate Secretary, General Counsel


         William C. Vassell is the Company's President, Chief Executive
Officer and Chairman of the Board. Mr. Vassell had been Chairman of the
Board, President and Chief Executive Officer of the Company since 1983, when
the Company repurchased the remaining 50% of its then-outstanding common
stock (he became a 50% owner of the Company in 1980). In connection with the
Company's acquisition of United Security Group Inc. ("United"), Mr. Vassell
resigned from the offices of President and Chief Executive Officer on
February 24, 1995, and retained his position as Chairman of the Board. He has
been a director of the Company since 1980, and has been a member of the
Executive Committee since March 1995. He was reappointed as President and
Chief Executive Officer on November 13, 2000 in conjunction with the Reliance
transaction. Mr. Vassell is active in various industry and trade
associations. He twice was Chairman of the Mid-Hudson Chapter of the American
Society for Industrial Security (the nationally recognized security
association), and he is a Certified Protection Professional within the
Society. He is also a director of the Associated Licensed Detectives of New
York State and a member of the Committee of National Security Companies.

<PAGE>

         Gregory James Miller has been a director of the Company since
September 1992. Since 1987 he has served as General Counsel for Goldline
Connectors, Inc., a Connecticut-based electronics manufacturer, and sits on
its board of directors. Mr. Miller also serves "of counsel" to Benenson &
Kates, in New York, handling labor law and contract negotiations for security
guard clients, and has handled various legal matters for the Company since
1985. Mr. Miller is currently employed by Goldline Connectors, Inc. He has a
Bachelors Degree from Kalamazoo College, and a Juris Doctor Degree from New
York Law School, where he was an Editor of the Journal of Human Rights.

          Peter J. Nekos has been a director of the Company since March 1991.
Mr. Nekos is a certified public accountant. From July 1984 to June 1986 he
was a partner of Nekos & Kilduff, an accounting firm located in New Rochelle,
New York. He operated his own accounting firm in Mamaroneck, New York from
July 1986 until September 1996.

         Geoffrey P. Haslehurst has been a director of the Company since
November 2000. Mr. Haslehurst has been Group Financial Director for Reliance
Security Group plc since 1996. Mr. Haslehurst was appointed Group Managing
Director in April 2001. Prior to joining Reliance, he was Group Financial
Director for Laura Ashley Holdings plc.

         Kenneth Allison has been a director of the Company since November
2000. Mr. Allison has been managing director of Reliance Security Services
Limited since 1996 and a member of the Board of Directors of Reliance
Security Group plc since 1998. Mr. Allison also serves as Chairman of
Reliance Group's Reliance Security Services (Scotland) Limited and Project
Security Limited Company. Prior to joining Reliance, Mr. Allison was the
managing director of the European food logistics division at Christian
Salvesen plc.

         Graeme R. Halder has been a director of the Company and its Chief
Financial Officer since January 2001. Mr. Halder is qualified as a Chartered
Accountant in the United Kingdom and worked from 1987 to 1988 with Touche
Ross at their London office. In 1988, he moved to the corporate head office
of Granada Group plc where he worked for eight years culminating in a
position as Finance Director of Granada Hospitality which had $2 billion of
revenue and $3 billion in assets. Granada is involved in retail, hotels and
catering. His final role at Granada Group plc was to spearhead the
integration of the accounting systems of several companies following the $6
billion acquisition of Forte plc in 1996. He moved to Reliance Security Group
plc in 1996 as Finance Director of the guard division before moving to the
United States to take up his current position as Chief Financial Officer of
Command.

         Carl E. Painter has been a director of the Company since April 2001.
Mr. Painter was most recently Chairman, President and Chief Executive Officer
of BICC Cables Corporation which was a leading manufacturer of electrical
cables in the United States and Canada with revenues in excess of $750
million. BICC Cables was a subsidiary of the London based BICC Group. In
1984, Mr. Painter was a co-founder of Cablec Corporation, a company formed to
complete the management buy-out of the power cable business of the Phelps
Dodge Cable & Wire Company. At the time of the MBO, revenues were $50
million. By 1989, revenues had increased to over $500 million as a result of
internal growth and several acquisitions and the company was acquired by the
BICC Group. During his time with the company, Mr. Painter held positions in
manufacturing, sales, marketing and general management and led a number of
acquisitions and the integration process following the acquisitions. He
served as a director on the main board of the BICC Group and was a director
on the board of Phillips Cables, Ltd., a Canadian subsidiary. He was also a
director for the National Electrical Manufacturers Association, the trade
association for the U.S. electrical industry. Mr. Painter received a Bachelor
of Science degree in electrical engineering from Lehigh University in 1968
and an MBA degree from the Harvard Business School in 1975. He served four
years as a Flight Officer in the U.S. Navy.

         Martin C. Blake, Jr. has over twenty-seven years of experience in
aviation security services. Prior to joining the company in 1995, Mr. Blake
retired as a Major in the United States Air Force, where he served in a
variety of senior management positions. Mr. Blake's last assignment was as
the Program Manager for Electronic Security Systems, Electronic Systems
Division. In this capacity he managed a $20 million annual program
responsible for global marketing, procurement, and deployment of electronic
security systems. He was responsible for integrating security systems and
programs at international airports in Germany, Turkey, and the United
Kingdom. Previously, Mr. Blake was the Director of Security at the Department
of Defense's largest classified air flight facility, incorporating over 1,200
square miles of restricted air space. Establishing aviation security programs
for major aircraft defense contractors was an integral responsibility of his
position. Mr. Blake also served as the Security Program Manager for Air Force
space programs, including security for the Space Shuttle and expendable space
launch vehicles. He also led the effort to integrate a shared automated entry
control system for use at Cape Canaveral, Kennedy Space Center, and the
Johnson Space Center.

<PAGE>

         William Dunn is the Secretary and General Counsel for Command
Security Corporation. He began working with the Company in 1997 and became
General Counsel in 1998, and Secretary in 2000. Mr. Dunn's duties include
managing litigation, licensing and compliance, contracts, and
employment-related issues. Prior to his association with Command, Mr. Dunn
was with the New York City Police Department for 22 years managing
investigations and legal matters in several areas. He also worked for the
United States Department of Agriculture in an investigative and adjudicative
position. Mr. Dunn graduated from City University of New York and New York
Law School. He has been a member of the New York Bar since 1988. He has also
been a member and associate of several Bar and Law enforcement organizations.


           SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Each director and executive officer of the Company who is subject to
Section 16 of the Securities Exchange Act of 1934, and each other person who
beneficially owns more than 10% of the Company's common stock, is required by
Section 16(a) of that Act to report to the Securities and Exchange Commission
by a specified date his or her ownership of and transactions in the Company's
common stock. Copies of such reports on Forms 3, 4, and 5 must also be
provided to the Company. Based solely on a review of Forms 3, 4 and 5 and any
amendments thereto, and written representations to the Company with respect
to the fiscal year ended March 31, 2002, the Company is not aware of any
person who, at any time during the fiscal year ended March 31, 2002, was a
director, officer or beneficial owner of more than ten percent (10%) of the
Company's common stock and who failed to file reports required by Section
16(a) of the Securities Exchange Act of 1934, as amended, during the fiscal
year ended March 31, 2002, except that: (i) Messrs. Nekos, Miller and Painter
were late in filing Form 5 in connection with the grant on March 1, 2002, of
warrants to each of them covering 10,000 shares of the Company's Common Stock
exercisable at $0.82 per share.

<PAGE>

                       ITEM 11. EXECUTIVE COMPENSATION

         The following table sets forth for the fiscal year ended March 31,
2002, all plan and non-plan compensation paid to, earned by, or awarded to
William C. Vassell, Chairman of the Board and Chief Executive Officer, Graeme
R. Halder, Chief Financial Officer and Martin C. Blake, Jr., Vice-President -
Aviation. No other executive officer of the Company received total annual
salary and bonus in excess of $100,000 for the fiscal year ended March 31,
2002 and, therefore, compensation for such other executive officers is not
disclosed.

<TABLE>
                          SUMMARY COMPENSATION TABLE
                  FOR THE FISCAL YEAR ENDED MARCH 31, 2002
<CAPTION>
                                                Annual Compensation                                   Long-Term Compensation

                                                                                                      Shares
                                     Fiscal Year                      Other Annual                    Underlying
Name and Principal                   Ended                            Salary                          Warrants
Position                             March 31      Annual Salary      Compensation        Bonus       Granted
--------                             --------      -------------      ------------        -----       --------
<S>                                  <C>           <C>                <C>                 <C>         <C>
William C. Vassell<F1>
President, Chairman of the Board
and Chief Executive Officer
                                     2000          $153,846           <F2>                0           0
                                     2001          $162,500           <F2>                0           1,217,444<F1>
                                     2002          $193,268           <F2>                $ 45,000    0

Graeme R. Halder
Chief Financial Officer
                                     2001          $ 30,000           $179,356            $ 13,800    75,000<F4>)
                                     2002          $163,083           $120,320<F3>        $ 29,256    0

Martin C. Blake, Jr.
Vice President -- Aviation
                                     2000          $116,074           <F2>                $ 12,900    0
                                     2001          $119,678           <F2>                $ 94,058    50,000<F4>
                                     2002          $119,678           <F2>                $114,312    0
<FN>
<F1> In November 2000, Mr. Vassell was granted two warrants covering
     1,217,444 shares of the Company's common stock in connection with the
     Reliance transaction. The first warrant issued to Mr. Vassell in
     connection with the Reliance transaction covers 204,485 shares at an
     exercise price of $1.25 per share. The shares became exercisable on
     November 12, 2000, but cannot be exercised until after the exercise by
     Reliance of a warrant issued to it and then only in the same proportion
     as to which Reliance has exercised its warrant. This warrant expires on
     November 12, 2005. The second warrant issued to Mr. Vassell in
     connection with the Reliance transaction covers 1,012,159 shares at an
     exercise price of $1.25 per share. It is exercisable only to the
     following extent: (i) with respect to one-third of the warrant shares if
     the Company's earnings satisfy certain "Confidential Performance
     Targets" (defined below under Item 11 - "Employment Agreements and
     Warrants and Termination of Employment and Change of Control Agreement -
     William C. Vassell") for the fiscal year ended March 31, 2002; (ii) with
     respect to two-thirds of the warrant shares if the Company's earnings
     satisfy the Confidential Performance Targets for the fiscal year ended
     March 31, 2003; and (iii) with respect to all of the warrant shares if
     the Company's earnings satisfy the Confidential Performance Targets for
     the fiscal year ended March 31, 2004. This warrant expires on November
     12, 2005.

<F2> All perquisites and other personal benefits, securities or property do
     not exceed either $50,000, or 10% of the total annual salary and bonus
     of the executive officer. All perquisites and other personal benefits,
     securities or property are properly indicated in the "Other Annual
     Salary Compensation" column, as they all fit into the categories set
     forth in Item 402 of Regulation S-K.

<F3> Pursuant to the Employment Agreement entered into between Mr. Halder and
     the Company as of January 1, 2001, and as superceded by one effective
     from August 20, 2001, Mr. Halder received perquisites and other personal
     benefits in excess of either $50,000 or 10% of his total annual salary
     and bonus. Mr. Halder received $7,753 for the use of a fully expensed
     vehicle, $50,595 towards the cost of rental accommodation in the US
     offset by $14,637 received on the rental of his UK property and $29,195
     in private school tuition for his two eldest children. His employment
     agreement also covers him for the tax consequences of his move to the
     States including any taxable benefit on the above costs and this is
     estimated at $45,027.

<F4> Covered by a warrant issued pursuant to the Company's 2000 Stock Option
     Plan at an exercise price of $0.75 per full share. The warrant may
     become exercisable May 1, 2004, provided certain Confidential
     Performance Targets are satisfied.
</FN>
</TABLE>
<PAGE>

Stock Options/Warrants

         The Company did not grant any stock  warrants  pursuant to its 2000
Stock Option Plan during the fiscal year ended March 31, 2002.


Employment Agreements and Warrants and Termination of Employment and Change
of Control Agreement

William C. Vassell

         The Company entered into an Employment Agreement with Mr. Vassell
dated as of September 12, 2000. The Agreement went into effect when the
Reliance transaction was consummated on November 13, 2000. The Agreement
provides that Mr. Vassell be employed as the Company's Chairman of the Board
of Directors, Chief Executive Officer and President. The contract will end on
the earlier of the third anniversary of the effective date or the date on
which Mr. Vassell's employment is terminated under the Agreement. Unless
either party gives ninety (90) days notice to the other party prior to an
anniversary of the effective date, the Agreement shall be automatically
extended for one (1) year on such anniversary date. Mr. Vassell's base salary
shall be $175,000 per annum for the first employment period, $225,000 for the
second employment period and $250,000 thereafter.

         Mr. Vassell shall be eligible to receive incentive compensation
commencing with the fiscal year ended March 31, 2001. He shall receive
incentive compensation equal to 20% of his base salary if the Company's
earnings before taxes for that year equal or exceed certain Confidential
Performance Targets. Said Confidential Performance Targets are set forth in a
confidential letter agreement between Mr. Vassell and the Company, dated
September 12, 2000. Said Letter Agreement references the Company's
confidential Business Plan dated March 13, 2000 and approved by the Company's
Board of Directors in November, 2000 following the Reliance Transaction. For
each percentage increase in earnings before taxes above the stated targets,
the incentive compensation will be increased by three percentage points of
the base salary up to a maximum incentive compensation equal to 50% of base
salary. Mr. Vassell also received two warrants which are described in
"Security Ownership of Certain Beneficial Owners and Management" and in the
annotations to the table above. Mr. Vassell's employment may be terminated by
the Board with or without cause or by Mr. Vassell in the event of a material
breach by the Company or Reliance of the Shareholders' Agreement dated
September 12, 2000, a material diminution in his duties and/or authority
under the Employment Agreement, or a relocation of the Company's headquarters
more than fifty (50) miles away from its his current location. Any such
diminution, relocation or other uncured breach is referred to as constructive
discharge. Mr. Vassell may also terminate his employment upon one hundred
eighty (180) days notice or under certain circumstances following a change in
control.

         In the event Mr. Vassell is terminated for cause or he terminates
other than for constructive discharge or following a change of control, death
or disability, the Company shall have no further obligation except to pay
those accrued obligations arising prior to the date of termination. In the
event the Company terminates Mr. Vassell without cause or Mr. Vassell
terminates as a result of constructive discharge, the Company will have no
obligation to Mr. Vassell other than to pay all accrued obligations such as
salary and benefits, the payment of the balance of his base salary for the
year of termination, plus incentive compensation under certain circumstances.

         The Employment Agreement provides that Mr. Vassell shall be subject
to a Confidentiality Agreement with respect to any confidential or
proprietary information, knowledge or data relating to the Company. In
addition, for one (1) year following termination of his employment for any
reason, Mr. Vassell shall not solicit for employment or employ any person who
is a senior executive or branch manager of the Company, solicit any customer
of the Company or provide to any customer of the Company services of the type
offered by the Company as of the date of such termination except under
certain circumstances.

         The Employment Agreement goes on to provide Mr. Vassell with
extensive indemnification with respect to any action taken or omission
occurring after the effective date of the contract. Such indemnification
provisions provide for advancement of expenses and costs.

         Pursuant to the Employment Agreement which expired in July 2000, Mr.
Vassell served as Chairman of the Board of the Company and received an annual
salary of $175,000 in fiscal years ended March 31, 1999 and March 31, 2000.
The Board determined that as of April 1, 1999, Mr. Vassell's salary would be
$150,000 annually. Mr. Vassell was also entitled to an annual bonus equal to
5% of the Company's pre-tax profit for each fiscal year exclusive of (a)
capital gains and losses; (b) the annual bonus; and (c) federal state and
local income and franchise taxes for that year ("Pre-Tax Operating Profit")
from $.5 million to $1.0 million, and 2% of all Pre-Tax Operating Profit in
excess of $1.0 million. Mr. Vassell was provided with the use of a
Company-owned automobile and reimbursement for automobile insurance and
operating expenses.

         In September of 1992, the Company entered into a Compensation
Continuation Agreement with Mr. Vassell. This Agreement provides that, if,
within specified periods of a change of control of the Company (as defined in
the Agreement) Mr. Vassell's employment is terminated by the Company without
cause (as defined in said Agreement), or if Mr. Vassell terminates his
employment for good reason (as defined in the Agreement), Mr. Vassell will be
paid 2.99 times the greater of his annual compensation as in effect on the
date of the Agreement or the highest annual compensation for any of the three
(3) years preceding the termination. All awards previously granted under any
performance incentive plan, the actual payment of which may be deferred, will
be vested as a result of the change of control and all options and warrants
held by Mr. Vassell will become immediately exercisable. Currently, the
aggregate amount payable to Mr. Vassell upon his termination in the event of
a change in control would be 2.99 times his total compensation of
approximately $225,000 for the fiscal year ended March 31, 2002, or
approximately $675,000.

Graeme R. Halder

         The Company entered into an Employment Agreement with Mr. Graeme R.
Halder that was effective from August 20, 2001. This superceded the prior
agreement that was effective from January 1, 2001. The Agreement provides
that Mr. Halder will be employed as the Company's Chief Financial Officer and
will report to Mr. Vassell. The contract will end on the earlier of the third
anniversary of the effective date of the agreement or the date on which Mr.
Halder's employment is terminated by the Company. His base salary will be
$146,280 per annum, which will be reviewed at each anniversary date and he
will be eligible to receive up to an additional fifty percent (50%) of his
base salary based on performance. The perquisites offered to Mr. Halder
include a Tax Equalization Agreement, a fully expensed automobile, a $13,800
disturbance allowance per annum, the reasonable costs of private education
for his two eldest children and a $6,000 per annum air travel allowance. The
Company also pays for the cost of renting a suitable property in the States
which is offset by rental income received on his property in the UK.

Martin C. Blake, Jr.

         The Company has executed an Employment Agreement with Mr. Blake
dated as of March 20, 2000. The Agreement went into effect on April 1, 2000
and superceded a prior Employment Agreement dated January 1, 1998. The
Agreement provides that Mr. Blake be employed as the Company's Vice President
and General Manager of the Company's Aviation Division. The contract will end
on the earlier of the third anniversary of the date of the Agreement or the
date on which Mr. Blake's employment is terminated under the Agreement. Mr.
Blake's base salary was $120,000 per annum. He is also eligible to receive a
performance-related bonus. The perquisites offered to Mr. Blake include an
automobile and reimbursement for all out-of-pocket business expenses.

         Due to the significant challenges within the aviation security
industry currently, Mr. Blake's employment agreement was amended on March 20,
2002. With effect from April 1, 2002, his salary became $150,000 per annum.
In the event Mr. Blake is terminated for cause, the Company shall have no
further obligation except to pay those accrued obligations arising prior to
the date of termination. In the event the Company terminates Mr. Blake's
employment without cause or Mr. Blake terminates his employment, the Company
is obligated to provide nine (9) months of health insurance and pay a lump
sum severance amount of $100,000 for termination in the third year of the
Agreement.

         The Agreement further provides that Mr. Blake will execute the
Company's standard form of Confidentiality and Non-Compete Agreement pursuant
to which, for one year following termination of his employment for any
reason, he will not engage in any employment or business in competition with
the Company. For one additional year he will not solicit any of the Company's
aviation clients or potential clients or hire or influence Company employees
to leave the Company.

Other Agreements

         Other than pursuant to the Employment Agreement and the Compensation
Continuation Agreement for Mr. Vassell and the employment agreements with
Messrs. Halder and Blake, there is no compensation plan or arrangement for
the benefit of any person named in the Summary Compensation Table that would
result from the resignation, retirement or other termination of such person's
employment.

         Other than the compensation described above, there are no long-term
incentive plans for the persons named in the Summary Compensation Table. In
November 1999, the Company adopted a qualified Retirement Plan which became
effective beginning calendar year 1999 and provided for elective employee
deferrals and discretionary employer contributions to non-highly compensated
participants. The Plan does not allow for employer matching of elective
deferrals. For the period ended March 31, 2002, no discretionary amounts have
been accrued or paid.

<PAGE>

Board of Directors' Compensation

         No executive officer receives any additional compensation for
serving as a director. Directors who are not employees of the Company or the
Reliance Security Group received a meeting fee of $1,000 for each meeting
attended, and all directors were reimbursed for expenses incurred in
attending Board meetings. Directors Gregory J. Miller and Peter J. Nekos
receive $1,000 per month in connection with services they provide to the
Company in their capacity as members of the audit committee. Mr. Miller
received fees of $450 for various legal services he provided to the Company
during the year at the rate of $225 per hour. No other directors who are not
also executive officers received any plan or non-plan compensation from the
Company during the last three fiscal years. In recognition of their service
as Directors, Messrs. Nekos and Painter, and Miller were each granted a
warrant covering 10,000 shares of the Company's Common Stock exercisable at
$0.82 per share. The warrants expire on February 28, 2005.

Limited Directors' Liability

    Pursuant to the New York Business Corporation Law, the Company's
Certificate of Incorporation, as amended, eliminates to the fullest extent of
such Law the liability of the Company's Directors, acting in such capacity,
for monetary damages if they should fail through negligence or gross
negligence to satisfy their duty of exercising proper business judgment in
discharging their duties, but not for acts or omissions in bad faith, or
involving intentional misconduct or amounting to a knowing violation of law
or under other limited circumstances.

   ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding the
number and percentage of common stock (being the Company's only voting
securities) beneficially owned by (i) each person who owns of record (or is
known by the Company to own beneficially) 5% or more of the Company's common
stock or as to which he has the right to acquire within sixty (60) days of
June 15, 2002, (ii) each director and executive officer and (iii) all of said
beneficial owners, officers and directors as a group, as of June 14, 2002.
Except as indicated below, the address for each director and executive
officer is the Company's principal office at Lexington Park, Route 55,
Lagrangeville, New York 12540.

<PAGE>

         Other than as set forth in the following table, the Company is not
aware of any person (including any "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) who owns more than 5% of the
common stock of the Company.

                                 Amount and Nature
                                 Of Beneficial
Name                             Ownership(1)              Percent of Class(2)

William C. Vassell               2,283,744(3)              30.43%(2)

Peter J. Nekos                   12,500(4)                 (12)

Gregory J. Miller                10,000(5)                 (12)

Geoffrey P. Haslehurst           23,500(6)                 (12)

Kenneth Allison                  23,500(6)                 (12)

Carl E. Painter                  10,000(5)                 (12)

Graeme R. Halder                 75,000(7)                 1.18%

Martin C. Blake, Jr.             50,000(8)                 (12)

William Dunn                     21,000(9)                 (12)

Reliance Security Group plc      5,220,111(10)             51.08%(2)
Boundary House
Cricketfield Road
Uxbridge, Middlesex UB81QG

Sandra F. and Norman H. Pessin   354,500(11)               5.6%(2)
605 Third Avenue
19th Floor
New York, NY 10158

All Officers and                 2,509,244(2) (3) (4)      32.6%(2)
Directors as a Group                      (7) (5) (6)
(9 Persons)                               (8) (9) (10)


(1)   The Company has been advised that all individuals listed have the
      sole power to vote and dispose of the number of shares set forth
      opposite their names except as indicated.

(2)   Percent of class for each shareholder is calculated as if all shares
      underlying Preferred Stock, options and warrants included in the
      table for such shareholder are outstanding. The number of
      outstanding shares of common stock is 6,287,343. The percent of
      class for all executive officers and directors as a group is
      calculated as if all shares underlying Preferred Stock, options and
      warrants held by any shareholders included in the group are
      outstanding. The denominator for the group calculation is 7,679,787.

(3)   The shares included under the beneficial ownership of Mr. Vassell
      include 204,485 shares at an exercise price of $1.25 per share,
      covered by a warrant exercisable only to the extent of the exercise
      by Reliance of a warrant issued to it. Also included are 1,012,959
      shares at an exercise price of $1.25 per share, covered by a warrant
      under which one-third of the shares become exercisable if the
      Company's earnings satisfy certain Confidential Performance Targets
      (defined above in Item 11 - "Employment Agreements and Warrants and
      Termination of Employment and Change of Control Agreement - William
      C. Vassell") for the year ending March 31, 2002. This Warrant
      becomes exercisable with respect to the two-thirds of the shares
      covered by it if the Company's earnings satisfy the Confidential
      Performance Targets for the year ended March 31, 2003. All of the
      shares covered by the warrant become exercisable if the Company's
      earnings satisfy the Confidential Performance Targets for the year
      ended March 31, 2004. Also included are 250,000 shares held in
      escrow pursuant to an Escrow Agreement between Mr. Vassell and
      Reliance dated November 12, 2000. Mr. Vassell shares voting and
      dispository power over 16,300 shares with his wife.

(4)   Includes 10,000 shares underlying a warrant currently exercisable.

(5)   Includes 10,000 shares underlying a warrant currently exercisable.

(6)   Messrs. Haslehurst and Allison are currently officers of Reliance
      Security Group plc and hold the shares and warrants of Reliance in
      an indirect capacity.

(7)   Includes 75,000 shares covered by a warrant issued pursuant to the
      Company's 2000 Stock Option Plan and not exercisable until May 1, 2004.

(8)   Includes 50,000 shares covered by a warrant issued pursuant to the
      Company's 2000 Stock Option Plan and not exercisable until May 1, 2004.

(9)   Includes 20,000 shares covered by a warrant issued pursuant to the
      Company's 2000 Stock Option Plan and not exercisable until May 1, 2004.

(10)  The shares included under the beneficial ownership for Reliance
      include 1,289,484 shares of common stock and 12,325.35 shares of
      preferred stock convertible into 1,232,535 shares of Common Stock.
      Also included is a currently exercisable warrant for 150,000 shares
      at an exercise price of $1.03125 per share; and a warrant covering
      2,298,092 shares, at an exercise price of $1.25 per share; and the
      right to take possession of 250,000 shares placed in escrow pursuant
      to an Escrow Agreement between William C. Vassell and Reliance dated
      November 12, 2000. This last warrant provides that in case the
      Vassell warrants shall vest and become exercisable in accordance
      with their terms at any time after the date the warrants were first
      issued, then the number of warrant shares issuable upon exercise of
      the warrant shall be proportionally adjusted so that Reliance after
      such vesting shall be entitled to receive such number of warrant
      shares equal to twenty percent (20%) of the outstanding common stock
      taking into account the exercise of all stock options, warrants and
      rights to acquire shares of common stock outstanding on the date
      hereof, conversion of all shares of the Company's preferred stock
      outstanding on the date hereof, and exercise of the warrant and that
      portion of the Vassell warrants vested on such date. This
      information is based on the schedule 13D filing with the Securities
      and Exchange Commission by Reliance Security Group PLC dated
      September 13, 2001.

(11)  The shares included under the beneficial ownership for Sandra F. and
      Norman H. Pessin include 6,000 personally owned by Mr. Pessin and
      348,500 shares beneficially held by Mr. Pessin's wife, Sandra F.
      Pessin. This information is based upon a filing with the Securities
      and Exchange Commission on Form 13D dated November 29, 2001.

(12)  Less than 1 percent of class.

<PAGE>

           ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ATM UK Contract

         In March 2001, the Company entered into a contract to provide
security services to a bank services provider in the UK. Following a review
of the potential sub-contractors in the UK market, discussions were held with
2 potential suppliers. The contract was subsequently awarded to Reliance
Security Group, a major shareholder of the Company. The contract was
negotiated at arms length at competitive rates and was a profitable contract
for the Company until the end of the contract in January 2002. Revenue on
this contract in the 2002 fiscal year totaled $1,279,845, while
sub-contractor costs were $1,143,717.


                                   PART IV

           ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT

                      SCHEDULES AND REPORTS ON FORM 8-K

(A) (1) Financial statements filed as part of this report:

                                                                  Page No.

           Independent auditor's report...........................  F-1

           Balance Sheets - March 31, 2002 and 2001...............  F-2

           Statements of Operations - years ended........ ........  F-3
           March 31, 2002, 2001, and 2000

           Statements of changes in stockholders' equity..........  F-4
           years ended March 31, 2002, 2001, and 2000

           Statements of cash flows - years ended.................  F-5 - F-6
           March 31, 2002, 2001, and 2000

           Notes to Financial Statements..........................  F-7 - F-20

    (2)  Financial statement schedule filed as part of
         this report:

           Valuation and qualifying accounts - years ended........  F-21
           March 31, 2002, 2001, 2000

<PAGE>

         All other schedules are omitted since the required information is
not present or is not present in amounts sufficient to require submission of
the schedule, or because the information required is included in the
financial statements and notes thereto.

3.1   Amended & Restated Articles           Incorporated by reference to
                                            Exhibit of Incorporation 3.3 of
                                            the form 10-K for the fiscal year
                                            ending March 31, 1993 (the
                                            "1993 10-K")

3.2    By-Laws                              Incorporated by reference to
                                            Exhibit 3.3 of the Form 10-K
                                            for the fiscal year ended March
                                            31, 1991 (the "1991 10-K")

3.3    Amendments to By-Laws                Incorporated by reference to
                                            Exhibit 3.3 of the Form 10-K/A
                                            for the fiscal year ended March
                                            31, 1994 (the "1994 10-K/A")

3.4    Certificate of Amendment of          Incorporated by reference to
                                            Exhibit Certificate of
                                            Incorporation 3.4 of the Eighth
                                            Amendment to the Registration
                                            Statement filed on Form S-1,
                                            File No. 33-75336  (the "S-1").

4.1    Specimen Stock Certificate           Incorporated by reference to
                                            Exhibit 4.A to amendment #1 to
                                            Registrant's Registration
                                            Statement on Form S-18,
                                            file number 33, 35007-NY
                                            (the "S-18")

4.2    Reclassified as Exhibit 10.37

4.3    Reclassified as Exhibit 10.38

4.4    Reclassified as Exhibit 10.39

4.5    Reclassified as Exhibit 10.40

4.6    Warrant (50,000) to the CIT          Incorporated by reference to
       Group/Credit Finance                 Exhibit 4.2of the Form 8-K filed
                                            on March 13, 1996

4.7   Specimen Series A Preferred Stock     Incorporated by reference to
      Certificate                           Exhibit 4.2 of the Third
                                            Amendment to the S-1.

10.1  Form of Amendment to Employment       Incorporated by reference to
      Agreement for William C. Vassell      Exhibit 10.1 of the 10-K for the
      dated April 8, 1991                   fiscal year ended March 31, 1992
                                            (the "1992 10-K")

10.2  Amended and Restated Employment       Incorporated by reference to
      Agreement for William C. Vassell      Exhibit 10.3 of the 1992 10-K
      dated June 18, 1991

10.3  Amendment #1 to Amended & Restated    Incorporated by reference to
      Employment Agreement for William      Exhibit 10.5 to the 1993 10-K
      C. Vassell dated September 25, 1992

10.4  Form of Amendment to Employment       Incorporated by reference
      Agreement for Gordon Robinett         to Exhibit 10.2 of the 1992 10-K
      dated April 8, 1991

10.5  Amended and Restated Employment       Incorporated by reference to
      Agreement for Gordon Robinett         Exhibit 10.4 of the 1992 10-K
      dated June 18, 1991

10.6   Amendment #1 to Amended Restated     Incorporated by reference to
       Employment Agreement for Gordon      Exhibit & 10.6 of the 1993 10-K
       Robinett dated September 25, 1992

10.7   Form of Warrant Agreement and        Incorporated by reference to
       Warrant for William C. Vassell       Exhibit 10.3 of the 1991 10-K
       (175,000 shares) and Gordon
       Robinett (60,000 shares)

10.8   Form of Warrant Agreement dated      Incorporated by reference to
       May 15, 1992 for William C.          Exhibit 10.7 to the 1992 10-K
       Vassell (125,000 shares),  Gordon
       Robinett (60,000 shares) and
       Peter J. Nekos (10,000 shares)
<PAGE>

10.9   Compensation Continuation Agreement  Incorporated by reference to
       for William C. Vassell dated         Exhibit 10.9 of the 1993 10-K
       September 25, 1992

10.10  Consulting Agreement with Robert     Incorporated by reference to
       Ellin dated December 2, 1992         Exhibit 10.10of the 1992 10-K

10.11  Warrant Agreement for William C.     Incorporated by reference to
       Vassell (500,000)                    Exhibit 10.16 of the Form 10-K
                                            for fiscal year ended March 31,
                                            1994 (the "1994 10-K

10.12  Franchise Offering Prospectus        Incorporated by reference to
       dated December 1, 1992               Exhibit 10.11 of the 1993 10-K

10.13  Warrant Agreement and  Warrant       Incorporated by reference to
       for Stuart James Company, Inc.       Exhibit 4.B of S-18

10.14  Form of Second Amendment to May      Incorporated by reference to
       15, 1992 Warrant Agreement and       Exhibit 10.13 in 1994 10-K
       Warrant Certificate for William C.
       Vassell and Gordon Robinett

10.15  Form of Third Amendment to April     Incorporated by reference to
       8, 1991 Warrant Agreement and        Exhibit 10.14 in the 1994 10-K
       Warrant Certificate for William C.
       Vassell and Gordon Robinett

10.16  Form of Third Amendment to May 15,   Incorporated to Exhibit 10.15
       1992 Warrant Agreement and Warrant   in the 1994 10-K
       Certificate for William C. Vassell
       and Gordon Robinett

10.17  Placement Agent Agreement            Incorporated by reference to
                                            Exhibit 1.1 of the Form 8-K
                                            filed October 17, 1993

10.18  Registration Agreement
                                            Incorporated by reference to
                                            Exhibit 4.1 to the Form 8-K
                                            filed October 17, 1993

10.19  Form of Warrant for Private          Incorporated by reference to
       Placement                            Exhibit 4.2 to the Form 8-K
                                            filed October 27, 1993

10.20  Warrant Agreement (Placement         Incorporated by reference to
       Agreement)                           Exhibit 4.3 to the Form 8-K
                                            filed October 27, 1993

10.21  William C. Vassell Indemnity         Incorporated by reference to
       Agreement                            Exhibit 10.17 of the 1994 10-K

10.22  Plan of Acquisition, Reorganization, Incorporated by reference to
       Liquidation or Succession of ISS     Exhibit 2 of the Form 8-K filed
       International Service Systems, Inc.  October 27, 1993

10.23  Amendment to ISS Purchase Agreement  Incorporated by reference to
                                            Exhibit 10.23 of the 1994 10-K/A

10.24  Plan of Acquisition, Reorganization, Incorporated by reference to
       Liquidation or Succession of         Exhibit 2 of the Form 8-K
       Madison                              filed November 12, 1993

10.25  Purchase and Sale Agreement dated    Incorporated by reference to
       February 24, 1996, for the           Exhibit 2.1 of the Form 8-K filed
       acquisition of United Security       march 23, 1996
       Group Inc.

10.26  Placement Agent Agreement dated      Incorporated by reference to
       February 24, 1996, between the       Exhibit 10.26 to the Third
       Company and Sands Brothers & Co.,    Amendment to the Form S-1
       Ltd. with Amendment as of March
       24, 1996

10.27  Shareholders Voting Agreement dated  Incorporated by reference to
       March 8, 1996, by all directors in   Exhibit 10.27 of the Third
       their capacities as Shareholders     Amendment to the S-1

10.28  Amendment No. 2 to Amended and       Incorporated by reference to
       Restated Employment Agreement for    Exhibit 10.28 of the Third
       William C. Vassell dated February    Amendment to the S-1
       24, 1996

10.29  Amendment No. 2 to Amended and       Incorporated by reference to
       Restated Employment Agreement for    Exhibit 10.29 of the Third
       Gordon Robinett dated February 24,   Amendment to the S-1
       1996
<PAGE>

10.31  Form of Warrant (250,000) to         Incorporated by reference to
       Sands Brothers & Co., Ltd.           Exhibit 10.31 of the Third
                                            Amendment to the S-1

10.32  Warrant Reduction Agreement          Incorporated by reference to
       (275,000) William C. Vassell         Exhibit 10.32 the Third
                                            Amendment to the S-1

10.34  Loan and Security Agreement          Incorporated by reference to
       with CIT Group/Credit Finance, Inc.  Exhibit 4.7 of the Third
                                            Amendment to the S-1

10.35  Term Loan Agreement with             Incorporated by reference to
       Deltec Development Corp.             Exhibit 4.8 of the Third
                                            Amendment to the S-1

10.36  Promissory Note to William C.        Incorporated by reference to
       Vassell ($85,000) dated              Exhibit 10.36 of the form 10-K
       August 22, 1994                      for the fiscal year ending March
                                            31, 1995 (the "1995 10-K")

10.37  Notes Payable - ISS                  Incorporated by reference as
                                            Exhibit 4.2 to the 1994 10-K/A

10.38  Bank Note - September 1, 1992        Incorporated by reference as
       maturity                             Exhibit 4.2 to the l994 l0-K/A

10.39  Bank Note - November 1, 1997         Incorporated by reference as
       maturity Exhibit 4.4                 of the 1994 10-K/A

10.40  Mehlich Notes                        Incorporated by reference as
                                            Exhibit 4.5 of the 1994 10-K/A

11.00  Computation of Income Per            Incorporated by reference to
       Share of Common Stock                Exhibit 11 annexed to Financial
                                            Statements.

99.2   Placement Agent Agreement            Incorporated by reference to
       dated February 24, 1995              Exhibit 1.1 to the Form 8-K/A
                                            dated February 24, 1995

99.3  Amendment to Exhibit C to the         Incorporated by reference to
      Placement Agent Agreement dated       Exhibit 1.2 to the Form 8-K
      March 24, 1995                        dated March 24, 1995

99.4  Agreement with John B. Goldsborough   Incorporated by reference to
                                            Exhibit 99.3 to the Fourth
                                            Amendment to the S-1

99.5  Warrant Standstill Agreement          Incorporated by reference to
      from William C. Vassell               Exhibit 99.4 to the Fourth
                                            Amendment to the S-1

99.6  Shareholders Voting Agreement         Incorporated by reference to
      dated March 8, 1995                   Exhibit 99 to the Form 8-K
                                            dated March 24, 1995

99.7  Letter to Company from                Incorporated by reference to
      D'Arcangelo & Co. L.L.P.              Exhibit 99.7 to the Form 8-K
      dated February 28, 1994.              dated February 9, 1996

99.8  Letter to Company from Coopers        Incorporated by reference to
      & Lybrand L.L.P. dated                Exhibit 99.8 to the Form 8-K
      February 7, 1996 confirming           dated February 9, 1996.
      termination of engagement

99.9  Letter to Company from Coopers        Incorporated by reference to
      & Lybrand,L.L.P. dated February       Exhibit 99.9 to the Form 8-K
      9, 1996.                              dated February 9, 1996.

99.10 Letter (revised) to Commission        Incorporated by reference to
      from Coopers & Lybrand L.L.P.         Exhibit 99.10 to the Form 8-K/A
      dated March 8, 1996.                  filed March 11, 1996.

99.11 Press Release dated June 25, 1997     Incorporated by reference to
      re: FYE 1997 results                  Exhibit 99.11 to the 1997 10-K.

99.12 Press Release dated June 29, 2002     Incorporated by reference to
                                            Exhibit 99.12 to the 10-K for
                                            year ended March 31, 1999.

99.13 Stock Purchase Agreement              Incorporated by reference to
                                            Exhibit 99.13 of the Form 8-K
                                            filed September 27, 2000.

99.14 Reliance Warrant                      Incorporated by reference to
                                            Exhibit 99.14 of the Form 8-K
                                            filed September 27, 2000.

<PAGE>

99.15 Vassell Warrant                       Incorporated by reference to
                                            Exhibit 99.15 of the Form 8-K
                                            filed September 27, 2000.

99.16 Vassell Warrant                       Incorporated by reference to
                                            Exhibit 99.16 of the Form 8-K
                                            filed September 27, 2000.

99.17 Kikis Voting Agreement                Incorporated by reference to
                                            Exhibit 99.17 of the Form 8-K
                                            filed September 27, 2000.

99.18 Sands Voting Agreement                Incorporated by reference to
                                            Exhibit 99.18 of the Form 8-K
                                            filed September 27, 2000.

99.19 Shareholders' Agreement               Incorporated by reference to
                                            Exhibit 99.19 of the Form 8-K
                                            filed September 27, 2000.

99.20 Vassell Employment Agreement          Incorporated by reference to
                                            Exhibit 99.20 of the Form 8-K
                                            filed September 27, 2000.

99.21 Stipulation                           Incorporated by reference to
                                            Exhibit 99.21 of the Form 8-K
                                            filed September 27, 2000.

99.22 Registration Rights Agreement         Incorporated by reference to
                                            Exhibit 99.22 of the Form 8-K
                                            filed September 27, 2000.

99.23 Audit Committee of the Board          Incorporated by reference to
      of Directors Charter and Powers       Exhibit 99.23 of the Form 10-K
                                            filed July 3, 2001.


99.24 Halder Employment Agreement           Incorporated by reference to
                                            Exhibit 99.24 of the Form 10-K
                                            filed July 3, 2001.

99.25 2002 Stock Option Plan                Incorporated by reference to
                                            Exhibit 99.25 of the Form 10-K
                                            filed July 3, 2001.

99.26 Halder Warrant                        Incorporated by reference to
                                            Exhibit 99.26 of the Form 10-K
                                            filed July 3, 2001.

99.27 Blake Warrant                         Incorporated by reference to
                                            Exhibit 99.27 of the Form 10-K
                                            filed July 3, 2001.

99.28 Dunn Warrant                          Incorporated by reference to
                                            Exhibit 99.28 of the Form 10-K
                                            filed July 3, 2001.

99.29 McDonald Warrant                      Incorporated by reference to
                                            Exhibit 99.29 of the Form 10-K
                                            filed July 3, 2001.

(b)   Reports on Form 8-K

         (i)      Report on Form 8-K dated April 16, 1996 Item 7 (c) - Exhibit
                  Press release dated April 15, 1996

         (ii)     Report on Form 8-K dated September 10, 1996 Item 7(c) -
                  Exhibits Press release dated August 19, 1996 Press
                  release dated September 05, 1996 Press release dated
                  September 09, 1996

         (iii)    Report on Form 8-K dated September 26, 1996 Item 7(c) -
                  Exhibit Press release dated September 17, 1996
<PAGE>

         (iv)     Report on Form 8-K dated November 13, 1996 Item 7(c) -
                  Exhibits Press release dated October 23, 1996 Press
                  release dated November 06, 1996

         (v)      Report on Form 8-K dated November 19, 1996 Item 7(c) -
                  Exhibit Press release dated November 13, 1996

         (vi)     Report on Form 8-K dated February 14, 1997 Item 7(c) -
                  Exhibits Press release dated February 07, 1997 Press
                  release dated February 10, 1997

         (vii)    Report on Form 8-K dated August 15, 1997 Item 7(c) -
                  Exhibits Press release dated August 11, 1997

         (viii)   Report on Form 8-K dated September 11, 1997 Item 7(c)
                  - Exhibits Press release dated September 10, 1997

         (ix)     Report on Form 8-K dated November 19, 1997 Item 7(c) -
                  Exhibits Press release dated November 19, 1997

         (x)      Report on Form 8-K dated December 18, 1997 Item 5

         (xi)     Report on Form 8-K dated July 8, 1998 (item 7(c) -
                  Exhibits Press Release dated July 7, 1998.

         (xii)    Report on Form 8-K dated July 29, 1998 Item 7(c) -
                  Exhibits Press Release dated July 17, 1998.

         (xiii)   Report on Form 8-K dated September 15, 1998 Item 7(c) Press
                  release dated August 17, 1998.

         (xiv)    Report on Form 8-K dated December 1, 1998 Item 7(c)
                  Press release dated November 30, 1998.

         (xv)     Report on Form 8-K dated July 1, 1999 Item 7(c) Press release
                  dated July 20, 2002.

         (xvi)    Report on Form 8-K dated August 24, 1999 Item 7(c)
                  Press release dated August 27, 2002.

         (xvii)   Report on Form 8-K dated October 6, 1999 Item
                  7(c) Press release dated October 6, 1999 and
                  October 12, 1999.

         (xviii)  Report on Form 8-K dated November 1, 1999 Item 7(c) Press
                  release dated November 1, 1999.

         (xix)    Report on Form 8-K dated November 11, 1999 Item 7(c) Press
                  release dated November 11, 1999.

         (xx)     Report on Form 8-K dated February 15, 2000 Item 7(c) Press
                  release dated February 15, 2000.

         (xxi)    Report on Form 8-K dated March 3, 2000 Item 7(c) Press release
                  dated March 3, 2000.

         (xxii)   Report on Form 8-K dated June 30, 2000 Item 7(c) Press
                  release dated June 30, 2000.

         (xxiii)  Report on Form 8-K dated August 22, 2000 Item 7(c) Press
                  release dated August 21, 2000.

         (xxiv)   Report on Form 8-K dated September 12, 2000 Item 7(c) Press
                  release dated September 12, 2000.

         (xxv)    Report on Form 8-K dated November 10, 2000 Item 7(c) Press
                  releases dated November 10, 2000 and November 14, 2000.

         (xxvi)   Report on Form 8-K dated February 14, 2001 Item 7(c) Press
                  release dated February 14, 2001.

         (xxvii)  Report on Form 8-K dated April 18, 2001 Item 7(c) Press
                  release dated April 17, 2001.

         (xxviii) Report on Form 8-K dated April 8, 2002 Item 7(c) Press
                  Release dated April 1, 2002.


<PAGE>


                                   SIGNATURES

      PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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.

                                             COMMAND SECURITY CORPORATION

                                             /s/ William C. Vassell
                                             -----------------------------
                                             William C. Vassell
                                             President, Chairman and Chief
                                             Executive Office

Date: June 20, 2002


      PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.

                                                                   Date

                                 President, Chairman and
_/s/ William C. Vassell ____     Chief Executive Officer        June 20, 2002
William C. Vassell
                                 Chief Financial Officer,
_/s/ Graeme R. Halder ______     Director                       June 20, 2002
Graeme R. Halder

_/s/ Gregory J. Miller _____     Director                       June 20, 2002
Gregory J. Miller

_/s/ Peter J. Nekos ________     Director                       June 20, 2002
Peter J. Nekos

_/s/ Geoffrey P. Haslehurst_     Director                       June 20, 2002
Geoffrey P. Haslehurst

_/s/ Kenneth Allison________     Director                       June 20, 2002
Kenneth Allison

/s/ Carl E. Painter_________     Director                       June 20, 2002
Carl E. Painter


<PAGE>

Independent Auditor's Report
on the Financial Statements

To the Board of Directors
  and Stockholders of
  Command Security Corporation

We have audited the accompanying balance sheets of Command Security
Corporation as of March 31, 2002 and 2001, and the related statements of
operations, changes in stockholders' equity and cash flows for each of the
three years in the period ended March 31, 2002. Our audits also included the
financial statement schedule listed in the index at Item 14(A). These
financial statements and the schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Command Security Corporation
as of March 31, 2002 and 2001, and the results of its operations and its cash
flows for each of the three years in the period ended March 31, 2002, in
conformity with accounting principles generally accepted in the United States
of America. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

/s/ D'Arcangelo & Co., LLP

May 16, 2002
Poughkeepsie, New York


F-1

<PAGE>

<TABLE>

<CAPTION>

Command Security Corporation
Balance Sheets
March 31, 2002 and 2001

                                                                                            2002                   2001
<S>                                                                                         <C>                    <C>

ASSETS
Current assets:
  Restricted cash                                                                           $         0            $   466,403
  Accounts receivable from guard service customers, less allowance for
    doubtful accounts of $359,015 and $562,945, respectively                                 21,280,638             14,101,319
  Accounts receivable from administrative service client customers, less
    allowance for doubtful accounts of $24,095 and $32,840, respectively                        648,826                391,650
  Prepaid expenses                                                                              498,203                353,922
  Other receivables                                                                             388,066                308,842
                                                                                            -----------            -----------
       Total current assets                                                                  22,815,733             15,622,136

Furniture and equipment at cost, net                                                          1,195,422              1,230,178
Intangible assets, net                                                                          195,910                352,656
Restricted cash                                                                                 253,548                244,620
Deferred income taxes                                                                         1,300,000                      0
Other assets                                                                                    556,110                540,925
                                                                                            -----------            -----------
       Total assets                                                                         $26,316,723            $17,990,515
                                                                                            ===========            ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Cash overdraft                                                                            $ 2,063,361            $ 1,039,698
  Current maturities of long-term debt                                                        1,626,065              1,441,080
  Current maturities of obligations under capital leases                                        120,532                104,773
  Short-term borrowings                                                                      11,823,022              6,942,779
  Accounts payable and accrued expenses                                                       5,492,855              4,132,346
  Due to administrative service clients                                                         164,794                 87,157
                                                                                            -----------            -----------
       Total current liabilities                                                             21,290,629             13,747,833

Self-insurance reserves                                                                         647,935                730,374
Long-term debt, net                                                                             186,988              1,628,307
Obligations under capital leases, net                                                           103,680                172,270
                                                                                            -----------            -----------
                                                                                             22,229,232             16,278,784
                                                                                            -----------            -----------

Commitments and contingencies (Notes 14 and 15)

Stockholders' equity:
  Preferred stock, convertible Series A, $.0001 par value per share,
    1,000,000 shares authorized, 12,325 shares
    issued and outstanding, liquidation value of $2,033,682                                   2,033,682              2,033,682
  Common stock, $.0001 par value per share, 20,000,000 shares
    authorized, 6,287,343 shares issued and outstanding                                             629                    629
  Paid-in capital                                                                             8,619,286              8,619,286
  Accumulated Deficit                                                                        (6,566,106)            (8,941,866)
                                                                                            -----------            -----------
                                                                                              4,087,491              1,711,731
                                                                                            -----------            -----------
       Total liabilities and stockholders' equity                                           $26,316,723            $17,990,515
                                                                                            ===========            ===========

</TABLE>

See accompanying notes and auditor's report


F-2

<PAGE>

<TABLE>

<CAPTION>

Command Security Corporation
Statements of Operations
Years Ended March 31, 2002, 2001 and 2000

                                                                        2002                2001                2000

<S>                                                                     <C>                 <C>                 <C>
Guard service revenue                                                   $83,885,203         $71,320,440         $59,245,927
Cost of guard service revenue                                            70,356,400          59,789,330          49,243,061
                                                                        -----------         -----------         -----------
    Gross profit                                                         13,528,803          11,531,110          10,002,866

Administrative service revenue                                              276,652             274,277             554,196
                                                                        -----------         -----------         -----------
                                                                         13,805,455          11,805,387          10,557,062
                                                                        -----------         -----------         -----------

Operating expenses:
    General and administrative expenses                                  11,314,660          10,099,333           8,202,239
    Amortization of intangibles                                             156,746             297,440           1,176,448
    Provision for doubtful accounts and notes                               581,679             524,304             969,937
    Bad debt recoveries                                                          -0-                 -0-           (106,578)
    Stockholder derivative suit related expenses                                 -0-            431,445                  -0-
    Line of credit termination fee                                               -0-            125,000                  -0-
                                                                        -----------         -----------         -----------
                                                                         12,053,085          11,477,522          10,242,046
                                                                        -----------         -----------         -----------

    Operating income                                                      1,752,370             327,865             315,016
                                                                        -----------         -----------         -----------

Other income/(expense)
    Interest income                                                          93,201             114,373             172,533
    Interest expense                                                       (780,155)           (956,352)           (848,860)
    Insurance rebates                                                            -0-             60,799              15,689
    Gain on equipment dispositions                                           10,344              14,429                 912
    Other income                                                                 -0-                 -0-             35,000
                                                                        -----------         ------------        -----------
                                                                           (676,610)           (766,751)           (624,726)
                                                                        -----------         -----------         -----------
    Income/(loss) before income tax benefit                               1,075,760            (438,886)           (309,710)

Income tax benefit                                                        1,300,000                  -0-                 -0-
                                                                        -----------         -----------         -----------

    Net income/(loss)                                                     2,375,760            (438,886)           (309,710)

Preferred stock dividends                                                        -0-            (40,674)           (177,851)
                                                                        -----------         -----------         -----------

Net income/(loss) applicable to common stockholders                     $ 2,375,760         $  (479,560)        $  (487,561)
                                                                        ===========         ===========         ===========


Income/(loss) per share of common stock
   Basic                                                                $       .38         $      (.08)        $      (.07)
                                                                        ===========         ===========         ===========
   Diluted                                                              $       .32                 n/a                 n/a
                                                                        ===========         ===========         ===========
Weighted average number of common
  shares outstanding
    Basic                                                                 6,287,343           6,287,343           6,535,581
                                                                        ===========         ===========         ===========
    Diluted                                                               7,524,868                 n/a                 n/a
                                                                        ===========         ===========         ===========

</TABLE>

See accompanying notes and auditor's report


F-3

<PAGE>

<TABLE>

<CAPTION>

Command Security Corporation
Statements of Changes in Stockholders' Equity
Years Ended March 31, 2002, 2001 and 2000

                                                                                          Common
                                     Preferred     Common    Paid-In       Accumulated    Stock In
                                     Stock         Stock     Capital       Deficit        Treasury      Total
<S>                                  <C>           <C>       <C>           <C>            <C>           <C>
Balance at March 31, 1999            $2,033,682    $666      $9,277,997    $(8,193,270)   $      -0-    $3,119,075
Return of escrowed
  common stock                                      (15)       (214,006)                                  (214,021)
Purchase of treasury stock                                                                 (226,202)      (226,202)
Preferred stock dividends                                      (177,851)                                  (177,851)
Net loss                                                                      (309,710)                   (309,710)
                                     ----------    ----      ----------     ----------     --------     ----------
Balance at March 31, 2000             2,033,682     651       8,886,140     (8,502,980)    (226,202)     2,191,291

Retirement of common
  stock in treasury                                 (22)       (226,180)                    226,202
Preferred stock dividends                                       (40,674)                                   (40,674)
Net loss                                                                      (438,886)                   (438,886)
                                     ----------    ----      ----------     ----------     --------     ----------
Balance at March 31, 2001             2,033,682     629       8,619,286     (8,941,866)          -0-     1,711,731

Net income                                                                   2,375,760                   2,375,760
                                     ----------    ----      ----------     ----------     --------     ----------
Balance at March 31, 2002            $2,033,682    $629      $8,619,286    $(6,566,106)    $     -0-    $4,087,491
                                     ==========    ====      ==========    ===========     ========     ==========

</TABLE>

See accompanying notes and auditor's report


F-4

<PAGE>

<TABLE>

<CAPTION>

Command Security Corporation
Statements of Cash Flows
Years Ended March 31, 2002, 2001 and 2000

INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

                                                                        2002                2001                2000
<S>                                                                     <C>                 <C>                 <C>
OPERATING ACTIVITIES
Net income/(loss)                                                       $ 2,375,760         $  (438,886)        $  (309,710)
Adjustments to reconcile net income/(loss) to net
  cash provided by/(used in) operating activities:
    Depreciation and amortization                                           702,963             894,792           1,695,458
    Provision for doubtful accounts and
      notes receivable, net of recoveries                                   581,679             524,304             863,359
    Gain on equipment dispositions                                          (10,344)            (14,429)               (912)
    Deferred income taxes                                                (1,300,000)                 -0-                 -0-
    Self-insurance reserves                                                 241,247             369,144             448,291
    Stock compensation settlement                                                -0-                 -0-           (154,021)
    Changes in operating assets and liabilities:
      Accounts receivable                                                (8,018,174)         (3,004,807)         (1,313,963)
      Prepaid expenses                                                      371,947              27,179             215,285
      Other receivables                                                     (70,011)             41,085             (41,226)
      Other assets                                                          335,805              98,528             279,569
      Accounts payable and accrued expenses                               1,036,823             344,855            (831,214)
      Due to administrative service clients                                  77,637            (384,731)            (89,597)
                                                                        -----------         -----------         -----------
        Net cash provided by/(used in)
          operating activities                                           (3,674,668)         (1,542,966)            761,319
                                                                        -----------         -----------         -----------

INVESTING ACTIVITIES
Purchase of equipment                                                      (230,855)           (226,368)           (158,168)
Purchase of intangible assets                                                    -0-           (190,033)            (12,000)
Proceeds from equipment dispositions                                         45,436              54,487              24,041
Notes purchased                                                                  -0-           (167,185)                 -0-
Issuance of notes by administrative service client                          (35,000)            (80,769)                 -0-
Principal collections on notes receivable                                   132,272              44,575                  -0-
                                                                        -----------         -----------         -----------
        Net cash used in investing activities                               (88,147)           (565,293)           (146,127)
                                                                        -----------         -----------         -----------

FINANCING ACTIVITIES
Net borrowings/(payments) on line of credit                               4,846,734            (332,776)            212,878
Proceeds from other borrowings                                                   -0-          2,875,000                  -0-
Repayments on other short and long-term debt                             (1,965,243)         (1,092,873)           (689,447)
Repayments on capital lease obligations                                    (142,339)           (114,670)            (82,486)
Cash overdraft                                                            1,023,663             854,926             184,772
Purchase of treasury stock                                                       -0-                 -0-           (226,202)
Payment of preferred stock dividends                                             -0-            (81,348)           (137,177)
                                                                        -----------         -----------         -----------
        Net cash provided by/(used in) financing activities               3,762,815           2,108,259            (737,662)
                                                                        -----------         -----------         -----------
Net decrease in cash and cash equivalents                                        -0-                 -0-           (122,470)

Cash and cash equivalents, beginning of year                                     -0-                 -0-            122,470
                                                                        -----------         -----------         -----------

Cash and cash equivalents, end of year                                  $        -0-        $        -0-        $        -0-
                                                                        ===========         ===========         ===========

</TABLE>

See accompanying notes and auditor's report


F-5

<PAGE>

Command Security Corporation
Statements of Cash Flows, Continued
Years Ended March 31, 2002, 2001 and 2000

1. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Cash paid during the period for:

                                    2002           2001            2000

Interest                        $773,347       $882,569        $848,860
Income Taxes                          -0-            -0-             -0-



2. SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES

For the years ended March 31, 2002, 2001 and 2000, the Company purchased
equipment with direct installment and lease financing of $315,698, $597,352
and $701,662, respectively. These amounts have been excluded from the
statements of cash flows.

The Company generally obtains short-term financing to meet its insurance
needs. For the years ended March 31, 2002, 2001 and 2000, $516,228, $322,621
and $122,644 respectively, have been borrowed for this purpose. These
borrowings have been excluded from the statements of cash flows.

In January, 2001, the Company refinanced a note receivable from an
administrative service client. The balance of the note refinanced of $78,839
along with net charges of $20,392 have been excluded from the statement of
cash flows.

In November, 2000, the Company refinanced its line of credit and term loan
with LaSalle Business Credit, Inc.("LaSalle"). The principal balance on the
previous line of credit with CIT Group/Credit Finance, Inc. ("CIT") at the
time of refinancing was $7,898,547. The statement of cash flows presents only
the net change for the period between both lending arrangements. As part of
the lending arrangement, the Company received a $3,000,000 term loan,
replacing a term loan with CIT, originally for $500,000 and a remaining
balance of $125,000. Proceeds from the term loan are shown net of the CIT
term loan satisfied. As part of the refinancing, the Company also purchased
the remaining balances of two notes of an administrative service client and a
customer list purchaser that the Company had previously guaranteed. Cash used
for this purpose is shown in the accompanying statement of cash flows under
cash flows from investing activities.

In December, 1999, the Company entered into an agreement modifying a stock
compensation arrangement entered into in November, 1993, and canceling
150,000 shares of the Company's common stock held in escrow. The resultant
charges to common stock and paid-in capital and credits to accrued expenses
have been excluded from the statement of cash flows.

In August, 1999, the Company purchased certain guard service accounts and
related equipment and supplies for a total consideration of $30,000. The
Company paid $12,000 and issued a note for $18,000. The non-cash portion has
been excluded from the purchase of accounts and issuance of notes in the
statement of cash flows.

See accompanying notes and auditor's report


F-6

<PAGE>

Command Security Corporation
Notes to Financial Statements
March 31, 2002, 2001 and 2000


1. Business Description and Summary of Accounting Policies

The following is a description of the principal business activities and
significant accounting policies employed by Command Security Corporation.

Principal business activities

    Command Security Corporation (the Company) is a uniformed
    security guard service company operating in New York,
    Connecticut, California, Florida, Illinois, Massachusetts, New
    Jersey and Pennsylvania. In addition, the Company also provides
    other security guard companies (administrative service clients)
    and police departments in various states with administrative
    services, such as billing, collection and payroll, for a
    percentage of the related gross revenue.

Estimates

    The preparation of financial statements in conformity with
    generally accepted accounting principles requires management to
    make estimates and assumptions that affect the reported amounts
    of assets and liabilities and disclosure of contingent assets
    and liabilities at the date of the financial statements and the
    reported amounts of revenue and expenses during the reporting
    period. Such estimates include provisions for uncollectible
    accounts and notes receivable, valuation allowances for
    deferred tax assets and reserves for general liability and
    workers' compensation claims, among others. Actual results
    could differ from those estimates.

Revenue recognition

    The Company records revenue as services are provided to its
    customers and to its administrative service clients. Revenue
    consists primarily of security guard services which are
    typically billed at hourly rates. These rates may vary
    depending on base, overtime and holiday time worked. Revenue
    for administrative services provided to other guard companies
    are based on a percentage of the administrative service
    client's revenue and are recognized as billings for the related
    guard services are generated. Costs associated with the
    Company's guard service revenue consist of direct and indirect
    payroll and related expenses, subcontract costs, vehicle and
    other costs directly related to the guard service revenue
    generated. Costs related to the administrative service revenue
    are primarily clerical and administrative in nature and are not
    readily segregated from the Company's total general and
    administrative costs.

    In December, 1999, the Staff of the Securities and Exchange
    Commission issued Staff Accounting Bulletin No. 101 ("SAB
    101"), "Revenue Recognition in Financial Statements".
    Management believes that the Company's practices and policies
    are in compliance with SAB 101.

Cash and cash equivalents

    For purposes of the cash flows statements, the Company defines
    cash and cash equivalents as operating cash (non restricted)
    and investments with maturities of three months or less.

Furniture and equipment

    Furniture and equipment are stated at cost. Depreciation is
    accumulated using the straight-line method over the estimated
    useful lives of the equipment ranging from three to seven
    years.

Intangible assets

    Intangible assets are stated at cost and consist primarily of
    customer lists which are being amortized on a straight-line
    basis over five years. The life assigned to customer lists
    acquired is based on management's estimate of the attrition
    rate. The attrition rate is estimated based on historical
    contract longevity and management's operating experience. Any
    possible impairment is evaluated annually based on anticipated
    undiscounted future cash flows and actual customer attrition in
    accordance with the provisions of SFAS 121.


F-7

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


1. Business Description and Summary of Accounting Policies, continued

Intangible assets(continued)

    In June 2001, the FASB issued SFAS 141, "Business
    Combinations." SFAS 141 addresses financial accounting and
    reporting for business combinations and supercedes APB No. 16,
    "Business Combinations" and SFAS No. 38, "Accounting for
    Preacquisition Contingencies of Purchased Enterprises." All
    business combinations in the scope of SFAS 141 are to be
    accounted for under the purchase method. SFAS 141 is effective
    June 30, 2001. The adoption of SFAS 141 did not have an impact
    on the Company's financial position, results of operations or
    cash flows.

    In June 2001, the FASB also issued SFAS 142, "Goodwill and
    Other Intangible Assets." SFAS 142 addresses financial
    accounting and reporting for intangible assets acquired
    individually or with a group of other assets (but not those
    acquired in a business combination) at acquisition. SFAS 142
    also addresses financial accounting and reporting for goodwill
    and other intangible assets subsequent to their acquisition.
    With the adoption of SFAS 142, goodwill is no longer subject to
    amortization. Rather, goodwill will be subject to at least an
    annual assessment for impairment by applying a fair value test.
    The impairment loss is the amount, if any, by which the implied
    fair value of goodwill is less than the carrying or book value.
    SFAS 142 is effective for fiscal years beginning after December
    15, 2001. Impairment loss for goodwill arising from the initial
    application of SFAS 142 is to be reported as resulting from a
    change in accounting principle. The Company does not expect
    there will be an impact to its financial position, results of
    operations or cash flows upon adoption of SFAS 142.

    In August 2001, the FASB also issued Statement of Financial
    Accounting Standards No. 144 ("SFAS 144"), "Accounting for the
    Impairment or Disposal of Long-Lived Assets." SFAS 144 is
    effective for fiscal years beginning after December 15, 2001.
    For long-lived assets to be held and used, SFAS 144 retains the
    existing requirements to (a) recognize an impairment loss only
    if the carrying amount of a long-lived asset is not recoverable
    from its discounted cash flows and (b) measure an impairment
    loss as the difference between the carrying amount and the fair
    value of the asset. SFAS 144 establishes one accounting model
    to be used for the long-lived asset to be disposed of by sale
    and revises guidance for assets to be disposed of other than by
    sale. The Company does not expect there will be an impact to
    its financial position, results of operations or cash flows
    upon adoption of SFAS 144.

Advertising costs

    The Company expenses advertising costs as incurred. Amounts
    incurred for recruitment and general business advertising were
    $131,266, $184,697 and $214,142 for the years ended March 31,
    2002, 2001 and 2000, respectively.

Reserve for doubtful accounts

    The Company periodically evaluates the requirement for
    providing for credit losses on its accounts receivables.
    Criteria used by management to evaluate the adequacy of the
    allowance for doubtful accounts include, among others, the
    creditworthiness of the customer, prior payment performance,
    the age of the receivables and the Company's overall historical
    loss experience. Individual accounts are charged off as
    management deems them as uncollectible.

Income/(loss) per common share

    Under the requirements of Financial Accounting Standards Board
    Statement No. 128 (SFAS 128), "Earnings Per Share," the
    dilutive effect of potential common shares, if any, is excluded
    from the calculation for basic earnings per share. No diluted
    earnings per share are presented for the years ended March 31,
    2001 and 2000, because the effect of assumed issuance of common
    shares in connection with warrants and stock options
    outstanding and preferred stock conversions was antidilutive.


F-8

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


1. Business Description and Summary of Accounting Policies, continued

Accounting for stock options

    Financial Accounting Standards Board Statement No. 123 (SFAS
    123) provides companies with a choice to follow the provisions
    of SFAS 123 in the determination of stock-based compensation
    expenses or to continue with the provisions of APB 25,
    "Accounting for Stock Issued to Employees." The Company will
    continue to follow APB 25 and will provide pro forma
    disclosures as required by SFAS 123. SFAS 123 did not have an
    impact on the Company's financial condition or results of
    operations for the periods presented. Stock-based compensation
    issued to non employees are accounted for based on the fair
    value and nature of goods and/or services received.


2. Furniture and Equipment

Furniture and equipment at March 31, consist of the following:

                                   2002                 2001

Transportation equipment           $ 1,234,197          $ 1,392,073
Security equipment                     473,692              582,075
Office furniture and equipment       1,105,227            2,128,993
                                   -----------          -----------
                                     2,813,116            4,103,141
Accumulated depreciation            (1,617,694)          (2,872,963)
                                   -----------          -----------
                                   $ 1,195,422          $ 1,230,178
                                   ===========          ===========

Depreciation expense for the years ended March 31, 2002, 2001 and 2000, was
$546,217, $597,352 and $519,010, respectively, and includes amortization of
assets purchased under capital lease arrangements (see Note 14). During the
year ended March 31, 2002, the Company removed fully depreciated equipment
with an original cost of $1,383,390 from its accounts. The equipment was
considered obsolete.


3. Intangible Assets

Intangible assets at March 31, consist of the following:

                                   2002                2001

Customer list                      $ 404,881           $ 547,284
Borrowing cost                       190,034             190,034
Goodwill                              34,007              34,007
                                   ---------           ---------
                                     628,922             771,325
Accumulated amortization            (433,012)           (418,669)
                                   ---------           ---------
                                   $ 195,910           $ 352,656
                                   =========           =========

Amortization expense for the years ended March 31, 2002, 2001 and
2000, was $156,746, $297,440 and $1,176,448, respectively. During the
year ended March 31, 2002 and 2001, the Company removed fully
amortized customer lists with an initial cost of $142,403 and
$3,128,105, respectively, from its accounts.


4. Restricted Cash

Restricted cash represents deposits for the benefit of the Company's
insurance carrier as collateral for workers compensation claims. The
Company's insurance carrier released $466,403 from the restrictions in
June, 2001.


F-9

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


5. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at March 31, consist of the following:

                                               2002           2001

Trade accounts payable                         $1,178,715     $1,097,298
Payroll and related expenses                    2,958,848      2,021,922
Insurance                                         900,000        589,398
Sales tax                                          14,971         48,139
Accrued interest payable                           80,591         73,783
Accrued professional fees                          55,000         60,000
Accrued loss contingencies and settlements        238,000         42,000
Other                                              66,730        199,806
                                               ----------     ----------
                                               $5,492,855     $4,132,346
                                               ==========     ==========

As of March 31, 2002 and 2001, the Company has accrued $238,000 and $42,000,
respectively, for loss contingencies and settlements in connection with
certain legal proceedings and labor claims where either a monetary settlement
has been reached or management has determined that it is probable that a
liability has been incurred.


6. Short-Term Borrowings

Short-term borrowings at March 31, consist of the following:

                                          2002               2001

Bank line of credit                       $11,671,919        $6,823,985
Various insurance financing
  arrangements, interest at 7.5%              151,103           118,794
                                          -----------        ----------
                                          $11,823,022        $6,942,779
                                          ===========        ==========

In November, 2000, the Company entered into a three year agreement with
LaSalle Busines Credit, Inc. ("LaSalle") under a loan and security agreement
(the "agreement"), providing for a line of credit of up to 85% of eligible
accounts receivable, as defined in the agreement, but in no event in excess
of $15 million. The agreement was modified in January, 2002, and again in
March, 2002, to provide for a $250,000 overadvance and to expand the
definition of eligible accounts receivable. At March 31, 2002, the Company
had used $11,671,919 of this line, representing approximately 89% of its
maximum borrowing capacity. Interest is payable at prime plus .5% (5.25% at
March 31, 2002) on the outstanding balance. The line is collateralized by
customer accounts receivable and substantially all other assets of the
Company.

The Company terminated its previous agreement with CIT Group/Business Credit,
Inc. ("CIT"), which provided for financing based on 85% of eligible accounts
receivable, as defined, but in no event in excess of $10 million. Interest
was payable monthly at 1.5% over prime. The line was collateralized by
customer accounts receivable and substantially all other assets of the
Company. The agreement was scheduled to expire in February, 2001, and, in
accordance with the terms of the CIT agreement, the Company paid a $125,000
early termination fee.


F-10

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


7. Long-Term Debt

Long-term debt at March 31, consists of the following:

<TABLE>

<CAPTION>
                                                                 2002             2001
<S>                                                              <C>              <C>
LaSalle Business Credit, Inc., due December, 2002,
  interest at prime plus .75% (5.5% at March 31, 2002), <F1>     $ 1,400,000      $ 2,600,000
Various installment loans due at various dates
  through February, 2005, with interest ranging
  from 8.9% to 11.75% <F2>                                           413,053          469,387
                                                                 -----------      -----------
                                                                   1,813,053        3,069,387
Current maturities                                                (1,626,065)      (1,441,080)
                                                                 -----------      -----------
                                                                 $   186,988      $ 1,628,307
                                                                 ===========      ===========

<FN>

<F1>  Term loan from LaSalle Business Credit, Inc., initially
      payable in monthly installments of $100,000 with interst
      payable at LIBOR plus 2.5% or at prime. The note was modified
      in conjunction with the revolving line of credit modifications
      (see Note 6) and now requires monthly payments of $150,000
      plus interest at prime plus .75%. The note is collateralized
      with the security pledged under the revolving loan and
      security agreement (see Note 6).

<F2>  Payable to General Motors Acceptance Corporation and Ford
      Motor Credit Corporation. The notes are collateralized by
      automobiles and security equipment.

</FN>

</TABLE>

The aggregate amount of required principal payments of long-term debt
is as follows:

Year ending: March 31, 2003            $1,626,065
             March 31, 2004               138,707
             March 31, 2005                48,281
                                       ----------
                                       $1,813,053
                                       ==========


8. Stockholders' Equity

Changes in the number of equity shares of the Company's preferred, common and
treasury stock for the years ended March 31, 2002, 2001 and 2000, are as
follows:

                                     Preferred      Common         Treasury
                                     Stock          Stock          Stock

Balance at March 31, 1999            12,325         6,658,143            -0-
Return of escrowed common stock                      (150,000)
Purchase of treasury stock                                          220,800

Balance at March 31, 2000            12,325         6,508,143       220,800
Retirement of treasury stock                         (220,800)     (220,800)
                                     ------         ---------      --------
Balance at March 31, 2001            12,325         6,287,343            -0-
                                     ======         =========      ========
Balance at March 31, 2002            12,325         6,287,343            -0-
                                     ======         =========      ========


F-11

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


9. Net Income per Share

The following is a reconciliation of the numerators and the denominators of
the basic and diluted per-share computations for net income for the year
ended March 31, 2002:

                                 Income          Shares           Per-Share
                                 (Numerator)     (Denominator)    Amount

Basic EPS                        $ 2,375,760      6,287,343       $ .38
                                                                  =====
Effect of dilutive shares
  Options issued March 1, 2002                          386
  Convertible preferred stock                     1,232,500
                                 -----------      ---------
Diluted EPS                      $ 2,375,760      7,524,868       $ .32
                                 ===========      =========       =====

Additional options and warrants outstanding during the year ended March 31,
2002, were excluded from the computation of diluted EPS because the exercise
price was greater than the average market price of the common shares.


10. Retirement Plans

In November, 1999, the Company adopted a qualified retirement plan providing
for elective employee deferrals and discretionary employer contributions to
non-highly compensated participants. The plan does not allow for employer
matching of elective deferrals. For the years ended March 31, 2002, 2001 and
2000, no discretionary amounts have been accrued or paid.


11. Concentration of Risk

Geographic concentrations of credit risk with respect to trade receivables
are primarily in California with 40% and 25% and in the New York Metropolitan
area with 29% and 43% of total receivables as of March 31, 2002 and 2001,
respectively. As of March 31, 2002, 26% of the Company's trade receivables
were due from the Federal Aviation Administration. The remaining trade
receivables consist of a large number of customers dispersed across many
different geographic regions. During the years ended March 31, 2002, 2001 and
2000, the Company generated 55%, 46% and 38%, respectively, of its revenue
from airport security and related services. Trade receivables due from the
commercial airline industry comprised 43% and 37% of net receivables as of
March 31, 2002 and 2001, respectively. The Company's remaining customers are
not concentrated in any specific industry.


12. Significant Customers

For the years ended March 31, 2002 and 2001, no customer accounted for 10% or
more of revenue. For the year ended March 31, 2000, one customer accounted
for approximately $6 million, or 10%, of revenue.


13. Self-Insurance

For the years from March 1, 1997 to February 29, 2000, the Company provided a
partially self-insured health insurance program to all eligible
administrative personnel. There was a maximum loss of $30,000 per year per
employee and an aggregate amount per year, based on the number of
participants, that the Company could be responsible for. A stop-loss
insurance policy covered all claims in excess of the above amounts. As of
March 1, 2000, the Company is providing traditional fully insured coverage to
its employees. Amounts accrued for health insurance under the partially
self-insured plan and included in general and administrative expenses were
$326,817 for the policy year ended February 29, 2000, based on the maximum
aggregate for the year.


F-12

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


13. Self-Insurance, continued

The Company has an insurance policy covering workers' compensation claims in
most states that the Company performs services. Annual premiums are based on
incurred losses as determined at the end of the coverage period, subject to a
minimum and maximum premium. Estimated accrued liabilities are based on the
Company's historical loss experience and the ratio of claims paid to the
Company's historical payout profiles for the years ended March 31, 2002 and
2001. For the year ended March 31, 2000, the Company based its estimated
losses on industry payout profiles. Charges for estimated workers'
compensation related losses incurred and included in cost of sales were
$2,195,536, $1,802,379 and $1,584,916, for the years ended March 31, 2002,
2001 and 2000, respectively. Had the Company used its own historical payout
profile for the year ended March 31, 2000, the charges for workers'
compensation related losses would not have differed by a material amount.

The nature of the Company's business also subjects it to claims or litigation
alleging that it is liable for damages as a result of the conduct of its
employees or others. The Company insures against such claims and suits
through general liability policies with third-party insurance companies. Such
policies have limits of $5,000,000 per occurrence and $10,000,000 in the
aggregate. Prior to December 1, 2001, the Company had limits of $1,000,000
per occurance. Prior to October 1, 2001, the Company also had coverage under
an excess general liability insurance policy that covered claims for an
additional $50,000,000 in the aggregate ($30,000,000 prior to October 1,
1999). Since the tragedy of September 11, 2001, such excess coverage was no
longer available at the October, 2001, policy renewal time. The Company
retains the risk for the first $25,000 per occurrence ($50,000 for claims
based on losses incurred prior to October 1, 2000). Charges for general
liability self-insurance expense of $241,247, $369,144 and $448,291, are
included in cost of sales for the years ended March 31, 2002, 2001 and 2000,
respectively. Estimated accrued liabilities are based on specific reserves in
connection with existing claims as determined by third party risk management
consultants and actuarial factors to provide for estimated losses incurred
but not yet reported.

Cumulative amounts estimated to be payable by the Company with respect to
pending and potential claims for all years in which the Company is liable
under its health, general liability risk retention and workers' compensation
policies have been accrued as liabilities. Such accrued liabilities are
necessarily based on estimates; thus, the Company's ultimate liability may
exceed or be less than the amounts accrued. The methods of making such
estimates and establishing the resultant accrued liability are reviewed
continually and any adjustments resulting therefrom are reflected in current
earnings.


14. Contingencies

The nature of the Company's business is such that there is a significant
volume of routine claims and lawsuits that are issued against it, the vast
majority of which never lead to substantial damages being awarded. The
Company maintains general liability, casualty and workman's compensation
insurance coverage that it believes is appropriate to the relevant level of
risk and potential liability. Some of the claims brought against the Company
could result in significant payments, however, the exposure to the Company
under general liability is limited to the first $50,000 for cases before
October 1, 2000, and $25,000 for cases after that date. The only potential
impact would be on future premiums, which may be adversely effected by a poor
claims history.

In addition to such cases, the Company has been named as a defendant in
several uninsured employment related claims which are currently before
various courts, the EEOC or various state and local agencies. The Company has
instituted policies to minimize these occurrences and monitors those that do
occur. At this time the Company is unable to determine the impact on the
financial position and results of operation that these claims may have should
the investigations conclude that they are valid.


F-13

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


14. Contingencies, continued

In May, 1996, a complaint was filed in Queens County Civil Court by three
former employees alleging emotional distress, anguish, mental distress and
injury to their professional reputation due to retaliatory discharge and
related matters. Plaintiffs each seek $2 million for compensatory damages and
$2 million in punitive damages in addition to payment of overtime wages of
$25,000. The Company's customer, also a defendant and a former employer, has
engaged counsel representing all defendants. On November 27, 1998, the Kings
County Supreme Court ruled on a motion dismissing three counts concerning
contractual allegations but allowed the remaining nine counts to proceed to
findings. The Company's customer and the Company reached an agreement for the
remaining nine counts whereby the Company will be released from all claims in
connection with this matter. The costs associated with this agreement, or
$238,000, have been accrued in the financial statements as of March 31, 2002.

Pursuant to Federal regulation as a result of the terrorist attacks on
September 11, 2001, the Federal government has taken responsibility for
pre-board screening functions effective February 17, 2002. The Company has
contracted with the government to continue to provide these functions at
least until the government has the infrastructure in place to hire as direct
Federal employees all persons who would act as pre-board screeners. Such
services accounted for approximately $4.4 million, or 48% of revenue, for the
month of March, 2002. Under current law, the Company's involvement with
pre-board screening functions will be eliminated no later than the end of
2002. It is not known at this time if the government will provide any
compensation to the Company for the loss of the pre-board screening revenue.


15. Lease Commitments

The Company is obligated under various operating lease agreements for office
space, equipment and auto rentals. Rent expense under operating lease
agreements approximated $736,400, $646,700 and $564,900, for the years ended
March 31, 2002, 2001 and 2000, respectively.

The Company leases certain equipment and vehicles under agreements which are
classified as capital leases. Most equipment leases have purchase options at
the end of the original lease term. Cost and related accumulated depreciation
of leased capital assets included in furniture and equipment at March 31,
2002, are $683,122 and $383,651 and at March 31, 2001, are $648,744 and
$298,552, respectively.

The future minimum payments under long-term noncancellable capital and
operating lease agreements are as follows:

                                   Capital             Operating
                                   Leases              Leases

Year ending: March 31, 2003        $142,463            $  593,065
             March 31, 2004          74,874               460,051
             March 31, 2005          39,875               269,626
             March 31, 2006           3,182               187,406
             March 31, 2007              -0-              185,880
             Later years                 -0-              940,118
                                   --------            ----------
                                    260,394            $2,636,146
                                                       ==========
Amounts representing interest       (36,182)
                                   --------
                                   $224,212
                                   ========


F-14

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


16. Stock Option Plan and Warrants

In November, 2000, the Company's Board of Directors and stockholders approved
the adoption of a qualified stock option plan. Under the option plan,
substantially all employees are eligible to receive options to purchase up to
an aggregate of 500,000 shares at an exercise price which cannot be less than
the fair market value of the shares on the date the options are granted. A
previous similar plan allowing for the purchase of up to 107,500 shares
expired in May, 2000. In February, 2001, options to purchase 225,000 shares
of common stock have been issued. These options are exercisable at any time
after February 1, 2004, and before January 31, 2011, at $.75 per share and
are further restricted based on the achievement of certain financial results
of the Company for the years ending March 31, 2002 through 2004.

The Company issued warrants to its former Treasurer to purchase 107,500
shares of its common stock at an exercise price of $5 per share. In July,
1996, the exercise price of these warrants was adjusted to $2.50 and the
expiration date extended to July, 2000, when the warrants expired.

On April 8, 1991, as amended on June 18, 1991, the Board of Directors
approved the issuance to each of the Company's President (now also Chairman
of the Board) and former Treasurer, for $100, a five-year warrant to purchase
175,000 and 60,000 shares of common stock, respectively, at an exercise price
of $3.375 per share, the market value at the time of the grant. The warrants
vested on March 31, 1992. The exercise price was adjusted to $3.25, fair
value on date of adjustment, and the expiration date extended to April, 1998,
during fiscal 1994. The warrant extended to the Chairman of the Board expired
in April, 1998. The exercise price for the warrant extended to the former
Treasurer was adjusted again in July, 1996, to $2.50 per share and the
expiration date extended to July, 2000, when the warrant expired.

In May 1992, the Board of Directors approved the issuance to the Company's
Chairman, former Treasurer and Board member a five year warrant to purchase
125,000, 60,000 and 10,000 shares of common stock, respectively, at an
exercise price of $3.88 per share, the fair market value at the time of the
grant. The exercise price was adjusted to $3.25, the fair value on date of
adjustment, and the expiration date extended to May, 1999, during fiscal
1994. The warrants issued to the Chairman and Board member expired in May,
1999. The exercise price for the warrant extended to the former Treasurer was
adjusted again in July, 1996, to $2.50 per share and the expiration date
extended to July, 2000, when the warrant expired.

The Company entered into a consulting agreement dated November 1, 1993, under
which the Company agreed to issue stock or warrants in exchange for
consulting services. The aggregate value of such stock or warrants to be
granted will not exceed $300,000. The Company fully expensed the consulting
fee by October, 1994. During the fiscal year ended March 31, 1994, the
Company issued warrants for 200,000 shares and in July, 1994 issued
additional warrants for 100,000 shares. The warrants expired in July, 1997,
however, the Company had reserved 150,000 shares of common stock to provide
the consultant with up to $300,000 of compensation. During the year ended
March 31, 1999, $85,979 was paid in cash, reducing the stock to be released
to a value not to exceed $214,021. In December, 1999, the Company entered
into an agreement to pay an additional $60,000 to the consultant as full
settlement of any and all claims of the consultant in connection with this
agreement. Consequently, the 150,000 shares of the Company's common stock
held in escrow were canceled.

On February 24, 1995, the Company issued warrants for 250,000 shares of
common stock to a firm owned by a member of the Company's Board of Directors
and warrants for 50,000 shares of common stock to a lender who provided the
Company's working capital line of credit until November, 2000, respectively,
in connection with the financing for the acquisitions of the security guard
business of United Security Group Inc. The warrants issued to the firm
expired in February, 1998. The warrants issued to the lender were exercisable
at $2.10 per share and expired in November, 2000.

On October 4, 1996, the Company issued warrants for 35,000, 150,000, 10,000
and 10,000 shares of common stock to the Company's then Chief Financial
Officer and three Board members, respectively. The warrant for 35,000 shares
was canceled due to the termination of the former Chief Financial Officer's
employment. The remaining warrants expired in September, 2001.


F-15

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


16. Stock Option Plan and Warrants, continued

On November 25, 1996, warrants to purchase 50,000 shares of common stock were
subscribed to for $500 by the Company's public relations firm. The warrants
expired in November, 2001.

On November 11, 1999, the Company authorized the issuance of warrants to
purchase 150,000 shares of common stock to a former Board member in
recognition of services to the Company, at an exercise price of $1.031 per
share, the fair market value at the time of the grant. The warrants expire in
November, 2004.

In November, 2000, the Company issued warrants to purchase 2,298,092 shares
of common stock to Reliance. The warrants are exercisable at $1.25 per share
at anytime after November 13, 2001, expiring November 13, 2005.

In November, 2000, the Company also issued warrants and incentive stock
options to the Chairman of the Board and current President to purchase
204,485 and 1,012,959 shares of common stock, respectively, exercisable at
$1.25 per share after November 13, 2001, and expiring November 13, 2005. The
warrants are exercisable only after the exercise by Reliance of its warrants
and only to the extent of the Reliance exercise. The options are exercisable
with respect to one-third of the shares covered for each of the years ending
March 31, 2002 through 2004, and are further restricted based on the
achievement of certain financial results of the Company for the years ending
March 31, 2002 through 2004.

In March, 2002, the Company issued warrants for 10,000 shares of common stock
to each of three of the Company's directors at an exercise price of $.82 per
share, the fair market value at the time of the grant. The warrants expire in
February, 2005.

Certain of the option and warrant agreements contain anti-dilution adjustment
clauses.

The following is a summary of activity related to all Company stock option
and warrant arrangements:

<TABLE>

<CAPTION>

                                                    Options                         Warrants

                                            Exercise        Number of        Exercise          Number of
                                            Price           Shares           Price             Shares
<S>                                         <C>             <C>              <C>               <C>
Outstanding at March 31, 1999                2.25-2.50<F1>    160,000         1.87-3.25          560,000
  Issued                                                                      1.03               150,000
  Expired                                    2.25             (52,500)        3.25              (135,000)
                                            -----------     ---------        -----------       ---------

Outstanding at March 31, 2000                2.50             107,500         1.03-2.50          575,000
  Issued                                      .75-1.25      1,237,959         1.25             2,502,577
  Expired                                    2.50            (107,500)        2.10-2.50         (205,000)
                                            -----------     ---------        -----------       ---------

Outstanding at March 31, 2001                 .75-1.25      1,237,959         1.03-2.25        2,872,577
  Issued                                                                       .82                30,000
  Expired                                                                     1.88-2.25         (220,000)
                                            -----------     ---------        -----------       ---------
Outstanding at March 31, 2002               $ .75-$1.25     1,237,959        $ .82-$1.25       2,682,577
                                            ===========     =========        ===========       =========

<FN>

<F1> Adjusted

</FN>

</TABLE>

At March 31, 2002, there were 1,237,959 and 2,682,577 options and warrants
outstanding, respectively, exercisable at prices ranging from $.75 to $1.25,
and 4,195,536 shares reserved for issuance under all stock arrangements.


F-16

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


16. Stock Option Plan and Warrants, continued

Significant option and warrant groups outstanding at March 31, 2002, and the
related weighted average exercise price and life information are as follows:

<TABLE>

<CAPTION>

                                                                       Weighted           Weighted
                             Options/             Options/             Average            Average
Range of                     Warrants             Warrants             Exercise           Remaining
Exercise Price               Outstanding          Exercisable          Price              Life (years)
---------------              -----------          -----------         --------            ------------
<S>                          <C>                  <C>                 <C>                 <C>
$           .75                225,000                 -0-            $   .750            8.84
            .82                 30,000             30,000                 .820            2.92
          1.031                150,000            150,000                1.031            2.62
          1.250              3,515,536                 -0-               1.250            3.62
                             ---------            -------
$  .75 - $1.250              3,920,536            180,000                1.210            5.97
                             =========            =======

</TABLE>

As disclosed in Note 1, the Company continues to follow the provisions of APB
25, "Accounting for Stock Issued to Employees," when determining the value of
stock based compensation. Accordingly, no compensation expense has been
recognized for its stock based compensation. If the Company had used the fair
value method of accounting for stock based compensation, there would have
been no significant effect on the net income or loss of the Company for the
years ended March 31, 2002, 2001 or 2000. The weighted fair value of options
and warrants granted during the years ended March 31, 2002 and 2001, were
$.11, $.03 and $.10 per equivalent share, respectively. For the years ended
March 31, 2002, 2001 and 2000, the fair value was estimated using the
exercise price on the date of the grant and the following assumptions: risk
free interest rate of 2.93%, 4.30% and 5.35%, volatility of 93.27%, 53.76%
and 62.49% and a dividend yield of 0.00% for each year, respectively.


17. Preferred Stock

The Board of Directors has been authorized to issue preferred stock in series
and to fix the number, designation, relative rights, preferences and
limitations of each series of such preferred stock. Of the 1,000,000 shares
authorized for issuance, 12,325 have been designated as Series A Convertible
Preferred Stock ("Series A"). The Series A shareholders are entitled to
receive annual dividends equal to 8% of the liquidation value of their
shares, payable in cash. Upon liquidation or redemption the Series A
shareholders are entitled to $165 per share. Any holder of Series A shares
may at any time convert their shares into common stock of the Company at a
conversion ratio of 100 shares of common stock for each share of Series A
stock.

The Company had suspended payment of preferred dividends as of July 1, 2000,
until it could re-establish sufficient surplus in accordance with applicable
regulations. Total dividends in arrears as of March 31, 2002, were $284,708,
or $.05 per common share. In April, 2002, the Board declared and paid all
dividends in arrears.


18. Income Taxes

Income tax benefit for the years ended March 31 consists of the following:

                               2002              2001           2000
Current:
  Federal                      $        -0-      $      -0-     $      -0-
  State and local                       -0-             -0-            -0-
                               -----------       ---------      ---------
                                        -0-             -0-            -0-
                               -----------       ---------      ---------
Deferred:
  Federal                       (1,020,000)             -0-            -0-
  State and local                 (280,000)             -0-            -0-
                               -----------       ---------      ---------
                                (1,300,000)             -0-            -0-
                               -----------       ---------      ---------
        Income tax benefit     $(1,300,000)      $      -0-     $      -0-
                               ===========       =========      =========


F-17

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


18. Income Taxes, continued

The deferred tax benefit consists of a decrease of a previously established
allowance in connection with certain net operating loss carryovers.

The differences (expressed as a percentage of pretax income) between the
statutory Federal income tax rate and the effective income tax rate as
reflected in the accompanying statements of operations are as follows:

                                      2002           2001          2000

Statutory federal income tax rate       34.0         (34.0)        (34.0)
State and local income taxes,
  net of federal benefit                 9.8          (9.8)         (9.8)
Valuation allowance and reserves      (166.3)         38.4          38.4
Permanent differences                    1.5           5.4           5.4
                                      -------        ------        ------
Effective tax rate                    (121.0)%         0.0%          0.0%
                                      =======        ======        ======

The significant components of deferred tax assets and liabilities as of
March 31, 2002 and 2001, are as follows:

<TABLE>

<CAPTION>

                                                      2002                2001
<S>                                                   <C>                 <C>
Current deferred tax assets:
  Accounts receivable                                 $    99,318         $     98,054
  Accrued expenses                                        132,169              106,140
                                                      -----------         ------------
                                                          231,487              204,194
    Valuation allowance                                  (231,487)            (204,194)
                                                      -----------         ------------
        Net current deferred tax asset                $        -0-        $         -0-
                                                      ===========         ============

Non-current deferred tax assets/(liabilities):
  Equipment                                           $   (73,519)        $    (54,756)
  Intangible assets                                       895,285              897,047
  Self-insurance                                          278,612              314,130
  Net operating loss carryover                          2,021,385            2,490,827
                                                      -----------         ------------
                                                        3,121,763            3,647,248
    Valuation allowance                                (1,821,763)          (3,647,248)
                                                      -----------         ------------
        Net non-current deferred tax asset            $ 1,300,000         $         -0-
                                                      ===========         ============

</TABLE>

The valuation allowance decreased by $1,798,192 during the year ended March
31, 2002, and increased by $160,414, and $53,550, during the years ended
March 31, 2001 and 2000, respectively. Federal and State net operating loss
carry-overs were approximately $4,485,000 and $4,828,000, respectively, at
March 31, 2002. They begin to expire in 2010.


19. Administrative Service Agreements

The Company has entered into agreements with various security guard companies
(administrative service clients) whereby the Company administers the billing,
collection and payroll functions and the administrative service clients
administer the operations of the respective guard contracts. Under these
arrangements, the Company receives title to all the receivables generated and
is obligated to pay the administrative service clients' guards and related
expenses. The transfer of receivables are accounted for as a sale/purchase in
accordance with SFAS No. 125, relating to transfers and servicing of
financial assets. Under some arrangements the Company may for Internal
Revenue reporting, workers compensation, general liability and disability
insurance coverage purposes become the employer of record for all applicable
guard personnel. Where the Company provides insurance resources, such costs
are allocated to the administrative service clients based on payroll. All
contracts contain renewal provisions based on the volume of business
generated by the respective service companies. Although title to the
receivables generated belong to the Company, the rights to service the guard
contracts are retained by the service company.


F-18

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


19. Administrative Service Agreements, continued

The Company records the billings for administrative service clients contracts
in accounts receivable with a corresponding liability, "due to administrative
service clients," net of the Company's administrative fees and payroll and
related expenses paid by the Company, at the time the services are provided
to the administrative service clients' customers. Receivables not collected
are charged back to the administrative service clients generally after 90
days. The administrative fees charged to the administrative service clients,
which are based on either a percentage of guard revenue or gross profit, are
recognized as "administrative service revenue" on the Company's statements of
operations.

The Company may extend operating loans to these administrative service
clients. As of March 31, 2002, the Company had two loan outstanding with
balances of $24,500 and $138,000, respectively, providing for monthly
payments of $1,167 and $3,000 plus interest at 14 % per annum.


20. Fair Value

The fair value of the Company's long-term notes receivable is based on the
current rates offered by the Company for notes of the same remaining
maturities. The fair value of the Company's long-term debt is based on the
borrowing rates currently available to the Company for loans with similar
terms and average maturities. At March 31, 2002 and 2001, the fair value of
long-term notes receivable and long-term debt approximates their carrying
amounts.


21. Related Party Transactions

In connection with providing security guard services to one of its
multi-national clients, the Company has engaged Reliance Security Group plc,
a significant stockholder, as a subcontractor for these services. Included in
cost of sales for the year ended March 31, 2002 and 2001, are $1,143,717 and
$52,510, respectively, charged by Reliance for these services. The contract
terminated in January, 2002 and as of March 31, 2002, there were no amounts
owed under this arrangement. The balance owed to Reliance as of March 31,
2001, of $52,510, as well as advances owed to Reliance in connection with the
cost of providing the Company with financial oversight services of $140,000
are included with current liabilities as of March 31, 2001.


22. Reclassifications

Certain 2001 amounts have been reclassified to conform with the 2002
presentation. These reclassifications had no impact on financial condition or
results of operations.


F-19

<PAGE>

Command Security Corporation
Notes to Financial Statements, Continued
March 31, 2002, 2001 and 2000


23. Quarterly Results (unaudited)

Summary data relating to the results of operations for each quarter for the
years ended March 31, 2002 and 2001, follows:

<TABLE>

<CAPTION>

                                                              Three Months Ended

                                     June 30            Sept. 30           Dec. 31            March 31
                                     -----------        -----------        -----------        -----------
<S>                                  <C>                <C>                <C>                <C>
Fiscal year 2002
  Guard service revenue              $18,498,741        $18,775,798        $21,815,881        $24,794,783
  Gross profit                         2,562,892          3,089,807          3,387,512          4,488,592
  Net income/(loss)                     (394,220)           (34,411)           457,994          2,346,397
  Net income/(loss
    per common share (basic)                (.06)              (.01)               .07                .37
    per common share (diluted)               n/a                n/a                .06                .31

Fiscal year 2001
  Guard service revenue              $16,117,665        $18,322,148        $18,836,792        $18,043,835
  Gross profit                         2,681,553          2,932,147          3,099,764          2,817,646
  Net income/(loss)                       70,107           (421,912)           (75,261)           (11,820)
  Net income/(loss)
    per common share (basic)                .005               (.07)              (.02)             (.002)
    per common share (diluted)               n/a                n/a                n/a                n/a

</TABLE>

The fourth quarter 2002 income includes a $1,300,000 decrease in the deferred
income tax valuation allowance. The second quarter 2001 loss includes
stockholder derivative suit related expenses of $373,746.


F-20

<PAGE>

<TABLE>
                                               COMMAND SECURITY CORPORATION
                                       SCHEDULE OF VALUATION AND QUALIFYING ACCOUNT

<CAPTION>
                                                             Against
                                                             Amounts                                              Uncollectible
                                     Balance at  Charged to  Due to           Charged                 Accounts    Balance
                                     Beginning   Costs and   Administrative   to Other                Written     at End of
                                     of Period   Expenses    Service Clients  Accounts    Recoveries  Off         Period
<S>                                  <C>         <C>         <C>              <C>         <C>         <C>         <C>
Year ended March 31, 2002:
Deducted from asset accounts:
  Allowance for doubtful accounts
    receivable - current maturities  $  595,785  $581,679    $ 11,246         $ 11,193    $           $  816,793  $  383,110
  Allowance for doubtful notes
    receivable - current maturities       2,246                                                            2,246          -0-
  Allowance for other doubtful
    receivables - current maturities         -0-                                                                          -0-
  Allowance for doubtful notes and
    long-term receivables, net of
    current maturities                       -0-                                                                          -0-

Year ended March 31, 2001:
Deducted from asset accounts:
  Allowance for doubtful accounts
    receivable - current maturities   1,288,246   417,656      32,840            5,407                 1,148,364     595,785
  Allowance for doubtful notes
    receivable - current maturities       8,717                                             6,471                      2,246
  Allowance for other doubtful
    receivables - current maturities         -0-  113,119                                                113,119          -0-
  Allowance for doubtful notes and
    long-term receivables, net of
    current maturities                       -0-                                                                          -0-

Year ended March 31, 2000:
Deducted from asset accounts:
  Allowance for doubtful accounts
    receivable - current maturities     701,325   969,937                      106,972<F1> 71,970        418,018   1,288,246
  Allowance for doubtful notes
    receivable - current maturities     267,790                                 34,408     34,608        258,873       8,717
  Allowance for other doubtful
    receivables - current maturities    987,192                                                          987,192          -0-
  Allowance for doubtful notes and
    long-term receivables, net of
    current maturities                       -0-                                                                          -0-

<FN>

<F1> Represents sales tax refund claims ($85,823) and expense accrual reduction ($21,149).

</FN>

</TABLE>

See auditor's report


F-21