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


                                 FORM 10-Q/A

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    For the quarterly period ended December 31, 1997

                              OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    For the transition period from ______ to __________


                        Commission File Number: 0-8125


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


                           DETECTION SYSTEMS, INC.
            (Exact name of registrant as specified in its charter)


State of New York                               16-0958589
(State or other jurisdiction                    (I.R.S. Employer
of incorporation or organization)               Identification No.)

                130 Perinton Parkway, Fairport, New York 14450
             (Address of principal executive offices) (Zip Code)

                                (716) 223-4060
             (Registrant's telephone number, including area code)

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


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
the filing requirements for the past 90 days.    Yes   X      No _____


As of February 20, 1998 there were outstanding 6,286,495 shares of the
registrant's common stock, par value $.05 per share.





                           PART I FINANCIAL INFORMATION
                      DETECTION SYSTEMS, INC. AND SUBSIDIARIES
                             Consolidated Balance Sheet

                                                Dec. 31, 1997  March 31, 1997
                                                (Unaudited)
Assets
Current assets:
Cash and cash equivalents                         $ 7,128,288     $ 2,244,265
Accounts receivable, less allowance
   for doubtful accounts of $563,400 and           23,428,292      15,246,309
   $313,800, respectively
Inventories                                        33,844,010      29,995,215
Deferred income tax charges                         2,173,715       2,132,156
Prepaid expenses and other assets                   1,774,764         883,137
                                                   ----------      ----------
                                                   68,349,069      50,501,082
                                                   ----------      ----------
Fixed assets                                       11,746,215      11,248,171

Deferred income taxes                               3,046,420       3,046,200
Goodwill and other intangibles                      4,975,111       2,942,626
Other assets                                          555,653         537,772
                                                   ----------      ----------
  Total Assets                                    $88,672,468     $68,275,851
                                                   ==========      ==========

Liabilities and Shareholders' Equity
Current liabilities:
   Current portion of long term debt              $ 2,935,971     $   953,648
   Current portion of capital lease
     obligation                                        58,987         147,574
   Short term borrowings                              684,000               0
   Accounts payable                                14,299,732      12,259,380
   Accrued payroll and benefits                     1,315,461       2,818,487
   Other accrued liabilities                        2,537,267       3,254,593
                                                   ----------      ----------
                                                   21,831,418      19,433,682

Obligations under capital leases                       25,000          54,125
Other long term liabilities                         3,330,784       2,924,975
Long term debt                                     14,650,644      28,031,802


Shareholders' equity:
  Common stock, par value $.05 per
   share; Authorized - 12,000,000
   shares; Issued - 6,325,282 shares
   at December 31, 1997, and 4,478,993
   shares at March 31, 1997                           316,221         223,950
Capital in excess of par value                     42,601,283       9,448,917
Retained earnings                                  10,335,738       8,594,306
                                                   ----------      ----------
                                                   53,253,242      18,267,173
Less - Treasury stock, at cost                     (3,785,647)        (52,553)
  Notes receivable for stock purchases               (325,401)       (378,373)
  Cumulative translation adjustment                  (307,572)         (4,980)
                                                   ----------      ----------
                                                   48,834,622      17,831,267
                                                   ----------      ----------
Total liabilities and shareholders' equity        $88,672,468     $68,275,851
                                                   ==========      ==========

               (See accompanying notes to financial statements)



                   DETECTION SYSTEMS, INC. AND SUBSIDIARIES
          Consolidated Statement of Operations and Retained Earnings
                                 (Unaudited)

                                               Dec. 31, 1997      Dec. 31, 1996
For the Three Months Ended:                    (Current Year)   (Preceding Year)
                                                  ----------        -----------
Net sales                                        $31,346,845        $26,441,837

Costs and expenses:
 Production                                       21,736,505         17,366,386
 Research and development                          2,266,100          2,046,418
 Marketing, administrative and general             7,105,519          5,165,390
                                                  ----------         ----------
Total costs and expenses                          31,108,124         24,578,194

Operating income                                     238,721          1,863,643

Interest income                                       91,813             54,270
Interest expense                                    (418,948)          (464,645)
Other income (expense)                               (21,981)                 0
                                                  ----------         ----------
Income before taxes                                 (110,395)         1,453,268

(Benefit) provision for taxes                        (34,497)           379,000
                                                  ----------         ----------
Net income                                        $  (75,898)        $1,074,268
                                                  ==========         ==========

Retained earnings at beginning of period          10,411,636          6,287,437
                                                  ----------         ----------
Retained earnings at end of period               $10,335,738         $7,361,705
                                                  ==========         ==========
Earnings per share
 Basic                                                $(0.01)             $0.24
                                                        ====               ====
 Diluted                                              $(0.01)             $0.21
                                                        ====               ====
               (See accompanying notes to financial statements)
                  


                   DETECTION SYSTEMS, INC. AND SUBSIDIARIES
                   Consolidated Income Statement(Unaudited)


For the Nine Months Ended:                     Dec. 31, 1997    Dec. 31, 1996
                                               (Current Year)  (Preceding Year)
                                                ------------    -------------

Net Sales                                        $94,017,726     $74,485,802

Costs and expenses:
   Production                                     62,325,836      49,309,576
   Research and development                        6,554,052       5,803,833
   Marketing, administrative and general          20,980,760      14,635,291
                                                  ----------      ----------

Total costs and expenses                          89,860,648      69,748,700

Operating income                                   4,157,078       4,737,102

Interest income                                       97,843          82,396
Interest expense                                  (1,873,248)     (1,332,458)
Other income                                         216,777          23,643
                                                  ----------      ----------

Income before taxes                                2,598,450       3,510,683

Provision for taxes                                  869,002       1,018,000
                                                  ----------      ----------

Net income                                       $ 1,729,448      $2,492,683
                                                  ----------      ----------

Retained earnings at beginning of period           8,594,306       4,869,022

Amortization of redeemable common stock               11,984
                                                  ----------       ---------
Retained earnings at end of period               $10,335,738      $7,361,705
                                                  ==========       =========
Earnings per share
 Basic                                                 $0.34           $0.58
                                                        ====            ====
 Diluted                                               $0.31           $0.52
                                                        ====            ====
              (See accompanying notes to financial information)
  
               
                   DETECTION SYSTEMS, INC. AND SUBSIDIARIES
               Consolidated Statement of Cash Flows (Unaudited)

For the Nine Months Ended December 31,                      1997         1996
Cash Flows from Operating Activities:                       ----         ----
Net income                                            $1,729,448   $2,492,683
                                                       ---------    ---------
Adjustments to reconcile net income to net cash
   provided by operating activities:
  Depreciation and amortization                        2,951,340    1,901,244
  Gain on sale of land                                  (205,000)
  Stock based compensation                                85,975
   Deferred compensation                                 457,415      (16,669)

  Changes in operating assets and liabilities:
  Accounts receivable                                 (1,820,675)  (4,222,330)
  Inventories                                          2,313,245  (10,177,328)
  Income tax receivable                                 (786,684)      97,424
  Prepaid expenses and other assets                     (959,934)  (1,155,565)
  Accounts payable                                    (2,447,886)   5,100,922
  Accrued payroll and benefits                        (1,643,109)   1,354,410
   Other accrued liabilities                          (2,577,193)    (248,677)
                                                       ---------    ---------
  Total adjustments                                   (4,632,506)  (7,366,569)
                                                       ---------    ---------
   Net cash used in operating
    activities                                        (2,903,058)  (4,873,886)

Cash Flows from Investing Activities:
   Proceeds from sale of land                            312,000
   Capital expenditures                               (1,976,675)  (2,317,285)
   Purchase of companies, net of cash acquired        (6,816,052)
                                                       ---------   ----------
   Net cash used in investing activities              (8,480,727)  (2,317,285)
                                                       ---------    ---------
 
Cash Flows from Financing Activities:
   Proceeds from borrowings                            6,718,198    5,257,700
   Proceeds from issuance of common stock             28,519,669    2,000,005
   Principal payments on long-term debt and
    capital lease obligations                        (19,135,399)    (527,789)
   Common stock transactions                             455,948      437,521
   Amortization of redeemable common stock                11,984
                                                       ---------   ----------
Net cash provided by financing activities             16,570,400   7,167,437
                                                       ---------   ----------
Effect of exchange rate changes on cash balances        (302,592)

Net increase in cash and cash                                      
  equivalents                                          4,884,023      (23,734)

Cash and cash equivalents at beginning of period       2,244,265      913,716

Cash and cash equivalents at end of period            $7,128,288    $ 889,982
                                                       =========     ========

Cash paid during the year for:
   Interest                                           $1,531,948     $976,200
                                                      
   Income taxes                                       $1,611,600     $585,200
                                                      
              (See accompanying notes to financial information)


                   DETECTION SYSTEMS, INC. AND SUBSIDIARIES
                        NOTES TO FINANCIAL INFORMATION
                      THREE AND NINE MONTH PERIODS ENDED
                              December 31, 1997
                                 (Unaudited)

NOTE 1. GENERAL

The accompanying unaudited interim consolidated financial information has
been prepared in accordance with the rules and regulations of the Securities
and Exchange Commission (SEC).  The unaudited interim consolidated financial
information include the consolidated accounts of Detection Systems, Inc. and
its majority-owned subsidiaries (collectively, "the Company") with all
intercompany transactions eliminated.  In the opinion of management, all
adjustments necessary for a fair statement of the financial position, results
of operations and cash flows for the interim periods presented have been
made.  Certain footnote disclosures normally included in financial
information prepared in accordance with generally accepted accounting
principles (GAAP) have been condensed or omitted pursuant to such SEC rules
and regulations.  The financial information should be read in conjunction
with the Company's Annual Report on Form 10-K for the year ended March 31,
1997.

Cash flow statement - During the first quarter of fiscal 1998, the Company
issued 221,738 and 34,121 shares of common stock in connection with the
acquisitions of DA Systems and Seriee S.A., respectively.  The Company
repurchased the 221,738 shares issued in connection with the acquisition of
DA Systems during the second quarter of fiscal 1998 (see Note 3).

Earnings per share - The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share," during the quarter ended
December 31, 1997.  As required by this Statement, earnings per share of
prior periods are presented in accordance with the provisions of SFAS No.
128.   There are no significant reconciling items between net income as
presented in the consolidated statement of operations and net income
available to common stockholders used in the calculation of earnings per
share.  Earnings per share in future periods will be impacted by the
acquisition of EDM in January 1998 (See Note 3).  Reconciling items between
the number of shares used in the calculation of basic and diluted earnings
per share relate only to deferred compensation plans, options and warrants,
as follows:

                                        Three months ending   Nine months ending
                                              Dec. 31,              Dec. 31,
                                           1997       1996      1997       1996
Weighted average number of
 shares outstanding                   6,047,782  4,451,985 5,164,808  4,320,765
Shares associated with deferred
 compensation, option and
 warrant plans                               --    582,297   397,576    469,182

NOTE 2.  INVENTORIES

Major classifications of inventory follow:

                                    Dec. 31, 1997      Mar. 31, 1997
Component parts                       $17,488,101        $19,457,368
Work in process                         1,778,394          2,697,459
Finished products                      14,577,516          7,840,388
                                       ----------         ----------
                                      $33,844,010        $29,995,215
                                       ==========         ==========
NOTE 3.  ACQUISITIONS

In May 1997, the Company acquired all of the outstanding stock of DA Systems,
in exchange for 221,738 shares of its common stock.  The shares were callable
at the Company's option at $17 per share plus interest at 8.25% until June
30, 1998, and could be put to the Company at that price after that date.  The
Company exercised its call option to repurchase these shares in connection
with the issuance of common stock in September 1997.  The cost of this
acquisition was approximately $4.0 million.  DA Systems is a leading British
manufacturer of security control equipment with annual net sales of
approximately $10.8 million.

In June 1997, the Company acquired 99.5% of the outstanding stock of Seriee
S.A. of France, in exchange for 34,121 shares of its common stock, valued at
approximately $0.6 million.  Seriee is a leading manufacturer of electronic
control and communication equipment with annual net sales of approximately
$6.3 million.

In June 1997, the Company acquired 98.7% of the outstanding stock of
Radio-Active Systems N.V.("RAS") of Belgium for approximately $3.6 million in
cash.  RAS has the largest security equipment distribution network in Belgium
with annual net sales of approximately $10 million.

In January 1998, the Company acquired all of the outstanding stock of
Electronics Design & Manufacturing Pty Limited ("EDM") of Australia in
exchange for 186,667 shares of its common stock and $2.8 million in cash.
EDM is a major Australian manufacturer of security control equipment with
annual net sales of approximately $4.6 million.

These transactions have been accounted for as purchases and, accordingly, the
results of DA Systems, Seriee, RAS and EDM are included, or in the case of
EDM, will be included in the consolidated financial information as of the
date of acquisition.  The financial information reflects the preliminary
allocation of purchase price as the purchase price allocation has not been
finalized.  Unallocated excess of purchase price over net assets acquired as
of December 31, 1997 is $2.3 million and is included with goodwill and other
intangibles.

Note 4.  ISSUANCE OF COMMON STOCK

In September 1997, the Company sold 1,325,000 shares of common stock at $20
per share in a public offering. The Company had granted the underwriters a
30-day option to purchase up to 231,750 additional shares of common stock
under the same terms and conditions as the public offering to cover
over-allotments, and this option was exercised in October 1997.  Expenses
associated with this offering of approximately $2.7 million were net against
proceeds.

NOTE 5.  RESTATEMENT

The Company discovered an incorrect posting in second quarter fiscal quarter
1998 accounts payable of approximately $950,000.  This error occurred in the
conversion of its China manufacturing facility's existing information system
to the corporate system.  The Company restated the financial statements
included in its second quarter fiscal 1998 Form 10-Q in a Form 10-Q/A.  In
cconnection with the fiscal 1998 year end close, the Company discovered
offsetting errors relating to the second quarter and errors relating to the
third quarter of fiscal 1998, of approximately $432,000 and ($264,000),
respectively.  The Company is restating its second and third quarter Form
10-Q's in Form 10-Q/A's.  As a result of this, net income for the second
quarter was $0.7 million ($0.14 per basic share and $0.12 per diluted share)
compared to previously reported net income of $0.4 million ($0.08 per basic
share and $0.07 per diluted share) and net loss for the third quarter was
$0.1 million (a loss of $0.01 per basic and per diluted share)compared to
previously reported net income of $0.1 million ($0.02 per basic and per
diluted share).
 
The third quarter of fiscal 1998 and year to date results of operations and
Management's Discussion and Analysis included in this report reflect the
restated results of operations for the quarter and nine months ended December
31, 1997.


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

Overview

    The Company is a leading supplier of equipment to the electronic
protection industry. The Company designs, manufactures and markets electronic
detection, control and communication equipment for security, fire protection,
access control and CCTV applications, offering products primarily for the
commercial and mid- to high-end residential portions of the market. From its
founding in 1968 until 1995, the Company was primarily a niche provider of
intrusion detection devices for the domestic market. In 1995, the Company
adopted a strategy designed to substantially expand its product offerings,
establish an international sales presence, increase its manufacturing
capacity and improve its manufacturing cost structure. The Company has since
made six acquisitions, opened sales offices in six countries and established
a manufacturing facility in China. The Company's net sales increased 26.2% to
$94.0 million in the nine months ended December 31, 1997 from $74.5 million
in the comparable period in fiscal 1997.  Approximately $15.6 million of the
Company's sales for the nine months ended December 31, 1997 are from these
acquired companies.

    The Company's significant acquisitions during the current fiscal year
were: (i) purchase in May 1997 of DA Systems in the U.K., with annual net
sales of approximately $10.8 million, (ii) purchase in June 1997 of Seriee in
France, with annual net sales of approximately $6.3 million, (iii) purchase
in June 1997 of RAS in Belgium, with annual net sales of approximately $10.0
million and (iv) purchase in January 1998 of EDM in Australia, with annual
net sales of approximately $4.6 million. Previous significant acquisitions
were Radionics (February 1996) and Senses International, Inc. (July 1996).
These acquisitions have a significant impact on the comparative financial
information for the three and nine month periods ending December 31, 1997 and
1996.  The acquisitions were funded by borrowings under a commercial credit
facility and/or issuance of the Company's common stock.
 
      Since the opening of the China manufacturing facility in late fiscal
1996 and throughout fiscal 1997, a portion of the Company's manufacturing was
moved from domestic plants to the China facility.  While production of the
Company's highest volume products were moved to China during this period,
such products were limited in number relative to the Company's entire product
line. During the first and second quarters of fiscal 1998, a far greater
number of products that continued to be manufactured at the Company's
Radionics subsidiary were moved to the China facility.  Manufacturing
efficiencies consistent with previous product transfers are anticipated, but
the short term impact of this rapid shift in production location resulted in
unexpected inefficiencies, exacerbated by the Company's multiple
manufacturing information systems, which created difficulties in effectively
coordinating overall materials procurement, production and scheduling.
Consequently, production quantities, yields and efficiency of the China
facility declined during this period while production related overhead
expenses, such as freight, remained constant or increased. To help assure
timely customer deliveries, the Company restarted manufacturing some of its
products at its Radionics facility. These factors resulted in higher average
unit costs for much of the product sold by the Company during the second and
third quarters of fiscal 1998.

      Recently, the Company assigned a senior executive, George E. Behlke,
Vice President of Engineering, to manage and improve manufacturing operations
worldwide.  In addition, the Company has added key personnel to both the
financial and management information systems departments.  This team is
leading the modification of the Company's inventory and manufacturing
information systems, allowing the Company to improve all aspects of the
supply chain process.

Results of Operations

    The following table sets forth, for the periods indicated, the
percentages which certain items of income and expense bear to net sales:
                                Three months     Nine months       Fiscal year
                               ended Dec. 31,   ended Dec. 31,   ended March 31,
                               1997      1996    1997     1996    1997   1996

Net sales                     100.0%    100.0%  100.0%   100.0%  100.0% 100.0%
Costs and expenses:
 Production                    69.3      65.7    66.3     66.2    64.2   66.9
 Research and development       7.2       7.7     7.0      7.8     8.0   11.2
 Marketing, administrative
  and general                  22.7      19.6    22.3     19.6    21.1   25.1
Purchased in-process                                                          
  research and development                                               22.3 
                               ----      ----    ----     ----    ----   ----
Operating income (loss)         0.8       7.0     4.4      6.4     6.7  (25.5)
Interest income                 0.3       0.3     0.1      0.0     0.2    0.8
Interest expense                1.3       1.8     2.0      1.8     1.7    0.8
Other income (expense)         (0.1)      0.0     0.3      0.1     0.0    0.0
                               ----      ----    ----     ----    ----   ----
Income (loss) before
 income taxes                  (0.3)      5.5     2.8      4.7     5.2  (25.5)
Provision (benefit) for                
 income taxes                  (0.1)      1.4     0.9      1.4     1.5   (6.7)
                               ----      ----    ----     ----    ----   ----
 Net income (loss)             (0.2)%     4.1%    1.8%     3.3%    3.7% (18.8)%
                               ====      ====    ====     ====    ====  =====
 
Three Months Ended December 31, 1997 Compared to Three Months Ended December
31, 1996

    The Company's net sales increased 18.6% to $31.3 million in the fiscal
1998 period from $26.4 million in the comparable period in fiscal 1997.  The
net sales of DA Systems, RAS and Seriee, which were acquired in the first
quarter of fiscal 1998, accounted for $6.5 million of this increase.
Excluding the impact of acquisitions, sales declined $1.6 million primarily
as a result of reduced sales volumes to the Company's largest domestic
distributor. In addition, during the third quarter of fiscal 1998, two of the
Company's larger customers were acquired by other companies.  It is
anticipated that these transactions may result in some decline in sales to
these customers in the future.  However, the Company is working to minimize
any potentially adverse impact.

    Production expenses increased 25.2% to $21.7 million in the fiscal 1998
period from $17.4 million in the comparable period in 1997. The increase in
production expenses was primarily due to a corresponding increase in the
Company's net sales. Gross margin during the third quarter of fiscal 1998 of 
30.7% declined from the 34.3% gross margin reported for the third quarter of 
fiscal 1997.  Margins have been adversely impacted by lower margin sales from 
companies acquired during fiscal 1998 as well as manufacturing inefficiencies 
from the consolidation of manufacturing operations in China, previously 
discussed.

    Research and development expenses increased 10.7% to $2.3 million in the
fiscal 1998 period from $2.0 million in the comparable period in fiscal
1997.  As a percentage of net sales, research and development expenses
decreased to 7.2% in the fiscal 1998 period from 7.7% in the comparable
period in fiscal 1997.  The increase in research and development expenses was
primarily due to the addition of DA Systems and Seriee research and
development expenses.  The decrease in research and development expenses as a
percentage of net sales was primarily due to savings achieved from the
continued consolidation of certain research and development efforts of
Radionics and the Company.

    Marketing, administrative and general expenses increased 37.6% to
$7.1 million in the fiscal 1998 period from $5.2 million in the comparable
period in fiscal 1997.  As a percentage of net sales, marketing,
administrative and general expenses increased to 22.7% in the fiscal 1998
period from 19.6% in the comparable period in fiscal 1997.  This increase was
primarily due to additional marketing, administrative and general expenses
related to the newly acquired companies and increased international marketing
expenditures.  General expenses also included $250,000 of exchange losses
during the quarter ended December 31, 1997.  Exchange losses were
insignificant during the same quarter last year.  The Company is currently
reviewing strategies to reduce exposure to currency fluctuations.

    Interest expense decreased to $0.4 million in the fiscal 1998 period from
$0.5 million in the comparable period in fiscal 1997.  This decrease was
primarily due to the repayment of borrowings originally used to finance the
Company's international expansion and increased inventory levels.  Borrowings
were repaid using proceeds from the second quarter offering of common stock.

    The Company's effective income tax rate for the fiscal 1998 period was
31.2% compared to 26.1% for the comparable period in fiscal 1997.  The higher
effective rate is due to a shift in the source of pretax income among
domestic and international entities.

Nine Months Ended December 31, 1997 Compared to Nine Months Ended December
31, 1996

    The Company's net sales increased 26.2% to $94.0 million in the fiscal
1998 period from $74.5 million in the comparable period in fiscal 1997.  The
net sales of DA Systems, RAS and Seriee which were acquired in the first
fiscal quarter of fiscal 1998, accounted for $15.6 million of this increase.
Excluding the impact of these acquisitions, sales increased $3.9 million or
5.2% as a result of increased sales penetration across many accounts.
 
    Production expenses increased 26.4% to $62.3 million in the fiscal 1998
period from $31.9 million in the comparable period in fiscal 1997 primarily
due to the corresponding increase in sales. Gross margins remained steady at 
33.7% in the fiscal 1998 period compared to 33.8% reported in the comparable 
year ago period.

    Research and development expenses increased 12.9% to $6.6 million in the
fiscal 1998 period from $5.8 million in the comparable period in fiscal
1997.  As a percentage of net sales, research and development expenses
decreased to 7.0% in the fiscal 1998 period from 7.8% in the comparable
period in fiscal 1997.  The increase in research and development expenses was
primarily due to the addition of DA Systems' and Seriee's research and
development expenses.  The decrease in research and development expenses as a
percentage of net sales was primarily due to savings achieved from the
continued consolidation of certain research and development efforts of
Radionics and the Company.

    Marketing, administrative and general expenses increased 43.4% to
$21.0 million in the fiscal 1998 period from $14.6 million in the comparable
period in fiscal 1997.  As a percentage of net sales, marketing,
administrative and general expenses increased to 22.3% in the fiscal 1998
period from 19.6% in the comparable period in 1997. This increase was
primarily due to additional marketing, administrative and general expenses
related to the newly acquired companies and increased international marketing
expenditures.  General expenses for the nine months ended December 31, 1998
also include $431,000 of losses associated with foreign exchange
transactions, an increase of approximately $325,000 over the same period of
fiscal 1997.

    Interest expense increased to $1.9 million in the fiscal 1998 period from
$1.3 million in the comparable period in fiscal 1997.  This increase was
primarily due to additional borrowings required to finance the Company's
international expansion and increased inventory levels necessary during the
transition of a portion of the Company's manufacturing operations to the
China facility.

    The Company's effective income tax rate for the fiscal 1998 period was
33.4% compared to 29.0% for the comparable period in fiscal 1997.  The higher
effective rate reflects a shift in the source of pretax income between
domestic and international entities.

Liquidity and Capital Resources

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

    Nine Months Ended December 31, 1997.  During the nine months ended
December 31, 1997, the Company used cash in its operations of $2.9 million.
This use of cash was primarily driven by an increase in net working capital
due to the increase in inventory related to the shift in manufacturing to the
Company's China facility and significant reductions in accounts payable,
payroll and other accruals.

    During the nine months ended December 31, 1997, cash used for investing
activities was $8.5 million.  Approximately $6.8 million was used for the
acquisition of RAS, DA Systems and $2.0 million was used for capital
expenditures, primarily for production tooling.

    During the nine months ended December 31, 1997, cash flows provided by
financing activities were $16.6 million.  Net proceed from the sale of common
stock were approximately $28.4 million, with $19.1 million of these proceeds
being used to repay outstanding borrowings.

    Capital Resources.  On December 31, 1997, the Company had cash balances
of $7.1 million.  On that date, the Company also has $17.0 million available
under a revolving credit facility.  This credit facility bears interest based
on the prime rate or the London Interbank Offered Rate, plus applicable
points based on the Company's degree of financial leverage, and matures on
July 31, 1998.

      During September 1997, the Company sold 1,325,000 shares of common
stock at $20 per share.  Expenses of approximately $2,333,500 were net
against proceeds.  The Company granted the underwriters a 30-day option to
purchase up to 231,750 additional shares of common stock under the same terms
and conditions as the public offering to cover over-allotments.  This option
was exercised in October 1997.

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

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

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

    Year 2000 Issues.  The Company does not believe that Year 2000 issues
will significantly affect future financial results or required cash
expenditures.

Forward-Looking Statements

    The foregoing discussion and analysis contain certain "forward-looking
statements" within the meaning of Section 27A of the Securities Act, which
represent the Company's expectations or beliefs, including, but not limited
to, statements concerning the Company's operations, performance, financial
condition, growth and acquisition strategies, margins and growth in sales of
the Company's products.  For this purpose, any statements contained therein
that are not statements of historical fact may be deemed to be
forward-looking statements.  These statements by their nature involve
substantial risks and uncertainties, certain of which are beyond the
Company's control, and actual results may differ materially depending on a
variety of important factors, including those presented under "Risk Factors"
included in the Company's Prospectus dated September 19, 1997.


                                 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.

                                    DETECTION SYSTEMS, INC. 
                                    Registrant


DATE: August 11, 1998               /s/ Karl H. Kostusiak
                                    Karl H. Kostusiak, President



                                    /s/ Frank J. Ryan
                                    Frank J. Ryan, Vice President,
                                    Secretary and Treasurer
                                    (Principal Financial Officer)

 
                                    /s/ Christopher P. Gerace
                                    Christopher P. Gerace
                                    Chief Accounting Officer
                                    (Principal Accounting Officer)


                          PART II OTHER INFORMATION


Item 1.  Legal Proceedings

         Not applicable


Item 4.  Submission of Matters to a Vote of Security Holders.

         Not Applicable


Item 5.  Other matters

         Not Applicable


Item 6.  Exhibits and Reports for Form 8-K.

         A. Exhibits

            See Exhibit Index

         B. Reports on Form 8-K

            On February 2, 1998, a Form 8-K was filed under Item 5, related
            to the Registrant's acquisition of all of the outstanding stock
            of Electronics Design & Manufacturing Pty Limited on January 21, 
            1998. No financial reports were included with this report.


                                EXHIBIT INDEX

3 (a)        Detection Systems, Inc. Certification of Incorporation, as
             amended, are incorporated by reference to Exhibit 3(a) to the
             Company's 1997 Annual Report on Form 10-K.

3 (b)        Detection Systems, Inc. By-laws, as amended, are incorporated by
             reference to Exhibit 3(b) to the Company's 1997 Annual Report on
             Form 10-K.

10 (a)       Executive Employment Agreement with Karl H. Kostusiak is
             incorporated by reference to Exhibit 10(a) of the Company's
             Quarterly Report on Form 10-Q for the quarter ended 6/30/97.

10 (b)       Executive Employment Agreements with David B. Lederer are
             incorporated by reference to Exhibit 10(b) of the Company's
             Quarterly Report on Form 10-Q for the quarter ended 6/30/97.

10 (c)       Deferred Compensation Plans are included as Exhibit 10(c) of this
             Quarterly Report on Form 10-Q.

(11)         Statement regarding computation of per share earnings is included
             as Exhibit 11 of this Quarterly Report on Form 10-Q.

(27)         Financial data schedule is included as Exhibit 27 to the
             electronic Edgar filing of this Interim Report on Form 10-Q.