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, 2006

                                       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 SYSTEMS, 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)

                                      None
(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 is a large accelerated filer, an
accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act):

Large Accelerated Filer     Accelerated Filer     Non-Accelerated Filer  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 8, 2006


                                      
COMMON STOCK, $.01 PAR VALUE PER SHARE   13,300,185






                                                                            Page
                                                                            ----
                                                                         
PART I:  FINANCIAL INFORMATION
   ITEM 1. Financial Statements
      NAPCO SECURITY SYSTEMS, INC. AND SUBSIDIARIES
      INDEX - MARCH 31, 2006
         Condensed Consolidated Balance Sheets, March 31, 2006 and
            June 30, 2005                                                     3
         Condensed Consolidated Statements of Income for the Three
            Months ended March 31, 2006 and 2005                              4
         Condensed Consolidated Statements of Income for the Nine
            Months ended March 31, 2006 and 2005                              5
         Condensed Consolidated Statements of Cash Flows for the Nine
            Months ended March 31, 2006 and 2005                              6
         Notes to Condensed Consolidated Financial Statements                 7
   ITEM 2. Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                      13
   ITEM 3. Quantitative and Qualitative Disclosures About Market Risk        17
   ITEM 4. Controls and Procedures                                           18

PART II: OTHER INFORMATION                                                   19

SIGNATURE PAGE                                                               20



                                       2



PART I: FINANCIAL INFORMATION

ITEM 1. Financial Statements

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



                                                                   March 31,      June 30,
                                                               2006 (unaudited)     2005
                                                               ----------------   --------
                                                               (in thousands, except share
                                                                          data)
                                                                            
                           ASSETS
Current Assets:
   Cash and cash equivalents                                       $   988         $ 1,178
   Accounts receivable, less allowance for doubtful accounts        20,729          21,899
   Inventories, net                                                 23,115          16,242
   Prepaid expenses and other current assets                           953             799
   Deferred income taxes                                             1,567           1,356
                                                                   -------         -------
      Total current assets                                          47,352          41,474
Property, Plant and Equipment, net                                   9,186           8,533
Goodwill                                                             9,686           9,686
Other assets                                                           145             214
                                                                   -------         -------
                                                                   $66,369         $59,907
                                                                   =======         =======

            LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable                                                $ 5,758         $ 5,249
   Accrued expenses                                                  1,150           1,156
   Accrued salaries and wages                                        2,077           2,518
   Accrued income taxes                                              1,315           1,534
                                                                   -------         -------
      Total current liabilities                                     10,300          10,457
Long-term debt                                                       3,700           1,950
Accrued income taxes                                                 2,243           2,243
Deferred income taxes                                                1,707           1,579
                                                                   -------         -------
   Total liabilities                                                17,950          16,229
                                                                   -------         -------
Stockholders' Equity (Note 1):
   Common stock, par value $.01 per share; 40,000,000 and
      21,000,000 shares authorized, 13,300,185 and
      12,982,665 shares issued and outstanding, respectively           133             130
   Additional paid-in capital                                       13,280          11,585
   Unearned stock-based compensation                                  (730)             --
   Retained earnings                                                35,736          31,963
                                                                   -------         -------
   Total stockholders' equity                                       48,419          43,678
                                                                   -------         -------
                                                                   $66,369         $59,907
                                                                   =======         =======


*    The 3:2 stock split declared on November 29, 2005 (see Note 1) has been
     retroactively reflected in Stockholders' Equity.

 See accompanying notes to condensed consolidated financial statements.


                                       3



                  NAPCO SECURITY SYSTEMS, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)



                                                           Three Months Ended
                                                               March 31,
                                                       -------------------------
                                                           2006          2005
                                                       -----------   -----------
                                                         (in thousands, except
                                                       share and per share data)
                                                               
Net Sales                                              $    17,085   $    15,743
Cost of Sales                                               10,729        10,647
                                                       -----------   -----------
   Gross profit                                              6,356         5,096
Selling, General and Administrative Expenses                 4,032         3,423
                                                       -----------   -----------
   Operating income                                          2,324         1,673
                                                       -----------   -----------
Interest Expense, net                                           68            50
Other Expenses, net                                              4            72
                                                       -----------   -----------
   Other expenses                                               72           122
                                                       -----------   -----------
   Income before minority interest and provision for
      income taxes                                           2,252         1,551
Minority interest in net income of subsidiary, net               2            --
                                                       -----------   -----------
   Income before provision for income taxes                  2,250         1,551
Provision for income taxes                                     775           538
                                                       -----------   -----------
   Net income                                          $     1,475   $     1,013
                                                       ===========   ===========
Net income per share (Note 1 and Note 4) *: Basic      $      0.11   $      0.08
                                                       ===========   ===========
                                            Diluted    $      0.11   $      0.07
                                                       ===========   ===========
Weighted average number of shares
   outstanding (Note 1 and Note 4) *: Basic             13,245,385    12,865,689
                                                       ===========   ===========
                                      Diluted           13,807,626    13,583,310
                                                       ===========   ===========


*    The 3:2 stock split declared on November 29, 2005 (see Note 1) has been
     retroactively reflected in all 2005 share and per share data.

     See accompanying notes to condensed consolidated financial statements.


                                        4



                  NAPCO SECURITY SYSTEMS, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)



                                                                        Nine Months Ended
                                                                            March 31,
                                                                    -------------------------
                                                                        2006          2005
                                                                    -----------   -----------
                                                                      (in thousands, except
                                                                    share and per share data)
                                                                            
Net Sales                                                           $    48,488   $    45,202
Cost of Sales                                                            30,958        30,915
                                                                    -----------   -----------
   Gross profit                                                          17,530        14,287
Selling, General and Administrative Expenses                             11,690        10,263
                                                                    -----------   -----------
   Operating income                                                       5,840         4,024
                                                                    -----------   -----------
Interest Expense, net                                                       166           176
Other Expenses, net                                                          10           170
                                                                    -----------   -----------
   Other expenses                                                           176           346
                                                                    -----------   -----------
   Income before minority interest and provision for income taxes         5,664         3,678
Minority interest in net loss of subsidiary, net                            113            --
                                                                    -----------   -----------
   Income before provision for income taxes                               5,777         3,678
Provision for income taxes                                                2,004         1,280
                                                                    -----------   -----------
   Net income                                                       $     3,773   $     2,398
                                                                    ===========   ===========
Net income per share (Note 1 and Note 4) *: Basic                   $      0.29   $      0.19
                                                                    ===========   ===========
                                            Diluted                 $      0.27   $      0.18
                                                                    ===========   ===========
Weighted average number of shares
   outstanding (Note 1 and Note 4) *: Basic                          13,153,431    12,804,585
                                                                    ===========   ===========
                                      Diluted                        13,720,926    13,463,438
                                                                    ===========   ===========


*    The 3:2 stock split declared on November 29, 2005 (see Note 1) has been
     retroactively reflected in all 2005 share and per share data.

     See accompanying notes to condensed consolidated financial statements.


                                        5



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



                                                                 Nine Months Ended
                                                                     March 31,
                                                                 -----------------
                                                                   2006      2005
                                                                 -------   -------
                                                                   (in thousands)
                                                                     
Cash Flows from Operating Activities:
   Net income                                                    $ 3,773   $ 2,398
   Adjustments to reconcile net income to net cash
      (used in) provided by operating activities:
      Depreciation and amortization                                  811       844
      Provision for doubtful accounts                                105       (35)
      Deferred income taxes                                          (83)       --
      Excess tax benefits from exercise of stock options            (210)       --
      Non-cash stock based compensation expense                      312        --
   Changes in operating assets and liabilities:
      Accounts receivable                                          1,065     2,375
      Inventories                                                 (6,873)     (638)
      Prepaid expenses and other current assets                     (154)      (81)
      Other assets                                                    65       (42)
      Accounts payable, accrued expenses, accrued salaries and
         wages, and accrued income taxes                              53     1,255
                                                                 -------   -------
Net Cash (Used in) Provided by Operating Activities               (1,136)    6,076
                                                                 -------   -------
Cash Flows used in Investing Activities:
   Purchases of property, plant and equipment                     (1,461)     (548)
                                                                 -------   -------
Cash Flows from Financing Activities:
   Proceeds from exercise of employee stock options                  447       216
   Proceeds from long-term debt                                    1,750     2,350
   Principal payments on long-term debt                               --    (7,737)
   Excess tax benefits from exercise of stock options                210        --
                                                                 -------   -------
         Net cash provided by (used in) financing activities       2,407    (5,171)
                                                                 -------   -------
Net (decrease) increase in Cash                                     (190)      357
Cash, Beginning of Period                                          1,178       796
                                                                 -------   -------
Cash, End of Period                                              $   988   $ 1,153
                                                                 =======   =======
Cash Paid During the Period for:
   Interest                                                      $   146   $   177
                                                                 =======   =======
   Income taxes                                                  $ 2,096   $   784
                                                                 =======   =======


     See accompanying notes to condensed consolidated financial statements.


                                        6



                  NAPCO SECURITY SYSTEMS, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED 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 period ended March 31, 2006 are not
     necessarily indicative of results that may be expected for any other
     interim period or for the full year. Certain prior year amounts have been
     reclassified to conform with the current years' presentation.

     The unaudited Condensed Consolidated Financial Statements include the
     accounts of Napco Security Systems, Inc. and all of its wholly-owned
     subsidiaries. The Company has also consolidated a 51%-owned joint venture.
     The 49% interest, owned 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.

     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, 2005. The accounting policies used in preparing these unaudited
     Condensed Consolidated Financial Statements are consistent with those
     described in the June 30, 2005 Consolidated Financial Statements, except as
     described herein (see Note 2). However, for interim financial statements,
     inventories are calculated using a gross profit percentage.

     Advertising and Promotional Costs

     Advertising and promotional costs are included in "Selling, General and
     Administrative" expenses in the Condensed Consolidated Statements of Income
     and are expensed as incurred. Advertising expense for the three months
     ended March 31, 2006 and 2005 was $180,000 and $163,000, respectively.
     Advertising expense for the nine months ended March 31, 2006 and 2005 was
     $772,000 and $786,000, respectively.

     Research and Development Costs

     Research and development costs incurred by the Company are charged to
     expense in the period incurred. Research and Development expense for the
     three months ended March 31, 2006 and 2005 was $1,286,000 and $1,222,000,
     respectively. Research and Development expense for the nine months ended
     March 31, 2006 and 2005 was $3,690,000 and $3,692,000, respectively. These
     expenses are included in "Cost of Sales" in the Condensed Consolidated
     Statements of Income.

     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
     differently, depending on the nature of the concentration, and vary in
     significance. The Company has two major customers with Sales and Accounts
     Receivable as follows (in thousands):



              Sales for the three months
                   ended March 31,
             ---------------------------
                 2006           2005
             ------------   ------------
               $       %      $       %
             -----   ----   -----   ----
                        
Customer A   1,402     8%   1,353     8%
Customer B   1,190     7%   1,374     9%
             -----   ---    -----   ---
             2,592    15%   2,727    17%
             =====   ===    =====   ===



                                        7





              Sales for the nine months
                   ended March 31,
             ---------------------------
                 2006           2005
             ------------   ------------
               $       %      $       %
             -----   ----   -----   ----
                        
Customer A   3,964     8%   3,452     7%
Customer B   3,617     8%   3,945     9%
             -----   ---    -----   ---
             7,581    16%   7,397    16%
             =====   ===    =====   ===


                           Accounts Receivable as of:



               March 31,      June 30,
                 2006           2005
             ------------   ------------
               $       %      $       %
             -----   ----   -----   ----
                        
Customer A   4,820    23%   4,400    20%
Customer B   2,657    13%   3,306    15%
             -----   ---    -----   ---
             7,477    36%   7,706    35%
             =====   ===    =====   ===


     These customers sell primarily within North America. Although management
     believes that these customers are sound and creditworthy, a severe adverse
     impact on their business operations could have a corresponding material
     adverse effect on the Company's net sales, cash flows, and/or financial
     condition. In the ordinary course of business, the Company has established
     an allowance for doubtful accounts and customer deductions in the amount of
     $485,000 and $380,000 as of March 31, 2006 and June 30, 2005, respectively.
     The increase in this allowance related primarily to a bankruptcy of one of
     the Company's customers. The allowance for doubtful accounts is a
     subjective critical estimate that has a direct impact on reported net
     earnings. This allowance is based upon the evaluation of accounts
     receivable aging, specific exposures and historical trends.

     Stock Options

     During the three and nine months ended March 31, 2006 the Company granted
     25,000 and 70,000 stock options, respectively, under its 2002 Employee
     Incentive Stock Option Plan. The aggregate fair value of these options,
     calculated using the Black-Scholes option pricing model, was $262,000 and
     $546,000, respectively, which will be expensed over the four year vesting
     schedule. 108,000 and 317,520 options were exercised under this plan during
     the three and nine months ended March 31, 2006, respectively. These figures
     reflect the effect of the 3:2 stock split described below.

     Stock Dividend and Stock Splits

     On November 29, 2005 the Company's Board of Directors approved a 3-for-2
     split of its common stock, payable in the form of a 50% stock dividend to
     stockholders of record on December 14, 2005. The additional shares were
     distributed on December 28, 2005. Upon completion of the split, the total
     number of shares of common stock outstanding increased from approximately
     8,795,000 to approximately 13,192,000. There was no net effect on total
     stockholders' equity as a result of the stock split. All share and per
     share amounts have been retroactively adjusted to reflect the stock
     dividend and stock splits.

     Recent Accounting Pronouncements

     In September 2005, the Financial Accounting Standards Board ("FASB") issued
     FASB Staff Position ("FSP") No. FAS 123(R)-1, "Classification and
     Measurement of Freestanding Financial Instruments Originally Issued in
     Exchange for Employee Services under FASB Statement No. 123(R)," to defer
     the requirement of SFAS No. 123(R) that a freestanding financial instrument
     originally subject to SFAS No. 123(R) becomes subject to the recognition
     and measurement requirements of other applicable GAAP when the rights
     conveyed by the instrument to the holder are no longer dependent on the
     holder being an employee of the entity. The rights under stock-based
     payment awards issued to employees by the Company are all dependent on the
     recipient being an employee of the Company. Therefore, this FSP currently
     does not have an impact on the Company's consolidated financial statements
     and its measurement of stock-based compensation in accordance with SFAS No.
     123(R).


                                        8



     In October 2005, the FASB issued FSP No. FAS 123(R)-2, "Practical
     Accommodation to the Application of Grant Date as Defined in FASB Statement
     No. 123(R)," to provide guidance on determining the grant date for an award
     as defined in SFAS No. 123(R). This FSP stipulates that assuming all other
     criteria in the grant date definition are met, a mutual understanding of
     the key terms and conditions of an award to an individual employee is
     presumed to exist upon the award's approval in accordance with the relevant
     corporate governance requirements, provided that the key terms and
     conditions of an award (a) cannot be negotiated by the recipient with the
     employer because the award is a unilateral grant, and (b) are expected to
     be communicated to an individual recipient within a relatively short time
     period from the date of approval. The Company has applied the principles
     set forth in this FSP upon its adoption of SFAS No. 123(R).

     In November 2005, the FASB issued FSP No. FAS 123(R)-3, "Transition
     Election Related to Accounting for the Tax Effects of Share-Based Payment
     Awards", to provide an alternate transition method for the implementation
     of SFAS No. 123(R). Because some entities do not have, and may not be able
     to re-create, information about the net excess tax benefits that would have
     qualified as such had those entities adopted SFAS No. 123(R) for
     recognition purposes, this FSP provides an elective alternative transition
     method. That method comprises (a) a computational component that
     establishes a beginning balance of the APIC pool related to employee
     compensation and (b) a simplified method to determine the subsequent impact
     on the APIC pool of employee awards that are fully vested and outstanding
     upon the adoption of SFAS No. 123(R). The Company has applied the
     alternative transition method set forth in this FSP upon its adoption of
     SFAS No. 123(R).

     In February 2006, the FASB issued FSP No. FAS 123(R)-4, "Classification of
     Options and Similar Instruments Issued as Employee Compensation That Allow
     for Cash Settlement upon the Occurrence of a Contingent Event", to address
     the classification of options and similar instruments issued as employee
     compensation that allow for cash settlement upon the occurrence of a
     contingent event. The guidance in this FSP amends paragraphs 32 and A229 of
     FASB Statement No. 123 (revised 2004), "Share-Based Payment". The Company
     has applied the principles set forth in this FSP upon its adoption of SFAS
     No. 123(R).

2.)  Employee Stock-based Compensation

     The Company has established two share incentive programs as discussed in
     more detail in the Company's annual report on Form 10-K for the year ended
     June 30, 2005. Prior to fiscal 2006, the Company applied the intrinsic
     value method as outlined in Accounting Principles Board Opinion No. 25,
     "Accounting for Stock Issued to Employees," ("APB No. 25") and related
     interpretations in accounting for stock options and share units granted
     under these programs. Under the intrinsic value method, no compensation
     expense was recognized if the exercise price of the Company's employee
     stock options equaled the market price of the underlying stock on the date
     of the grant. Accordingly, no compensation cost was recognized in the
     accompanying condensed consolidated statements of income prior to fiscal
     year 2006 on stock options granted to employees, since all options granted
     under the Company's share incentive programs had an exercise price equal to
     the market value of the underlying common stock on the date of grant.
     Stock-based compensation costs of $197,000 and $312,000 were recognized in
     three and nine months ended March 31, 2006, respectively. The effect on
     Basic Earnings per share was $0.015 and $0.024 for the three and nine
     months ended March 31, 2006, respectively. The effect on both Diluted
     Earnings per share was $0.014 and $0.023 for the three and nine months
     ended March 31, 2006, respectively.

     Effective July 1, 2005, the Company adopted Statement of Financial
     Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment" ("SFAS No.
     123(R)"). This statement replaces SFAS No. 123, "Accounting for Stock-Based
     Compensation" ("SFAS No. 123") and supersedes APB No. 25. SFAS No. 123(R)
     requires that all stock-based compensation be recognized as an expense in
     the financial statements and that such cost be measured at the fair value
     of the award. This statement was adopted using the modified prospective
     method of application, which requires us to recognize compensation expense
     on a prospective basis. Therefore, prior period financial statements have
     not been restated. Under this method, in addition to reflecting
     compensation expense for new share-based awards, expense is also recognized
     to reflect the remaining service period of awards that had been included in
     pro-forma disclosures in prior periods. 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.

     Prior to the Company's adoption of SFAS No. 123(R), SFAS No. 123 required
     that the Company provide pro forma information regarding net earnings and
     net earnings per common share as if compensation cost for the Company's
     stock-based awards had been determined in accordance with the fair value
     method prescribed therein. The Company had previously adopted the
     disclosure portion of SFAS No. 148, "Accounting for Stock-Based
     Compensation - Transition and Disclosure," requiring quarterly SFAS No. 123
     pro forma disclosure. The pro forma charge for compensation cost related to
     stock-based awards granted was recognized over the service period. For
     stock options, the service period represents the period of time between the
     date of grant and the date each option becomes exercisable without
     consideration of acceleration provisions (e.g., retirement, change of
     control, etc.).

     The following table illustrates the effect on net earnings per common share
     as if the fair value method had been applied to all outstanding awards for
     the three and nine months ended March 31, 2005:


                                        9





                                                    Three Months ended        Nine Months ended
                                                      March 31, 2005           March 31, 2005
                                                  ----------------------   ----------------------
                                                      (in thousands,           (in thousands,
                                                  except per share data)   except per share data)
                                                                     
Net income, as reported                                   $1,013                   $2,398
Deduct: Total stock-based employee compensation
   expense determined under fair value method
   for all awards, net of related tax effects                (55)                    (171)
                                                          ------                   ------
Pro forma net income                                      $  958                   $2,227
                                                          ======                   ======
Earnings per common share (1):
   Basic - as reported                                    $ 0.08                   $ 0.19
                                                          ======                   ======
   Basic - pro forma                                      $ 0.07                   $ 0.17
                                                          ======                   ======
   Diluted - as reported                                  $ 0.07                   $ 0.18
                                                          ======                   ======
   Diluted - pro forma                                    $ 0.07                   $ 0.17
                                                          ======                   ======


(1)  Information reflects stock dividend and stock splits. See Note 1.

3.)  Inventories



                                         March 31,   June 30,
                                            2006       2005
                                         ---------   --------
                                               
Inventories consist of (in thousands):
   Component parts                        $15,366     $10,740
   Work-in-process                          2,388       1,697
   Finished products                        5,361       3,805
                                          -------     -------
                                          $23,115     $16,242
                                          =======     =======


     For interim financial statements, inventories are calculated using a gross
     profit percentage.

4.)  Earnings 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) (Information reflects the stock dividend and stock splits
     as described in Note 1):



                                             Three months ended March 31, 2006
                                          ---------------------------------------
                                           Net Income       Shares      Per Share
                                          (numerator)   (denominator)    Amounts
                                          -----------   -------------   ---------
                                                               
BASIC EPS
Net income attributable to common stock      $1,475         13,245        $0.11
EFFECT OF DILUTIVE SECURITIES
Options                                      $   --            562        $  --
                                             ------         ------        -----
DILUTED EPS
Net income attributable to common stock
   and assumed option exercises              $1,475         13,807        $0.11
                                             ======         ======        =====


     25,000 options to purchase shares of common stock in the three months ended
     March 31, 2006 were excluded in the computation of Diluted EPS because the
     option prices were in excess of the average market price for this period.


                                       10





                                             Three months ended March 31, 2005
                                          ---------------------------------------
                                           Net Income       Shares      Per Share
                                          (numerator)   (denominator)    Amounts
                                          -----------   -------------   ---------
                                                               
BASIC EPS
Net income attributable to common stock      $1,013         12,866       $ 0.08

EFFECT OF DILUTIVE SECURITIES
Options                                      $   --            717       $(0.01)
                                             ------         ------       ------
DILUTED EPS
Net income attributable to common stock
   and assumed option exercises              $1,013         13,583       $ 0.07
                                             ======         ======       ======


     No options to purchase shares of common stock in the three months ended
     March 31, 2005 were excluded in the computation of Diluted EPS because no
     option prices were in excess of the average market price for this period.



                                              Nine months ended March 31, 2006
                                          ---------------------------------------
                                           Net Income       Shares      Per Share
                                          (numerator)   (denominator)    Amounts
                                          -----------   -------------   ---------
                                                               
BASIC EPS
Net income attributable to common stock      $3,773         13,153       $ 0.29

EFFECT OF DILUTIVE SECURITIES
Options                                      $   --            568       $(0.02)
                                             ------         ------       ------
DILUTED EPS
Net income attributable to common stock
   and assumed option exercises              $3,773         13,721       $ 0.27
                                             ======         ======       ======


     25,000 options to purchase shares of common stock in the nine months ended
     March 31, 2006 were excluded in the computation of Diluted EPS because the
     option prices were in excess of the average market price for this period.



                                              Nine months ended March 31, 2005
                                          ---------------------------------------
                                           Net Income       Shares      Per Share
                                          (numerator)   (denominator)    Amounts
                                          -----------   -------------   ---------
                                                               
BASIC EPS
Net income attributable to common stock      $2,398         12,805       $ 0.19

EFFECT OF DILUTIVE SECURITIES
Options                                      $   --            658       $(0.01)
                                             ------         ------       ------
DILUTED EPS
Net income attributable to common stock
   and assumed option exercises              $2,398         13,463       $ 0.18
                                             ======         ======       ======


     No options to purchase shares of common stock in the nine months ended
     March 31, 2005 were excluded in the computation of Diluted EPS because no
     option prices were in excess of the average market price for this period.

5.)  Long Term Debt

     In May 2001, the Company amended its secured revolving credit agreement
     with its primary bank. The Company's borrowing capacity under the amended
     agreement was increased to $18,000,000. The amended revolving credit
     agreement is secured by all the accounts receivable, inventory, the
     Company's headquarters in Amityville, New York, common stock of three of
     the Company's subsidiaries and certain other assets of Napco Security
     Systems, Inc. The revolving credit agreement bears interest at either the
     Prime Rate less 1/4% or an alternate rate based on LIBOR as described in
     the agreement. The agreement contains various restrictions and covenants
     including, among others, restrictions on payment of dividends, restrictions
     on borrowings, restrictions on capital expenditures, the maintenance of
     minimum amounts of tangible net worth, and compliance with other certain
     financial ratios, as defined in the agreement. As of March 31, 2006, the
     Company was not in compliance with one of these covenants for which it has
     subsequently received the appropriate waiver from its primary bank. In
     October 2004 the Company renegotiated this secured revolving credit
     agreement at essentially the same terms and conditions with a new
     expiration date of September 2008.


                                       11



6.)  Geographical Data

     The Company's domestic and foreign sales for the periods presented are
     summarized in the following tabulation (in thousands):



                                      Three Months        Nine Months
                                    Ended March 31,     Ended March 31,
                                   -----------------   -----------------
                                     2006      2005      2006      2005
                                   -------   -------   -------   -------
                                                     
Sales to external customers (1):
   Domestic                        $14,375   $13,045   $41,057   $37,614
   Foreign                           2,710     2,698     7,431     7,588
                                   -------   -------   -------   -------
   Total Net Sales                 $17,085   $15,743   $48,488   $45,202
                                   =======   =======   =======   =======


(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.

7.)  Commitments and Contingencies

     As previously reported, on or about August 27, 2001, a Complaint was filed
     against NAPCO Security Group and Alarm Lock Systems, Inc. by Jose Ramirez
     and Glenda Ramirez in the Supreme Court of State of New York, County of the
     Bronx. The Complaint sought fifteen million dollars ($15,000,000) in
     damages on behalf of Mr. Ramirez and two million dollars ($2,000,000) on
     behalf of Ms. Ramirez. On May 2, 2006, the Company's motion for summary
     judgment was granted. As a result, the case against the Company was
     dismissed.

     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.


                                       12



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

Napco Security Systems, Inc.

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, adverse tax
consequences of offshore operations, distribution problems, unforeseen
environmental liabilities and the uncertain military, political and economic
conditions in the world.

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 16% and 15% of our
revenues for fiscal year 2005 and the first nine months of fiscal 2006,
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 customer demand or utilization of
our manufacturing capacity. As product demand rises and factory utilization
increases, the fixed costs are spread over increased output, which should
improve profit margins. Conversely, when sales decline our fixed costs are
spread over reduced levels, thereby decreasing margins.

The security 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 2006 did not contribute materially
to revenue during that 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

The post September 11th era has generally been characterized by a favorable
business climate for suppliers of electronic security products and services. The
Company believes the security equipment market is likely to continue to exhibit
healthy growth, particularly in industrial sectors, due to ongoing concerns over
the adequacy of security safeguards.

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 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.

Critical Accounting Policies

The Company's consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America
which require, in some cases, that certain estimates and assumptions be made
that affect the amounts and disclosures reported in the those financial
statements and the related accompanying notes. Estimates are based on current
facts and circumstances, prior experience and other assumptions believed to be
reasonable. Management uses its best judgment in valuing these estimates and
may, as warranted, solicit external advice. Actual results could differ from
these estimates, assumptions and judgments and these differences could be
material. The following critical accounting policies, some of which are impacted
significantly by estimates,


                                       13



assumptions and judgments, affect the Company's consolidated financial
statements. Our most critical accounting policies relate to revenue recognition;
concentration of credit risk; inventory; goodwill and other intangible assets;
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 purchase. 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 allowances.

Our sales return accrual is a subjective critical estimate that has a direct
impact on reported net sales. 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.

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 differently, depending
on the nature of the concentration, and vary in significance. The Company has
two major customers with Sales and Accounts receivable as follows (in
thousands):



                Sales for the three
               months ended March 31,
             -------------------------
                 2006          2005
             -----------   -----------
               $      %      $      %
             -----   ---   -----   ---
                       
Customer A   1,402     8%  1,353     8%
Customer B   1,190     7%  1,374     9%
             -----   ---   -----   ---
             2,592    15%  2,727    17%
             =====   ===   =====   ===




                 Sales for the nine
               months ended March 31,
             -------------------------
                 2006          2005
             -----------   -----------
               $      %      $      %
             -----   ---   -----   ---
                       
Customer A   3,964     8%  3,452     7%
Customer B   3,617     8%  3,945     9%
             -----   ---   -----   ---
             7,581    16%  7,397    16%
             =====   ===   =====   ===




             Accounts Receivable as of:
             --------------------------
              March 31,      June 30,
                 2006          2005
             -----------   -----------
               $      %      $      %
             -----   ---   -----   ---
                       
Customer A   4,820    23%  4,400    20%
Customer B   2,657    13%  3,306    15%
             -----   ---   -----   ---
             7,477    36%  7,706    35%
             =====   ===   =====   ===


These customers sell primarily within North America. Although management
believes that these customers are sound and creditworthy, a severe adverse
impact on their business operations could have a corresponding material adverse
effect on the Company's net sales, cash flows, and/or financial condition. In
the ordinary course of business, the Company has established an allowance for
doubtful accounts and customer deductions in the amount of $485,000 and $380,000
as of March 31, 2006 and June 30, 2005, respectively. The allowance for doubtful
accounts is a subjective critical estimate that has a direct impact on reported
net earnings. This allowance is based upon the evaluation of accounts receivable
aging, specific exposures and historical trends.


                                       14



Inventories

We state our inventory at the lower of cost or fair market value, with cost
being determined on the first-in, first-out (FIFO) method. We believe FIFO most
closely matches the flow of our products from manufacture through sale. The
reported net value of our inventory includes finished saleable products,
work-in-process and raw materials that will be sold or used in future periods.
Inventory cost includes raw materials, direct labor and overhead.

We also record an inventory obsolescence reserve, which represents the
difference between the cost of the inventory and its estimated fair market
value, based on various product sales projections. This reserve is calculated
using an estimated obsolescence percentage based on age, historical trends and
requirements to support forecasted sales. In addition, and as necessary, we may
establish specific inventory obsolescence reserves for known or anticipated
events. For interim financial statements, inventories are calculated using a
gross profit percentage.

Goodwill and Other Intangible Assets

Effective July 1, 2001, the Company adopted 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. Those intangible assets that are classified as goodwill or as other
intangibles with indefinite lives are not amortized.

Impairment testing for Goodwill 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. The Company has performed its annual
impairment evaluation required by this standard and determined that the goodwill
is not impaired.

Income taxes

Deferred income taxes are recognized for the expected future tax consequences of
temporary differences between the amounts reflected for financial reporting and
tax purposes. Net deferred tax assets are adjusted by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
portion or all of the net deferred tax assets will not be realized. If the
Company determines that a deferred tax asset will not be realizable or that a
previously reserved deferred tax asset will become realizable, an adjustment to
the deferred tax asset will result in a reduction of, or increase to, earnings
at that time. The provision (benefit) for income taxes represents U.S. Federal,
state and foreign taxes. Through June 30, 2001, the Company's subsidiary in the
Dominican Republic, Napco/Alarm Lock Group International, S.A. ("Napco DR"), was
not subject to tax in the United States, as a result, no taxes were provided.
Effective July 1, 2001, the Company made a domestication election for Napco DR.
Accordingly, its income is subject to taxation in the United States on a going
forward basis.

In March 2003, Napco Security Systems, Inc. timely filed its income tax return
for the fiscal year ended June 30, 2002. This return included an election to
treat one of the Company's foreign subsidiaries, Napco DR, as if it were a
domestic corporation beginning July 1, 2001. This election was based on a then
recently enacted Internal Revenue Code ("Code") provision. As a result of this
election, Napco DR is treated, for Federal income tax purposes, as transferring
all of its assets to a domestic corporation in connection with an exchange.
Although this type of transfer usually results in the recognition of taxable
income to the extent of any untaxed earnings and profits, the Code provision
provides an exemption for applicable corporations. The Company qualifies as an
applicable corporation pursuant to this Code section, and based on this Code
exemption, the Company treated the transfer of approximately $27,000,000 of
Napco DR's untaxed earnings and profits as nontaxable.

The Internal Revenue Service has issued a Revenue Procedure which is
inconsistent with the Code exemption described above. The Code is the actual
law; a Revenue Procedure is the IRS's interpretation of the law. The Code has a
higher level of authority than a Revenue Procedure. Management believes that it
has appropriately relied on the guidance in the Code when filing its income tax
return. If challenged, the Company believes that the potential liability would
range from $0 to $9,450,000. However, the Company also believes there are other
mitigating factors that would limit the amount of the potential liability, and
as a result, management accrued a liability of $2,243,000 as of June 30, 2002.
The Company's tax provision utilizes estimates made by management and as such,
is subject to change.


                                       15



Results of Operations



                                        Three months ended March 31,      Nine months ended March 31,
                                      -------------------------------   -------------------------------
                                                          % Increase/                       % Increase/
                                        2006      2005     (decrease)     2006      2005     (decrease)
                                      -------   -------   -----------   -------   -------   -----------
                                                                          
Net sales                             $17,085   $15,743       8.5%      $48,488   $45,202       7.3%
Gross profit                            6,356     5,096      24.7%       17,530    14,287      22.7%
Gross profit as a % of net sales         37.2%     32.4%      4.8%         36.2%     31.6%      4.6%
Selling, general and administrative     4,032     3,423      17.8%       11,690    10,263      13.9%
Selling, general and administrative
   as a percentage of net sales          23.6%     21.7%      1.9%         24.1%     22.7%      1.4%
Operating income                        2,324     1,673      38.9%        5,840     4,024      45.1%
Interest expense                           68        50      36.0%          166       176      (5.7)%
Other expense                               4        72     (94.4)%          10       170     (94.1)%
Minority interest in net income of
   subsidiary, net                          2        --       n/a           113        --       n/a
Provision for income taxes                775       538      44.1%        2,004     1,280      56.6%
Net income                              1,475     1,013      45.6%        3,773     2,398      57.3%


Sales for the three months ended March 31, 2006 increased by approximately 9% to
$17,085,000 as compared to $15,743,000 for the same period a year ago. Sales for
the nine months ended March 31, 2006 increased by approximately 7% to
$48,488,000 as compared to $45,202,000 for the same period a year ago. The
increase in sales for the three and nine months was mainly in the Company's
intrusion alarm and access control product lines.

The Company's gross profit for the three months ended March 31, 2006 increased
by $1,260,000 to $6,356,000 or 37.2% of sales as compared to $5,096,000 or 32.4%
of sales for the same period a year ago. The Company's gross profit for the nine
months ended March 31, 2006 increased by $3,243,000 to $17,530,000 or 36.2% of
sales as compared to $14,287,000 or 31.6% of sales for the same period a year
ago. The increase in gross profit was due primarily to the increase in sales
which allowed for more fixed overhead absorption. Increased margins also
resulted from a reduction in the Company's inventory reserves of approximately
$200,000, the Company's previously reported realignment of its burglar alarm
product distribution network as well as cost reductions of certain of the
Company's raw material costs.

Selling, general and administrative expenses for the three months ended March
31, 2006 increased by $609,000 to $4,032,000, or 23.6% of sales, as compared to
$3,423,000, or 21.7% of sales a year ago. Selling, general and administrative
expenses for the nine months ended March 31, 2006 increased by $1,427,000 to
$11,690,000, or 24.1% of sales, as compared to $10,263,000, or 22.7% of sales a
year ago. The increase in dollars and as a percentage of sales for the three and
nine months ended March 31, 2006 was due primarily to increased selling
activity, an increase in bad debt expense relating to a bankruptcy of one of the
Company's customers as well as the recording of non-cash compensation expenses
beginning in fiscal 2006 in accordance with FAS123R.

Interest expense, net for the three months ended March 31, 2006 increased by
$18,000 to $68,000 as compared to $50,000 for the same period a year ago.
Interest expense, net for the nine months ended March 31, 2006 decreased $10,000
to $166,000 as compared to $176,000 for the same period a year ago. The increase
in the third quarter of fiscal 2006 resulted primarily from the increase in
interest rates as compared to those from the same period a year ago. The slight
decrease in first nine months of fiscal 2006 resulted primarily from lower
average outstanding borrowings as partially offset by the increase in interest
rates during the nine months ended March 31, 2006 as compared to the same period
a year ago.

The Company's provision for income taxes for the three months ended March 31,
2006 increased by $237,000 to $775,000 as compared to $538,000 for the same
period a year ago. The Company's provision for income taxes for the nine months
ended March 31, 2006 increased by $724,000 to $2,004,000 as compared to
$1,280,000 for the same period a year ago. The tax provisions are calculated
using an estimated effective tax rate of 35%. The increase in provision for
income taxes resulted from the increase in Income before income tax, which
resulted primarily from the aforementioned increase in net sales and gross
profit.

Net income increased by $462,000 to $1,475,000 or $0.11 per share for the three
months ended March 31, 2006 as compared to $1,013,000 or $0.08 per share for the
same period a year ago. Net income increased by $1,375,000 to $3,773,000 or
$0.29 per share


                                       16



for the nine months ended March 31, 2006 as compared to $2,398,000 or $0.19 per
share for the same period a year ago. These increases were primarily due to the
aforementioned increases in net sales and gross profit as partially offset by
the increases in selling, general and administrative expenses, net of the
related increase in provision for income taxes. The effect of the 3-for-2 stock
split discussed above has been retroactively reflected in all fiscal 2005 per
share data.

Liquidity and Capital Resources

During the nine months ended March 31, 2006 the Company utilized all of its cash
generated from operations plus proceeds from its revolving line of credit
($1,750,000) to purchase property, plant and equipment ($1,461,000) and invest
in additional inventory ($6,873,000) as discussed below. The Company's
management believes that current working capital, cash flows from operations and
its revolving credit agreement will be sufficient to fund the Company's
operations through at least the next twelve months.

Accounts Receivable at March 31, 2006 decreased $1,170,000 to $20,729,000 as
compared to $21,899,000 at June 30, 2005. This decrease is primarily the result
of the higher sales volume during the quarter ended June 30, 2005 as compared to
the quarter ended March 31, 2006 as well as extended terms granted to certain of
the Company's customers during the quarter ended June 30, 2005. Certain of these
terms extended beyond March 31, 2006.

Inventory at March 31, 2006 increased by $6,873,000 to $23,115,000 as compared
to $16,242,000 at June 30, 2005. This increase was primarily the result of the
Company's 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 as well as adding
additional models to the Company's existing product lines.

As of March 31, 2006, the Company's credit facility consisted of an $18,000,000
secured revolving credit agreement. In December 2004, the Company utilized a
portion of this revolving credit agreement to accelerate repayment of two term
loans aggregating $1,658,000 As of March 31, 2006 there was approximately
$14,300,000 available under the secured revolving credit facility. This credit
facility expires in September 2008.

As of March 31, 2006 the Company had no material commitments for capital
expenditures or inventory purchases other than purchase orders issued in the
normal course of business.

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk

The Company's principal financial instrument is long-term debt consisting of a
revolving credit and term loan facility that provides for interest at a spread
above the prime rate. 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, 2006 an aggregate amount of
approximately $3,700,000 was outstanding under this facility. If these
borrowings remained at this quarter-end level for an entire year and the prime
rate increased or decreased, respectively, by 1% the Company would pay or save,
respectively, an additional $37,000 in interest that year.

From time to time, the Company requires that letters of credit be provided on
foreign sales. In addition, a significant number of 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 because
approximately 15% of the Company's net sales are derived from foreign customers.
In addition, the Company transacts approximately 50% of these foreign sales 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 the
Dominican Peso ("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 $365,000.


                                       17



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, 2006, 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.

Our independent registered accounting firm Marcum & Kliegman, LLP ("MK"),
informed us and our Audit Committee of the Board of Directors that in connection
with their audit of our financial results for the fiscal year ended June 30,
2005, MK had discovered conditions which they deemed to be significant
deficiencies, (as defined by standards established by the Public Company
Accounting Oversight Board) in our financial statement closing process. A
significant deficiency is a control deficiency where there is more than a remote
likelihood that a misstatement of the company's annual or interim financial
statements that is more than inconsequential will not be prevented or detected.
The significant deficiencies related to the timely performance of processes and
procedures for the period end closing process and its review by internal
accounting personnel. Management has informed MK and the Audit Committee that it
will increase its staffing relating to the financial statement closing process
to more a adequate level to prevent reoccurrences of this deficiency 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 this action be be completed before the end of
fiscal 2006.

During the third quarter of 2006, 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 as described above. Management does not believe that
the above significant deficiencies affected the results of the quarter ended
March 31, 2006 or any prior period.


                                       18



PART II: OTHER INFORMATION

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


                                       19



                                   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 9, 2006

                           NAPCO SECURITY SYSTEMS, 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)


                                       20