Form 10-Q Quarterly Report

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

     [x] QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934

                  For the quarterly period ended June 30, 1998

                                       OR

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

     Commission File Number 0-22693

                        SYSCOMM INTERNATIONAL CORPORATION
             (Exact Name of Registrant as Specified in its Charter)

          Delaware                                    11-2889809
(State or other Jurisdiction of                   (I.R.S. Employer
 Incorporation or Organization)                 Identification Number)

                               20 Precision Drive
                               Shirley, N.Y. 11967
              (Address of Principal Executive Offices and Zip Code)

                                 (516) 205-1000
              (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 such
filing requirements for the past 90 days.

         Yes       X                No  ________

     Number of shares  outstanding of the issuer's Common Stock,  par value $.01
per share, as of August 5, 1998: 4,749,905 shares.

<PAGE>

     Part I. Financial Information

     Item 1. Consolidated Financial Statements              

     Consolidated Statements of Operations (Unaudited)
     for the Three and Nine Months Ended June 30, 1998
     and 1997                                               1

     Consolidated Balance Sheets
     as of June 30, 1998 and September 30, 1997             2

     Consolidated Statements of Cash Flows
     For the Nine Months Ended June 30, 1998
     and 1997                                               3

     Notes to Consolidated Financial Statements             4

     Item 2. Management's Discussion and Analysis of
     Financial Condition and Results of Operations          7

     Part II. Other Information

     Signatures                                             9

<PAGE>

                         Part I - FINANCIAL INFORMATION
                          Item 1. Financial Statements



                        SYSCOMM INTERNATIONAL CORPORATION
                      Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                 THREE MONTHS ENDED                   NINE MONTHS ENDED
                                              6/30/98           6/30/97         6/30/98             6/30/97
                                              -------           -------         -------             -------
<S>                                      <C>                  <C>              <C>              <C>  

Net sales                                  $ 26,416,609      $ 24,718,664     $ 76,706,890      $ 63,877,540
Cost of sales                                23,917,082        22,101,526       69,519,956        55,991,555
                                             ----------        ----------       ----------        ----------
     Gross profit                             2,499,527         2,617,138        7,186,934         7,885,985
                                             ----------        ----------       ----------        ----------
Selling & administrative expenses             2,067,453         1,544,756        6,096,657         4,501,904
                                             ----------        ----------       ----------        ----------
Income from operations                          432,074         1,072,382        1,090,277         3,384,081
                                             ----------        ----------       ----------        ----------
Other income (expenses)
   Interest expenses                           (245,456)         (226,558)        (701,324)         (778,702)
   Other                                       ( 34,930)           21,723         ( 28,637)           79,283
                                               ---------         ---------        ---------       -----------
   Total other expenses                        (280,386)         (204,835)        (729,961)         (699,419)
                                               ---------         ---------        ---------       -----------
   Income from operations
     before income taxes                        151,688           867,547          360,316         2,684,662

Provision for income taxes                       62,600           365,200          150,600         1,132,000
                                               ---------         ---------        ---------       -----------
Net income                                $      89,088     $     502,347    $     209,716     $   1,552,662
                                               =========         =========        =========       ===========
Net income per common share
         Basic                            $        0.02     $        0.15    $        0.05     $        0.48
         Diluted                          $        0.02     $        0.14    $        0.04     $        0.45
                                                     
                                                   

Weighted average number of common
shares outstanding
         Basic                                4,562,969         3,362,848        4,558,016         3,234,409
         Diluted                              4,932,794         3,649,042        4,963,031         3,468,229


</TABLE>

The accompanying notes are an integral part of these statements.

                                      (1)
<PAGE>

                        SYSCOMM INTERNATIONAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                 June 30, 1998            September 30, 1997
                                                                 -------------            ------------------
                                                                  (Unaudited)                  (Audited)

<S>                                                         <C>                             <C>   

                      ASSETS

Cash and cash equivalents                                     $   1,623,278                $       437,594
Accounts and note receivable, net                                23,707,792                     23,209,156
Inventory                                                         6,469,513                     12,644,343
Other                                                               451,882                        275,307
                                                                 ----------                     ----------
   Total current assets                                          32,252,465                     36,566,400
                                                                 ----------                     ----------
Property, plant and equipment, net                                3,440,972                      1,201,549
Other assets                                                        315,476                        336,087
                                                                 ----------                     ----------
   Total assets                                                $ 36,008,913                  $  38,104,036
                                                                 ==========                     ==========
                                                                 
                 LIABILITIES AND
               STOCKHOLDERS' EQUITY

Supplier credit facility                                       $ 12,721,731                   $ 10,614,838
Accounts payable and accrued liabilities                         11,175,078                     15,052,319
Income taxes payable                                                    ---                        499,214
Other current liabilities                                            34,972                         43,613
                                                                 ----------                     ----------
   Total current liabilities                                     23,931,781                     26,209,984
Long-term liabilities                                                42,780                         66,416
                                                                 ----------                     ----------
   Total liabilities                                             23,974,561                     26,276,400
                                                                 ==========                     ==========
Stockholders' Equity:
         Preferred stock, no par value                                    -                              -
         Common stock, $.01 par value                                50,432                         50,172
         Additional paid-in capital                               5,629,692                      5,610,452
         Unrealized loss on available-for-
            sale securities                                         (83,216)                       (60,716)
         Retained earnings                                        6,579,614                      6,369,898
         Less: Treasury stock (at cost)                            (142,170)                      (142,170)
                                                                 ----------                     ----------
   Total stockholders' equity                                    12,034,352                     11,827,636
                                                                 ----------                     ----------
   Total liabilities and
      stockholders' equity                                    $  36,008,913                  $  38,104,036
                                                                 ==========                     ==========


</TABLE>

The accompanying notes are an integral part of these statements.


                                      (2)
<PAGE>







                        SYSCOMM INTERNATIONAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                        Nine Months Ended June 30,
                                                                        --------------------------
                                                                          1998              1997
                                                                          ----              ----
<S>                                                                    <C>               <C>

Cash Flows From Operating Activities
  Net Income                                                       $     209,716       $  1,552,662
  Adjustments to reconcile net income to net cash
      provided by operating activities
          Depreciation and amortization                                  208,200            123,107
          Gain on disposition of fixed assets                              - 0 -             (2,570)
          Changes in assets and liabilities
              Accounts and note receivable                              (498,636)         1,458,109
              Inventory                                                6,174,830          1,148,170
              Other assets                                              (178,464)           (88,901)
              Accounts payable and accrued liabilities                (3,877,241)           516,505
              Income taxes payable                                      (499,214)          (928,252)
                                                                      ----------          ---------
                 Net Cash Provided by Operating Activities             1,539,191          3,778,830
                                                                      ----------          ---------

Cash Flows From Investing Activities
   Purchase of fixed assets                                          (2,447,623)           (298,871)
   Proceeds from disposition of fixed assets                             -0-                  7,300
                                                                     -----------          ----------
        Net Cash Used in Investing Activities                        (2,447,623)           (291,571)
                                                                     -----------          ----------

Cash Flows From Financing Activities
   Net proceeds from (payments under) supplier credit facility         2,106,893         (8,777,120)
   Net proceeds from initial public offering of common stock                 -0-          4,892,136
   Net proceeds from the exercise of stock options                        19,500                -0-
   Payments of long-term liabilities                                     (32,277)           (24,517)
                                                                      ----------          ----------
        Net Cash Provided by (Used by) Financing Activities            2,094,116         (3,909,501)
                                                                      ----------          ----------
        Net Increase (Decrease) in Cash and Cash Equivalents           1,185,684           (422,242)

Cash and Cash Equivalents at Beginning of Period                         437,594          1,180,680
                                                                      ----------          ----------

Cash and Cash Equivalents at End of Period                         $   1,623,278    $       758,438
                                                                      ==========          ==========

Supplemental Disclosures of Cash Flow Information Cash paid during the year for:
        Income taxes                                               $     809,910    $     2,060,279
        Interest                                                         701,324            778,702

Supplemental Schedules of Non-cash Investing and
   Financing Activities
   Acquisition of equipment:
        Cost of Equipment                                          $      -0-        $       79,245
           Less: Equipment financed                                       -0-               (79,245)
                                                                      ----------          ----------
                Cash Paid for Capital Expenditures                 $      -0-        $       - 0 -
                                                                      ==========          ==========
                                                                                            

</TABLE>
                                      (3)
<PAGE>


                       SYSCOMM INTERNATIONAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     1. The condensed consolidated financial statements of SysComm International
Corporation  (the  "Company")  are  unaudited  (except  for  the  balance  sheet
information  as of  September  30,  1997,  which is derived  from the  Company's
audited  financial  statements) and reflect all adjustments  (consisting only of
normal recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of the financial  position and operating results for the
interim periods. The condensed  consolidated financial statements should be read
in conjunction  with the  consolidated  financial  statements and notes thereto,
contained in the Company's  Annual  Report.  The results of  operations  for the
three and nine months ended June 30, 1998 are not necessarily  indicative of the
results for the entire  fiscal year ending  September  30,  1998,  or any future
interim period.

     2. Commitments and Contingencies

     (A) Employment Agreements

     Effective  June 17,  1997,  the Company  entered into  two-year  employment
agreements  with four  senior  executives.  The  employment  agreements  include
compensation plans for fiscal 1998 as follows:  John H. Spielberger will receive
a base salary of $160,000 plus a bonus based on a percentage of pre-tax earnings
of the Company based on sales volume; Thomas J. Baehr will receive $160,000 plus
a bonus of a percentage of pre-tax earnings based on sales volume of Information
Technology Services, Inc. ("InfoTech");  the Company's wholly-owned  subsidiary;
Dennis R. Wilson will receive $140,000 plus a discretionary  bonus determined by
the Compensation  Committee;  and Norman M. Gaffney will receive $140,000 plus a
bonus of 1% of the  gross  profit  dollars  and 1% of the  pre-tax  earnings  of
InfoTech.  These annual performance  incentive plans will be reviewed during the
fiscal  year  and  new  incentive  plans  may be  implemented  by the  Company's
Compensation Committee for the fiscal year 1999, and thereafter as applicable.

     (B) Litigation

     The Company was a defendant in a lawsuit which alleged wrongful termination
of employment.  The action had been in the discovery stage since 1992. Effective
April 14, 1998, the Company entered into a Confidential Settlement Agreement and
General  Release with the plaintiff.  Neither the execution of the Agreement nor
the Agreement  itself is an admission of liability or wrongdoing by the Company.
In  consideration  of the  obligations of the plaintiff and in full and complete
settlement and final satisfaction of any claims which plaintiff may have against
the Company,  the Company  agreed to pay plaintiff  $35,000 as full and complete
settlement of the Action.  The Company has no other legal actions pending.

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

     Results of Operations:

     Three Months Ended June 30, 1998  Compared with Three Months Ended June 30,
1997

     Net income for the three months ended June 30, 1998 was $89,088 compared to
$502,347  for the same period last year.  Basic  earnings per share was $.02 for
the three months  ended June 30, 1998  compared to $.15 for the same period last
year.  Basic earnings per share was  calculated  using  4,562,969  common shares
outstanding  for the three  months ended June 30, 1998 versus  3,362,848  common
shares for the same period last year.

     Revenues

     Sales for the three months ended June 30, 1998 were $26,416,609 compared to
$24,718,664 for the same period last year an increase of $1,697,945 or 6.9%. All
of the sales increase relates to improved results in the Company's new locations
in Connecticut and Buffalo,  New York which began operations in January 1997 and
October 1997, respectively.

                                      (4)
<PAGE>
     Gross Profit

     Gross  Profit  as a  percentage  of sales  decreased  to 9.5% for the three
months ended June 30, 1998 compared to 10.6% for the same period last year.  The
reduction in gross profit  percentage  was due primarily to tighter  competition
and lower  selling  prices  especially in the personal  computer  segment of the
market.  Additionally,  the Company had some large sales during the three months
ended June 30, 1998 which produced  relatively low margins. As pricing pressures
in the computer market remain intense, the Company is becoming more selective in
participating  in programs that cannot meet  profitability  requirements.  It is
anticipated that this will help to increase gross profit margins.

     Selling & Administrative Expenses

     Selling  and  Administrative  expenses  increased  by  $522,697  or  34% to
$2,067,453  from  $1,544,756  for the same  period  last year.  The  increase in
expense  relates to the costs  associated  with the  openings  and growth in the
Connecticut;  New Jersey;  and Buffalo,  New York offices  including payroll and
payroll  related  expenses.  The Company is currently  reviewing  all  operating
expenses with the intention of lowering costs.

     Interest Expense

     Interest expense for the three months ended June 30, 1998 increased $18,898
or approximately 8% to $245,456 from $226,558 for the same period last year. The
increase in interest  expense  for the three  months  ended June 30, 1998 is the
result of the increase in accounts  receivable due to the increased sales volume
and the funding of the new facility in Shirley, New York.

     Income from Operations before Income Taxes

     Income from  operations  before  income  taxes was  $151,688  for the three
months  ended June 30, 1998  compared to $867,547 for the same period last year.
The decrease is  attributable to the decrease in gross profit  percentage  along
with the increases in selling and administrative expenses.

     Taxes

     The Company's  effective tax rate was 41.3% for the three months ended June
30, 1998 compared to 42.1% for the same period last year.

     Nine Months  Ended June 30, 1998  Compared  With Nine Months Ended June 30,
1997.

     Net income for the nine months ended June 30, 1998 was $209,716 compared to
$1,552,662 for the same period last year.  Basic earnings per share was $.05 for
the nine months  ended June 30,  1998  compared to $.48 for the same period last
year.  Basic earnings per share was  calculated  using  4,558,016  common shares
outstanding  for the nine months  ended June 30, 1998  versus  3,234,409  common
shares for the same period last year.

     Revenues

     Sales for the nine months ended June 30, 1998 were $76,706,890  compared to
$63,877,540  for the same period last year an  increase of  $12,829,350  or 20%.
Approximately  $10,400,000 of the sales  increases  relates to improved  results
from the  Company's  new locations in  Connecticut  and New Jersey,  which began
operations in January 1997 and Buffalo, New York which began in October 1997.

     Gross Profit

     Gross profit as a percentage of sales decreased to 9.4% for the nine months
ended June 30, 1998 as  compared  to 12.3% for the same  period  last year.  The
reduction in gross profit is attributable to a more competitive market and lower
selling prices  especially in the personal  computer  market.  In addition,  the
Company did not attain all its vendors  quotas which  substantially  reduced the
amount of vendor  rebates  and soft  dollars  available.  During the nine months
ended June 30,  1998,  the  Company  had some large  sales with  relatively  low
margins.  The Company is currently  becoming more selective and is re-evaluating
its position regarding low margin sales.

                                      (5)
<PAGE>
     Selling & Administrative Expenses

     Selling and  administrative  expenses  increased  by  $1,594,753  or 35% to
$6,096,657  from  $4,501,904  for the same  period last year.  This  increase in
expenses is  attributable to the expenses  related to the costs  associated with
the growth in the Connecticut;  New Jersey;  and Buffalo,  New York locations as
well as payroll and payroll related expenses including increased commissions due
on the increased sales volume.


     Interest Expense

     Interest expense for the nine months ended June 30, 1998 decreased  $77,378
or 10% to $701,324 from $778,702 for the same period last year. The Company used
a majority of the proceeds  from the  Company's  1997 public  offering to reduce
debt, but the increase in Accounts  Receivable due to the increased sales volume
and the funding of the new  facility  increased  the amount of debt  outstanding
from the same period last year.

     Income from Operations before Income Taxes

     Income from operations before income taxes was $360,316 for the nine months
ended June 30, 1998  compared to $2,684,662  for the same period last year.  The
increase relates directly to the decrease in gross profit  percentage along with
the increases in selling and administrative expenses.

     Taxes

     The Company's effective tax rate is 41.8% for the nine months ended June 30
1998 compared to 42.2% for the same period last year.

     Liquidity and Capital Resources

     The  Company's  current  ratio at June 30, 1998 and 1997 was 1.35 and 1.50,
respectively.  Working  capital at June 30,  1998 was  $8,320,684  a decrease of
$1,189,852  from the same period last year.  This decrease in working capital is
the result of the Company's funding of its new facility in Shirley.  The Company
secured a mortgage on this facility in July 1998 for $1,650,000.

                                      (6)
<PAGE>
     Cash  provided by  operating  activities  was  $1,539,191  and  $3,778,830,
respectively, for the nine months ended June 30, 1998 and 1997 due to reductions
in inventory  during 1998 and both inventory and  receivables in 1997. Cash used
in investing  activities  was  $2,447,632 and $291,571 for the nine months ended
June  30,  1998,  respectively,  and  was  used  to  finance  the  building  and
furnishings  of the new  facility  in 1998  and  computer  equipment,  leasehold
improvements  and  furniture  and fixtures in 1997.  Cash  provided by financing
activities  during  the nine  months  ended  June 30,  1998 was  $2,094,116  and
included net proceeds  received from the Supplier Credit Facility.  Cash used by
financing  activities during the nine months ended June 30, 1997 was $3,909,501,
and included net payments made under the Supplier Credit Facility.

     The Company has a credit arrangement with IBM Credit  Corporation  pursuant
to  which  it may  borrow  up to 85% of its  eligible  receivables  and  100% of
eligible  inventory to a maximum of  $27,500,000.  In addition to the  permanent
credit line,  there are various credit line uplifts  during the year,  which can
increase the line of credit by as much as 50%. As of June 30, 1998,  interest on
outstanding  borrowings  was prime or prime plus 6.5% should the Company fail to
meet certain collateral requirements.  Throughout fiscal 1997 and the first nine
months of fiscal 1998,  the Company has been in a positive  collateral  position
with IBM Credit.

     The  Company  believes  that its  present  line of credit  with IBM  Credit
Corporation  coupled with its current earnings  capacity and the proceeds of the
recent  mortgage on its new  facility  and the  proceeds  of its initial  public
offering will be sufficient to meet its capital and operational requirements for
at least the next twelve months.

     Forward-Looking Statements

     Certain  information  contained  in this  Quarterly  Report  on Form  10-Q,
including,  without  limitation,  information  appearing  under  Part I, Item 2,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," are  forward-looking  statements (within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities  Exchange Act of
1934).  Factors set forth in the Company's Prospectus filed June 17, 1997, or in
the Company's other Securities and Exchange Commission filings, could affect the
Company's  actual results and could cause the Company's actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company in this Quarterly Report on Form 10-Q.

                                      (7)
<PAGE>


                           PART II - OTHER INFORMATION

     Item 1. Legal Proceedings

     The Company was a defendant in a lawsuit which alleged wrongful termination
of employment.  The action had been in the discovery stage since 1992. Effective
April 14, 1998, the Company entered into a Confidential Settlement Agreement and
General  Release with the plaintiff.  Neither the execution of the Agreement nor
the Agreement  itself is an admission of liability or wrongdoing by the Company.
In  consideration  of the  obligations of the plaintiff and in full and complete
settlement and final satisfaction of any claims which plaintiff may have against
the Company,  the Company  agreed to pay plaintiff  $35,000 as full and complete
settlement of the Action. The Company has no other legal actions pending.

     Item 2. Changes in Securities

     None

     Item 3. Defaults Upon Senior Securities

     None

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

     None

     Item 5. Other Information

     None

     Item 6. Exhibits and Reports on Form 8-K

     (a) Exhibits

                  *3.1     Amended and Restated Certificate of Incorporation
                  *3.2     Amended and Restated By-Laws
                  *4.1     Form of Common Stock Certificate
                  *4.2     Form of Representative Warrant
                  11       Statement Re:    Computation of Per Share Earnings
                  27       Financial Data Schedule

     (b) Reports on Form 8-K

     None

-----------------------------------------------------------------------        *

Incorporated by reference from the Registrant's  Registration  Statement on Form
S-1, Registration No. 333-25593


                                      (8)
<PAGE>

                                   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.


                                     SYSCOMM INTERNATIONAL CORPORATION
                                             (Registrant)


                                    /s/John H. Spielberger
                                    ------------------------------------------
                                    John H. Spielberger
                                    President and Chief Executive Officer


                                    /s/Dennis R. Wilson
                                    ------------------------------------------
                                    Dennis R. Wilson
                                    Vice President, Chief Financial Officer
                                         And Secretary


                                      (9)