UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

 X      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
---     EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2009

                                       OR
        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
---     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______.

Commission File number:                 0-10004
                       ---------------------------------------------------------

                        NAPCO SECURITY TECHNOLOGIES, INC.
                  --------------------------------------------
             (Exact name of Registrant as specified in its charter)

        Delaware                                             11-2277818
-------------------------------                     ----------------------------
(State or other jurisdiction of                     (IRS Employer Identification
 incorporation of organization)                              Number)

        333 Bayview Avenue
        Amityville, New York                                 11701
----------------------------------------            ----------------------------
(Address of principal executive offices)                   (Zip Code)

                                 (631) 842-9400
               ---------------------------------------------------
               (Registrant's telephone number including area code)

                          NAPCO SECURITY SYSTEMS, INC.
             (Former name, former address and former fiscal year if
                            changed from last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the  Securities  and  Exchange Act of 1934
during the  preceding  12 months (or  shorter  period  that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days:

     Yes   X      No
        ------      ------

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted  and posted  pursuant to Rule 405 of  Regulation  S-T during the
preceding 12 months (or such shorter  period that the registrant was required to
submit and post such files).     Yes         No
                                    ------     ------

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer or a smaller reporting company.  See
definition  of "large  accelerated  filer",  "accelerated  filer"  and  "smaller
reporting company" in Rule 12b-2 of the Exchange Act:


                                                                
Large Accelerated Filer    Accelerated Filer    Non-Accelerated Filer    Smaller reporting company X
                       ---                  ---                      ---                          ---

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act):

                               Yes      No   X
                                  ------  ------

Number of shares outstanding of each of the issuer's classes of common stock, as
of: May 19, 2009

               COMMON STOCK, $.01 PAR VALUE PER SHARE 19,095,713

                                       1
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                                                                                   Page
                                                                                   ----
PART I:  FINANCIAL INFORMATION

    ITEM 1.      Financial Statements

         NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES
         INDEX - MARCH 31, 2009

             Condensed Consolidated Balance Sheets March 31, 2009 and
             June 30, 2008                                                           3

             Condensed Consolidated Statements of Operations for the Three
             Months ended March 31, 2009 and 2008                                    4

             Condensed Consolidated Statements of Operations for the Nine
             Months ended March 31, 2009 and 2008                                    5

             Condensed Consolidated Statements of Cash Flows for the Nine
             Months ended March 31, 2009 and 2008                                    6

             Notes to Condensed Consolidated Financial Statements                    7

    ITEM 2.      Management's Discussion and Analysis of Financial Condition
                   and Results of Operations                                        15

    ITEM 3.      Quantitative and Qualitative Disclosures About Market Risk         20

    ITEM 4.      Controls and Procedures                                            20

PART II: OTHER INFORMATION                                                          21

SIGNATURE PAGE                                                                      22

                                       2
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PART I:  FINANCIAL INFORMATION

ITEM 1.  Financial Statements

               NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                March 31,           June 30,
                   ASSETS                   2009 (unaudited)     2008 (audited)
                   ------                   ----------------    ----------------
                                             (in thousands, except share data)
Current Assets:
  Cash and cash equivalents                 $          2,567    $         2,765
  Accounts receivable, net of reserves                18,574             25,823
  Inventories, net                                    26,012             19,548
  Prepaid expenses and other current assets              748              1,121
  Income tax receivable                                  790                 --
  Deferred income taxes                                  861                769
                                            ----------------    ----------------

    Total Current Assets                              49,552             50,026

Inventories - non-current, net                         8,777              7,724
Property, plant and equipment, net                     9,215              8,989
Intangible assets, net                                16,103                 --
Goodwill                                              10,609              9,686
Other assets                                             440                298
                                            ----------------    ----------------

    Total Assets                            $         94,696    $        76,723
                                            ================    ================

    LIABILITIES AND STOCKHOLDERS' EQUITY
    ------------------------------------

Current Liabilities:
  Loans payable (Note 6)                    $         34,314    $            --
  Accounts payable                                     4,946               4857
  Accrued expenses                                     1,603              1,333
  Accrued salaries and wages                           1,982              2,543
  Accrued restructuring costs                            350                 --
                                            ----------------    ----------------

    Total Current Liabilities                         43,195              8,733

Long-term debt                                            --             12,400
Accrued income taxes                                     210                294
Deferred income taxes                                  1,823              1,607
Minority interest in subsidiary                           --                147
                                            ----------------    ----------------

    Total Liabilities                                 45,228             23,181
                                            ----------------    ----------------

Commitments and Contingencies
Stockholders' Equity:
  Common stock, par value $.01 per share;
   40,000,000 shares authorized, 20,095,713
   and 20,092,473 shares issued and
   19,095,713 and 19,092,473 shares
   outstanding, respectively                             201                201
  Additional paid-in capital                          13,710             13,424
  Retained earnings                                   41,172             45,532
                                            ----------------    ----------------
                                                      55,083             59,157
  Less: Treasury Stock, at cost (1,000,000
   shares)                                            (5,615)            (5,615)
                                            ----------------    ----------------

    Total stockholders' equity                        49,468             53,542
                                            ----------------    ----------------

    Total Liabilities and Stockholders'
     Equity                                 $         94,696    $        76,723
                                            ================    ================

     See accompanying notes to condensed consolidated financial statements
                                  (unaudited).

                                       3
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               NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

                                                     Three Months Ended
                                                         March 31,
                                            ------------------------------------
                                                  2009                2008
                                             ---------------     --------------
                                                (in thousands, except share and
                                                         per share data)

Net sales                                   $         14,024    $        16,222
Cost of sales                                         13,110             10,506
Restructuring costs                                    1,110                 --
                                             ---------------     --------------

  Gross (Loss) Profit                                   (196)             5,716
Selling, general and administrative expenses           4,919              4,148
Restructuring costs                                      145                 --
                                             ---------------     --------------

  Operating (Loss) Income                             (5,260)             1,568
                                             ---------------     --------------

Other expense:
  Interest expense, net                                  426                216
  Other expense, net                                      76                 12
                                             ---------------     --------------

  Total Other expense                                    502                228
                                             ---------------     --------------

  (Loss) Income Before Minority Interest and
   Benefit for Income Taxes                           (5,762)             1,340

Minority interest in (income) loss of
 subsidiary                                             (112)                33
                                             ---------------     --------------

  (Loss) Income Before Benefit for Income
   Taxes                                              (5,874)             1,373

Benefit for income taxes                                (859)            (1,904)
                                             ---------------     --------------

  Net (Loss) Income                         $         (5,015)   $         3,277

(Loss) Earnings per share:
  Basic                                     $          (0.26)   $          0.17
                                             ===============    ===============
  Diluted                                   $          (0.26)   $          0.17
                                             ===============    ===============

Weighted average number of shares
 outstanding:
  Basic                                           19,095,713         19,092,487
                                             ===============     ==============
  Diluted                                         19,095,713         19,626,043
                                             ===============     ==============

      See accompanying notes to condensed consolidated financial statements
                                  (unaudited).

                                       4
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               NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

                                                     Nine Months Ended
                                                         March 31,
                                            ------------------------------------
                                                  2009                2008
                                            ---------------      ---------------
                                                (in thousands, except share and
                                                        per share data)

Net sales                                   $        50,586     $        46,264
Cost of sales                                        37,852              29,877
Restructuring costs                                   1,110                  --
                                            ---------------      ---------------

  Gross Profit                                       11,624              16,387
Selling, general and administrative expenses         15,142              12,731
Restructuring costs                                     145                  --
                                            ---------------      ---------------

  Operating (Loss) Income                            (3,663)              3,656
                                            ---------------      ---------------

Other expense:
  Interest expense, net                               1,170                 635
  Other expense, net                                    101                  30
                                            ---------------      ---------------

  Total Other expense                                 1,271                 665
                                            ---------------      ---------------

  (Loss) Income Before Minority Interest and
   Provision for Income Taxes                        (4,934)              2,991

Minority interest in loss of subsidiary                  --                  92
                                            ---------------      ---------------

  (Loss) Income Before Provision for Income
   Taxes                                             (4,934)              3,083

(Benefit) Provision for income taxes                   (574)             (1,741)
                                            ---------------      ---------------

  Net (Loss) Income                         $        (4,360)    $         4,824
                                            ===============      ===============

(Loss) Earnings per share:
  Basic                                     $         (0.23)    $          0.25
                                            ===============      ===============
  Diluted                                   $         (0.23)    $          0.24
                                            ===============      ===============

Weighted average number of shares
 outstanding:
  Basic                                          19,095,595          19,319,967
                                            ===============      ===============
  Diluted                                        19,095,595          19,873,655
                                            ===============      ===============

      See accompanying notes to condensed consolidated financial statements
                                  (unaudited).

                                       5
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               NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

                                                Nine Months Ended March 31,
                                            ------------------------------------
                                                  2009                2008
                                            ------------------------------------
                                                       (in thousands)
Cash Flows from Operating Activities:
  Net (loss) income                         $        (4,360)    $         4,824
  Adjustments to reconcile net (loss)
   income to net cash
  provided by operating activities:
    Depreciation and amortization                     1,440                 854
    Provision for doubtful accounts                     126                  40
    Change to inventory obsolescence reserve            (20)                150
    Deferred income taxes                               124                 730
    Non-cash stock based compensation
     expense                                            280                 216
    Change in minority interest                        (147)                 --
  Changes in operating assets and
   liabilities, net of acquisition effects:
    Accounts receivable                               8,959               3,731
    Inventories                                        (756)             (6,607)
    Prepaid expenses and other current
     assets                                             485                (120)
    Income tax receivable                              (790)               (443)
    Other assets                                          4                (113)
    Accounts payable, accrued expenses,
     accrued salaries and
    wages, and accrued income taxes                  (1,558)             (2,061)
    Accrued restructuring costs                         350                  --
                                            ---------------      ---------------

Net Cash Provided by Operating Activities             4,137               1,201
                                            ---------------      ---------------

Cash Flows Used in Investing Activities:
  Cash used in business acquisition, net of
   cash acquired of $520                            (24,581)                 --
  Purchases of property, plant and equipment           (428)               (668)
                                            ---------------      ---------------
Net Cash Used in Investing Activities               (25,009)               (668)
                                            ---------------      ---------------

Cash Flows from Financing Activities:
  Proceeds from exercise of employee stock
   options                                                6                   4
  Proceeds from acquisition financing                25,000                  --
  Proceeds from long-term debt borrowings             2,200               5,000
  Principal payments on long-term debt               (6,286)             (2,000)
  Cash paid for deferred financing costs               (246)                 --
  Cash paid for purchase of treasury stock               --              (3,225)
                                            ---------------      ---------------
Net Cash Provided by (Used in) Financing
 Activities                                          20,674                (221)
                                            ---------------      ---------------
Net (decrease) increase in Cash and Cash
 Equivalents                                           (198)                312
Cash and Cash Equivalents, Beginning of
 Period                                               2,765               1,748
                                            ---------------      ---------------
Cash and Cash Equivalents, End of Period    $         2,567     $         2,060
                                            ===============      ===============

Cash Paid During the Period for:
  Interest                                  $         1,034     $           589
                                            ===============      ===============
  Income taxes                              $           130     $           102
                                            ===============      ===============

Non-cash Investing activities:
  Adjustment to Retained earnings relating
   to adoption of FIN 48                    $            --     $           485
                                            ===============      ===============
  Accrued Business Acquisition costs        $           295     $            --
                                            ===============      ===============
  Debt assumed in the Acquisition           $         1,000     $            --
                                            ===============      ===============

      See accompanying notes to condensed consolidated financial statements
                                  (unaudited).

                                       6
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               NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1.)  Summary of Significant Accounting Policies and Other Disclosures
     ----------------------------------------------------------------

     The accompanying Condensed Consolidated Financial Statements are unaudited.
     In  management's  opinion,  all  adjustments  (consisting  of  only  normal
     recurring  accruals)  necessary for a fair presentation have been made. The
     results  of  operations  for the  periods  ended  March  31,  2009  are not
     necessarily  indicative  of  results  that may be  expected  for any  other
     interim period or for the full year.

     The unaudited Condensed Consolidated Financial Statements should be read in
     conjunction  with the Consolidated  Financial  Statements and related notes
     contained in the  Company's  Annual  Report on Form 10-K for the year ended
     June 30, 2008. The accounting  policies used in preparing  these  unaudited
     Condensed  Consolidated  Financial  Statements  are  consistent  with those
     described in the June 30, 2008 Consolidated Financial Statements.  However,
     for interim financial statements,  inventories are calculated using a gross
     profit percentage.  In addition,  the Condensed  Consolidated Balance Sheet
     was derived from the audited financial  statements but does not include all
     disclosures required by Generally Accepted Accounting Principles ("GAAP").

     The  consolidated  financial  statements  include  the  accounts  of  Napco
     Security  Technologies,  Inc.  and  all of its  wholly-owned  subsidiaries,
     including  those of Marks USA I, LLC ("Marks"),  a newly formed  subsidiary
     which acquired  substantially all of the assets and certain  liabilities of
     G. Marks Hardware,  Inc. acquired on August 18, 2008 . The Company has also
     consolidated a 51%-owned joint venture.  The 49% interest,  held by a third
     party, is reflected as minority  interest.  All inter-company  balances and
     transactions have been eliminated in consolidation.

     The Company has made a number of estimates and assumptions  relating to the
     assets and liabilities, the disclosure of contingent assets and liabilities
     and the  reporting  of revenues  and  expenses to prepare  these  financial
     statements in conformity with accounting  principles  generally accepted in
     the United States. Actual results could differ from those estimates.

     Seasonality

     The  Company's  fiscal  year  begins  on  July  1  and  ends  on  June  30.
     Historically,  the end  users  of  Napco's  products  want to  install  its
     products prior to the summer;  therefore sales of its products historically
     peak in the period April 1 through  June 30, the  Company's  fiscal  fourth
     quarter,  and are  reduced in the period July 1 through  September  30, the
     Company's  fiscal first quarter.  To a lesser  degree,  sales in Europe are
     also adversely  impacted in the Company's  first fiscal quarter  because of
     European  vacation  patterns,  i.e., many  distributors  and installers are
     closed for the month of August.  In  addition,  demand is  affected  by the
     housing and  construction  markets.  The  severity of the current  economic
     downturn may also affect this trend.

     Advertising and Promotional Costs

     Advertising  and  promotional  costs are included in "Selling,  General and
     Administrative"  expenses  in  the  condensed  consolidated  statements  of
     operations and are expensed as incurred.  Advertising expense for the three
     months   ended  March  31,   2009  and  2008  was  $91,000  and   $100,000,
     respectively.  Advertising expense for the nine months ended March 31, 2009
     and 2008 was $711,000 and $817,000, respectively.

     Research and Development Costs

     Research  and  development  costs  are  included  in "Cost of Sales" in the
     condensed  consolidated  statements  of  operations  and  are  expensed  as
     incurred. Research and development expense for the three months ended March
     31, 2009 and 2008 was $1,259,000 and $1,375,000, respectively. Research and
     development  expense for the nine months  ended March 31, 2009 and 2008 was
     $3,823,000 and $4,097,000, respectively.

     Business Concentration and Credit Risk

     An entity is more  vulnerable  to  concentrations  of credit  risk if it is
     exposed to risk of loss greater than it would have had if it mitigated  its
     risk through  diversification  of  customers.  Such risks of loss  manifest
     themselves differently,  depending on the nature of the concentration,  and
     vary in significance.

     The  Company had two  customers  with  accounts  receivable  balances  that
     aggregated  31% and 34% of the Company's  accounts  receivable at March 31,
     2009 and June 30, 2008,  respectively.  Sales to neither of these customers
     exceeded 10% of net sales in any of the past three fiscal years.

                                       7
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     Allowance for Doubtful Accounts

     In the ordinary  course of business,  the Company has established a reserve
     for doubtful accounts and customer deductions in the amount of $492,000 and
     $405,000  as of  March  31,  2009  and June  30,  2008,  respectively.  The
     Company's reserve for doubtful  accounts is a subjective  critical estimate
     that has a direct  impact on reported net  earnings.  This reserve is based
     upon the evaluation of accounts  receivable agings,  specific exposures and
     historical trends.

     Stock Options

     During the three months  ended March 31, 2009 the Company  granted no stock
     options under its 2002  Employee  Incentive  Stock Option Plan.  During the
     nine months ended March 31, 2009 the Company  granted 100,000 stock options
     under its 2002 Employee  Incentive Stock Option Plan.  These grants have an
     exercise  price of $4.25, a fair value of  approximately  $198,000 and vest
     over a  two-year  period  from the date of  grant.  There  were no  options
     granted under its 2000 Non-employee Incentive Stock Option Plan. During the
     three  months  ended March 31, 2009 there were no options  exercised  under
     either  plan.  During the nine months ended March 31, 2009 there were 3,240
     options exercised,  with proceeds of approximately  $6,000,  under the 2002
     Employee  Incentive  Stock  Option  Plan and no  exercises  under  the 2000
     Non-employee Incentive Stock Option Plan.

     Intangible Assets

     Under the Statement of Accounting Standards ("SFAS") No.142,  "Goodwill and
     Other  Intangible  Assets",  all  goodwill  and certain  intangible  assets
     determined  to have  indefinite  lives  will not be  amortized  but will be
     tested for  impairment  at least  annually.  Intangible  assets  other than
     goodwill  will be  amortized  over  their  useful  lives and  reviewed  for
     impairment at least annually at the Company's  fiscal yearend of June 30 or
     more often whenever there is an indication that the carrying amount may not
     be recovered.

     The Company's  acquisition of  substantially  all of the assets and certain
     liabilities  of  Marks  included  intangible  assets  with a fair  value of
     $16,440,000 on the date of acquisition. In accordance with the requirements
     of  SFAS  No.  141,  "Business  Combinations",  the  Company  recorded  the
     estimated  value  of  $9,800,000  related  to the  customer  relationships,
     $340,000 related to a non-compete  agreement and $6,300,000  related to the
     Marks trade name within  intangible  assets.  The  remaining  excess of the
     purchase price of $922,000 was assigned to Goodwill. In accordance with the
     provisions of SFAS No. 142,  "Goodwill and Other  Intangible  Assets",  the
     intangible  assets will be amortized over their  estimated  useful lives of
     twenty  years  (customer   relationships)   and  seven  years  (non-compete
     agreement). The Marks USA trade name was deemed to have an indefinite life.
     The goodwill  recorded as a result of the  acquisition  is  deductible  for
     Federal and New York State income tax purposes over a period of 15 years.

     Recent Accounting Pronouncements

     In March 2008, the Financial  Accounting  Standards  Board ("FASB")  issued
     SFAS  No.  161,  "Disclosures  about  Derivative  Instruments  and  Hedging
     Activities - an amendment of FASB Statement No. 133. This statement changes
     the  disclosure   requirements  for  derivative   instruments  and  hedging
     activities. Entities are required to provide enhanced disclosures about (a)
     how and why an  entity  uses  derivative  instruments,  (b) how  derivative
     instruments  and related hedged items are accounted for under Statement 133
     and its related  interpretations,  and (c) how derivative  instruments  and
     related  hedged  items  affect an entity's  financial  position,  financial
     performance, and cash flows. SFAS No. 161 is effective for fiscal years and
     interim periods  beginning after November 15, 2008. The Company's  adoption
     of SFAS No. 161 is not expected to have a material  effect on its condensed
     consolidated financial statements.

     In  February  2008,  the FASB issued  FASB Staff  Position  ("FSP") No. FAS
     157-1,  "Application of FASB Statement No. 157 to FASB Statement No. 13 and
     Other Accounting  Pronouncements  That Address Fair Value  Measurements for
     Purposes of Lease  Classification  or Measurement under Statement 13." This
     FSP amends SFAS No. 157 to exclude certain leasing  transactions  accounted
     for under previously  existing  accounting  guidance.  However,  this scope
     exception does not apply to assets  acquired and  liabilities  assumed in a
     business  combination,  regardless of whether those assets and  liabilities
     are related to leases.

     In February  2008,  the FASB issued FSP No. FAS 157-2,  "Effective  Date of
     FASB  Statement No. 157".  This FSP delays the  effective  date of SFAS No.
     157, "Fair Value Measurements",  for non-financial assets and non-financial
     liabilities,  except for items that are  recognized  or  disclosed  at fair
     value in the financial statements on a recurring basis (at least annually).
     This  FSP  defers  the  effective  date of SFAS  No.  157 to  fiscal  years
     beginning  after November 15, 2008, and interim periods within those fiscal
     years for items within the scope of this FSP.

     In October 2008, the FASB issued FSP No. FAS 157-3,  "Determining  the Fair
     Value of a  Financial  Asset When the Market for That Asset Is Not  Active"
     ("FSP 157-3").  FSP 157-3  classified the application of SFAS No. 157 in an
     inactive market. It demonstrated how the fair value of a financial asset is
     determined when the market for that financial asset is inactive.  FSP 157-3
     was effective upon issuance,  including  prior periods for which  financial
     statements  had not been issued.  The  implementation  of FSP 157-3 did not
     have a material effect on the Company's  condensed  consolidated  financial
     statements.

                                       8
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     In  April  2008,   the  FASB  issued  FASB  Staff   Position   SFAS  142-3,
     "Determination of the Useful Life of Intangible Assets" ("FSP SFAS 142-3").
     FSP SFAS 142-3 amends the factors that should be  considered  in developing
     renewal or extension  assumptions  used to  determine  the useful life of a
     recognized  intangible  asset under FASB  Statement  No. 142,  Goodwill and
     Other  Intangible  Assets.  The  objective  of this FSP is to  improve  the
     consistency between the useful life of a recognized  intangible asset under
     Statement  142 and the period of  expected  cash flows used to measure  the
     fair value of the asset under SFAS 141R, Business  Combinations,  and other
     U.S.  GAAP  principles.  FSP  SFAS  142-3 is  effective  for  fiscal  years
     beginning  after  December  31,  2008.  The  adoption  of FSP SFAS 142-3 is
     effective July 1, 2009 and is not expected to have a material effect on the
     Company's condensed consolidated financial statements.

     In December  2007, the FASB issued SFAS No. 141 (revised  2007),  "Business
     Combinations"  ("SFAS No. 141(R)").  SFAS No. 141(R) replaces SFAS No. 141,
     "Business  Combinations," however, it retains the fundamental  requirements
     of  the  former  Statement  that  the  acquisition   method  of  accounting
     (previously  referred to as the  purchase  method) be used for all business
     combinations  and for an acquirer to be identified for each business.  SFAS
     No. 141(R)  defines the acquirer as the entity that obtains  control of one
     or  more  businesses  in  the  business  combination  and  establishes  the
     acquisition  date as the date that the  acquirer  achieves  control.  Among
     other  requirements,  SFAS No. 141(R)  requires the  acquiring  entity in a
     business   combination  to  recognize  the  identifiable  assets  acquired,
     liabilities  assumed and any  non-controlling  interest in the  acquiree at
     their    acquisition-date    fair   values,    with   limited   exceptions;
     acquisition-related  costs generally will be expensed as incurred. SFAS No.
     141(R) requires certain financial statement  disclosures to enable users to
     evaluate and  understand  the nature and financial  effects of the business
     combination.  SFAS No.  141(R)  must be applied  prospectively  to business
     combinations  that are consummated  beginning in the Company's fiscal 2010.
     The  Company's  adoption  of SFAS  No.  141(R)  is not  expected  to have a
     material effect on its condensed consolidated financial statements.

     In December 2007, the FASB issued SFAS No. 160, "Non-controlling  Interests
     in Consolidated  Financial  Statements,  an Amendment of ARB No. 51" ("SFAS
     No.  160")  to  establish   accounting  and  reporting  standards  for  the
     non-controlling  interest in a subsidiary and for the  deconsolidation of a
     subsidiary.  Among  other  requirements,  SFAS  No.  160  clarifies  that a
     non-controlling interest in a subsidiary, which is sometimes referred to as
     minority  interest,  is to be reported as a separate component of equity in
     the  consolidated   financial  statements.   SFAS  No.  160  also  requires
     consolidated  net income to include  the amounts  attributable  to both the
     parent and the  non-controlling  interest and to disclose  those amounts on
     the face of the  consolidated  statement  of  income.  SFAS No. 160 must be
     applied  prospectively  for fiscal years,  and interim periods within those
     fiscal  years,  beginning  in the  Company's  fiscal  2010,  except for the
     presentation   and   disclosure   requirements,   which   will  be  applied
     retrospectively for all periods.  The Company's adoption of SFAS No. 160 is
     not  expected  to have a  material  effect  on its  condensed  consolidated
     financial statements.

     In February  2007, the FASB issued SFAS No. 159, "The Fair Value Option for
     Financial Assets and Financial Liabilities".  SFAS No. 159 permits entities
     to choose to measure many financial  instruments and certain other items at
     fair value.  The objective is to improve  financial  reporting by providing
     entities with the opportunity to mitigate  volatility in reported  earnings
     caused by measuring  related  assets and  liabilities  differently  without
     having to apply complex hedge accounting provisions. Most of the provisions
     of this Statement  apply only to entities that elect the fair value option.
     However, the amendment to SFAS No. 115, "Accounting for Certain Investments
     in  Debt  and   Equity   Securities",   applies   to  all   entities   with
     available-for-sale   and  trading   securities.   Some  requirements  apply
     differently to entities that do not report net income.  SFAS No. 159 became
     effective  for the Company in its fiscal year  ending  June 30,  2009.  The
     Company's  adoption  of SFAS No. 159 did not have a material  effect on its
     condensed consolidated financial statements.

     In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements".
     SFAS No. 157 provides  guidance for using fair value to measure  assets and
     liabilities.  In addition, this statement defines fair value, establishes a
     framework  for measuring  fair value,  and expands  disclosures  about fair
     value  measurements.   Where  applicable,  this  statement  simplifies  and
     codifies related guidance within generally accepted accounting  principles.
     SFAS No. 157 became  effective  for the  Company in its fiscal  year ending
     June 30,  2009.  The  Company's  adoption  of SFAS  No.  157 did not have a
     material effect on its condensed consolidated financial statements.

     Reclassification.

     Certain expenses in Cost of sales for fiscal 2008 have been reclassified to
     Selling,  general and  administrative  expenses to conform with the current
     period's presentation.

                                       9
================================================================================


2.)  Stock-based Compensation
     ------------------------

     The Company has established  two share  incentive  programs as discussed in
     more detail in the  Consolidated  Financial  Statements  and related  notes
     contained in the  Company's  annual  report on Form 10-K for the year ended
     June 30, 2008.  The Company  accounts for its stock options and share units
     granted in accordance  with SFAS No. 123(R),  "Share-Based  Payment" ("SFAS
     No.  123(R)")  which  requires that all  stock-based  compensation  must be
     recognized  as an  expense  in the  financial  statements  and that cost be
     measured  at the fair  market  value of the  award.  SFAS No.  123(R)  also
     requires  that excess tax  benefits  related to stock  option  exercises be
     reflected as  financing  cash inflows  instead of operating  cash  inflows.
     Stock-based  compensation  costs of $73,000 and $64,000 were  recognized in
     three  months  ended  March 31,  2009 and 2008,  respectively.  Stock-based
     compensation  costs of $280,000 and $216,000 were recognized in nine months
     ended  March  31,  2009  and  2008,   respectively.   Unearned  stock-based
     compensation cost was $370,000 as of March 31, 2009.

     The fair values of stock options granted during the nine months ended March
     31,  2009  were  estimated  on the date of grant  using  the  Black-Scholes
     option-pricing model that used the following weighted average assumptions:

     Expected life in years         5
     Risk-free interest rates       3.07%
     Volatility                     49.86%
     Dividend yield                 0%

3.)  Inventories, net
     ----------------

     For interim financial statements,  inventories are calculated using a gross
     profit  percentage.  The Company regularly reviews parts and finished goods
     inventories  on hand and, when  necessary,  records a reserve for excess or
     obsolete  inventories.  As of March 31, 2009 and June 30, 2008, the balance
     in this reserve  amounted to $1,412,000 and $1,200,000,  respectively.  The
     Company also regularly  reviews the period over which its inventories  will
     be converted to sales. Any inventories  expected to convert to sales beyond
     12 months from the balance sheet date are classified as non-current.

     Inventories, net of reserves consist of the following (in thousands):


                                                           March 31,   June 30,
                                                             2009       2008
                                                          ----------  ----------

                Component parts                           $   18,651  $  12,924
                Work-in-process                                4,798      4,114
                Finished product                              11,340     10,234

                                                          $   34,789  $  27,272
                                                          ==========  ==========

     Classification of inventories, net of reserves:

                Current                                   $   26,012  $  19,548
                Non-current                                    8,777      7,724
                                                          ----------  ----------

                                                          $   34,789  $  27,272
                                                          ==========  ==========

4.)  Earnings (Loss) Per Common Share
     --------------------------------

     The Company  follows the provisions of SFAS No. 128,  "Earnings Per Share".
     In accordance with SFAS No. 128,  earnings per common share amounts ("Basic
     EPS") were computed by dividing  earnings by the weighted average number of
     common  shares  outstanding  for the  period.  Earnings  per  common  share
     amounts, assuming dilution ("Diluted EPS"), were computed by reflecting the
     potential  dilution  from the  exercise  of  stock  options.  SFAS No.  128
     requires the  presentation of both Basic EPS and Diluted EPS on the face of
     the condensed consolidated statements of income.

     A  reconciliation  between the numerators and denominators of the Basic and
     Diluted EPS  computations  for earnings is as follows (in thousands  except
     per share data):

                                           Three months ended March 31, 2009
                                        ----------------------------------------
                                         Net (Loss)      Shares      Per Share
                                        (numerator)   (denominator)   Amounts
                                        ------------  ------------  ------------
     Basic EPS
     ---------
     Net loss, as reported              $     (5,015)       19,096  $    (0.26)
     Effect of dilutive securities
     -----------------------------
     Employee Stock Options             $         --            --  $        -
                                        ------------  ------------  ------------

                                       10
================================================================================

     Diluted EPS
     -----------
     Net loss, as reported and
         assumed option exercises       $     (5,015)       19,096  $    (0.26)
                                        ============  ============  ============

     1,321,000  options to purchase  shares of common  stock in the three months
     ended  March 31,  2009 were  excluded  in the  computation  of Diluted  EPS
     because their inclusion would be anti-dilutive.

                                           Three months ended March 31, 2008
                                        ----------------------------------------
                                         Net (Loss)      Shares      Per Share
                                        (numerator)   (denominator)   Amounts
                                        ------------  ------------  ------------

     Basic EPS
     ---------
     Net income, as reported            $      3,277        19,092  $     0.17
     Effect of dilutive securities
     Employee Stock Options             $         --           534  $       --
                                        ------------  ------------  ------------
     Diluted EPS
     -----------
     Net income, as reported and
         assumed option exercises       $      3,277        19,626  $     0.17
                                        ============  ============  ============

     196,000  options to  purchase  shares of common  stock in the three  months
     ended  March 31,  2008 were  excluded  in the  computation  of Diluted  EPS
     because the exercise  prices were in excess of the average market price for
     this period and their inclusion would be anti-dilutive.

                                             Nine months ended March 31, 2009
                                        ----------------------------------------
                                         Net (Loss)      Shares      Per Share
                                        (numerator)   (denominator)   Amounts
                                        ------------  ------------  ------------
     Basic EPS
     ---------
     Net loss, as reported              $     (4,360)       19,096  $    (0.23)
     Effect of dilutive securities
     Employee Stock Options             $         --            --  $       --
                                        ------------  ------------  ------------
     Diluted EPS
     -----------
     Net loss, as reported and
         assumed option exercises       $     (4,360)       19,096  $    (0.23)
                                        ============  ============  ============

     970,000 options to purchase shares of common stock in the nine months ended
     March 31,  2009 were  excluded  in the  computation  of Diluted EPS because
     their inclusion would be anti-dilutive.

                                             Nine months ended March 31, 2008
                                        ----------------------------------------
                                         Net (Loss)      Shares      Per Share
                                        (numerator)   (denominator)   Amounts
                                        ------------  ------------  ------------

     Basic EPS
     ---------
     Net income, as reported            $      4,824        19,320  $     0.25
     Effect of dilutive securities
     Employee Stock Options             $         --           554  $    (0.01)
                                        ------------  ------------  ------------
     Diluted EPS
     -----------
     Net income, as reported and
         assumed option exercises       $      4,824        19,874  $     0.24
                                        ============  ============  ============

     187,000 options to purchase shares of common stock in the nine months ended
     March 31, 2008 were excluded in the  computation of Diluted EPS because the
     exercise  prices were in excess of the average market price for this period
     and their inclusion would be anti-dilutive.

     Option  activity  during the nine months ended March 31, 2009 is summarized
     as follows:

                                                     Weighted Average
                                          Options     Exercise Price
                                        ------------  --------------
         Outstanding at July 1, 2008       1,323,480     $ 2.89
         Granted                             100,000       4.25
         Cancelled                                --         --
         Exercised                            (3,240)     (1.90)
                                        ------------

         Outstanding at March 31, 2009     1,420,240       2.99
                                        ============

         Exercisable at March 31, 2009     1,255,588
                                        ============

                                       11
================================================================================

5.)  Acquisition of Business
     -----------------------

     On August 18, 2008, the Company  acquired  substantially  all of the assets
     and business of G. Marks Hardware,  Inc.  ("Marks") for $25.2 million,  the
     repayment  of $1  million  of bank  debt  and  the  assumption  of  current
     liabilities  as described more fully in the Asset  Purchase  Agreement.  As
     such, the operations of Marks have been included in the Company's Statement
     of Operations  for the period August 18, 2008 to March 31, 2009.  The Marks
     business  involves  the  manufacturing  and  distribution  of  door-locking
     devices. The Company completed this acquisition at a price in excess of the
     value  of  the  net  identifiable  assets  because  it  believes  that  the
     combination of the two companies offers the potential for manufacturing and
     operational  synergies  as the Company  combines the Marks  operations  and
     production into its own door-locking  operations and production  structure.
     The  Company  funded the  acquisition  with a term loan from its lenders as
     described in Note 6.

     The  acquisition  described  above was  accounted for as a purchase and was
     valued  based on  management's  estimate  of the fair  value of the  assets
     acquired  and  liabilities   assumed.  The  estimates  of  fair  value  are
     preliminary  and subject to adjustment  for a period of up to one year from
     the date of acquisition.  Based on the Company's evaluation, the allocation
     of the purchase price for the acquisition was as follows (in thousands):

     Assets Acquired:
         Cash                                         $        520
         Accounts receivable                                 1,836
         Inventory                                           6,740
         Prepaid expenses and other current assets             112
         Property and equipment                                801
         Goodwill                                              922
         Intangible assets                                  16,440
                                                      ------------
                                                            27,371
                                                      ------------

     Less: Liabilities Assumed:
         Line of credit borrowings outstanding               1,000
         Accounts payable                                      637
         Accrued expenses                                      339
                                                      ------------
                                                             1,976
      Total consideration (including acquisition
         Costs of $222)                               $     25,395
                                                      ============

     In  accordance   with  the   requirements   of  SFAS  No.  141,   "Business
     Combinations",  the Company  recorded  the  estimated  value of  $9,800,000
     related to the customer  relationships,  $340,000  related to a non-compete
     agreement and $6,300,000  related to the Marks trade name within intangible
     assets  and the  excess of the  purchase  price  over the fair value of the
     acquired  assets of $922,000 was assigned to Goodwill.  In accordance  with
     the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets", the
     intangible  assets will be amortized over their  estimated  useful lives of
     twenty  years  (customer   relationships)   and  seven  years  (non-compete
     agreement).  The weighted  average  amortization  period of these assets is
     19.6 years. The Marks trade name was deemed to have an indefinite life. The
     goodwill  recorded as a result of the acquisition is deductible for Federal
     and New York State income tax purposes over a period of 15 years.

     Unaudited pro-forma  consolidated  financial information is presented below
     as if the  acquisition  had  occurred  as of the first day of the  earliest
     period  presented.  Results  have been  adjusted  to account  for:  (1) the
     initial  $25,000,000  cash borrowing and related interest expense under the
     term  loan,  (2) cash  used to repay  $1,000,000  in  assumed  bank debt at
     closing of the  purchase  transaction,  (3)  deferred  financing  costs and
     related  amortization  associated with the term loan, (4) additional salary
     and employee stock option expense for employees not previously  included in
     salary expense, and (5) amortization expense of acquired intangible assets.
     The pro-forma  information presented below does not purport to present what
     actual  results  would have been if the  acquisition  had  occurred  at the
     beginning of such periods, nor does the information project results for any
     future period. The unaudited pro-forma  consolidated  financial information
     should be read in  conjunction  with the historical  financial  information
     included  in other  reports  and  documents  filed with the  United  Stated
     Securities and Exchange Commission.

     The unaudited pro-forma  consolidated  financial  information for the three
     and nine months ended March 31, 2009 and 2008 is as follows (in  thousands,
     except share and per share data):

                                       12
================================================================================

                                  Three Months ended      Nine Months ended
                                       March 31,              March 31,
                                ----------------------  ----------------------
                                   2009        2008        2009        2008
                                ----------  ----------  ----------  ----------

     Pro-forma:
       Net sales                $   14,024  $   22,169  $   53,105  $   64,901
       Net income (loss)        $   (5,015) $    3,390  $   (4,267) $    5,242

     Net income (loss) per
      share:
       Basic                    $    (0.26) $     0.18  $    (0.22) $     0.27
       Diluted                  $    (0.26) $     0.17  $    (0.22) $     0.26

     Weighted average number
      of shares:
       Basic                    19,095,713  19,092,487  19,095,595  19,319,967
       Diluted                  19,095,713  19,626,043  19,095,595  19,873,655

6.)  Long Term Debt
     --------------

     On August 18,  2008,  the Company and its banks  amended and  restated  the
     existing $25,000,000  revolving credit agreement.  The amended facility was
     $50,000,000 and provides for a $25,000,000 revolving credit line as well as
     a $25,000,000 term portion of which the entire  $25,000,000 was utilized to
     finance the asset  purchase  agreement  as described in Note 5. The amended
     revolving  credit  agreement  and term loan was amended in November 2008 to
     $20,000,000  and is  secured  by the  accounts  receivable,  a  portion  of
     inventory,  the Company's  headquarters  building in Amityville,  New York,
     certain other assets of Napco  Security  Technologies,  Inc. and the common
     stock of three of the Company's subsidiaries.  The agreements bear interest
     based on  either  the Prime  Rate or an  alternate  rate  based on LIBOR as
     described in the  agreement.  The August  amendment  extended the revolving
     credit  agreement  to August 2012.  Any  outstanding  borrowings  are to be
     repaid or refinanced on or before that time. As of March 31, 2009 there was
     $11,100,000  outstanding  under  the  revolving  credit  facility  with  an
     interest rate of 5.0% and $23,214,000  outstanding under the term loan with
     an interest  rate of 5.0%.  The term loan is being  repaid in 19  quarterly
     installments  of $893,000  each,  commencing in December  2008, and a final
     payment of $8,033,000 due in August 2013.

     The agreements contain various restrictions and covenants including,  among
     others,  restrictions  on payment of dividends,  restrictions on borrowings
     and compliance with certain  financial ratios, as defined in the agreement.
     As of March 31, 2009 the Company  was not in  compliance  with three of the
     covenants;  the ratio of Funded Debt to EBITDA, Debt Service Coverage Ratio
     and a  Modified  Quick  Ratio.  As a result,  the banks have  notified  the
     Company that they have limited the  revolving  line of credit to the amount
     currently  outstanding  of $11,100,000  until the credit  facilities can be
     amended with the Company.  The Company is currently in discussions with its
     banks regarding waivers for the non-compliance  with the covenants at March
     31, 2009 and  amendments  to the existing  credit  facilities.  The Company
     expects to amend the existing credit facilities and receive the appropriate
     waivers  from its banks but this has not been  completed  as of the date of
     this filing. As a result, the Company has classified the amount outstanding
     under  these  facilities  as a current  liability  until it  completes  the
     amendment with the banks.

7.)  Geographical Data
     -----------------

     The  Company is engaged in one major  line of  business:  the  development,
     manufacture,  and distribution of security alarm products and door security
     devices for commercial and residential use. Sales to unaffiliated customers
     are  primarily  shipped from the United  States.  The Company has customers
     worldwide with major  concentrations  in North America,  Europe,  and South
     America.

     The  Company  observes  the  provisions  of SFAS  No.  131.  The  following
     represents selected  consolidated  geographical data for the three and nine
     months ended March 31, 2009 and 2008 (in thousands):

                                  Three Months ended      Nine Months ended
                                       March 31,              March 31,
                                ----------------------  ----------------------
                                   2009        2008        2009        2008
                                ----------  ----------  ----------  ----------

     Sales to external
        customers(1):
     --------------------------
        Domestic                $   12,953  $   13,288  $   45,504  $   38,255
        Foreign                      1,071       2,934       5,082       8,009
                                ----------  ----------  ----------  ----------
                Total Net Sales $   14,024  $   16,222  $   50,586  $   46,264
                                ==========  ==========  ==========  ==========

                                       13
================================================================================


                                         As of
                                ----------------------
                                 March 31,   June 30,
                                  2009        2008
                                ----------  ----------
     Identifiable assets:
        United States           $   68,045  $   50,056
        Dominican Republic (2)      21,614      19,841
        Other foreign countries      5,037       6,826
                                ----------  ----------
          Total Identifiable
             Assets             $   94,696  $   76,723
                                ==========  ==========

     (1) All of the  Company's  sales occur in the United States and are shipped
     primarily  from the  Company's  facilities  in the United States and United
     Kingdom.  There were no sales into any one foreign country in excess of 10%
     of Net Sales.
     (2) Consists  primarily of inventories  ($16,818,000  and  $14,754,000) and
     fixed assets ($4,713,000 and $4,970,000) located at the Company's principal
     manufacturing  facility in the Dominican  Republic as of March 31, 2009 and
     June 30, 2008, respectively.

8.)  Commitments and Contingencies
     -----------------------------

     In the normal  course of business,  the Company is a party to claims and/or
     litigation.  Management  believes that the settlement of such claims and/or
     litigation,  considered in the aggregate,  will not have a material adverse
     effect on the Company's  financial  position and results of operations.  In
     August 2008, the Company  entered into a lease for the building where Marks
     has maintained its  operations.  The lease provides for an annual base rent
     of $288,750 plus maintenance and real estate taxes,  expires in August 2009
     and  provides for two annual  extensions  thereafter  at similar  terms and
     conditions.  In March 2009,  the Company  began a  Restructuring  Plan,  as
     described in Note 10, which includes  consolidating the operations of Marks
     from this building into the Corporate  Headquarters  in Amityville,  NY and
     its production facility in the Dominican Republic. The move from the leased
     building  described  above  is  expected  to  be  completed  prior  to  the
     expiration of the lease. The Marks business  involves the manufacturing and
     distribution of door-locking devices.

9.)  Income Taxes
     ------------

     The provision for income taxes represents Federal,  foreign,  and state and
     local income taxes.  The effective rate differs from statutory rates due to
     the  effect  of  state  and  local  income  taxes,  tax  rates  in  foreign
     jurisdictions and certain  nondeductible  expenses.  Our effective tax rate
     will change from quarter to quarter  based on recurring  and  non-recurring
     factors  including,  but not limited to, the  geographical mix of earnings,
     enacted tax  legislation,  and state and local income  taxes.  In addition,
     changes in judgment from the evaluation of new information resulting in the
     recognition,  de-recognition or re-measurement of a tax position taken in a
     prior annual period are recognized separately in the quarter of the change.

     The  Company  does not  expect  that our  unrecognized  tax  benefits  will
     significantly  change within the next twelve months. We file a consolidated
     U.S.  income  tax return  and tax  returns  in certain  state and local and
     foreign  jurisdictions.  There are no current tax examinations in progress.
     Accordingly,  as of March 31, 2009, we remain subject to examination in all
     tax jurisdictions for all relevant jurisdictional statutes.

     The  Company  adopted  the  provisions  of FIN 48 as of July 1,  2007.  The
     Company has  identified  its U.S.  Federal  income tax return and its State
     return  in New York as its major tax  jurisdictions.  During  the three and
     nine months  ending  March 31, 2009 the Company  decreased  its reserve for
     uncertain income tax positions by $95,000 and $84,000,  respectively.  As a
     result, as of March 31, 2009 the Company has a long-term accrued income tax
     liability of $210,000.

10.) Restructuring Costs
     -------------------

     In March 2009,  the Company  began a  Restructuring  Plan  consisting  of a
     series of actions to  consolidate  its Sales,  Production  and  Warehousing
     operations  of Marks  and  those in  Europe  and the  Middle  East into the
     Corporate Headquarters in Amityville, NY and its production facility in the
     Dominican  Republic.  We expect  these  restructuring  initiatives  to cost
     between  $1,200,000  and  $1,500,000.  The  majority  of these  actions are
     expected to be completed by July 31, 2009, while certain Production-related
     actions are expected to be completed by December 31, 2009. Accordingly, the
     Company recognized  Restructuring costs of $1,255,000 in the three and nine
     months ended March 31, 2009. Of this amount,  $210,000 relates to Workforce
     Reductions  communicated in March 2009 and $1,045,000 to Business Exits and
     related costs  associated with inventory and lease  impairments  related to
     the closure of the Marks, European and Middle East facilities.  As of March
     31,  2009,  $905,000  of the  $1,255,000  in  Restructuring  costs has been
     incurred and $350,000 remains in accrued expenses.

                                       14
================================================================================


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

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

This Quarterly Report on Form 10-Q and the information incorporated by reference
may include  "Forward-Looking  Statements"  within the meaning of Section 27A of
the  Securities  Act of 1933 and Section 21E of the  Exchange  Act of 1934.  The
Company intends the Forward-Looking  Statements to be covered by the Safe Harbor
Provisions  for  Forward-Looking   Statements.   All  statements  regarding  the
Company's  expected  financial  position  and  operating  results,  its business
strategy,  its  financing  plans  and  the  outcome  of  any  contingencies  are
Forward-Looking  Statements. The Forward-Looking Statements are based on current
estimates and  projections  about our industry and our  business.  Words such as
"anticipates,"  "expects," "intends," "plans," "believes," "seeks," "estimates,"
or  variations  of such words and similar  expressions  are intended to identify
such Forward-Looking  Statements.  The Forward-Looking Statements are subject to
risks and  uncertainties  that could cause actual  results to differ  materially
from those set forth or implied by any Forward-Looking  Statements. For example,
the Company is highly  dependent on its Chief  Executive  Officer for  strategic
planning.  If he is unable to perform his services for any significant period of
time, the Company's ability to continue growing could be adversely affected.  In
addition,  factors that could cause actual results to differ materially from the
Forward-Looking  Statements  include,  but are not  limited  to, the  ability to
maintain  adequate  financing to fund  operations,  adverse tax  consequences of
offshore operations,  significant  fluctuations in the exchange rate between the
Dominican  Peso  and  the  U.S.  Dollar,   distribution   problems,   unforeseen
environmental  liabilities,  the  uncertain  economic,  military  and  political
conditions  in the  world  and the  successful  integration  of  Marks  into our
existing operations.

Overview

The Company is a diversified  manufacturer  of security  products,  encompassing
intrusion  and fire  alarms,  building  access  control  systems and  electronic
locking   devices.   These  products  are  used  for  commercial,   residential,
institutional,  industrial and governmental applications, and are sold worldwide
principally  to  independent  distributors,  dealers and  installers of security
equipment.  International  sales accounted for  approximately 10% and 17% of our
revenues for the nine months ended March 31, 2009 and 2008, respectively.

The Company owns and operates manufacturing  facilities in Amityville,  New York
and the Dominican  Republic.  A significant  portion of our operating  costs are
fixed, and do not fluctuate with changes in production  levels or utilization of
our manufacturing  capacity.  As production levels rise and factory  utilization
increases,  the fixed  costs are spread  over  increased  output,  which  should
improve profit margins.  Conversely,  when  production  levels decline our fixed
costs are spread over reduced levels, thereby decreasing margins.

On August 18, 2008,  the Company  acquired  substantially  all of the assets and
business of G. Marks Hardware,  Inc. ("Marks") for $25.2 million,  the repayment
of $1 million of bank debt and the  assumption of certain  current  liabilities.
The  Company  also  entered  into a  lease  for the  building  where  Marks  has
maintained  its  operations.  The  lease  provides  for an  annual  base rent of
$288,750  plus  maintenance  and real estate  taxes,  expires in August 2009 and
provides for two annual extensions  thereafter.  In March 2009 the Company began
to move the Marks operations into its existing facilities.  The Company plans on
completing  the  majority  of this  consolidation  by July 31,  2009.  The Marks
business involves the manufacturing and distribution of door-locking devices.

The security products market is characterized by constant incremental innovation
in product design and manufacturing technologies. Generally, the Company devotes
7-8% of revenues to research and development (R&D) on an annual basis.  Products
resulting from our R&D investments in fiscal 2008 did not contribute  materially
to revenue  during this fiscal year,  but should benefit the Company over future
years.  In general,  the new products  introduced  by the Company are  initially
shipped in limited quantities,  and increase over time. Prices and manufacturing
costs tend to decline over time as products and technologies mature.

Economic and Other Factors

Since October 2008,  the U.S. and  international  economies  have  experienced a
significant  downturn  and continue to be very  volatile.  In the event that the
downturn  in the U.S.  or  international  financial  markets is  prolonged,  our
revenue,  profit and cashflow levels could be materially  adversely  affected in
future periods. This could effect our ability to maintain adequate financing. If
the  current  worldwide  economic  downturn  continues,  many of our  current or
potential  future  customers may experience  serious cash flow problems and as a
result may,  modify,  delay or cancel  purchases of our products.  Additionally,
customers may not be able to pay, or may delay payment of,  accounts  receivable
that are owed to us.  Furthermore,  the current downturn and market  instability
makes it difficult for us to forecast our revenues.

Restructuring Costs

In March 2009, the Company began a Restructuring  Plan consisting of a series of
actions to consolidate its Sales, Production and Warehousing operations of Marks
and those in Europe  and the  Middle  East into the  Corporate  Headquarters  in
Amityville,  NY and its production facility in the Dominican Republic. We expect
these restructuring  initiatives to cost between $1,200,000 and $1,500,000.  The
majority of these  actions are expected to be completed by July 31, 2009,  while
certain  Production-related actions are expected to be completed by December 31,
2009. Accordingly,  the Company recognized  Restructuring costs of $1,255,000 in
the three and nine months ended March 31, 2009. Of this amount, $210,000 relates
to Workforce  Reductions  communicated  in March 2009 and $1,045,000 to Business
Exits and related costs associated with inventory and lease impairments  related
to the closure of the Marks,  European and Middle East  facilities.  As of March
31, 2009,  $905,000 of the $1,255,000 in  Restructuring  costs has been incurred
and $350,000 remains in accrued expenses.

                                       15
================================================================================


Seasonality

The  Company's  fiscal year begins on July 1 and ends on June 30.  Historically,
the end users of Napco's  products  want to install  its  products  prior to the
summer;  therefore sales of its products historically peak in the period April 1
through June 30, the  Company's  fiscal fourth  quarter,  and are reduced in the
period July 1 through  September 30, the Company's  fiscal first  quarter.  To a
lesser  degree,  sales in Europe are also  adversely  impacted in the  Company's
first  fiscal  quarter  because  of  European  vacation  patterns,   i.e.,  many
distributors  and  installers  are closed for the month of August.  In addition,
demand is affected by the housing and construction  markets. The severity of the
current economic downturn may also affect this trend.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations
are based upon our consolidated  financial statements,  which have been prepared
in  conformity  with  accounting  principles  generally  accepted  in the United
States.  The  preparation  of these  financial  statements  requires  us to make
estimates  and  assumptions   that  affect  the  reported   amounts  of  assets,
liabilities, revenues and expenses reported in those financial statements. These
judgments can be subjective and complex,  and consequently  actual results could
differ from those  estimates.  Our most critical  accounting  policies relate to
revenue  recognition;  concentration  of credit  risk;  inventories;  intangible
assets; goodwill; and income taxes.

Revenue Recognition

Revenues from merchandise  sales are recorded at the time the product is shipped
or delivered to the customer  pursuant to the terms of sale. We report our sales
levels on a net sales basis, which is computed by deducting from gross sales the
amount of actual  returns  received and an amount  established  for  anticipated
returns and other allowances.

Our sales return  accrual is a subjective  critical  estimate  that has a direct
impact on reported net sales and income.  This accrual is calculated  based on a
history  of gross  sales  and  actual  sales  returns,  as well as  management's
estimate of anticipated returns and allowances.  As a percentage of gross sales,
sales returns,  rebates and allowances were 10% and 6% for the nine months ended
March 31, 2009 and 2008, respectively.

Concentration of Credit Risk

An entity is more vulnerable to  concentrations  of credit risk if it is exposed
to risk of loss greater than it would have had if it mitigated  its risk through
diversification   of  customers.   Such  risks  of  loss   manifest   themselves
differently,  depending  on  the  nature  of  the  concentration,  and  vary  in
significance.

The Company had two customers with accounts  receivable balances that aggregated
31% and 34% of the Company's accounts  receivable at March 31, 2009 and June 30,
2008,  respectively.  Sales to neither of these  customers  exceeded  10% of net
sales in any of the past three fiscal years.

In the ordinary course of business,  we have  established a reserve for doubtful
accounts  and customer  deductions  in the amount of $492,000 and $405,000 as of
March  31,  2009 and June 30,  2008,  respectively.  Our  reserve  for  doubtful
accounts is a subjective  critical estimate that has a direct impact on reported
net earnings.  This reserve is based upon the evaluation of accounts  receivable
agings, specific exposures and historical trends.

Inventories

For interim  financial  statements,  inventories  are  calculated  using a gross
profit  percentage.  The Company  regularly  reviews  parts and  finished  goods
inventories  on hand  and,  when  necessary,  records a  reserve  for  excess or
obsolete  inventories.  As of March 31, 2009 and June 30,  2008,  the balance in
this reserve amounted to $1,412,000 and $1,200,000,  respectively.  This reserve
is based in part on subjective  estimates and  approximations and actual results
could differ from those estimates. The Company also regularly reviews the period
over which its inventories will be converted to sales. Any inventories  expected
to convert to sales beyond 12 months from the balance sheet date are  classified
as non-current.

                                       16
================================================================================


In  addition,  the Company  records an  inventory  obsolescence  reserve,  which
represents  the  difference  between the cost of the inventory and its estimated
market value,  based on various product sales  projections.  The balance in this
reserve was  $1,412,000  and  $1,200,000 as of March 31, 2009 and June 30, 2008,
respectively.  This  reserve  is  calculated  using  an  estimated  obsolescence
percentage   applied  to  the  inventory  based  on  age,   historical   trends,
requirements  to support  forecasted  sales,  and the ability to find  alternate
applications of its raw materials and to convert finished product into alternate
versions of the same product to better match customer demand.  There is inherent
professional  judgment and subjectivity  made by both production and engineering
members of management in determining the estimated obsolescence  percentage.  In
addition,  and as  necessary,  the Company may establish  specific  reserves for
future known or anticipated events.

The Company also regularly reviews the period over which its inventories will be
converted  to sales.  Any  inventories  expected  to convert to sales  beyond 12
months from the balance sheet date are classified as non-current.

Goodwill and Other Intangible Assets

The Company  accounts for  Goodwill in  accordance  with  Statement of Financial
Accounting  Standards  (SFAS) No. 141,  Business  Combinations and SFAS No. 142,
Goodwill and Other Intangible Assets.  These statements  established  accounting
and  reporting  standards  for acquired  goodwill and other  intangible  assets.
Specifically,  the standards  address how acquired  intangible  assets should be
accounted  for  both  at the  time of  acquisition  and  after  they  have  been
recognized  in the  financial  statements.  In  accordance  with  SFAS No.  142,
intangible  assets,   including  purchased  goodwill,   must  be  evaluated  for
impairment.  Intangible  assets are reviewed for impairment at least annually at
the  Company's  fiscal  year-end of June 30 or more often  whenever  there is an
indication  that the  carrying  amount may not be  recovered.  Those  intangible
assets that are classified as goodwill or as other  intangibles  with indefinite
lives are not amortized.

Impairment  testing  is  performed  in two  steps:  (i) the  Company  determines
impairment  by  comparing  the fair value of a reporting  unit with its carrying
value,  and (ii) if there is an impairment,  the Company  measures the amount of
impairment  loss by  comparing  the  implied  fair  value of  goodwill  with the
carrying amount of that goodwill.  At the conclusion of fiscal 2008, the Company
performed  its  annual  impairment  evaluation  required  by this  standard  and
determined that its goodwill is not impaired.

The  Company's  acquisition  of  substantially  all of the  assets  and  certain
liabilities of Marks included intangible assets with a fair value of $16,440,000
on the date of acquisition. In accordance with the requirements of SFAS No. 141,
"Business Combinations",  the Company recorded the estimated value of $9,800,000
related  to  the  customer  relationships,  $340,000  related  to a  non-compete
agreement  and  $6,300,000  related to the Marks  trade name  within  intangible
assets and Goodwill of $922,000  subject to further  adjustment.  In  accordance
with the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets", the
intangible  assets will be amortized over their estimated useful lives of twenty
years (customer  relationships)  and seven years  (non-compete  agreement).  The
Marks USA  trade  name was  deemed  to have an  indefinite  life.  The  goodwill
recorded as a result of the  acquisition  is deductible for Federal and New York
State income tax purposes over a period of 15 years.

Income Taxes

The provision for income taxes represents Federal,  foreign, and state and local
income taxes.  The effective rate differs from statutory rates due to the effect
of state and local income taxes, tax rates in foreign  jurisdictions and certain
nondeductible  expenses.  Our  effective  tax rate will change  from  quarter to
quarter based on recurring and non-recurring factors including,  but not limited
to, the  geographical mix of earnings,  enacted tax  legislation,  and state and
local income taxes. In addition,  changes in judgment from the evaluation of new
information resulting in the recognition,  de-recognition or re-measurement of a
tax position  taken in a prior annual  period are  recognized  separately in the
quarter of the change.

We do not expect that our  unrecognized tax benefits will  significantly  change
within the next twelve months. We file a consolidated U.S. income tax return and
tax returns in certain state and local and foreign  jurisdictions.  There are no
current tax  examinations  in progress.  Accordingly,  as of March 31, 2009,  we
remain  subject  to  examination  in all  tax  jurisdictions  for  all  relevant
jurisdictional statutes.

                                       17
================================================================================

Results of Operations


                                                                                                      
                                             Three months ended March 31,                  Nine months ended March 31,
                                                (dollars in thousands)                       (dollars in thousands)
                                       -----------------------------------------    -----------------------------------------
                                                                   % Increase/                                % Increase/
                                           2009          2008       (decrease)         2009        2008         (decrease)
                                       --------------------------------------------------------------------------------------
Net sales                              $    14,024   $    16,222         (13.5)%    $   50,586  $   46,264              9.3%
Gross profit (loss)                           (196)        5,716        (103.4)%        11,624      16,387            (29.1)%
Gross profit (loss) as a % of net sales       (1.4)%        35.2%        (36.6)%          23.0%       35.4%           (12.4)%
Selling, general and administrative          4,919         4,148          18.6%         15,142      12,731             18.9%
Selling, general and administrative as
 a percentage of net sales                    35.1%         25.6%          9.5%           29.9%       27.5%             2.4%
Operating income (loss)                     (5,260)        1,568        (435.5)%        (3,663)      3,656           (200.2)%
Interest expense, net                          426           216          97.2%          1,170         635             84.3%
Other (income) expense                          76            12         533.3%            101          30            236.7%
Minority interest in net (loss) income
 of subsidiary                                (112)           33        (439.4)%            --          92           (100.0)%
Provision (Benefit) for income taxes          (859)       (1,904)         54.9%           (574)     (1,741)            67.0%
Net income (loss)                           (5,015)        3,277        (253.0)%        (4,360)      4,824           (190.4)%


Sales for the three months ended March 31, 2009 decreased by  approximately  14%
to $14,024,000 as compared to $16,222,000  for the same period a year ago. Sales
for the nine months  ended  March 31,  2009  increased  by  approximately  9% to
$50,586,000  as compared  to  $46,264,000  for the same  period a year ago.  The
decrease in sales for the three months ended March 31, 2009 was  primarily  from
decreased  sales of the  Company's  intrusion  products  ($2,974,000),  products
specific to the  Company's  Middle East  operation  ($1,595,000),  door  locking
products ($1,441,000) and access control products ($369,000) as partially offset
by the net sales added from the Marks acquisition ($4,177,000).  The increase in
sales for the nine months ended March 31, 2009 was  primarily  the result of the
net sales added from the Marks acquisition  ($12,265,000) and an increase in the
company's  door-locking  products ($379,000) as partially offset by decreases in
the  Company's  intrusion  products  ($6,725,000),   products  specific  to  the
Company's  Middle  East  operation  ($1,484,000)  and  access  control  products
($114,000).  The  Company's  sales  were  adversely  affected  by the  worldwide
economic  downturn to a greater  extent in the  quarter  ended March 31, 2009 as
compared to previous quarters.

Gross profit for the three  months  ended March 31, 2009  decreased to a loss of
$196,000 or (1.4)% of sales as compared  to a profit of  $5,716,000  or 35.2% of
sales for the same period a year ago.  Gross  profit for the nine  months  ended
March  31,  2009  decreased  to  $11,624,000  or 23.0% of sales as  compared  to
$16,387,000  or 35.4% of sales for the same period a year ago.  The  decrease in
Gross  profit in  dollars  and as a  percentage  of sales for the three and nine
months was  primarily  due to the decrease in sales of the  Company's  non-Marks
products as described above as well as $1,110,000 in restructuring  costs in the
three and nine months ended March 31, 2009 as  partially  offset by the addition
of the Gross profit of Marks ($1,118,000 and $3,732,000, respectively) resulting
from the acquisition on August 18, 2008.

Selling,  general and  administrative  expenses for the three months ended March
31, 2009 increased by $771,000 to $4,919,000,  or 35.1% of sales, as compared to
$4,148,000,  or 25.6% of sales a year ago. Selling,  general and  administrative
expenses for the nine months ended March 31, 2009  increased  by  $2,411,000  to
$15,142,000,  or 29.9% of sales, as compared to $12,731,000, or 27.5% of sales a
year ago. The increases in dollars for the three and nine months ended March 31,
2009 was due primarily to the additional  expenses  relating to Marks  ($820,000
and  $2,415,000,  respectively).  The increases as a percentage of sales are due
primarily to the decreases in sales as described above.

Interest  expense,  net for the three months  ended March 31, 2009  increased by
$210,000 to  $426,000  as  compared to $216,000  for the same period a year ago.
Interest  expense,  net for the nine months  ended March 31, 2009  increased  by
$535,000 to  $1,170,000  as compared to $635,000 for the same period a year ago.
The  increase  in  interest  expense  for the  three  and nine  months  resulted
primarily from the increase in the Company's average outstanding debt, which was
due to the  $25,000,000  term loan utilized for the Marks  acquisition in August
2008.

The  Company's  provision  for income taxes for the three months ended March 31,
2009  increased by  $1,045,000 to a benefit of $859,000 as compared to a benefit
of $1,904,000 for the same period a year ago. The Company's provision for income
taxes for the nine months  ended March 31, 2009  increased  by  $1,167,000  to a
benefit of $574,000 as compared to a benefit of $1,741,000 for the same period a
year ago.  The  increase in  provision  for income  taxes for the three and nine
months resulted  primarily from the benefits  recognized in the third quarter of
fiscal 2008 for the  reversal of certain tax  reserves  for which the statute of
limitations  expired and also in the second  quarter of fiscal 2008  relating to
the Company's corporate restructuring. As a result, the Company's effective rate
for income tax was 14.6% and 11.6% for the three and nine months ended March 31,
2009,  respectively  as compared to (138.7)%  and (56.4)% for the same periods a
year ago.

                                       18
================================================================================


Net income  decreased  by  $8,292,000  to a loss of  $5,015,000  or $(0.26)  per
diluted share for the three months ended March 31, 2009 as compared to income of
$3,277,000 or $0.17 per diluted share for the same period a year ago. Net income
decreased by $9,184,000 to a loss of $4,360,000 or $(0.23) per diluted share for
the nine months  ended March 31,  2009 as  compared to income of  $4,824,000  or
$0.24 per diluted  share for the same period a year ago.  The  decrease  for the
three and nine months ended March 31, 2009 was  primarily due to the decrease in
net sales and gross profit in the Company's intrusion product lines.

Liquidity and Capital Resources
-------------------------------

During the nine months ended March 31, 2009 the Company utilized all of its cash
from  operations  and  additional  borrowings to complete the Marks  acquisition
($26,173,000,  which  includes  payment  of the  $1,000,000  of  assumed  debt),
purchase inventory ($756,000) and property, plant and equipment ($428,000). As a
result  of the  Company  not  being  in  compliance  with the  financial  ratios
described  below,  the Company's  banks have notified the Company that they have
limited the  revolving  line of credit to the amount  currently  outstanding  of
$11,100,000  until the credit  facilities  can be amended with the Company.  The
Company is currently in  discussions  with its banks  regarding  waivers for the
non-compliance  with the  covenants  at March  31,  2009 and  amendments  to the
existing  credit  facilities.  The Company  expects to amend the existing credit
facilities and receive the  appropriate  waivers from its banks but this has not
been  completed  as of the date of this  filing.  As a result,  the  Company has
classified the amount  outstanding under these facilities as a current liability
until it completes the amendment with the banks. While the Company expects to be
able to negotiate amended credit facilities, should it fail to do so its current
working  capital,  cash flows from operations and its revolving credit agreement
may not be sufficient to fund the Company's  operations  through the next twelve
months.

Accounts  Receivable at March 31, 2009  decreased  $7,249,000 to  $18,574,000 as
compared to $25,823,000 at June 30, 2008.  This decrease is primarily the result
of the lower sales volume during the quarter ended March 31, 2009 as compared to
the quarter ended June 30, 2008,  which is typically the Company's  highest,  as
partially offset by the Accounts Receivable generated by Marks ($2,179,000).

Inventories at March 31, 2009 increased by $7,517,000 to $34,789,000 as compared
to $27,272,000  at June 30, 2008.  This increase was primarily the result of the
Marks  acquisition  ($5,064,000)  as  well  as  the  Company  level-loading  its
production schedule in anticipation of its historical sales cycle where a larger
portion of the Company's  sales occur in the latter fiscal  quarters as compared
to the earlier quarters.  The Company initiated several steps in order to reduce
inventory  levels in fiscal 2008 and is  continuing  them in fiscal 2009.  These
efforts were  mitigated by the decreased  sales volume that has occurred  during
the first nine months of fiscal 2009  (exclusive of the sales resulting from the
Marks acquisition) and which was below the sales forecast used by the Company to
plan and build it's inventory.  These forecasts have been adjusted subsequent to
March 31, 2009.

On August 18, 2008,  the Company and its banks amended and restated the existing
$25,000,000 revolving credit agreement. The amended facility was $50,000,000 and
provides for a $25,000,000  revolving  credit line as well as a $25,000,000 term
portion of which the  entire  $25,000,000  was  utilized  to  finance  the asset
purchase  agreement  as  described  in  Note 5.  The  amended  revolving  credit
agreement and term loan was amended in November 2008 to $20,000,000  and amended
in May  2009 to  $11,100,000  and is  secured  by all the  accounts  receivable,
inventory, the Company's headquarters in Amityville,  New York and certain other
assets of Napco Security Technologies, Inc. and the common stock of three of the
Company's  subsidiaries.  The agreements bear interest based on either the Prime
Rate or an  alternate  rate based on LIBOR as described  in the  agreement.  The
August  amendment  extended the revolving  credit  agreement to August 2012. Any
outstanding borrowings are to be repaid or refinanced on or before that time. As
of March 31, 2009 there was $11,100,000  outstanding  under the revolving credit
facility with an interest  rate of 5.0% and  $23,214,000  outstanding  under the
term loan with an  interest  rate of 5.0%.  The term loan is being  repaid in 19
quarterly  installments  of $893,000  each,  commencing in December  2008, and a
final payment of $8,033,000 due in August 2013. The agreements  contain  various
restrictions and covenants including,  among others,  restrictions on payment of
dividends,  restrictions  on borrowings  and compliance  with certain  financial
ratios, as defined in the agreement.  The Company is currently not in compliance
with the covenants relating to the ratio of Funded Debt to EBITDA,  Debt Service
Coverage Ratio and a Modified Quick Ratio, which constitutes an event of default
under its credit  facilities,  and is currently in  discussions  with it's banks
regarding the  appropriate  waivers as well as amendments to the existing credit
facilities as discussed above.

As of March  31,  2009 the  Company  had no  material  commitments  for  capital
expenditures  or inventory  purchases  other than purchase  orders issued in the
normal course of business.

                                       19
================================================================================

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk
------------------------------------------------------------------

The Company's principal financial  instrument is long-term debt (consisting of a
revolving credit facility and term loan) that provides for interest based on the
prime rate or an alternate  rate based on LIBOR as  described in the  agreement.
The Company is affected by market risk exposure  primarily through the effect of
changes in interest  rates on amounts  payable by the Company  under this credit
facility.  At March 31, 2009,  an aggregate  principal  amount of  approximately
$34,314,000 was outstanding  under the Company's credit facility with a weighted
average interest rate of approximately  5.0%. If principal  amounts  outstanding
under the Company's  credit  facility  remained at this level for an entire year
and the prime rate increased or decreased, respectively, by 1% the Company would
pay or save, respectively, an additional $343,000 in interest that year.

A  significant   number  of  foreign  sales  transactions  by  the  Company  are
denominated in U.S.  dollars.  As such, the Company has shifted foreign currency
exposure onto many of its foreign customers. As a result, if exchange rates move
against foreign customers,  the Company could experience  difficulty  collecting
unsecured accounts  receivable,  the cancellation of existing orders or the loss
of future orders. The foregoing could materially  adversely affect the Company's
business,  financial  condition  and results of  operations.  In  addition,  the
Company transacts certain sales in Europe in British Pounds Sterling,  therefore
exposing  itself  to a certain  amount  of  foreign  currency  risk.  Management
believes that the amount of this exposure is immaterial.  We are also exposed to
foreign currency risk relative to expenses  incurred in Dominican Pesos ("RD$"),
the  local  currency  of the  Company's  production  facility  in the  Dominican
Republic.  The  result  of a 10%  strengthening  in the U.S.  dollar  to our RD$
expenses  would  result  in an annual  decrease  in income  from  operations  of
approximately $315,000.


ITEM 4: Controls and Procedures
-------------------------------

We maintain  disclosure controls and procedures that are designed to ensure that
information  required to be  disclosed  in our Exchange Act reports is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our  management  to allow timely  decisions  regarding  required  disclosure.
Management  necessarily applied its judgment in assessing the costs and benefits
of such  controls  and  procedures,  which,  by their  nature,  can provide only
reasonable assurance regarding management's control objectives.

At the  conclusion  of the  period  ended  March 31,  2009,  we  carried  out an
evaluation,  under the supervision and with the participation of our management,
including  our Chief  Executive  Officer  and Chief  Financial  Officer,  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures.  Based upon that evaluation,  the Chief Executive  Officer and Chief
Financial  Officer  concluded that our disclosure  controls and procedures  were
effective in alerting  them in a timely  manner to  information  relating to the
Company required to be disclosed in this report except as follows:

Management's  review over its internal controls at the conclusion of fiscal 2008
identified  conditions which they deemed to be material weaknesses,  (as defined
by standards  established by the SEC and the Public Company Accounting Oversight
Board)  with  respect to  certain of our  inventory  valuation  methods  both at
year-end and relating to the Gross profit method used to calculate  Gross profit
and  Inventories  for interim  reporting  purposes.  Management has informed its
independent auditors and the Audit Committee that it has corrected its method of
calculating its gross profit and inventory for interim  reporting by including a
more  comprehensive  review of changes  within the business and  accounting  for
those changes where appropriate.  The Company has also initiated a review of the
ways in which we can more accurately  cost its inventory for year-end  reporting
and will  continue to monitor the  effectiveness  of these actions and will make
any other changes or take such additional actions as management determines to be
appropriate. Management expects to complete the actions relating to the year-end
inventory valuation during fiscal 2009.

The  Company  has  excluded  from this  assessment  the  internal  control  over
financial  reporting  of Marks USA,  which was  acquired in August  2008.  Total
assets and total net sales subject to Marks USA internal  control over financial
reporting,  represented 26% and 24%, respectively, of the Company's consolidated
total assets and net sales for the nine months ended March 31, 2009.

During the third quarter of fiscal 2009,  there were no changes in the Company's
internal control over financial reporting that have materially affected,  or are
reasonably  likely to materially  affect,  the Company's  internal  control over
financial reporting except for the procedure described above which has corrected
the weakness relating to interim Gross profit and inventory calculations.

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PART II: OTHER INFORMATION

Item 1A. Risk Factors
         ------------

     Information  regarding  the  Company's  Risk  Factors  are set forth in the
     Company's  Annual  Report on Form 10-K for the year  ended  June 30,  2008.
     There  have  been  no  material  changes  in the  risk  factors  previously
     disclosed  in the  Company's  Form 10-K for the year  ended  June 30,  2008
     during the three months ended March 31, 2009 except as follows:

     Our  Business  Could Be  Materially  Adversely  Affected as a Result of the
     ---------------------------------------------------------------------------
     Inability to Maintain Adequate Financing
     ----------------------------------------

     Our business is dependent on  maintaining  the financing  used in the Marks
     acquisition and to fund operations. The current debt facilities provide for
     certain  minimum  payments on the Marks term loan and  financial  covenants
     relating  to ratios  affected  by profit  and debt  levels.  If  profits or
     cash-flow  levels  decline  below  the  minimums  required  to  meet  these
     covenants or make the minimum debt  payments,  the debt  facilities  may be
     materially  adversely  affected.  Effects on the Company's  financing could
     include  higher  interest  costs,  reduction in borrowing  availability  or
     revocation of the existing credit facilities.

     Our Business Could Be Materially  Adversely Affected as a Result of General
     ---------------------------------------------------------------------------
     Economic and Market Conditions
     ------------------------------

     We are subject to the effects of general economic and market conditions. If
     these  conditions  deteriorate,  our  business,  results of  operations  or
     financial condition could be materially  adversely  affected.  In addition,
     since October 2008, the U.S. and international economies have experienced a
     significant  downturn and continue to be very  volatile.  In the event that
     the  downturn in the U.S. or  international  economies  is  prolonged,  our
     revenue levels could be materially adversely affected in future periods. If
     the current worldwide economic downturn  continues,  many of our current or
     potential future customers may experience serious cash flow problems and as
     a  result  may,  modify,   delay  or  cancel  purchases  of  our  products.
     Additionally,  customers  may not be able to pay, or may delay  payment of,
     accounts receivable that are owed to us. Furthermore,  the current downturn
     and market instability makes it difficult for us to forecast our revenues.

     Our Business  Could Be  Materially  Adversely  Affected by the Inability to
     ---------------------------------------------------------------------------
     Reduce Expenses Relative to the Current Decreases in Sales Levels
     -----------------------------------------------------------------

     While Management has begun implementation of a restructuring plan to reduce
     expense  levels  relative  to  current  sales  levels,   if  this  plan  is
     unsuccessful, delayed or sales levels decrease further, our business may be
     adversely affected.

     Our Business Could Be Materially  Adversely  Affected by the Integration of
     ---------------------------------------------------------------------------
     Marks into Our Existing Operations
     ----------------------------------

     Our  business is dependent on the  orderly,  effective  integration  of the
     acquired Marks business, technologies, product lines and employees into our
     organization.  If this  integration  is  unsuccessful,  our business may be
     materially adversely affected.

Item 6. Exhibits
        --------


     31.1 Certification  Pursuant  to Rule  13a-14(a)/15d-14(a)  of  Richard  L.
          Soloway, Chairman of the Board and President

     31.2 Certification Pursuant to Rule 13a-14(a)/15d-14(a) of Kevin S. Buchel,
          Senior Vice President of Operations and Finance

     32.1 Section 1350 Certifications

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                                   SIGNATURES


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


May 21, 2009


                        NAPCO SECURITY TECHNOLOGIES, INC.
                                  (Registrant)


By:  /s/ RICHARD L. SOLOWAY
     -------------------------------------------------------------
     Richard L. Soloway
     Chairman of the Board of Directors, President and Secretary
     (Chief Executive Officer)


By:  /s/ KEVIN S. BUCHEL
     -------------------------------------------------------------
     Kevin S. Buchel
     Senior Vice President of Operations and Finance and Treasurer
     (Principal Financial and Accounting Officer)





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