Detection Systems Inc · S-2 · On 7/24/97

Filed On 7/24/97   ·   SEC File 333-31951   ·   Accession Number 901309-97-38

Registration of Securities   ·   Form S-2
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-2         Registration of Securities                            81±   275K 
 2: EX-2        Exhibit 2(D)                                          17     59K 
 3: EX-2        Exhibit 2(E)                                          16     50K 
 4: EX-2        Exhibit 2(F)                                          11±    42K 
 5: EX-10       Exhibit 10(D)                                         43    154K 
 6: EX-10       Exhibit 10(O)                                          4     24K 
 7: EX-23       Exhibit 23(B)                                          1      6K 

S-2   ·   Registration of Securities
Document Table of Contents

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     As Filed with the Securities and Exchange Commission on July 23, 1997

                                     Registration No. 333-__________

  SECURITIES AND EXCHANGE COMMISSION
     WASHINGTON, D.C.  20549

  FORM S-2
    REGISTRATION STATEMENT
     UNDER
    THE SECURITIES ACT OF 1933

       DETECTION SYSTEMS, INC.
    (Exact name of Registrant as Specified in its Charter)

           New York                           16-0958589
     (State or Other Jurisdiction               (I.R.S. Employer
      of Incorporation or Organization)          Identification No.)

    130 Perinton Parkway
    Fairport, New York 14450
    716-223-4060
(Address, Including Zip Code, and Telephone Number, Including Area Code, of     
Registrant's Principal Executive Office)                                        

    Frank J.  Ryan, Vice President
    130 Perinton Parkway, Fairport, New York 14450
    716-223-4060
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,  
of Agent for Service)                                                           

    Copies of all communications to:

          Justin P. Doyle, Esq.               R. Alan Higbee, Esq.
           Roger W. Byrd, Esq.                David M. Doney, Esq.
        Nixon, Hargrave, Devans & Doyle LLP    Fowler, White, Gillen, Boggs,
           Clinton Square, Suite 1300           Villareal and Banker, P.A.
           Rochester, New York  14604            501 East Kennedy Blvd.,
                                                 Suite  1700
                                                 Tampa, Florida  33602

    Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.   

 If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of  
1933, check the following box./  /                                              

If the registrant elects to deliver its latest annual report to security  
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1) 
of this Form, check the following box. /  /                                     

If this Form is filed to register additional securities for an offering   
pursuant to Rule 462(b) under the Securities Act, please check the following    
box and list the Securities Act registration statement number of the earlier    
effective registration statement for the same offering./ / _____________        

If this Form is a post-effective amendment filed pursuant to Rule 462(c)  
under the Securities Act, check the following box and list the Securities Act   
registration statement number of the earlier effective registration statement   
for the same offering.  /  / _____________                                      

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  <square>                                       
    CALCULATION OF REGISTRATION FEE:

                                    Proposed
                     Proposed        Maximum
                                   Maximum       Aggregate   Amount of
Title of Shares to     Amount to     Offering Price   Offering   Registration   
be Registered      be Registered      Per Share       Price        Fee      

Common Stock,                                                                   
par value $.05      1,495,000(1)     $18.875(2)   $28,218,125(2)  $8,551    

(1) Includes 195,000 shares of Common Stock which may be sold by the Company to 
cover over-allotments.                                                  
(2) Estimated solely for purposes of calculating the registration fee in        
accordance with Rule 457 of the Securities Act of 1933.                 

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

The registrant hereby amends this Registration Statement on such date or  
dates as may be necessary to delay its effective date until the registrant      
shall file a further amendment which specifically states that this Registration 
Statement shall thereafter become effective in accordance with section 8(a) of  
the Securities Act or until the Registration Statement shall become effective   
on such date as the Commission, acting pursuant to said section 8(a), may       
determine.                                                                      

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 SUBJECT TO COMPLETION DATED JULY 23, 1997

1,300,000 SHARES

[DSI LOGO]                  DETECTION SYSTEMS, INC.          [RADIONICS LOGO]   
COMMON STOCK      

 OF THE 1,300,000 SHARES OF COMMON STOCK OFFERED HEREBY, 1,072,000
SHARES ARE BEING ISSUED AND SOLD BY DETECTION SYSTEMS, INC. (THE "COMPANY") AND 
228,000 SHARES ARE BEING SOLD BY CERTAIN SHAREHOLDERS OF THE COMPANY (THE       
"SELLING SHAREHOLDERS").  THE COMPANY WILL NOT RECEIVE ANY OF THE PROCEEDS FROM 
THE SALE OF COMMON STOCK BY THE SELLING SHAREHOLDERS.  SEE "PRINCIPAL AND       
SELLING SHAREHOLDERS."                                                          

  THE COMMON STOCK IS QUOTED ON THE NASDAQ NATIONAL MARKET UNDER THE
SYMBOL "DETC." ON JULY 21, 1997, THE LAST REPORTED SALE PRICE OF THE COMMON     
STOCK WAS $18.875 PER SHARE.                                                    

      SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF
  CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
      INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND    
EXCHANGE  COMMISSION  OR  ANY  STATE  SECURITIES  COMMISSION  NOR  HAS  THE     
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION           
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY                   
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.                           

            Price        Underwriting         Proceeds       Proceeds to
           to         Discounts and           to           Selling
            Public       Commissions(1)       Company(2)    Shareholders
[S]        [C]               [C]                [C]             [C]             
Per Share     $_________        $_________        $_________      $_________    
Total (3)   $_____________    $_____________    $_____________  $_____________  

(1)The Company and the Selling Shareholders have agreed to indemnify the        
several Underwriters against certain liabilities, including liabilities   
under the Securities Act of 1933, as amended.  See "Underwriting."        

(2)Before deducting expenses estimated to be $250,000, which are payable by the 
Company.                                                                  

(3)The Company has granted the Underwriters a 30-day option to purchase up to   
195,000 additional shares of Common Stock on the same terms and conditions
as the securities offered hereby, solely to cover over-allotments, if any.
  If such option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to Company will be $_____________, 
$_____________ and $_____________, respectively.  See "Underwriting."     

   THE SHARES OF COMMON STOCK ARE OFFERED BY THE SEVERAL UNDERWRITERS,
SUBJECT TO PRIOR SALE, WHEN, AS AND IF DELIVERED TO AND ACCEPTED BY THEM, AND   
SUBJECT TO CERTAIN OTHER CONDITIONS INCLUDING THE RIGHT OF THE UNDERWRITERS TO  
WITHDRAW, CANCEL, MODIFY OR REJECT ANY ORDER IN WHOLE OR IN PART.  IT IS        
EXPECTED THAT DELIVERY OF THE SHARES WILL BE MADE ON OR ABOUT                   
, 1997, AT THE OFFICES OF RAYMOND JAMES & ASSOCIATES, INC., ST.  PETERSBURG,    
FLORIDA.                                                                        

RAYMOND JAMES & ASSOCIATES, INC.         NEEDHAM & COMPANY, INC.                

               The date of this Prospectus is                 , 1997

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******************************************************************************  
*Information contained herein is subject to completion or amendment.  A      *  
*registration statement relating to these securities has been filed with the *  
*Securities and Exchange Commission.  These securities may not be sold nor   *  
*may offers to buy be accepted prior to the time the Registration Statement  *  
*becomes effective.  This Prospectus shall not constitute an offer to sell   *  
*or the solicitation of an offer to buy nor shall there be any sale of these *  
*securities in any state in which such offer, solicitation or sale would be  *  
*unlawful prior to registration or qualification under the securities laws of*  
*any such state.                                                             *  
******************************************************************************  

          INSIDE FRONT COVER

[Photograph of Security System Components]                                

Samples of the Company's Security System Products                               

                                  [Photograph of Fire System Components]

                                 Samples of the Company's Fire System Products

[Photograph of Access Control System Components]                                

Samples of the Company's Access Control System Products                         

                                         [Photograph of CCTV Components]

                                      Samples of the Company's CCTV Products

DETECTION SYSTEMS, DA SYSTEMS, DS VISION, EASIKEY, RADIONICS, READYKEY,         
SAFECOM, TRISENSE, TRITECH AND SECURITY ESCORT ARE TRADEMARKS OF THE COMPANY.   

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS       
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.    
THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING AND MAY BID FOR 
AND PURCHASE SHARES OF COMMON STOCK IN THE OPEN MARKET.  FOR A DESCRIPTION OF   
THESE ACTIVITIES, SEE "UNDERWRITING."                                           

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP 
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK   
ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M UNDER 
THE SECURITIES EXCHANGE ACT OF 1934.  SEE "UNDERWRITING."                       

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  PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED   
INFORMATION AND THE CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES      
THERETO (THE "CONSOLIDATED FINANCIAL STATEMENTS"), APPEARING ELSEWHERE IN THIS  
PROSPECTUS.  UNLESS OTHERWISE INDICATED, ALL INFORMATION SET FORTH HEREIN       
ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION, REFLECTS A      
THREE-FOR-TWO STOCK SPLIT IN THE FORM OF A STOCK DIVIDEND DISTRIBUTED ON        
DECEMBER 17, 1996, AND ASSUMES THAT 221,738 SHARES OF COMMON STOCK OWNED BY     
NUMEREX CORP. ARE REPURCHASED SIMULTANEOUSLY WITH THE CLOSING OF THE OFFERING.  
AS USED HEREIN, THE "COMPANY" MEANS DETECTION SYSTEMS, INC. AND ITS             
SUBSIDIARIES, EXCEPT WHERE THE CONTEXT INDICATES OTHERWISE, AND A "FISCAL YEAR" 
MEANS THE TWELVE-MONTH PERIOD ENDING ON MARCH 31ST OF THE SPECIFIED YEAR.       

   THE COMPANY

 The Company is a leading supplier of equipment to the electronic protection
industry.  The Company designs, manufactures and markets electronic detection,  
control and communication equipment for security, fire protection, access       
control and closed circuit television ("CCTV") applications, offering products  
primarily for the commercial and mid- to high-end residential portions of the   
market.  From its founding in 1968 until 1995, the Company was primarily a      
niche provider of  intrusion detection devices for the domestic market.  In     
1995, the Company adopted a strategy designed to substantially expand its       
product offerings, establish an international sales presence, increase its      
manufacturing capacity and improve its manufacturing cost structure.  The       
Company has since made five acquisitions, opened sales offices in six countries 
and successfully established a manufacturing facility in China. These           
initiatives have enabled the Company to significantly expand its product        
catalog and market reach and to increase its net sales from $34.3 million in    
fiscal 1995 to $101.3 million in fiscal 1997.  Excluding amounts attributable   
to acquisitions, the Company's net sales grew by approximately 22.5% in fiscal  
1997.                                                                           

The Company manufactures system components for sale to installation       
companies, distributors and other equipment manufacturers either as individual  
components or, increasingly, bundled with other compatible components to form   
an integrated system for a specific customer's application.  The Company is not 
engaged in the installation or monitoring aspects of the industry.  The         
Company's primary customers are: (i) national and regional installation         
companies such as ADT, Ameritech, Checkpoint, Holmes Protection, Honeywell,     
Simplex, Wells Fargo and Westar; (ii) national distributors such as ADI in the  
U.S., Efsec in Sweden, Glastrak in the Netherlands and Rimi in Russia; (iii)    
original equipment manufacturers ("OEMs") such as Pittway and ITI Technologies  
that integrate the Company's components into their finished products, and       
(iv) certain large commercial customers such as Pepsico and agencies of the     
federal government.                                                             

The Company presently offers products in all four of the principal        
categories of the electronic protection equipment market:  security, fire,      
access control and CCTV.  According to industry statistics, combined U.S.       
wholesale equipment sales for these four categories were estimated at $5.3      
billion in 1996.  The Company believes international markets of significant     
size also exist for each of these four categories.  There are several factors   
driving the growth of the private security industry.  The perception by         
Americans that crime is a significant problem has continued to grow as          
evidenced by the focus on crime in political campaigns and in the media.        
Insurance companies often provide incentives to businesses for installing       
electronic security systems or require such systems as a condition of insurance 
coverage.  An electronic fire system is required in commercial facilities in    
many localities in order to comply with municipal fire codes.  There has been a 
trend for large commercial customers to centralize their security function at   
the corporate level instead of managing security on an ad hoc site-basis.  This 
has often resulted in greater attention and resources for security solutions.   
The growth in telecommuting and in-home offices has created incremental demand  
for residential security products by bringing expensive office equipment into   
the home.  Market penetration has also been driven by the increased             
affordability of systems, as advances in technology and reduced manufacturing   
costs have increasingly brought high quality systems into price ranges          
attractive to residential and small commercial customers.  In addition to new   
systems, there is ongoing system replacement in the commercial and mid- to      
high-end residential markets, creating significant retrofit opportunities.  The 
Company estimates that customers in these markets typically upgrade or replace  
their systems every seven to ten years.                                         

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The scale and product scope of the Company has increased significantly due
to recent acquisitions, particularly the February 1996 acquisition of           
Radionics, Inc. ("Radionics").  Based in Salinas, California, Radionics had net 
sales of $45.1 million for the year ended December 31, 1995 and was a leading   
provider of control panels and related equipment to the Company's industry.     
Subsequent to the Radionics acquisition, the Company has completed four         
additional acquisitions: (i) the purchase in July 1996 of certain assets of     
Senses International, Inc. ("Senses") which had annual net sales of             
approximately $2.0 million, (ii) the purchase in May 1997 of Digital Audio      
Limited ("DA Systems") which had annual net sales of approximately $10.8        
million, (iii) the purchase in June 1997 of Seri<e'>e, S.A. ("Seri<e'>e") which 
had annual net sales of approximately $6.3 million, and (iv) the purchase in    
June 1997 of Radio-Active Systems N.V. ("RAS") which had annual net sales of    
approximately $9.9 million.  These acquisitions have served both to broaden the 
Company's product lines and increase its international presence.                

The Company's goal is to be an international leader in the design,        
manufacture and marketing of equipment for the electronic protection industry,  
satisfying all of its customers' protection needs with a complete line of high- 
quality, technologically advanced products which are distributed by a worldwide 
marketing organization and supported by a service-oriented product support      
team.  Among the principal elements of the Company's strategy are the           
following:                                                                      

*    Catalog expansion - continuing to expand its product catalog through 
     internal development, acquisitions and partnering with companies that
      have technological capabilities that complement the Company's internal
      capabilities.  The Company believes that the ability to provide a full
    catalog of products will result in competitive advantages over firms
     which only provide a small portion of the products regularly required
      by the industry's customers.  Part of the Company's motivation for its
     recent acquisitions was to expand the Company's product catalog.  The
   Company is promoting the sale of its fire, access control and other
       product lines by leveraging the superior market acceptance it enjoys in
the security equipment arena.                                   

*    INTERNATIONAL EXPANSION -  continuing to expand its international    
 sales efforts.  The Company's acquisitions of DA Systems, RAS and
Seri<e'>e have given the Company inroads into important European
     markets.  The Company plans to use the distribution networks of these
       companies to distribute its full range of products, as appropriate.  In
     addition, the Company's sales offices in Asia and Australia have been
    successful in developing a base of operations from which the Company
can further expand in those markets.                            

*    TECHNOLOGICAL ADVANCEMENT -  continuing to develop technologically   
     advanced products.  The Company utilizes the power of microprocessors
       and application specific integrated circuits to fully exploit presently
available technology.  By using this technology, the Company has
  developed:  detection products which feature demonstrably superior
     signal processing capacity which optimize the trade-off between false
       alarms and catch performance;  control products which generally provide
  a superior level of programming flexibility and more sophisticated
firmware than competitive product offerings; and communication  
      equipment which provides access to a variety of commercially available
communication technologies.                                     

*    Market focus - continuing to focus on the installation and service   
professionals that service the commercial and mid- to high-end  
residential security and fire alarm system markets, who view the
    features and quality of the Company's products as providing superior
    value.  The Company is also increasing its sales efforts directed to
the U.S. government.                                            

*    Production efficiencies - increasing utilization of its China        
     facility and continuing to consolidate its purchasing.  The Company's
   China facility became operational in October 1995.  The Company has
 been able to reduce its unit manufacturing costs by transitioning
production from its Fairport, New York and Salinas, California  
    locations to its China facility.  The Company anticipates additional
     cost savings from the continued transition of production to its China
      facility.  The Company has also realized cost savings by consolidating
purchasing of components for its worldwide operations.          

The address of the Company's principal executive offices is 130 Perinton  
Parkway, Fairport, New York 14450, and its telephone number is (716) 223-4060.  

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  THE OFFERING

Common Stock offered by the Company             1,072,000 shares                

Common Stock offered by the Selling                                             
Shareholders                                  228,000 shares                

Common Stock to be outstanding after                                            
the offering                                   5,599,032 shares(1)            

Use of proceeds                                 To repay indebtedness under the 
                                          Company's revolving credit
                                              facility, which repayment will
                                               provide availability under such
                                            facility for working capital
                                               and general corporate purposes,
                                  including possible
                                               acquisitions, and to repurchase
                                      Common Stock issued in
                                        connection with a recent
                                         acquisition.  See "Use of
                          Proceeds."

Nasdaq National Market symbol                   DETC                            

(1)Does not include shares issuable upon the exercise of outstanding options    
and warrants or under deferred compensation plans which, as of March 31,  
  1997, were: (i) an aggregate of 355,020 shares issuable upon the exercise of
currently outstanding options and warrants, (ii) 98,019 shares issuable   
under the Company's Deferred Compensation Plan, and (iii) 252,390 shares  
issuable under the Company's Deferred Stock Compensation Plan.            

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   SUMMARY CONSOLIDATED FINANCIAL DATA
   (in thousands except per share amounts)

                                                                [Download Table]
                                            FISCAL YEAR ENDED MARCH 31,             
                                ------------------------------------------------    

                                  1993       1994      1995      1996(1)    1997    
                                -------     ------     ------    --------   -----   

                                                                                    
OPERATING DATA:                                                                     
Net sales                      $29,432    $31,355   $34,336      $41,858    $101,251

Costs and expenses:                                                                 
Production                      18,036     19,541    20,830       27,978      64,916
Research and development         3,534      4,161     4,070        4,700       8,115
Purchased in-process research                                                       
  and development                                                  9,350            
Marketing, administrative                                                           
and general                      5,511      6,112     6,789       10,515      21,411

Operating income (loss)          2,351      1,541     2,647      (10,685)      6,809

Interest income                    239        196       113          340         206
Interest expense                   234        166       168          320       1,765
                                   ---        ---       ---          ---       -----
Income (loss) before taxes and                                                      
  cumulative effect of a change                                                     
  in accounting principle        2,356      1,571     2,592      (10,665)      5,250

Provision (benefit) for taxes      919        426     1,078       (2,810)      1,525
                                   ---        ---     -----       -------      -----
Income (loss) before cumulative                                                     
   effect of a change in                                                            
   accounting principle          1,437       1,145    1,514       (7,855)      3,725

Cumulative effect of a change in                                                    
  accounting principle                         130                                  
                                 -----       ------  ------        ------      -----

Net income (loss)               $1,437      $1,275   $1,514      $(7,855)     $3,725
                                ======      ======   ======       =======     ======
Earnings (loss) per common                                                          
  and common equivalent share     $.34       $.30      $.35       ($1.83)       $.76
                                =======     =======  =======      ========     =====
Weighted average number of                                                          
   shares                        4,376       4,407    4,484        4,285       4,934

                                                   At Year End
                                                  March 31, 1997
                                                   -------------------------
                                                              As
                                                  Actual         Adjusted(2)
                                                 --------         ----------
Balance Sheet Data:                                                             
Cash and cash equivalents                         $  2,244         $  2,244     
Working capital                                     31,067           32,020     
Total assets                                        68,276           68,276     
Total debt, including current portion(3)            29,187           14,379     
Shareholders' equity                                17,831           36,500     
_____________________                                                           
(1)  In February 1996, the Company acquired Radionics.  Purchased in-process    
  research and development of Radionics, which consisted of products still
   in the development stage but not considered to have reached technological
feasibility, was valued at $9.4 million.  In accordance with generally
   accepted accounting principles, this amount was expensed upon acquisition
  in the fourth quarter of fiscal 1996.  The Company's fiscal 1996 results
   were also adversely affected by $3.9 million in costs associated with the
start-up of the Company's China facility and other international      
operations.                                                           
(2)  Adjusted to reflect the sale of 1,072,000 shares of Common Stock offered   
  by the Company hereby at an assumed public offering price of $18.875 per
share and the application of the net proceeds therefrom in the manner 
described under "Use of Proceeds."                                    
(3)  Reflects repayment of $3.9 million associated with the repurchase of       
   221,738 shares of Common Stock issued to Numerex Corp. in connection with
the Company's May 1997 purchase of its DA Systems subsidiary.         

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    RISK FACTORS

THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK, INCLUDING THE  
RISKS DESCRIBED BELOW.  PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE     
SPECIFIC FACTORS SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION CONTAINED IN 
THIS PROSPECTUS, BEFORE DECIDING WHETHER TO INVEST IN THE COMMON STOCK OFFERED  
HEREBY.                                                                         

THIS PROSPECTUS CONTAINS CERTAIN "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE           
"SECURITIES ACT"), WHICH REPRESENT THE COMPANY'S EXPECTATIONS OR BELIEFS,       
INCLUDING, BUT NOT LIMITED TO, STATEMENTS CONCERNING INDUSTRY PERFORMANCE, THE  
COMPANY'S OPERATIONS, PERFORMANCE, FINANCIAL CONDITION, GROWTH AND ACQUISITION  
STRATEGIES, MARGINS AND GROWTH IN SALES OF THE COMPANY'S PRODUCTS.  FOR THIS    
PURPOSE, ANY STATEMENTS CONTAINED IN THIS PROSPECTUS THAT ARE NOT STATEMENTS OF 
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS.  WITHOUT        
LIMITING THE GENERALITY OF THE FOREGOING, WORDS SUCH AS "MAY," "WILL,"          
"EXPECT," "BELIEVE," "ANTICIPATE," "INTEND," "COULD," "ESTIMATE" OR "CONTINUE"  
OR THE NEGATIVE OR OTHER VARIATIONS THEREOF OR COMPARABLE TERMINOLOGY ARE       
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS.  THESE STATEMENTS BY THEIR     
NATURE INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES, CERTAIN OF WHICH ARE BEYOND 
THE COMPANY'S CONTROL, AND ACTUAL RESULTS MAY DIFFER MATERIALLY DEPENDING ON A  
VARIETY OF IMPORTANT FACTORS, INCLUDING THOSE DESCRIBED BELOW UNDER THIS "RISK  
FACTORS" SECTION AND ELSEWHERE IN THIS PROSPECTUS.                              

DEPENDENCE ON SIGNIFICANT CUSTOMERS                                             

   The success of the Company depends heavily on the business it conducts with
a limited number of significant customers.  In fiscal 1997, 10.7%, 10.6% and    
6.0% of the Company's net sales were attributable to Pittway Corporation        
("Pittway"), Ameritech Corp. ("Ameritech") and Honeywell Inc., respectively.    
Pittway is a competitor of the Company across many of its product lines and     
purchases the Company's products to incorporate them into its products and      
systems.  During October 1996, Ameritech (an established customer of the        
Company) began purchasing the Company's products through Pittway to utilize     
Pittway's distribution facilities. The Company has had long-standing            
relationships with most of its significant customers; however, it generally     
does not have supply contracts with them and they may unilaterally reduce or    
discontinue their purchases without penalty.  The Company's loss of (or failure 
to retain a significant amount of business with) any of these customers could   
have a material adverse effect on the Company.  See "Business-Marketing."       

COMPETITION                                                                     

The markets in which the Company operates are highly competitive.  The  
Company's competitors include  manufacturers of security and fire alarm         
equipment from all over the world.  In addition, the Company may face           
competition from new entrants into these markets and increased competition from 
existing competitors.  A number of the Company's competitors have substantially 
greater financial and other resources than the Company.  In many cases the      
Company's competitors are concentrated in one market niche in the electronic    
protection industry, allowing them to concentrate their resources in that       
niche.  The Company competes on the basis of providing superior value to        
customers with respect to both products and services.  There can be no          
assurance that the Company's products and services will continue to be          
competitive and accepted by the market in the future.  See                      
"Business-Competition."                                                         

IMPACT AND RISKS OF ACQUISITIONS                                                

Between February 1996 and July 1997 the Company made five acquisitions: 
Radionics, DA Systems, Senses, Seri<e'>e and RAS.  Part of the Company's growth 
strategy is to expand its product catalog, technologies and markets through     
additional acquisitions.  There can be no assurance that the Company will be    
able to successfully integrate the operations and management of its recent      
acquisitions or that the Company will be able to consummate or, if consummated, 
successfully integrate the operations and management of future acquisitions.    
Acquisitions involve significant risks, including risks associated with: (i)    
the diversion of management's attention to the assimilation of the acquired     
businesses; (ii) the ability of the acquired businesses to maintain the quality 
of products and services that the acquired business has historically provided;  
(iii) the need to integrate financial and other systems with those of the       
Company; (iv) the loss of key employees of the acquired business after the      
acquisition; (v) unforseen liabilities of the acquired business; (vi) the       
dilutive effect of the issuance of additional equity securities; (vii) the      
incurrence of additional debt as part of such acquisition or to fund the        
operations of the acquired business; and (viii) the amortization of goodwill    
and other intangible assets involved in any acquisitions that are accounted for 
using the purchase method of accounting.  In addition, certain of the           
businesses acquired by the Company have been unprofitable and there can be no   
assurance that they can be made profitable.  There can be no assurance that     
future                                                                          

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acquisition opportunities will become available, that future acquisitions can   
be consummated on favorable terms or that such acquisitions will contribute to  
the Company's profitability.  Currently, the Company has no arrangements or     
understandings with any party with respect to any future acquisition.  The      
Company, however, continues to investigate and consider acquisition             
opportunities.  See "Business-Strategy."                                        

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS                                  

The Company is exposed to risks associated with international operations
because a significant portion of its products are manufactured at its China     
facility and it has increasingly significant sales in a number of foreign       
countries.  Approximately 25% of the Company's manufacturing output during      
fiscal 1997 was produced at its China facility.  The Company leases its China   
facility from the local Chinese government and is dependent on the local        
Chinese government for personnel and utilities as well as all other municipal   
services.  See "Business-Manufacturing."  The Company believes that its         
relationship with the local Chinese government is good, however, any future     
deterioration of such relationship could have a material adverse effect on the  
Company's results of operations.  Sales of the Company's products outside the   
United States accounted for approximately 16% of its net sales during fiscal    
1997.  One aspect of the Company's business strategy is to increase the sale of 
its products in international markets.  The Company's international operations  
give rise to political and economic uncertainties relating to, among other      
things, U.S. and foreign trade restrictions; foreign government stability; risk 
of renegotiation or modification of existing agreements or arrangements with    
governmental authorities; foreign economic stability; shipping costs and        
delays; tariffs; export controls; government regulation; patent and trademark   
availability, protection and registration; foreign exchange restrictions which  
limit the repatriation of investments and earnings therefrom; changes in        
taxation or international tax treaties; military action and other hostilities   
or confiscation of property.  While the United States imposes quotas and duties 
on selected imported products, there are currently no U.S. quotas or duties on  
the Company's products.                                                         

The Company is subject to currency exchange risks to the extent that its
purchases and sales occur outside the United States and it is unable to         
denominate its purchases or sales in dollars or otherwise shift to its          
customers or suppliers the risks of currency exchange rate fluctuations.        
Currently, the Company does not engage in currency hedging transactions for     
normal operations, although it did engage in a hedging transaction in           
connection with the purchase of RAS, and it may do so in the future.            
Fluctuations in exchange rates may affect the results of the Company's          
international operations reported in dollars and the value of such operations'  
net assets reported in dollars.  Additionally, the results of operations,       
financial condition and competitive position of the Company may be affected by  
the relative strength of the currencies in countries where its products are     
sold.                                                                           

INTELLECTUAL PROPERTY                                                           

 The Company's ability to compete effectively will depend, in part, on its
ability to protect its intellectual property, including its patents,            
trademarks, copyrights and trade secrets, and on its ability to develop and     
protect future intellectual property.  In addition to patents, the Company      
relies on a combination of trademark registrations, copyrights and              
confidentiality agreements to protect its proprietary rights in intellectual    
property.  The Company's ability to compete effectively also depends on its     
ability to avoid infringing on the proprietary rights of others.  New patent    
applications are continually being filed and prosecuted, and pending U.S.       
patent applications are confidential until patents are issued.  As a result, it 
is impossible to anticipate all potential patent infringement issues.  There    
can be no assurance that the steps taken by the Company to protect its          
intellectual property will be adequate to prevent misappropriation or that      
others will not independently develop technology or products that compete with  
or are superior to the products of the Company.  Likewise, there can be no      
assurance that the Company will not inadvertently infringe on the intellectual  
property rights of others.                                                      

RISKS OF TECHNOLOGICAL CHANGE                                                   

The electronic protection industry is characterized by continuous       
technological advances, frequent new product introductions and enhancements,    
declining market prices for similar products over time and changes in customer  
requirements.  The Company's future success will depend in large part on its    
ability to develop new products and technology to meet customer needs as well   
as to enhance its existing products and to continually reduce product costs.    
Any failure by the Company to anticipate or respond rapidly to technological    
advances, new products and enhancements by competitors, or changes in customer  
requirements could have a material adverse effect on the Company.  See          
"Business-Industry Overview" and "Business-Intellectual Property."              

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DEPENDENCE ON KEY PERSONNEL                                                     

The Company is dependent upon the efforts of certain key members of its 
senior management team, including Karl H.  Kostusiak, President and Chief       
Executive Officer.  The loss of a key member of the Company's senior management 
team could have an adverse effect on the operations of the Company.  The        
Company carries no key man life insurance on any of its management, but has     
non-competition agreements with certain key officers and technical personnel.   
See "Management."                                                               

PRODUCT LIABILITY CLAIMS                                                        

If an intrusion, fire or other event that the Company's products are    
designed to detect occurs in a setting where the Company's products have been   
installed, the Company may be subject to a claim that an error or omission on   
the part of the Company contributed to the damages resulting from such event,   
which damages could be substantial.  Such a claim could be made whether or not  
the Company's product performed properly under the circumstances.  From time to 
time the Company is subject to product liability claims in the ordinary course  
of its business.  The Company carries product liability insurance which         
management believes is adequate; however, a product liability judgment or       
settlement in excess of available insurance proceeds could have a material      
adverse effect on the financial condition and results of operations of the      
Company and any adverse claim or settlement could have an adverse effect on the 
availability and cost to the Company of product liability insurance.  The       
Company does not believe that any pending or threatened litigation will have a  
material adverse effect on the financial condition or results of operation of   
the Company.  See "Business-Legal."                                             

DEPENDENCE ON SUPPLIERS; CONCENTRATION OF MANUFACTURING                         

While the Company manufactures most of the products it sells, certain of
the components used in its products are purchased from third parties and are    
available from a limited number of sources.  The loss of any one supplier or an 
inability of suppliers to provide the Company with the required quantity or     
quality of these components could have an interruptive effect on the Company's  
business until such time as an alternative source of supply is found.  See      
"Business-Manufacturing."                                                       

    The Company manufactures approximately 85% of the products it markets,
and obtains the other 15% from external suppliers of finished goods.            
Substantially all of the products manufactured by the Company are produced at   
its facilities in Fairport, New York or Zhuhai, China.  Accordingly, any event  
resulting in the slowdown or stoppage of either of these manufacturing          
operations could have a material adverse effect on the Company.                 

GOVERNMENT REGULATION AND PRODUCT LISTING                                       

Many of the Company's products require approval by the Federal          
Communications Commission ("FCC") before they can be marketed in the United     
States.  In addition, commercial acceptance of the Company's products is        
typically dependent on the listing of such products by Underwriters             
Laboratories ("UL").  The Company has successfully obtained FCC approval and UL 
listing of its products in the past; however, it cannot predict whether it will 
obtain approvals for future products or whether FCC regulations or UL listing   
requirements relating to the Company's current or future products might change. 
Failure to comply with FCC regulations or UL listing requirements, an inability 
to receive approval for products under development or a change in existing      
regulations or listing requirements that would make products non-compliant,     
could have a material adverse effect on the financial condition and results of  
operations of the Company.  Most foreign countries also have similar regulatory 
agencies and private certification or listing organizations, which could have   
the same impact on sales of the Company's products within those countries.  In  
addition to the regulation of its products, the Company is subject to local,    
state, federal and foreign laws regarding the discharge of materials into the   
environment.                                                                    

VOLATILITY OF STOCK PRICE                                                       

The Common Stock has experienced significant volatility, as well as a   
significant increase in market price, since the Company's acquisition of        
Radionics in February 1996.  The market for securities of technology companies  
historically has been more volatile than the market for stocks in general.  The 
trading price of the Common Stock may be subject to wide fluctuations in        
response to quarter-to-quarter variations in operating results, announcement of 
future developments including possible acquisitions, new products by the        
Company or its competitors and other events or factors.  These fluctuations may 
be compounded by the historically low trading volume in the Common Stock.  In   
addition, the stock market has from time                                        

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to time experienced extreme price and volume fluctuations that have             
particularly affected the market price for many technology companies and that   
often have been unrelated to the operating performance of these companies.      
These broad market fluctuations may adversely affect the market price of the    
Common Stock.  See "Price Range of Common Stock."                               

SHARES ELIGIBLE FOR FUTURE SALE                                                 

Upon the completion of this offering, the Company will have 5,599,032   
shares of Common Stock outstanding (5,794,032 shares if the Underwriters'       
over-allotment option is exercised in full).  Of these shares, 4,665,660 shares 
(4,860,660 shares if the Underwriters' over-allotment option is exercised in    
full), including the shares sold in this offering, will be freely tradeable by  
persons other than affiliates of the Company without restriction under the      
Securities Act.  Of the remaining 933,372 shares, 727,802 shares will be        
beneficially owned by persons who are affiliates of the Company which are       
eligible for public sale subject to the volume and other limitations of Rule    
144, 171,429 shares will be "restricted" securities within the meaning of Rule  
144 under the Securities Act which may be sold pursuant to a currently          
effective registration statement under the Securities Act, and 34,141 shares    
will be subject to the resale restrictions under Regulation S of the Securities 
Act.  The Company, certain shareholders of the Company selling shares of Common 
Stock hereunder (the "Selling Shareholders"), and the Company's executive       
officers and directors have agreed not to sell, contract to sell or otherwise   
dispose of any of their shares for a period of 120 days after the closing of    
this offering without the prior written consent of Raymond James & Associates,  
Inc.  Notwithstanding the foregoing, at any time on or after the date of this   
Prospectus, the Company may issue shares pursuant to the exercise of warrants   
or employee stock options outstanding on the date of this Prospectus, which     
issuances or sales may be effected any time after the date of this Prospectus.  
Sales of substantial amounts of shares of Common Stock in the public market     
after this offering, including sales pursuant to Rule 144 or Regulation S, or   
the perception that such sales could occur, may adversely affect the market     
price of the Common Stock.                                                      

ANTI-TAKEOVER PROVISIONS                                                        

The Company has entered into employment and consulting agreements with  
certain officers which provide that upon the occurrence of certain events       
following a change in control of the Company, such officers may be entitled to  
receive the equivalent of three years' compensation.  See                       
"Management-Employment Agreements."  The shares beneficially owned by the       
Company's executive officers and directors and the compensation payable to      
certain officers following a change in control may have the effect of           
discouraging persons from pursuing a non-negotiated takeover of the Company and 
preventing certain changes of control.  Also, Section 912 of the New York       
Business Corporation Law, which is applicable to the Company, contains          
provisions that restrict certain business combinations with interested          
shareholders, which may have the effect of inhibiting a non-negotiated merger   
or other business combination involving the Company.                            

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     USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,072,000 shares of
Common Stock offered by the Company, after deducting underwriting discounts and 
commissions and estimated offering expenses and assuming a public offering      
price of $18.875 per share, are estimated to be approximately $18.7 million     
(approximately $22.1 million if the Underwriters' over-allotment option is      
exercised in full).  Approximately $3.9 million of the net proceeds from this   
offering will be used to repurchase 221,738 shares of Common Stock issued to    
Numerex Corp. in connection with the Company's May 1997 purchase of its DA      
Systems subsidiary.  The balance of the proceeds will be used to repay          
indebtedness under the Company's revolving credit facility which, after such    
payment, will have approximately $17.0 million of availability for working      
capital and general corporate purposes, including possible acquisitions.  The   
revolving credit facility matures on July 31, 1998 and bears interest at a      
floating rate which was 9.25% per year as of July 21, 1997.  The Company will   
not receive any of the proceeds from the sale of Common Stock by the Selling    
Shareholders; however, certain of the Selling Shareholders have advised the     
Company that they intend to use their proceeds from the sale of the Common      
Stock to repay stock option loans from the Company.                             

    CAPITALIZATION

The following table sets forth the capitalization of the Company as of  
March 31, 1997 and as adjusted to reflect the sale of 1,072,000 shares of       
Common Stock offered by the Company hereby at an assumed public offering price  
of $18.875 per share and the application of the net proceeds therefrom in the   
manner described under "Use of Proceeds."  This table should be read in         
conjunction with "Management's Discussion and Analysis of Financial Condition   
and Results of Operations" and the Consolidated Financial Statements.           

                                          MARCH 31, 1997
                                           -------------------------
                                           ACTUAL      AS ADJUSTED
                                           ------      -----------

Current maturities of obligations under capital                                 
leases and long-term debt                      $1,101           $148      

Obligations under capital leases                      54             54         
Long-term debt(2)                                 28,032         14,177         

Shareholders' equity:                                                           
Common stock, par value $.05 per share,                                         
4,478,993 shares issued and outstanding,                                  
5,500,993 shares issued and outstanding                                   
as adjusted(1)                                    224            278      
Capital in excess of par value                     9,449         28,064         
Retained earnings                                  8,594          8,594         
Treasury stock, at cost                              (53)           (53)        
Notes receivable for stock purchases                (378)          (378)        
Cumulative translation adjustment                     (5)            (5)        
                                         -------         -------
Total shareholders' equity                     17,831         36,500      
                                         --------       --------
Total capitalization                          $45,917        $50,731      
                                         ========       ========

_________________                                                               
(1) Does not include shares issuable upon the exercise of outstanding options   
and warrants or under deferred compensation plans which, as of March 31,
 1997, were: (i) an aggregate of 355,020 shares issuable upon the exercise
  of currently outstanding options and warrants, (ii) 98,019 shares issuable
under the Company's Deferred Compensation Plan, and (iii) 252,390 shares
issuable under the Company's Deferred Stock Compensation Plan.          
(2) Reflects repayment of $3.9 million associated with the repurchase of        
 221,738 shares of Common Stock issued to Numerex Corp. in connection with
the Company's May 1997 purchase of its DA Systems subsidiary.           

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     PRICE RANGE OF COMMON STOCK

The Common Stock is quoted on the Nasdaq National Market under the symbol 
"DETC."  The following table sets forth the high and low closing prices of the  
Common Stock for the periods indicated.                                         

FISCAL YEAR ENDED MARCH 31, 1995                          HIGH         LOW      

First Quarter                                         $7.000      $4.000    
Second Quarter                                         6.312       4.062    
Third Quarter                                          6.250       3.687    
Fourth Quarter                                         5.312       3.187    

FISCAL YEAR ENDED MARCH 31, 1996                                                

First Quarter                                          5.187       4.312    
Second Quarter                                         5.187       5.375    
Third Quarter                                          5.250       3.937    
Fourth Quarter                                         6.500       3.687    

FISCAL YEAR ENDED MARCH 31, 1997                                                

First Quarter                                         12.312       6.312    
Second Quarter                                        13.812       9.687    
Third Quarter                                         20.875      10.750    
Fourth Quarter                                        24.500      14.500    

FISCAL YEAR COMMENCING APRIL 1, 1997                                            

First Quarter                                         20.250      13.500    
Second Quarter (through July 21, 1997)                18.875      17.500    

On July 21, 1997, the last reported sale price for the Common Stock as reported 
on the Nasdaq National Market was $18.875 per share and the number of           
shareholders of record was approximately 1,150.                                 

     DIVIDEND POLICY

The Company has never declared or paid any cash dividends on its Common   
Stock.  The Company currently anticipates that all of its earnings will be      
retained for development and expansion of the Company's business and does not   
anticipate paying any cash dividends in the foreseeable future.  Any future     
determination as to the payment of cash dividends will depend on a number of    
factors, including future earnings, capital requirements, the financial         
condition and prospects of the Company and any restrictions under credit        
agreements existing from time to time, as well as such other factors as the     
Company's Board of Directors may deem relevant.  Certain financial covenants in 
the Company's current credit facility, including a covenant to maintain a       
minimum tangible net worth, limit the Company's ability to pay dividends.       

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    SELECTED CONSOLIDATED FINANCIAL DATA
    (in thousands, except per share amounts)

The selected consolidated financial data presented below has been derived 
from the Consolidated Financial Statements.  The Consolidated Financial         
Statements as of and for the years ended March 31, 1993, 1994, 1995, 1996 and   
1997 have been audited by Price Waterhouse LLP, independent accountants.  The   
following information should be read in conjunction with "Management's          
Discussion and Analysis of Financial Condition and Results of Operations," the  
Consolidated Financial Statements and other consolidated financial information  
included elsewhere in this Prospectus.                                          

                                   FISCAL YEAR ENDED MARCH 31,

                                                                [Download Table]

                                  1993      1994      1995     1996(1)    1997    
                                  -----     -----     -----    -------    -----   
                                                                                  
OPERATING DATA:                                                                   
Net sales                         $29,432   $31,355   $34,336   $41,858   $101,251

Costs and expenses:                                                               
 Production                        18,036    19,541    20,830    27,978     64,916
 Research and development           3,534     4,161     4,070     4,700      8,115
 Purchased in-process research                                                    
  and development                                                 9,350           
 Marketing, administrative and                                                    
   general                          5,511     6,112     6,789    10,515     21,411
                                    ------   ------     -----    ------     ------
Operating income (loss)             2,351     1,541     2,647   (10,685)     6,809
Interest income                       239       196       113       340        206
Interest expense                      234       166       168       320      1,765
                                     ----       ----      ---       ---      -----
Income (loss) before income taxes                                                 
  and cumulative effect of a                                                      
  change in accounting principle    2,356     1,571     2,592   (10,665)     5,250

Provision (benefit) for income                                                    
taxes                                 919       426     1,078    (2,810)     1,525

Income (loss) before cumulative                                                   
 effect of a change in accounting                                                 
 principle                          1,437     1,145     1,514    (7,855)     3,725
Cumulative effect of a change in                                                  
  accounting principle                          130                               
                                    ------    ------    -----     ------     -----
Net income (loss)                  $1,437    $1,275    $1,514   $(7,855)    $3,725
                                   =======   =======   ======    =======    ======
Earnings (loss) per common                                                        
and common equivalent share          $.34      $.30      $.35    ($1.83)      $.76

Weighted average number of                                                        
shares                              4,376     4,407     4,484     4,285      4,934

                                                                [Download Table]

                                            AT YEAR END MARCH 31,                
                               ------------------------------------------------  
                                1993       1994      1995       1996      1997   
                              --------   -------    -------    -------   ------- 
                                                                                 
BALANCE SHEET DATA:                                                              

Cash and cash equivalents  $  1,762   $  3,907  $  4,597      $     930  $  2,244
Working capital              12,205     13,447    14,963         15,712    31,067
Total assets                 22,543     22,780    24,745         45,898    68,276
Total debt, including                                                            
current portion               1,662      1,582     1,181         19,680    29,187
Shareholders' equity         16,059     17,492    19,194         11,569    17,831

_____________________                                                           
(1)  In February 1996, the Company acquired Radionics.  Purchased in-process    
  research and development of Radionics, which consisted of products still
   in the development stage but not considered to have reached technological
feasibility, was valued at $9.4 million.  In accordance with generally
   accepted accounting principles, this amount was expensed upon acquisition
  in the fourth quarter of fiscal 1996.  The Company's fiscal 1996 results
   were also adversely affected by $3.9 million in costs associated with the
start-up of the Company's China facility and other international      
operations.                                                           

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     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
     CONDITION AND RESULTS OF OPERATIONS

OVERVIEW                                                                        

   The Company is a leading supplier of equipment to the electronic protection
industry.  The Company designs, manufactures and markets electronic detection,  
control and communication equipment for security, fire protection, access       
control and CCTV applications, offering products primarily for the commercial   
and mid- to high-end residential portions of the market.   From its founding in 
1968 until 1995, the Company was primarily a niche provider of  intrusion       
detection devices for the domestic market.  In 1995, the Company adopted a      
strategy designed to substantially expand its product offerings, establish an   
international sales presence, increase its manufacturing capacity and improve   
its manufacturing cost structure.  The Company has since made five              
acquisitions, opened sales offices in six countries and successfully            
established a manufacturing facility in China. These initiatives have enabled   
the Company to significantly expand its product catalog and market reach and to 
increase its net sales from $34.3 million in fiscal 1995 to $101.3 million in   
fiscal 1997.                                                                    

   The Company more than doubled its annualized net sales with its purchase of
Radionics in February 1996.  The Radionics acquisition had a significant impact 
on the comparative information for fiscal 1996 and 1997 with respect to both    
the results of operations as well as asset and liability balances.  Radionics   
had net sales of $45.1 million for the year ended December 31, 1995.  The       
Radionics acquisition was funded by borrowings under a commercial credit        
facility which caused a significant increase in interest expense for the        
periods following the acquisition.                                              

In April 1995, the Company commenced development of a manufacturing     
facility in China which became operational  in October 1995. This facility has  
significantly increased the manufacturing capacity of the Company.  The Company 
has realized manufacturing efficiencies by transitioning to its China facility  
a portion of its domestic manufacturing operations, including substantially all 
of the manufacturing operations previously conducted by Radionics.  The Company 
believes that these efficiencies, coupled with the volume generated by its      
expanded product catalog and sales network, may further enable it to reduce its 
unit manufacturing costs.                                                       

The Company has recently completed four additional acquisitions: (i) the
purchase in July 1996 of certain assets of Senses which had annual net sales of 
approximately $2.0 million, (ii) the purchase in May 1997 of DA Systems which   
had annual net sales of approximately $10.8 million, (iii) the purchase in June 
1997 of Seri<e'>e which had annual net sales of approximately $6.3 million, and 
(iv) the purchase in June 1997 of RAS which had annual net sales of             
approximately $9.9 million.  These acquisitions have served both to broaden the 
Company's product lines and increase its international presence.                

The Company recognizes net sales upon shipment of products to customers.
Production expenses include materials, direct labor and manufacturing overhead  
as well as an allocated portion of indirect overhead.  Outgoing freight,        
customs and other costs associated with delivery of products to customers are   
classified under marketing, administrative and general expenses.  Research and  
development expenses include costs associated with salaries and benefits for    
certain engineering employees, supplies, agency approvals, depreciation and     
occupancy, as well as charges for independent testing and independent           
contractors engaged for specific projects.  Marketing, administrative and       
general expenses include costs related to the Company's sales efforts and       
corporate and general administrative functions, including costs of executive,   
administrative and sales personnel, marketing/selling supplies, advertising,    
depreciation and professional fees.                                             

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RESULTS OF OPERATIONS                                                           

  The following table sets forth, for the periods indicated, the percentages
which certain items of income and expense bear to net sales:                    

                                 FISCAL YEAR ENDED MARCH 31,
                                   -----------------------------------
                                    1995             1996           1997
                                    --------        ---------     --------
[S]                                   [C]              [C]            [C]       
Net sales                               100.0%           100.0%         100.0%  

Costs and expenses:                                                             
Production                             60.7             66.9           64.2 
Research and development               11.9             11.2            8.0 
Purchased in-process research and                                           
development                                          22.3             
Marketing, administrative and general  19.7             25.1           21.1 
                                      ------           ------           ----
Operating income (loss)                   7.7            (25.5)           6.7   
Interest income                           0.3              0.8            0.2   
Interest expense                          0.5              0.8            1.7   
                                      ------           ------           ----
Income (loss) before income taxes         7.5            (25.5)           5.2   
Provision (benefit) for income taxes      3.1             (6.7)           1.5   
                                      ------           ------           ----
Net income (loss)                       4.4%           (18.8)%          3.7%
                                      =======          ======           ====

YEAR ENDED MARCH 31, 1997 COMPARED TO YEAR ENDED MARCH 31, 1996         

 The Company's net sales increased 141.9% to $101.3 million in fiscal 1997
from $41.9 million in fiscal 1996.  The acquisition of Radionics in February    
1996 accounted for $45.6 million of this increase, while international and      
domestic sales growth accounted for $7.2 million and $6.5 million,              
respectively.  See Note 10 of the Notes to the Consolidated Financial           
Statements for information regarding the Company's sales information by         
geographic area.                                                                

 Production expenses increased 132.0% to $64.9 million in fiscal 1997 from
$28.0 million in fiscal 1996.  As a percentage of net sales, production         
expenses decreased to 64.2% in fiscal 1997 from 66.9% in fiscal 1996.  The      
increase in production expenses was primarily due to a corresponding increase   
in the Company's net sales.  The decrease in production expenses as a           
percentage of net sales was primarily due to manufacturing efficiencies         
achieved by transitioning a portion of its domestic manufacturing to its China  
facility during fiscal 1997.  This decrease was achieved despite the lower      
gross margins experienced by the Company from certain of its initial            
international sales.  The Company anticipates further cost savings from the     
continued consolidation of its manufacturing operations during fiscal 1998 and  
1999.                                                                           

   Research and development expenses increased 72.7% to $8.1 million in fiscal
1997 from $4.7 million in fiscal 1996.  As a percentage of net sales, research  
and development expenses decreased to 8.0% in fiscal 1997 from 11.2% in fiscal  
1996.  The increase in research and development expenses was primarily due to   
the addition of Radionics' research and development expenses.  The decrease in  
research and development expenses as a percentage of net sales was primarily    
due to savings achieved from the consolidation of certain research and          
development efforts of Radionics and the Company.                               

Marketing, administrative and general expenses increased 103.6% to $21.4
million in fiscal 1997 from $10.5 million in fiscal 1996.  As a percentage of   
net sales, marketing, administrative and general expenses decreased to 21.1% in 
fiscal 1997 from 25.1% in fiscal 1996.  The increase in marketing,              
administrative and general expenses was primarily due to the addition of        
Radionics' operations.  The decrease in marketing, administrative and general   
expenses as a percentage of net sales was primarily due to savings derived from 
the consolidation of Radionics into the Company's organization.                 

  Interest expense increased to $1.8 million in fiscal 1997 from $320,000 in
fiscal 1996.  This increase was primarily due to the debt financing associated  
with the Radionics acquisition.  Interest income decreased to $206,000 in       
fiscal 1997 from $340,000 in fiscal 1996.                                       

Income before income taxes was $5.3 million in fiscal 1997 compared to a
loss of $10.7 million for fiscal 1996.  The fiscal 1996 results included a $9.4 
million non-recurring charge related to in-process research and development     
associated with the Radionics acquisition and the expensing of $3.9 million in  
costs associated with the start-up of the Company's China facility and other    
international operations.  The remainder of the improvement was due to the      
other factors described above.                                                  

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  The Company's effective income tax rate for fiscal 1997 was 29.0% compared
to a benefit rate of 26.4% in fiscal 1996.  The fiscal 1997 effective rate      
reflects the benefits of certain lower foreign income tax rates used to promote 
economic growth and the utilization of loss carryforwards from fiscal 1996.     

YEAR ENDED MARCH 31, 1996 COMPARED TO YEAR ENDED MARCH 31, 1995         

The Company's net sales increased 21.9% to $41.9 million in fiscal 1996 
from $34.3 million in fiscal 1995.  The acquisition of Radionics in February    
1996 accounted for $6.0 million of this increase.  In addition, international   
sales grew by $4.9 million in fiscal 1996 as a result of the Company's          
international sales initiative.  This increase was partially offset by a $3.4   
million decline in domestic sales primarily attributable to reduced sales to a  
single domestic customer.  See Note 10 of the Notes to the Consolidated         
Financial Statements for information regarding the Company's sales by           
geographic area and significant customers.                                      

Production expenses increased 34.3% to $28.0 million in fiscal 1996 from
$20.8 million in fiscal 1995.  As a percentage of net sales, production         
expenses increased to 66.9% in fiscal 1996 from 60.7% in fiscal 1995.  The      
increase in production expenses was primarily due to a corresponding increase   
in the Company's net sales.  The increase in production expenses as a           
percentage of net sales was primarily due to the expensing of costs associated  
with the start-up of the Company's China facility.                              

   Research and development expenses increased 15.5% to $4.7 million in fiscal
1996 from $4.1 million in fiscal 1995.  As a percentage of net sales, research  
and development expenses decreased to 11.2% in fiscal 1996 from 11.9% in fiscal 
1995.  The increase in research and development expenses was primarily due to   
the addition of Radionics' research and development expenses.                   

Marketing, administrative and general expenses increased 54.9% to $10.5 
million in fiscal 1996 from $6.8 million in fiscal 1995.  As a percentage of    
net sales, marketing, administrative and general expenses increased to 25.1% in 
fiscal 1996 from 19.7% in fiscal 1995.  The increase in marketing,              
administrative and general expenses, both in dollars and as a percentage of net 
sales, was primarily due to costs associated with the start-up of foreign       
operations and the addition of Radionics' operations.                           

Interest expense increased to $320,000 in fiscal 1996 from $169,000 in  
fiscal 1995, and interest income increased to $340,000 in fiscal 1996 from      
$113,000 in fiscal 1995.                                                        

  The Company incurred a loss before income taxes of $10.7 million in fiscal
1996 compared to income of $2.6 million for fiscal 1995.  The fiscal 1996       
results included a $9.4 million non-recurring charge related to in-process      
research and development associated with the Radionics acquisition and the      
expensing of $3.9 million of costs associated with the start-up of foreign      
operations. The remainder of the decline was due to the other factors described 
above.                                                                          

The Company's effective income tax rate for fiscal 1996 was a benefit of
26.4% compared to a tax rate of 41.6% in fiscal 1995.  The benefit rate for     
fiscal 1996 resulted from the Company's inability to fully recognize tax        
benefits associated with certain subsidiary losses and certain other items not  
deductible for tax purposes.  The fiscal 1995 corporate tax rate was consistent 
with federal and state income tax rates in effect at that time.                 

LIQUIDITY AND CAPITAL RESOURCES                                                 

The Company considers liquidity to be its ability to meet its long- and 
short-term cash requirements.  Prior to 1996, those requirements were primarily 
met by cash generated by the Company's operating activities and cash reserves.  
Since the 1995 implementation of the Company's strategy designed to enhance its 
product offerings, manufacturing capacity and international operations,         
particularly the acquisition of Radionics and the development of the China      
facility, the Company has required external sources of financing to satisfy its 
liquidity needs.                                                                

YEAR ENDED MARCH 31, 1997.  During fiscal 1997, the Company's operating 
activities used $6.6 million.  The primary factor contributing to this use of   
cash was a $15.9 million increase in inventories, which resulted from the       
transition of the manufacturing of the Company's products to the China facility 
as well as a strategic decision by the Company to increase inventories to       
enable it to improve its delivery and order turnaround performance.  Net        
income, depreciation and amortization provided $6.5 million of net operating    
cash and other account changes contributed $2.9 million to operating cash flow. 
The                                                                             

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Company believes that the consolidation of its manufacturing operations will    
enable the Company to reduce future inventory levels.                           

   During fiscal 1997, cash used for investing activities was $4.0 million and
was utilized for capital expenditures, primarily for the expansion of the       
Company's international operations and production tooling relating to the       
Radionics product lines.                                                        

  During fiscal 1997, cash flows provided by financing activities were $11.9
million.  The two primary sources of this cash were:  (i) $10.0 million of      
borrowings under the Company's revolving credit facility and (ii) receipt of    
$2.0 million from a private placement of Common Stock which the Company         
completed with five institutional investors in October 1996.                    

YEAR ENDED MARCH 31, 1996.  During fiscal 1996, the Company's operating 
activities used $3.4 million.  The primary factors contributing to this use of  
cash were losses from operations and an increase in inventories of $4.3 million 
during the year.  Sources of operating cash included depreciation and           
amortization of $2.0 million and a $9.4 million non-cash charge related to the  
write-off of in-process research and development associated with the Radionics  
acquisition.  Other account changes used $2.7 million of cash.                  

 During fiscal 1996, cash used for investing activities was $18.9 million,
consisting of the purchase of Radionics for $18.0 million (including expenses   
and net of cash acquired) and capital expenditures of $3.4 million, offset by   
liquidation of short-term investments of $2.4 million.                          

  During fiscal 1996, cash flows provided by financing activities were $18.7
million.  The source of this cash was $18.9 million of borrowings under the     
Company's commercial credit facilities, offset by principal payments on capital 
lease obligations.                                                              

CAPITAL RESOURCES.  On March 31, 1997, the Company had cash balances of 
$2.2 million.  On that date, the Company had an $11.5 million revolving credit  
facility that was fully drawn.  Subsequently, this was increased to $17.0       
million, a portion of which was used for recent acquisitions.  This credit      
facility bears interest based on the prime rate or the London Interbank Offered 
Rate, plus applicable points based on the Company's degree of financial         
leverage, and matures on July 31, 1998.                                         

The Company expects to continue its pursuit of acquisitions and the     
development of new products and markets.   The Company has budgeted $3.0        
million for capital expenditures during fiscal 1998, excluding any amounts      
required for acquisitions.  These expenditures will include continued research  
and development investment in security detection, fire detection, security,     
fire and access control products as well as several wireless projects.  The     
Company also plans to continue its efforts to market its products               
internationally.                                                                

The Company believes that the combination of its current cash balances, 
cash flows from operations and existing credit facilities will be sufficient to 
fund its planned operations during fiscal 1998.                                 

 DIVIDEND POLICY.  The Company is dedicated to promoting shareholder value
through long term profitability and growth and believes that continued          
investments in future product development are essential to this goal.  For this 
reason, it has been the Company's policy to not pay cash dividends.             

INFLATION.  During fiscal 1995, 1996 and 1997, inflation did not have a 
significant impact on the Company's business.                                   

FORWARD-LOOKING STATEMENTS                                                      

The foregoing discussion and analysis contain certain "forward-looking  
statements" within the meaning of Section 27A of the Securities Act, which      
represent the Company's expectations or beliefs, including, but not limited to, 
statements concerning the Company's operations, performance, financial          
condition, growth and acquisition strategies, margins and growth in sales of    
the Company's products.  For this purpose, any statements contained therein     
that are not statements of historical fact may be deemed to be forward-looking  
statements.  These statements by their nature involve substantial risks and     
uncertainties, certain of which are beyond the Company's control, and actual    
results may differ materially depending on a variety of important factors       
including those described under the caption "Risk Factors" and elsewhere in     
this Prospectus.                                                                

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    BUSINESS

THE COMPANY                                                                     

   The Company is a leading supplier of equipment to the electronic protection
industry.  The Company designs, manufactures and markets electronic detection,  
control and communication equipment for security, fire protection, access       
control and CCTV applications, offering products primarily for the commercial   
and mid- to high-end residential portions of the market.   From its founding in 
1968 until 1995, the Company was primarily a niche provider of  intrusion       
detection devices for the domestic market.  In 1995, the Company adopted a      
strategy designed to substantially expand its product catalog, establish an     
international sales presence, increase its manufacturing capacity and improve   
its manufacturing cost structure.  The Company has since made five              
acquisitions, opened sales offices in six countries and successfully            
established a manufacturing facility in China. These initiatives have enabled   
the Company to significantly expand its product catalog and market reach and to 
increase its net sales from $34.3 million in fiscal 1995 to $101.3 million in   
fiscal 1997.  Excluding amounts attributable to acquisitions, the Company's net 
sales grew by approximately 22.5% in fiscal 1997.                               

INDUSTRY OVERVIEW                                                               

The electronic protection industry consists of companies that design,   
manufacture, distribute, sell, install, monitor and maintain intrusion, fire    
alarm and other electronic protection systems.  The Company manufactures system 
components for sale to installation companies, distributors, other equipment    
manufacturers and, in limited cases, significant commercial or governmental     
end-users.  The Company is not engaged in the installation or monitoring        
aspects of the industry.  For many years, the electronic protection industry    
was oriented towards the protection of physical assets with simple burglary     
detection and alarm equipment.  In line with its customers' requirements, the   
industry has since broadened in scope to one which not only provides            
sophisticated equipment for intrusion detection but additionally provides       
important "premises control" functions, such as fire detection, personnel       
access control and CCTV monitoring of interior and exterior areas.  Equipment   
required for these functions is sold as individual components or, increasingly, 
bundled with other compatible components to form an integrated system for a     
specific customer's application.                                                

The Company presently offers products in all four of the principal      
categories of the electronic protection equipment market:  security, fire,      
access control and CCTV.  According to statistics compiled by the Security      
Industry Association (the "SIA") in its 1997 SECURITY INDUSTRY MARKET OVERVIEW, 
combined U.S. wholesale equipment sales for these four categories were          
estimated at $5.3 billion in 1996.  The Company believes international markets  
of significant size also exist for each of the four categories.  The SIA report 
contains various U.S. statistics for each of the four categories, including the 
following:                                                                      

*   SECURITY PRODUCTS.  This category had an estimated U.S. market size 
      of $1.8 billion in 1996, with a 7.1% annual growth rate forecasted for
      the five year period ending 2001.  This market data includes sales for
  commercial and residential alarm systems of all price points.  The
       Company presently addresses the commercial market and  mid- to high-end
residential applications.                                       

*   FIRE PRODUCTS.  This category had an estimated U.S. market size of  
$1.1 billion in 1996, when considering only equipment sales for 
commercial applications.  The Company competes primarily in the 
commercial fire equipment market and, to a lesser extent, offers
products for residential applications.                          

*   ACCESS CONTROL PRODUCTS.  This category had an estimated U.S.       
market size of $1.6 billion in 1996.  The U.S. market for access
     control equipment is forecasted to grow at 9.0% each year through the
   four year period ending 2000.  The most rapidly growing part of the
    access control market has been high-technology, PC-based systems for
     large commercial applications with multiple entrance and exit points.

*   CCTV PRODUCTS.  This category had an estimated U.S. market size of  
      $758.0 million in 1996.  The U.S. CCTV market is forecasted to grow at
   a rate of 10.2% each year through the four year period ending 2000.

According to the SIA study, the overall U.S. market for all private     
security products and services is forecasted to grow at approximately 8% per    
year through 2000.  There are several factors driving the growth of the private 
security industry.  The perception by Americans that crime is a significant     
problem has continued to grow as evidenced by the focus on crime in political   
campaigns and in the media.  Insurance companies often provide incentives to    
businesses for installing electronic security systems or require such systems   
as a condition of insurance coverage.  An electronic fire system is required in 

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commercial facilities in many localities in order to comply with municipal fire 
codes.  There has been a trend for large commercial customers to centralize     
their security function at the corporate level instead of managing security on  
an ad hoc site-basis.  This has often resulted in greater attention and         
resources for security solutions.  The growth in telecommuting and in-home      
offices has created incremental demand for residential security products by     
bringing expensive office equipment into the home.  Market penetration has also 
been driven by the increased affordability of systems, as advances in           
technology and reduced manufacturing costs have increasingly brought high       
quality systems into price ranges attractive to residential and small           
commercial customers.  In addition to new systems, there is ongoing system      
replacement in the commercial and mid- to high-end residential markets,         
creating significant retrofit opportunities.  The Company estimates that        
customers in these markets typically upgrade or replace their systems every     
seven to ten years.                                                             

The  Company believes that product manufacturing in the electronic      
protection industry is characterized by the following attributes:               

*   HIGH DEGREE OF FRAGMENTATION.  Manufacturing for the electronic     
      protection industry is highly fragmented and consists of a broad array
   of equipment manufacturers, each of which typically provides only a
    portion of the products required to deliver a comprehensive security
      solution.  The Company believes that there are more than 200 companies
engaged in manufacturing system components in the United States.

*   TRENDS TOWARD CONSOLIDATION.  There have recently been a number of  
mergers and acquisitions among manufacturers of products for the
       electronic protection industry, including the five acquisitions made by
       the Company since 1996.  The Company believes that this acceleration in
       manufacturer consolidation is based in part on a competitive model that
    has emerged in the industry which rewards companies that can offer a
       full product catalog across all four of the principal categories of its
    industry:  security products, fire products, access control products
     and CCTV products.  The Company's customers are seeking vendors which
not only provide a full catalog of products, but can also supply
   products for the many electric and electronic standards which exist
     throughout the world.  The installation and monitoring segment of the
industry has also been consolidating rapidly, with national and 
     regional firms such as ADT, Ameritech and Entergy regularly acquiring
      local competitors.  The national and regional consolidators often seek
     to reduce the number of vendors required to meet their product needs.
   The Company believes international full-catalog equipment suppliers
    will have advantages over small niche product suppliers in capturing
business from these large installation and monitoring companies.

*   CONTINUING TECHNOLOGICAL CHANGE.  Detection, control and            
communication equipment are being continuously improved, taking 
       advantage of increasing capabilities of microprocessors and application
       specific integrated circuits.  The improvements are primarily software-
     based and are generally directed at increasing system sophistication,
  reducing false alarms, reducing installation and service costs and
  enhancing end-user convenience.  A recent trend has been increased
      integration of different types of security and alarm systems.  Whereas
 basic security and fire alarm systems were once adequate for many
    customers, many customers now prefer access control and CCTV systems
  integrated into a single system with traditional security and fire
   capabilities.  Despite the technological advances that occur in the
     industry, there remains a certain inertia or loyalty to products that
have already been widely accepted by installation and monitoring
companies.  It can be expensive for installation and monitoring 
      companies to adopt new products because product changes may create new
   inventory requirements, necessitate re-training of installation and
      service personnel and make inventories of displaced products obsolete.
It is often difficult for new products to gain rapid commercial 
     penetration.  For this reason, acquisitions are often attractive, and
       sometimes preferred to new product development, as a means of growth in
the Company's industry.  This is particularly true when a niche 
      manufacturer can be purchased that has a significant existing customer
base.                                                           

*   DIGITAL COMMUNICATIONS TECHNOLOGY.  Digital technology has          
permitted the consolidation of local stations into large, remote
monitoring stations, often hundreds of miles from the end-user's
business or residence.  This has driven demand for a whole new  
     generation of products which take advantage of digital technology and
    which utilize non-traditional communication channels such as two-way
    radio, derived channel, cellular and satellite communications.  Many
  times, these communications channels are more reliable, secure and
  often lower in cost than traditional communication methods such as
telephone lines.                                                

*   FALSE ALARMS.  The electronic protection industry is increasingly   
      focusing on false alarms because of the significant burden they impose
on the support infrastructure of police and fire departments and
      because, over the long-term, they undermine the protection afforded by
       electronic protection systems.  Industry associations and manufacturing

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     and installation companies have been working together in recent years
to develop products and procedures to reduce false alarms.      

STRATEGY                                                                        

The Company's goal is to be an international leader in the design,      
manufacture and marketing of equipment for the electronic protection industry,  
satisfying all of its customers' protection needs with a complete line of high- 
quality, technologically advanced products which are distributed by a worldwide 
marketing organization and supported by a service-oriented product support      
team.  Principal elements of the Company's strategy include:                    

*   Catalog expansion - continuing to expand its product catalog        
through internal development, acquisitions and partnering with  
  companies that have technological capabilities that complement the
       Company's internal capabilities.  The Company believes that the ability
to provide a full catalog of products will result in competitive
advantages over firms which only provide a small portion of the 
     products regularly required by the industry's customers.  Part of the
  Company's motivation for its recent acquisitions was to expand the
    Company's product catalog.  The Company is promoting the sale of its
       fire, access control and other product lines by leveraging the superior
market acceptance it enjoys in the security equipment arena.    

*   INTERNATIONAL EXPANSION -  continuing to expand its international   
 sales efforts.  The Company's acquisitions of DA Systems, RAS and
Seri<e'>e have given the Company inroads into important European
     markets.  The Company plans to use the distribution networks of these
       companies to distribute its full range of products, as appropriate.  In
     addition, the Company's sales offices in Asia and Australia have been
    successful in developing a base of operations from which the Company
can further expand in those markets.                            

*   TECHNOLOGICAL ADVANCEMENT -  continuing to develop technologically  
     advanced products.  The Company utilizes the power of microprocessors
       and application specific integrated circuits to fully exploit presently
available technology.  By using this technology, the Company has
  developed:  detection products which feature demonstrably superior
     signal processing capacity which optimize the trade-off between false
       alarms and catch performance;  control products which generally provide
  a superior level of programming flexibility and more sophisticated
firmware than competitive product offerings; and communication  
      equipment which provides access to a variety of commercially available
communication technologies.                                     

*   Market focus - continuing to focus on the installation and service  
professionals that service the commercial and mid- to high-end  
residential security and fire alarm system markets, who view the
    features and quality of the Company's products as providing superior
    value.  The Company is also increasing its sales efforts directed to
the U.S. government.                                            

*   Production efficiency - increasing utilization of its China         
     facility and continuing to consolidate its purchasing.  The Company's
   state-of-the-art China facility became operational in October 1995.
   The Company has been able to reduce its unit manufacturing costs by
 transitioning production from its Fairport, New York and Salinas,
    California locations to its China facility.  The Company anticipates
      additional cost savings from the continued transition of production to
  its China facility.  The Company has also realized cost savings by
     consolidating  purchasing of components for its worldwide operations.

*   Customer development - continuing to partner with significant       
       customers to develop new or enhanced products to meet specific end-user
   needs.  Products that the Company has jointly developed in the past
      include a line of intrusion detectors with self-diagnostics for ADT to
       work with its proprietary communication protocol, an integrated control
     panel for Honeywell and a long-range photoelectric smoke detector for
Simplex.                                                        

*   Related applications - exploiting opportunities to apply its        
       technologies in related applications for markets from which it does not
    currently generate significant revenues.  For example, the Company's
    Security Escort product leverages its technological capabilities and
     has provided it with an application that is useful in markets such as
 colleges and prisons, which are different than those which it has
served historically.                                            

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ACQUISITIONS                                                                    

The Company's recent acquisitions demonstrate the implementation of its 
primary strategies of catalog and international expansion.  These acquisitions  
significantly expanded the Company's product catalog while simultaneously       
expanding its domestic and international distribution network.                  

RADIONICS.  In February 1996 the Company acquired all of the outstanding
stock of Radionics, which has generally been regarded as a premier U.S.         
manufacturer of security, fire and access control equipment and central station 
receivers.  Radionics had annual net sales of $45.1 million for calendar year   
1995, and this acquisition more than doubled the Company's net sales rate.      
This acquisition gave the Company access to Radionics' network of over 1,000    
dealers.  Radionics had a number of advanced products and models under          
development which have subsequently been completed by the Company, such as a    
246-zone fully-integrated control panel and a control communicator which can    
function as a wired, wireless or hybrid system and can communicate using        
BellSouth's Cellemetry<reg-trade-mark> technology.                              

SENSES.  In July 1996 the Company acquired certain assets of Senses, a  
manufacturer of long-range wireless alarm transmission equipment marketed under 
the name "Safecom," with annual net sales of approximately $2.0 million.  This  
acquisition provided the Company with an important new technology, a patent on  
the transmission of alarm signals from a digital communicator through a radio   
network, and access to dealers who have installed approximately 150 Safecom     
radio networks.  Safecom networks are operating in 19 countries around the      
world, with the greatest penetration in South America.  The Safecom products    
are particularly attractive in markets where the infrastructure for more        
traditional forms of signal communication do not exist or are unreliable.       

  DA SYSTEMS.  In May 1997 the Company acquired all of the outstanding stock
of DA Systems, a leading British manufacturer of security control equipment     
with annual net sales of approximately $10.8 million.  This acquisition         
provided the Company with a line of controls and communication devices approved 
for sale in the U.K., which has unique requirements for the design of security  
control and communication equipment.  Approval of future products should be     
expedited by having U.K.-based engineers working on such products.  DA Systems  
also provided the Company with an important new in-building wireless radio      
technology believed by the Company to be superior in performance to competitive 
offerings.                                                                      

SERIEE.  On June 24, 1997 the Company acquired 99.5% of the outstanding 
stock of Seriee.  Seri<e'>e is a leading French manufacturer of electronic      
control and communications equipment with net sales of approximately            
$6.3 million per year and has the largest security equipment distribution       
network in France.  Like the U.K., France has unique design requirements and    
this acquisition provides the Company with a line of French-approved control    
panels which, coupled with Seriee's 10 agency offices located throughout        
France, give the Company a significant entrance into the French market.  Prior  
to its acquisition, Seriee was a distributor for certain Company products.      

  RAS.  On June 25, 1997 the Company acquired 98.7% of the outstanding stock
of RAS.  RAS, with net sales of approximately $9.9 million per year, has the    
largest security equipment distribution network in Belgium, with five regional  
sales offices located throughout that country.  The Company believes that RAS   
has significant technical expertise in CCTV and access control systems and is   
strategically located to service northern European customers by providing       
convenient technical support and inventory.  RAS had been a distributor for the 
Company for over 15 years and, immediately prior to its acquisition, was the    
Company's second largest distributor.                                           

PRODUCTS                                                                        

The Company produces and distributes a wide variety of electronic       
protection equipment, offering a single source of products to the professional  
installers who provide custom systems for different types of buildings and      
protection requirements.  The Company's products include security, fire and     
access control systems and components, CCTV system components and the Security  
Escort multiple user help call system.  The Company seeks to be a value leader  
by offering high quality and technologically advanced products at competitive   
prices.  The Company believes that the commercial and mid- to high-end          
residential portions of the electronic protection industry recognize the        
quality of the Company's products and consider them to offer attractive value.  

 The following table sets forth the Company's net sales for fiscal 1997 in
each of the primary categories of products offered by the Company:              

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                 Fiscal 1997
                               Net Sales       Percent
Product Type                        (in thousands)   of Total       
-------------                       --------------   --------       

Security products                           $77,298         76.3%               
Fire products                                13,029         12.9%               
Access control products                       9,067          9.0%               
CCTV products                                 1,857          1.8%               
                             ----------      -------
Total                                    $101,251        100.0%             
                             ===========     =======

 From its inception until 1995, the Company was primarily a niche provider
of  intrusion detection devices.  Following the shift in the Company's strategy 
in 1995 to expand the products it offers by acquisition and internal            
development, the Company has significantly expanded its product catalog by      
adding: (i) control and communication equipment with its purchase of Radionics  
in February 1996, (ii) wireless radio network products with its purchase of     
certain assets of Senses in July 1996, (iii) in-building wireless radio         
technology with its purchase of DA Systems in May 1997, and (iv) an additional  
line of security control panels with its acquisition of Seri<e'>e in June 1997. 
Since early 1995, the Company has introduced several internally developed       
products including, among others, its TriTech pet avoidance detectors, a        
control panel that offers both wired and wireless on-premise communication      
capability, an enhanced and broadened line of smoke detectors, a new line of    
passive infrared intrusion detectors, and a fire system control and             
communication product.  In addition, the Company completed Radionics' second    
generation of integrated panels which are capable of simultaneously controlling 
a full-featured alarm system, fire system and access control system.  The       
Company has also expanded its product catalog by entering into a number of      
alliances with partners that have technological capabilities that complement    
the Company's internal capabilities.  One recent example of such an alliance    
brought about the Company's first entry into the CCTV market in fiscal 1997.    

SECURITY PRODUCTS                                                       

Security systems consist of intrusion detectors coupled with control and
communications equipment and, in many cases, notification devices.  When a      
triggering event occurs, a detector senses the event and notifies the control   
equipment, which in turn causes the communications equipment to transmit an     
alarm signal to a remote central alarm monitoring service or directly to the    
police.  The control equipment also activates notification devices such as      
strobes, horns and sirens if these options are features of the system.          

      DETECTORS.  Security detectors are the components of a security system
which sense intrusion into protected areas.  The Company markets security       
detectors under the brand names Detection Systems, Radionics, TriSense, DA      
Systems and Seriee.  Security detectors differ in three primary respects:       
the way they sense intrusion or another alarm condition, the way they           
communicate with control equipment and the type of information they transmit to 
the control equipment.                                                          

 The Company offers detectors which use six basic technological approaches
for sensing the existence of an intrusion or other alarm condition:             

Type of Detector                             Operation          
 -----------------------------------   -----------------------------------
Passive infrared body heat detection  Passive infrared detectors operate
                                     by detecting the change in energy
                                  that occurs when a body of one
                                      temperature passes by a background
                                     of another temperature within the
                             detector's field of view.
                                 Special processing techniques
                                    enable the detector to determine
                                 whether a change in energy is
                                       caused by a person or by some other
                       false alarm source.

Combination passive infrared and      Dual detectors combine passive    
microwave detection                 infared detectors with microwave
("dual detectors")                  detectors.  Microwave detectors 
                                         generate microwave signals and detect
                                       either a reduction or distortion of
                                          received energy caused by an intruder.

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  Photoelectric beam interruption    Photoelectric beam detectors consist of
                                a light transmitter and a separate
                                 receiver.  The transmitter emits an
                                      invisible infrared beam to the receiver.
                                 If the beam is broken, the receiver
               signals an alarm.

Acoustic glass break detection     Glass breakage detectors use         
                                 microprocessor-based sound analysis
                                   technology to listen for the specific
                                  frequencies associated with breaking
                               glass. They can be used to detect
                                    breakage of plate, tempered, laminated
              and wired glass.

   Vibration detection                Vibration or seismic detectors use three
                                   distinct detection systems to protect
                                against attack from heavy objects,
                                      drilling or explosion. They are designed
                                    specifically for protection of vaults,
                                     safes and ATMs, but also can be used to
                                    protect other reinforced areas such as
                               night deposit boxes, data storage
                           cabinets and filing cabinets.

  Magnetic contacts                  Magnetic contacts are used primarily on
                                      doors and windows and signal the control
                                     equipment when an electrical connection
                                  is broken due to a protected door or
                  window being opened.

These different types of detectors are needed for different types of            
applications in commercial and mid- to high-end residential security systems    
and complement each other in their system applications and the types of         
environments in which they function best.  Many alarm systems incorporate       
several different types of detectors in a single alarm system to maximize the   
effectiveness of the system.                                                    

   Detectors can communicate with an alarm system's control equipment directly
(wired), indirectly (wireless) or on a combined or "hybrid" basis (where the    
detector communicates via wireless transmission to a peripheral device which is 
wired to the control equipment).  The Company offers detectors which are used   
in each of these types of systems.  The information that detectors communicate  
to the control equipment ranges from a simple communication that an alarm event 
has occurred to, in a multiplex system, the identity of the detector sensing    
the alarm condition, the nature of the alarm condition and diagnostic           
information about the detector.                                                 

The Company believes that for the markets it serves it offers the widest
variety of detectors available from any single supplier and that its detectors  
are among the most advanced detectors available from any source.  The Company   
believes that its detectors generally provide greater features, performance and 
reliability than its competitors' products.  These characteristics are          
attractive to professional installers because they make installation easier,    
reduce service calls and expense, minimize false alarms and increase end-user   
satisfaction.  Specific attributes of the Company's detectors include:          

*   FEATURES.  The Company offers a wide variety of detector types      
which incorporate certain special features such as field-       
     interchangeable optic systems which permit installers to use the same
       detector for different coverage patterns by simply adjusting the mirror
       configuration; sensitivity controls which allow the installer to adjust
     the sensitivity of the detector as appropriate for the application to
minimize false alarms; multiple mounting options to provide more
   installation flexibility; pointable optics that permit the coverage
       pattern to be directed thereby providing more mounting alternatives and
       allowing adjustment for changes in use without re-mounting; and a broad
    range of operating voltages for many detectors permitting them to be
used in older or specialized security systems.                  

*   PERFORMANCE.  Some examples of how the Company's products maximize  
      performance are its patented signalling processing techniques ("motion
analyzer processing") incorporated into its passive infrared and
TriTech detectors which enables them to distinguish between the 
electronic signatures of valid and false alarm conditions.  The 
Company's newest dual detectors can be used in residential or   
       commercial environments to prevent up to 100-pound animals from causing
   the detector to detect an alarm condition but still be tripped by a
  human weighing less than 100 pounds.  The Company's newest passive
   infrared models can distinguish and ignore smaller animals, such as
 rodents.  Another example of the Company's detectors' performance
capability is their ability to perform under a broad range of   
temperatures from -40<circle> fahrenheit through 120<circle>    
fahrenheit.                                                     

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*   RELIABILITY.  Each of the Company's detectors undergoes computer-   
    based functional testing and in-circuit electrical testing to insure
that it functions as designed.  The Company further enhances the
reliability of its more sophisticated detectors by incorporating
   patented software-based diagnostic systems in them that confirm the
   detectors are functioning in a number of respects and have not been
blocked or "masked-off."                                        

      CONTROL EQUIPMENT.  The control components of a security system manage
all the functions of the system and provide the link between the system's       
detectors and communications equipment.  The Company markets control products   
under the brand names Radionics, Detection Systems, DA Systems and Seri<e'>e.   
The Company's control products include control panels which collect, interpret  
and transmit the signals from the detectors and arming stations which are used  
to program certain features of the system and to arm and disarm it.  The        
Company's control and communication product offering was greatly expanded in    
1996 by its acquisition of the Radionics control product line, which had a      
favorable industry reputation for alarm control and communication equipment.    

   The Company's security control product line includes products that are used
in all three types of systems installed by security professionals.              
Conventional security systems include wired, wireless and hybrid (combination   
wired and wireless) systems and simply communicate that an alarm condition      
exists.  In the next level, multiplex systems, each sensor is addressable,      
which means that the specific location of the alarm condition is reported.  At  
the highest level, the Company's advanced multiplex systems feature the         
capacity to report back addressable test and alarm condition information,       
assuring that the system is working properly, and to report whether a detector  
has been tampered with.                                                         

  The Company has a wide range of control panels, ranging from its Detection
Systems' low-cost six-zone panel which can operate six detection device         
circuits, to Radionics' recently introduced 246-zone fully integrated security, 
fire and access control panel which can operate a combination of up to 246      
intrusion detection, smoke detection and access control circuits and devices.   
Features of the Company's control panels that enhance its ability to market its 
control panels include:  (i) the ability to quickly communicate data about      
events occurring in the control system; (ii) the flexibility to select which    
information is reported locally and which is transmitted to a central           
monitoring station; (iii) the ability to specify how the keypad works for each  
user at each location; (iv) "robust" power supplies which ensure adequate power 
supply to the detectors, notification devices and other system components and   
(v) enhanced transient immunity which protects the system from power surges and 
lightning.                                                                      

COMMUNICATIONS EQUIPMENT.  The Company offers a broad line of   
communications equipment, ranging from Radionics' central station receiving     
equipment, which performs the function of receiving alarm signals from multiple 
sources, to transmission equipment capable of accessing telephone lines, as     
well as most of the alternative communication technologies which are            
commercially available.  One of these technologies is BellSouth's new           
Cellemetry<reg-trade-mark> data service, which permits wireless transmission of 
alarm signals to a central station using existing cellular networks.  Another   
is the ARDIS radio network, which offers a more secure alternative to telephone 
lines as the means for contacting a central monitoring station, and ultimately  
the police or fire department.  In addition, the Company offers its Safecom     
long-range wireless alarm transmission system which allows a monitoring company 
to establish and maintain a proprietary two-way radio network to transmit and   
receive alarm signals.  The Company also offers its Fastlink system which       
provides one-way radio communication of alarm signals to a remote monitoring    
station.  The Company, through its Radionics and DA Systems subsidiaries, is    
licensed to manufacture and sell in the U.K. and U.S. derived channel           
communication devices that transmit alarm signals over the unused bands of      
standard telephone lines.  This allows alarm signals to be transmitted at the   
same time a telephone line is being used for voice communications.              

     SECURITY ESCORT.  The Company's Security Escort product is a multiple
user help call system which allows a user to alert appropriate security         
personnel as to their location, name, address and any handicap or other special 
data by using a palm-size transmitter.  Security Escort systems may be enabled  
to permit a user to trigger a strobe and sound a siren as well.  The primary    
components of a Security Escort system are a central command station which is   
monitored by security personnel, a Microsoft Windows<reg-trade-mark>-based      
system software package, transceivers, receivers and individual transmitters.   
This system uses a digital micro-cellular architecture which accommodates up to 
16 million individual user ID codes.  The system is now available through       
several regional and national installation companies.  It has been successfully 
installed in college, prison, nursing home, psychiatric hospital, parking lot   
complex and museum environments.                                                

 The Security Escort's advanced design features include:  self-supervision
of the system's operational integrity by internally generating and monitoring   
test transmissions; testing of transmitters by users; and system-generated      
notices regarding system maintenance requirements.  Security Escort allows a    
user to test the system and his or her transmitter at any time and              

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receive visual confirmation that both are functioning properly.  In addition,   
the system software provides for full archiving of all system activity          
including victim tracking and alarm map recall.                                 

FIRE PRODUCTS                                                           

Fire detection systems work in the same manner as security systems.  In 
fact, many fire detection systems are operated in tandem with a security system 
by the same control equipment.  Fire alarm systems range from conventional      
systems, which can sense and signal a fire condition or non-condition, to       
addressable systems, which permit identification of the triggered detector      
within the system, and analog systems, which permit communication of            
information regarding the condition of the environment at the detector          
location.  The Company offers fire detection products under the brand names     
Detection Systems and Radionics.  The Company's fire detection product line,    
which includes products for both residential and commercial applications,       
features detection components, dedicated control panels, communication          
equipment and notification devices.                                             

      DETECTORS.  The Company's fire detection components sense the presence
of smoke and heat by employing a variety of technologies, including beam smoke  
detectors, photoelectric spot smoke detectors, ionization spot smoke detectors  
and heat probes.  The Company's smoke detectors are differentiated by a         
patented chamber which provides increased immunity to dust, which is the        
leading cause of false fire alarms.  The Company also has a patented automatic  
test and calibration feature which continuously senses and signals if dust or   
other conditions cause the detector's sensitivity to deviate from its           
acceptable range.  The Company's fire detectors offer many of the same features 
as its security detectors and undergo the same stringent testing requirements.  

     CONTROL EQUIPMENT.  As described above, many of the Company's control
panels operate both security and fire alarm systems; however, some of the       
Company's control panels are designed exclusively for operating fire alarm      
systems.  The Company originally entered the fire detection business as an      
extension of the security products line by providing fire detection features    
and accessories through the security control panel.  The Company is in the      
process of introducing two new control product lines for the dedicated fire     
market, a market which the Company has not historically addressed.  One of      
these products utilizes state-of-the-art analog fire monitoring technology.     

 COMMUNICATION EQUIPMENT.  The technologies the Company's products
provide for communicating fire alarm signals are the same as those provided by  
its security alarm communications equipment.  In the fire systems market, the   
Company's capabilities in communications take on added importance because of    
National Fire Protection Association ("NFPA") guidelines requiring all local    
fire systems to have communications capability permitting alarm and trouble     
conditions to be monitored remotely.  The Company was the first to develop a    
supplementary communications product specifically designed to permit existing   
systems to be updated to comply with NFPA guidelines.  The Company's Safecom    
long-range wireless system provides fully-supervised two-way fire reporting by  
radio which provides enhanced security.                                         

NOTIFICATION DEVICES.  The Company distributes a full range of  
notification devices such as strobes, horns and sirens varying in color and     
intensity which fully comply with the Americans with Disabilities Act.  These   
products are distributed under the Company's name and are supplied by a leading 
specialty manufacturer of such products.                                        

ACCESS CONTROL PRODUCTS                                                 

   Electronic access control systems consist of equipment that can identify an
authorized individual and permit that person to enter a restricted area.  While 
intrusion control products protect the property when no one is on-site, access  
control products protect the property while it is occupied.  The market for     
access control systems is divided into three major end-user categories:         
industrial, commercial, and governmental.  Fear of crime, potential liability   
and convenience have created a significant retrofit market for access control   
products in addition to the new construction market.                            

  Access control systems can include card-based systems, CCTV-based systems,
audio systems and bar code systems.  The Company distributes access control     
products on an OEM basis under the brand names Readykey, Easikey and Radionics. 
Access control products sold by the Company include control systems, card       
readers, cards and detector accessories.  Card-based technology is currently    
the most attractive option both in terms of price and reliability, and          
card-based systems currently dominate the access control market.  Card-based    
systems are currently in place in a number of non-residential operations,       
including office buildings and hotels, and are becoming more prevalent in       
residential settings such as college campuses.                                  

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CCTV PRODUCTS                                                           

       CCTV is a system of relaying video and audio signals from a camera to a
monitor or a recording device.  The term CCTV refers to a closed-circuit system 
sending signals to select receivers as opposed to a system broadcasting signals 
to the general public.  The Company distributes CCTV products under the brand   
name DS Vision.  These products consist of cameras, monitors, recorders,        
control units and other accessories.  The Company distributes color and black-  
and-white as well as both high and low resolution cameras and monitors.         

Professional CCTV security and surveillance systems can be simple or    
complex.  While a convenience store might employ a system consisting of a       
single camera and monitor, an airport system would likely include hundreds of   
cameras, monitors and video recorders along with computer-based control         
equipment and video multiplexers.  Professionally installed CCTV systems are    
used in retail stores, banks, warehouses, office buildings, industrial sites,   
government facilities, casinos, mines, airports, prisons and, increasingly, in  
private homes.  The Company is promoting a state-of-the-art system to enable    
authorized personal computer users to remotely "look in" on the CCTV system     
installed at their facility.                                                    

MARKETING                                                                       

   The Company's primary customers are: (i) national and regional installation
companies such as ADT, Ameritech, Checkpoint, Holmes Protection, Honeywell,     
Simplex, Wells Fargo and Westar; (ii) national distributors such as ADI in the  
U.S., Efsec in Sweden, Glastrak in the Netherlands and Rimi in Russia; and      
(iii) original equipment manufacturers such as Pittway and ITI Technologies     
that integrate the Company's components into their finished products.           
End-users of the Company's products include federal and state governments,      
Autozone, Boeing, J.C. Penney, Kmart, Northrop Grumman, Pepsico, Tandy and      
Wal-Mart.  The Company has a sales force of approximately 105 representatives   
of which 50 are domestic and 55 are international.  The Company presently has   
approximately 137 distributors that accounted for 13.4% of the Company's net    
sales during fiscal 1997.                                                       

The Company's products are installed in industrial, commercial,         
institutional and residential buildings, in both new and upgraded system        
installations.  Radionics and DA Systems sell their products to national        
dealer/installer networks which combine their products with those of other      
suppliers to form complete systems.  Historically, Radionics has sold its       
products to installation companies in the high-end commercial, retail and       
governmental markets.  More recently, Radionics has broadened its product       
offering by supplying products suitable for the residential market.             
Conversely, DA Systems has historically sold its products to installation       
companies and distributors for the small commercial and residential markets.    

   In connection with the Company's international marketing initiative, it has
opened six international sales offices.  The Company's distributors and sales   
representatives cover an additional 50 countries.  Foreign sales (including     
sales to Canada) accounted for approximately 16% of the Company's net sales in  
fiscal 1997.                                                                    

 Domestically, large regional and national accounts are supported directly
by regional sales and service managers.  The Company's sales managers provide   
technical support to customers regarding system design, installation and        
service.  The Company also conducts regular training programs for its customers 
as well as technical seminars at national and regional trade shows.  A call to  
the Company's 800 sales number typically results in same-day shipment of most   
standard products from one of two warehouses.  To support the on-site installer 
or service person, toll-free 800 lines connect directly to the Technical        
Service Department.  Detection Systems and Radionics maintain regional          
sales/training personnel in 14 states.                                          

 The Company markets the Security Escort multiple user help call system in
North America and in Australia.  While the system was initially designed for    
the protection of individuals on college and university campuses, it is         
suitable for many other applications.  The Company is seeking additional        
distribution relationships to expand the market coverage for the system to      
other environments, such as apartment complexes, condominiums, retirement       
communities, hospitals, correctional facilities, governmental facilities and    
manufacturing facilities.                                                       

      The success of the Company depends heavily on the business it conducts
with a limited number of significant customers.  In fiscal 1997, 10.7%, 10.6%   
and 6.0% of the Company's net sales were attributable to Pittway, Ameritech and 
Honeywell, respectively.  Pittway is a competitor of the Company across many of 
its product lines and purchases the Company's products to incorporate them into 
its products and systems.  During October 1996, Ameritech (an established       
customer of the Company) began purchasing the Company's products through        
Pittway to utilize Pittway's distribution facilities.  The Company has had      
long-standing relationships with most of its significant customers; however, it 
generally does                                                                  

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not have supply contracts with them and they may unilaterally reduce or         
discontinue their purchases without penalty.  The Company's loss of (or failure 
to retain a significant amount of business with) any of these customers could   
have a material adverse effect on the Company.  The Company's acquisitions, its 
international marketing initiatives and its increased use of distributors have  
reduced the potential for sales fluctuations associated with the Company's      
largest customers.                                                              

COMPETITION                                                                     

The markets in which the Company operates are highly competitive.  The  
Company's competitors include manufacturers of security and fire alarm          
equipment from all over the world.  The Company believes its three major        
competitors are Pittway, the Berwind Group and C&K Systems.  In addition, the   
Company may face competition from new entrants into these markets and increased 
competition from existing competitors.  A number of the Company's competitors   
have substantially greater financial and other resources than the Company.  In  
many cases the Company's competitors are concentrated in one market niche in    
the electronic protection industry, allowing them to concentrate their          
resources in that niche.  The Company competes on the basis of providing        
superior value to customers with respect to both products and services.  When   
selecting intrusion and fire detection equipment, professional installation and 
service companies consider the breadth of products offered by manufacturers and 
distributors, product performance and reliability, as well as the incorporation 
of advanced technological features such as automatic testing, efficiency of     
delivery, ease of installation and service, sales and technical support         
services and price.  There can be no assurance that the Company's products and  
services will continue to be competitive and accepted by the market in the      
future.                                                                         

MANUFACTURING                                                                   

The Company has manufacturing facilities in Fairport, New York; Zhuhai, 
China; Salinas, California; and Southall, England; although it has ceased using 
the Salinas and Southall plants for regular product manufacturing.  The Company 
is ISO 9002 certified at all four of its manufacturing facilities.              

The Company designs its products and prepares specifications for the    
component parts used in its products.   The Company purchases certain           
components from outside sources and then assembles them into finished products. 
Before product assembly, components are sample tested for compliance with       
quality control standards and critical components are individually tested.  The 
Company assembles circuit boards using both automatic and semi-automatic        
assembly equipment utilizing both pin-through-hole and surface-mount            
technologies.  Intermediate quality control processes are used to evaluate      
components and products being transferred between assembly departments.         
Completed circuit boards are tested and calibrated against Company-defined      
performance standards.                                                          

   The Company's China manufacturing operations, which commenced during fiscal
1996, are conducted in a 70,000 square foot manufacturing facility in Zhuhai,   
People's Republic of China.  Manufacturing operations and the first product     
shipments from the Company's China facility commenced in October 1995.          
Initially, the Company duplicated in this facility the proven manufacturing     
procedures historically used in its Fairport facility.  Subsequently, the       
Company's management at the China facility has fine-tuned the manufacturing     
process to take advantage of local conditions.  The Company has transitioned    
the manufacturing of many Detection Systems' motion sensors and most of         
Radionics' controls to the China manufacturing facility to take advantage of    
its lower production costs.  The Company has ceased using the Radionics plant   
in Salinas, California for regular product manufacturing and is currently using 
the production area there primarily for product configuration.  During fiscal   
1997, approximately 25% of the Company's manufacturing output was produced at   
its China facility.  The Company is in the process of consolidating its         
purchasing for all its manufacturing materials, which it expects will result in 
additional cost savings.                                                        

INTELLECTUAL PROPERTY                                                           

The Company has obtained over 40 patents related to its products.  While
the Company obtains patents as appropriate and considers certain of its patents 
valuable, it does not believe any one of them by itself is crucial to the       
successful conduct of its business.  The Company relies on a combination of     
patents, trademark registrations, copyrights and confidentiality agreements to  
protect its intellectual property.                                              

 During the fiscal 1995, 1996 and 1997, the Company expended approximately
$4.1 million, $4.7 million and $8.1 million, respectively, on research and      
development activities relating to the development of new products and the      
improvement of existing products.                                               

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SUPPLIERS                                                                       

  The Company purchases raw materials and components worldwide from numerous
suppliers.  The vast majority of these materials are generally available from   
more than one supplier and the Company has not encountered any serious          
shortages or delays.  Certain raw materials used in producing some of the       
Company's products can be obtained only from one or two suppliers, the shortage 
of which could adversely impact production of certain security equipment by the 
Company.  The Company believes that the loss of any other single source of      
supply would not have a material adverse effect on its overall business.        

REGULATION                                                                      

  Many of the Company's products require approval by the FCC before they can
be marketed in the United States.  In addition, commercial acceptance of the    
Company's products is typically dependent on UL listing.  The Company has       
successfully obtained FCC approval and UL listing of its products in the past;  
however, it cannot predict whether it will obtain approvals for future products 
or whether FCC regulations or UL listing requirements relating to the Company's 
current or future products might change.  Failure to comply with FCC            
regulations or UL listing requirements, an inability to receive approval for    
products under development or a change in existing regulations or listing       
requirements that would make products non-compliant, could have a material      
adverse effect on the financial condition and results of operations of the      
Company.  Most foreign countries have similar agencies and regulations, which   
could have the same impact on sales of the Company's products within those      
countries.  In addition to the regulation of its products, the Company is       
subject to local, state, federal and foreign laws regarding the discharge of    
materials into the environment.                                                 

A number of municipalities have enacted or are considering enacting     
legislation which penalizes false alarms which trigger responses by police or   
fire departments.  The Company is unable to quantify the effects such           
legislation may have on the security and fire protection markets as a whole,    
but believes that false alarm legislation is causing installation companies and 
system buyers to be more inclined toward the use of higher quality equipment,   
such as that manufactured and sold by the Company.                              

Compliance with federal, state and local laws and regulations regulating
the discharge of materials into the environment, or otherwise relating to the   
protection of the environment have not had, and are not expected to have, a     
material effect upon the capital expenditures, earnings or competitive position 
of the Company.                                                                 

EMPLOYEES                                                                       

 As of July 21, 1997, the Company directly employed 723 persons worldwide,
including 340 in manufacturing, 86 in engineering and product development, 68   
in customer service, 104 in sales, 93 in management and administration and 32   
in marketing.  In addition, the Company's China facility employs 387 persons    
who are under the supervision of the Company, including approximately 342 in    
manufacturing, eight in engineering and product development, two in customer    
service, two in sales and 33 in management and administration.  None of the     
Company's employees is represented by a collective bargaining organization, and 
the Company's management believes employee relations are good.                  

PROPERTIES                                                                      

  The Company conducts manufacturing, research and general office operations
at its 92,000 square foot facility at 130 Perinton Parkway, Fairport, New York. 

Radionics' research, product configuration and general office operations
are conducted at its 156,000 square foot facility located in Salinas,           
California, the lease on which expires in July 1999.  The manufacturing of      
Radionics' products has been transitioned to the Company's China and Fairport   
facilities.                                                                     

The Company's China manufacturing operations are conducted in a 70,000  
square foot manufacturing facility in Zhuhai, People's Republic of China.       
Detection Systems (HK) Ltd., a subsidiary of the Company ("DS Hong Kong"),      
leases the facility from the local Chinese government under a ten-year lease    
which expires May 31, 2005.  DS Hong Kong has also entered into a sub-          
contracting agreement which runs through June 2000 and provides for the local   
Chinese government to arrange for personnel and utilities and for DS Hong Kong  
to furnish manufacturing equipment, raw materials and management                

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services.  Pursuant to this agreement DS Hong Kong pays a fee and production    
expenses to the local Chinese government and makes payments to the workers at   
the facility.                                                                   

LEGAL                                                                           

The Company experiences routine litigation in the normal course of its  
business.  The Company occasionally receives, and may receive in the future,    
communications from third parties claiming that the Company's products or       
technologies infringe on such parties' intellectual property rights.  The       
Company does not believe that any pending or threatened litigation or           
intellectual property claims will have a material adverse effect on the         
financial condition or results of operation of the Company.                     

    MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS                                                

   The following table sets forth certain information concerning the executive
officers and directors of the Company:                                          

NAME                 AGE                  POSITION                
--------------------   ------------   ----------------------------------------  
Karl H.  Kostusiak          58        Chairman of the Board, Chief Executive    
                     Officer and President

David B.  Lederer           57        Executive Vice President and Director     

Lawrence R.  Tracy          50        President of Detection Systems            
                                    International, Inc. and Radionics, Inc.,
                       subsidiaries of the Company

Frank J.  Ryan              43        Vice President, Secretary and Treasurer   

George E.  Behlke           39        Vice President, Engineering               

Gary Holroyd                38        Vice President, Operations                

Donald R. Adair             53        Director                                  

Mortimer B. Fuller, III     55        Director                                  

Edward C. McIrvine          63        Director                                  

KARL H. KOSTUSIAK has been President and Chief Executive Officer of the   
Company since its founding in 1968.  He has been a director of the Company      
since 1968 and also serves as Chairman of the Board.  He is a graduate of the   
State University of New York at Buffalo with a Bachelor of Science in           
Electrical Engineering and of the University of Rochester with a Master of      
Science in Electrical Engineering.  Mr. Kostusiak is a member of and actively   
participates in the American Society for Industrial Security, the Central       
Station Alarm Association, the National Burglar and Fire Alarm Association, the 
National Fire Protection Association and the Security Industry Association.     

DAVID B. LEDERER, one of the founders of the Company, has been Executive  
Vice President of the Company since 1981 and a director since 1968.  He is a    
graduate of the State University of Nebraska with a Bachelor of Science and     
Master of Science in Electrical Engineering.  Mr. Lederer is a member of the    
American Society for Industrial Security, the Central Station Alarm             
Association, the National Burglar and Fire Alarm Association, the National      
Electrical Manufacturers Association and the Security Industry Association.     

LAWRENCE R. TRACY has been President of Detection Systems International,  
President of Radionics since March 1996.  Both DSII and Radionics are           
subsidiaries of the                                                             

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Company.  Prior to joining the Company, Mr. Tracy was President and Chief       
Executive Officer of C&K Systems, Inc., a position he held for 13 years.  Mr.   
Tracy  is a member of the American Society for Industrial Security, the Central 
Station Alarm Association, the National Burglar and Fire Alarm Association, the 
National Fire Protection Association and the Security Industry Association.     

FRANK J. RYAN has been Vice President of the Company since 1988 and has   
served as the Company's Chief Financial Officer since 1982.  He is also the     
Company's Secretary and Treasurer.  He is a graduate of the State University of 
New York at Fredonia.  Mr. Ryan is a member of the Institute of Management      
Accountants, the Central Station Alarm Association and the National Association 
of Manufacturing.                                                               

GEORGE E. BEHLKE has served as the Company's Vice President, Engineering  
since May 1995.  Mr. Behlke has been with the Company since 1977 and served as  
its Engineering Manager from 1984 until May 1995.  His efforts in the           
development of intrusion and smoke sensors have resulted in numerous patents    
held by the Company.  Mr. Behlke is a graduate of Alfred State Agriculture and  
Technical College.                                                              

 GARY HOLROYD has served as the Company's Vice President of Operations since
November 1996, having held similar positions for Radionics and Expamet          
International PLC, Radionics' previous parent company, since 1975.  He is a     
graduate of the University of Newcastle, United Kingdom.                        

DONALD R. ADAIR has been a director of the Company since 1991 and also    
serves on the Board's Compensation, Stock Option and Audit Committees.  He is   
the principal of Adair Law Firm, which was established in 1988 and focuses on   
serving businesses in Rochester, New York.  He is a graduate of Harvard College 
and Cornell Law School.  Mr. Adair is also a director of Stone Construction     
Equipment, Inc. in Honeoye, New York, and Victor Insulators, Inc. in Victor,    
New York.                                                                       

MORTIMER B. FULLER, III has been a director of the Company since 1990 and 
also serves on the Board's Compensation, Stock Option and Audit Committees.     
Since 1977, he has been President and Chief Executive Officer of Genesee and    
Wyoming Industries, Inc., a holding company in Greenwich, Connecticut which     
owns and operates regional and short line freight railroads and provides rail   
related services to railroads and shippers.  He is a graduate of Princeton      
University, Boston University School of Law and Harvard Business School.  Mr.   
Fuller is also a director of Genesee and Wyoming Industries and the American    
Short Line Railroad Association.  He is a founding member of the Regional       
Railroads of America, and serves on that Association's executive committee.  He 
is also a trustee of the Lawrenceville School.                                  

EDWARD C. MCIRVINE has been a director of the Company since 1981 and also 
serves on the Board's Compensation, Stock Option and Audit Committees.  Since   
1987, he has been a self-employed research and development management           
consultant and, from 1987 through 1991, he served as Dean of the College of     
Graphic Arts and Photography at the Rochester Institute of Technology in        
Rochester, New York.  He is a graduate of the University of Minnesota and       
earned his Ph.D. in Theoretical Physics from Cornell University.  He is an      
elected Fellow of the American Physical Society and served on the Board of the  
American Institute of Physics.                                                  

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EXECUTIVE COMPENSATION                                                          

  SUMMARY COMPENSATION TABLE.  The following table sets forth the compensation
of the Company's Chief Executive Officer and certain other executive officers   
of the Company (collectively, the "Named Executive Officers") for fiscal years  
ended March 31, 1997, 1996 and 1995.  The Company did not grant any restricted  
stock awards or stock appreciation rights or make any long-term incentive plan  
payouts during the years indicated.                                             

                                                        [Enlarge/Download Table]

                                                              Long Term               
                                                            Compensation              
                                 Annual Compensation           Awards                 
                                 -------------------         -----------              
                                                    Other    Securities               
Name and                                           Annual    Underlying   All Other   
Principal         Fiscal                             Compen-    Options/     Compen-  
Position           Year    Salary($)    Bonus($)    sation($)    SARS(#)  sation($)(2)
-----------       -------  ---------    -------     --------    --------  ----------- 
                                                                                      
Karl H. Kostusiak   1997   212,100      403,333       --(3)           0      3,266    
Chairman, President 1996   205,926        1,419      26,186           0      2,542    
and CEO             1995    196,110     184,746       --(3)           0      2,625    

David B. Lederer    1997    169,700      322,670       --(3)          0      3,364    
Executive Vice      1996    164,741        1,135     27,956           0      2,534    
President           1995    156,897      147,794       --(3)          0      2,625    

Lawrence R. Tracy   1997   148,470      282,377       --(3)      18,775      3,301    
President of        1996   144,148       31,648       --(3)           0          0    
Detection Systems   1995    21,000      102,405       --(3)      60,000          0    
International, Inc.                                                                   
and                                                                                   
Radionics, Inc.                                                                       

George E. Behlke    1997    108,150       81,790      24,761(4)   9,650      1,964    
Vice President,     1996     89,363          723        --(3)         0      2,272    
Engineering         1995        N/A          N/A         N/A        N/A        N/A    

Gary Holroyd(1)     1997    117,636       74,587       --(3)      1,460        238    
Vice President,     1996        N/A          N/A         N/A        N/A        N/A    
Operations          1995        N/A          N/A         N/A        N/A        N/A    

Frank J. Ryan       1997    108,150       59,308       --(3)      2,190      1,973    
Vice President,     1996    105,000          723       --(3)          0      2,298    
Secretary and       1995    100,000       35,017       --(3)      2,250      2,242    
Treasurer                                                                             

_________________________                                                       
(1)   Mr. Holroyd became an officer of the Company on November 7, 1996.         
(2)   Represents contributions by the Company to accounts of the named          
  executive officers under the Company's 401(k) retirement savings plan.
(3)   Values are less than the minimum amount required to be reported.          
(4)   Includes $21,000 which represents the difference between the market value 
     and the exercise price for a nonqualified stock option awarded during the
fiscal year.                                                        

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OPTION GRANTS IN LAST FISCAL YEAR.  The following table sets forth      
information with respect to stock options granted to the Named Executive        
Officers during fiscal 1997.  Each grant was for incentive or nonqualified      
stock options to purchase Common Stock under the Company's 1992 Restated Stock  
Option Plan.  All options are exercisable 40% after one year, 60% after two     
years, 80% after three years and 100% after four years.  Options awarded prior  
to December 17, 1996 were adjusted to reflect the three-for-two stock split     
effected on that date.  The Company has not granted any stock appreciation      
rights.                                                                         

                                                        [Enlarge/Download Table]

                                                                                     Potential Realizable     
                             Percent of                                                Value at Assumed       
               Number of        Total                                                Annual Rates of Stock    
              Securities    Options/SARs    Exercise or                                      Price            
              Underlying     Granted to     Base Price   Market Price                  Appreciation for       
              Option/SARs    Employee in                                Expiration        Option Term         
                                                                                      ------------------------
     Name      Granted (#)   Fiscal Year      ($/Sh)        ($/Sh)        Date            5% ($)       10% ($)
     ----      ----------    -------------  ----------   -------------   ----------   ----------     ---------
                                                                                                              
K. Kostusiak            0          --           --            --              --          --            --    
D. Lederer              0          --           --            --              --          --            --    
L. Tracy            6,000        37.5%         10.00         13.50         11/6/06       37,740       95,640  
                   12,775                      19.25         19.25         1/21/02       67,963      150,106  
G. Behlke           6,000        19.2%         10.00         13.50         11/6/06       37,740       95,640  
                    3,650                      19.25         19.25         1/21/02       19,418       42,888  
G. Holroyd          1,460         2.9%         19.25         19.25         1/21/02        7,767       17,155  
F. Ryan             2,190         4.4%         19.25         19.25         1/21/02       11,651       25,733  

OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES.  The   
following table sets forth information with respect to the Named Executive      
Officers concerning the exercise of options during fiscal 1997 and unexercised  
options held as of March 31, 1997.  The value of the underlying securities was  
determined by taking the market value at year-end minus the exercise price.     
The market price of the Company's stock on March 31, 1997 was $17.50 per share. 

                                                        [Enlarge/Download Table]

                Shares                       Number of Securities        Value of Unexercised     
               Acquired                     Underlying Unexercised      In-the-Money Options at   
                  on        Value        Options at March 31, 1997 (#)    March 31, 1997 ($)      
       Name   Exercise (#)  Realized($)    Exercisable / Unexercisable  Exercisable/Unexercissable
       ----   ------------  -----------  -----------------------------  --------------------------
                                                                                                  
K. Kostusiak           0            0                0 / 0                      0 / 0             
D. Lederer             0            0                0 / 0                      0 / 0             
L. Tracy               0            0           36,000 / 42,775           474,000 / 338,644       
G. Behlke          6,444      101,465            1,500 / 11,150            19,000 / 127,875       
G. Holroyd             0            0            3,000 / 5,960             41,000 / 58,945        
F. Ryan            3,240       19,408            1,800 / 2,640             22,800 /  1,868        

At March 31, 1997, Messrs. Kostusiak, Lederer and Ryan had stock option 
loans outstanding that totaled $182,910, $134,117 and $66,999, respectively.    
As of June 6, 1996, the outstanding balances were $167,285, $121,210 and        
$59,091, respectively.  The loans carry interest rates ranging from 5.54% to    
8.42%.                                                                          

EMPLOYMENT AGREEMENTS                                                           

  EXECUTIVE AGREEMENTS.  The Company has employment agreements with three of
its executive officers, Messrs. Kostusiak, Lederer and Tracy (the "Executive    
Agreements").  The Executive Agreements with Messrs. Kostusiak and Lederer are  
through May 2002 and the agreement with Mr. Tracy is through February 1999.     
The Executive Agreements provide for severance benefits under certain           
circumstances.  The terms "change of control," "cause" and "disability" are     
used in the following description as defined in the Executive Agreements.  The  
Executive Agreements terminate upon the executive's death or permanent          
disability except as described below.                                           

Under the agreements with Messrs. Kostusiak and Lederer, if the Company 
terminates the executive's employment without cause, the Company will continue  
compensation and benefits to the executive for the then remaining balance of    
the term of employment or for a period of three years from the date of          
termination, whichever is longer.  Under such circumstances, Mr. Tracy's        
agreement provides that his compensation will continue for the then remaining   
balance of the term                                                             

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of employment or for a period of one year from the date of termination,         
whichever is longer.  The continuation of compensation and benefits includes    
the executive's base salary plus participation in all applicable executive      
incentive compensation plans and fringe benefit packages.  Further, if Mr.      
Kostusiak's or Mr. Lederer's employment is terminated by the Company without    
cause after expiration of the agreement but prior to the Company and the        
executive reaching agreement with respect to the executive's retirement         
benefits, the Company will also continue the executive's compensation and       
benefits for a period of two years from the date of termination.                

 If the Company terminates Mr. Kostusiak's or Mr. Lederer's employment for
cause, each will receive compensation and benefits for the remaining balance of 
the term of employment or for a period of three years from the date of          
termination, whichever is longer, provided that this compensation is reduced by 
any monetary damage suffered by the Company due to the cause.  The same applies 
for Mr. Tracy, except that compensation and benefits will continue for the      
remaining balance of the term of employment or for a period of one year from    
the date of termination, whichever is longer.                                   

If, within four months after a "change in control," as defined in the   
Executive Agreements, Mr. Kostusiak's or Mr. Lederer's employment is terminated 
by the Company or the executive, each would be entitled to receive: (a) the     
base salary through the termination date, as in effect at the time of           
termination or at the time the change in control occurs, whichever is higher,   
plus any bonus which has been earned but not yet paid; (b) an amount equal to   
three times the highest total base salary and bonus compensation paid to him in 
any of the Company's preceding three fiscal years; and (c) the continuation of  
fringe benefits for three years after termination.  No provision relating to a  
change of control is included in Mr. Tracy's agreement.                         

All three agreements restrict the executives from competing with the    
Company for various periods subsequent to termination of employment, depending  
on the circumstances of the termination.                                        

PENSION PROVISIONS.  Effective April 1996, the Company approved the     
addition of a pension plan for Messrs. Kostusiak and Lederer in their Executive 
Agreements.  Under the terms of the Executive Agreements, the Company will pay  
each of them retirement benefits for his lifetime and for his spouse's          
lifetime, if his spouse survives him, as follows:  (i) a retirement wage        
benefit initially equal to 12% of his base salary on the date of his retirement 
or death, increased each year thereafter by any increase, less 0.5%, in the     
Consumer Price Index (except that the wage benefit shall be 75% of that amount  
after executive's death); (ii) continuation of his full health insurance or     
similar benefit for him and his spouse; and (iii) continuation of any other     
benefit programs that provide continuation pursuant to their terms.             

Based on a 5% compounded annual increase in their base compensation, and
assuming that they each retire at age 65, the estimated initial annual benefit  
that would be payable to Messrs. Kostusiak and Lederer under the pension plan   
provision in their Executive Agreements would be $34,108 and $27,290,           
respectively.                                                                   

The Executive Agreements further provide that:  (i) the payment of      
retirement benefits may be terminated if an executive has violated the non-     
competition provisions of his Executive Agreement, and (ii) the Company will    
purchase and maintain life insurance sufficient to fund the estimated benefits  
for the spouse (any excess policy proceeds to be available, if agreed, to       
purchase shares of the Company's Common Stock held in the executive's estate)   
and the policy or policies of such insurance shall be held in a trust designed  
for this purpose.                                                               

 CHANGES IN MR. LEDERER'S EMPLOYMENT.  Mr. Lederer has advised the Company
that, subject to the successful completion of this offering, he intends to      
reduce the scope of his employment to part-time.  The Company is willing to     
employ Mr. Lederer on a part-time basis and is presently negotiating the terms  
of such employment with Mr. Lederer.                                            

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    PRINCIPAL AND SELLING SHAREHOLDERS

 The following table sets forth certain information concerning the
beneficial ownership of the Common Stock as of July 21, 1997 and as adjusted to 
reflect the sale of 1,072,000 shares of Common Stock by the Company and the     
sale of 228,000 shares of Common Stock by the Selling Shareholders, by (i) each 
person known by the Company to be the beneficial owner of more than 5% of the   
outstanding Common Stock, (ii) each of the Selling Shareholders, (iii) each     
director of the Company, (iv) each of the Named Executive Officers and (v) all  
executive officers and directors of the Company as a group.                     

                                                        [Enlarge/Download Table]

                                  Shares Beneficially               Shares Beneficially
                                      Owned Prior     Shares to be      Owned After    
                                    To Offering(1)       Sold in         Offering(1)   
    Name of Beneficial Owner       Number   Percent    Offering      Number  Percent   
    _______________________        -----    ------     ---------     ------  -------   
                                                                                       
Donald R. Adair                    1,549(2)      *            0       1,549       *    
George E. Behlke                  38,393(3)(4)   *            0      38,393       *    
Mortimer B. Fuller, III            5,670(5)      *            0       5,670       *    
Gary Holroyd                       4,725(3)      *            0       4,725       *    
Karl H. Kostusiak                636,161(4)      12.9%   60,000     576,161    9.6%    
David B. Lederer                 451,276(4)       9.3%  150,000     301,276    5.1%    
Edward C. McIrvine                25,325(6)      *            0      25,325       *    
Frank J. Ryan                     78,212(3)(4)(7) 1.6%    8,000      70,212    1.2%    
Lawrence R. Tracy                100,008(3)(4)    2.1%   10,000      90,008    1.5%    

All Directors and Executive                                                            
  Officers                                                                             
  as a Group (9 persons)       1,341,319(2)-(7)  26.2%  228,000   1,113,319   18.0%    
Dimensional Fund Advisors, Inc.  253,572          5.3%        0     253,572    4.4%    


_________________________                                                       
*    Percentage of Common Stock owned is less than 1%.                          
(1)  For all shares listed, each person possesses both sole voting and          
investment power, except for those shares indicated in notes (2) - (7)
below.  The share amounts include the shares of Common Stock actually 
   owned as of July 21, 1997 and the shares of Common Stock which the person
or group had the right to acquire within 60 days of such date.  In    
   calculating the percentage of ownership, all shares of Common Stock which
   the identified person or group had the right to acquire within 60 days of
   July 21, 1997 upon the exercise of options or retirement are deemed to be
outstanding for the purpose of computing the percentage of shares of  
Common Stock owned by such person or group, but are not deemed to be  
  outstanding for the purpose of computing the percentage of the shares of
Common Stock owned by any other person.                               
(2)  Includes 1,173 shares held in custodianship for Mr. Adair's children under 
the Uniform Gifts to Minors Act of New York for which shares Mr. Adair
disclaims beneficial ownership.                                       
(3)  Includes 1,500, 3,000, 1,800, 36,000 and 42,300 shares which may be        
acquired upon exercise of warrants and options held by Messrs. Behlke,
   Holroyd, Ryan, Tracy and all directors and executive officers as a group,
respectively.                                                         
(4)  Includes  9,234, 179,840, 117,465, 8,492, 6,488 and 321,519 hypothetical   
 shares credited to the accounts of  Messrs. Behlke, Kostusiak, Lederer,
Ryan, Tracy and all directors and executive officers as a group,      
    respectively, pursuant to the Company's deferred compensation plans, which
shares may be acquired upon retirement.                               
(5)  Includes 2,025 shares held by Mr. Fuller's wife for which shares he        
disclaims beneficial ownership.                                       
(6)  Includes 20,300 shares held by Dr. McIrvine's wife for which shares he     
disclaims beneficial ownership.                                       
(7)  Includes 810 shares held in trust for Mr. Ryan's son under the Uniform     
Gifts to Minors Act of New York for which shares Mr. Ryan disclaims   
beneficial ownership.                                                 

    DESCRIPTION OF CAPITAL STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK                                        

 The authorized capital stock of the Company consists of 12,000,000 shares
of common stock, par value $0.05 per share (the "Common Stock").  As of the     
date of this Prospectus, there are 4,743,894 issued and outstanding shares of   
Common Stock.  As of such date, there are outstanding options to purchase       
319,120 shares of Common Stock pursuant to the Company's 1992 Restated Stock    
Option Plan at exercise prices ranging from $3.75 per share to $22.75 per share 
with a weighted average exercise price of $6.10 per share.  In addition, the    
Company has outstanding warrants to purchase 15,000 shares of Common Stock for  
$3.83 per share and 1,500 shares of Common Stock for $13.50 per share.  There   
are also 98,019 shares of Common Stock issuable under the Company's Deferred    
Compensation Plan and 278,528 shares of Common Stock issuable under the         
Company's Deferred Stock Bonus Plan.  The following description of the Common   
Stock is qualified in                                                           

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its entirety by reference to the Company's Certificate of Incorporation and By- 
laws, which are exhibits to the Registration Statement of which this Prospectus 
is a part.                                                                      

COMMON STOCK                                                                    

  The Common Stock possesses ordinary voting rights, and the holders thereof
vote together as a single class for the election of directors and in respect of 
other corporate matters.  Holders of shares of Common Stock are entitled to one 
vote per share, and cumulative voting of shares is not permitted.  In the event 
of the voluntary or involuntary liquidation, distribution or sale of assets,    
dissolution or winding up of the Company, the holders of Common Stock are       
entitled to receive and share ratably in all net assets available for           
distribution to shareholders after satisfaction of the Company's liabilities.   
The Common Stock carries no preemptive rights and is not convertible,           
redeemable or assessable.  The holders of Common Stock are entitled to such     
dividends as may be declared by the Company's Board of Directors and paid out   
of funds legally available therefor.  See "Dividend Policy."                    

CERTAIN PROVISIONS OF  LAW                                                      

  The Company is subject to anti-takeover provisions under New York law that
apply to a public corporation organized under New York law unless the           
corporation has elected to opt out of such provisions in its Certificate of     
Incorporation or, depending on the provision in question, its By-Laws.  The     
Company has not elected to opt out of these provisions.  The Common Stock is    
subject to the "affiliated transaction" provisions of Section 912 the New York  
Business Corporation Law.  These provisions, subject to certain exceptions,     
restrict business combinations between the Company and interested shareholders  
unless either the business combination or the acquisition of shares making a    
person an interested shareholder (the "Triggering Acquisition") is approved by  
the Board of Directors prior to the date of the Triggering Acquisition.  Once   
the provisions are triggered, a business combination must either (i) meet       
stringent fairness requirements, or (ii) after five years from the Triggering   
Acquisition have elapsed, be approved by the holders of a majority of the       
outstanding voting shares of the Company excluding the interested shareholder.  

TRANSFER AGENT AND REGISTRAR                                                    

The transfer agent and registrar for the Common Stock is American Stock 
Transfer & Trust Company, New York, New York.                                   

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    UNDERWRITING

The underwriters named below (the "Underwriters"), acting through their 
representatives, Raymond James & Associates, Inc. and Needham & Company, Inc.   
(the "Representatives"), have severally agreed, subject to the terms and        
conditions of the underwriting agreement (the "Underwriting Agreement") by and  
among the Company, the Selling Shareholders and the Underwriters, to purchase   
from the Company and the Selling Shareholders the number of shares of Common    
Stock set forth below opposite their respective names, at the public offering   
price less the underwriting discounts and commissions set forth on the cover    
page of this Prospectus:                                                        

                                   Number of
Name                                      Shares        
---------------------------------                ---------              

Raymond James & Associates, Inc.                                        
Needham & Company, Inc.                                                 

                                     -----------
Total                                               
                                     ===========
The Underwriting Agreement provides that the obligations of the several 
Underwriters to pay for and accept delivery of the shares of Common Stock       
offered hereby are subject to approval of certain legal matters by their        
counsel and to certain other conditions.  The Underwriters are obligated to     
take and pay for all shares of Common Stock offered hereby (other than those    
covered by the over-allotment option described below) if any such shares are    
purchased.                                                                      

The Company and the Selling Shareholders have been advised by the       
Representatives that the Underwriters propose to offer the shares of Common     
Stock directly to the public at the public offering price set forth on the      
cover page of this Prospectus and to certain dealers, including the             
Underwriters, at such price less a concession not in excess of $     per share. 
The Underwriters may allow, and such dealers may reallow, a concession not in   
excess of $     per share to certain other dealers.  After the public offering, 
the public offering price and other selling terms may be changed by the         
Underwriters.  The Representatives have informed the Company and the Selling    
Shareholders that the Underwriters do not intend to confirm sales to any        
accounts over which they exercise discretionary authority.                      

Certain of the Underwriters and the selling group members that currently
act as market makers for the Common Stock may engage in "passive market making" 
in the Common Stock on the Nasdaq National Market in accordance with Rule 103   
of Regulation M under the Securities Exchange Act of 1934, as amended (the      
"Exchange Act").  Rule 103 permits, upon satisfaction of certain conditions,    
underwriters and selling group members participating in a distribution that are 
also Nasdaq market makers in the security being distributed to engage in        
limited market making activity when Rule 101 would otherwise prohibit such      
activity.  Rule 103 prohibits underwriters and selling group members engaged in 
passive market making generally from entering a bid or effecting a purchase at  
a price that exceeds the highest bid for those securities displayed on the      
Nasdaq National Market by a market maker that is not participating in the       
distribution of the Common Stock.  Each underwriter or selling group member     
engaged in passive market making is subject to a daily net purchase limitation  
equal to 30% of such entity's average daily trading volume during the two full  
consecutive calendar months immediately preceding the date of the filing of the 
Registration Statement of which this Prospectus forms a part.                   

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The Company has granted to the Underwriters an option, exercisable not  
later than 30 days after the date of this Prospectus, to purchase up to an      
aggregate of 195,000 additional shares of Common Stock, at the public offering  
price, less the underwriting discounts and commissions, set forth on the cover  
page of this Prospectus.  To the extent that the Underwriters exercise such     
option, each of the Underwriters will have a firm commitment to purchase        
approximately the same percentage thereof which the number of shares of Common  
Stock to be purchased by it shown in the above table bears to the total shown,  
and the Company will be obligated, pursuant to the option, to sell such shares  
to the Underwriters.  The Underwriters may exercise this option only to cover   
over-allotments, if any, made in connection with the sale of the shares of      
Common Stock offered hereby.  If purchased, the Underwriters will sell such     
additional shares on the same terms as those on which the shares are being      
offered.                                                                        

The Company and the Selling Shareholders have agreed to indemnify the   
Underwriters against, and to contribute to losses arising out of, certain civil 
liabilities in connection with this offering, including liabilities under the   
Securities Act.                                                                 

 The Company, its officers and directors and the Selling Shareholders have
agreed that for a period of 120 days following the date of this Prospectus,     
they will not, except with the prior written consent of Raymond James &         
Associates, Inc., acting for the Underwriters, sell, contract to sell or        
otherwise dispose of any shares of Common Stock.  This restriction does not     
apply to shares sold by Selling Shareholders hereunder or certain issuances of  
Common Stock by the Company pursuant to its stock option plans.  See "Risk      
Factors-Shares Eligible for Future Sale."                                       

   The foregoing includes a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete.  Reference is made to the copy   
of the Underwriting Agreement that is on file as an exhibit to the Registration 
Statement of which this Prospectus forms a part.                                

     LEGAL MATTERS

  Certain legal matters with respect to the Common Stock offered hereby will
be passed upon for the Company and for the Selling Shareholders by Nixon,       
Hargrave, Devans & Doyle LLP, Rochester, New York, and for the Underwriters by  
Fowler, White, Gillen, Boggs, Villareal and Banker, P.A., Tampa, Florida.       

     EXPERTS

 The consolidated financial statements and financial statement schedule of
the Company as of March 31, 1995, 1996 and 1997, and for each of the three      
fiscal years in the period ended March 31, 1997, included herein and/or         
incorporated by reference from the Company's Annual Report on Form 10-K for the 
year ended March 31, 1997, have been so included herein and/or incorporated by  
reference in reliance on the report of Price Waterhouse LLP, independent        
accountants, given on the authority of said firm as experts in auditing and     
accounting.                                                                     

     AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other      
information with the Securities and Exchange Commission (the "Commission").     
Such reports, proxy statements and other information filed by the Company may   
be inspected and copied (at prescribed rates) at the public reference           
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,   
Washington, D.C.  20549 and at the following regional offices of the            
Commission: 7 World Trade Center, Suite 1300, New York, New York 10048 and      
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,       
Illinois 60661.  In addition, such reports, proxy statements and other          
information can be obtained from the Commission's web site at                   
http://www.sec.gov.  Quotations relating to the Common Stock appear on the      
Nasdaq National Market.  Such reports, proxy statements and other information   
concerning the Company can also be inspected at the offices of the National     
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.  
20006.                                                                          

  The Company has filed with the Commission a Registration Statement on Form
S-2 (the "Registration Statement") under the Securities Act, with respect to    
the shares of Common Stock offered hereby.  This Prospectus, which is a part of 
the Registration Statement, does not contain all the information set forth in,  
or annexed as exhibits to, such Registration                                    

37            

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Statement, certain portions of which have been omitted pursuant to rules and    
regulations of the Commission.  For further information with respect to the     
Company and the shares of Common Stock offered hereby, reference is hereby made 
to such Registration Statement, including the exhibits thereto.  Copies of such 
Registration Statement, including exhibits, may be obtained from the            
aforementioned public reference facilities of the Commission upon payment of    
the prescribed fees, or may be examined without charge at such facilities.      
Statements contained herein concerning any document filed as an exhibit are not 
necessarily complete and, in each instance, reference is made to the copy of    
such document filed as an exhibit to the Registration Statement.  Each such     
statement is qualified in its entirety by such reference.                       

     INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

  The following documents filed by the Company with the Commission under the
Exchange Act are incorporated by reference in and made a part of this           
Prospectus:                                                                     

(a) the Company's Annual Report on Form 10-K for the fiscal year ended  
March 31, 1997;                                                                 

(b) the Company's Proxy Statement relating to its 1997 Annual Meeting of
Shareholders; and                                                               

(c) the Company's Current Report on Form 8-K dated May 7, 1997 and filed
with the Commission on May 21, 1997.                            

Any statement contained in a document incorporated or deemed to be      
incorporated by reference herein shall be deemed to be modified or superseded   
for purposes of this Prospectus to the extent that a statement contained        
herein, or in any other subsequently filed documents, which also are            
incorporated or deemed to be incorporated by reference herein, modifies or      
supersedes such statement.  Any such statement so modified or superseded shall  
not be deemed, except as so modified or superseded, to constitute a part of     
this Prospectus.                                                                

   This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith.  The Company hereby undertakes to provide,        
without charge, to each person, including any beneficial owner, to whom a copy  
of this Prospectus is delivered, on the written or oral request of such person, 
a copy of any or all of the information incorporated herein by reference.       
Exhibits to any of such documents, however, will not be provided unless such    
exhibits are specifically incorporated by reference into such documents.  The   
requests should be addressed to the Company's principal executive offices:      
Attn: Secretary, 130 Perinton Parkway, Fairport, New York  14450, telephone     
number (716) 223-4060.                                                          

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     DETECTION SYSTEMS, INC.

    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Accountants                                       F-2     

Consolidated Balance Sheets at March 31, 1995, 1996 and 1997            F-3     

Consolidated Statement of Operations and Retained Earnings for the              
years ended March 31, 1995, 1996 and 1997                            F-4  

Consolidated Statement of Cash Flows for the years ended March 31,              
1995, 1996 and 1997                                                  F-5  

Notes to Consolidated Financial Statements                              F-6     

F-1           

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Report of Independent Accountants               

To the Board of Directors and                                                   
Shareholders of Detection Systems, Inc.                                         

In our opinion, the accompanying consolidated balance sheet and                 
the related consolidated statements of operations and retained                  
earnings and of cash flows present fairly, in all material                      
respects, the financial position of Detection Systems, Inc. and                 
its subsidiaries at March 31, 1995, 1996 and 1997 and the results               
of their operations and their cash flows for each of the three                  
years in the period ended March 31, 1997 in conformity with                     
generally accepted accounting principles.  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 audits.  We conducted our audits of these               
statements in accordance with generally accepted auditing                       
standards which 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, assessing the accounting               
principles used and significant estimates made by management, and               
evaluating the overall financial statement presentation.  We                    
believe that our audits provide a reasonable basis for the                      
opinion expressed above.                                                        

/s/ Price Waterhouse LLP                                                        

Rochester, New York                                                             
June 2, 1997                                                                    

F-2             

DETECTION SYSTEMS, INC.                 
CONSOLIDATED BALANCE SHEET                

At Year Ended March 31,                 1995        1996        1997            
                            ---------    ---------   ---------
Assets                                                                          
Current assets:                                                                 
Cash and cash equivalents           $4,597,047   $  930,012  $2,244,265         
   4,597,047
Short term investments               2,421,546                                  
Accounts receivable, less allowance                                             
for doubtful accounts ($100,000 in                                              
1995, $235,000 in 1996 and                                                      
$313,800 in 1997)                    4,916,052   10,482,660  15,246,309         
Inventories                          5,255,724   14,065,843  29,995,215         
Deferred income taxes                  354,500    1,554,900   2,132,156         
Prepaid expenses and other assets      408,406    1,392,913     883,137         
                           ----------   ----------  ----------
                           17,953,275   28,426,328  50,501,082
                           ----------   ----------  ----------
Fixed assets, net                    3,920,571    7,085,357  11,057,256         
Property under capital lease, net    2,725,513    2,491,475     190,915         
Deferred income taxes                             3,983,200   3,046,200         
Goodwill and other intangibles, net               3,762,327   2,942,626         
Other assets                           145,934      148,891     537,772         
                           ----------   ----------  ----------
                          $24,745,294  $45,897,578 $68,275,852
                           ==========   ==========  ==========
Liabilities and Shareholders' Equity                                            
Current liabilities:                                                            
Notes payable                                    $1,183,750                     
Current portion of long term debt                              $953,648         
Current portion of capital                                                      
lease obligation                      $434,934      559,860     147,574         
Accounts payable                     1,213,958    6,231,737  12,259,380         
Accrued payroll and benefits         1,074,103    1,566,777   2,818,487         
Other accrued liabilities              266,526    3,171,914   3,254,593         
                           ----------   ----------  ----------
                            2,989,521   12,714,038  19,433,682
                           ----------   ----------  ----------
Long term liabilities                  288,200    1,931,900   1,173,694         
Obligations under capital leases       745,733      186,471      54,125         
Long term debt                                   17,750,000  28,031,802         
Deferred compensation                1,527,638    1,745,886   1,751,281         

Shareholders' equity:                                                           
Common stock, par value $.05 per                                                
share                                                                           
Authorized - 12,000,000 shares                                                  
Issued - 2,792,489 shares in 1995,                                              
2,811,361 shares in 1996 and                                                    
4,478,993 shares in 1997               139,624      140,568     223,950         
Capital in excess of par value       6,853,246    6,972,431   9,448,917         
Retained earnings                   12,724,265    4,869,022   8,594,306         
                           ----------   ----------  ----------
                           19,717,135   11,982,021  18,267,173
Less - Treasury stock, at cost         (36,326)     (12,363)    (52,553)        
Notes receivable for stock purchases  (486,608)    (392,514)   (378,373)        
Cumulative translation adjustment                    (7,861)     (4,980)        
                            ----------  ----------  ----------
                            19,194,201  11,569,283  17,831,267
                            ----------  ----------  ----------
                           $24,745,293 $45,897,578 $68,275,851
                            ==========  ==========  ==========
See accompanying notes to consolidated financial statements.                

F-3               

DETECTION SYSTEMS, INC.               
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS                

Year ended March 31,                     1995         1996          1997        

Net sales                         $34,336,336  $41,857,809  $101,251,380        

Costs and expenses:                                                             
Production                        20,829,843   27,978,460    64,916,410       
Research and development           4,070,443    4,699,643     8,114,671       
Purchased in-process research                                                 
and development                                9,350,000                    
Marketing, administrative and                                                 
general                           6,788,924   10,514,797    21,411,444      
                            ---------   ----------    ----------
                           31,689,210   52,542,900    94,442,525
                           ----------   ----------    ----------
Operating income (loss)             2,647,126  (10,685,091)    6,808,855        

Interest income                       113,420      340,311       206,049        
Interest expense                     (168,557)    (320,463)   (1,764,620)       
                           ----------   ----------    ----------
Income (loss) before income taxes   2,591,989  (10,665,243)    5,250,284        

Provision (benefit) for income                                                  
taxes                          1,077,500   (2,810,000)    1,525,000   
                           ----------   ----------    ----------
Net income (loss)                   1,514,489   (7,855,243)    3,725,284        

Retained earnings at beginning                                                  
of year                       11,209,776   12,724,265     4,869,022   
                           ----------   ----------    ----------
Retained earnings at end of year  $12,724,265  $ 4,869,022    $8,594,306        
                                         4,869,022     8,594,306
                           ==========   ==========    ==========
Earnings (loss)  per common and                                                 
common equivalent share                 $.35       ($1.83)         $.76       
                                  ===        =====           ===

See accompanying notes to consolidated financial statements.                

F-4               

DETECTION SYSTEMS, INC.               
CONSOLIDATED STATEMENT OF CASH FLOWS                

Year Ended March 31,                    1995        1996        1997            
                             ---------   ---------   ---------
Cash flows from operating                                                       
activities:                                                                     
Net income (loss)                   $1,514,489 ($7,855,243) $3,725,284        
                             ---------  ----------  ----------
Adjustments to reconcile net income                                           
to net cash provided by operating                                         
activities:                                                               
Depreciation and amortization      1,502,516    2,043,373   2,737,438       
Purchased in-process research                                               
and development                                9,350,000                  
Loss (Gain) on disposition of                                               
fixed assets                         8,561      275,349     (14,670)    
Deferred compensation                103,933      218,248       5,395       
Deferred income taxes               (123,500)  (3,536,000)    177,800       
Stock based compensation              48,800       34,763     146,950       
Changes in operating assets and                                               
liabilities:                                                              
Accounts receivable                  480,783   (1,156,325) (4,763,649)      
Inventories                          590,227   (4,264,805)(15,929,372)      
Prepaid expenses and other assets      3,069     (634,523)    120,895       
Accounts payable                     514,680    2,354,624   6,027,687       
Accrued payroll and benefits         102,232      190,159   1,251,710       
Other accrued liabilities            (62,592)    (460,930)    (99,684)      
                            ---------   ----------  ----------
Total adjustments                  3,168,709    4,413,933 (10,339,500)      
Net cash provided by (used in)                                                  
operating activities               4,683,198   (3,441,310) (6,614,216)      
                            ---------   ----------  ----------
Cash flows from investing                                                       
activities:                                                                     
Purchase of Radionics net of cash                                             
acquired                                      (17,965,381)                  
Capital expenditures               (1,358,009)  (3,376,867) (3,968,349)       
Short term investments             (2,437,842)   2,421,546                    
                            ---------   ----------  ----------
Net cash (used in) investing                                                    
activities                         (3,795,851) (18,920,702) (3,968,349)       
                            ---------   ----------  ----------
Cash flows from financing                                                       
activities:                                                                     
Notes payable                                    1,183,750                    
Proceeds from long term debt                    17,750,000  10,047,007        
Principal payments on long term                                               
debt and capital lease obligations  (401,815)    (434,336)   (539,939)      
Issuance of common stock              140,375       94,295   2,238,805        
Stock options exercised                47,733      109,129     148,064        
                            ---------   ----------  ----------
Net cash (used in) provided by                                                  
financing activities                 (213,707)  18,702,838  11,893,937        
                            ---------   ----------  ----------
Effect of exchange rate changes                      (7,861)      2,881         
Net increase (decrease) in cash                                                 
and cash equivalents                  673,640   (3,667,035)  1,314,253        
Cash and cash equivalents at                                                    
beginning of year                   3,923,407    4,597,047     930,012        
                            ---------   ----------  ----------
Cash and cash equivalents at                                                    
end of year                        $4,597,047   $  930,012  $2,244,265        
                            =========    =========   =========
Cash paid during the year for:                                                  
Interest                            $  173,709   $  226,929  $1,574,812         
                            =========    =========   =========
Income taxes                        $1,141,276   $1,041,284  $1,095,754         
                            =========    =========   =========

See accompanying notes to consolidated financial statements.                

F-5               

DETECTION SYSTEMS, INC.               
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                
MARCH 31, 1995, 1996 AND 1997               

NOTE 1 - DESCRIPTION OF OPERATIONS AND ACCOUNTING POLICIES:                     

DESCRIPTION OF OPERATIONS -                                                     

Detection Systems, Inc.  ("the Company") designs, manufactures                  
and markets electronic detection, control and communication                     
equipment for the security, fire protection, access control and                 
CCTV industries. From its inception in 1968 until 1995,                         
the Company was primarily a niche provider of  intrusion                        
detection devices for the domestic market.  In 1995, the Company                
adopted a strategy designed to substantially expand its product                 
offerings, establish an international sales presence,                           
increase its manufacturing capacity and improve its                             
manufacturing cost structure.  The Company has since made five                  
acquisitions, opened sales offices in six countries and successfully            
established a manufacturing facility in China.  These initiatives have          
enabled the Company to significantly expand its product catalog and             
market scope.                                                                   

PRINCIPLES OF CONSOLIDATION -                                                   

The consolidated financial statements of the Company include all                
majority-owned U.S. and non-U.S. subsidiaries.  Intercompany                    
accounts, transactions and profits are eliminated.  Certain                     
amounts in the prior years' financial statements have been                      
reclassified to conform with the current year's presentation.                   

The preparation of financial statements in conformity with                      
generally accepted accounting principles requires management to                 
make estimates and assumptions that affect the reported amounts                 
of assets and liabilities at year-end as well as the reported                   
amounts of revenues and expenses during the reporting period.                   
Actual results could differ from those estimates.                               

CASH AND CASH EQUIVALENTS -                                                     

Cash equivalents include time deposits and highly liquid                        
investments with original maturities of three months or less.                   

INVESTMENTS -                                                                   

The Company accounts for its investment securities in accordance                
with Statement of Financial Accounting Standards ("SFAS") No. 115,              
"Accounting for Certain Investments in Debt and Equity                          
Securities."  All of the Company's reported investments are                     
classified as available for sale.  Accordingly, unrealized                      
holding gains and losses, net of applicable taxes, are excluded                 
from income and recognized as a separate component of                           
shareholders' equity until realized.                                            

INVENTORIES -                                                                   

Inventories, which include materials, labor and overhead, are                   
recorded at the lower of cost, determined by the first-in, first-               
out method, or market value.                                                    

FIXED ASSETS AND PROPERTY UNDER CAPITAL LEASE -                                 

The building and related improvements are depreciated using the                 
straight-line method over an estimated useful life ranging from                 
26 to 40 years.  Land improvements, machinery and equipment,                    
production tooling and furniture are depreciated on the                         
straight-line method over estimated useful lives ranging from                   
three to ten years.  Expenditures for maintenance and repairs are               
charged to expense as incurred.   Major improvements are capitalized.           

F-6               

GOODWILL AND OTHER INTANGIBLES-                                                 

Goodwill and other intangibles represents the excess of the cost                
of net tangible assets acquired in business combinations over                   
their fair value.  Goodwill and other intangibles are amortized                 
using the straight-line method over periods ranging from three to               
twenty years.  The Company evaluates goodwill and intangibles for               
impairment at least annually by comparing its best estimate of                  
undiscounted future cash flows to the respective carrying amount.               
Accumulated amortization at March 31, 1996 and 1997 was                         
approximately $69,000 and $494,000, respectively.                               

RETIREMENT PLANS -                                                              

The Company has two defined contribution pension plans which, in                
aggregate, cover substantially all domestic employees.  The first               
plan requires the Company to match 100% of an employee's                        
contribution up to one percent of the employee's base salary and                
25% of an employee's contribution between two and four percent of               
the employee's base salary.  The second plan permits employees to               
contribute up to 20% of their eligible earnings.  Annual                        
contributions by the Company, out of its net profits, are in                    
amounts approved by the Company's Board of Directors.                           

The Company's contributions to these plans were approximately                   
$113,000, $117,000 and $155,000 in 1995, 1996 and 1997,                         
respectively.                                                                   

During the first quarter of fiscal 1997 the Company established a               
defined benefit pension plan for certain key executives.  The                   
plan provides for an annual benefit of 12% of their ending annual               
compensation and medical expense coverage for life after                        
retirement.  The liability is being recognized over their                       
remaining service periods.                                                      

REVENUE RECOGNITION -                                                           

Revenues are recognized when product is shipped.                                

RESEARCH AND DEVELOPMENT COSTS -                                                

All product development costs are charged to operations during                  
the period incurred.                                                            

FOREIGN CURRENCY TRANSLATION -                                                  

Assets and liabilities of non-U.S. subsidiaries are translated at               
current exchange rates, and related revenues and expenses are                   
translated at average exchange rates in effect during the period.               
Resulting translation adjustments are recorded as a separate                    
component of shareholders' equity.                                              

STOCK BASED COMPENSATION -                                                      

The Company applies Accounting Principles Board ("APB") Opinion No.             
25, "Accounting for Stock Issued to Employees," which requires                  
compensation cost to be recognized based on the difference, if                  
any, between the quoted market price of the stock on the grant                  
date and the amount an employee must pay to acquire the stock.                  

INCOME TAXES -                                                                  

The Company accounts for certain income and expense items                       
differently for financial reporting and income tax purposes in                  
accordance with SFAS No. 109, "Accounting for Income Taxes."                    
Deferred tax assets and liabilities are determined based on the                 
difference between the financial statement and tax bases of                     
assets and liabilities applying enacted statutory rates in effect               
for the year in which the differences are expected to reverse.                  

STOCK SPLIT -                                                                   

On November 7, 1996, a meeting of the Board of Directors was held               
authorizing a three-for-two stock split effective December 17,                  
1996 for shareholders of record at the close of business on                     
November 27, 1996.  All references in the consolidated financial                
statements referring to share prices, per share amounts and stock               
plans have been adjusted retroactively for the three-for-two                    
stock split.                                                                    

F-7               

EARNINGS PER SHARE -                                                            

The computation of earnings (loss) per common and common                        
equivalent share is based upon the weighted average number of                   
common and common equivalent shares outstanding during the                      
period. The weighted average common and common equivalent shares                
used in this calculation, as adjusted to reflect the three-for-                 
two stock split, were 4,483,706, 4,285,238 and 4,933,541 in 1995,               
1996 and 1997, respectively.                                                    

The earnings per share computations do not consider common                      
equivalent shares when the Company is in a loss position or when                
the effect of such inclusion is anti-dilutive.  There was no                    
material difference between primary and fully diluted earnings                  
per share in 1995, 1996 and 1997, respectively.                                 

CONCENTRATION OF CREDIT RISK -                                                  

Financial instruments which potentially expose the Company to                   
concentration of credit risk consist principally of bank                        
deposits, temporary investments and accounts receivable.  The                   
Company performs ongoing credit evaluations of its customers'                   
financial condition and the Company maintains an allowance for                  
uncollectible accounts receivable based upon the expected                       
collectibility of all accounts receivable.                                      

FAIR VALUE OF FINANCIAL INSTRUMENTS -                                           

The carrying amount of the Company's financial instruments,                     
including cash and cash equivalents, short-term investments,                    
accounts receivable and notes payable, approximates their fair                  
value at March 31, 1996 and 1997 as the maturity of these                       
instruments is short term.  The carrying amount of the Company's                
long term debt obligations approximates their fair value as the                 
interest rates on such obligations approximate the market rate at               
March 31, 1996 and 1997.                                                        

CASH FLOW STATEMENT -                                                           

The Company accepted notes receivable from employees for stock                  
purchases in the amount of $258,071, $13,314 and $22,758 in 1995,               
1996 and 1997, respectively.                                                    

NEW ACCOUNTING STANDARDS -                                                      

In February 1997, SFAS No. 128, "Earnings Per Share," was issued                
by the Financial Accounting Standards Board.  SFAS No. 128                      
specified modifications to the calculation of earnings per share                
from that currently used by the Company.  Under SFAS No. 128,                   
"basic earnings per share" is calculated based upon the weighted                
average number of common shares actually outstanding, and                       
"diluted earnings per share" is calculated based upon the                       
weighted average number of common shares outstanding and other                  
potential common shares (e.g. stock options and warrants) if they               
are dilutive.  SFAS No. 128 is effective for periods ending after               
December 15, 1997 and will be adopted at that time.  Had the                    
Company determined earnings per share in accordance with SFAS No.               
128, for the years ended March 31, 1995, 1996 and 1997, basic pro               
forma earnings (loss) per share would have been $.37, ($1.87) and               
$.85, respectively, and pro forma diluted earnings (loss) per                   
share would have been $.34, ($1.87) and $.75, respectively.                     

NOTE 2 - ACQUISITION                                                            

In July 1996, the Company acquired certain assets and patent                    
rights of Senses International, Inc., a manufacturer of long                    
range wireless alarm transmission equipment.  The Company paid                  
approximately $600,000 for these assets.                                        

In February 1996, the Company acquired all of the stock of                      
Radionics, Inc. (Radionics) for a total cash purchase price,                    
including expenses, of approximately $18.2 million.  Funding for                
the acquisition was provided by borrowings from a commercial bank               
pursuant to a term loan facility (Note 6).                                      

F-8               

The acquisition was accounted for under the purchase method, and                
Radionics' results of operations have been consolidated with the                
Company's results of operations effective as of the acquisition                 
date.  The Company made a determination and allocation of the                   
purchase price as of the acquisition date and finalized this                    
allocation during fiscal 1997.  The allocation of purchase price                
consisted of the following:                                                     

Accounts receivable                              $ 4,410,300                    
Inventories                                        4,545,300                    
Other current assets                               1,638,100                    
Accounts payable and other current liabilities    (6,032,000)                   
                             -----------
Net working capital acquired                       4,561,700                    
Fixed assets                                       1,803,600                    
Purchased in-process research and development      9,350,000                    
Goodwill and other intangibles                     3,351,400                    
Other non-current items, net                        (899,500)                   
                             -----------
Total purchase price, including expenses       $18,167,200                  
                             ===========

The valuation of technology, including other intangibles, was                   
accomplished through the application of an income approach.                     
Projected debt-free income, revenue net of provision for                        
operating expenses, income taxes and returns on requisite assets                
were discounted to a present value.  This approach was used for                 
each of the Radionics product lines.  Technology was divided into               
two categories: current products and in-process research and                    
development.                                                                    

Current products included those products currently in the market                
place as of the acquisition date and products which, while still                
in the development stage at the acquisition date, were                          
technologically feasible.  The fair market value of the purchased               
current products was determined to be $890,000.  This amount is                 
recorded as an intangible asset and is being amortized on a                     
straight line basis over three years.                                           

Purchased in-process research and development included the value                
of products still in the development stage, but not considered to               
have reached technological feasibility.  As a result of the                     
valuation, the fair market value of the purchased in-process                    
research and development was determined to be $9,350,000.  In                   
accordance with generally accepted accounting practice, this                    
amount was expensed upon acquisition in the fourth quarter of                   
fiscal 1996.                                                                    

The following table summarizes, on an unaudited, pro forma basis,               
the estimated combined results of operations of the Company as                  
though the acquisition was made at the beginning of 1995 and                    
1996.  For purposes of preparing the unaudited pro forma                        
information, the results from Detection Systems' years ended                    
March 31, 1995 and 1996 have been combined with the results of                  
Radionics' years ended December 31, 1994 and 1995, respectively.                
The pro forma amounts do not necessarily reflect the results that               
actually would have been obtained had the transaction taken place               
at the beginning of periods indicated, nor are they intended to                 
be a projection of future results:                                              

   1995         1996
   ------       ------
     (Unaudited)
Net revenues                  $78,550,000  $81,285,000                          
Costs and expenses             84,671,000   93,509,000                          
Loss before taxes              (6,121,000)                                      
                  (12,224,000)
Net loss                       (3,780,000)                                      
                   (7,706,000)
Net loss per share                  ($.88)      ($1.80)                         

The charge for in process research and development of $9,350,000                
is reflected in the fiscal year 1996 amounts above.                             

F-9               

NOTE 3 - INVENTORIES:                                                           

Major classifications of inventory are as follows.                              

Year Ended March 31,              1995         1996         1997                
                  ----         ----         ----
Component parts                $2,300,894  $ 6,924,870  $20,636,368             
Work in process                   475,927      705,473    2,697,459             
Finished products               2,853,903    7,414,700    8,276,688             
                   ---------   ----------   ----------
                   5,630,724   15,045,043   31,610,515

Less-Reserve for obsolescence    (375,000)    (979,200)  (1,615,300)            
                   ---------   ----------   ----------
                  $5,255,724  $14,065,843  $29,995,215
                   =========   ==========   ==========

NOTE 4 - FIXED ASSETS:                                                          

Major classifications of fixed assets are as follows.                           

Year Ended March 31,                 1995         1996         1997             
                        ----         ----         ----
Land and improvements             $  211,735   $  219,435  $   714,582          
Building and improvements          1,503,103    2,490,409    4,001,527          
Machinery and equipment            7,099,144    9,802,633   14,080,783          
Production tooling                 3,140,152    3,134,229    3,865,900          
Furniture                            701,142    1,120,620    1,268,455          
                        ----------   ----------   ----------
                        12,655,276   16,767,326   23,931,247

Less - Accumulated depreciation   (8,734,705)  (9,681,969) (12,873,991)         
                        ----------   ----------   ----------
                        $3,920,571   $7,085,357  $11,057,256
                         =========    =========   ==========

Total depreciation expense on fixed assets was approximately                    
$1,197,700, $1,711,100 and $2,126,700 in 1995, 1996 and 1997,                   
respectively.                                                                   

NOTE 5 - CAPITAL LEASES:                                                        

During 1982, the Company entered into an agreement with a local                 
government agency under which the agency's bond proceeds of                     
$3,800,000 were used to purchase land and construct an operating                
facility for lease to the Company.  These expenditures had been                 
recorded as property under capital lease.                                       

The lease, which required quarterly principal payments of $63,330               
plus interest at two-thirds of a designated bank's prime lending                
rate, extended to October 1997.  However, all outstanding                       
principal on this obligation was repaid in June 1996, at which                  
time title to the property passed to the Company.                               

The Company has various equipment under capital lease agreements                
which require payments of principal and interest of $156,117 in                 
1998; $38,934 in 1999 and $28,682 in 2000.                                      

F-10                

Property under capital leases consist of the following.                         

Year Ended March 31,              1995         1996         1997                
                  ----         ----         ----
Land and improvements          $  495,147  $  495,147                           
Building                        2,938,072   2,938,072                           
Machinery and equipment         1,327,591   1,327,591  $1,316,044               
                 ---------   ---------   ---------
                 4,760,810   4,760,810   1,316,044

Less-Accumulated depreciation  (2,035,297) (2,269,335) (1,125,129)              
                 ---------   ---------   ---------
                $2,725,513  $2,491,475  $  190,915
                 =========   =========   =========

Obligations under capital leases are summarized below.                          

Year Ended March 31,              1995         1996         1997                
                  ----         ----         ----
Operating facility             $  696,830  $443,510                             
Production and office equipment   483,837   302,821    $201,699                 
               ---------   -------     -------
               1,180,667   746,331     201,699

Less - Current portion           (434,934) (559,860)   (147,574)                
                ---------  -------     -------
               $ 745,733  $186,471    $ 54,125
               =========   =======     =======

Total depreciation expense on property under capital leases was                 
approximately $294,800, $263,000 and $185,000 in 1995, 1996 and                 
1997, respectively.                                                             

NOTE 6 - INDEBTEDNESS                                                           

During 1996, the Company had a line of credit secured by general                
business assets of the Company allowing borrowings of up to                     
$6,500,000.  At March 31, 1996, borrowings on the line of credit                
aggregated $1,183,750 at approximately 7.4%.  The maximum amount                
of borrowings on the line of credit outstanding during 1996 was                 
$1,183,750.                                                                     

During 1997, the Company increased this line of credit to                       
$11,500,000.  At March 31, 1997, borrowings on the line of credit               
aggregated $11,230,757 at approximately 9.25%.  This line                       
requires interest only payments through July 1998, at which time                
all outstanding principal is due.  Consequently, borrowings on                  
this line of credit outstanding as of March 31, 1997 are                        
classified as long term.  The maximum amount of borrowings on the               
line of credit outstanding during 1997 was $11,230,757.                         

In connection with the acquisition of Radionics, the Company                    
borrowed $17,750,000, of which $3,400,000 is secured by certain                 
real estate and matures in April 2006.  The remaining $14,350,000               
is secured by general business assets and matures in April 2003.                
At March 31, 1997 and 1996, the interest rate on these borrowings               
was approximately 7.4%.                                                         

Interest on the outstanding debt accrues based upon either the                  
federal funds rate, the prime rate or LIBOR, each adjusted by a                 
factor which varies based upon the rates of funded debt to                      
earnings before interest, tax, depreciation and amortization.                   

F-11                

Pursuant to the terms of the debt agreements for the obligations                
listed above, the Company has certain levels and covenants to                   
maintain with respect to such items as working capital, funded                  
debt and fixed charges.  Failure to comply with these guidelines                
constitutes default and obligations become currently due.  The                  
Company is in compliance with all covenants and requirements under              
the terms of the borrowing agreements.                                          

Annual maturities of the Company's long term debt for the next                  
five years are approximately: 1998 - $953,600; 1999 -                           
$14,091,700; 2000 - $2,860,900; 2001 - $2,860,900; and 2002 -                   
$2,860,900.                                                                     

NOTE 7 - DEFERRED COMPENSATION PLANS:                                           

The Company's deferred compensation plan allows certain employees               
to defer the receipt of salary or bonuses which they may be                     
entitled to receive.  The compensation is normally payable at                   
retirement, and is fully vested when deferred.  For salaries or                 
bonuses deferred, the employee elects, at the time of deferral,                 
to be paid in either stock or cash plus interest which has                      
accrued from the date of deferral.                                              

Unissued common share equivalents are limited to 145,800 shares                 
under provisions of the plan.  As of March 31, 1995, 1996 and                   
1997, unissued common share equivalents of 89,636, 97,537 and                   
98,019 respectively, existed under the plan.                                    

The Company's stock bonus plan provides for bonuses payable in                  
stock to certain officers and key personnel if specified sales                  
growth, pretax profit growth and earning per share goals are                    
attained.  The plan also provides that recipients may defer                     
receipt of stock bonuses until retirement. The bonus is fully                   
vested when deferred. Unissued common share equivalents existing                
under the plan were 227,610 in 1995, 252,390 in 1996 and 252,390                
in 1997.                                                                        

NOTE 8 - SHAREHOLDERS' EQUITY:                                                  

The following table presents the changes in shareholders' equity                
balances during the three years ended March 31, 1997.                           

                    Common stock      Treasury Stock    Capital in
                    ---------------  ----------------    excess of
                   Shares   Amount  Shares    Amount   par value
Balances, March 31,                                                             
1994                 2,771,489 $138,574  80,727  $322,778  $6,724,970     
                 ========  =======  ======   =======   =========
Distribution                                                                    
of stock bonuses                           (6,550)  (32,157)     16,643       
Exercise of options and                                                         
warrants                                  (69,184) (276,570)    (27,692)      
Treasury stock purchases                     2,475    22,275                    
Common stock issued        21,000    1,050                       139,325        
                 --------  -------  ------   -------   ---------

Balances, March 31,                                                             
1995                 2,792,489 $139,624   7,468  $ 36,326  $6,853,246     
                =========  =======  ======   =======   =========
Distribution of stock                                                           
bonuses                    2,400      120  (2,500)  (11,953)     22,690       
Exercise of options                                                             
and warrants               2,972      149  (7,029)  (20,313)      2,875       
Treasury stock                                                                  
purchases                                   4,268     8,303                   
Common stock issued        13,500      675                        93,620        
                 --------  -------  ------   -------   ---------
Balances, March 31,                                                             
1996                 2,811,361 $140,568   2,207  $ 12,363  $6,972,431     
                 ========  =======  ======   =======   =========

F-12                

                 Common stock      Treasury Stock   Capital in
                ---------------     --------------     excess of
               Shares   Amount     Shares  Amount    par value

Distribution of stock                                                           
bonuses                11,200      560                         84,140         
Exercise of options                                                             
and warrants           39,697    1,986    (7,679) (12,355)    172,127         
Treasury stock                              9,609   52,545                      
purchases                                                                       
Three-for-two stock                                                             
split               1,482,449   74,122     1,786              (74,122)        
Common stock issued    134,286    6,714                      2,232,091          
Other                                                           62,250          
           ---------  -------    ------  -------   ---------
Balances, March 31,                                                             
1997               4,478,993 $223,950     5,923 $ 52,553  $9,448,917        
            ========  =======    ======  =======   =========

On December 17, 1996, the Company distributed a three-for-two             
stock split effected in the form of a stock dividend to                         
shareholders of record on November 27, 1996.  This distribution                 
increased the number of shares outstanding by 1,482,449.  The                   
amount of $74,122 was transferred from capital in excess of par                 
to common stock.  All per share amounts in this report have been                
restated to reflect this stock split.                                           

In October 1996, the Company authorized a private placement               
offering for the sale of 114,286 shares from its authorized but                 
unissued shares of common stock at a pre-split price of $17.50                  
per share.  The Company received approximately $2,000,000 in cash               
from this transaction.                                                          

In May 1995, the Company's Board of Directors authorized the              
repurchase of up to 100,000 shares of its outstanding common                    
stock for issuance in connection with incentive stock option and                
stock bonus plans.  As of March 31, 1997, the Company had not                   
repurchased any of its outstanding common stock pursuant to this                
plan.                                                                           

The Company has a fixed stock option plan whereby options for a           
total of 250,000 shares of the Company's common stock may be                    
granted to key employees or non-employees of the Company by the                 
Board of Directors.  The exercise price of the options must equal               
or exceed the market value of the Company's common stock on the                 
date of grant.  Options are generally exercisable at a rate of                  
40% in the second year after grant, 60% in the third year after                 
grant, 80% in the fourth year after grant and in full thereafter.               
Options expire up to ten years after the date of grant.                         

Pro forma net earnings and earnings per share information, as               
required by SFAS No. 123, "Accounting for Stock-Based                           
Compensation," has been determined as if the Company had                        
accounted for employee stock options under SFAS No. 123's fair                  
value method.  The fair value of these options was estimated at                 
the grant date using a Black-Scholes option pricing model with                  
the following weighted-average assumptions:  a risk-free interest               
rate based on the anticipated length of time until exercise                     
ranging from 5.06% to 7.66%; expected life of 4 to 5 years;                     
and an expected volatility of 80%.  For purposes of pro forma                   
disclosures, the estimated fair value of the options is amortized               
to expense over the options' vesting period (generally 4 years).                

The Company's pro forma information follows:                              

Year ended March 31,                1995        1996        1997                
                  ------      ------      ------
Net earnings (loss)                                                             
As reported                 $1,514,000 ($7,855,000) $3,725,000              
Pro forma                   $1,263,000 ($8,072,000) $3,439,000              

Net earnings (loss) per                                                         
common and common equivalent share                                              
As reported                       $.35      ($1.83)       $.76              
Pro forma                         $.28      ($1.88)       $.70              

F-13                

This disclosure is not likely to be representative of the effects               
on reported net earning for future years, because options vest                  
over four years and additional awards generally are made each                   
year.                                                                           

A summary of the status of the Company's stock option plan as of                
March 31, 1995, 1996 and 1997, and changes during the years                     
ending on those dates, is presented below:                                      

    1995*             1996*             1997
     ----------------- ----------------- -----------------
              Weighted          Weighted          Weighted
             Average           Average           Average
              Exercise          Exercise          Exercise
  Shares   Price    Shares   Price    Shares   Price
Outstanding at                                                                  
beginning                                                                       
of year         144,710  $2.92     227,690  $4.57   362,493 $ 4.45              
Granted         184,500   4.64     171,825   4.17    50,100  14.54              
Exercised       (95,676)  2.31     (15,002)  3.19   (48,198)  4.65              
Forfeited        (5,844)  4.34     (22,020)  4.75   (25,875)  3.97              
-------            -------          -------     
Outstanding at                                                                  
end of year     227,690   4.57     362,493   4.45   338,520   5.95              
  =======   ====     =======   ====   =======   ====

Options exercis-                                                                
able at year-                                                                   
end              33,921   3.91      98,568   4.68   140,820   4.51              
Weighted-                                                                       
average                                                                         
fair value of                                                                   
options granted                                                                 
during the year   $2.11              $1.75            $8.18                     

*Amounts have been adjusted to reflect the three-for-two stock                
split during fiscal 1997.               

Options Outstanding                       Options Exercisable       
-------------------------------------------    --------------------           
           Weighted                             Weighted
Range of     Number    average     Weighted       Number    average           
Exercise   Outstand  Remaining      average    Outstand-   Exercise           
Prices     ing at   Contrac-     Exercise       ing at      Price         
Per  March 31,  tual Life    Price Per    March 31,        Per      
Share       1997      Years        Share         1997      Share        
--------    -------       ----       ------      -------      -----           
$3  - $5    283,420        3.1       $ 4.43      139,270      $4.49           
$5  - $7      5,000        2.2       $ 5.52        1,550      $6.06           
$10 - $14     29,625        4.5       $11.24                                    
$19 - $23     20,475        4.8       $19.32                                    
--------    -------       ----       ------      -------      -----           
$3 - $23    338,520        3.3        $5.95      140,820      $4.51           
--------    -------       ----       ------      -------      -----           

A summary of changes in outstanding warrants as of March 31,                    
1995, 1996 and 1997, and changes during the years ending on those               
dates is presented below:                                                       

      1995*            1996*              1997
       -----------------   --------------- -----------------
                Weighted          Weighted          Weighted
                 Average           Average           Average
                Exercise          Exercise          Exercise
       Shares      Price   Shares    Price Shares      Price
       ------    -------   ------  ------- ------    -------
Outstanding at                                                                  
beginning                                                                       
of year          16,200      $4.40    8,100    $4.40 23,100     $ 4.03          
Granted                              15,000     3.83  1,500      13.50          
Exercised        (8,100)     $4.40                   (8,100)      4.40          
       -------     -----   ------   ------ -------    ------
Outstanding at                                                                  
end of year       8,100      $4.40   23,100    $4.03 16,500     $ 4.71          
        =====       ====   ======     ====  =====       ====

* Amounts have been adjusted to reflect the three-for-two stock               
split during fiscal 1997.               

F-14                

NOTE 9 - INCOME TAXES:                                                          

The provision (benefit) for income taxes consists of the                        
following.                                                                      

Year Ended March 31,            1995         1996         1997                  
             --------      -------     ---------

Federal                                                                         
Current                     $997,200     $594,400    $1,184,000               
Deferred                     (98,800)  (2,433,600)     (314,300)              

State                                                                           
Current                      203,800      131,600       415,500               
Deferred                     (24,700)    (728,500)      (73,100)              

Foreign                                                                         
Current                                                 103,300               
Deferred                                 (373,900)      209,600               
             ---------   ---------     ---------
            $1,077,500 ($2,810,000)   $1,525,000
             =========  ==========     =========

A reconciliation of the statutory federal income tax rate to the                
effective rate is as follows.                                                   

Year Ended March 31,            1995      1996      1997                        
        ----      ----      ----
Statutory federal rate          34.0%    (34.0%)    34.0%                       
State taxes, net of federal                                                     
benefit                         7.9      (3.6)      4.5                       
Write-off of intangibles                   6.4                                  
Foreign tax rate differences               2.1      (8.1)                       
Change in valuation allowances             2.0        .8                        
Research and development                                                        
credits                        (3.0)               (4.5)                      
Recapture of subsidiary excess                                                  
losses                         6.5                                          
Foreign sales corporation                                                       
benefit                       (2.1)      (.5)      (.6)                     
benefit                                                                         
Other                           (1.7)      1.2       2.9                        
        ----      ----      ----
Effective income tax rate       41.6%    (26.4%)    29.0%                       
        ====      ====      ====

F-15                

Deferred tax assets (liabilities) are comprised of the following:               

Year Ended March 31,                  1995        1996        1997              
Book accruals not currently                                                     
deductible for tax                 42,200   1,593,500   1,200,900             
Deferred compensation              618,200     706,500     733,200              
Inventory obsolescence reserve     164,100     141,600     467,500              
Accrued payroll and related costs  119,000     780,300     965,200              
State investment tax credit                                                     
carryforwards                     310,900     303,600     303,600             
Subsidiary net operating loss                                                   
carryforwards                      48,300     741,000     399,800             
Tax basis of intangibles in                                                     
excess of book                               2,688,300   2,796,400              
Other                              134,000     345,000     161,100              
                   ---------   ---------   ---------
Total deferred tax assets        1,436,700   7,299,800   7,027,700              
                   ---------   ---------   ---------
Depreciation                      (951,300) (1,016,200)   (962,700)             
Prepaid assets                     (34,900)   (100,000)    (61,500)             
Other                              (25,000)    (66,000)   (121,700)             
                   ---------   ---------   ---------
Total deferred tax liabilities  (1,011,200) (1,182,200) (1,145,900)             
                   ---------   ---------   ---------
Deferred tax asset valuation                                                    
reserve                         (359,200)   (579,500)   (703,400)           
                   ---------   ---------   ---------
Net deferred tax asset          $   66,300  $5,538,100  $5,178,400              
                   =========   =========   =========

Realization of the tax loss and credit carryforwards, which                     
expire at various times between 2002 and 2011, is contingent on                 
future taxable earnings.  Valuation allowances have been recorded               
for these and other asset items which may not be realized.                      

Deferred income taxes have not been provided on the undistributed               
earnings of foreign subsidiaries.  The amount of such earnings                  
included in consolidated retained earnings at March 31, 1997 was                
approximately $1.8 million.  These earnings have been                           
substantially reinvested and the Company does not plan to                       
initiate any action that would precipitate the payment of income                
taxes thereon.                                                                  

NOTE 10 - GEOGRAPHIC INFORMATION AND SIGNIFICANT CUSTOMERS                      

The Company currently operates in one industry segment.  During                 
1995, the Company established a manufacturing and marketing                     
subsidiary in Hong Kong and a marketing subsidiary in Australia.                
The Company also maintains a sales presence in Canada and Europe.               

Net sales by the Company to unaffiliated customers outside the                  
United States represents 11.3%, 21.0% and 15.7% of consolidated net             
sales for the years ended March 31, 1995, 1996 and 1997.  Net                   
Sales by the Company's domestic operations to unaffiliated                      
customers outside the United States represent 11.3%, 12.3% and 7.0%             
of the Company's consolidated net sales for the years ended March               
31, 1995, 1996 and 1997, respectively.                                          

The following table presents net sales, income (loss) before                    
income taxes and identifiable assets of the Company's domestic                  
and foreign operations.  Net sales and income (loss) before                     
income taxes of the Company's domestic operations include the                   
impact of export sales.  Inter-area sales are presented on a                    
basis intended to reflect the market value of the products as                   
nearly as possible.  Identifiable assets are those assets of the                
Company that are identified with the operations in the respective               
geographic area.                                                                

F-16                

Year Ended March 31,                1995         1996         1997              
                      ----------   ----------   ----------
Net sales                                                                       
United States operations        $34,336,336  $38,234,057  $92,442,003           
Foreign operations                             3,623,752    8,809,377           
Inter-area                                     1,394,684   33,956,925           
Eliminations                                  (1,394,684) (33,956,925)          
                       ----------   ----------   -----------
                     $34,336,336  $41,857,809 $101,251,380
                      ==========   ==========  ===========
Income (loss) before income                                                     
taxes                                                                           
United States operations         $2,591,989  ($8,917,291)  $3,631,097           
Foreign operations                            (1,432,217)   2,191,278           
Eliminations                                    (315,735)    (572,091)          
                      ----------   ----------  -----------
                     $ 2,591,989 ($10,665,243)  $5,250,284
                      ==========   ==========  ===========
Identifiable assets                                                             
United States operations        $24,745,293  $40,830,577  $48,142,435           
Foreign operations                             5,067,001   20,133,416           
                      ----------   ----------  -----------
                     $24,745,293  $45,897,578  $68,275,851
                      ==========   ==========  ===========

During 1997 sales to the Company's three largest customers accounted            
for 10.7%, 10.6% and 6.0% of the Company's net sales, respectively.             
Accounts receivable from the Company's three largest customers represented      
20.0%, 0.9% and 6.6% of the accounts receivable balances at March 31, 1997,     
respectively.  During 1996, sales to the Company's two largest customers        
accounted for 13.8% and 9.7% of net sales, respectively.  During 1995,          
sales to the Company's two largest customers accounted for 19.3% and 18.7%      
of net sales, respectively.                                                     

NOTE 11 - COMMITMENTS                                                           

The Company leases certain facilities pursuant to operating lease               
agreements.  Operating lease expense for offices and other                      
equipment was approximately $16,000 in 1995, $470,000 in 1996 and               
$1,208,000 in 1997.  Future minimum rental payments under                       
noncancelable operating lease agreements are as follows: 1998 -                 
$1,498,000; 1999 - $1,335,000 and 2000 - $379,000.                              

NOTE 12 - SUBSEQUENT EVENTS                                                     

On May 8, 1997, the Company announced its purchase of Digital                   
Audio Limited, (DA Systems), from Numerex Corporation in exchange               
for 226,168 shares of the Company's common stock valued at $3.9                 
million.  The shares are callable, at the Company's option, at                  
$17 per share plus interest at 8.25% until June 30, 1998, and may               
be put by Numerex to the Company at that price after that date.                 

F-17                

No dealer, salesperson or any other                      1,300,000 SHARES       
person has been authorized to give any                                          
information or to make any                                                      
representation not contained in this                                            
Prospectus in connection with this                                              
offering, and, if given or made, such                       [DSI LOGO]          
information or representation must not                                          
be relied upon as having been                                                   
authorized by the Company, the Selling                                          
Shareholders or the Underwriters.  This                                         
Prospectus does not constitute an offer                 DETECTION               
to sell or a solicitation of an offer                 SYSTEMS, INC.             
to buy any securities other than the                                            
registered securities to which it                                               
relates, or an offer to sell or                                                 
solicitation of an offer to buy such                 RADIONICS LOGO]            
securities in any jurisdiction where,                                           
or to any person to whom, it is                                                 
unlawful to make such an offer or                                               
solicitation.  Neither the delivery of                                          
this Prospectus nor any sale made                                               
hereunder shall, under any                            COMMON STOCK              
circumstances, create any implication                                           
that there has been no change in the                                            
affairs of the Company since the date                                           
hereof or that the information                                                  
contained herein is correct as of any                                           
time subsequent to the date hereof.                                             
                                        PROSPECTUS

TABLE OF CONTENTS                                       

PAGE    
Prospectus Summary                    3                                         
Risk Factors                          7       RAYMOND JAMES & ASSOCIATES, INC.  
Use of Proceeds                      11                                         
Capitalization                       11            NEEDHAM & COMPANY, INC.      
Price Range of Common Stock          12                                         
Dividend Policy                      12                                         
Selected Consolidated Financial Data 13                             , 1997      
Management's Discussion and Analysis                                            
of Financial Condition and Results                                          
of Operations                      14                                       
Business                             18                                         
Management                           29                                         
Principal and Selling Shareholders   34                                         
Description of Capital Stock         34                                         
Underwriting                         36                                         
Legal Matters                        37                                         
Experts                              37                                         
Available Information                37                                         
Incorporation of Certain Documents                                              
by Reference                        38                                        
Index to Consolidated Financial                                                 
Statements                       F-1                                        

S-2
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     PART II

    INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.                          

The Company will pay all of the expenses incurred in connection with the
offering described in this registration statement.  Such expenses are estimated 
to be as follows:                                                               

Securities and Exchange Commission registration fee  $8,551             
Nasdaq National Market listing fee                   17,500             
NASD fee                                              3,322             
Legal fees and expenses                              80,000             
Printing expenses                                   100,000             
Accounting fees and expenses                         25,000             
Miscellaneous                                        15,627             
                                      --------
Total                                   $250,000  
                                       =========

ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.                            

The New York Business Corporation Law (the "BCL") provides that if a    
derivative action is brought against a director or officer of a corporation,    
the corporation may indemnify him or her against amounts paid in settlement and 
reasonable expenses, including attorneys' fees incurred by him or her, in       
connection with the defense or settlement of such action, if such director or   
officer acted in good faith for a purpose which he or she reasonably believed   
to be in the best interests of the corporation, except that no indemnification  
shall be made without court approval in respect of a threatened action, or a    
pending action settled or otherwise disposed of, or in respect of any matter as 
to which such director or officer has been found liable to the corporation.  In 
a nonderivative action or threatened action, the BCL provides that a            
corporation may indemnify a director or officer against judgments, fines,       
amounts paid in settlement and reasonable expenses, including attorneys' fees   
incurred by him or her in defending such action, if such director or officer    
acted in good faith for a purpose which he or she reasonably believed to be in  
the best interests of the corporation.                                          

Under the BCL, a director or officer who is successful, either in a     
derivative or nonderivative action, is entitled to indemnification as outlined  
above.  Under any other circumstances, such director or officer may be          
indemnified only if certain conditions specified in the BCL are met.  The       
indemnification provisions of the BCL are not exclusive of any other rights to  
which a director or officer seeking indemnification may be entitled pursuant to 
the provisions of the certificate of incorporation or the bylaws of a           
corporation or, when authorized by such certificate of incorporation or bylaws, 
pursuant to a shareholders' resolution, a directors' resolution or an agreement 
providing for such indemnification.                                             

The above is a general summary of certain provisions of the BCL and is  
subject, in all cases, to the specific and detailed provisions of               
Sections 721-725 of the BCL.                                                    

   Article V, Section 2 of the Company's By-Laws contains provisions requiring
indemnification by the Company of its directors and officers against certain    
liabilities and expenses which they may incur as directors and officers of the  
Company or of certain other entities in accordance with Sections 722-723 of the 
BCL.                                                                            

 Section 726 of the BCL also contains provisions authorizing a corporation
to obtain insurance on behalf of any director and officer against liabilities,  
whether or not the corporation would have the power to indemnify against such   
liabilities.  The Company maintains insurance coverage under which the          
directors and officers of the Company are insured, subject to the limits of the 
policy, against certain losses, as defined in the policy, arising from claims   
made against such directors and officers by reason of any wrongful acts as      
defined in the policy, in their respective capacities as directors or officers. 

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ITEM 16.  EXHIBITS.                                                             

                                                                [Download Table]

Exhibit                                                                 
Number                 Exhibit                Location                  
--------      ----------------------------    ------------------------  
                                                                        
1              Underwriting Agreement          To be filed by amendment 

2(a)           Definitive Stock Purchase       Incorporated by reference
               Agreement, dated February 12,   as Exhibit 2 to the      
               1996, for purchase of stock of  Company's Form 8K/A filed
               Radionics, Inc.                 April 29, 1996           

2(b)           Asset Purchase Agreement, dated Incorporated by reference
               July 22, 1996, for the purchase to Exhibit 2(b) of the   
               of the assets of Senses         Company's 1997 Annual    
               International                   Report on Form 10-K      

2(c)           Stock Purchase Agreement, dated Incorporated by reference
               May 7, 1997, for the purchase   to Exhibit 2-1 of the    
               of the stock of Digital Audio   Company's Form-8K filed  
               Limited                         May 21, 1997             

2(d)           Stock Purchase Agreement, dated Filed herewith           
               June 24, 1997, for the purchase                          
               of shares of Seriee SA                                   

2(e)           Share Purchase Agreement, dated Filed herewith           
               June 25, 1997, for the purchase                          
               of a portion of the stock of                             
               Radio-Active Systems.                                    

2(f)           Share Purchase Agreement,       Filed herewith           
               dated June 25, 1997, for the                             
               purchase of a portion of the                             
               stock of Radio-Active Systems.                           

4              Rights of Holders of common     Incorporated by reference
               stock - 1981 plan               to Exhibit 4 of the      
                                               Company's 1993 Annual    
                                               Report on Form 10-K      

5              Opinion of Nixon, Hargrave,     To be filed by amendment 
               Devans & Doyle LLP                                       

10(a)          Non-employee director stock     Incorporated by reference
               option plan (warrant plan)      to Exhibit 10(a) of the  
                                               Company's 1994 Annual    
                                               Report on Form 10-K      

                                   II-2                                 

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10(b)          Medical reimbursement plan      Incorporated by reference
                                               to Exhibit 10(b) of the  
                                               Company's 1997 Annual    
                                               Report on Form 10-K      

10(c)          Employee stock purchase plan    Incorporated by reference
                                               to Exhibit 10 of the     
                                               Company's 1994 Annual    
                                               Report on Form 10-K      

10(d)          Amended & Restated Credit       Filed herewith           
               Facility Agreement dated June                            
               24, 1997 among Detection                                 
               Systems, Inc., Radionics, Inc.                           
               and Fleet Bank, together with                            
               Amended and Restated Term Loan                           
               Note, Revolving Line Note and                            
               Mortgage Loan Note, each dated                           
               June 24, 1997                                            

10(e)          Deferred Compensation Plan and  Incorporated by reference
               Deferred Bonus Plan, both       to Exhibit 10(e) of the  
               amended January 1997            Company's 1997 Annual    
                                               Report on Form 10-K      

10(f)          1992 Restated Stock Option Plan Incorporated by reference
                                               to Exhibit 22 of the     
                                               Company's 1995 Annual    
                                               Report on Form 10-K      

10(g)          Detection Systems, Inc.         Incorporated by reference
               Executive Bonus Plan            to Exhibit 10(g) of the  
                                               Company's 1997 Annual    
                                               Report on Form 10-K      

10(h)          Executive employment contract   Incorporated by reference
               with Karl H. Kostusiak          to Exhibit 10(h) of the  
                                               Company's 1996 Annual    
                                               Report on Form 10-K      

10(i)          Executive employment contract   Incorporated by reference
               with David B. Lederer           to Exhibit 10(i) of the  
                                               Company's 1996 Annual    
                                               Report on Form 10-K      

10(j)          Executive employment contract   Incorporated by reference
               with Lawrence R. Tracy          to Exhibit 10 of the     
                                               Company's 1995 Annual    
                                               Report on Form 10-K.     

10(k)          ECI Amended License and Mfg.    Incorporated by reference
               Agreement & Amendment No. 1     to Exhibit 10(k) of the  
                                               Company's 1996 Annual    
                                               Report on Form 10-K      

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10(l)          Shareholders Agreements w/ ECI  Incorporated by reference
                                               to Exhibit 10 of the     
                                               Company's 1994 Annual    
                                               Report on Form 10-K      

10(m)          Stock Purchase Agreements with  Incorporated by reference
               Karl H. Kostusiak and David B.  to Exhibit 10(n) of the  
               Lederer                         Company's 1997 Annual    
                                               Report on Form 10-K      

10(n)          Joint Venture Agreement for     Incorporated by reference
               Establishment of D.S. First     to Exhibit 10(o) of the  
               Systems (Beijing) Limited       Company's 1996 Annual    
                                               Report on Form 10-K      

10(o)          1997 Stock Option Plan          Filed herewith           

10(p)          Lease for China Facility dated  To be filed by amendment 
               _______, 1995                                            

11             Statement re: Computation of    To be filed by amendment 
               Per Share Earnings                                       

23(a)          Consent of Nixon, Hargrave,     Included in Exhibit 5    
               Devans & Doyle LLP                                       

23(b)          Consent of Independent          Filed herewith           
               Accountants                                              

24             Power of Attorney               Reference is made to page
                                               II-6 hereof              

ITEM 17.  UNDERTAKINGS.                                                         

(a)  Insofar as indemnification for liabilities arising under the       
Securities Act of 1933 may be permitted to directors, officers, and controlling 
persons of the Registrant pursuant to the foregoing provisions, or otherwise,   
the Registrant has been advised that in the opinion of the Securities and       
Exchange Commission such indemnification is against public policy as expressed  
in the Securities Act of 1933 and is, therefore, unenforceable.  In the event   
that a claim for indemnification against such liabilities (other than the       
payment by the Registrant of expenses incurred or paid by a director, officer,  
or controlling person of the Registrant in the successful defense of any        
action, suit or proceeding) is asserted by such director, officer or            
controlling person in connection with the securities being registered, the      
Registrant will, unless in the opinion of counsel the matter has been settled   
by controlling precedent, submit to a court of appropriate jurisdiction the     
question whether such indemnification by it is against public policy as         
expressed in the Securities Act of 1933 and will be governed by the final       
adjudication of such issue.                                                     

(b)  The undersigned registrant hereby undertakes that:                 

       (1)  For purposes of determining any liability under the Securities Act
  of 1933, the information omitted from the form of prospectus filed as part
  of this registration statement in reliance upon Rule 430A and contained in
  a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
 (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this registration statement as of the time it was declared effective.

      (2)  For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of      
 prospectus shall be deemed to be a new registration statement relating to
   the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.      

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    SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant      
certifies that it has reasonable grounds to believe that it meets all of the    
requirements for filing on Form S-2 and has duly caused this Registration       
Statement to be signed on its behalf by the undersigned, thereunto duly         
authorized, in the City of Rochester, State of New York, on this 22nd day of    
July, 1997.                                                                     

                                 DETECTION SYSTEMS, INC.

                                   By: /s/ Karl H. Kostusiak

                                               Karl H.  Kostusiak, Chairman,
                                            President, Chief Executive
                                      Officer and Director

Pursuant to the requirements of the Securities Act, this Registration   
Statement has been signed by the following persons in the capacities and on the 
dates indicated:                                                                

       Name                           Title                       Date

/s/ Karl H. Kostusiak          Chairman, President, Chief      July 22, 1997
Karl H. Kostusiak          Executive Officer and Director           
      Officer and Director

/s/Frank J. Ryan               Vice President (Principal       July 23, 1997
Frank J. Ryan               Financial Officer and                     
               Principal Accounting Officer)

/s/Donald R. Adair             Director                        July 23, 1997
Donald R. Adair                                                       

/s/Mortimer B. Fuller, III     Director                        July 23, 1997
Mortimer B. Fuller, III                                               

/s/David B. Lederer            Director                        July 23, 1997
David B. Lederer                                                      

/s/Edward C. McIrvine          Director                        July 23, 1997
Edward C. McIrvine                                                    

              II-5

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     POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below, hereby constitutes and appoints Karl H. Kostusiak and Frank J. Ryan, or  
either of them, his or her attorneys-in-fact and agents, with full power of     
substitution and resubstitution for him or her in any and all capacities, to    
sign any or all amendments or post-effective amendments to this Registration    
Statement, and any registration statement filed pursuant to Rule 462(b) of the  
Securities Act prepared in connection therewith, and to file the same, with     
exhibits thereto and other documents in connection therewith or in connection   
with the registration of the Common Stock under the Exchange Act, with the      
Securities and Exchange Commission, granting unto each of such attorneys-in-    
fact and agents full power and authority to do and perform each and every act   
and thing requisite and necessary in connection with such matters as fully to   
all intents and purposes as he or she might or could do in person, hereby       
ratifying and confirming all that each of such attorneys-in-fact and agents or  
his or her substitute or substitutes may do or cause to be done by virtue       
hereof.                                                                         

       Name                           Title                       Date

/s/ Karl H. Kostusiak          Chairman, President, Chief      July 22, 1997
Karl H. Kostusiak          Executive Officer and Director           
      Officer and Director

/s/Frank J. Ryan               Vice President (Principal       July 23, 1997
Frank J. Ryan               Financial Officer and                     
               Principal Accounting Officer)

/s/Donald R. Adair             Director                        July 23, 1997
Donald R. Adair                                                       

/s/Mortimer B. Fuller, III     Director                        July 23, 1997
Mortimer B. Fuller, III                                               

/s/David B. Lederer            Director                        July 23, 1997
David B. Lederer                                                      

/s/Edward C. McIrvine          Director                        July 23, 1997
Edward C. McIrvine                                                    

              II-6

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This S-2 Filing		Date		First		Last			Other Filings
		3/31/93		14
		3/31/94		14
		12/31/94		41
		3/31/95		13		41			10-K405, DEF 14A
		12/31/95		5		41
		3/31/96		13		41			10-K405, 10-K405/A, DEF 14A
		4/29/96		43					8-K/A
		6/6/96		33
		7/22/96		43
		11/7/96		32		41
		11/27/96		41
		12/17/96		4		41
		3/31/97		6		41			10-K, DEF 14A
		4/1/97		13
		5/7/97		39		43			8-K
		5/8/97		41
		5/21/97		39		43			8-K
		6/2/97		41
		6/24/97		22		44			8-K
		6/25/97		22		43
		7/21/97		2		35
		7/22/97		46		47
		7/23/97		1		47
Filed On / Filed As Of		7/24/97
		12/15/97		41					SC 13D
		6/30/98		41					10-Q, NT 10-K
		7/31/98		12		18
		5/31/05		29
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