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Command Security Corp – ‘10-K/A’ for 3/31/96 – EX-13.1

As of: Wednesday, 9/25/96 · For: 3/31/96 · Accession #: 1005477-96-292 · File #: 0-18684

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 9/25/96  Command Security Corp             10-K/A      3/31/96    2:136K                                   CT EDGAR123/FA

Amendment to Annual Report — Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K/A      Form 10-K Amendment for the Year Ended 3/31/96        13     53K 
 2: EX-13.1     Annual Report                                         45±   210K

EX-13.1 — Annual Report
Exhibit Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Liquidity and Capital Resources Notes to Financial Statements
1	1st Page - Filing Submission
12	Liquidity and Capital Resources
19	Notes to Financial Statements

EX-13.1 1st “Page” of 27 TOC ↑Top Previous Next ↓Bottom Just 1st
 
                                                                COMMAND SECURITY
                                                           CORPORATION
                                                                      [Logo] CSC

[Photograph]

                                                                          1996

                                                                          ANNUAL

                                                                          REPORT

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ABOUT THE COMPANY                                                               
-----------------                                                               

     Command Security Corporation is one of the fastest growing companies in the
security service business today. The Company relies heavily on innovative and   
proprietary technology to deliver the highest level of security services for a  
wide range of corporate and institutional clients. We further differentiate     
ourselves by our dedication to meticulous personnel selection and training,     
which results in the high quality standards of our people for which Command     
Security has become known.                                                      

    Command Security's four major Divisions will be discussed in detail below.
The past year was one in which the acquisition of United Security Group         
substantially increased the size of the Company. Senior management's objective  
was to provide an environment in which each Division executive has the authority
to manage his respective operation with considerable autonomy while conforming  
to a high standard of corporate responsibility and profitability. We continue to
look for ways to streamline overall operations and to increase returns.         

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FINANCIAL HIGHLIGHTS                                                            
--------------------                                                            

Statement of Operations Data                                                    
Years Ended March 31,                                                           

                                                        [Enlarge/Download Table]

                                                     1996           1995            1994 
                                             ------------------------------------------- 
                                                                                         
Revenue (excluding service company revenue)  $ 54,995,444   $ 39,595,272    $ 25,393,933 
Gross profit                                    8,496,499      4,527,365       2,914,928 
Service contract revenue                        1,519,803      1,291,943       1,022,684 
Operating profit (loss)                         1,250,713     (2,412,603)     (2,227,936)
Net income (loss)                                 511,650     (2,983,823)     (2,727,102)
Income (loss) per common share - primary              .06           (.70)           (.96)
Weighted average number of common                                                        
   shares outstanding - primary                 6,663,986      4,274,657       2,827,297 

                                                                [Download Table]


Balance Sheet Data as of March 31,                                                  
                                                1996           1995            1994 
                                        ------------------------------------------- 
                                                                                    
Working capital (deficiency)            $    218,968   $   (531,602)   $   (772,143)
Total assets                              22,384,414     20,267,099      17,733,634 
Redeemable convertible preferred stock     1,614,525      1,495,065                 
Stockholders' equity                       5,189,226      4,993,859       5,135,744 

REVENUE                                                                         
in millions                                                                     

[The following table was represented as a bar graph in the printed material]    

94       95       96                                                          
-----    -----    -----                                                         
$25.4    $39.6    $54.9                                                         

TOTAL ASSETS                                                                    
in millions                                                                     

[The following table was represented as a bar graph in the printed material]    

94       95      96                                                           
-----    -----    -----                                                         
$17.7    $20.3    $22.4                                                         

STOCKHOLDERS'                                                                   
EQUITY                                                                          
in millions                                                                     

[The following table was represented as a bar graph in the printed material]    

94       95       96                                                          
-----    -----    -----                                                         

$5.1     $5.0     $5.2                                                          

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TO OUR SHAREHOLDERS:                                                            
--------------------                                                            

We are happy to report that fiscal 1996 was a year of considerable    
corporate activity and financial progress. Revenues increased by 39% to $55.0   
million compared to $39.6 million in fiscal 1995. We reported net income of     
$512,000 in fiscal 1996 compared to a net loss of $3.0 million registered in the
prior year. Earnings before interest, taxes, depreciation and amortization      
(EBITDA) was $2,812,000, a sharp improvement from a loss of $1,441,000 recorded 
in fiscal 1995. Contributing significantly to Command's profit rebound were the 
results from the United Security Group, whose assets were acquired in February, 
1995. This was the first full year USG was under our management and we were able
to realize considerable cost savings from operational efficiencies.             

EBITDA                                                                          
in millions                                                                     

[The following table was represented as a bar graph in the printed material]    

94       95       96                                                          
-----    -----    -----                                                         
-$1.5    -$1.4    $2.8                                                          

  Operating expenses rose by just 6.5% in fiscal 1996, reflecting our cost
reduction efforts as well as a drop in professional fees, the result of         
resolving several disputes that were in litigation.                             

  We will continue to seek overhead cost savings as we assimilate United's
operations. However, we will also look to enhance revenues by aggressively      
marketing the wider scope of services that United brought to Command. United's  
Aviation Security Division, which in its first year with the Company accounted  
for 25% of total revenue, places the Company in an important position in this   
critical security market and provides us with a platform from which to expand   
internationally.                                                                

A key element in Command Security's business plan is our industry     
consolidation strategy. We look for "stand-alone" opportunities, typically with 
larger firms, as was the case of United Security, that can bring us into new,   
growth markets, as we did with both aviation security and private investigation.
We also look for "fold-in" acquisitions, which we can readily absorb into our   
own operations with little or no additional fixed cost. We completed two such   
"fold-ins" during the past year. We target markets, either from a geographic or 
service standpoint, in which we believe we have a strong competitive or a niche 
position. We enjoy a strong capability to accomplish "fold-ins." Given our      
extensive experience providing turn-key back office and scheduling services to  
independent security companies through our COMGUARD Servicing Agreements, we    
have the infrastructure and capacity to handle such transactions seamlessly. We 
will also exit a market if these criteria are not met. Accordingly, after a     
review of the market and our competitive position, we sold our Boston office    
last year. Management is constantly monitoring the Company's acquisition        
strategy in order ensure that our decisions add to shareholder value.           

     Command Security enters fiscal 1997 a stronger company by several measures.
In addition to our documented financial improvement, we have strengthened our   
management team by the addition                                                 

 2

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of many talented security industry professionals, many of whom joined Command   
from United Security. Moreover, in the past two years, we have more than doubled
the number of security guards we employ, from 1,750 to 3,800.                   

     We continue to invest our resources in technology to maintain a competitive
edge in operations, product development and interactive training programs.      

   The security industry is a $6.5 billion business comprised of some 13,500
firms. Three "conglomerates" account for approximately 37% of total annual      
revenues, while 37 national firms, such as Command account for about 35% of the 
market. There are more than 13,400 smaller firms which represent a little less  
than 30% of the market. We like the position we occupy as a leading national    
firm. We believe our size enables us to be more innovative and more responsive  
to the specific needs of our customers than the industry giants. On the other   
hand, we possess the critical mass of stable client contracts to continue to    
grow in our focused markets and to provide unique, technology-driven services.  
And, we are large enough to implement successfully our acquisition strategy to  
participate in the consolidation of this fragmented industry.                   

   We are grateful to our loyal employees and customers for enabling Command
Security to pursue the exciting growth strategy we have planned. We wish to     
thank our shareholders for their continued confidence and support in our        
efforts. Sincerely,                                                             

/s/ William C. Vassell                                                          

William C. Vassell                                                              
Chairman of the Board                                                           
July 8, 1996                                                                    

[Photograph of H. Richard Dickinson, Executive Vice President and Chief         
Financial Officer, Gordon Robinett, Vice Chairman, Eugene McDonald, Senior Vice 
President, Debra Miller, Corporate Secretary, William Vassell, Chairman of the  
Board]                                                                          

standing left to right:                                                         
H. Richard Dickinson,                                                           
Executive Vice President and                                                    
Chief Financial Officer,                                                        
Gordon Robinett,                                                                
Vice Chairman,                                                                  
Eugene McDonald,                                                                
Senior Vice President,                                                          

seated left to right:                                                           
Debra Miller,                                                                   
Corporate Secretary William                                                     
Vassell                                                                         
Chairman of the Board                                                           

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GUARD SERVICES                                                                  
--------------                                                                  

This Division represents the largest segment of Command Security's    
operations, accounting for approximately 72% of total revenue. It includes the  
traditional uniformed and plainclothes guards, security system console          
operators, crowd control and special events personnel, vehicle and traffic      
control and visitor control and parcel inspection services. Command Security's  
guards are trained and prepared to respond to emergency situations such as      
natural disasters, fires, accidents and medical crises, as well as to handle the
more traditional security tasks including access control and theft prevention.  
The Company has also created a pro-active security program for labor unrest     
called Strike Team for Occupational Protection(TM) or S.T.O.P.(TM). S.T.O.P.(TM)
preventive services include pre-strike analysis and security surveys designed to
assist managements in their planning and preparation for possible labor         
disturbances. In the event of an actual or threatened dispute, S.T.O.P.(TM)     
services include security officers specially trained to deal with access        
control, executive protection, fire prevention, theft and vandalism. In         
addition, there are documentation teams that collect evidence to support pleas  
for restraining orders, injunctions and other legal actions. There is also a    
Technical Services Unit that uses surveillance counter measures to assure       
confidentiality of customer communications during strikes or sensitive          
negotiations.                                                                   

  The Company analyzes each prospective customer's location and particular
security needs prior to recommending an appropriate security program. This      
typically involves a review of the customer's physical layout, lighting, visitor
controls, electronic alarm reporting systems, safety, emergency and personnel   
and vehicle identification procedures.                                          

 At Command Security we place enormous value on employee recruitment and
training. Applicants for guard positions undergo extensive background screening,
testing and interviews and are ultimately selected based on maturity, physical  
fitness, experience, stability and reliability. Training is equally as          
demanding. Accepted applicants undergo three phases of comprehensive,           
multi-media training. Pre-assignment training topics include report writing,    
personal appearance, law and ethics, regulations, search and seizure and        
emergency procedures and the duties and powers of security guards. On-the-Job   
assignment training covers the specific duties as required by the post and      
customer needs. Refresher training is on-going, provided at the discretion of   
local area supervisors. The Company developed STAIRS(TM) (Security Training And 
Information                                                                     

[Photograph]                                                                    

--------------------------------------------------------------------------------

Quality employees                                                               

Command Security carefully screens each applicant. We remain committed to       
individuals who demonstrate the skills necessary for only the best in           
performance.                                                                    

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--------------------------------------------------------------------------------

Superior Training                                                               

Command Security has invested in state-of-the art multimedia training software. 
This interactive program can be customized to each client's needs. Our guards   
are better prepared for every possible circumstance.                            

--------------------------------------------------------------------------------

Reference System), which is a state-of-the-art, interactive, multi-media        
training and support service system. This technology enables the Company to     
train it's own personnel as well to provide an "outsource" option for customers.
STAIRS(TM) technology enables training programs to be either generalized or     
customer-specific and has proven successful in increasing comprehension and     
retention of instructional materials. Its internal feedback system enables      
managers to measure and document each guard's learning process.                 

The Security Guard Division is structured on a decentralized basis,   
operating out of fourteen locations in New York, New Jersey, Connecticut,       
Florida, Illinois and California. Offices are typically established in urban    
markets in which there is concentration of businesses and institutions likely to
require security services. Management looks for niche markets which offer a     
combination of attractive business opportunities and a reasonable competitive   
atmosphere. This decentralized structure also enables supervisory personnel to  
maintain close contact with customers, in both the initial program development  
stage and on an on-going basis to provide a high level of customer service and  
support.                                                                        

The scheduling of guards is a most critical function of every security
company. Command Security developed a proprietary computerized scheduling and   
management information system called COMGUARD(TM). This system not only reduces 
the time our managers would typically spend scheduling daily guard hours, it    
automatically matches guards to meet our customer's requirements and            
specifications. It also handles all "back-office" functions, further reducing   
the time needed for administrative matters. This means our regional managers    
have more time to spend on customer service issues and marketing.               

[4 Photographs]                                                                 

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--------------------------------------------------------------------------------

Value added                                                                     

The use of Safe Passage(TM) is a good illustration of management's operating    
strategy of providing value-added service delivered by a top-of-the-industry    
security force trained with the most advanced technology available.             

--------------------------------------------------------------------------------

AVIATION SERVICES                                                               
-----------------                                                               

     This Division, which accounted for 25% of revenues in fiscal 1996, provides
specialized security and corollary support services for the air transport       
industry. Aviation Safeguards was a key factor in the 1995 acquisition of United
Security Group. Services provided include Preboard Passenger Screening, Positive
Baggage Claim Security, Skycap Service and Wheelchair Escorts, Curbside and Air 
Cargo Security. Recent events have drawn considerable attention to aviation     
security. At most European airports, stringent security services, including     
passenger and cargo screening, are mandated by local authorities who require the
airlines to provide such services. Specialists such as Aviation Safeguards are  
typically brought in to provide these services. We think enhanced federal       
security programs at US airports could evolve along the lines of this European  
experience, which could ultimately lead to increased business opportunities for 
the Company. Once again, the use of leading edge technology as well as exacting 
standards for personnel selection and training set our services apart. Aviation 
Safeguards serves fifty-eight domestic and international air carriers, operating
from John F. Kennedy International Airport and Los Angeles International        
Airport.                                                                        

In 1990, Aviation Safeguards began using a training and certification 
program called Safe Passage(TM) for preboard security screeners. Safe           
Passage(TM) is a computer-based, interactive learning system that puts a trainee
through a battery of twenty four tests to prepare him or her to recognize       
unlawful or dangerous items going through an x-ray machine. Since its           
installation at both airports, Safe Passage(TM) has dramatically increased the  
operating performance and detection efficiency of Aviation Safeguards' passenger
and baggage screening services. The use of Safe Passage(TM) is a good           
illustration of management's operating strategy of providing value-added service
delivered by a top-of-the-industry security force trained with the most advanced
technology available.                                                           

     Another example of technology-based, value-added service is SmartWheel(TM).
This is a proprietary management system that schedules, tracks and monitors     
wheelchair escort services in airport terminals. The Company also provides a    
comprehensive Wheelchair Training and Customer Service Program for handling     
disadvantaged personnel to comply with the Americans with Disabilities Act.     

[2 Photographs]                                                                 

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INVESTIGATIVE SERVICES                                                          
----------------------                                                          

This is Command Security's loss prevention and investigation arm. The 
Management Services Division provides fraud audits, insurance claims and        
recovery work, substance abuse, theft and arson investigations, undercover and  
surveillance operations, background checks, pre- and post-acquisition due       
diligence and in-store detective programs. This Division, which accounted for   
.5% of 1996 revenue, also provides security consulting services for threat    
assessment and risk analysis, physical security and controls auditing, loss     
prevention analysis and security systems planning and design. Its customers are 
businesses and institutions, including hospitals.                               

 Management Services rounds out Command Security's product line with its
focus on white collar crime investigations and has stepped up its marketing     
efforts to existing Company clients. Another marketing initiative has identified
a growing need by retailers and supermarkets for undercover store detectives.   
Unlike traditional investigative work which has a finite term, this has the     
potential of being a recurring source of revenue. Management Services has a     
unique ability to tap a national network of specialized technical, investigation
professionals to respond to a wide variety of customer demands.                 

[2 Photographs]                                                                 

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Unique Ability                                                                  

Management Services has a unique ability to tap a national network of           
specialized technical, investigation professionals to respond to a wide variety 
of customer demands.                                                            

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BACK OFFICE SERVICES                                                            
--------------------                                                            

  This Division, which accounted for 2.5% of 1996 revenues, capitalizes on
Command Security's COMGUARD(TM) program to provide computerized scheduling,     
information and administrative systems to independent security companies. Having
begun this activity in 1990, Command Security currently has eleven clients. By  
providing clients turn-key back office support, they are freed from the         
administrative burdens of running their companies. There are additional benefits
as well, such as more favorable insurance coverage and rates and accounts       
receivable financing. Command Security charges a fee equal to a percentage of   
the service client's revenue, in exchange for enabling these companies to reduce
their general and administrative expenses and to free up the owners to          
concentrate on expanding their business.                                        

These service agreements have helped the Company offset the cost of   
developing the COMGUARD(TM) program. They have also enabled Command Security to 
reach out to smaller security operations across the country. This has several   
advantages. First, it diversifies the Company's revenue stream by geographic    
region, which reduces the exposure to individual markets. Also, it provides the 
Company with a source of regional and market intelligence, providing helpful    
input on a variety of issues. And finally, it introduces Command Security to    
private companies whose management may ultimately conclude that a brighter      
future exists as a part of a larger operation.                                  

  Our back-office staff possesses broad based knowledge of service-related
issues, an understanding of law-enforcement and contractual requirements, a     
history of innovative programming and proven ability to respond effectively to  
meet changing service needs. This has established our outstanding track record  
as evidenced by the excellent ratings CSC receives from our service agreement   
clients.                                                                        

   In November, Command Security Corporation was pleased to announce that it
had signed it's first back office service agreement for special duty police work
in Stamford, Connecticut. We are excited about the opportunity of working with  
the Stamford Police Department, assisting them with out-sourcing their          
back-office services for their special duty work for local businesses and       
residents.                                                                      

    Command Security is a member of the International Association of Chiefs of
Police and attends the national conference as an exhibitor annually. We         
anticipate a rapid expansion in our Special Duty Police Service Agreement client
base with this key association. An affiliation with Command Security allows the 
Police Department to concentrate and focus on what it does best - Law           
Enforcement.                                                                    

[2 Photographs]                                                                 

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Technological edge                                                              

With COMGUARD(TM) we can rapidly select the right people for our customer's     
needs and facilitate accurate billing.                                          

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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, 1996, 1995, 1994, 1993 and   
1992, which have been audited by independent certified public accountants. The  
information should be read in conjunction with "Managements Discussion and      
Analysis of Financial Condition and Results of Operations" and with the         
financial statements and related notes included in the Report. See Note 21,     
"Acquisitions", for factors affecting the comparability of the financial data.  

                                                        [Enlarge/Download Table]


Statement of Operations Data                                                                                      
Years Ended March 31,                               1996           1995          1994           1993          1992
                                             ---------------------------------------------------------------------

                                                                                                                  
Revenue (excluding service company revenue)  $54,995,444    $39,595,272   $25,393,933    $ 9,760,092   $16,714,464
Gross profit                                   8,496,499      4,527,365     2,914,928      1,939,632     2,699,355
Service contract revenue                       1,519,803      1,291,943     1,022,684      1,527,670     1,431,455
Operating profit (loss)                        1,250,713     (2,412,603)   (2,227,936)      (311,477)      322,357
Net income (loss)                                511,650     (2,983,823)   (2,727,102)      (315,469)      114,102
Income (loss) per common share - primary             .06           (.70)         (.96)          (.15)          .05
Weighted average number of common                                                                                 
   shares outstanding - primary                6,663,986      4,274,657     2,827,297      2,053,075     2,137,000


                                                        [Enlarge/Download Table]

Balance Sheet Data as of March 31,                                                                           
                                               1996           1995          l994           1993          1992
                                        ---------------------------------------------------------------------
                                                                                                             
Working capital (deficiency)            $   218,968    $  (531,602)  $  (772,143)   $ 1,063,648   $ 2,306,790
Total assets                             22,384,414     20,267,099    17,733,634     11,909,890    10,806,072
Short-term debt(1)                        8,506,911      6,095,183     6,936,086      3,940,092     3,024,587
Long-term debt(2)                         1,194,505      1,229,773     1,106,221                       69,252
Redeemable convertible preferred stock    1,614,525      1,495,065                                           
Stockholders' equity                      5,189,226      4,993,859     5,135,744      4,182,472     4,371,016

(1)  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 and 9 of "Notes to Financial Statements."                     

(2)  The Company's long-term debt includes the long-term portion of obligations 
under capital leases.                                                 

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.                         

Results of Operations                                                           

For the fiscal year ended March 31, 1996, the Company's operations resulted in a
net profit of $511,650 after a net income tax benefit of $300,541. In addition, 
as of that date, the Company had positive working capital of $218,968 and its   
public accounting firm has removed the "going concern" modification which was   
included in the prior auditor's report. The operating results for the year were,
in part, due to management's development and implementation of a plan to reduce 
administrative expenses primarily through synergies realized with the           
elimination of duplicative overhead costs following the acquisition of United.  

The Company plans to grow through internal sales expansion, through   
acquisitions and by selling its Service Agreements. The Company intends to      
finance this growth through its existing lines of credit; cash realized from the
exercise of stock options and warrants; and/or private placement or public issue
of stock. Management will continue to seek cost reductions in its direct labor, 
payroll tax rates and insurance expense, as well as administrative savings where
appropriate.                                                                    

Fiscal Year Ended March 31, 1996 Compared with                                  
March 31, 1995                                                                  

During the fiscal year ended March 31, 1996, revenue increased by $15.4 million 
or 39.0% over the fiscal year ended March 31, 1995. Revenue increased by        
approximately $24.4 million as a result of the acquisition of United in February
24, 1995 and other, smaller acquisitions closed during fiscal year 1996. This   
increase was offset by $5.9 million resulting from contract cancellations net of
new contract starts, $0.4 million resulting from the sale of the Company's      
Boston operation and $2.7 million attributable to the special event security    
provided for WOODSTOCK '94 (see "--Liquidity and Capital Resources") which was  
reported in the prior year and did not recur in the fiscal year ended March 31, 
1996.                                                                           

   Gross profit as a percentage of revenue increased to 15.4% in fiscal 1996
from 11.4% in fiscal 1995. This increase is primarily attributable to lower     
direct labor costs, as well as lower costs for union benefits. Offsetting this  
increase was the high margin special event security provided for WOODSTOCK '94  
(see "--Liquidity and Capital Resources") that did not recur in the fiscal year 
ended March 31, 1996.                                                           

   The Company provides payroll and billing services and accounts receivable
financing through contracts with service company 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. The caption "Service Contract Revenue" represents the income
earned on the Service Agreements.                                               

     Service Contract Revenue increased by $227,860 to $1,519,803 in fiscal year
1996 compared to $1,291,943 fiscal year 1995. $275,034 of this increase is      
attributable to the Company's non-employer of record program, new in fiscal year
1996. Fees also increased by another $229,221 due to higher volume generated by 
existing Service Agreements, offset by the loss during the third quarter of     
fiscal year 1995 of a contract with one service company client, revenue from    
which amounted to $276,395 in fiscal year 1995.                                 

  General administrative expenses increased by $2,788,500 to $9,339,191 in
fiscal 1996 from $6,550,691 in fiscal 1995. The major areas of increase are the 
ongoing general and administrative costs of $1,649,135 resulting from the       
addition of the United operations; depreciation and amortization expense of     
$615,719; bank service fees of $202,224; and administrative salary expense of   
$158,263.                                                                       

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     The provision for doubtful accounts decreased by $1,424,153 from $1,777,460
to $353,307. This decrease is primarily due to provisions established during    
fiscal year 1995 for the collection of the WOODSTOCK '94 receivables of         
$639,530, as well as for various service accounts and notes receivable. During  
fiscal year 1996, the Company reported bad debt recoveries of $220,918 compared 
with $111,107 for the prior fiscal year. This caption represents the amounts    
collected on accounts receivable in excess of the value carried, net of         
established provisions for doubtful accounts. Of the amount reported for fiscal 
year 1996, $200,000 represents the amount collected in excess of book value of  
the WOODSTOCK '94 receivable.                                                   

    Insurance rebates received by the Company for fiscal years ended March 31,
1996 and 1995 of $742,305 and $150,238 represent dividends received from the    
Company's former worker's compensation insurance carrier for a multi-state      
program that was in effect for the three years ended September 30, 1995. The net
premium paid by the Company was based on ultimate losses pursuant to a          
predetermined calculation with rebates of excess premiums refundable to the     
Company in the form of dividends at the discretion of the insurance carrier.    
Although the insurance carrier has no legal obligation to declare a dividend,   
the Company believes that it is likely that it will receive a similar dividend  
during the fourth quarter of fiscal year ended 1997 for an amount ranging from  
$600,000 to $800,000. The policy for the current policy year is also loss       
sensitive but provides for a contractual obligation on the part of the insurance
carrier to refund premiums paid in excess of actually determined premiums. As   
such, the Company has calculated its insurance expense for the last six months  
of the 1996 fiscal year on the basis of estimated losses plus certain minimum   
premium amounts. Therefore, no significant rebates will be forthcoming in the   
future with respect to the current policy year.                                 

The loss on value of intangible assets represents a write-down of an  
acquired customer list for the value of the customers lost (see Note 4 to "Notes
to Financial Statements").                                                      

   Net interest increased by $389,911 to $1,013,502 in fiscal year 1996 from
$623,591 in fiscal year 1995. This increase is attributable to the interest     
required to service the increased debt resulting from the acquisition of United 
and higher working capital requirements.                                        

    Equipment dispositions primarily represent older cars sold or taken out of
service.                                                                        

Fiscal Year Ended March 31, 1995 Compared with                                  
March 31, 1994                                                                  

During the fiscal year ended March 31, 1995, revenue increased by $14,201,339 or
55.9% over the fiscal year ended March 31, 1994. Approximately $9.3 million of  
the increase was attributable to the acquisition of the security guard business 
of ISS International Service System, Inc., ("ISS"), approximately $2.7 million  
of the increase was attributable to the special event security provided for     
WOODSTOCK '94 (gross profit is calculated prior to adjustment for provisions for
doubtful accounts) (see "--Liquidity and Capital Resources"); and approximately 
$2.1 million of the increase was attributable to the acquisition of United.     

   After giving effect to a reclassification of insurance rebates applicable
to prior years, gross profit as a percentage of revenue decreased to 11.4% in   
fiscal year 1995 from 11.5% in fiscal year 1994. This decrease was primarily    
attributable to higher union costs in connection with the Company's New York    
City operation offset by the high margin special event security provided for    
WOODSTOCK '94 and the higher margin business acquired from United. Without the  
special event security and the higher margin business acquired from United,     
gross profit would have declined by .4% to 11.0% of revenue.                    

     Service Contract Revenue increased by $269,259 in fiscal year 1995 compared
to fiscal year 1994. Approximately two-thirds of the increase in fiscal year    
1995 compared to fiscal year 1994 was due to increased volume generated by      
existing Service Agreements and one-third was attributable to new Service       
Agreements. A contract with one service company client ended in December, 1994. 
Revenue for this client amounted to $276,395 in fiscal year 1995.               

  General administrative expenses increased by $1,419,076 to $6,550,691 in
fiscal year 1995 from $5,131,615 in fiscal year 1994. The major areas of        
increase were the ongoing general and administrative costs of the acquisitions  
of ISS, Madison and United of $411,000, $159,000 and $177,000, respectively;    
depreciation and amortization expense of $239,000; and administrative salary    
expense of $460,000 ($312,500 of which represents provision for former employee 
arbitration potential liability). The provision for doubtful accounts increased 
by $727,420 from $938,933 to $1,666,353. The major components of this increase  
were provisions established for the collection of WOODSTOCK '94 receivables     
$639,530 with the remainder attributable to service accounts and notes          
receivable. The loss on value of intangible assets represents a write-down of an
acquired customer list for the value of the customers lost.                     

 Net interest increased by $218,471 to $623,591 in fiscal year 1995 from
$405,120 in fiscal year 1994. This increase was attributable to the interest    
required to service the increased debt resulting from the acquisition of ISS and
United.                                                                         

    Equipment dispositions primarily represent older cars sold or taken out of
service.                                                                        

Liquidity and Capital Resources                                                 

The Company pays its guard employees and those of its Service Agreement Clients 
on a weekly basis, while its customers and the customers of service company     
clients pay for the services of such employees generally between 50 to 60 days  
after billing by the Company. In order to provide funds for payment to its guard
employees, on February 24, 1995, the Company entered into a commercial revolving
loan arrangement with CIT Group/Credit Finance (CIT). Under this agreement,     
borrowings may be made in an amount up to 80% of eligible accounts receivable,  
but in no event more than $10,000,000. During the quarter ended December 31,    
1995, this agreement was amended to increase the borrowing availability from 80%
to 82.5%. Outstanding balances bear interest at per annum rate of 2% in excess  
of the "prime rate" and are collateralized by a pledge of the Company's accounts
receivable and other assets. Prior to the existing agreement, the Company       
utilized a commercial revolving loan agreement with another institutional       
lender.                                                                         

     At March 31, 1996, the Company had borrowed $5,964,204 or approximately 52%
of its billed accounts receivable (after allowance for bad debts, but before    
accrued and unbilled receivables) and virtually 100% of its maximum borrowing   
capacity based on the definition of "eligible accounts receivable" under the    
terms of the revolving loan arrangement.                                        

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).                                              

  The Company entered into a subordinated loan arrangement on February 24,
1995, with Deltec Development Corporation (Deltec) pursuant to which the Company
borrowed $1.5 million, the proceeds of which were used primarily to acquire the 
assets of United. The subordinated loan has a term of four years, calls for     
quarterly principal and interest payments and bears interest at fourteen percent
(14%) per annum. It is collateralized, on a subordinated basis, by all the      
Company's assets, properties and other revenue.                                 

The loan agreements with CIT and Deltec contain numerous non-financial
covenants. For the year ended March 31, 1996, the Company was not in compliance 
with several of the administrative requirements. Subsequent to the year end, the
Company obtained a waiver of these violations from both CIT and Deltec. (See    
Notes 6 and 9 to "Notes to Financial Statements".)                              

    Other short-term borrowings of $502,000 as of March 31, 1996, consisted of
insurance premium financing of $383,000 with the remainder primarily consisting 
of service account acquisition indebtedness.                                    

 Long-term debt as of March 31, 1996 consisted of $1,000,000 due to ISS;
$1,125,000 due to Deltec Development Corporation; $478,764 (net of imputed      
interest of $36,383) due to 32B-J Pension, Health and Annuity Fund with which   
the Company reached agreement in January, 1996 (see Note 9 to "Notes to         
Financial Statements"); and $42,500 due to William C. Vassell, the Company's    
Chairman of the Board; with the remainder of $471,000 primarily representing    
various auto and other installment loans.                                       

The ISS debt of $1,000,000 created in connection with the purchase of 
various guard service accounts consists of two notes in the amount of $500,000  
each due, on March 31, 1995 and October 27, 1995, respectively. The Company has 
defaulted on both payments and is engaged in nego-                              

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tiations with ISS to settle the obligation. The Company believes that ISS has   
breached certain provisions of the various agreements associated with the       
acquisition. ISS has the right to foreclose on certain shares of the Company's  
common stock owned by Mr. Vassell, the Company's Chairman of the Board. The     
Company has entered into an agreement to indemnify Mr. Vassell in the event of  
foreclosure whereby the Company would issue to Mr. Vassell such number of shares
as were delivered to ISS in foreclosure. This would result in a reduction of the
ISS-related debt and a corresponding increase in stockholders' equity. There    
would be no impact to the Company's net income except a decrease in earnings per
share due to the increased number of shares outstanding. See "SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT--Change in Ownership".              

     The Company completed a series of private placements of 2,087,508 shares of
Common Stock and 9,061 shares of Series A Preferred Stock as of February 24,    
1995. The total capital raised was approximately $4,160,000. The capital was    
used for working capital purposes as well as for the acquisition of United.     
Expenses incurred in connection with the acquisition and private placements were
approximately $1,150,000. Approximately $500,000 was used for working capital   
purposes.                                                                       

On October 27, 1993, the Company completed a private placement of 1.6 
million units at $2.50 per unit. Each unit consists of one share of common stock
and one warrant for one-half share exercisable at $3.50 per full share. The     
private placement raised $4,000,000 of which $2,250,000 was used along with debt
financing to close the acquisition of the security guard business of ISS.       
Expenses in connection with the private placement were approximately $677,000.  
Expenses relating to the acquisition were approximately $146,000. The remainder 
of $927,000 was used for working capital purposes.                              

   The Private Placement Memorandum issued by the Company in connection with
both the 1993 and 1995 Private Placements contained financial information which 
has since been restated. It is possible that under federal and/or state         
securities laws, the purchasers of Units pursuant to the 1993 offering and the  
purchasers of shares in connection with the offerings that consummated in       
February, 1995, may allege that they have a right to the return of their        
investment, which totaled $4.0 million and $4.16 million respectively, with     
interest. (See Note 13 to "Notes to Financial Statements".) Management believes 
that the probability of such claims and the resultant negative impact on the    
Company's financial condition is diminishing with time.                         

During the fiscal year ended March 31, 1995, the Company established a
reserve in the amount of $629,530 against a gross receivable balance of $940,833
plus interest and legal fees owed to it on its security contract for WOODSTOCK  
'94. During the third quarter of fiscal year 1996, the Company reached an       
agreement with Polygram Diversified Ventures, Inc. and Woodstock Ventures, Inc.,
as a result of which the Company received a final cash settlement of $650,000.  

   Accounts receivable, net of allowance for doubtful accounts, increased by
approximately $2.6 million primarily as a result of new business generated by   
existing service agreement clients ($1.5 million) as well as the addition of new
service agreements ($0.7 million) signed during fiscal year 1996. This increase 
was financed primarily by borrowings on the line of credit. Accounts payable and
accrued expenses decreased by approximately $1.0 million due in substantial part
to payment during the fiscal year 1996 of certain liabilities assumed pursuant  
to the acquisition of United and a reduction in accounts payable resulting from 
the more timely payment of the Company's obligations to its vendors.            

   The Company had positive working capital as of March 31, 1996 of $218,968
as compared to a working capital deficit of $531,602 as of March 31, 1995. This 
improvement during the fiscal year 1996 was primarily due to earnings, as well  
as the favorable settlement with the 32BJ union over past benefits. (See Note 9 
to "Notes to Financial Statements".)                                            

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.                                             

   The Company has no present material commitments for capital expenditures.

  During fiscal year 1995, the Company adopted the provisions of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived      
Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121). This statement  
requires that the long-lived assets (e.g., certain intangibles) be reviewed for 
impairment whenever events indicate that the carrying amount of an asset may not
be recoverable and provides guidelines for measuring the impairment. The        
adoption of SFAS 121 had no material impact on the financial position or results
of operations of the Company.                                                   

However, in light of the recent increase in the attrition rate of certain 
acquired customer accounts, the Company will be required to re-evaluate the     
estimated remaining lives of its customer lists (intangibles) and may therefore 
increase the rate of amortization in future periods. Such increase in           
amortization would represent a non-cash expense, and would therefore not have an
impact on the cash flow of the Company.                                         

Changes in and Disagreements with Accountants on                                
Accounting and Financial Disclosure                                             

On February 5, 1996, at the direction of its Board of Directors, the  
Company advised Coopers & Lybrand L.L.P. ("Coopers") that due to cost           
containment efforts, its engagement of Coopers as its independent public        
accountants was terminated. The Board also determined to engage D'Arcangelo &   
Co. L.L.P. ("D'Arcangelo"), as its new independent public accountants, effective
as of February 8, 1996.                                                         

  The following information concerns prior opinions and disagreements with
the Company's former accountants during the two most recent fiscal years.       

Cooper's report on the financial statements for the fiscal years ended
March 31, 1994 and March 31, 1995 contained an opinion modified to disclose     
substantial doubt about the Company's continuation as a going concern. Coopers' 
report on the financial statements for the year ended March 31, 1994 also       
contained a modification to disclose the restatement of the Company's March 31, 
1992 and March 31, 1993 year-end financial statements. The restatements were    
made in connection with the application of an accounting principle related to   
the method of recognizing gain on sales of the Company's customer lists and     
advances to service companies in exchange for notes. Previously, the Company    
recognized gain associated with the sale of a customer list at the date the     
transaction was consummated if certain conditions, such as the adequacy of      
collateral and a reasonable expectation of performance, were met. Advances to   
service companies were recorded as a current or long term asset, depending on   
the term of the note. Upon reconsideration, the Company determined that, absent 
an adequate down payment at closing, such gain should be recognized only when   
cash collections are received. Advances to customer list purchasers are charged 
to operations and recognized only upon recovery.                                

    The above-mentioned application of an accounting principle was the subject
of a disagreement between the Company and Coopers in early February 1994. The   
disagreement was resolved to the satisfaction of Coopers and the Company's Board
of Directors. The Company has authorized Coopers to respond fully to the        
inquiries of the successor accounting firm, D'Arcangelo, regarding the          
disagreement.                                                                   

 In connection with the disagreement with Coopers, the Company consulted
with D'Arcangelo concerning the recognition of earnings generated by the Company
from one of its service agreement clients. D'Arcangelo, which had been providing
supplemental accounting and consulting services to the Company, expressed its   
view regarding this matter of disagreement with Coopers. D'Arcangelo's views    
were that the Company's method of recognizing earnings from its service         
agreement clients was correct. As stated above, Coopers' view was that certain  
earnings reported by the Company in connection with one of its service agreement
clients was not the correct manner of accounting for those transactions.        

Upon final disposition of the matters which were the subject of the   
disagreement, all parties, including the Company, Coopers and D'Arcangelo, were 
in agreement with the manner in which the subject matter was accounted for.     

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Command Security Corporation                                                    

BALANCE SHEETS                                                                  

                                                        [Enlarge/Download Table]

                                                                                         March 31,        
ASSETS                                                                               1996            1995 
                                                                             ---------------------------- 
                                                                                                          
Current assets:                                                                                           
  Cash and cash equivalents                                                  $          0    $          0 
  Accounts receivable from guard service customers, less allowance for                                    
    doubtful accounts of $519,220 and $657,135, respectively                    8,040,826       7,641,122 
  Accounts receivable from service contract customers, less allowance for                                 
    doubtful accounts of $322,786 and $246,764, respectively                    4,279,586       2,077,461 
  Prepaid expenses                                                              1,176,972         910,238 
  Notes receivable, current maturities, less allowance for doubtful                                       
    accounts of $362,164 and $340,045, respectively                               260,547         191,259 
  Other receivables, less allowance for doubtful accounts                                                 
    of $17,372 and $122,513, respectively                                         285,469         290,650 
  Income taxes receivable                                                               0         144,188 
                                                                             ---------------------------- 
      Total current assets                                                     14,043,400      11,254,918 
Furniture and equipment at cost, net                                              975,832         953,245 
Notes and long-term receivables, less allowance for doubtful                                              
  accounts of $737,436 and $1,650,272, respectively                               210,659         708,686 
Intangible assets, net                                                          6,270,440       7,179,955 
Deferred income taxes                                                             300,541               0 
Other assets                                                                      583,542         170,295 
                                                                             ---------------------------- 
      Total assets                                                           $ 22,384,414    $ 20,267,099 
                                                                             ============================ 
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                      
Current liabilities:                                                                                      
  Cash overdraft                                                             $    913,944    $    711,199 
  Current maturities of long-term debt                                          1,938,273       1,555,998 
  Current maturities of obligations under capital leases                          102,811          91,924 
  Short-term borrowings                                                         6,465,827       4,447,261 
  Accounts payable and accrued expenses                                         3,761,633       4,885,722 
  Due to service companies                                                        641,944          94,416 
                                                                             ---------------------------- 
      Total current liabilities                                                13,824,432      11,786,520 

Deferred gain                                                                     133,303          56,799 
Self-insurance reserves (Note 13)                                                 428,423         705,083 
Long-term debt, net                                                             1,178,962       1,187,330 
Obligations under capital leases, net                                              15,543          42,443 
                                                                             ---------------------------- 
                                                                               15,580,663      13,778,175 
                                                                             ---------------------------- 
Commitments and contingencies (Notes 12, 13 and 18) Redeemable, convertible                               
Series A preferred stock, $.0001 par value                                                                
  per share, 9,785 and 9,061 shares designated, issued and outstanding in                                 
  1996 and 1995, redemption and liquidation value of $1,614,525                                           
  and $ 1,495,065, respectively                                                 1,614,525       1,495,065 
                                                                             ---------------------------- 
Stockholders' equity:                                                                                     
  Preferred stock $.0001 par value per share, authorized 1,000,000 shares,                                
    including redeemable Series A preferred stock                                                         
  Common stock, $.0001 par value per share, authorized 20,000,000                                         
    shares, issued 8,119,606 and 7,989,332, respectively                              812             799 
  Paid-in capital                                                               9,805,425      10,121,721 
  Deficit                                                                      (4,614,011)     (5,125,661)
                                                                             ---------------------------- 
                                                                                5,192,226       4,996,859 
  Common stock in treasury, at cost, 1,355,400 shares                              (3,000)         (3,000)
                                                                             ---------------------------- 
                                                                                5,189,226       4,993,859 
      Total liabilities and stockholders' equity                             $ 22,384,414    $ 20,267,099 
                                                                             ============================ 

See accompanying notes and accountant's report.                                 

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Command Security Corporation                                                    

STATEMENTS OF OPERATIONS                                                        

                                                        [Enlarge/Download Table]

                                                                      Years Ended March 31,           
                                                                 1996            1995            1994 
                                                         -------------------------------------------- 
                                                                                                      
Revenue (excluding service company revenue-see Note 17)  $ 54,995,444    $ 39,595,272    $ 25,393,933 
Cost of revenue                                            46,498,945      35,067,907      22,479,005 
                                                         -------------------------------------------- 
      Gross profit                                          8,496,499       4,527,365       2,914,928 
                                                         -------------------------------------------- 
Service contract revenue (Note 17)                          1,519,803       1,291,943       1,022,684 
                                                           10,016,302       5,819,308       3,937,612 
                                                         -------------------------------------------- 
Operating expenses:                                                                                   
  General and administrative expenses                       9,339,191       6,550,691       5,131,615 
  Provision for doubtful accounts                             353,307       1,777,460       1,098,007 
  Bad debt recoveries                                        (220,918)       (111,107)       (159,074)
  Insurance rebates                                          (742,305)       (150,238)              0 
  Loss on value of intangible assets, net (Note 4)             36,314         165,105          95,000 
                                                         -------------------------------------------- 
                                                            8,765,589       8,231,911       6,165,548 
                                                         -------------------------------------------- 
      Operating income/(loss)                               1,250,713      (2,412,603)     (2,227,936)
                                                         -------------------------------------------- 
Other expense/(income):                                                                               
  Interest expense                                          1,182,779         717,204         492,685 
  Interest income                                            (169,277)        (93,613)        (87,565)
  Loss on equipment dispositions                               28,952           5,296          20,745 
  Other income                                                 (2,850)         (4,219)         (9,141)
                                                         -------------------------------------------- 
                                                            1,039,604         624,668         416,724 
                                                         -------------------------------------------- 
      Income/(loss) before income tax (benefit)/expense       211,109      (3,037,271)     (2,644,660)
Income tax (benefit)/expense                                 (300,541)        (53,448)         82,442 
                                                         -------------------------------------------- 
      Net income/(loss)                                       511,650      (2,983,823)     (2,727,102)
Preferred stock dividends                                     119,460               0               0 
                                                         -------------------------------------------- 
Net income/(loss)applicable to common stockholders       $    392,190    $ (2,983,823)   $ (2,727,102)
                                                         ============================================ 
Income/(loss) per share of common stock                  $        .06    $       (.70)   $       (.96)
                                                         ============================================ 
Weighted average number of common and                                                                 
  common equivalent shares outstanding                      6,663,986       4,274,657       2,827,297 
                                                         ============================================ 

See accompanying notes and accountant's report.                                 

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Command Security Corporation                                                    

STATEMENTS OF STOCKHOLDERS' EQUITY                                              

                                                        [Enlarge/Download Table]

                                                               Years Ended March 31, 1996, 1995 and 1994                    

                                                Common Stock                           Retained                             
                                            --------------------        Paid-In        Earnings     Stock In                
                                               Shares     Amount        Capital       (Deficit)     Treasury          Total 
                                            ------------------------------------------------------------------------------- 

                                                                                                                            
Balance at April 1, 1993                    3,437,900       $344    $ 3,599,864    $    585,264      $(3,000)  $  4,182,472 
Issuance of Common stock                                                                                                    
  o Private placement, net (Note 18)        1,600,000        160      3,322,914                                   3,323,074 
  o Other                                      14,000          1         41,999                                      42,000 
Deferred stock compensation expense                                      77,800                                      77,800 
Common stock purchase warrants exercised       95,000         10        237,490                                     237,500 
Net loss                                                                             (2,727,102)                 (2,727,102)
                                            ------------------------------------------------------------------------------- 

Balance at March 31, 1994                   5,146,900        515      7,280,067      (2,141,838)      (3,000)     5,135,744 
Issuance of common stock                                                                                                    
  o Private placements, net (Note 18)       2,087,508        209      2,042,227                                   2,042,436 
  o Other                                     754,924         75        773,627                                     773,702 
Deferred stock compensation expense                                      25,800                                      25,800 
Net loss                                                                             (2,983,823)                 (2,983,823)
                                            ------------------------------------------------------------------------------- 

Balance at March 31, 1995                   7,989,332        799     10,121,721      (5,125,661)      (3,000)     4,993,859 
Deferred stock compensation expense                                       4,300                                       4,300 
Common stock registration costs                                        (136,436)                                   (136,436)
Issuance/(return) of escrowed common stock                                                                                  
  o Accrued fees                              152,774         15            (15)                                          0 
  o Retention settlement                      (22,500)        (2)       (64,685)                                    (64,687)
Preferred stock dividends                                              (119,460)                                   (119,460)
Net income                                                                              511,650                     511,650 
                                            ------------------------------------------------------------------------------- 
Balance at March 31, 1996                   8,119,606       $812    $ 9,805,425     $(4,614,011)     $(3,000)   $ 5,189,226 
                                            =============================================================================== 

See accompanying notes and accountant's report.                                 

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Command Security Corporation                                                    

STATEMENTS OF CASH FLOWS                                                        

                                                        [Enlarge/Download Table]


INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                             Years Ended March 31,          
                                                                         1996           1995           1994 
                                                                  ----------------------------------------- 
                                                                                                            
OPERATING ACTIVITIES                                                                                        
  Net income/(loss)                                               $   511,650    $(2,983,823)   $(2,727,102)
 Adjustments to reconcile net income/(loss) to net                                                          
   cash provided by/(used in) operating activities:                                                         
    Depreciation and amortization                                   1,587,832        972,653        733,873 
    Provision for doubtful accounts and notes receivable              353,307      1,777,460      1,098,007 
    Deferred income                                                    15,734       (131,613)        (4,102)
    Loss on equipment dispositions                                     28,952          5,296         20,745 
    Loss on value of intangible assets, net                            36,314        165,105         95,000 
    Deferred income taxes                                            (300,541)       434,314       (130,460)
    Compensatory common stock purchase warrants                         4,300         25,800         77,800 
    Self insurance reserves                                           171,704        (38,817)       435,826 
    Changes in operating assets and liabilities,                                                            
     net of effects of business acquisitions:                                                               
      Accounts receivable, current and long-term                   (2,300,578)       474,960     (2,891,109)
      Prepaid insurance                                               326,796       (149,616)      (224,702)
      Other receivables                                               168,365       (207,019)       (57,428)
      Other assets                                                   (379,972)       (87,453)       (52,273)
      Accounts payable and accrued expenses                        (1,036,351)       350,272      1,675,859 
      Income taxes                                                          0       (130,695)       (45,372)
      Due to service companies                                        259,382          6,595       (333,542)
                                                                  ----------------------------------------- 
          Net cash provided by/(used in) operating activities        (553,106)       483,419     (2,328,980)
                                                                  ----------------------------------------- 

INVESTING ACTIVITIES                                                                                        
  Purchase of equipment                                              (124,838)      (256,718)      (322,486)
  Business acquisitions and purchase of intangible assets            (249,034)    (4,719,399)    (3,551,888)
  Proceeds from equipment dispositions                                 18,153          3,329          5,646 
  Proceeds from sale of intangible assets                              69,825              0              0 
  Issuance of notes by service companies and other third parties     (138,450)      (168,883)       (59,738)
  Principal collections on notes receivable                           258,039        260,286        322,204 
                                                                  ----------------------------------------- 
           Net cash used in investing activities                     (166,305)    (4,881,385)    (3,606,262)
                                                                  ----------------------------------------- 

FINANCING ACTIVITIES                                                                                        
  Net borrowings/(payments) on line of credit                       2,149,686       (783,529)     2,082,989 
  Proceeds from other short-term borrowings                                 0        482,644        330,731 
  Proceeds from long-term debt                                              0      1,639,000      1,202,239 
  Repayments on other short and long-term debt                     (1,380,126)    (1,694,757)    (1,263,744)
  Repayments on capital lease obligations                            (116,458)          (505)             0 
  Net proceeds from/(cost of) issuance of stock                      (136,436)     3,862,751      3,365,074 
  Proceeds from common stock warrants exercised                             0              0        237,500 
  Cash overdraft                                                      202,745        711,199              0 
                                                                  ----------------------------------------- 
           Net cash provided by financing activities                  719,411      4,216,803      5,954,789 
                                                                  ----------------------------------------- 

Net (decrease)/increase in cash and cash equivalents                        0       (181,163)        19,547 
Cash and cash equivalents, beginning of year                                0        181,163        161,616 
                                                                  ----------------------------------------- 
Cash and cash equivalents, end of year                            $         0    $         0    $   181,163 
                                                                  ========================================= 

See accompanying notes and accountant's report                                  

1. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION                           

Cash paid during the period for:                                          

                                              1996           1995           1994
                                       -----------------------------------------
   Interest                            $ 1,190,675    $   731,455    $   459,642
   Income Taxes                                  0          2,719        258,274

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Command Security Corporation                                                    

STATEMENTS OF CASH FLOWS continued                                              

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

For the years ended March 31, 1996, 1995 and 1994, the Company purchased        
transportation and security equipment with direct installment and lease         
financing of $354,493, $54,000 and $159,374, respectively.                      

For the year ended March 31, 1996, the Company accrued accumulated    
dividends of $119,460 and issued 724 additional shares of its Series A          
convertible preferred stock to its preferred stockholders. This charge to       
paid-in capital and credit to preferred stock has been excluded from the        
statement of cash flows.                                                        

     In March, 1996, the Company purchased certain guard service accounts from a
former service company for a total consideration of $224,764. A portion of the  
purchase price was paid via the assumption of long-term debt ($104,770) and     
cancellation of cash statement deficits ($42,013) and notes receivable ($7,650).
The Company has retained a reserve of $30,525 to be adjusted based on client    
retention. These amounts have been excluded from the purchase of intangibles,   
proceeds from long-term debt, collection of notes and increase in amounts due to
service companies.                                                              

  In January, 1996, the Company reached an agreement with a union covering
certain guard service sites whereby it has converted amounts owed for past union
contract health and welfare benefit obligations in the amount of $579,541 to a  
non interest bearing note payable over one and one-half years. The discounted   
amount of $536,103 has been reclassified to long-term debt and has been excluded
from proceeds from other borrowings in the statement of cash flows.             

     In December, 1995, the Company purchased certain guard service accounts and
related assets for a total consideration of $201,497. The Company paid $120,254 
and issued a short-term note for $81,243, payable in three quarterly            
installments. This amount has been excluded from the purchase of intangible     
assets in the statement of cash flows.                                          

In October, 1995, the Company sold its Boston office for a total      
consideration of $146,925. The Company received $75,000 in cash and a note for  
$71,925, which has been excluded from the proceeds from the sale of intangible  
assets in the statement of cash flows.                                          

On March 20, 1995, the Company purchased certain customer lists and   
accounts receivable of National Security, Ltd. A portion of the purchase price  
was paid through the issuance of 112,911 shares of the Company's common stock   
which was valued at $218,764 at the date of acquisition. This amount has been   
excluded from the purchase of intangible assets ($186,487), changes in operating
assets and liabilities ($32,277) and proceeds from issuance of stock ($218,764).

On February 24, 1995, the Company purchased certain assets of United  
Security Group, Inc. A portion of the purchase price was paid in the form of    
assumed liabilities ($1,000,000) and short-term borrowings ($170,924). These    
amounts have been excluded from the purchase of intangible assets, changes in   
operating assets and liabilities and proceeds from other short-term borrowings. 
As part of the acquisition, the Company assumed certain capital lease           
obligations amounting to $134,872. This amount has been excluded from the       
purchase of equipment and proceeds from long-term debt.                         

  On December 14, 1994, the Company purchased certain customer lists and a
covenant not to compete from McVey Security Agency, Inc., a portion of which was
paid in the form of a note payable of $39,000 and 20,513 shares of the Company's
common stock which was valued at $50,000 at the date of acquisition. These      
amounts have been excluded from the purchase of intangible assets, proceeds from
other short-term borrowings and proceeds from issuance of stock.                

     On August 29, 1994, the Company purchased certain customer lists of Applied
Security Corporation in exchange for 64,500 shares of the Company's common stock
which was valued at $179,688 at the date of acquisition. In June, 1996, the     
Company reached an agreement with the seller, whereby 22,500 shares of the      
Company's common stock held by the escrow agent will be returned to the Company 
in connection with a customer retention adjustment. The issuance and subsequent 
partial return of the common stock have been excluded in the statement of cash  
flows.                                                                          

In July, 1994, the Company reached an agreement with ISS International
Service System, Inc., whereby it has adjusted the purchase price for accounts   
lost in connection with its October, 1993, acquisition of certain security guard
assets. Under this agreement, the purchase price for customer lists has been    
reduced by $750,000 and the note in said amount, originally due on October 22,  
1994 has been cancelled. This amount has been excluded in the statement of cash 
flows from principal payments on other borrowings.                              

 In June, 1994, the Company purchased certain guard service accounts and
entered into a non-compete agreement with the seller for a total consideration  
of $130,000. The Company paid $85,000 and issued a short-term note for $45,000, 
payable by December, 1994. The note was reduced by $29,575 in connection with a 
customer retention adjustment and the balance paid in full in November, 1995.   
The issuance of the note and subsequent adjustment have been excluded in the    
statement of cash flows.                                                        

   During the year ended March 31, 1994, the Company sold certain intangible
assets in exchange for notes. These sales increased notes receivable ($186,704) 
and deferred income ($114,754) and decreased intangible assets ($71,950). These 
amounts have been excluded from issuance of notes to service companies and other
third parties, deferred income and proceeds from sale of intangible assets.     

 On November 1, 1993, the Company purchased the customer list of Madison
Detective Bureau, Inc. A portion of the purchase price was paid through the     
discharging of amounts owed the Company by Madison. The purchase caused an      
increase in intangible assets ($313,495) and decreases in accounts receivable   
($162,645), notes receivable ($1,239,509), due to service companies ($95,594)   
and deferred income ($993,065). These amounts have been excluded from purchase  
of intangibles, principal collections on notes receivable, deferred income and  
changes in operating assets and liabilities.                                    

On October 22, 1993, the Company purchased the security guard service 
customer list of ISS International Service System, Inc. A portion of the        
purchase price was paid in the form of short-term borrowings ($750,000) and     
long-term debt ($1,000,000). These amounts have been excluded from the purchase 
of intangible assets, proceeds from other short-term borrowings and proceeds    
from long term debt.                                                            

See accompanying notes and accountant's report.                                 

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Command Security Corporation                                                    

NOTES TO FINANCIAL STATEMENTS                                                   
March 31, 1996, 1995 and 1994                                                   

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

Estimates:                                                                      

Management uses estimates and assumptions in preparing these financial          
statements in accordance with generally accepted accounting principles. Those   
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported revenues  
and expenses. Actual results could vary from the estimates that were used.      

Revenue recognition:                                                            

The Company records revenue as services are provided to its customers and to its
service companies. Revenue consists primarily of security guard services and    
administrative services provided to service companies. Sale of service contracts
to service companies is recognized as cash is received and is recorded as other 
income. Any proceeds given in the form of notes are deferred pending the        
collection of the principal portion of such notes.                              

Cash and cash equivalents:                                                      

For purposes of the cash flows statement, the Company defines cash and cash     
equivalents as cash and investments with maturities of three months or less.    

Equipment:                                                                      

Equipment is stated at cost. Depreciation is accumulated using the straight-line
method over the estimated useful lives of the equipment ranging from 3 to 7     
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 to fifteen 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. Recoverability is     
evaluated annually based on anticipated expected future cash flows and actual   
customer attrition. Due to a significant recent increase in the attrition rate  
in connection with some of the Company's New York area customer lists, it is at 
least reasonably possible that the estimated remaining lives of these customer  
lists will change in the near term.                                             

During fiscal l995, the Company adopted the provisions of Financial       
Accounting Standards No. 121, "Accounting for the Impairment of Long-lived      
Assets and for Long-lived Assets to be Disposed of" (SFAS 121). This statement  
requires that long-lived assets (e.g., certain intangibles) be reviewed for     
impairment whenever events indicate that the carrying amount of the assets may  
not be recoverable and provides guidelines for measuring the impairment. The    
adoption of SFAS 121 had no material impact on the financial position or results
of operations of the Company.                                                   

Income/(loss) per common share:                                                 

Income/(loss) per common share is based on the weighted average number of shares
of common stock and common stock equivalents outstanding during the period.     
Warrants and stock options outstanding and preferred stock conversions were     
excluded from the computation for each period presented because their effect was
antidilutive.                                                                   

2. Continuity of Operations                                                     

The Company's financial statements have been presented on a going concern basis.
The Company's operations resulted in net losses of $2,983,823 and $2,727,102 for
the years ended March 31, 1995 and 1994, respectively, and working capital      
deficits at March 31, 1995 and 1994, of $531,602 and $772,143, respectively. The
Company is in default of 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 accountant's report on the March 31,
1995 and 1994, financial statements was modified, indicating that these factors 
raised substantial doubt about the Company's ability to continue as a going     
concern. The Company's viability as a going concern is dependent on it's ability
to achieve profitability from its operations, the forbearance of its lenders and
it's ability to continue to obtain adequate financing and to favorably resolve  
the litigation and contingency.                                                 

     The Company's operations resulted in an operating profit for the year ended
March 31, 1996, in part due to management's development and implementation of a 
plan to reduce its administrative expenses primarily through synergies realized 
as a result of the elimination of duplicative overhead costs following the      
acquisition of United Security Group Inc. (United), increased profit margins and
the reduction of professional fees expended in conjunction with certain         
litigation and regulatory requirements. The Company has working capital of      
$218,968 as of March 31, 1996, and its lenders have agreed to waive the existing
non-financial covenant defaults.                                                

Management anticipates a continued favorable financial impact from the
United acquisition as well as additional savings from certain changes in its    
insurance arrangements, including the procurement of a workers compensation     
retro insurance policy based on incurred losses. Furthermore, management is of  
the opinion that the probability of claims and a resultant negative impact on   
operations and financial condition in connection with contingencies diminishes  
with time.                                                                      

3. Furniture and Equipment                                                      

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

                                                          1996              1995
                                                   -----------------------------
Transportation equipment                            $  750,751        $  637,262
Security equipment                                     481,191           345,929
Office furniture and equipment                       1,360,275         1,314,378
Leasehold improvements                                       0            27,125
                                                   -----------------------------
                                                     2,592,217         2,324,694
Less: Accumulated depreciation                       1,616,385         1,371,449
                                                   -----------------------------
                                                    $  975,832        $  953,245
                                                   =============================

    Depreciation expense for the years ended March 31, 1996, 1995 and 1994 was
$388,904, $335,306 and $311,748, respectively.                                  

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4. Intangible Assets                                                            

Intangible assets at March 31, consist of the following:                        

                                                          1996              1995
                                                   -----------------------------
Customer Lists                                      $7,834,914        $7,498,131
Borrowing costs                                        497,233           509,516
Other intangibles                                       59,007           130,007
                                                   -----------------------------
                                                     8,391,154         8,137,654
Less: Accumulated amortization                       2,120,714           957,699
                                                  ----------------------------
                                                    $6,270,440        $7,179,955
                                                   =============================

     Amortization expense for the years ended March 31, 1996, 1995 and 1994, was
$1,198,928, $637,347 and $422,125, respectively. During fiscal years 1996, 1995 
and 1994, the Company realized impairment losses of $101,002, $165,105 and      
$95,000, respectively on its purchased customer lists. During the year ended    
March 31, 1996, the Company recovered $64,688 in connection with a purchased    
customer list previously written off.                                           

5. Other Assets                                                                 

Other assets at March 31, consist of the following:                             

                                                         1996               1995
                                                    ----------------------------
Restricted cash                                      $393,678           $      0
Deposits                                              156,589            170,295
Other receivables                                      33,273                  0
                                                    ----------------------------
                                                     $583,540           $170,295
                                                    ============================

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

6. Short-Term Borrowings                                                        

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

                                                           1996             1995
                                                    ----------------------------
Bank line-of-credit                                  $5,964,204       $3,814,518
Various insurance financing                                                     
arrangements, interest ranging                                              
  from 7.99% to 8.29%                                   382,774          405,612
Other obligations                                       118,849          227,131
                                                    ----------------------------
                                                     $6,465,827       $4,447,261
                                                    ============================

In February, 1995, the Company entered into an agreement with the CIT 
Group/Finance, Inc. ("CIT") under a revolving loan and security agreement. The  
agreement as amended on December 1, 1995, provides for a discretionary line of  
credit of up to 82.5% of eligible accounts receivable as defined, but in no     
event in excess of $10,000,000. At March 31, 1996, the Company had used         
$5,964,204 of this line, representing virtually 100% of its maximum borrowing   
capacity. Interest is payable monthly at 2.0% over prime, or 10.25% at March 31,
1996. The line is collateralized by customer accounts receivable and            
substantially all other assets of the Company. The term of the agreement is two 
years, expiring in February, 1997.                                              

  The Company relies heavily on its revolving loan from CIT which contains
numerous non-financial covenants. As of March 31, 1996, the Company was not in  
compliance with several of the non-financial covenants. Subsequently, the       
Company obtained a waiver from CIT for these violations.                        

The Company has obtained short-term financing in order to meet its    
insurance needs. Required monthly principal payments range from $63,916 in      
April, 1996 to $43,631 in October, 1996.                                        

7. Accounts Payable and Accrued Expenses                                        

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

                                                           1996             1995
                                                    ----------------------------
Trade accounts payable                               $  629,710       $  828,781
Payroll and related expenses                          2,281,946        2,973,267
Insurance                                               155,372           51,854
Interest                                                 33,250           41,145
Sales tax                                                87,807          237,647
Accrued professional fees                               203,165          285,806
Liabilities assumed in acquisitions                     123,003          456,539
Other                                                   247,380           10,683
                                                    ----------------------------
                                                     $3,761,633       $4,885,722
                                                    ============================

 Accrued professional fees at March 31, 1996 includes $128,165 owed to a
former employee in connection with an arbitration award issued. In accordance   
with the agreement, the Company issued on January 19, 1996, 152,774 shares of   
its common stock to an escrow agent as collateral for this debt.                

8. Deferred Gain                                                                

Deferred gain of $133,303 and $56,799 included on the balance sheet at March 31,
1996 and 1995, represents gain on the sale of certain of the Company's service  
contracts and billings for services to service companies in exchange for notes  
and interest thereon. These gains have been deferred pending cash collections on
the notes and elimination of certain debt guarantees extended (see Note 13).    

9. Long-Term Debt                                                               

Long-Term Debt at March 31, consists of the following:                          

                                                           1996             1995
                                                    ----------------------------
ISS International Service                                                       
System, Inc., due March and                                                 
October, 1995, interest at prime,                                           
  currently 8.25% (a)                                $1,000,000       $1,000,000

32 B-J Pension, Health and                                                      
Annuity Fund, due July, 1997, net                                           
  of imputed interest of $36,383 (b)                    478,764                0

Deltec Development Corporation,                                                 
due February 24, 1999, interest                                             
  at 14% (c)                                          1,125,000        1,500,000

Capital Resource Company, due                                                   
  January 5, 2000, interest at 14%                      103,083                0

Various installment loans due                                                   
at various dates through                                                    
October, 2000, with interest                                                
  ranging from 7.9% to 15.90%                           367,888          158,328

William C. Vassell (Chairman of                                                 
the Board), due February, 1996,                                             
  interest at 8%, unsecured (d)                          42,500           85,000
                                                    ----------------------------
                                                      3,117,235        2,743,328
Less: Current maturities                              1,938,273        1,555,998
                                                    ----------------------------
                                                     $1,178,962       $1,187,330
                                                    ============================

(a) In October, 1993, the Company acquired the security guard business of ISS   
International Service System, Inc. ("ISS") and is obligated to ISS for a        
$1,000,000 note, originally due October, 1995. This note was renegotiat-        

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ed resulting in an agreement on July 22, 1994, whereby the purchase price for   
the customer list has been reduced by $750,000, a related short-term note       
canceled and the $1,000,000 owed to ISS was modified to require a principal     
payment of $500,000 in March, 1995 with the remaining $500,000 due in October,  
1995. As of June 12, 1996, the Company has not made the March, 1995, and the    
October, 1995 payment and is currently in negotiations to extend the payment    
terms. The note is collateralized by shares of the Company's common stock owned 
by the Chairman of the Board (see Note 13).                                     

(b) In January, 1996, the Company reached an agreement in connection with       
arbitration of certain union contract health and welfare benefit obligations    
whereby it paid $400,000 and signed a note with a face amount of $579,541       
payable in eighteen monthly installments of $32,197 without interest. The       
installment obligation balance of $515,147 is shown on the balance sheet at     
March 31, 1996, net of a $36,383 discount based on the Company's current average
cost of borrowing, or 10.5%.                                                    

(c) The term loan from Deltec Development Corporation ("Deltec"), payable in    
quarterly installments of $93,750, is collateralized by substantially all of the
assets of the Company and is subordinate to the CIT borrowings. As of March 31, 
1996, the Company was not in compliance with several of the non-financial       
covenants contained in the loan agreement. Subsequently, the Company obtained a 
waiver from Deltec for these violations.                                        

(d) Final payment on the loan from William C. Vassell has been deferred in      
accordance with the Company's loan agreement with CIT, requiring certain minimum
availability under its borrowing arrangement.                                   

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

Year Ending: March 31, 1997                                           $1,938,273
             March 31, 1998                                              649,247
             March 31, 1999                                              484,251
             March 31, 2000                                               40,017
             March 31, 2001                                                5,447
                                                                     -----------
                                                                      $3,117,235
                                                                     ===========

10. Reclassifications                                                           

Certain 1995 amounts have been reclassified to conform with the 1996            
presentations.                                                                  

11. Concentration of Risk                                                       

The Company extends credit to the various service companies for which it        
administers billings, collection and payroll functions. At March 31, 1996 and   
1995 the Company had loans and advances outstanding to current and former       
service companies of $457,195 and $250,303, net of reserves of $761,305 and     
$706,748, respectively. The notes are collateralized by customer lists and other
general intangibles in accordance with the service company agreements. The      
service companies operate in New York, Florida, Illinois, New Jersey, Texas,    
Virginia, Arizona, California, Massachusetts and Washington.                    

    Geographic concentrations of credit risk with respect to trade receivables
are primarily in the New York Metropolitan area consisting of 45% and 51% of    
total receivables as of March 31, 1996 and l995, respectively. The remaining    
trade receivables consist of a large number of customers dispersed across many  
different geographic regions. During the year ended March 31, 1996, the Company 
generated 24% of its revenue from the commercial airline industry. The Company's
remaining customers are not concentrated in any specific industry.              

  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.                                                                    

12. 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 $778,000, $609,000 and $410,000 for the years ended March 31, 1996,
1995 and 1994, respectively.                                                    

The future minimum rental commitments under long-term noncancelable   
operating lease agreements are $309,679, $89,768, $18,999 and $11,154 for the   
years ending March 31, 1997 to 2000, respectively, for a total of $429,600.     

13. Contingent Liabilities                                                      

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. The Company insures against such claims and suits through  
policies with third-party insurance companies. Such policies have limits of     
$1,000,000 per occurrence and $2,000,000 in aggregate. In addition, the Company 
has obtained an excess liability policy that covers claims for an additional    
$25,000,000 in the aggregate. The Company retains the risk for the first $50,000
per occurrence. The Company has included liabilities of $428,423 and $705,083   
for the estimated losses incurred under these risk retentions at March 31, 1996 
and 1995, respectively.                                                         

  The Company has guaranteed certain installment loans extended to various
service companies by Capital Resources Company. The total outstanding balance of
such loans as of March 31, 1996, was approximately $815,000.                    

    An action was commenced against the Company and the City of New York on or
about August 20, 1992. This action seeks $3 million in damages together with $9 
million in punitive damages arising from injuries allegedly sustained by the    
plaintiff as a result of an assault by one of the Company's guards, while said  
guard was on duty. This suit has been turned over to the insurance carrier for  
defense. Insurance coverage is limited to $6 million covering this claim.       
Punitive damages, if any, may not be covered under the Company's insurance      
policy. The Company denies any culpability and asserts an affirmative defense   
that its liability, if any, does not exceed 50% of the liability of all         
defendants and hence seeks apportionment of liability. Management is of the     
opinion that the results of this litigation will not have a material effect on  
the Company's financial condition or results of operations.                     

In March, 1996, the NSC Shareholder Trust (successor in interest to   
National Security, Ltd.) pursuant to the agreement dated March 20, 1995 for the 
purchase and sale of certain assets has requested that the Company redeem       
112,911 shares issued to National at the agreed upon price of $2.50 per share,  
for a total of $282,278. In order to satisfy the request for redemption, Command
and National have negotiated an agreement whereby the Company's obligations     
would be modified to include the issuance of an additional 185,867 shares of its
common stock to National. In the event that the proceeds from the sale of these 
and the original securities by National by December 31, 1996, is less than the  
redemption price, the Company would be obligated to pay the difference in cash  
and the Company's working capital would be reduced accordingly.                 

In August, 1992, the Company commenced action against a former service
company client for non-payment of obligations owed by the service company to the
Company. At approximately the same time, the service company initiated suit for 
non-performance of the Company in connection with the terms of the service      
agreement seeking compensatory damages in an unspecified amount. Management has 
reviewed both suits with legal counsel and is of the opinion that the likelihood
of loss on the suit against the Company is remote. Accordingly, no adjustment   
has been made to the accompanying financial statements. In addition, management 
is of the opinion that all amounts due to the Company from the former service   
company are bona fide claims for services provided by the Company and are col-  

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lectible, subject to the financial viability of the service company and the     
value of related collateral. Amounts due from this service company, which       
approximate $495,000 plus interest and legal fees, have been fully reserved.    

   The Chairman of the Board of the Company has pledged his personally owned
shares of Company stock (510,000 shares are currently in escrow) to ISS         
International Service System, Inc. (ISS) in connection with the Company's       
acquisition of certain security guard assets from ISS. The number of shares is  
subject to adjustment. Such shares have been pledged as collateral to secure the
Company's $1 million in promissory notes to ISS for the balance of the purchase 
price of the ISS security guard assets. In the event of default, as defined by  
the ISS agreement, ISS is entitled to the transfer of so much of the pledged    
stock as is equal in value to the amounts outstanding on the defaulted note(s). 
The Company has defaulted on the payment of $500,000 due on March 31, 1995 and  
on the payment of $500,000 due October 27, 1995. ISS has not exercised its right
to foreclose on the pledged shares and may look for arbitration in an effort to 
settle this matter. In conjunction with this pledge, the Company has entered    
into an indemnification agreement with the Chairman of the Board whereby the    
Company would issue to the Chairman of the Board such number of shares as were  
delivered to ISS in the event of default. This event would result in a reduction
of the ISS related debt and a corresponding increase in stockholders' equity.   
There would be no impact on the Company's results of operations, except a       
dilution of per share amounts.                                                  

  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. It is possible   
that the 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 a claim for, among other things, rescission of their investment, which 
totaled $4,000,000 in the 1993 offering and approximately $4,160,000 in the 1995
offerings, plus interest, alleging, in each case, as the basis, the             
above-mentioned restatements. Additional expenditures in the form of damages and
fees, if any, are not quantifiable. Other causes of action against the Company  
based on federal and/or state securities laws are also possible. No such claims 
have been received by the Company to date. If the Company were to become        
involved in litigation arising from these circumstances, the Company's results  
of operations and financial condition may be materially adversely affected due  
to the drain on cash and management resources. Management is of the opinion that
the probability of claims and a resultant negative impact on the Company's      
operations and financial condition is diminishing with time.                    

14. 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. During the year ended  
March 31, 1996, options to purchase 7,500 shares expired.                       

    In conjunction with its initial public offering in July, 1990, the Company
issued warrants to the underwriter of its common stock to acquire 75,000 shares 
of its common stock at $6 per share, which expired in July, 1995. The Company   
also issued options to its Treasurer to purchase 107,500 shares of its common   
stock at an exercise price of $5 per share. The exercise price of these warrants
was adjusted to $3.25, the fair value on date of adjustment during fiscal 1994. 
On April 8, 1991, the Company issued to an officer of the Company for $100, a   
warrant to purchase 50,000 shares of common stock at an exercise price of $3.375
per share, the market value at the time of grant, exercisable for the shorter of
a period of 5 years or termination of employment.                               

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 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 during fiscal 1994. In May 1992, the Board of Directors approved the 
issuance to the Company's Chairman, 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, during fiscal 1994.                                      

  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 and 
expire in October, 1996. The Company has 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 from 
$4.50 to $3.50 per full share, the fair value on the date of adjustment.        

   The Company entered into a Consultant's Agreement dated November 1, 1993,
under which the Company has 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. 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 are exercisable at $2.375 per share   
and expire in July 1997. The Company has reserved 150,000 common shares to      
provide for the exercise of the rights represented by these warrants. At the    
consultant's election, either the warrants can be exercised or the common shares
may be released out of escrow to the extent that either will provide the        
consultant $300,000 of compensation. As of March 31, 1996, neither election has 
been exercised by the consultant.                                               

     On December 16, 1993, the Company granted to the President (now 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 expires 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. Warrants for 65,000 shares under   
this agreement expired during the fiscal year ended March 31, 1995.             

20

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

 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 whose director is also a 
member of the Company's Board of Directors, in connection with the equity and   
debt financing for the acquisitions of the security guard business of United    
Security Group Inc. The warrants are exercisable at $2.22 and $2.10 per share,  
and expire in February, 1998 and 1999, respectively.                            

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:                                                       

                            Options                     Warrants
                           -----------------------------------------------------
                             Exercise      Number of     Exercise      Number of
                             Price        Shares         Price        Shares
                           -----------------------------------------------------
Outstanding at                                                                  
 April 1, 1993             $3.81-$5.00     122,500    $2.50-$6.00      600,000

Granted                                                 2.375-3.75    1,660,000 
Expired/Cancelled                                             2.50      (95,000)
                           -----------------------------------------------------
Outstanding at                                                                  
 March 31, 1994             3.25*-5.00     122,500      2.38-6.00    2,165,000

Granted                            2.25      45,000      2.10-3.63      725,000 
Expired/Cancelled                                        3.00-3.75     (540,000)
                           -----------------------------------------------------
Outstanding at                                                                  
 March 31, 1995              2.25-5.00     167,500      2.10-6.00    2,350,000

Expired/Cancelled                  5.00      (7,500)          6.00      (75,000)
                           -----------------------------------------------------
Outstanding at                                                                  
 March 31, 1996            $2.25-$3.81     160,000    $2.10-$3.75    2,275,000
                           =====================================================

*Adjusted                                                                       

  At March 31, 1996, there were 160,000 and 2,275,000 options and warrants
outstanding, respectively, exercisable at prices ranging from $2.10 to $3.81,   
and 2,482,500 shares reserved for issuance under all stock arrangements.        

15. Deferred Stock Compensation Expense                                         

In May 1990, the President (now Chairman of the Board) and then sole shareholder
of the Company sold 43,000 shares of his stock in the Company to the Treasurer  
of the Company at a price below that of the anticipated public offering. As a   
result, the Company recognized deferred compensation expense of $129,000 and has
amortized the deferred cost over five years, the vesting period, with a         
corresponding credit to paid-in capital. At March 31, 1996, the amount was fully
amortized.                                                                      

16. Income Taxes                                                                

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

                                          1996            1995            1994
                                     -------------------------------------------
Current:                                                                        
 Federal                             $       0       $(451,955)      $ 146,394
 State and local                             0         (35,807)         66,508
                                     -------------------------------------------
                                             0        (487,762)        212,902
                                     -------------------------------------------
Deferred:                                                                       
  Federal                              (209,680)        434,317        (207,744)
 State and local                       (90,861)             (3)         77,284
                                     -------------------------------------------
                                       (300,541)        434,314        (130,460)
                                     -------------------------------------------
Income tax                                                                      
 expense/(benefit)                   $(300,541)      $ (53,448)      $  82,442
                                     ===========================================

  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:                    

                                              1996         1995         1994
                                             -----------------------------------
Statutory federal income tax rate               34.0         34.0         34.0  
State and local income taxes,                                                   
Net of federal benefit                         9.8          9.8          9.7
Valuation allowance                           (178.0)       (40.7)       (47.0) 
Permanent differences                           (8.2)        (1.3)          .2  
                                             -----------------------------------
Effective tax rate                            (142.4)%        1.8%        (3.1)%
                                             ===================================

 The significant components of deferred tax assets and liabilities as of
March 31, 1996 and 1995 are as follows:                                         

                                                         1996             1995
                                                  ------------------------------
Current deferred assets:                                                        
 Accounts receivable                              $   164,225      $    50,623
 Accrued expenses                                     336,502          310,829
                                                  ------------------------------
                                                      500,727          361,452
  Valuation allowance                                 (500,727)        (361,452)
                                                  ------------------------------
 Net current deferred asset                                 0                0
                                                  ==============================

Long-term deferred assets/(liabilities):                                        
 Notes receivable                                     293,875          589,883
  Equipment                                            (64,890)         (83,266)
 Intangible assets                                    657,136          840,008
 Self-insurance                                       184,222          303,186
 Deferred revenue                                      36,753                0
 Deferred compensation                                      0           53,621
 Net operating loss carryover                         870,618          413,557
                                                  ------------------------------
                                                    1,977,714        2,116,989
  Valuation allowance                               (1,677,173)      (2,116,989)
                                                  ------------------------------

 Net long-term deferred asset                     $   300,541      $         0
                                                  ==============================

During the year ended March 31, 1994, a net valuation allowance of    
$1,243,300 was recorded. The valuation allowance increased by $1,235,141 during 
the year ended March 31, 1995, and decreased by $300,541 during the year ended  
March 31, 1996.                                                                 

Federal and State net operating loss carryovers were approximately    
$1,896,000 and $2,746,000, respectively, at March 31, 1996. They begin to expire
in 2010.                                                                        

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17. Service Agreements                                                          

The Company has entered into agreements with various security guard companies   
(service companies) whereby the Company administers the billing, collection and 
payroll functions and the service companies 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  
service companies.                                                              

    The Company records the billings for service company contracts in accounts
receivable with a corresponding liability, "due to service companies", 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 service companies'        
customers. The administrative fees charged to the service companies are included
in "service contract revenue" on the Company's statements of operations.        

 The following is a summary of the service companies' activities for the
years ended March 31, 1996, 1995 and 1994, respectively, the components of which
have been excluded from the Company's financial statements:                     

                                            1996            1995            1994
                                    --------------------------------------------
Service companies'                                                              
  guard service revenue              $20,267,157     $19,671,179     $23,082,851
Cost of revenue                       16,657,284      15,600,251      18,313,558
                                    --------------------------------------------
Gross profit                           3,609,873       4,070,928       4,769,293
Service companies' share                                                        
  of gross profit                      2,365,104       2,778,985       3,746,609
                                    --------------------------------------------
                                       1,244,769       1,291,943       1,022,684
Other service revenue                    275,034               0               0
                                    --------------------------------------------
Service contract revenue             $ 1,519,803     $ 1,291,943     $ 1,022,684
                                    ============================================

The Company has extended various operating loans to these service     
companies. Interest charged varies between 2% above the prime lending rate of   
the Chase Manhattan Bank and 14% per annum. Principal repayment terms extend    
through the fiscal year ending March 31, 2000. In addition, the Company has     
guaranteed bank loans to certain service companies (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 is 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. 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 (see Note 14). 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 has 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, 9,785 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 
(see Note 9) have been paid in full and then in cash thereafter. During the year
ended March 31, 1996, 724 Series A shares have been issued representing         
dividends accrued through February 24, 1996. Accrued dividends at March 31,     
1996, approximated 77 shares of Series A stock ($12,700). 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 is obligated to redeem any unconverted Series A shares at such
time as the Deltec debt is paid in full. However, no redemption shall be        
required until all outstanding warrants issued in the Company's October 1993    
private placement are exercised, and only if the proceeds received are          
sufficient to redeem all outstanding Series A shares.                           

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.
At March 31, 1996, the fair value of long-term notes receivable approximates    
their carrying amount.                                                          

21. Acquisitions                                                                

On October 27, 1993, the Company acquired certain security guard assets of ISS, 
consisting primarily of a customer list, for $3,250,000 in cash and notes for   
$1,000,000, as renegotiated, for an adjusted total purchase price of $4,250,000 
(see Note 9). This acquisition was accounted for as a purchase. The financial   
statements include the operations of ISS from the acquisition date. The customer
list is included in intangible assets and is being amortized on a straight-line 
basis over 15 years, the estimated economic life of the list.                   

 On November 1, 1993, the Company purchased the customer list of Madison
Detective Bureau, Inc. (Madison), a former service client. The purchase price of
$340,272 was paid by the discharge of amounts owed by Madison to the Company and
$26,777 in cash. The acquisition was accounted for as a purchase. The financial 
statements include the operations of Madison from the acquisition date. The     
customer list is being amortized on a straight-line basis over 5 years, the     
estimated economic life of the list.                                            

   On February 24, 1995, the Company acquired the security guard and related
businesses of United Security Group Inc. The assets acquired consist primarily  
of accounts receivable, customer lists and equipment. The $5 million purchase   
price was provided by payment of $4 million in cash and $1 million in assumed   
liabilities. This acquisition was accounted for as a purchase. The financial    
statements include the operations of United from                                

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the acquisition date. The customer list is included in intangible assets and is 
being amortized on a straight-line basis over 5 years, the estimated economic   
life of the list.                                                               

During fiscal year 1995, the Company acquired several smaller security
guard businesses, principally customer lists for an aggregate cost of           
approximately $845,000, payable in cash, notes and Company stock. Common stock  
issued in connection with these acquisitions amounted to 195,724 shares with a  
fair value of $457,000 on date of issue. One contract provides the seller with  
the right to put 112,911 shares for a fixed price of $2.50 per share (see Note  
13).                                                                            

22. Related Party Transactions                                                  

The Company's former general counsel is also a member of the Board of Directors.
Legal fees paid amounted to $1,826, $28,074 and $24,869 for the years ended     
March 31, 1996, 1995 and 1994, respectively.                                    

 A director of Deltec International SA, the parent of Deltec Development
Corporation, the subordinated debt lender to the Company, is also a member of   
the Board of Directors of the Company. Interest paid in connection with this    
debt amounted to $192,318 for the year ended March 31, 1996. Fees paid to Deltec
in connection with the February 24, 1995 financing amounted to $180,000 and a   
warrant for the purchase of 50,000 shares of common stock. In addition, Deltec  
acquired 3,000 shares of the Company's preferred stock at a cost of $495,000    
(see Note 19). Dividends accrued and paid in additional shares of preferred     
stock for the year ended March 31, 1996 amounted to $39,600, or 240 shares.     

    Another member of the Company's Board of Directors and a shareholder is an
officer/director of Sands Brothers & Co. (Sands), which has provided financial  
advisory services and acted as private placement agent in connection with the   
Company's private placement offerings. Fees paid to Sands in connection with    
these offerings and other consulting services amounted to $664,000 and $520,000 
during the years ended March 31, 1995 and 1994, respectively. In addition, Sands
received warrants for the purchase of 350,000 and 160,000 shares of the         
Company's common stock in fiscal 1995 and 1994, respectively (see Note 14).     

23. Fourth Quarter Adjustments                                                  

During 1995, the Company had fourth quarter adjustments which included an       
increase in self-insurance reserves ($188,000), establishment of reserves for   
litigation ($154,000), an increase in reserve for doubtful accounts and notes   
receivable ($1,225,000), write-off of intangible assets ($165,000) and accrual  
for employee health and welfare benefits ($683,000). The aggregate effect of    
such adjustments was to increase net loss and net loss per share by             
approximately $2,415,000 and $.56, respectively.                                

24. 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.          

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. 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
high and low bid quotations or last sales price for the Common Stock as reported
by the National Quotation Bureau, Inc. for each full quarterly period within the
two most recent fiscal Years.                                                   

Period(1)                                                   Last Sales Price    
--------------------------------------------------------------------------------
                                                         High          Low
1995                                                       ---------------------
---------------                                                                 
First Quarter                                               3 5/8        2 3/8  
Second Quarter                                              4 1/8        1 7/8  
Third Quarter                                               3 3/4        2 3/8  
Fourth Quarter                                              2 7/8        1 37/64

1996                                                                            
---------------                                                                 
First Quarter                                               2              3/4  
Second Quarter                                              1 7/16         7/8  
Third Quarter                                               1 9/32         23/32
Fourth Quarter                                              1 7/16         7/8  

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

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 24, 1996, there were approximately 232 holders of record of the
Company's Common Stock. Management believes there are in excess of 1,000        
beneficial holders of the Company's Common Stock.                               

  The last sales price of the Company's Common Stock on June 24, 1996, was
$1.4375.                                                                        

   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 earnings, capital            
requirements and the operating and financial condition of the Company. At the   
present time, 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.                                       

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REPORT OF INDEPENDENT ACCOUNTANTS                                               

To the Board of Directors and Stockholders                                      
of Command Security Corporation                                                 

We have audited the financial statements of Command Security Corporation listed 
in Item 14(a) of this Form 10-K as of March 31, 1995 and for the year ended     
March 31, 1995 and 1994. These financial statements and financial statement     
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and financial statement  
schedules 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, 1995 and the results of its operations and its cash flows for   
each of the two years in the period ended March 31, 1995 in conformity with     
generally accepted accounting principles. In addition, in our opinion, the      
financial statement schedules referred to above, when considered in relation to 
the basic financial statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.                      

    The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Notes 2, 6 and 9 to   
the financial statements, the Company incurred losses for the years ended March 
31, 1995 and 1994 and a working capital deficit at March 31, 1995, is in default
on certain of its debt covenants; and, as described in Notes 13 and 18, there is
a contingency and litigation for which the outcomes are uncertain. The Company's
continuation is dependent on the forbearance of its lenders, and its ability to 
continue to obtain adequate financing, to achieve profitability from its        
operations and to favorably resolve the contingency and litigation. These       
factors raise substantial doubt about the Company's ability to continue as a    
going concern Management's plans in regard to these matters are described in    
Note 2. The financial statements do not include any adjustments that might be   
necessary if the Company is unable to continue as a going concern or            
satisfactorily resolve the contingency and litigation.                          

/s/ Coopers & Lybrand LLP                                                       

Albany, New York                                                                
July 8, 1995, except for Notes 13 and 23                                        
for which the date is September 19, 1995.                                       

To the Board of Directors and Stockholders                                      
of Command Security Corporation                                                 

We have audited the financial statements and financial statement schedule of    
Command Security Corporation listed in item 14(a) of this Form 10-K as of March 
31, 1996, and for the year then ended. These financial statements are the       
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements based on our audit.                       

We conducted our audit 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 audit provides 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, 1996 and the results of its operations and its cash flows for   
the year then ended in conformity with generally accepted accounting principles.
In addition, in our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole, 
presents fairly, in all material respects, the information required to be       
included therein.                                                               

/s/ D'Arcangelo & Co., LLP                                                      

June 12, 1996                                                                   
Poughkeepsie, New York                                                          

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CORPORATE DIRECTORY                                                             

Officers and Directors                                                          

William C. Vassell                                                              
Chairman of the Board                                                           

Gordon Robinett                                                                 
Vice Chairman of the Board,                                                     
Treasurer and Director                                                          

H. Richard Dickinson                                                            
Executive Vice President,                                                       
Chief Financial Officer and Director                                            

Eugene U. McDonald                                                              
Senior Vice President--Operations                                               

Debra M. Miller                                                                 
Secretary                                                                       

Gregory J. Miller                                                               
Director                                                                        
General Counsel                                                                 
Goldline Connectors, Inc.                                                       

Peter J. Nekos                                                                  
Director                                                                        
Certified Public Accountant                                                     

Peter T. Kikis                                                                  
Director                                                                        
President, Spencer                                                              
Management Company                                                          

Steven B. Sands                                                                 
Director                                                                        
Chairman, Sands                                                                 
Brothers & Co., Ltd.                                                        

Lloyd H. Saunders, III                                                          
Director                                                                        
Managing Director, Sands                                                        
Brothers & Co. Ltd.                                                         

Corporate Counsel                                                               

Herzog, Engstrom & Koplovitz                                                    
Albany, New York                                                                

Independent Auditor                                                             

D'Arcangelo & Co. LLP                                                           
Poughkeepsie, New York                                                          

Transfer Agent                                                                  

American Securities Transfer, Inc.                                              
938 Quail Street, Suite 101                                                     
Lakewood, Colorado 80215-5513                                                   

Corporate Office and Data Center                                                

Route 55                                                                        
Lexington Park                                                                  
Lagrangeville, NY 12540                                                         
Tel: (914) 454-3703                                                             
Fax:(914) 454-0075                                                              

Executive Office                                                                

386 Park Avenue South                                                           
New York, NY 10016                                                              
Tel: (212) 689-6565                                                             
Fax: (212) 689-6490                                                             

Operating Divisions                                                             

Command Security Corporation                                                    
Albany, New York                                                                
(518) 459-1845                                                                  

Balston Spa, New York                                                           
(518) 885-0677                                                                  

Buffalo, New York                                                               
(716) 631 -5305                                                                 

Farmingdale, New York                                                           
(516) 753-6098                                                                  

Hartford, Connecticut                                                           
(203) 493-2553                                                                  

Miami, Florida                                                                  
(305) 597-9752                                                                  

New York, New York                                                              
(212) 387-0212                                                                  

Poughkeepsie, New York                                                          
(914) 454-4414                                                                  

Shelton, Connecticut                                                            
(203) 929-8050                                                                  

Union, New Jersey                                                               
(908) 686-1400                                                                  

White Plains, New York                                                          
(914) 948-0118                                                                  

CSC Security Services                                                           
Chicago, Illinois                                                               
(312) 881-0055                                                                  

Los Angeles, California                                                         
(213) 722-1605                                                                  

Management Services Division/                                                   
Investigation and Undercover                                                    
New York, New York                                                              
(212) 689-6565                                                                  

Aviation Safeguards Division                                                    
JFK International Airport                                                       
Jamaica, New York                                                               
(800) 272-6483                                                                  

LAX International Airport                                                       
Los Angeles, California                                                         
(310) 646-1179                                                                  

STAIRS(TM)  Division                                                            
New York, New York                                                              
(212) 689-6565                                                                  

Service Company Locations                                                       
Albuquerque, New Mexico                                                         
Chicago, lllinois                                                               
Fort Pierce, Florida                                                            
Indianapolis, Indiana                                                           
Jamaica, New York                                                               
Los Angeles, California                                                         
Minneapolis, Minnesota                                                          
Newport News, Virginia                                                          
Phoenix, Arizona                                                                
Providence, Rhode Island                                                        
Quincy, Massachusetts                                                           
Richmond, Virginia                                                              
Seattle, Washington                                                             
Sparta, New Jersey                                                              
Tucson, Arizona                                                                 
Virginia Beach, Virginia                                                        
W. Springfield, Massachusetts                                                   
Worchester, Massachusetts                                                       

Form 10-K                                                                       

Copies of the Company's Annual Report                                           
on Form 10-K may be obtained at no                                              
cost by writing to the Company at:                                              
Lexington Park                                                                  
PO Box 340                                                                      
Lagrangeville, NY 12540                                                         

Stock Listing                                                                   

Command Security Corp. common stock                                             
is traded in the over-the-counter                                               
securities market on NASDAQ under the                                           
symbol CMMD.                                                                    

Augusta Design Group Inc./NYC

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-K/A’ Filing	Date	First	Last	Other Filings

	3/31/00	24		10-K, 10-K/A
	1/5/00	20
	2/24/99	20
	9/30/97	22		10-Q, NT 10-Q
	3/31/97	21		10-K, NT 10-K
	12/31/96	21		10-Q
Filed on:	9/25/96			8-K
	7/8/96	5
	6/24/96	25
	6/12/96	21	26
For Period End:	3/31/96	11	26	10-K
	2/24/96	24
	2/8/96	13
	2/5/96	13
	1/19/96	20
	12/31/95	12
	12/1/95	20
	10/27/95	12	22
	9/30/95	12
	9/19/95	26
	7/10/95	25
	7/8/95	26
	3/31/95	11	26
	3/20/95	18	21
	2/24/95	11	25
	12/14/94	18
	10/22/94	18
	9/28/94	23
	9/12/94	22
	8/29/94	18
	7/22/94	21
	4/27/94	22
	3/31/94	11	26
	12/16/93	22
	11/1/93	18	24
	10/27/93	13	24
	10/22/93	18
	4/1/93	23
	3/31/93	11	13
	8/20/92	21
	3/31/92	11	22
				List all Filings

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Filing Submission 0001005477-96-000292 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Command Security Corp – ‘10-K/A’ for 3/31/96 – EX-13.1

As of: Wednesday, 9/25/96 · For: 3/31/96 · Accession #: 1005477-96-292 · File #: 0-18684

Previous ‘10-K’: ‘10-K’ on 7/12/96 for 3/31/96 · Next: ‘10-K’ on 7/1/97 for 3/31/97 · Latest: ‘10-K’ on 6/11/18 for 3/31/18

Amendment to Annual Report — Form 10-KFiling Table of Contents

EX-13.1 — Annual ReportExhibit Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Amendment to Annual Report — Form 10-K
Filing Table of Contents

EX-13.1 — Annual Report
Exhibit Table of Contents