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, 2000

|_|   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

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             (Exact name of registrant as specified in its charter)

           New York                                        14-1626307

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(State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                       Identification No.)

Lexington Park, Lagrangeville, New York                      12540

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(Address of Principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code:  (914) 454-3703

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

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

     Common Stock

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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 27, 2000, the aggregate market value of the voting stock held
by non-affiliates of the registrant, based on the last sales price of $0.72
on that date, was approximately $3,274,699.

     As of June 16, 2000, the registrant had issued and outstanding
6,287,343 shares of common stock.

<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 eighteen operating offices in New York,
Massachusetts, New Jersey, Illinois, California, Pennsylvania, Connecticut,
Florida and Georgia to commercial, financial, industrial, aviation and
governmental clients in the United States. Security services include
providing uniformed guards for access control, theft prevention,
surveillance, vehicular and foot patrol and crowd control. The Company
employs approximately 73 employees indirectly attributable to guard services
including supervisors and dispatchers, another approximately 87
administrative employees, including the executive staff, and approximately
2,640 hourly guards. The Company also provides administrative services for
other security guard companies (formerly referred to as "service company
clients") and back-office suppport to police departments for off-duty police
services. Administrative service agreements are contracts with other security
guard companies which provide security guard services to their clients, which
include retail stores, residential and commercial real estate buildings, and
government agencies. Police back-office support and the administrative
services provided by the Company include scheduling, billing, collection
and/or payroll.

     Management believes there is heightened attention to security matters
due to 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 provide an opportunity for increased market
participation and growth.

     The Company provides its security services to a wide range of industries
which the Company has categorized into three groups. The first includes
aviation and airport related clients to which the Company provides boarding
security and baggage handling services in accordance with Air Transportation
Association and Federal Aviation Administration standards. The second group
includes industrial and commercial clients such as retail chains,
construction sites and health care institutions. Included in this second
group is the Company's national network of independent security guard
companies which service Company clients with ATM sites throughout the United
States. The third group includes governmental and quasi-governmental clients
such as cities and statewide institutions.

     From 1983, when William C. Vassell, the Company's Chairman of the Board
acquired control, to June 1990, the Company expanded its business through
internal sales efforts and by acquisitions of the customer lists of smaller
security firms in markets the Company was already serving.

     In 1990, the Company began offering administrative service agreements to
other security guard companies. Pursuant to written administrative service
agreements, the Company provides computerized scheduling and information
system and programs, as well as accounts receivable financing and insurance
resources. 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. The Company charges a fee equal to a percentage of the
administrative service client's revenue or gross profits. Administrative
service clients are classified into two categories: the employer of record
and non-employer of record. The security guards of an employer of record
client are employed by the Company and receive W2 forms at year end with the

<PAGE>

Company's EIN number. This is similar to an employee leasing arrangement.
GAAP principals are similar for both employer of record and non-employer of
record categories: 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. Administrative service revenue is shown as a
separate revenue line item in the Company's Statement of Operations.

     In 1998, the Company began developing and implementing a national
network of independent security guard companies to service clients with ATM
sites throughout the United States. The Company offers these services in 47
states, and Canada through approximately 291 affiliates and believes this is
a growing niche business.

Operations

     As a licensed watchguard and patrol agency, the Company 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 plainclothed,
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 also
provides private investigation services.

     The Company 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.

     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.

     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
(eg. 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 $1.0 million per occurrence and umbrella
liability insurance in the amount of $50 million per occurrence and $50
million in the aggregate, which it believes is suitable and at a level
customary for the industry for a business of its size.

     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 needed changes to
existing security programs or services. Surveys typically include an

<PAGE>

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 both sales and service. The Company believes that in most
situations the combination of both sales and service responsibilities in a
single individual results in better supervision and quality control and
greater responsiveness to customer concerns.

     The Company generally renders its security 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, equipment, instruction, supervision, fringe benefits, bonding 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.

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
eliability. Medical examinations and substance abuse testing may also be

<PAGE>

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 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

     British Air accounted for approximately $6,027,000 or 10% of the
Company's gross revenue in the fiscal year ended March 31, 2000. During
fiscal 1999 and 1998 there was no individual client accounting for 10% or
more of revenue.

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, Inc., The Wackenhut Corporation, Burns
International Security Services, Inc. and Wells Fargo Guard Services, 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 or investigators 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.

<PAGE>

     The Federal Aviation Administration has recently proposed new rules for
certification of screening companies including the Company's Aviation
Safeguard Division. The proposed rule has two objectives: procedures for
certification of screening companies used by airlines and airport authorities
as well as other requirements to enhance airport screening such as training
and testing requirements. Implementing these changes will increase the
Company's expenditures and require a higher technical staffing level. The
Company is expected to pass these costs to the air carriers through pricing
amendments.

Employees

     The Company currently employs approximately 2,640 hourly workers
performing guard services and approximately 73 other employees indirectly
attributable to guard services including supervisors and dispatchers. The
Company also employs approximately 87 executive, sales, administrative or
clerical staff, most of whom are salaried.

     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 58% 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 42% 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 also are 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.

                               ITEM 2. PROPERTIES

     As of March 31, 2000, the Company owned and used in connection with its
business approximately 76 vehicles.

<PAGE>

     As of March 31, 2000, 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
$102,300 under a five year lease expiring September 30, 2003. The Company
also occupies the following offices:

                                                       Square       Base Annual
Location                               When Opened     Footage      Rent
--------                               -----------     -------      -----------

Los Angeles International               8/15/96          647        $17,236
  Airport
380 World Way, Box N-28
Los Angeles, CA

5801 E. Slauson Avenue                  11/9/94        1,689        $22,295
Suite G-160
Los Angeles, CA

1651 E. Fourth Street                   8/10/99          762        $11,724
Suite 144
Santa Ana, CA

7841 Balboa Ave.                         2/8/00          395        $ 6,000
San Diego, CA

8939 S. Sepulveda Blvd.                  3/1/00        1,422        $22,188
Suite #201
Los Angeles, CA

1450 Barnum Avenue                       2/1/98        2,300        $19,558
Suite 105
Bridgeport, CT

15 Lewis Street, Suite 207
Hartford, CT                             5/1/92        1,075        $13,320

2777 Summer Street                      3/13/95         1515        $30,300
Stamford, CT

8181 North West 36th St.                 6/1/98          300        $11,700
Unit 21A
Miami, FL

800 Virginia Avenue                      8/1/97          400        $ 7,881
Suite 53
Fort Pierce, FL

3500 North  State Road                   5/1/97          300        $ 7,447
#200D
Lauderdale Lakes, FL

10105 West Sample Rd.                    6/1/99          400        $ 4,200
Coral Springs, FL

Miami Int'l. Airport                     7/1/98          130        $ 9,210
Miami, FL

<PAGE>

954 South Main Street                    5/1/98          900        $ 9,375
Suite 120
Conyers, GA

10 West 35th Street                      3/1/99        1,059        $17,791
Suite 11F3-4
Chicago, IL

Cummings Park                           3/15/99          198        $ 3,663
S-224
Woburn, MA

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                    2/1/93        3,400        $60,300
11th Floor
New York, NY

300 Hamilton Avenue
Suite 300
White Plains, NY                        8/15/96        1,538        $22,301

505 Main Street
Suite #2
Williamsville, NY                        5/1/93          680        $ 5,700

JFK International Airport                4/1/97        1,700        $67,200
175-01 Rockaway Boulevard
Jamaica, NY

1237 Central Avenue                    10/19/93          400        $ 4,800
Suite 201
Albany, NY

2144 Doubleday Avenue                    4/1/93          800        $12,840
Ballston Spa, NY

52 Oswego Rd.                            6/1/98          120        $ 1,500
Baldwinsville, NY

3366 Parke Avenue                        3/1/00        1,000        $12,000
Office #210
Wantagh, NY

55 Park Avenue                           5/1/98          300        $ 7,200
Apartment 1NW
New York, NY

2222 Morris Avenue                       2/1/98        2,250        $23,100
Union, NJ

124 Chestnut Street, Suite 5           11/25/96          500        $ 8,460
Philadelphia, PA

RR4, Box 8269                            2/1/98                     $ 4,800
Milford, PA

<PAGE>

613 West Hartford St.                    6/1/00         1200        $14,400
2nd Floor
Milford, PA

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

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

     On or about December 4, 1997, an outside shareholder and four of the
Company's directors (Sands, P. Kikis, Saunders, and T. Kikis) commenced an
action in the Supreme Court of the State of New York, County of New York
(Index No. 606166/97) against the other four directors (Vassell, Robinett,
Nekos and Miller), the Company's outside corporate and securities counsel
and the Company itself in a lawsuit characterized as a derivative action. The
claims against the Company's outside corporate and securities counsel have
since been dismissed. The complaint alleges that one or more of the
defendant-directors engaged in improper activities, including ultra-vires
acts, breach of fiduciary duty, fraud against the Company, constructive fraud
and waste of corporate assets. These charges are based upon claims that the
defendant-directors concealed information from the plaintiff-directors
regarding the Company's earnings, lacked power to enter into an employment
agreement on behalf of the Company with Mr. Robinett, and entered into
administrative service agreements with financially unstable companies without
performing due diligence. The plaintiffs further allege that the Company has
failed to appoint a replacement to the office of president and that the
directors have entered into a shareholder agreement which is violative of
public policy. Plaintiffs seek the award of money damages in an amount which
is "not less than" $11 million from the individual defendants, a declaratory
judgment that the shareholder agreement is void, an order for an accounting,
certain other injunctive relief and attorneys' fees and disbursements.

     The Company has interposed an answer denying the allegations contained
in the complaint. The individual defendants have stated that they believe the
allegations are completely without merit and intend to vigorously defend
against each and every claim. The Company's Certificate of Incorporation and
the Business Corporation Law of New York provide for indemnification of
officers and directors with respect to damages and legal fees incurred in
connection with lawsuits against them arising by reason of serving the
Company. Due to the fact that certain members of the board have chosen to
participate as plaintiffs in this lawsuit, the Company's insurance carrier
has reserved its rights with respect to the defense and indemnity of Command
based on a claimed exclusion from coverage. To date, the Company has not been
notified of declination of coverage. The Company may have a claim against its
carrier based on the carrier's failure to timely disclaim coverage. The
defendant-directors intend to seek indemnification, and have received
advancements of legal fees incurred in connection with their defense, from

<PAGE>

the Company. Through March 31, 2000, the Company has expended and charged
earnings with approximately $204,000 in legal fees (none during the year
ended March 31, 2000) in defense of this matter on its own behalf as well as
on behalf of the defendant officers and directors. In addition, the Company
has expended $100,000 for legal fees on behalf of the plaintiff directors in
December, 1998, and in March, 1999, accrued a $92,000 contingency for legal
fees incurred by one of the defendants, where Management has determined that
indemnification by the Company is probable. On or about March 25, 1998, the
plaintiffs filed a motion for the appointment of a temporary receiver. On
June 5, 1998, the Court ordered the appointment of a temporary receiver, but
prior to the order taking effect, the parties agreed to a stipulation
pursuant to which Franklyn H. Snitow, Esq., was appointed acting President
and Chief Executive Officer and acting ninth Board member during the pendency
of the defendants' appeal to the Appellate Division of the decision to
appoint a receiver. Based on the stipulation, the defendants' request to the
Appellate Division for a stay pending the appeal of the order appointing the
receiver was granted. At a duly convened meeting of the board of directors on
June 22, 1998, the board voted unanimously to elect Mr. Snitow as an acting
director and to appoint him acting president and chief executive officer
pending the outcome of the appeal. On January 12, 1999, the Appellate
Division dismissed the appeal and modified the lower court's order to
continue Mr. Snitow's authority to discharge his responsibilities as Acting
President, Chief Executive Officer and Director pending the underlying
litigation. Mr. Snitow is a partner in the law firm of Snitow & Cunningham,
LLP, located in New York, New York.

     The Company is unable to reasonably estimate the potential continued
impact on the Company's financial condition and results of operations from
this lawsuit. The parties are currently in agreement that future proceedings
will be held in abeyance while management is exploring alternate ways to
settle the litigation.

     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. At this time the Company is unable to estimate the possible loss,
if any, that may be incurred as a result of this action. The ultimate outcome
may or may not have a material impact on the Company's financial position or
results of operations.

     The Company has been named as a defendant in several other employment
related claims, including claims of sexual harassment by current and former
employees, some of which are currently under investigation by 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.

     In August, 1997, a complaint was filed in Los Angeles County Superior
Court by six former employees alleging discrimination, wrongful termination,
breach of employment contract and intentional infliction of emotional
distress. The complaint alleges that plaintiffs have suffered damages in
excess of $1 million. After filing the complaint, the plaintiffs, through
counsel, agreed to submit the dispute to binding arbitration and a request
for dismissal, without prejudice, was filed with the Court. At this time the
Company is unable to estimate the possible loss, if any, that may be incurred
as a result of such arbitration. The ultimate outcome of such arbitration may

<PAGE>

or may not have a material impact on the Company's financial position or
results of operations.

     In August of 1998, the Company was informed that the US Department of
Transportation, the Federal Aviation Authority and the United States
Attorneys' Office for the Southern District of Florida were conducting a
criminal investigation of certain activities at the Miami office of its
Aviation Safeguards Division. The investigation concerned the official
certifications of employee background investigations made by the Company's
Aviation Safeguards division through its branch manager. Indications are that
the background investigations were not properly conducted and hence the
certifications were false and in violation of United States Code and
regulations. The Company has cooperated fully with the investigation and is
taking steps to ensure future compliance in all areas covered by the
investigation. The Company's local counsel has completed negotiations with
the United States Attorney's office whereby the proposed pleas and settlement
were accepted by the United States Attorney's office and approved by the
Court. As a result of this settlement, in March, 2000, the Company paid
$35,400 and has accrued an additional $75,000, payable in three equal
installments during the year ending March 31, 2001.

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

     The Company held its Annual Meeting of Shareholders on March 14, 2000.
Five 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 five directors.

Name                                For                       Withheld

Franklyn H. Snitow                  4,084,100                 172,346
William C. Vassell                  4,084,400                 172,046
Gordon Robinett                     4,012,921                 243,525
Gregory Miller                      4,012,621                 243,825
Peter J. Nekos                      4,084,800                 171,646

     The following Directors continued in their term of office until the
Company's next Annual Meeting of Shareholders: Peter T. Kikis, Steven B.
Sands, Lloyd H. Saunders, III, and Thomas P. Kikis.

     The only other item of business of the Company's Annual Meeting of
Shareholders was to ratify the selection of D'Arcangelo & Co., LLP to serve
as the Company's auditors for the fiscal year ending March 31, 2000. The
proposal was passed by the following vote: For - 4,226,949, Against - 11,470,
Abstain - 19,027.

                                   PART II

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

     Since July 10, 1995 the Company's common stock has been traded on the
over-the-counter NASDAQ SmallCap market under the symbol "CMMD." For several
years prior to that time the Company's common stock was traded on the NASDAQ
National Market.

     The following table sets forth, for the calendar periods indicated, the

<PAGE>

high and low sales price for the Common Stock as reported by the NASDAQ Stock
Market, Inc. for each full quarterly period within the two most recent fiscal
years.

<TABLE>
<CAPTION>

             Period<F1>                                       Last Sales Price
             ---------                                        ------------------------

             <S>                                              <C>                <C>
             1999                                             High               Low
             --------------                                   -----              -----
             First Quarter                                    1.312              0.812
             Second Quarter                                   0.968              0.625
             Third Quarter                                    1.281              0.625
             Fourth Quarter                                   1.812              0.937

             2000                                             High               Low
             --------------                                   -----              -----
             First Quarter                                    1.437              0.937
             Second Quarter                                   1.093              0.687
             Third Quarter                                    1.125              0.625
             Fourth Quarter                                   1.375              0.718

<FN>
<F1> Reflects fiscal years ended March 31 of the year indicated.

</FN>

</TABLE>

     The above quotations do not include retail mark-ups, mark-downs 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 16, 2000 there were approximately 209 holders of record of the
Company's common stock. Management believes there are approximately 1,369
beneficial holders of the Company's common stock.

     The last sales price of the Company's common stock on June 27, 2000,
was $0.72.

     The Company has never paid cash dividends on its common stock. Payment
of dividends, 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.

         On May 31, 2000, the Company was informed that its common stock was
not in compliance with the minimum bid price requirements for continued
listing on The Nasdaq Small Cap Market. If the Company is unable to
demonstrate compliance with the minimum bid price requirements on or before
August 29, 2000, its common stock will be delisted at the opening of business
on August 31, 2000. The Company's management fully recognizes the importance
to its shareholders of continued listing on The Nasdaq Small Cap Market. The
Company intends to take actions to comply with the listing requirements and
thereby retain its listing on The Nasdaq Small Cap Market.

<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, 2000, 1999,
1998, 1997, and 1996, 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 Data
                                                                               Years Ended March 31,

                                                        2000           1999            1998            1997           1996

<S>                                                     <C>            <C>             <C>             <C>            <C>
Revenue (excluding administrative service revenue)      $59,245,927    $57,642,041     $51,796,882     $49,237,418    $54,995,444
Gross profit                                            $10,002,866    $ 9,716,418     $ 7,340,096     $ 8,443,578    $ 8,496,499
Administrative service revenue                          $   554,196    $   913,498     $ 1,450,592     $ 1,471,313    $ 1,519,803
Operating profit/(loss)                                 $   330,705    $   877,434     $(2,915,001)    $ 1,267,805    $ 1,250,713
Net income/(loss)                                       $  (309,710)   $   (15,399)    $(4,013,890)    $   450,030    $   511,650
Income/(loss) per common share                          $      (.07)   $      (.02)    $      (.62)    $       .05    $       .06
Weighted average number of common shares outstanding      6,535,581      6,658,143       6,689,352       6,955,548      6,663,986

                                                                          Balance Sheet Data as of March 31,

                                                        2000           1999            1998            1997           1996

Working capital/(deficiency)                            $   749,710    $   200,236     $(1,122,869)    $ 1,413,212    $   218,968
Total assets                                            $15,347,971    $16,187,980     $17,697,259     $23,188,576    $22,384,414
Short-term debt<F1>                                     $ 7,716,870    $ 7,557,957     $ 7,994,445     $ 8,817,997    $ 8,506,911
Long-term debt<F2>                                      $   587,637    $   471,701     $   531,323     $ 1,284,423    $ 1,194,505
Redeemable convertible preferred stock                  $        -0-   $        -0-    $        -0-    $ 1,743,555    $ 1,614,525
Stockholders' equity                                    $ 2,191,291    $ 3,119,075     $ 3,134,474     $ 5,731,180    $ 5,189,226

<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, 8 and 14 of "Notes to 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

Management's Discussion and Analysis should be read in conjunction with the
Financial Statements and Notes to Financial Statements.

The following can be interpreted as including forward looking statements
under the Private Securities Litigation Reform Act of 1995. Such statements
are typically identified by the words "intends", "plans", "efforts",
"anticipates", "believes", "expects", or words of similar import. Various
important factors that could cause actual results to differ materially from
those expressed in the forward looking statements are identified below and
may vary significantly based on a number of factors including, but not
limited to, availability of labor, marketing success, competitive conditions
and the change in economic conditions of the various markets the Company
serves. Actual future results may differ materially from those suggested in
the following statements.

For the fiscal year ended March 31,2000, the Company's operations resulted in
a net loss of $309,710 after the loss of $738,117 in connection with Tower
Air, Inc. Chapter 11 bankruptcy filing compared to a loss of $15,399 for the
fiscal year ended March 31, 1999. In addition, as of March 31, 2000, the
Company had positive working capital of $749,710 compared to positive working
capital of $200,236 as of March 31, 1999.

On November 30, 1998, the Company announced that it was engaging in
discussions concerning the possible sale of the Company. Senior management
representatives continued meeting with interested parties through August of
1999. These discussions did not lead to any agreements with respect to a sale
of the Company.

Results of Operations
Fiscal Year ended March 31, 2000 Compared with March 31, 1999

During the fiscal year ended March 31, 2000, revenue increased by $1,603,886
to $59,245,927 from $57,642,041 for the fiscal year ended March 31, 1999. The
major components of this increase are: approximately $4,830,000 from
additional accounts within the commercial airline industry; $580,000 of
additional non-recurring revenue consisting of approximately $790,000 in
fiscal 2000 due to the liquidation of a long haul trucking concern while
fiscal 1999 had $210,000 non-recurring revenue due to the Goodwill Games; and
approximately $764,000 increase in revenue from the servicing of new ATM
sites through the network of independent security guard companies. The above
increases were partially offset by approximately $4,570,000 of contract
cancellations and terminations net of new contract starts from general
commercial accounts especially in New York City, Long Island and California
representing 73% of lost revenue. Management believes that the net increase
is not necessarily indicative of a trend and, due to the competitive nature
of the business, there can be no assurance that future net increases can be
obtained at acceptable margins to offset lost accounts.


<PAGE>

Gross profit increased by $286,448 to $10,002,866 or 16.88% of revenue for
the fiscal year ended March 31, 2000, compared to $9,716,418 or 16.86% of
revenue for the fiscal year ended March 31, 1999. Gross profit increased by
approximately $433,748 as a result of revenue growth mentioned above.
However, this increase is offset by an increase in cost of sales of $147,300,
the major components of which consist of: accruals regarding disputed Company
charges with an administrative service client of $310,000 (see Note 13 to the
Financial Statements), an increase in uniform expense of $161,600 partially
due to new start-ups, car depreciation and expenses of $148,000 due to
increase in number of vehicles servicing customers and inflationary fuel
prices, increase in worker's compensation estimated losses of $119,300,
insurance cost increase of $101,100 and various losses incurred at client
premises of $67,000 offset by $546,500 decrease in labor costs due to
termination of lower margin accounts and new and temporary business at
improved margins, $125,000 reduction in general liability self-insurance
reserves provisions, $62,600 decrease in union benefit costs due to
recognition withdrawal by a service union and $25,600 decrease in payroll
related taxes due to more favorable unemployment insurance rates and increase
in usage of subcontractors.

The Company insures against general liability claims and lawsuits through a
general liability insurance policy with a third-party insurance carrier. The
policy has a limit of $1,000,000 per occurrence and an additional limit of
$10,000,000 in the aggregate. The Company retains the risk for the first
$50,000 for each occurrence. The Company has an excess general liability
insurance policy covering an additional $50,000,000 in the aggregate
($30,000,000 prior to October 1, 1999). The general liability self-insurance
reserve is based on existing claims, actuarial computations and the timing of
reported claims that are all factored to estimate losses incurred but not yet
reported to the Company. At this time, it is not known if similar decreases
will continue in future periods.

The Company has a worker's compensation insurance policy where the premium is
based on incurred losses as determined at the end of coverage period 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. The insurance premium portion is insurance coverage for
Company annual losses in excess of $1,875,000 for both policy years October
1, 1998 through September 30, 1999 and October 1, 1999 through September 30,
2000, plus losses exceeding the $500,000 limit for one occurrence.

Management expects margins to stabilize at between 16.5% and 18% of revenue
as long as the economy remains strong. Should a recession develop, margins
will trend lower due to, among other things, increased competition for
accounts and potentially higher employment costs.

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


<PAGE>

responsible for worker's compensation and general liability claims for
damages which 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 caption "Administrative Service
Revenue" represents the income earned on the Administrative Agreements as
well as income earned on back-office support to police departments for
off-duty police services. Administrative Service revenue decreased by
$359,302 to $554,196 for the fiscal year ended March 31, 2000, compared to
$913,498 for the fiscal year ended March 31, 1999. The decrease is primarily
due to the termination of two administrative service agreements during the
quarter ended June 30, 1999 and the renegotiation of one contract in August,
1998 from an "employer of record" administrative service contract to a "non
employer of record" contract expiring in February, 2001 at a lower service
rate ($282,581 in fiscal 2000 and $272,580 in fiscal 1999). By mutual
consent, this contract was terminated in May, 2000 as part of the final
settlement regarding disputed Company charges (see Note 13 to Financial
Statements) and consequently administrative service revenue in fiscal 2001
will decrease by approximately $260,000. Although there are potential new
administrative service clients, the Company did not sign any new
administrative service agreements in this fiscal year. The Company currently
services one administrative service client. Additionally, the Company
services one police department in connection with off-duty police support.

General and administrative expenses decreased by $190,003 to $8,187,675 in
the fiscal year ended March 31, 2000, from $8,377,678 in the fiscal year
ended March 31, 1999. The major area of reduction is professional fees
($644,300) primarily due to legal fees expended in fiscal 1999 in connection
with the derivative action disclosed in footnote 13 to the Financial
Statements and "Legal Proceedings", above, as well as legal and
compliance-related consulting fees incurred in connection with the Miami
airport employee background verification matter also disclosed in footnote 13
to the Financial Statements. The reduction was primarily offset by increases
in office and administrative salaries of $268,900 due to expansion in Florida
and corporate administration after the reduction of $154,000 for a stock
compensation settlement related credit, recruitment advertising of $80,600
due to a tightened labor market and increase in new business, $23,000
increase in health insurance costs due to the termination of partially
self-insured health insurance program and other costs of approximately
$83,000.

Amortization of intangibles decreased by $104,239 to $1,176,448 for the
fiscal year ended March 31, 2000 from $1,280,687 for the fiscal year ended
March 31, 1999. This decrease is primarily due to intangible assets from the
United Securities Group Inc. and Madison Detective Services, Inc.
acquisitions being fully amortized. Amortization charges are expected to be
significantly lower in fiscal 2001 and thereafter as additional purchased
customer lists become fully amortized.

The provisions for bad debts increased by $602,021 to $969,937 for the fiscal
year ended March 31, 2000, from $367,916 for the fiscal year ended March 31,
1999. The Chapter 11 bankruptcy filing of Tower Air, Inc., the Company's
second largest customer, on February 29, 2000, resulted in an increase of
$738,117 in the provision for bad debts. This provision represents the
Company's total exposure in connection with Tower Air, Inc. and the total
loss amount is deemed unrecoverable.

<PAGE>

Excluding the loss on Tower Air, bad debt expense has decreased $136,100 due
to improved collection procedures reducing the occurrence of additional past
due receivables. The provision for bad debts is management's estimate of
accounts that may be uncollectible based on the results of its continuous
monitoring of accounts outstanding in excess of 60 days. It is not known if
bad debts will decrease in future periods.

Bad debt recoveries decreased by $209,467 to $106,578 for the fiscal year
ended March 31, 2000 from $316,045 for the fiscal year ended March 31, 1999.
This decrease is principally due to a $250,000 unusual bad debt recovery in
fiscal 1999 from a former administrative service client in Texas.

The Company has settled various labor claims in fiscal 1999 for lower amounts
than the $174,000 loss contingencies accrued in fiscal 1998. No similar labor
claims requiring loss accruals were presented to the Company in both fiscal
1999 and fiscal 2000.

The Company recorded a loss on the value of intangible assets of $58,646 for
the fiscal year ended March 31, 1999 due to management's re-evaluation of the
business retained in New Jersey from the Pro-Tech Security Services, Inc.
acquisition.  There was no similar loss in fiscal 2000.

Interest income increased by $21,317 to $172,533 for the fiscal year ended
March 31, 2000 compared to $151,216 for the fiscal year ended March 31, 1999.
This increase resulted from the collection of interest from a non-employer of
record administrative service client that prior to August 1998 was contracted
by the Company as an employer of record administrative service client where
interest fee structure is excluded from the contract. Interest income in
fiscal 2001 is expected to decrease by approximately $78,000 as a result of
the termination of the above administrative service client in May, 2000 (see
note 13 of Financial Statement).

Interest expense decreased by $143,358 to $848,860 for the fiscal year ended
March 31, 2000 compared to $992,218 for the fiscal year ended March 31, 1999.
This decrease is due primarily to reductions in current maturity of long-term
debt with final payment of the Deltec loan arrangement in March 31,1999, and
reduced usage of the revolving loan arrangement with CIT Group/Business
Credit, Inc. while the prime rate increased 125 basis points from 7.75% on
April 1, 1999 to 9.00% at the end of the fiscal 2000. It is not known if
interest expense will continue to decrease in future periods in light of
potential business growth and continued upward pressure by the Federal
Reserve Board on interest rates.

Gain on equipment dispositions represents proceeds of older vehicles sold or
retired from service in excess of book value. Other income of $35,000 for the
fiscal year ended March 31, 2000 represents an administrative service client
termination fee recognized by the Company for terminating an employer of
record agreement prior to its October 2000 expiration. Such termination fees
are not expected to recur in future periods.

Management expects the Company to be profitable during the immediate fiscal
year ending March 31, 2001 in part due to reduced amortization

<PAGE>

charges (see footnote 4 to the Company's Financial Statements) and
improvements in management and procedural controls. The Company's performance
will be dependent on its ability to continue to reduce corporate overhead
costs, reduce customer collection risk, develop new higher margin product
lines and to obtain profitability for under-performing branches through the
implementation of an internal regional sale force. Management regularly
evaluates the feasibility of consolidating and/or selling existing branch
offices, with emphasis on those offices generating losses prior to the
allocation of corporate overhead.

Fiscal Year ended March 31, 1999 Compared with March 31, 1998

o    For the fiscal year ended March 31, 1999, the Company's operations
     resulted in a net loss of $15,399 after charges for amortization of
     intangibles of $1,280,687 and prior to preferred stock dividends,
     compared to a loss of $4,013,890 for the fiscal year ended March 31,
     1998. In addition, as of March 31, 1999, the Company had positive
     working capital of $200,236 and cash of $122,470, compared to a working
     capital deficit of $1,122,869 and cash overdraft of $449,895 as of March
     31, 1998. As a result, the Company's public accounting firm has removed
     the "going concern" modification which was included in the prior year's
     audit report. The improved operating results were due to a combination
     of (i) increased sales, improved operating expense controls, reduced bad
     debt expense and recovery of previously reserved receivables in fiscal
     1999 and (ii) charges in fiscal 1998 in connection with the Chapter 7
     bankruptcy filing of GFM Bayview (a former administrative service
     client), charges for impairment of long-lived assets in California and
     Illinois, high labor related claims and an increase in the valuation
     allowance for deferred tax assets. These items are more fully described
     below.

During the fiscal year ended March 31, 1999, revenue increased by $5,845,159
to $57,642,041 from $51,796,882 for the fiscal year ended March 31, 1998. The
major components of this increase were: approximately $2,435,000 increase
primarily due to the additional sales impact in fiscal 1999 for accounts
acquired as a result of four acquisitions completed within different periods
in fiscal 1998; approximately $3,200,000 increase due to new security guard
contract starts net of contract cancellations; and approximately $210,000 of
non-recurring revenue due to the Goodwill Games.

Gross profit increased by $2,376,322 to $9,716,418 or 16.9% of revenue for
the fiscal year ended March 31, 1999, compared to $7,340,096 or 14.2% of
revenue for the fiscal year ended March 31, 1998. The gross profit increase
resulted from reduction in the self-insurance reserve for general liability
claims of $392,000, reduction in unemployment costs of $378,000, uniform
costs of $277,000, workers' compensation losses of $100,000, auto expense of
$99,000, indirect payroll costs of $93,000, security supplies and other costs
of $128,000, and an approximately $828,000 increase attributed to sales
growth. The Company insures against general liability claims and lawsuits
through a general

<PAGE>

liability insurance policy with a third-party insurance
carrier. The policy had a limit of $1,000,000 per occurrence while the
Company retained the risk for the first $50,000 for each occurrence and an
additional limit of $10,000,000 in the aggregate. The Company had an excess
general liability insurance policy covering an additional $30,000,000 in the
aggregate. The general liability self-insurance reserve was based on existing
claims, actuarial computations and the timing of reported claims which are
all factored to estimate losses incurred but not yet reported to the Company.

Administrative Service revenue decreased by $537,094 to $913,498 for the
fiscal year ended March 31, 1999, compared to $1,450,592 for the fiscal year
ended March 31, 1998. The decrease was due to the termination of the GFM
Bayview administrative service agreement (GFM filed Chapter 7 bankruptcy on
August 28, 1997 ($89,464)), the termination of three other administrative
service contracts ($175,050) and the renegotiation of a contract for a large
"employer of record" administrative service agreement client effective
August, 1998, as a "non employer of record" contract at a lower service
charge ($272,580). The Company serviced four administrative service clients
during fiscal 1999 and did not sign any new administrative service
agreements. No contracts were scheduled to expire during fiscal 2000,
however, one contract with annualized administrative service revenue of
$165,000 terminated as the result of the sale of the business of this
administrative service client.

General and administrative expenses increased by $628,952 to $8,377,678 in
the fiscal year ended March 31, 1999, from $7,748,726 in the fiscal year
ended March 31, 1998. The major areas of increase were administrative
salaries ($470,000) and professional fees ($337,000); offset by a reduction
in health insurance ($144,000) due to unusually high claims in fiscal year
ended March 31, 1998. Office and administrative salaries increases are due to
additional staffing in the Company's corporate and branch offices as a result
of adding branches in Georgia, Florida and Pennsylvania, as well as general
merit and cost of living increases. The increase in professional fees was
primarily due to legal fees expended in connection with the derivative action
disclosed in footnote 13 to the financial statements and "Legal Proceedings",
above, as well as legal and compliance-related consulting fees incurred in
connection with the Miami airport employee background verification matter
also disclosed in footnote 13 to the financial statements.

Amortization of intangibles decreased by $371,202 to $1,280,687 for the
fiscal year ended March 31, 1999 from $1,651,889 for the fiscal year ended
March 31, 1998. This decrease was primarily due to the write-down in the
fiscal year ended March 31, 1998, of intangible assets which was the result
of management's re-evaluation of the business retained from certain prior
acquisitions as well as some intangibles from prior acquisitions being fully
amortized.

The provisions for bad debts decreased by $1,083,235 to $367,916 for the
fiscal year ended March 31, 1999, from $1,451,151 for the fiscal year ended
March 31, 1998. The decrease was primarily due to the Chapter 7 bankruptcy
filing of GFM Bayview, an administrative service client, in August, 1997.

<PAGE>

Bad debt recoveries increased by $70,452 to $316,045 for the fiscal year
ended March 31, 1999 from $245,593 for the fiscal year ended March 31, 1998.
This increase was primarily due to a significant bad debt recovery from a
former administrative service client in Texas.

The decrease in labor claims contingencies and settlements was primarily due
to a labor claim settlement in fiscal 1998 which resulted from a default
judgment against the Company in the amount of $314,377 entered in the Eastern
District Court of New York in favor of a guard who alleged unjust
termination. The claim was settled for $180,000. In addition, the Company
accrued $174,000 for loss contingencies in connection with certain labor
claims in fiscal 1998. Some of these claims were settled for lower amounts in
fiscal 1999. No similar claims were presented to the Company in fiscal 1999.

The Company recorded a loss on the value of intangible assets of $58,646 for
the fiscal year ended March 31, 1999 due to management's re-evaluation of the
business retained in New Jersey from the Pro-Tech Security Services, Inc.
acquisition. This compared to the loss on the value of intangible assets of
$745,516 for fiscal year ended March 31, 1998, primarily with respect to
business retained from the ISS International Service System, Inc. acquisition
in Illinois ($246,288) and California ($319,963), as well as several smaller
acquisitions in Illinois ($179,265).

Interest income decreased by $78,277 to $151,216 for the fiscal year ended
March 31, 1999 compared to $229,493 for the fiscal year ended March 31, 1998
primarily due to the lower number of active administrative service clients
and the Chapter 7 bankruptcy of GFM Bayview, a former administrative service
client. Interest expense decreased by $77,005 to $992,218 for the fiscal year
ended March 31, 1999 compared to $1,069,223 for the fiscal year ended March
31, 1998. This decrease was due primarily to reductions in long-term debt.

Loss on equipment dispositions primarily represents older vehicles sold or
retired from service. Other income of $35,000 for the fiscal year ended March
31, 1998 represents a fee earned by the Company for its assistance in a
financial transaction involving one of its administrative service clients.

Liquidity and Capital Resources

The Company pays its guard employees and those of its administrative service
clients on a weekly basis, while its customers and the customers of
administrative service clients pay for the services of such employees
generally within 60 days after billing by the Company. In order to fund the
Company's payroll and operations, the Company maintains a commercial
revolving loan arrangement with CIT Group/Business Credit, Inc. (CIT).

The CIT loan agreement provides for borrowings in an amount up to 85%
(previously 82.5%) of the Company's eligible accounts receivable, but in no
event more than $10,000,000. CIT has also provided a term loan in the amount
of $500,000 to be repaid in equal monthly installments of $8,333 through
February, 2002. Outstanding balances under the

<PAGE>

revolving loan and the term loan bear interest at a per annum rate of 1 and
1/2% (previously 2%) in excess of the "prime rate" and are collateralized by
a pledge of the Company's accounts receivable and other assets.

At March 31, 2000, the Company had borrowed $7,156,761 representing virtually
100% of its maximum borrowing capacity based on the definition of "eligible
accounts receivable" under the terms of the revolving loan agreement.
Generally the Company borrows a high percentage of its available borrowing,
which can fluctuate materially from day to day due to changes in the status
of the factors used to determine availability (such as billing, payments and
aging of accounts receivable).

Long term debt (including current maturities) was reduced by $197,547 to
$720,279 at March 31, 2000 from $917,826 at March 31, 1999. $108,000 of this
reduction represents payments of unsecured notes to Capital Resource Company
which were assumed in connection with the purchase of certain guard accounts
in March, 1996, the foreclosure on two administrative service companies in
July and December 1997 and the bankruptcy of a former administrative service
client in August, 1997. $100,000 of the reduction represents payments of the
term loan to CIT and $45,000 represents final payment to Gordon Robinett, a
Director and former Treasurer of the Company, under a note issued in
consideration of his covenant not to compete. Offsetting these reductions is
an increase of $55,000 in collateralized notes payable to General Motors
Acceptance Corporation and Ford Motor Corporation.

The Company's capital lease obligations have increased by $275,733, net of
$82,486 in repayments during the year ended March 31,2000. This increase is
primarily due to the upgrade of the Company's computer system in order to
enhance communications, data utilization and to maintain a leadership role in
security guard software. Management expects to have the new system fully
operational during the latter half of 2000. Total required principal payments
on long term debt and capital lease obligations for the year ending March 31,
2001 are approximately $488,600 compared to $637,200 for the year ended March
31, 2000.

On or about December 4, 1997, an outside shareholder and four of the
Company's directors (Sands, P. Kikis, Saunders, and T. Kikis) commenced an
action in the Supreme Court of the State of New York, County of New York
(Index No. 606166/97) against the other four directors (Vassell, Robinett,
Nekos and Miller), the Company's outside corporate and securities counsel and
the Company itself in a lawsuit characterized as a derivative action. The
claims against the Company's outside corporate and securities counsel have
since been dismissed. The complaint alleges that one or more of the
defendant-directors engaged in improper activities, including ultra-vires
acts, breach of fiduciary duty, fraud

<PAGE>

against the Company, constructive fraud, waste of corporate assets and
concealment of information from the plaintiff-directors regarding the
Company's earnings, lacked power to enter into an employment agreement on
behalf of the Company with Mr. Robinett, and entered into service contracts
with financially unstable companies without performing due diligence. The
complaint further alleged that the Company failed to appoint a replacement to
the office of president and that the directors entered into a shareholder
agreement which was violative of public policy. Plaintiffs seek the award of
money damages in an amount which is "not less than" $11 million from the
individual defendants, a declaratory judgment that the shareholder agreement
is void, an order for an accounting, certain other injunctive relief and
attorneys' fees and disbursements.

The Company has interposed an answer denying the allegations contained in the
complaint. The individual defendants have stated that they believe the
allegations are completely without merit and intend to vigorously defend
against each and every claim. The Company's Certificate of Incorporation and
the Business Corporation Law of New York provide for indemnification of
officers and directors with respect to damages and legal fees incurred in
connection with lawsuits against them arising by reason of serving the
Company. Due to the fact that certain members of the board have chosen to
participate as plaintiffs in this lawsuit, the Company's carrier has reserved
its right with respect to the defense and indemnity of the Company based on a
claimed exclusion from coverage. To date, the Company has not been notified
of declination of coverage. The Company may have a claim against its carrier
based on the carrier's failure to timely disclaim coverage. The
defendant-directors intend to seek indemnification, and have received
advancements of legal fees incurred in connection with their defense, from
the Company. Through March 31, 2000, the Company has expended approximately
$204,000 in legal fees (none during the year ended March 31, 2000) in defense
of this matter on its own behalf as well as on behalf of the defendant
officers and directors. In addition, the Company has expended $100,000 for
legal fees on behalf of the plaintiff directors in December, 1998, and
accrued a $92,000 contingency for legal fees incurred by one of the
defendants, where Management has determined that indemnification by the
Company is probable.

On or about March 25, 1998, the plaintiffs filed a motion for the appointment
of a temporary receiver. On June 5, 1998, the Court ordered the appointment
of a temporary receiver, but prior to the order taking effect, the parties
agreed to a stipulation pursuant to which Franklyn H. Snitow, Esq., was
appointed acting President and Chief Executive Officer and acting ninth Board
member during the pendency of the defendants' appeal to the Appellate
Division of the decision to appoint a receiver. Based on the stipulation, the
defendants' request to the Appellate Division for a stay pending the appeal
of the order appointing the receiver was granted. At a duly convened meeting
of the board of directors on June 22, 1998, the board voted unanimously to
elect Mr. Snitow as an acting director and to appoint him acting president
and chief executive officer pending the outcome of the appeal. On January 12,
1999, the Appellate Division dismissed the appeal and modified the lower
court's order to continue Mr. Snitow's authority to discharge his
responsibilities as Acting President, Chief Executive Officer and Director
pending the underlying litigation. The Company is unable to reasonably
estimate the potential continued impact

<PAGE>

on the Company's financial condition and results of operations from this
lawsuit.

In August of 1998, the Company was informed that the U.S. Department of
Transportation, the Federal Aviation Administration and the United States
Attorneys' Office for the Southern District of Florida were conducting a
criminal investigation of certain activities at the Miami office of its
Aviation Safeguards Division. The investigation concerns the official
certifications of employee background investigations made by Aviation
Safeguards through its branch manager. Indications are that the background
investigations were not properly conducted and hence the certifications were
false and in violation of United States Code and regulations. The Company has
cooperated fully with the investigation and is taking steps to ensure future
compliance in all areas covered by the investigation. The Company's local
counsel has completed negotiations with the United States Attorneys' Office
whereby the proposed pleas and settlement were accepted by the United States
Attorney's office and approved by the Court. As result of this settlement, in
March, 2000, the Company paid $35,400 and has accrued an additional $75,000,
payable in three equal installments during the year ending March 31, 2001.
These amounts are not covered by insurance.

The Company's operations for the fiscal year ended March 31, 2000 resulted in
an operating profit of $330,705, a decrease of $546,729 compared to $877,434
for the fiscal year ended March 31, 1999 primarily due to the loss incurred
from the Tower Air, Inc. Chapter 11 bankruptcy filing as well as $310,000
accrual over disputed Company charges with an administrative service client.
Even though management believes that recovery of the Tower Air receivable is
unlikely, the Company has been able to increase its working capital by
$549,474 to $749,710 as of March 31, 2000 compared to positive working
capital of $200,236 as of March 31, 1999. The Company experienced a book
overdraft (defined as checks drawn in advance of future deposits) of $184,722
at March 31, 2000, compared to positive book balance of $122,470 at March 31,
1999. Cash balances can fluctuate materially from day to day depending on such
factors as collections, timing of billing and payroll. The Company
anticipates continued improvements in working capital with better operating
results and reductions in long-term debt service requirements.

In October, 1999 and November, 1999, the Company's Board of Directors
authorized the purchase of up to 200,000 shares of its common stock through
December 31, 1999. In January, 2000 the Board further authorized the purchase
of 75,000 additional shares on the open market. Through March 31, 2000, the
Company purchased the total currently authorized amount of 220,800 shares for
$226,202.

The Company finances vehicle purchases typically over three years and
insurance through short-term borrowings. The Company has no additional lines
of credit other than discussed herein and has no other present material
commitments for capital expenditures.

The Company expended $30,540 in connection with outside consultants for
services related to Year 2000 issues. All such expenditures have been charged
in the Company's financial statements as expense. The Company was not
required to purchase computer equipment to replace non-compliant systems. The
Company has not tracked internal labor costs because the Company believes
these costs to be immaterial. The only

<PAGE>

Year 2000 problem encountered was within a financial program residing only on
the Company's headquarters mainframe system and was insignificant.
Subsequently, no other problems were encountered with regard to Year 2000
issues.

On May 31, 2000, the Company received notice from the Nasdaq Stock Market
stating that the Company was not in compliance with Nasdaq listing
requirements because its stock had not complied with the minimum bid price
required of $1.00. If at anytime before August 29, 2000, the bid price of the
Company's Common Stock is at least $1.00 for a minimum of 10 consecutive
trading days, Nasdaq Staff will then determine whether the Company is in
compliance with the Nasdaq's minimum listing requirements. If the Company is
unable to demonstrate compliance, management believes that the Company would
then be listed on the OTC-Bulletin Board.

Cautionary Statement

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.

1.       The Company's assumptions regarding projected results depend largely
         upon the Company's ability to retain substantially all of the
         Company's current clients. Retention is affected by several factors
         including but not limited to 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 the loss of such clients and/or employees.

2.       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 expense, fees incurred in connection with extraordinary
         business transactions, inflation, labor unrest, increased payroll
         and related costs.

3.       Although management currently has no reasonable basis of information
         upon which to conclude that any significant administrative service
         client or security guard customers will default in payment for the
         services rendered by the Company, 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.


<PAGE>

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 its current registration statement on Form S-3 and any
amendments thereto (all as filed with the Securities and Exchange Commission
from time to time).

<PAGE>

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

     During the fiscal year ended March 31, 2000, the Company did not hold a
portfolio of securities instruments for either trading or for other purposes.

     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

     On or about December 4, 1997, an outside shareholder and four of the
Company's directors commenced an action against the other four directors, the
Company's outside corporate and securities counsel and the Company itself in
a lawsuit characterized as a derivative action. Please refer to Item 3, Legal
Proceedings, above, for a more complete description of this action. The
Company's by-laws provide for a two-class Board of Directors. The first class
consists of directors Steven B. Sands, Peter T. Kikis, Lloyd H. Saunders, III
and Thomas P. Kikis. The second class consists of Franklyn H. Snitow, William
C. Vassell, Gordon Robinett, Peter J. Nekos and Gregory J. Miller. The terms
of the directors in the first class will expire at the annual meeting of
shareholders in 2000 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 2001 or until their successors are elected
and qualified. Although Mr. Snitow's term is controlled by the Company's
Bylaws, the directors have agreed that in conformance with the Appellate
Division's modification of the lower Court's order, Mr. Snitow will continue
in office and be renominated through the duration of the lawsuit referred to
above. He will also continue in office as Acting President and Chief
Executive Officer. Each director's term, with the exception of Mr. Snitow, 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.

     Each member of the Board, with the exception of Mr. Snitow, has entered
into a Shareholder Voting Agreement dated March 8, 1995, which was finally
revised on March 24, 1995, and thereafter amended on June 2, 1995 and again
on September 22, 1997. It provides that each person then on the Board and a
party to the agreement will (i) vote all shares beneficially owned by him
(his "Shares") for the election to directorships of each of the other members
of the Board, (ii) refrain from voting any of his Shares for any action that
would result in the increase or decrease of the number of positions on the
Board or for the removal, without cause, of any member of the Board, and
(iii) in the event of death, resignation or removal of any director, vote all
of his Shares in favor of the election of the person designated as

<PAGE>

replacement in accordance with the Shareholders Voting Agreement. The
validity of this Shareholder Voting Agreement is being litigated as part of
the lawsuit discussed in Item 3, Legal Proceedings.

     The provisions of the Agreement will make it more difficult for
Shareholders to replace the current directors. The Agreement provides that it
will remain in effect so long as the parties thereto continue to hold Shares.

     Simultaneously with the execution of the Shareholders Voting Agreement,
all of the persons then on the Board signed a Unanimous Written Consent which
provides for them to designate certain members of the Board as replacements
for any current director upon death, resignation, removal or inability to
serve. Messrs. Vassell, Nekos, Miller and Robinett were given the authority
to nominate their replacements; Messrs. Thomas Kikis, Sands and Saunders were
given the authority to nominate their replacements; and Mr. Peter Kikis was
given the authority to nominate his replacement. The Board members agreed
that their respective nominees of any replacements could be provided at a
later date.

     The following table provides information concerning each person who was
an executive officer or director of the Company as of March 31, 2000.

Name                         Age      Title
----------------------       ---      -------------------------------------
Franklyn H. Snitow           52       Acting President, CEO and Director

William C. Vassell           41       Chairman of the Board

Gordon Robinett              64       Vice Chairman of the Board

Gregory J. Miller            40       Director

Peter J. Nekos               72       Director

Peter T. Kikis               76       Director

Steven B. Sands              40       Director

Lloyd H. Saunders, III       45       Director

Thomas P. Kikis              38       Director

Eugene U. McDonald           50       Sr. Vice President--Operations

Nathan Nelson                51       Chief Financial Officer and Executive
                                      Vice President

Debra M. Miller              44       Secretary

     Franklyn H. Snitow was elected Acting President, Chief Executive Officer
and Director by the Board at a meeting conducted on June 22, 1998. As
disclosed under Item 3, Legal Proceedings, above, Mr. Snitow's election was
the result of a stipulation entered into by the other eight members of the
Board of Directors pursuant to the derivative action commenced on or about
December 4, 1997. On January 12, 1999, the Appellate Division modified the
lower Court's order to continue Mr. Snitow's authority to discharge his
responsibilities as Acting President, Chief Executive Officer and Director
pending the underlying litigation. From 1993 through 1998, Mr. Snitow was a

<PAGE>

partner in the law firm of Snitow & Pauley. On July 1, 1998 he became a
partner in the law firm of Snitow & Cunningham, LLP. Mr. Snitow is being
compensated at the rate of $300 per hour for services rendered to the
Company. He is reimbursed for any expenses incurred in connection with the
rendering of such services and is authorized to engage the services of others
at the expense of the Company to assist in performance of his duties and
responsibilities. Mr. Snitow will be indemnified by the Company pursuant to
an Indemnification Agreement to the extent permitted in accordance with New
York law, the Company's Certificate of Incorporation and its Bylaws. Mr.
Snitow has been a director of Tofutti Brands, Inc. since 1990. Mr. Snitow
obtained a Bachelor of Arts Degree from American University in 1967 and a
Juris Doctor Degree from New York Law School in 1970.

     William C. Vassell has been Chairman of the Board since 1983. 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. , 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. 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.

     Gordon Robinett was appointed Vice Chairman of the Board of Directors on
February 24, 1995. He served as Treasurer of the Company from May, 1990 until
August 1, 1996 when Mr. Robinett and the Company agreed to mutually terminate
his employment. In August, 1997, Mr. Robinett was engaged as Acting Treasurer
until a replacement for the Company's former Chief Financial Officer, H.
Richard Dickinson was approved by the Board. On July 1, 1999, Mr. Robinett
resigned as Acting Treasurer in conjunction with the Board's approval of
Nathan Nelson as the Company's new Chief Financial Officer and Executive Vice
President. Mr. Robinett has been a director since 1990. From May 1989 to
April 1990, he was a consultant to Uniforce Temporary Personnel, Inc., a
publicly held national temporary personnel agency, and managed his personal
investments. From 1968 to April 1989, he was employed by Uniforce, initially
as Controller and thereafter as Vice President of Finance, Secretary and
Treasurer, and he continues to serve as a member of its Board of Directors.
Mr. Robinett also is currently a director of Comforce Corporation.

     Peter T. Kikis became a director of the Company on February 24, 1995 in
connection with the acquisition of United Security Group, Inc.. He has also
served as Chairman of the Company's Executive Committee of the Board of
Directors since March, 1995. He is a director of Deltec International S.A.,
the parent of Deltec Development Corporation, the former subordinated debt
lender to the Company. Since 1950, Mr. Kikis has been the President and a
principal in Spencer Management Company, a real estate development and
management company in New York, New York. From 1972 to 1992, Mr. Kikis was
Chairman of the Board of Directors and a principal of McRoberts Protective
Agency, a New York based provider of security guard services. Mr. Kikis is
the father of Thomas P. Kikis who is also a director of the Company.

     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

<PAGE>

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. See
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."

     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. At present he operates in Valhalla,
New York.

     Steven B. Sands was appointed to the Board on March 30, 1994, in
accordance with the provisions of the Company's agreement with Sands Brothers
executed in connection with the Company's 1993 Private Placement. Mr. Sands
is Chairman of the Board of Sands Brothers & Co., Ltd., a Delaware
corporation registered as a broker-dealer. Mr. Sands also has interests in
certain entities which own the Company's stock. These entities include Katie
and Adam Bridge Partners, L.P.; Owl-1 Partners, L.P.; Jenna Partners, L.P.;
Jenna Partners II, L.P.; and Lily Capital Appreciation Partners, L.P. Mr.
Sands is also currently on the board of directors of the following
publicly-traded companies: The Village Green Bookstore, Inc.; and
Semi-Conductor Packaging Materials, Inc.

     Lloyd H. Saunders, III, became a director of the Company on February 24,
1995, in connection with the acquisition of United Security Group, Inc.. He
is a managing director at Sands Brothers and has been so since 1991. From
1989 to 1990, he was a private investor and from 1986 to 1988 he was the
Director of Corporate Finance for Whale Securities, New York, New York.

     Thomas P. Kikis became a Director of the Company on September 22, 1997
in accordance with the terms of the Shareholders Voting Agreement entered
into by the Directors of the Company as of March 8, 1995. For the last seven
years, Mr. Kikis' principal occupation has been president of Kikis Asset
Management located in New York, New York. In September, 1998, he formed
Arcadia Securities, LLC, a New York registered broker-dealer. Mr. Kikis is
the son of Mr. Peter T. Kikis who is also a director of the Company.

      Eugene U. McDonald has more than 27 years of experience in the security
business. He joined the Company in October of 1992 as Vice President of
Corporate Services, and in 1995, he took over the position of Senior Vice
President-Operations. Mr. McDonald has held senior management positions with
Globe Security (1973-1990) and Burns International Security Services
(1990-1992). He has extensive direct personal experience with the handling of
specialized security personnel for cleared facilities as evidenced by his
duties as Group Vice President of Energy Services for Globe Security. He is
active in the American Nuclear Society, Institute of Nuclear Materials
Management, American Society for Industrial Security and the Connecticut
Police Chiefs Association.

     Nathan Nelson was appointed Chief Financial Officer and Executive Vice
President of the Company in July 1999. Before joining the Company, Mr. Nelson
was the Chief Financial Officer and Treasurer of Tower Air, Inc. From 1993 to
1998, Mr. Nelson was the Chief Financial Officer for the Amana Tool
Corporation. From 1992 to 1993, Mr. Nelson was the Chief Financial Officer
and a director for American Dream Airlines. Prior to that, Mr. Nelson was the

<PAGE>

Treasurer of Trump Shuttle, Inc. from 1989 through 1992. Mr. Nelson is not
presently a director of any publicly-held companies.

      Debra Miller has been employed by the Company since September 1983,
initially as Office Manager and, since March 1986, as Corporate Secretary.

           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, 2000, the Company is not aware of any
person who, at any time during the fiscal year ended March 31, 2000, 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, 2000, except that: (i) Mr. Sands has not filed a Form 5
for the fiscal year ended March 31, 2000, and the Company has not received a
written representation from Mr. Sands that a Form 5 is not required; and (ii)
Debra Miller was two days late in filing a Form 4.

                       ITEM 11. EXECUTIVE COMPENSATION

     The following table sets forth for the fiscal year ended March 31, 2000,
all plan and non-plan compensation paid to, earned by, or awarded to William
C. Vassell, Chairman of the Board, Nathan Nelson, Chief Financial Officer and
Executive Vice President, Franklyn H. Snitow, Acting President and Chief
Executive Officer, Gordon Robinett, Vice Chairman of the Board, Eugene U.
McDonald, Senior Vice President -- Operations, and Martin Blake,
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, 2000, and, therefore, compensation for such other
executive officers is not disclosed.

<TABLE>

                          SUMMARY COMPENSATION TABLE
                   FOR THE FISCAL YEAR ENDED March 31, 2000
<CAPTION>

                 Annual Compensation                                                         Long-Term Compensation

                                                                                          Shares
                              Fiscal Year                  Other Annual                   Underlying
Name and Principal            Ended                        Salary                         Warrants    Shares Underlying
Position                      March 31    Annual Salary    Compensation        Bonus      Granted     Repriced Warrants
--------                      --------    -------------    ------------        -----      --------    -----------------

<S>                           <C>         <C>              <C>                 <C>        <C>         <C>
Franklyn H. Snitow<F5>
Acting President and
Chief Executive Officer
                              1999        $      0                <F2>               0    0                 0
                              2000        $      0                <F2>               0    0                 0

William C. Vassell<F1>
Chairman of the Board

<PAGE>

                              1998        $174,579                <F2>               0    0                 0
                              1999        $175,000                <F2>               0    0                 0
                              2000        $153,846                <F2>               0    0                 0

Nathan Nelson
Chief Financial Officer and
Executive Vice President
                              2000        $103,384                <F2>               0    0                 0

Gordon Robinett
Vice Chairman
of the Board
                              1998        $ 36,923         $52,500<F2><F4>           0    0           227,500<F3>
                              1999        $ 60,000         $37,500<F2><F4>           0    0                 0
                              2000        $ 42,692         $22,500<F2><F4>           0    0                 0

Eugene U. McDonald
Senior Vice President -
Operations
                              1998        $125,794                <F2>         $18,000    0                 0
                              1999        $112,116                <F2>          20,000    0                 0
                              2000        $131,000                <F2>          11,297    0                 0

Martin Blake
Vice President-
 - Aviation                   1998        $100,000                <F2>         $15,000    0                 0
                              1999        $114,539                <F2>         $62,991    0                 0
                              2000        $116,074                <F2>         $12,900    0                 0

<FN>

<F1> As of June 20, 2000, Mr. Vassell held a total of 1,030,000 shares of the
     Company's common stock.

<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> Includes repricing of the: 107,500 shares issued on January 19, 1991,
     with exercise price at market value of $5.00, reduced to market value of
     $3.25 as of August 16, 1993 and reduced on July 15, 1996 to $2.50;
     60,000 shares issued on April 8, 1991, with exercise price at market
     value of $3.375, reduced to market value of $3.25 as of August 16, 1993
     and reduced on July 5, 1996 to $2.50; and 60,000 shares issued on May
     15, 1992, with exercise price at market value of $3.88, reduced to
     market value of $3.25 as of August 16, 1993 and reduced on July 15, 1996
     to $2.50.

<F4> Mr. Robinett received $22,500 under his termination agreement during the
     fiscal year ended March 31, 2000.

<PAGE>

<F5> Mr. Snitow is not compensated as an officer of the Company, however, Mr.
     Snitow's law firm has been paid legal fees of $45,662 during the fiscal
     year ending March 31, 2000. During the fiscal year ending March 31,
     1999, Mr. Snitow's law firm received $72,500.

</FN>
</TABLE>

Stock Options/Warrants

     The Company did not grant any stock options or warrants during the
fiscal year ending March 31, 2000 to the Company's chief executive officer or
to any of the Company's executive officers whose total annual salary and
bonus exceeded $100,000. There were no tandem or free standing stock
appreciation rights granted to any person during the fiscal year ending March
31, 2000.

Compensation Committee Interlocks and Insider Participation in Compensation
Decisions

     The Company's Compensation Committee is intended to make all
recommendations to the Board related to compensation issues with respect to
executive officers. It is comprised of William C. Vassell, Peter T. Kikis and
Steven B. Sands. While Mr. Vassell will participate in decisions relating to
compensation for executive officers, he will not vote on matters relating to
his own compensation. Likewise, none of the directors or executive officers
serve on the compensation committee of any other entity with the exception of
Gorden Robinett, who serves on the compensation committee of Uniforce
Temporary Personnel, Inc. None of the other members of the Company's Board of
Directors is an officer, director or employee of Uniforce Temporary
Personnel, Inc.

     On February 24, 1995 in connection with the acquisition of United
Security Group, Inc., the Company entered into a subordinated loan agreement
with Deltec Development Corporation, a subsidiary of Deltec International
S.A. Peter T. Kikis, a director of the Company, is a director of Deltec
International S.A. The original principal balance of the loan was $1,500,000
payable over four years at 14% interest. This loan has been satisfied. The
$1.5 million of subordinated secured indebtedness was repaid in full on or
about March 1, 1999.

     Steven B. Sands is Chairman of Sands Brothers & Co., Ltd. ("Sands
Brothers") a broker-dealer and investment banking firm with which the Company
has entered into numerous agreements. Sands Brothers was engaged as private
placement agent in connection with the Company's 1993 and 1995 private
placements. All agreements which the Company entered into with Sands Brothers
are no longer operative, and are of no force and effect, with the exception
of the Shareholder Voting Agreement dated March 8, 1995, as amended
(described in Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.)

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

     The Company has entered into an agreement pursuant to an engagement
letter and an indemnification agreement with Mr. Snitow. In accordance with
the engagement letter, Mr. Snitow shall be compensated at the rate of $300.00
per hour, plus reimburseable expenses, based on his hourly billing to the
Company. The indemnification agreement between the Company and Mr. Snitow
provides for the maximum indemnification permitted under New York law, and
the Company's Certificate of Incorporation and By-Laws. The inclusion of the
foregoing information is intended to comply with Section 725(d) of the New
York Business Corporation Law.

<PAGE>

     The Company has entered into employment agreements with Messrs. Vassell
and Robinett. These agreements were amended in April of 1991 and were amended
and restated in June of 1991. In September 1992, the terms of these
agreements were extended for two years to July 19, 1996, and were further
amended as of February 24, 1995, to extend the terms to July 19, 2000. Mr.
Robinett's employment agreement terminated on July 19, 1996. Following the
resignation in August of 1997 of H. Richard Dickinson, the Company's former
Chief Financial Officer and Executive Vice President, Mr. Robinett was
engaged on a per diem proration of his prior employment agreement to
temporarily perform the functions of Mr. Dickinson until a replacement was
approved by the Board. Mr. Robinett worked an average of three days per week
and was compensated therefor at the rate of $385 per day. On July 1, 1999 Mr.
Robinett resigned as Acting Treasurer in conjunction with the Board's
approval of Nathan Nelson as the Company's new Chief Financial Officer and
Executive Vice President. See Item 13. "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS."

     Pursuant to his employment agreement, as amended as of February 24,
1995, Mr. Vassell serves as Chairman of the Board of the Company and received
an annual salary of $175,000 in fiscal years ended March 31, 1998 and March
31, 1999. The Board has determined that as of April 1, 1999, Mr. Vassell's
salary shall be $150,000 annually. Mr. Vassell is 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 is provided with the
use of a Company-owned automobile and reimbursement for automobile insurance
and operating expenses. Also pursuant to the employment agreement, Mr.
Vassell was awarded a warrant to purchase 175,000 shares of Common Stock at a
price of $3.375 per share, exercisable on or after March 31, 1992. The
warrant expired in April, 1998. Mr. Vassell also received a warrant to
purchase 125,000 shares of Common Stock at a price of $3.25 per share,
exercisable on or after May 15, 1992. This warrant expired in May, 1999.

     Mr. Robinett's former employment agreement provided a non-qualified,
non-forfeitable five-year stock option to purchase 107,500 shares at a price
of $5.00 per share, a warrant to Purchase 60,000 shares at a price of $3.375
per share and a five-year warrant to purchase 75,000 shares at a price of
$6.00 per share. The 75,000 share warrant was canceled as a result of certain
financial goals not being met for the fiscal year ended March 31, 1992.

     In May, 1992 in recognition of sales and profit achievements for fiscal
year 1992, the Board of Directors issued to Mr. Vassell a five-year warrant
to purchase 125,000 shares at an exercise price of $3.88 per share and issued
to Mr. Robinett a five-year warrant to purchase 60,000 shares at an exercise
price of $3.88 per share. Also in May 1992, as an incentive for outside
directors, the Board of Directors issued to Peter J. Nekos a five-year
warrant to purchase 10,000 shares at an exercise price of $3.88 per share.
The exercise price of the foregoing warrants was the market value on the date
of grant. Mr. Vassell's five-year warrant to purchase 125,000 shares expired
in May, 1999. Mr. Nekos' five-year warrant to purchase 10,000 shares expired
in May, 1999.

     In recognition of certain voluntary salary reductions by Messrs. Vassell
and Robinett during 1993, and the contributions of Mr. Nekos, the Board of
Directors authorized the extension of Mr. Robinett's option and all of
Messrs. Vassell's, Robinett's and Nekos' outstanding warrants by two years
and the adjustment of the exercise prices under all of their warrants and
options to $3.25, the fair market value of the Company's stock as of August
16, 1993 (the date of the extension).

<PAGE>

     In September of 1992, the Company entered into a Compensation
Continuation Agreement with Mr. Vassell in consideration of his agreement to
extend the term of his employment for two years. 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 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 $150,000 for the fiscal year ended March 31,
2000, or approximately $450,000.

     Other than pursuant to the Employment Agreement and the Compensation
Continuation Agreement for Mr. Vassell (see "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS"), 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 was
effective for the calendar year 1999, which 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, 2000, no discretionary amounts
have been accrued or paid.

Board of Directors Compensation

     No executive officer receives any additional compensation for serving as
a director, except in the case of Mr. Snitow who is compensated at the rate
of $300 per hour in accordance with the engagement letter referenced above in
this Item 11. Directors who are not employees of the Company, and excluding
Mr. Snitow, receive a meeting fee of $1,000 for each meeting attended, and
all directors are reimbursed for expenses incurred in attending Board
meetings. With the exception of Gregory J. Miller and Peter T. Kikis, 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.

     On April 30, 1997, the Board voted to pay Mr. Peter Kikis $2,500 per
month starting as of April 1, 1996 in recognition of his successfully
negotiating certain matters on the Company's behalf and for his continuing
contributions to the Company, particularly in his capacity as chairman of the
Executive Committee of the Board of Directors.

     In May 1992, as an incentive for outside directors, the Board of
Directors issued to Peter J. Nekos a five-year warrant to purchase 10,000
shares at an initial exercise price of $3.88 per share, the market value on
the date of grant. In recognition of Mr. Nekos' contributions to the Company,
in August 1993 the Board of Directors authorized the extension of Mr. Nekos'
outstanding warrants by two years and reduced the purchase price to $3.25 per
share, the fair market value on the date of the extension. These warrants
expired in May, 1999. In October 1996 the Board of Directors granted Messrs.
Nekos and Miller five-year warrants for 10,000 shares with a purchase price
of $1.875 per share, the fair market value at the time of issuance. On that
same date the Board granted to Mr. Peter Kikis a warrant for 150,000 shares,
also with a purchase price of $1.875 per share, the fair market value at the
time of issuance.

<PAGE>

     In January 2000, the Board granted to Mr. Peter Kikis a warrant to
purchase 150,000 shares of common stock at a purchase price of $1.03125 per
share, the fair market value at the time of issuance.

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 60 days of June 20, 2000, (ii)
each director and executive officer and (iii) all of said beneficial owners,
officers and directors as a group, as of June 20, 2000. 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.

     Other than as set forth in the following table or pursuant to the
Shareholders Voting Agreement, 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.

<TABLE>
<CAPTION>
                          Amount and
                          Nature of
                          Beneficial
Name                      Ownership<F1>               Percent of Class<F8>
----------------------    -------------               --------------------

<S>                       <C>                         <C>
William C. Vassell        1,030,000                   16.4%

Steven B. Sands/            949,912<F2>               13.4%
Sands Brothers &
Co., Ltd.
101 Park Avenue
New York, NY

Franklyn H. Snitow                0                   <F9>

Gordon Robinett             262,500<F3>                4.0%

Peter T. Kikis              641,832<F4>                9.6%

Peter Nekos                  12,500<F5>               <F9>

<PAGE>

Debra Miller                    100<F6>               <F9>

Lloyd H. Saunders, III          500                   <F9>

Gregory J. Miller            10,000<F6>               <F9>

Thomas P. Kikis           1,007,548<F7>               14.9%

Eugene U. McDonald            1,250                   <F9>

Nathan Nelson                     0                   <F9>

All Officers and          3,274,310                   41.9%
Directors as a Group               <F2><F3><F4>
(12 Persons)                       <F5><F6><F7><F8>

<FN>

<F1> The Company has been advised that all individuals listed above, except
     Steven B. Sands (see Note (2), below) and Peter T. Kikis (see Note (4),
     and (8) below) have the sole power to vote and dispose of the number of
     shares set forth opposite their names. According to the most recent
     Schedule 13D filed on their behalf, Steven B. Sands and Martin S. Sands
     share both voting and dispositive power over the shares set forth next
     to Steven Sands' name. Peter T. Kikis shares voting and dispositive
     power over his shares with Thomas P. Kikis. Thomas P. Kikis exercises
     voting and dispositive power over all shares held by Kikis Asset
     Management Corporation (KAMC)

<F2> Includes 924,412 shares (824,412 shares of which are issuable upon
     conversion of shares of the Company's Series A Preferred Stock) owned by
     Katie and Adam Bridge Partners, L.P. Mr. Sands may be deemed to control
     the corporate general partner of this entity. Also includes 25,000
     shares owned by Owl-Partners, L.P. Mr. Sands may be deemed to control
     the corporate general partner of this entity. Does not include 192,550
     shares owned by partnerships in which an affiliate of Sands Brothers &
     Co., Ltd., other than Mr. Sands, may be deemed to be the beneficial
     owner. Mr. Sands is the Co-Chairman and Chief Executive Officer of Sands
     Brothers & Co., Ltd. On March 30, 1994, Mr. Sands was elected to the
     Company's Board. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
     The above information was provided to the Company by Mr. Sands.

<F3> Includes 107,500 shares underlying presently exercisable non-qualified
     stock options and 120,000 shares underlying warrants that are currently
     exercisable.

<F4> Includes 300,000 shares underlying warrants currently exercisable,
     108,832 shares issuable upon conversion of Series A Preferred Stock.

<F5> Includes 10,000 shares underlying options currently exercisable.

<F6> Includes 10,000 shares underlying warrants currently exercisable.

<F7> A Schedule 13D filed by Thomas P. Kikis, Kikis Asset Management
     Corporation ("KAMC") and Arcadia Securities, LLC ("Arcadia"), filed on
     or about January 31, 2000, indicates that these shares are beneficially
     owned by KAMC and Arcadia as follows: KAMC, 801,248 shares; Arcadia,
     206,300 shares. Of the 801,248 shares held by KAMC on behalf of its
     clients, 641,832 shares are beneficially owned by Peter T. Kikis,
     including 300,000 shares issuable upon the exercise of warrants and
     108,832 shares issuable upon the conversion of Series A Preferred Stock.
     KMAC also holds 144,416 shares on behalf of Thomas P. Kikis, including
     54,416 shares issuable upon the conversion of Series A Preferred Stock.
     KAMC, as investment advisor to its advisory clients, has sole voting
     power and dispositive power over 801,248 shares. Arcadia, as a
     broker-dealer to its brokerage clients, has sole voting power and
     dispositive power over 206,300 shares.

<PAGE>

<F8> Percent of class for each shareholder is calculated as if all 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 options and warrants held by any shareholders
     included in the group are outstanding. The denominator for the group
     calculation is 7,822,503.

<F9> Less than 1 percent.

</FN>
</TABLE>

                       ITEM 13. CERTAIN RELATIONSHIPS AND
                              RELATED TRANSACTIONS

     A description of the engagement letter and indemnification agreement
between the Company and Franklyn H. Snitow, Acting President, Chief Executive
Officer and director of the Company is found in Item 11 herein.

     The Company and its Board of Directors (except Mr. Snitow) are party to
a legal proceeding characterized as a derivative action. See "Item 3. LEGAL
PROCEEDINGS." Certain indemnification rights are afforded these parties under
the Company's Certificate of Incorporation and the Business Corporation Law
of New York. Due to the fact that certain members of the board have chosen to
participate as plaintiffs in this lawsuit, the Company may not have coverage
under its officers and directors liability insurance policy. The
defendant-directors intend to seek indemnification, and have received
advancements of legal fees incurred in connection with their defense, from
the Company. Through March 31, 2000, the Company has expensed and charged
earnings with approximately $204,000 in legal fees (none during the year
ended March 31, 2000) in defense of this matter on its own behalf as well as
on behalf of the defendant officers and directors. In addition, the Company
has expended $100,000 for legal fees on behalf of the plaintiff directors in
December, 1998, and accrued a $92,000 contingency for legal fees incurred by
one of the defendants, where Management has determined that indemnification
by the Company is probable.

     Gregory J. Miller has been a director of the Company since 1992. Mr.
Miller is general counsel for Goldline Connectors, Inc. and has rendered
legal services to the Company during his tenure as a director. Mr. Miller has
rendered legal services in connection with various litigation and contractual
matters during the last three fiscal years. During the last three fiscal
years, payments to Mr. Miller for legal services were minimal. In the fiscal
year ended March 31, 2000, there were no payments for legal fees to Mr.
Miller, however, it is expected that Mr. Miller will continue to render
minimal legal services to the Company from time to time. Management believes
that the terms of the various transactions between the Company and Mr. Miller
were as favorable as those which might have been obtained from an
unaffiliated party.

     Peter T. Kikis became a director of the Company on February 24, 1995, in
connection with the acquisition of United Security Group, Inc.. Mr. Kikis is
a director of Deltec International, S.A., of which Deltec Development
Corporation ("Deltec"), the former lender of the Company's $1.5 million
subordinated secured indebtedness obtained in connection with the United
Security Group, Inc. acquisition, is an indirect, wholly-owned subsidiary.
The terms of the loan agreement provide for interest at the rate of 14% per
annum and 16 equal quarterly payments of principal. The $1.5 million of
subordinated secured indebtedness was repaid in full on or about March 1,
1999.

<PAGE>

     Deltec received a financing fee of $180,000 in connection with the loan
to help defray certain costs, including legals fees, associated with the
transaction. Deltec also purchased 3,000 shares of the Company's Series A
Convertible Preferred Stock at $165 per share. Management believes that the
terms of the various transactions between the Company and Deltec were as
favorable as those which might have been obtained from an unaffiliated party.

     Gordon Robinett, a member of the Company's Board of Directors and former
Treasurer, entered into a Covenant Not to Compete with the Company on July
23, 1996 in connection with his termination of employment with the Company.
Under that agreement, the Company is to make periodic payments to Mr.
Robinett over four years totalling $180,000, the exercise price of Mr.
Robinett's options and warrants was reduced to $2.50, and an expiration date
was fixed at July 19, 2000. In return, Mr. Robinett is prohibited from
directly or indirectly competing with the Company until July 19, 2000. In
August of 1997, Mr. Robinett was engaged by the Company on a per diem
proration of his prior employment agreement to temporarily perform the
functions of Mr. Dickinson until a replacement was approved by the Board. Mr.
Robinett worked an average of three days per week and was compensated
therefor at the rate of $385 per day. On July 1, 1999, this arrangement
terminated and Mr. Robinett resigned as Acting Treasurer in conjunction with
the Board's approval of Nathan Nelson as the Company's new Chief Financial
Officer and Executive Vice President.

<PAGE>

                                   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
                                                                  ----

   Independent auditor's report                                   F-1

   Balance Sheets - March 31, 2000 and 1999                       F-2

   Statements of Operations - years ended                         F-3
     March 31, 2000, 1999, and 1998

   Statements of changes in stockholders' equity -                F-4
     years ended March 31, 2000, 1999, and 1998

   Statements of cash flows - years ended                         F-5 - F-7
     March 31, 2000, 1999, and 1998

   Notes to Financial Statements                                  F-8 - F-21

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

   Valuation and qualifying accounts - years ended                F-22
     March 31, 2000, 1999, 1998

     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.

<PAGE>

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 3.4
       Certificate of                  of the Eighth Amendment to the
       Incorporation                   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 Exhibit 4.2
       Group/Credit Finance            of the Form 8-K filed on March 13, 1996.

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

10.16  Form of Third Amendment to      Incorporated by reference to Exhibit
       May 15, 1992 Warrant Agreement  10.15 in the 1994 10-K
       and Warrant 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 Exhibit
       Placement                       4.2 to the Form 8-K filed October 27,
                                       1993

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

10.36  Promissory Note to William C.   Incorporated by reference to Exhibit
       Vassell ($85,000) dated August  10.36 of the form 10-K for the
       22, 1994                        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 Exhibit
       maturity                        4.2 to the l994 l0-K/A

10.39  Bank Note - November 1, 1997    Incorporated by reference as Exhibit
       maturity                        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 Exhibit
       Share of Common Stock           11 annexed to Financial Statements.

27.00  Financial Data Schedule         E-1

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

 (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

       (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

<PAGE>

        (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, 1999.

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

     (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.

<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, 2000 and 1999, 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, 2000. 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 generally accepted auditing
standards. 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, 2000 and 1999, and the results of its operations and its cash
flows for each of the three years in the period ended March 31, 2000, in
conformity with generally accepted accounting principles. 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
June 9, 2000
Poughkeepsie, New York

                                                                           F-1

<PAGE>

Command Security Corporation

Balance Sheets
March 31, 2000 and 1999

<TABLE>
<CAPTION>
                                    ASSETS

                                                                                            2000                   1999
<S>                                                                                         <C>                    <C>
Current assets:
  Cash and cash equivalents                                                                 $        -0-           $   122,470
  Accounts receivable from guard service customers, less allowance for
    doubtful accounts of $1,258,187 and $492,372, respectively                               10,018,827              8,693,441
  Accounts receivable from administrative service client customers, less
    allowance for doubtful accounts of $30,059 and $208,953, respectively                     1,892,657              2,767,439
  Prepaid expenses                                                                              491,969                396,227
  Other receivables, less allowance for doubtful accounts
    of $987,192 in 1999                                                                          94,607                 53,381
                                                                                            -----------            -----------
      Total current assets                                                                   12,498,060             12,032,958

Furniture and equipment at cost, net                                                          1,340,331              1,031,042
Intangible assets, net                                                                          460,063              1,606,511
Restricted cash                                                                                 799,993              1,091,527
Other assets                                                                                    249,524                425,942
                                                                                            -----------            -----------

      Total assets                                                                          $15,347,971            $16,187,980
                                                                                            ===========            ===========


                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Cash overdraft                                                                            $   184,772            $        -0-
  Current maturities of long-term debt                                                          410,603                492,677
  Current maturities of obligations under capital leases                                        113,752                 69,428
  Short-term borrowings                                                                       7,192,515              6,995,852
  Accounts payable and accrued expenses                                                       3,328,028              3,707,162
  Preferred dividends payable                                                                    40,674                     -0-
  Due to administrative service clients                                                         478,006                567,603
                                                                                            -----------            -----------
      Total current liabilities                                                              11,748,350             11,832,722

Self-insurance reserves                                                                         820,693                764,482
Long-term debt, net                                                                             309,676                425,149
Obligations under capital leases, net                                                           277,961                 46,552
                                                                                            -----------            -----------
                                                                                             13,156,680             13,068,905

Commitments and contingencies (Notes 13 and 14)

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, issued 6,508,143 and 6,658,143, respectively                                        651                    666
  Paid-in capital                                                                             8,886,140              9,277,997
  Accumulated Deficit                                                                        (8,502,980)            (8,193,270)
                                                                                            -----------            -----------
                                                                                              2,417,493              3,119,075
  Common stock in treasury, at cost, 220,800 shares in 2000                                    (226,202)                    -0-
                                                                                            -----------            -----------

                                                                                              2,191,291              3,119,075
                                                                                            -----------            -----------

  Total liabilities and stockholders' equity                                                $15,347,971            $16,187,980
                                                                                            ===========            ===========
</TABLE>

See accompanying notes and auditor's report

                                                                           F-2
<PAGE>

Command Security Corporation

Statements of Operations
Years Ended March 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                                        2000                1999                1998

<S>                                                                     <C>                 <C>                 <C>
Guard service revenue                                                   $59,245,927         $57,642,041         $51,796,882
Cost of guard service revenue                                            49,243,061          47,925,623          44,456,786
                                                                        -----------         -----------         -----------
    Gross profit                                                         10,002,866           9,716,418           7,340,096
Administrative service revenue                                              554,196             913,498           1,450,592
                                                                        -----------         -----------         -----------
                                                                         10,557,062          10,629,916           8,790,688
                                                                        -----------         -----------         -----------
Operating expenses:
  General and administrative expenses                                     8,187,675           8,377,678           7,748,726
  Amortization of intangibles                                             1,176,448           1,280,687           1,651,889
  Provision for doubtful accounts and notes                                 969,937             367,916           1,451,151
  Bad debt recoveries                                                      (106,578)           (316,045)           (245,593)
  Labor claims contingencies and settlements                                 (1,125)            (16,400)            354,000
  Loss on value of intangible assets                                             -0-             58,646             745,516
                                                                        -----------         -----------         -----------
                                                                         10,226,357           9,752,482          11,705,689
                                                                        -----------         -----------         -----------
    Operating income/(loss)                                                 330,705             877,434          (2,915,001)
                                                                        -----------         -----------         -----------
Other income/(expense)
  Interest income                                                           172,533             151,216             229,493
  Interest expense                                                         (848,860)           (992,218)         (1,069,223)
  Gain/(loss) on equipment dispositions                                         912             (51,831)            (34,324)
  Other income                                                               35,000                  -0-             35,000
                                                                        -----------         -----------         -----------
                                                                           (640,415)           (892,833)           (839,054)
                                                                        -----------         -----------         -----------
    Loss before
      income tax expense                                                   (309,710)            (15,399)         (3,754,055)
Income tax expense                                                               -0-                 -0-           (259,835)
                                                                        -----------         -----------         -----------
    Net loss                                                               (309,710)            (15,399)         (4,013,890)
Preferred stock dividends                                                  (177,851)           (150,643)           (139,484)
                                                                        -----------         -----------         -----------
Net loss applicable to common stockholders                              $  (487,561)        $  (166,042)        $(4,153,374)
                                                                        ===========         ===========         ===========
Loss per share of common stock                                          $      (.07)        $      (.02)        $      (.62)
                                                                        ===========         ===========         ===========
Weighted average number of common
  shares outstanding                                                      6,535,581           6,658,143           6,689,352
                                                                        ===========         ===========         ===========

</TABLE>

See accompanying notes and auditor's report

                                                                           F-3

<PAGE>



Command Security Corporation

Statements of Changes in Stockholders' Equity
Years Ended March 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                                                                        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, 1997           $       -0-         $ 842       $9,897,319       $(4,163,981)       $ (3,000)     $ 5,731,180

Common stock issued                                         5           54,008                                             54,013

Return of escrowed
  common stock
    o Note collateral                                     (35)              35                                                -0-
    o Retention adjustment                                (11)        (294,394)                                          (294,405)

Cash paid in lieu of
  compensatory stock warrants                                          (85,979)                                           (85,979)

Transfer of
  preferred stock                    1,813,297                                                                          1,813,297

Preferred stock dividends               69,742                        (139,484)                                           (69,742)

Net loss                                                                              (4,013,890)                      (4,013,890)
                                    ----------          ------      ----------       -----------        ---------     -----------

Balance at March 31, 1998            1,883,039            801        9,431,505        (8,177,871)          (3,000)      3,134,474

Retirement of common
  stock in treasury                                      (135)          (2,865)                             3,000             -0-

Preferred stock dividends              150,643                        (150,643)                                               -0-

Net loss                                                                                 (15,399)                         (15,399)
                                    ----------          ------      ----------       -----------        ---------     -----------

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
                                    ==========          ======      ==========       ===========        =========     ===========

</TABLE>

See accompanying notes and auditor's report

                                                                           F-4

<PAGE>

Command Security Corporation

Statements of Cash Flows
Years Ended March 31, 2000, 1999 and 1998

<TABLE>
               INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

<CAPTION>
                                                                        2000                1999                1998
<S>                                                                     <C>                 <C>                 <C>
OPERATING ACTIVITIES
   Net loss                                                             $  (309,710)        $   (15,399)        $(4,013,890)
    Adjustments to reconcile net loss to net
    cash provided by operating activities:
      Depreciation and amortization                                       1,695,458           1,720,197           2,038,794
      Provision for doubtful accounts and
        notes receivable, net of recoveries                                 863,359              51,871           1,451,151
      (Gain)/loss on equipment dispositions                                    (912)             51,831              34,324
      Loss on value of intangible assets                                         -0-             58,646             745,516
      Deferred income taxes                                                      -0-                 -0-            259,835
      Self-insurance reserves                                               448,291             572,833             900,128
      Stock compensation settlement                                        (154,021)                 -0-                 -0-
      Changes in operating assets and liabilities:
          Accounts receivable, current and long-term                     (1,313,963)           (322,530)            780,602
          Prepaid expenses                                                  215,285             460,896             880,665
          Other receivables                                                 (41,226)             38,995             (88,574)
          Other assets                                                      279,569             (71,944)           (244,246)
          Accounts payable and accrued expenses                            (831,214)         (1,005,756)            124,665
          Due to administrative service clients                             (89,597)            105,971              28,495
                                                                        ------------        ------------        ------------
                 Net cash provided by
                   operating activities                                     761,319           1,645,611           2,897,465
                                                                        ------------        ------------        ------------

INVESTING ACTIVITIES
   Purchase of equipment                                                   (158,168)           (101,372)           (153,298)
   Purchase of intangible assets                                            (12,000)            (45,735)           (116,521)
   Proceeds from equipment dispositions                                      24,041               2,278              27,122
   Issuance of notes by administrative service clients                           -0-             (5,000)                 -0-
   Principal collections on notes receivable                                    -0-              62,394             113,828
                                                                        ------------        ------------        ------------
                 Net cash used in investing activities                     (146,127)            (87,435)           (128,869)
                                                                        ------------        ------------        ------------

FINANCING ACTIVITIES
   Net borrowings/(payments) on line of credit                              212,878             326,955            (533,908)
   Repayments on other short and long-term debt                            (689,447)         (1,237,369)         (1,763,505)
   Repayments on capital lease obligations                                  (82,486)            (75,397)            (81,455)
   Cash paid in lieu of compensatory stock warrants                              -0-                 -0-            (85,979)
   Cash overdraft                                                           184,772            (449,895)           (303,749)
   Purchase of treasury stock                                              (226,202)                 -0-                 -0-
   Payment of preferred stock dividends                                    (137,177)                 -0-                 -0-
                                                                        ------------        ------------        ------------
          Net cash used in financing activities                            (737,662)         (1,435,706)         (2,768,596)
                                                                        ------------        ------------        ------------

Net increase/(decrease) in cash and cash equivalents                       (122,470)            122,470                  -0-

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

Cash and cash equivalents, end of year                                  $        -0-        $   122,470         $        -0-
                                                                        ============        ============        ============

</TABLE>

See accompanying notes and auditor's report

                                                                           F-5
<PAGE>

Command Security Corporation

Statements of Cash Flows, Continued
Years Ended March 31, 2000, 1999 and 1998

1.    SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

      Cash paid during the period for:
                                       2000         1999          1998

        Interest                       $848,860     $997,779      $1,100,903
        Income Taxes                         -0-          -0-             -0-


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

        For the years ended March 31, 2000, 1999 and 1998, the Company
        purchased equipment with direct installment and lease financing of
        $701,662, $247,043, and $365,825, 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, 2000, 1999 and 1998,
        $122,644 and $107,099, and $133,055, respectively, have been borrowed
        for this purpose. These borrowings have been excluded from the
        statements of cash flows.

        For the years ended March 31, 1999 and 1998, the Company accrued
        accumulated dividends of $150,643 and $139,484 and issued 913 and 845
        additional shares of its Series A convertible preferred stock to its
        preferred stockholders. These charges to paid-in capital and credits
        to preferred stock have been excluded from the statements of cash
        flows.

        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.

        In June, 1998, the Company purchased certain guard service accounts
        and related equipment and supplies for a total consideration of
        $222,098. The Company paid $55,525 and issued two notes for $55,525
        and $111,049, respectively. The second note was subsequently reduced
        by $31,015 as a retention adjustment. The non-cash portions have been
        excluded from the purchase of accounts and issuance of notes in the
        statement of cash flows.

        In March, 1998, the Company settled the retention adjustment in
        connection with the sale of certain customer lists originally closed
        in December, 1996. The resultant charge to deferred income of $63,159
        and credits to notes receivable and accrued expenses of $63,159 and
        $40,830, respectively, have been excluded from the statement of cash
        flows.

        During the year ended March 31, 1998, the Company settled various
        retention issues related to customer list purchases with the
        Company's common stock. The resultant net charge to equity and credit
        to intangible assets of $240,392 have been excluded from the
        statement of cash flows.

        During the year ended March 31, 1998, the Company acquired certain
        guard service accounts from three former administrative service
        clients in settlement of outstanding advances and the assumption of
        certain loan guarantees. Debt assumed of $150,006 and net advances of
        $94,655 have been excluded from the purchase of intangible assets in
        the statement of cash flows.

        In June, 1997, the Company purchased certain guard service accounts
        for a total consideration of $144,684. The Company paid $56,717,
        issued a note for $56,717 and entered into an agreement for
        consulting services for $31,250 to effect the transition of the
        accounts. The non-cash portions have 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, 2000, 1999 and 1998

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, Georgia, Illinois and New Jersey. In addition,
          the Company also provides other security guard companies
          (administrative service clients) in various states with
          administrative services, such as billing, collection and payroll,
          for a percentage of the related gross revenue or gross profit.

        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, recoverability and attrition rates
          of purchased customer lists, and reserves for general liability and
          workers' compensation claims. 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 or gross
          profit.

        Cash and cash equivalents

          For purposes of the cash flows statements, the Company defines cash
          and cash equivalents as cash 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.

        Advertising costs

          The Company expenses advertising costs as incurred. Amounts
          incurred for recruitment and general business advertising were
          $214,142, $133,553, and $129,400 for the years ended March 31,
          2000, 1999 and 1998, respectively.

                                                                           F-7

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

1.    Business Description and Summary of Accounting Policies, continued

        Income/(loss) per common share

          In February 1997, the Financial Accounting Standards Board issued
          Statement No. 128 (SFAS 128), "Earnings Per Share," which is
          required to be adopted for periods ending after December 15, 1997.
          Under the new requirements for calculating basic earnings per
          share, the dilutive effect of potential common shares, if any, is
          excluded. No diluted earnings per share are presented because the
          effect of assumed issuance of common shares in connection with
          warrants and stock options outstanding and preferred stock
          conversions was antidilutive. The implementation of SFAS 128 had no
          effect on the calculation of the Company's earnings per share for
          the years ended March 31, 2000, 1999 and 1998.

        Accounting for stock options

          During the year ended March 31, 1998, the Company adopted the
          Financial Accounting Standards Board Statement No. 123 (SFAS 123),
          "Accounting for Stock Based Compensation." 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.    Continuity of Operations

          The Company's financial statements have been prepared assuming that
          the Company will continue as a going concern, which contemplates
          the realization of assets and the satisfaction of liabilities in
          the normal course of business. The Company's operations resulted in
          a net loss of $309,710, $15,399 and $4,013,890 for the years ended
          March 31, 2000, 1999 and 1998, respectively, and a working capital
          deficit at March 31, 1998, of $1,122,869. As of March 31, 1998, the
          Company was not in compliance with certain of its debt covenants
          and, as described in Notes 13 and 18, there is litigation and a
          contingency for which the outcomes are uncertain. As a result, the
          independent auditor's report on the March 31, 1998, financial
          statements was modified, indicating that these factors raised
          substantial doubt about the Company's ability to continue as a
          going concern for a reasonable period of time. The Company's
          viability as a going concern is dependent on its ability to achieve
          profitability from its operations, to generate sufficient working
          capital to meet its obligations as they become due, the forbearance
          of its lenders and its ability to resolve the litigation and
          contingency.

          As of March 31, 2000 and 1999, the Company had positive working
          capital of $749,710 and $200,236, respectively, and its operations
          resulted in significantly reduced net losses of $309,710 and
          $15,399 for the years ended March 31, 2000 and 1999, respectively,
          compared to a loss of $4,013,890 for the year ended March 31, 1998.
          These improved results are due, in part, to significant charges in
          fiscal 1998 in connection with the Chapter 7 bankruptcy filing of a
          former administrative service client, charges for impairment of
          long-lived assets, unusually high labor claims and self-insurance
          claims which did not recur in fiscal 2000 or 1999, as well as
          management's development and implementation in fiscal 1999 of a
          national network of independent security guard companies to service
          clients with sites throughout the United States. The implementation
          of this network has increased its ability to compete against larger
          national companies and increased its profit margins. In addition,
          the Company has implemented a plan to actively seek rate increases
          from its existing clients and to sign new contracts in existing
          markets. Furthermore, it has implemented a centralized purchasing
          function in order to better control operating costs and implemented
          a centralized, pro-active credit management and collection policy
          which has significantly reduced bad debt expense and led to the
          recovery of receivables previously reserved.

          Management expects a continued favorable financial impact from the
          above mentioned strategies as well as improved cash flow as a
          result of the repayment in full of certain acquisition indebtedness
          in February, 1999. Furthermore, subsequent to March 31, 1998, the
          Company obtained a waiver from its principal lender, CIT
          Group/Business Credit, Inc., in connection with its non-compliance
          with certain non-financial covenants and management is of the
          opinion that the probability that contractual termination of its
          lending arrangement diminishes with improvements in operating
          results and working capital and that the probability of claims in
          connection with certain restatements and a resultant negative
          impact on operations and financial condition diminishes with time.

                                                                           F-8

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

3.    Furniture and Equipment

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

                                           2000                   1999

          Transportation equipment         $ 1,394,723            $ 1,142,334
          Security equipment                   594,563                537,658
          Office furniture and equipment     1,987,073              1,560,805
                                            ----------            ------------
                                             3,976,359              3,240,797
          Accumulated depreciation          (2,636,028)            (2,209,755)
                                           ------------           ------------

                                           $ 1,340,331            $ 1,031,042
                                           ===========            ===========

        Depreciation expense for the years ended March 31, 2000, 1999 and
        1998 was $519,010, $439,510, and $386,905, respectively, and includes
        amortization of assets purchased under capital lease arrangements
        (see Note 14).

4.    Intangible Assets

        Intangible assets at March 31, consist of the following:

                                           2000                   1999

          Customer lists                   $ 3,675,390            $ 5,657,732
          Borrowing costs                       50,000                 50,000
          Covenant not to compete              180,000                180,000
          Goodwill                              34,007                 34,007
                                           -----------            ------------
                                             3,939,397              5,921,739
          Accumulated amortization          (3,479,334)            (4,315,228)
                                           ------------           ------------

                                           $   460,063            $ 1,606,511
                                           ===========            ===========

        Amortization expense for the years ended March 31, 2000, 1999 and
        1998, was $1,176,448, $1,280,687, and $1,651,889, respectively.
        During the year ended March 31, 2000, the Company removed fully
        amortized customer lists with an initial cost of $2,012,342 from its
        accounts. Approximately 83% of the Company's remaining customer lists
        will become fully amortized during the year ending March 31, 2001.
        During the years ended March 31, 1999 and 1998, the Company removed
        customer lists of $83,780 and $1,743,880 and related accumulated
        amortization of $25,134 and $998,364, respectively, from its accounts
        and recognized impairment losses of $58,646 and $745,516,
        respectively, on its purchased customer lists due to lack of
        retention in some of its branches. Management believed that the
        future expected cash flows would not be sufficient to recover the
        remaining unamortized costs associated with these lists.

5.    Restricted Cash

        Restricted cash represents deposits for the benefit of the Company's
        insurance carrier as collateral for workers compensation claims.

                                                                           F-9

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

6.      Short-Term Borrowings

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

                                                       2000          1999

           Bank line of credit                         $ 7,156,761   $ 6,943,883
           Various insurance financing arrangements,
            interest ranging from 7.72% to 11.27%           35,754        35,630
           Other obligations                                   -0-        16,339
                                                       -----------   -----------

                                                       $ 7,192,515   $ 6,995,852
                                                       ===========   ===========

          In February, 1995, the Company entered into an agreement with CIT
          Group/Business Credit, Inc. ("CIT") under a revolving loan and
          security agreement. The agreement, as amended on January 30, 1997,
          provides for a discretionary line of credit of up to 85% of
          eligible accounts receivable, as defined, but in no event in excess
          of $10,000,000. At March 31, 2000, the Company had used $7,156,761
          of this line, representing virtually 100% of its maximum borrowing
          capacity. Interest is payable monthly at 1.5% over prime, or 10.5%
          at March 31, 2000. The line is collateralized by customer accounts
          receivable and substantially all other assets of the Company. The
          agreement will currently expire in February, 2001, and provides for
          automatic two year renewal terms.

7.      Accounts Payable and Accrued Expenses

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

                                                       2000          1999

           Trade accounts payable                      $   669,552   $   701,296
           Payroll and related expenses                  1,526,877     2,027,968
           Insurance                                       594,608       456,705
           Sales tax                                        70,189        73,997
           Accrued professional fees                       152,000       152,000
           Accrued loss contingencies and settlements       75,000       160,000
           Liabilities assumed in acquisitions              79,000        29,578
           Other                                           160,802       105,618
                                                       -----------   -----------

                                                       $ 3,328,028   $ 3,707,162
                                                       ===========   ===========

          As of March 31, 2000 and 1999, the Company has accrued $75,000 and
          $160,000, 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.

                                                                          F-10

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

8.    Long-Term Debt

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

<TABLE>
<CAPTION>
                                                                                          2000                     1999

          <S>                                                                             <C>                      <C>
          Gordon Robinett (Director), due October, 1999,
          no interest, collateralized by related covenant                                 $      -0-               $  45,000

          Capital Resource Company, (two notes and four notes)
          due October, 2000 and June, 2001, interest at 14%, unsecured                       57,674                  166,017

          Various installment loans due at various dates
          through February, 2003, with interest ranging
          from 3.9% to 12.25% <F1>                                                          470,938                  415,142

          CIT Group/Business Credit, Inc., due February 1, 2002
          interest at prime plus 1.5%, currently 10.5% <F2>                                 191,667                  291,667
                                                                                          ---------                ---------
                                                                                            720,279                  917,826
          Current maturities                                                               (410,603)                (492,677)
                                                                                          ---------                ---------

                                                                                          $ 309,676                $ 425,149
                                                                                          =========               ==========

<FN>
          <F1> Payable to General Motors Acceptance Corporation and Ford
               Motor Credit Corporation. The notes are collateralized by
               automobiles and security equipment.

          <F2> The term loan from CIT Group/Business Credit, Inc., payable in
               monthly installments of $8,333 plus interest at prime plus
               1.5% per annum, is collateralized with security pledged under
               the revolving loan and security agreement (see Note 6).

</FN>
</TABLE>

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

            Year ending:     March 31, 2001      $410,603
                             March 31, 2002       248,129
                             March 31, 2003        61,547
                                                 --------

                                                 $720,279
                                                 ========

                                                                          F-11

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

9.    Stockholders' Equity

         Changes in the number of equity shares of the Company's preferred
         and common stock for the years ended March 31, 2000, 1999 and 1998,
         are as follows:

<TABLE>
<CAPTION>
                                                                             Preferred       Common              Treasury
                                                                             Stock           Stock               Stock

<S>                                                                          <C>             <C>                 <C>
          Balance at March 31, 1997                                             -0-           8,424,332           1,355,400

          Transfer of preferred stock                                        10,567

          Preferred stock dividend shares issued                                845

          Common stock issued                                                                    57,447

          Return of escrowed common stock
           o Note collateral                                                                   (350,911)
           o Retention adjustment                                                              (117,325)
                                                                             ------          -----------         -----------

          Balance at March 31, 1998                                          11,412           8,013,543           1,355,400

          Preferred stock dividend shares issued                                913

          Retirement of common
            stock in treasury                                                                (1,355,400)         (1,355,400)
                                                                             ------          -----------         -----------

          Balance at March 31, 1999                                          12,325           6,658,143                  -0-

          Return of excrowed common stock                                                      (150,000)

          Purchase of treasury stock                                                                                220,800
                                                                             ------          -----------         -----------

          Balance at March 31, 2000                                          12,325           6,508,143             220,800
                                                                             ======          ===========         ===========

</TABLE>

10.   Concentration of Risk

         Geographic concentrations of credit risk with respect to trade
         receivables are primarily in the New York Metropolitan area
         consisting of 45% and 41% of total receivables as of March 31, 2000
         and 1999, respectively. The remaining trade receivables consist of a
         large number of customers dispersed across many different geographic
         regions. During the years ended March 31, 2000, 1999 and 1998, the
         Company generated 38%, 31% and 31%, respectively, of its revenue
         from the commercial airline industry. The Company's remaining
         customers are not concentrated in any specific industry.

         During the years ended March 31, 2000, 1999 and 1998, 56%, 53% and
         52% of administrative service revenue, respectively, was earned from
         one administrative service client. The contract with this
         administrative service client terminated in May, 2000.

         The Company maintains its cash accounts in commercial banks.
         Accounts at each bank are guaranteed by the Federal Deposit
         Insurance Corporation (FDIC) up to $100,000. At March 31, 2000, bank
         balances exceeded insured balances by approximately $1,600,000.

11.   Significant Customers

         During the year ended March 31, 2000, one customer accounted for
         approximately $6,027,000, or 10%, of revenue. During the years ended
         March 31, 1999 and 1998, no customers accounted for 10% or more of
         revenue.

                                                                          F-12

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

12.   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 is 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 can be
         responsible for. A stop-loss insurance policy covers all claims in
         excess of the above amounts. As of March 1, 2000, the Company is
         providing traditional fully insured coverage to its employees. The
         previous partially self-insured plan provides for a three month
         extension of benefit period following termination to provide for
         claim submission of losses incurred prior to the terminations date.
         Claims submitted during the benefit extension period, net of refunds
         of previously paid claims in excess of the self-insured limits, were
         negligible. Amounts accrued for health insurance under the partially
         self-insured plan and included in general and administrative
         expenses were $326,817, $328,938 and $324,752 for the policy years
         ended February 29, 2000, and February 28, 1999 and 1998,
         respectively.

         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.
         Insurance providers assist the Company in determining its estimated
         liability for these claims. Charges for estimated workers'
         compensation related losses incurred and included in cost of sales
         were $1,083,817, $1,137,375 and $1,176,128 for the years ended March
         31, 2000, 1999 and 1998, respectively, which are based on industry
         standard payout profiles.

         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 $1,000,000 per
         occurrence and $10,000,000 in the aggregate. In addition, the
         Company has obtained an excess general liability insurance policy
         that covers claims for an additional $50,000,000 in the aggregate
         ($30,000,000 prior to October 1, 1999). The Company retains the risk
         for the first $50,000 per occurrence. Charges for general liability
         self-insurance expense of $448,291, $572,833, and $900,128, are
         included in cost of sales for the years ended March 31, 2000, 1999
         and 1998, respectively. Such charges are based on a review of
         available data in connection with existing claims 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.

13.   Contingent Liabilities

         The Company has guaranteed three installment loans extended to two
         administrative service clients and one customer list purchaser,
         respectively, by Capital Resources Company. The total outstanding
         balance of such loans as of March 31, 2000, was approximately
         $276,800. The notes mature between September, 2000, and November,
         2001, and are guaranteed by customer lists.

         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. At this time the Company is unable to
         estimate the possible loss, if any, that may be incurred as a result
         of this action. The ultimate outcome may or may not have a material
         impact on the Company's financial position or results of operations.

                                                                          F-13
<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

13.   Contingent Liabilities, continued

         In August, 1997, a complaint was filed in Los Angeles County
         Superior Court by six former employees alleging discrimination,
         wrongful termination, breach of employment contract and intentional
         infliction of emotional distress. The complaint alleges that
         plaintiffs have suffered damages in excess of $1 million. After
         filing the complaint, the plaintiffs, through counsel, agreed to
         submit the dispute to binding arbitration and a request for
         dismissal, without prejudice, was filed with the Court. At this time
         the Company is unable to estimate the possible loss, if any, that
         may be incurred as a result of such arbitration. The ultimate
         outcome of such arbitration may or may not have a material impact on
         the Company's financial position or results of operations.

         The Company has been named as a defendant in several other
         employment related claims, including claims of sexual harassment by
         current and former employees, some of which are currently under
         investigation by 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.

         The Company was in negotiation with a client concerning disputed
         Company charges. Subsequent to March, 31, 2000, the Company reached
         an agreement whereby it has accrued $310,000 in order to retain good
         client relations and to avoid litigation costs in connection with
         this matter. These costs have been included in cost of sales for the
         year ended March 31, 2000.

         The Private Placement Memorandum issued in connection with the
         Company's 1993 Private Placement and the interim financial reports
         for the first three quarters in the fiscal years ended March 31,
         1994 and 1995, filed by the Company contained financial information
         which has since been restated to correct the accounting for advances
         to administrative service clients as well as union and insurance
         accruals. A legal action has been filed against the Company and is
         described in greater detail below. It includes claims based on the
         restatements. It is possible that other purchasers of Units pursuant
         to the 1993 offering and the purchasers of shares in connection with
         the offerings that were consummated in February, 1995, may make
         further claims against the Company, alleging, as the basis, among
         other possible claims the above-mentioned restatements.

         On or about December 4, 1997, an outside shareholder and four of the
         Company's directors (Sands, P. Kikis, Saunders and T. Kikis)
         commenced an action in the Supreme Court of the State of New York,
         County of New York (Index No. 606166/97) against the other four
         directors (Vassell, Robinett, Nekos and Miller), the Company's
         outside corporate and securities counsel and the Company itself in a
         lawsuit characterized as a derivative action. (The claims against
         the Company's outside corporate and securities counsel have since
         been dismissed.) The complaint alleges that one or more of the
         defendant-directors engaged in improper activities, including
         ultra-vires acts, breach of fiduciary duty, fraud against the
         Company, constructive fraud and waste of corporate assets. These
         charges are based upon claims that the defendant-directors concealed
         information from the plaintiff-directors regarding the Company's
         earnings, lacked power to enter into an employment agreement on
         behalf of the Company with Mr. Robinett, and entered into
         administrative service agreements with financially unstable
         companies without performing due diligence. The plaintiffs further
         allege that the Company has failed to appoint a replacement to the
         office of president and that the directors have entered into a
         shareholder agreement which is violative of public policy.
         Plaintiffs seek the award of money damages in an amount which is
         "not less than" $11 million from the individual defendants, a
         declaratory judgment that the shareholder agreement is void, an
         order for an accounting, certain other injunctive relief and
         attorneys' fees and disbursements.

         The Company has interposed an answer denying the allegations
         contained in the complaint. The individual defendants have stated
         that they believe the allegations are completely without merit and
         intend to vigorously defend against each and every claim. The
         Company's Certificate of Incorporation and the Business Corporation
         Law of New York provide for indemnification of officers and
         directors with respect to damages and legal fees incurred in
         connection with lawsuits against them arising by reason of serving
         the Company. Due to the fact that certain members of the board have
         chosen to participate as plaintiffs in this lawsuit, the Company's
         carrier has reserved its rights with respect to the defense and
         indemnity of the Company based on a claimed exclusion from coverage.
         To date, the Company has not been notified of declination of
         coverage. The Company may have a claim against its carrier based on
         the carrier's failure to timely disclaim coverage. The
         defendant-directors intend to seek indemnification, and have
         received advancements of legal fees incurred in connection with
         their defense, from the Company. Through March 31, 2000, the Company
         has expended and charged earnings with approximately $204,000 in
         legal fees (none during the year ended March 31, 2000) in defense of
         this matter on its own behalf as well as on behalf of the defendant
         officers and directors. In addition, the Company has expended
         $100,000 for legal fees on behalf of the plaintiff directors in
         December, 1998, and accrued a $92,000 contingency for legal fees
         incurred by one of the defendants, where management has determined
         that indemnification by the Company is probable. On or about March
         25, 1998, the plaintiffs filed a motion for the appointment of

                                                                          F-14

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

13.   Contingent Liabilities, continued

         a temporary receiver. On June 5, 1998, the Court ordered the
         appointment of a temporary receiver, but prior to the order taking
         effect, the parties agreed to a stipulation pursuant to which
         Franklyn H. Snitow, Esq., was appointed acting President and Chief
         Executive Officer and acting ninth board member during the pendency
         of the defendants' appeal to the Appellate Division of the decision
         to appoint a receiver. Based on the stipulation, the defendants'
         request to the Appellate Division for a stay pending the appeal of
         the order appointing the receiver was granted. On January 12, 1999,
         the Appellate Division dismissed the appeal and modified the lower
         court's order to continue Mr. Snitow's authority to discharge his
         responsibilities as Acting President, Chief Executive Officer and
         Director pending the underlying litigation. The Company is unable to
         reasonably estimate the potential impact on the Company's financial
         condition and results of operations from this lawsuit.

         In August of 1998, the Company was informed that the US Department
         of Transportation, the Federal Aviation Authority and the United
         States Attorneys' Office for the Southern District of Florida were
         conducting a criminal investigation of certain activities at the
         Miami office of its Aviation Safeguards Division. The investigation
         concerned the official certifications of employee background
         investigations made by the Company's Aviation Safeguards division
         through its branch manager. Indications are that the background
         investigations were not properly conducted and hence the
         certifications were false and in violation of United States Code and
         Regulations. The Company has cooperated fully with the investigation
         and is taking steps to ensure future compliance in all areas covered
         by the investigation. The Company's local counsel has completed
         negotiations with the United States Attorney's office whereby the
         proposed pleas and settlement were accepted by the United States
         Attorney's office and approved by the Court. As a result of this
         settlement, in March, 2000, the Company paid $35,400 and has accrued
         an additional $75,000, payable in three equal installments during
         the year ending March 31, 2001.

14.   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 $564,900, $569,200, and
         $605,000, for the years ended March 31, 2000, 1999 and 1998,
         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, 2000, are $730,163 and
         $246,852 and at March 31, 1999, $381,320 and $178,259, 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, 2001                     $157,714   $311,487
                         March 31, 2002                      137,114    252,361
                         March 31, 2003                      107,485    157,692
                         March 31, 2004                       55,227     85,032
                         March 31, 2005                       36,866     23,304
                                                            --------   --------
                                                             494,406   $829,876
                                                                       ========
                         Amounts representing interest       102,693
                                                            --------
                                                            $391,713
                                                            ========

15.   Stock Option Plan and Warrants

         In May, 1990, 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 107,500 shares at an
         exercise price which cannot be less than the fair market value of
         the shares on the date the options are granted.

         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.

                                                                          F-15

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

15.      Stock Option Plan and Warrants, continued

            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 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.

            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 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. The warrants
            issued to the Chairman and Board member expired in May, 1999.

            Pursuant to the 1993 Private Placement (see Note 18), the Company
            issued Unit Warrants to purchase an aggregate of up to 800,000
            shares to investors and warrants to purchase 160,000 shares to
            the placement agent. Each Unit Warrant represents the right to
            purchase one-half of a share at a price of $4.50 per full share.
            The placement agent warrants are exercisable at $2.50 per share.
            The Company had the right to redeem the Unit Warrants at $0.10
            per warrant at any time after April 27, 1994, if, at any time,
            the mean of the closing market price quotations for the shares
            over 20 consecutive trading days is at least $6.00 or the closing
            market price quotations for the shares is at least $6.00 for 10
            consecutive trading days. During the fiscal year ended March 31,
            1995, the exercise price of the Unit Warrants was adjusted to
            $3.50 per full share, the fair value on the date of adjustment.
            The options expired in October, 1997.

            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 has 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 has been 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 December 16, 1993, the Company granted to the Chairman of the
            Board a five-year warrant for 500,000 shares of common stock at
            an exercise price of $3.75, the fair value at time of grant, for
            services rendered in connection with the ISS acquisition. On
            March 31, 1995, the Chairman relinquished and waived his right to
            purchase 275,000 shares underlying this warrant. The warrant for
            the remaining 225,000 shares expired in December, 1998.

            On September 12, 1994, the Company entered into a consulting
            agreement with a firm owned by a member of the Company's Board of
            Directors to provide stockholder relations for a term of one
            year. In conjunction with this agreement, the Company issued
            certain employees of this firm warrants to purchase up to 100,000
            shares of common stock, exercisable through September 30, 1997,
            at exercise prices of $3.00 per share. All of the warrants
            expired during the year ended March 31, 1998.

            On September 28, 1994, the Company issued a warrant for 25,000
            shares of common stock exercisable at $3.63 per share in connection
            with the signing of a non-employer of record administrative service
            agreement to provide scheduling, payroll, billing and receivable
            financing services for an independent security guard service
            company.The warrant expired in October,1997.

                                                                          F-16

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

15.      Stock Option Plan and Warrants, continued

            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 provides the Company's working
            capital line of credit, 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 are
            exercisable at $2.10 per share and expire in February 2001.

            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 warrants are exercisable at $1.875 and expire
            on September 30, 2001.

            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 are exercisable at $2.25 per share
            and expire in November, 2001.

            On November 11, 1999, the Company authorized the issuance of
            warrants to purchase 150,000 of common stock to a 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.

            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, 1997        $2.25 - $2.50  160,000        $1.87  - $3.75    2,530,000

             Expired                                                1.87  -  2.25   (1,570,000)
                                     -----------------------       --------------   -----------

             Outstanding at
               March 31, 1998         2.25 -  2.50  160,000         1.87  -  3.75      960,000

             Expired                                                3.25  -  3.75     (400,000)
                                     -----------------------       --------------   -----------

             Outstanding at
               March 31, 1999         2.25 -  2.50  160,000         1.87  -  3.25      560,000

             Issued                                                          1.031     150,000
             Expired                          2.25  (52,500)                 3.25     (135,000)
                                     -----------------------       --------------   -----------

             Outstanding at
               March 31, 2000        $        2.50  107,500        $1.031 - $2.50      575,000
                                     =======================       ==============   ===========

</TABLE>

           At March 31, 2000, there were 107,500 and 575,000 options and
           warrants outstanding, respectively, exercisable at prices ranging
           from $1.031 to $2.50, and 730,000 shares reserved for issuance
           under all stock arrangements.

                                                                          F-17

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

15.       Stock Option Plan and Warrants, continued

           Significant option and warrant groups outstanding at March 31,
           2000, 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>
                         $1.031       150,000         150,000           $1.031        4.62
                          1.875       205,000         205,000            1.875        1.50
               2.10   to   2.50       327,500         327,500            2.401         .69
                                      -------         -------

               1.031  to   2.50       682,500         682,500            1.942        1.41
                                      =======         =======

</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 effect on the net income or loss of the Company for
           the years ended March 31, 2000, 1999 or 1998. The impact of the
           fair value method takes into account options and warrants granted
           since April 1, 1995. The weighted fair value of options and
           warrants granted during the year ended March 31, 2000, was $.10
           per equivalent share. There were no options or warrants issued
           during the years ended March 31, 1999 or 1998. For the year ended
           March 31, 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 5.35%, volatility of 62.49% and a dividend
           yield of 0.00%.

16.     Income Taxes

          Income tax expense/(benefit) for the years ended March 31 consists
          of the following:

                                                2000       1999       1998
            Current:
              Federal                           $-0-       $-0-       $    -0-
              State and local                    -0-        -0-            -0-
                                                ----       ----       --------
                                                 -0-        -0-            -0-

           Deferred:
              Federal                            -0-        -0-        181,283
              State and local                    -0-        -0-         78,552
                                                ----       ----       --------
                                                 -0-        -0-        259,835

                Income tax expense/(benefit)    $-0-       $-0-       $259,835
                                                ====       ====       ========

          The deferred tax expense for March, 1998, represents an increase in
          the beginning-of-year valuation allowance for deferred tax assets.

          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:

                                                2000     1999     1998

            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    (38.4)   (20.7)   (50.7)
            Permanent differences                (5.4)   (23.1)    (0.5)
                                                ------   ------   ------
            Effective tax rate                    0.0%     0.0%    (7.4)%
                                                =====    ======   ======

                                                                          F-18

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

16.     Income Taxes, continued

          The significant components of deferred tax assets and liabilities
            as of March 31, 2000 and 1999, are as follows:

                                             2000            1999
            Current deferred tax assets:
              Accounts receivable            $    72,507     $   124,114
              Accrued expenses                   139,424         297,289
                                             ------------    ------------
                                                 211,931         421,403

              Valuation allowance               (211,931)       (421,403)
                                             ------------    ------------

                Net current deferred
                  tax asset                  $        -0-    $        -0-
                                             ============    ============

            Non-current deferred tax
              assets/(liabilities):
              Equipment                      $   (48,811)    $   (80,086)
              Intangible assets                  982,898       1,131,567
              Self-insurance                     352,898         328,727
              Net operating loss carryover     2,192,112       1,835,867
                                               3,479,097       3,216,075

              Valuation allowance             (3,479,097)     (3,216,075)
                                             ------------    ------------

                Net non-current deferred
                  tax asset                  $        -0-    $        -0-
                                             ============    ============

          The valuation allowance increased by $53,550, 14,962 and $1,874,080
          during the years ended March 31, 2000, 1999 and 1998, respectively.
          Federal and State net operating loss carry-overs were approximately
          $4,818,000 and $5,203,000, respectively, at March 31, 2000. They
          begin to expire in 2010.

17.     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 under some
          arrangements may become the employer of record for all applicable
          guard personnel. All contracts contain renewal provisions based on
          the volume of business generated by the respective administrative
          service clients. The rights to service the guard contracts are
          retained by the administrative service clients.

          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 following is a summary of the administrative service clients'
          activities for the years ended March 31, 2000, 1999 and 1998,
          respectively, the components of which have been excluded from the
          Company's financial statements:

<TABLE>
<CAPTION>
                                                                         2000         1999             1998
           <S>                                                           <C>          <C>              <C>
           Employer of record administrative service revenue

             Administrative service clients' guard service revenue       $ 566,190    $ 7,528,163      $ 17,913,206
             Cost of revenue                                              (444,664)    (5,612,727)      (13,286,869)
                                                                         ----------   ------------      ------------
             Gross profit                                                  121,526      1,915,436         4,626,337
             Administrative service clients' share of gross profit         (87,634)    (1,468,608)       (3,551,906)
                                                                         ----------   ------------     -------------
                                                                            33,892        446,828         1,074,431
           Non employer of record administrative service revenue           520,304        466,670           376,161
                                                                         ----------   ------------     -------------

             Administrative service revenue                              $ 554,196    $   913,498      $  1,450,592
                                                                         ==========   ============     =============

</TABLE>

                                                                          F-19

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

17.     Administrative Service Agreements, continued

          The Company had extended various operating loans to these service
          companies. Interest charged varied between 2% above the prime
          lending rate of the Chase Manhattan Bank and 14% per annum. As of
          March 31, 2000, the Company did not have any performing outstanding
          loan balances, however, the Company has guaranteed bank loans to
          certain administrative service clients (see Note 13).

18.     Private Placements

          During January and February, 1995, the Company completed several
          private equity offerings including the issuance of 9,061 shares of
          convertible preferred stock with a liquidation value of $165 per
          share for a total of $1,495,065 (each share of preferred stock is
          convertible into 100 shares of the Company's common stock, provides
          a yield of 8% per annum and, as of March, 1998, was redeemable upon
          certain future financing events); 950,002 shares of common stock
          for a total of $1,377,500 pursuant to an offering exempt from
          registration under Regulation D; and 1,137,506 shares of common
          stock for a total of $1,287,174 pursuant to various offerings
          exempt from registration under Regulation S promulgated under the
          Securities Act of 1933. In addition, the Company issued warrants to
          purchase 250,000 shares to the placement agent which have since
          expired. Proceeds to the Company, net of placement agent fees of
          $356,000 and offering costs of $281,397, amounted to $3,522,342.

          In October, 1993, the Company completed a private placement of
          1,600,000 units, at $2.50 per unit, each consisting of one share of
          the Company's common stock and one three year redeemable warrant to
          purchase one-half common share. In addition, the Company issued
          warrants to purchase 160,000 shares to the placement agent. Both
          warrants have since expired. Proceeds to the Company, net of
          placement agent fees of $520,000 and offering costs of $156,926,
          amounted to $3,323,074. The Company was obligated to register the
          shares issued in connection with this offering by February, 1994,
          and attempted to do so. The registration, however, was not
          completed until November, 1995, and in December, 1994, the Company
          authorized the issuance of an additional 400,000 shares to the
          initial investors in accordance with the provisions of the private
          placement agreement.

          In connection with the above private placement offerings, the
          Company has certain risks that are described in Note 13.

19.     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 by
          the issuance of additional Series A stock until such time as all
          amounts due on the Deltec debt have been paid in full and then in
          cash thereafter. The $1.5 million Deltec indebtedness was repaid in
          full in February, 1999. During the years ended March 31, 1999 and
          1998, 913 and 845 Series A shares have been issued, representing
          dividends accrued through February 24, 1999 and 1998, respectively.
          Accrued dividends at March 31, 2000, were $40,674. 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 was obligated to redeem any unconverted Series A shares
          at such time as the Deltec debt is paid in full. However, no
          redemption was required until all outstanding warrants issued in
          the Company's October 1993 private placement were exercised. All
          such warrants expired in October, 1997, and the Company is no
          longer obligated to redeem the Series A preferred stock.
          Consequently, the preferred stock has been transferred and included
          with stockholders' equity on the balance sheets as of March 31,
          2000 and 1999.

                                                                          F-20

<PAGE>

Command Security Corporation

Notes to Financial Statements, Continued
March 31, 2000, 1999 and 1998

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, 2000 and 1999, the fair value of long-term notes
          receivable and long-term debt approximates their carrying amounts.

21.     Related Party Transactions

          The Company's former general counsel is also a member of the Board
          of Directors. Legal fees paid amounted to $2,394 and $6,238 for the
          years ended March 31, 1999 and 1998, respectively. No legal fees
          were paid to this Board member during the year ended March 31,
          2000.

          A director of Deltec International SA, the parent of Deltec
          Development Corporation, the former subordinated debt lender to the
          Company, is also a member of the Board of Directors of the Company.
          Interest paid in connection with the Deltec debt amounted to
          $32,813, and $85,312 for the years ended March 31, 1999 and 1998,
          respectively. The debt was paid in full in February, 1999. Expenses
          of $20,800, $20,800 and $28,100 were paid on behalf of this
          director as compensation for services rendered for the years ended
          March 31, 2000, 1999 and 1998, respectively.

22.     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 period ended March 31, 2000, no discretionary amounts have
          been accrued or paid.

23.     Operating Licenses

          The Company is subject to regulation and licensing by various state
          government agencies. The Chairman of the Company currently holds
          virtually all of the required state operating licenses. In the
          event the Company were to lose the services of the Chairman, an
          officer of the Company would have to obtain the necessary licenses,
          or the Company would have to hire someone who holds the required
          licenses for the Company to continue to conduct its business.

24.     Acquisitions

          During fiscal years 1999 and 1998, the Company acquired several
          security guard businesses, principally customer lists, for an
          aggregate final cost of approximately $181,000 and $378,000,
          respectively, payable in cash and notes. The Company accounted for
          these acquisitions using the purchase method. The financial
          statements include the operations of these businesses from the
          respective acquisition dates. The customer lists are being
          amortized over a five year period, the estimated economic lives of
          the lists.

                                                                          F-21

<PAGE>

                         COMMAND SECURITY CORPORATION
                SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>

                                                                  Against                                    Uncollec-
                                                                  Amounts                                    tible
                                         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, 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    267,590            -0-

    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-

Year ended March 31, 1999:
  Deducted from asset accounts:
    Allowance for doubtful accounts
      receivable - current maturities    $  716,347   $309,348    $(36,143)        $              $          $288,227    $  701,325

    Allowance for doubtful notes
      receivable - current maturities       273,715                 88,447                          60,448     33,924       267,790

    Allowance for other doubtful
      receivables - current maturities    1,024,319     58,568     (88,447)         250,000<F2>    255,597      1,651       987,192

    Allowance for doubtful notes and
      long-term receivables,
      net of current maturities                  -0-                                                                             -0-

Year ended March 31, 1998:
  Deducted from asset accounts:
    Allowance for doubtful accounts
      receivable - current maturities    $  619,621   $376,404    $119,847         $              $  5,837   $393,688    $  716,347

    Allowance for doubtful notes
      receivable - current maturities       450,653    180,360                       37,867<F3>      1,978    393,187       273,715

    Allowance for other doubtful
      receivables - current maturities      104,138    837,129       7,000          196,829<F3>      7,000    113,777     1,024,319

    Allowance for doubtful notes and
      long-term receivables,
      net of current maturities             785,360     57,258                                     230,778    611,840            -0-

<FN>

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

<F2> Represents cash received for item previously removed from accounts.

<F3> Represents deferred revenue reduction related to non-performing
     receivable.

</FN>
</TABLE>

                                                                          F-22
<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

                                  By:/s/ Franklyn H. Snitow
                                  -------------------------------------
                                  Franklyn H. Snitow
                                  Acting President and Chief Executive Officer

Date:  June 28, 2000

     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.

/s/ Franklyn H. Snitow        Director, Acting President         June 28, 2000
----------------------------- and Chief Executive Officer
Franklyn H. Snitow

/s/ William C. Vassell        Chairman of the                    June 28, 20000
----------------------------- Board and Director
William C. Vassell

/s/ Nathan Nelson             Chief Financial Officer            June 28, 2000
----------------------------- and Executive Vice President
Nathan Nelson

                              Vice Chairman of the               June __, 2000
----------------------------- Board and Director
Gordon Robinett

/s/ Peter T. Kikis            Director                           June 28, 2000
-----------------------------
Peter T. Kikis

/s/ Peter J. Nekos            Director                           June 28, 2000
-----------------------------
Peter J. Nekos

                              Director                           June __, 2000
-----------------------------
Gregory J. Miller

                              Director                           June __, 2000
-----------------------------
Steven B. Sands

                              Director                           June __, 2000
-----------------------------
Lloyd H. Saunders, III

/s/ Thomas P. Kikis           Director                           June 28, 2000
-----------------------------
Thomas P. Kikis