<PAGE>

   As filed with the Securities and Exchange Commission on February 13, 2001

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

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

                                  FORM 10-Q

   [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                            EXCHANGE ACT OF 1934
              For the quarterly period ended December 31, 2000

                                     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 NO.: 000-22693

                      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 No.)


                 20 PRECISION DRIVE, SHIRLEY, NEW YORK 11967
             (Address of Principal Executive Offices) (Zip Code)

     REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (631) 205-9000

         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 [ ]

         The number of shares outstanding of each class of our common equity
as of February 9, 2001 is as follows:


Class of Common Equity                                        Number of Shares
----------------------                                        ----------------
Common Stock, par value $.01                                      4,894,183

                                      1

<PAGE>
<PAGE>


PART I   FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATMENTS


                        SYSCOMM INTERNATIONAL CORPORATION

                              TABLE OF CONTENTS

   Item                          Description                                Page

                       PART I - FINANCIAL INFORMATION

    1.      Financial Statements
            Consolidated Balance Sheets -                                     3
            December 31, 2000 (unaudited) and September 30, 2000
            Consolidated Statements of Operations -                           4
            Three Months ended December 31, 2000 and 1999 (unaudited)
            Consolidated Statement of Stockholders' Equity                    5
            Three Months ended December 31, 2000 (unaudited)
            Consolidated Statements of Cash Flows -                           6
            Three Months ended December 31, 2000 and 1999 (unaudited)
            Notes to Consolidated Financial Statements (unaudited)            7
    2.      Management's Discussion and Analysis of Financial Condition      11
            and Results of Operations
    3.      Quantitative and Qualitative Disclosures About Market Risk       19

                         PART II - OTHER INFORMATION

    1.      Legal Proceedings                                                20
    2.      Changes In Securities                                            20
    3.      Defaults Upon Senior Securities                                  20
    4.      Submission of Matters to a Vote of Security Holders              20
    5.      Other Information                                                20
    6.      Exhibits and Reports on Form 8-K                                 20

 SIGNATURE                                                                   21
 EXHIBITS                                                                    22

                                      2

<PAGE>
<PAGE>

PART I   FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
               SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
--------------------------------------------------------------------------------

<TABLE>
                                               CONSOLIDATED BALANCE SHEETS
                                             (IN THOUSANDS, EXCEPT PAR VALUE)
<CAPTION>


                                                  ASSETS
                                                                                         DECEMBER 31,
                                                                                                 2000      September 30,
                                                                                           (UNAUDITED)              2000
                                                                                    -------------------------------------
<S>                                                                                          <C>                <C>
CURRENT ASSETS
   Cash and cash equivalents                                                                 $    394           $  1,039
   Accounts receivable (net of allowance for doubtful accounts of
      $612 at December 31 and $133 at September 30)                                             8,817              9,802
   Inventories                                                                                    420                404
   Notes receivable                                                                               118                 --
   Other current assets                                                                           386                241
-------------------------------------------------------------------------------------------------------------------------
         TOTAL CURRENT ASSETS                                                                  10,135             11,486

PROPERTY AND EQUIPMENT, NET                                                                     3,387              3,298

GOODWILL, NET                                                                                   2,330                 --

OTHER ASSETS                                                                                      825                846
-------------------------------------------------------------------------------------------------------------------------

                                                                                             $ 16,677           $ 15,630
=========================================================================================================================


                                   LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Current maturities of long-term debt                                                      $    116           $    279
   Accounts payable and accrued expenses                                                        4,088              5,144
-------------------------------------------------------------------------------------------------------------------------
         TOTAL CURRENT LIABILITIES                                                              4,204              5,423

LONG-TERM DEBT                                                                                  3,624                999
-------------------------------------------------------------------------------------------------------------------------

         TOTAL LIABILITIES                                                                      7,828              6,422
-------------------------------------------------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES                                                                      --                 --
-------------------------------------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY
   Preferred shares:
      Authorized 1,000 shares at December 31 and September 30; none issued                         --                 --
   Common shares:
      Authorized 40,000 shares at December 31 and September 30, of $.01 par
         value; 5,555 shares issued at December 31 and September 30                                56                 56
   Additional paid-in capital                                                                   6,502              6,502
   Retained earnings                                                                            3,209              3,562
   Treasury stock (carried at cost)                                                              (918)              (912)
-------------------------------------------------------------------------------------------------------------------------
         TOTAL STOCKHOLDERS' EQUITY                                                             8,849              9,208
-------------------------------------------------------------------------------------------------------------------------

                                                                                             $ 16,677           $ 15,630
=========================================================================================================================

--------------------------------------------------------------------------------
See the accompanying notes to consolidated financial statements.          Page 3
</TABLE>

<PAGE>
<PAGE>



               SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
--------------------------------------------------------------------------------

<TABLE>
                                          CONSOLIDATED STATEMENTS OF OPERATIONS
                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                       (UNAUDITED)
<CAPTION>


                                                                                               FOR THE THREE MONTHS
                                                                                                ENDED DECEMBER 31,
                                                                                      -----------------------------------
                                                                                                2000                1999
                                                                                      -----------------------------------

<S>                                                                                         <C>                 <C>
NET OPERATING REVENUE                                                                       $  7,428            $ 11,725

COST OF GOODS SOLD                                                                             5,687              10,443
-------------------------------------------------------------------------------------------------------------------------

GROSS PROFIT                                                                                   1,741               1,282

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                                  (2,033)             (2,159)
DEPRECIATION AND AMORTIZATION                                                                    (95)                (75)
INTEREST INCOME                                                                                   27                  --
INTEREST EXPENSE                                                                                 (35)                (46)
-------------------------------------------------------------------------------------------------------------------------

LOSS BEFORE PROVISION (BENEFIT) FOR INCOME TAXES                                                (395)               (998)

PROVISION (BENEFIT) FOR INCOME TAXES                                                             (42)               (250)
-------------------------------------------------------------------------------------------------------------------------

NET LOSS AVAILABLE TO COMMON STOCKHOLDERS                                                   $   (353)           $   (748)
=========================================================================================================================

NET LOSS PER COMMON SHARE - BASIC                                                           $   (.08)           $   (.16)
=========================================================================================================================
NET LOSS PER COMMON SHARE - DILUTED                                                         $   (.08)           $   (.16)
=========================================================================================================================

WEIGHTED AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING - BASIC                                                                  4,694               4,688
=========================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING - DILUTED                                                                4,694               4,688
=========================================================================================================================
</TABLE>


--------------------------------------------------------------------------------
See the accompanying notes to consolidated financial statements.          Page 4


<PAGE>
<PAGE>



               SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
--------------------------------------------------------------------------------

<TABLE>
                                           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                         FOR THE THREE MONTH PERIOD ENDED DECEMBER 31, 2000
                                                           (IN THOUSANDS)
                                                             (UNAUDITED)

<CAPTION>
                               PREFERRED STOCK       COMMON STOCK     ADDITIONAL                  TREASURY STOCK           TOTAL
                              -----------------   ------------------     PAID-IN   RETAINED     ------------------ STOCKHOLDERS'
                               NUMBER   AMOUNT     NUMBER    AMOUNT      CAPITAL   EARNINGS      NUMBER    AMOUNT         EQUITY
                              ---------------------------------------------------------------------------------------------------
<S>                               <C>     <C>       <C>        <C>       <C>        <C>            <C>     <C>           <C>
BALANCE - SEPTEMBER 30, 2000       --     $ --      5,555      $ 56      $ 6,502    $ 3,562        (852)   $ (912)       $ 9,208

 Net loss                          --       --         --        --           --       (353)         --        --           (353)
 Purchase of treasury shares       --       --         --        --           --         --          (9)       (6)            (6)

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

BALANCE - DECEMBER 31, 2000        --     $ --      5,555      $ 56      $ 6,502    $ 3,209        (861)   $ (918)       $ 8,849
=================================================================================================================================
</TABLE>

--------------------------------------------------------------------------------
See the accompanying notes to consolidated financial statements.          Page 5



<PAGE>
<PAGE>

               SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
--------------------------------------------------------------------------------

<TABLE>
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (IN THOUSANDS)
                                                       (UNAUDITED)



<CAPTION>
                                                                                              FOR THE THREE MONTHS
                                                                                               ENDED DECEMBER 31,
                                                                                      ----------------------------------
                                                                                                2000               1999
                                                                                      ----------------------------------
<S>                                                                                         <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                                 $   (353)           $  (748)
   Adjustments to reconcile net loss to net cash
      provided by operating activities:
         Depreciation and amortization                                                            95                 75
         Deferred tax benefit                                                                    (43)                --
         Change in assets and liabilities:
            Decrease in accounts receivable                                                    5,084              2,048
            Decrease in inventories                                                              405                 35
            Decrease in other current assets                                                      63                364
            (Increase) decrease in other assets                                                  (46)               172
            Decrease in accounts payable and
               accrued expenses                                                               (2,917)              (606)
------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                      2,288              1,340
------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Payments for costs of business acquisitions                                                (1,966)                --
   Payments for property and equipment                                                            (9)               (48)
------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                                                         (1,975)               (48)
------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net amounts paid on notes payable                                                            (762)                --
   Payments on long-term debt                                                                   (190)               (25)
   Purchase of treasury stock                                                                     (6)               (57)
------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES                                                           (958)               (82)
------------------------------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                            (645)             1,210

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                                1,039              2,263
------------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                                   $    394            $ 3,473
========================================================================================================================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
   Cash paid (received) during the period for:
      Income taxes                                                                          $      1            $  (350)
      Interest                                                                                    35                 46
SUPPLEMENTAL SCHEDULES OF NONCASH FINANCING ACTIVITIES
   Acquisition of business:
      Notes payable issued for acquisition                                                  $  2,652                 --
</TABLE>


--------------------------------------------------------------------------------
See the accompanying notes to consolidated financial statements.          Page 6


<PAGE>
<PAGE>



             SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT PER SHARE DATE)
                                (UNAUDITED)





1.       BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements of
Syscomm International Corporation (the "Company") as of December 31, 2000
and September 30, 2000 and for the three months ended December 31, 2000 and
1999 have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of
1934. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of the Company's management, all adjustments
(consisting of only normal recurring adjustments) considered necessary to
present fairly the consolidated financial statements have been made.

         The consolidated statement of operations for the three months ended
December 31, 2000 is not necessarily indicative of the results that may be
expected for the entire year. These statements should be read in conjunction
with the consolidated financial statements and related notes thereto
included in our Annual Report on Form 10-K for the year ended September 30,
2000.

2.       PRINCIPLES OF CONSOLIDATION

         The financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

3.       INVENTORY

         Inventory at December 31, 2000 and September 30, 2000 consists of:

<TABLE>
<CAPTION>
                                                                 December 31,           September 30,
                                                                     2000                    2000
                                                              ------------------     -------------------
<S>                                                               <C>                    <C>
         Finished goods                                           $         680          $          654
         allowance for excess and obsolescence                             (260)                   (250)
                                                              ------------------     -------------------
                                                                  $         420          $          404
                                                              ==================     ===================
</TABLE>

                                      7









<PAGE>
<PAGE>


             SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                 (UNAUDITED)

4.       LOSS PER SHARE

         The following is a reconciliation of the numerator and denominator
of basic and diluted loss per share:

<TABLE>
<CAPTION>
                                                                                  --------------------------------------
                                                                                            THREE MONTHS ENDED
                                                                                               DECEMBER 31,
                                                                                  --------------------------------------
                                                                                                2000               1999
                                                                                                ----               ----
<S>                                                                                      <C>                <C>
NUMERATOR:
Net loss available to common stockholders                                                $      (353)       $      (748)
                                                                                  ======================================

DENOMINATOR:
Denominator for basic loss per share -
Weighted-average shares                                                                        4,694              4,688
                                                                                  ======================================
Denominator for diluted loss per share(1)                                                      4,694              4,688
                                                                                  ======================================
Basic loss per share                                                                     $     (0.08)       $     (0.16)
                                                                                  ======================================
Diluted loss per share                                                                   $     (0.08)       $     (0.16)
                                                                                  ======================================
<FN>
-------------
(1)   The weighted average shares listed below were not included in the
      computation of diluted loss per share because to do so would have been
      anti-dilutive for the periods presented:
</TABLE>

<TABLE>
<CAPTION>
                                                                                  --------------------------------------
                                                                                             THREE MONTHS ENDED
                                                                                                DECEMBER 31,
                                                                                  --------------------------------------
                                                                                                2000               1999
                                                                                                ----               ----
<S>                                                                                              <C>                <C>
Employee stock options                                                                           604                424
                                                                                  --------------------------------------
                                                                                                 604                424
                                                                                  ======================================
</TABLE>

5.       MERGERS AND ACQUISITIONS

         The following represents acquisitions which occurred in
the first quarter of 2001:

<TABLE>
<CAPTION>
                                            Date of     Percent  Acquisition       Cash                         Business
                                          Acquisition  Acquired     Price     Consideration   Notes Issued     Description
--------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>       <C>            <C>            <C>        <C>
First Quarter 2001 Acquisitions
-------------------------------

Information Products                        12/01/20     100%      $4,550         $1,899         $2,651     Systems integrator
Center, Inc., Fairfield, NJ                                                                                   and networking
                                                                                                            solutions provider
</TABLE>

         On December 14, 2000, pursuant to the terms of a Stock Purchase
Agreement, as amended, between us and Applied Digital Solutions, we acquired
fifty-one percent (51%) of the outstanding shares of common stock of Information
Products Center, Inc., a New Jersey corporation ("IPC"). The purchase price for
the shares of IPC was $2,075, payable $1,821 in cash and $254 by promissory
note. On December 15, 2000, pursuant to the terms of a Stock Purchase
Agreement between us and Applied Digital

                                      8



<PAGE>
<PAGE>

          SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (IN THOUSANDS, EXCEPT PER SHARE DATA)
                              (UNAUDITED)

Solutions, we acquired the remaining forty-nine percent (49%) of the
outstanding shares of common stock of IPC for approximately $2,400,
payable by promissory note. The purchase price of IPC was assigned to
the assets acquired and the liabilities assumed based on their
estimated fair values at the acquisition date, which approximated their
book values, using the purchase method of accounting. Based upon such
allocations, the aggregate purchase price exceeded the estimated fair
value of the net assets acquired resulting in goodwill of approximately
$2,339 in value which is being amortized on a straight-line basis over
20 years.

         The assets of Information Products Center acquired
indirectly by us include, without limitation, physical property.
For the foreseeable future, we intend to utilize those assets in
connection with the operations of the business of Information
Products Center.

         Unaudited pro forma results of operations for the three
months ended December 31, 2000 and 1999 are included below. Such
pro forma information assumes that the above transaction occurred
as of October 1, 2000 and 1999, respectively.

<TABLE>
<CAPTION>

                                                                                       ------------------------------
                                                                                             THREE MONTHS ENDED
                                                                                                DECEMBER 31,
                                                                                       ------------------------------
                                                                                          2000                  1999
                                                                                          ----                  ----
<S>                                                                                    <C>                   <C>
Revenues                                                                               $12,866               $16,162
Net loss                                                                               $  (312)              $  (701)
Loss per common shares - basic                                                         $ (0.07)              $ (0.15)
Loss per common share - diluted                                                        $ (0.07)              $ (0.15)
</TABLE>

6.       CHANGE IN CONTROL

         On December 14, 2000, pursuant to the terms of a Stock Purchase
Agreement, as amended, between the selling shareholders described below and
Applied Digital Solutions, Inc., a Missouri corporation, Applied Digital
Solutions acquired approximately 55% of our issued and outstanding common
shares, resulting in a change in control of the Company. Shares of our common
stock were sold to Applied Digital Solutions by the following persons and
in the following amounts:

<TABLE>
<CAPTION>

 Selling Shareholders                                            Number of Shares Held       Percent Ownership
---------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                          <C>
 John H. Spielberger                                                   1,920,000                    41%
 Catherine Spielberger                                                    50,000                     1%
 Bearpen Limited Partnership                                             600,000                    13%
---------------------------------------------------------------------------------------------------------------
 Total                                                                 2,570,000                    55%
===============================================================================================================
</TABLE>

         Applied Digital Solutions acquired the shares listed above for
$4.5 million by issuing approximately 1.7 million shares of its common stock,
valued at approximately $2.75 million, to the selling shareholders listed above
and upon payment of an aggregate amount of cash equal to approximately $1.75
million to the selling shareholders listed above.

         As a condition to the closing of the transaction, John H. Spielberger,
John C. Spielberger, Lee Adams and Cornelia Eldridge resigned as officers and
directors of the Company. Garrett A. Sullivan, David A. Loppert and Anat
Ebenstein were appointed to fill the vacancies on the board of directors created
by such resignations, and the following persons become the officers of the
Company:

                                      9



<PAGE>
<PAGE>
             SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                 (UNAUDITED)


David A. Loppert       Chief Executive Officer, Assistant Secretary and
                       Assistant Treasurer
Anat Ebenstein         President, Chief Operating Officer
Michael Krawitz        Vice President, Secretary
J. Robert Patterson    Vice President, Chief Financial Officer and Treasurer
John C. Spielberger    Vice President, Sales and Marketing

7.       DE-LISTING FROM NASDAQ SMALL CAP MARKET

         On September 5, 2000, we received a notice that NASDAQ intended to
de-list our stock from trading on the NASDAQ SmallCap Market, where it had
previously been listed. The de-listing was postponed until January 8, 2001, but
our Common Stock is now traded on the OTC Bulletin Board. We have appealed the
NASDAQ ruling that de-listed our Common Stock, but no assurance can be given
that our Common Stock will again be traded on the NASDAQ SmallCap Market.

                                      10






<PAGE>
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         This discussion should be read in conjunction with the accompanying
consolidated financial statements and related notes in Item 1 of this report
as well as our Annual Report on Form 10-K for the year ended September 30, 2000.
Certain statements made in this report may contain forward-looking statements.
For a description of risks and uncertainties relating to such forward-looking
statements, see the Risk Factors sections later in this Item.

OUTLOOK

         We are a Delaware corporation incorporated in 1987. Through our wholly
owned subsidiaries, Information Technology Services, Inc. and Information
Products Center, Inc., we provide comprehensive information technology
solutions to Fortune 1000 and other companies as a value-added systems
integrator of computer hardware and software as well as providing a full range
of e-business solutions from web design and hosting through enterprise systems
management. We design, install and support complete technology solutions
including mid-range systems, PCs, LAN/WAN, Storage Solutions and Telephony,
for the financial services, health care, education, government and general
commercial sectors. Up until September 2000, our primary focus had been on the
sale, integration and servicing of International Business Machine Corporation,
or IBM, products including personal computers, mid-range systems based on the
IBM RS/6000 servers, the IBM AS/400 and the System/390 mainframe. In addition,
we integrate, resell and service products from such manufacturers as Hewlett
Packard, Compaq, Microsoft, and Novell. In 1999 we recognized that our margins
were shrinking in our core business, and because of a change in IBM's policies
with respect to the Authorized Assembler Program, we made a strategic decision
to attempt to fundamentally change the nature of our business. While we
continued to provide our customers with cost efficient, comprehensive solutions
that satisfy their information technology requirements, we attempted to focus
less on personal computer products and hardware, and more on mid-range products
network connectivity, services and consulting to develop e-solutions.

         During the last eighteen months, we transitioned our workforce,
through training and specialized hires, to position ourselves as a total
e-business solutions provider of hardware, software and consulting services,
while maintaining our status as an IBM Tier II Premier Business Partner in
mid-range systems. In addition we attempted to expand our capabilities in web
design and creation, remote access to databases via web interface, and Tivoli
enterprise systems management. The transformation was not altogether successful
and during the last six months of fiscal 2000 we laid off a substantial portion
of our workforce as we strived to find a strategic partner with whom to align
ourselves or seek to be acquired. In December 2000, Applied Digital Solutions
acquired a controlling interest and, simultaneously, we acquired from Applied
Digital Solutions, Information Products Center, a full service, profitable,
systems integrator.

         We intend to pursue new business by focusing on the sale and
integration of high-end systems in the financial, commercial, governmental,
healthcare and educational areas. To this end, we have identified the following
growth strategies: (i) targeting our traditional markets, particularly those
businesses seeking to expand their presence on the internet, (ii) offering a
more complete line of IBM and related products, (iii) expanding our role
as an IBM Premier Business Partner, and (iv) targeting client-server
architecture, e-commerce, enterprise network management and website hosting.

STRATEGY

         With our acquisition of Information Products Center, we are striving
to become a leader in the deployment and support of Enterprise Computing in
e-Business solutions that enable customers to maximize return on technology
investments by providing open, integrated end-to-end solutions from system

                                      11



<PAGE>
<PAGE>

architecture and implementation to hardware and software procurement, Computer
Telephony integration Security Solutions and IBM mid-range services. We strive
to offer our customers high quality computer and networking system hardware,
related operating system software and network design, system implementation
and support services in a timely, cost-effective manner.

RECENT DEVELOPMENTS

CHANGE IN CONTROL

         On December 14, 2000, pursuant to the terms of a Stock Purchase
Agreement, as amended, between the selling shareholders described below and
Applied Digital Solutions, Inc., a Missouri corporation, Applied Digital
Solutions acquired approximately 55% of our issued and outstanding common
shares, resulting in a change in control of the Company. Shares of our common
stock were sold to Applied Digital Solutions by the following persons and in
the following amounts:

<TABLE>
<CAPTION>
         Selling Shareholders                                Number of Shares Held     Percent Ownership
    -----------------------------------------------------------------------------------------------------
<S>                                                                <C>                        <C>
     John H. Spielberger                                           1,920,000                  41%
     Catherine Spielberger                                            50,000                   1%
     Bearpen Limited Partnership                                     600,000                  13%
    -----------------------------------------------------------------------------------------------------
     Total                                                         2,570,000                  55%
    =====================================================================================================
</TABLE>

         Applied Digital Solutions acquired the shares listed above for
$4.5 million by issuing approximately 1.7 million shares of its common stock,
valued at approximately $2.75 million, to the selling shareholders listed above
and upon payment of an aggregate amount of cash equal to approximately $1.75
million to the selling shareholders listed above.

         As a condition to the closing of the transaction, John H. Spielberger,
John C. Spielberger, Lee Adams and Cornelia Eldridge resigned as officers and
directors of the Company. Garrett A. Sullivan, David A. Loppert and Anat
Ebenstein were appointed to fill the vacancies on the board of directors created
by such resignations, and the following persons become the officers of the
Company:

     David A. Loppert      Chief Executive Officer, Assistant Secretary
                           and Assistant Treasurer
     Anat Ebenstein        President, Chief Operating Officer
     Michael Krawitz       Vice President, Secretary
     J. Robert Patterson   Vice President, Chief Financial Officer and
                           Treasurer
     John C. Spielberger   Vice President, Sales and Marketing

ACQUISITION OF ASSETS

         On December 14, 2000, pursuant to the terms of a Stock Purchase
Agreement, as amended, between us and Applied Digital Solutions, we acquired
fifty-one percent (51%) of the outstanding shares of common stock of Information
Products Center, Inc., a New Jersey corporation. The purchase price for the
shares of Information Products Center was $2.075 million, payable $1.821
million in cash and $0.254 million by promissory note.

         On December 15, 2000, pursuant to the terms of a Stock Purchase
Agreement between us and Applied Digital Solutions, we acquired the remaining
forty-nine percent (49%) of the outstanding shares of common stock of
Information Products Center.  The purchase price for the shares of Information
Products Center was approximately $2.4 million, payable by promissory note.

                                      12



<PAGE>
<PAGE>


         The assets of Information Products Center acquired indirectly by us
include, without limitation, physical property. For the foreseeable future, we
intend to utilize those assets in connection with the operations of the business
of Information Products Center.

DE-LISTING FROM NASDAQ SMALL CAP MARKET

         On September 5, 2000, we received a notice that NASDAQ intended to
de-list our stock from trading on the NASDAQ SmallCap Market, where it had
previously been listed. The de-listing was postponed until January 8, 2001, but
our Common Stock is now traded on the OTC Bulletin Board. We have appealed the
NASDAQ ruling that de-listed our Common Stock, but no assurance can be given
that our Common Stock will again be traded on the NASDAQ SmallCap Market.

OVERVIEW

         We operate in a highly competitive industry which in turn places
constant pressures on maintaining gross profit margins. Many of our sales are
high volume equipment sales which produce lower than average gross profit
margins, but are often accompanied by a service arrangement which yields higher
than average gross profit margins.

         The following table sets forth, for the periods indicated, the
percentage relationship to net sales of certain items in the Company's
consolidated statements of operations.

<TABLE>
<CAPTION>
                                                       RELATIONSHIP TO
                                                        NET OPERATING
                                                          REVENUE
                                               ----------------------------
                                                     THREE MONTHS ENDED
                                                         DECEMBER 31,
                                               ----------------------------
                                                  2000               1999
                                                  ----               ----
                                                     %                  %
                                                     -                  -
<S>                                              <C>                <C>
Net operating revenue                            100.0              100.0
Cost of goods sold                                76.6               89.1
                                               ----------------------------
Gross profit                                      23.4               10.9
Selling, general and administrative expenses      27.4               18.4
Depreciation and amortization                      1.3                0.6
Interest income                                   (0.4)               0.0
Interest expense                                   0.5                0.4
                                               ----------------------------
Loss before (benefit) for income taxes            (5.4)              (8.5)
Benefit for income taxes                          (0.6)              (2.1)
                                               ----------------------------
Net loss available to common stockholders         (4.8)              (6.4)
                                               ============================
</TABLE>

  THREE MONTHS ENDED DECEMBER 31, 2000 COMPARED TO THE THREE MONTHS ENDED
                             DECEMBER 31, 1999
                     (in $'000 unless otherwise noted)

         Sales for first quarter of 2001 decreased approximately $4,297 or
36.6% to $7,428 from $11,725 for the first quarter of 2000. The decrease in
sales was a result of the pending change in control of the Company in the
first quarter and the reduction in sales staff resulting in substantially
lower revenue in the quarter.

         Gross profit was $1,741 in 2001 a 35.8% increase compared to $1,282
in 2000. Gross profit percentage was 23.4% in 2001 compared to 10.9% in
2000. The substantial increase in the gross profit and

                                      13


<PAGE>
<PAGE>

the gross profit percentage, despite significantly lower revenue, was primarily
attributable to the acquisition of Information Products in December 2000.
Information Products services and hardware business produced a significantly
higher margin in December 2000 than the Company has historically experienced.

         Selling, General and Administrative expenses was $2,033 in 2001
down $126 or 5.8% from the $2,159 reported in 2000. The reduction in expense
is primarily due to layoff and other cost control programs, reduced
commissions on lower sales and staff reductions associated with redirecting
marketing efforts implemented in the 4th quarter offset by the additional
costs of Information Products Center included in December 2000 in SG&A.

         Interest income was $27 in 2001 arising from the investment of
accumulated cash on hand. There was no interest income in 2000. Interest
expense was $35 in 2001 compared to $46 in 2000, a decrease of $11 or 23.9%.
We believe that constant monitoring of accounts receivable has helped to
keep interest costs at a minimum. In addition, we use all available funds to
reduce our outstanding supplier credit facility on a daily basis.

         Loss before income taxes decreased $603 or 60.4% to $395 in 2001
compared to $998 in 2000. The reduction in the loss before income taxes is
attributable to a higher gross profit coupled with the reduction in SG&A
interest expense. Our effective tax rate was a negative 10.6% in fiscal year
2001 and a negative 25.1% in fiscal year 2000.

         Our net loss for the first quarter of 2001 decreased to $353 from
$748 in the first quarter of 2000, due to higher gross profit coupled with
the reduction in SG&A interest expense.

LIQUIDITY AND CAPITAL RESOURCES

         Our current ratios at December 31, 2000 and September 30, 2000 were
2.4 and 2.1, respectively. Working capital at December 31, 2000 was $5,931,
a $132 decrease from the $6,063 at September 30, 2000.

         Cash provided by operating activities in the first quarter of 2001
was $2,288 compared to $1,340 of cash provided by operating activities in
the first quarter of 2000. The cash provided by operating activities during
2001 and 2000 was as a result of significant reductions in inventory,
accounts receivable, recoverable taxes and accounts payable.

         Cash used in investing activities was $1,975 and $48 in 2001 and
2000, respectively, and was used primarily to acquire our interest in
Information Products Center, Inc. in the first quarter of 2001 finance
capital expenditures in both 2001 and 2000.

         Net cash used in financing activities was $958 and $82 in 2001 and
2000, respectively. The net cash used in both 2001 and 2000 were for
payments on notes payable and long-term debt and the re-purchase of our
common stock.

         Under our financing arrangement with IBM Credit Corporation, as of
both September 30, 2000 and December 31, 1999, we were able to borrow up to
85% of our eligible accounts receivable and 100% of our eligible inventory,
up to a maximum of $22,500,000. As of September 30, 2000 and December 31,
1999, we had no borrowings outstanding under the IBM Credit Corporation
facility. As a result of Applied Digital Solutions having acquired a
majority interest in the Company, we cancelled our credit agreement with IBM
Credit Corporation and established a line of credit with Applied Digital
Solutions which has its own credit facility with IBM Credit Corporation.
Borrowings from Applied Digital Solutions will be on such terms and
conditions as it may reasonably make available to us from time to time.

         Advances under our Agreement for Wholesale Financing from IBM
Credit Corporation totaling $1,979 and $4,411 are included in accounts
payable at December 31, 2000 and September 30, 2000,

                                      14


<PAGE>
<PAGE>

respectively, and were offset against the maximum credit available at that time
from IBM Credit Corporation.

         We believe that our present Agreement for Wholesale Financing with
IBM Credit Corporation, financing provided by Applied Digital Solutions and
our projected earnings capacity will be sufficient to fund our operations
and capital expenditures for at least the next 12 months.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK

         Certain statements in this Annual Report, and the documents
incorporated by reference herein, constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, Section 21E
of the Securities Exchange Act of 1934 and the Private Securities Litigation
Reform Act of 1995. We intend that such forward-looking statements be
subject to the safe harbors created thereby. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may
cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among
others, the following: our continued ability to sustain our growth through
product development and business acquisitions; the successful completion and
integration of future acquisitions; the ability to hire and retain key
personnel; the continued development of our technical, manufacturing, sales,
marketing and management capabilities; relationships with and dependence on
third-party suppliers; anticipated competition; uncertainties relating to
economic conditions where we operate; uncertainties relating to government
and regulatory policies; uncertainties relating to customer plans and
commitments; rapid technological developments and obsolescence in the
industries in which we operate and compete; potential performance issues
with suppliers and customers; governmental export and import policies;
global trade policies; worldwide political stability and economic growth;
the highly competitive environment in which we operate; potential entry of
new, well-capitalized competitors into our markets; changes in our capital
structure and cost of capital; and uncertainties inherent in international
operations and foreign currency fluctuations. The words "believe", "expect",
"anticipate", "intend" and "plan" and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the
date the statement was made.

RISK FACTORS

         In addition to the other information contained herein, the following
factors should be considered in evaluating our Company and our business.
These risks and uncertainties include, but are not limited to those set
forth herein and the risk factors described in our Prospectus dated June 17,
1997, and from time to time in our other filings with the Securities and
Exchange Commission.

UNCERTAINTY OF FUTURE FINANCIAL RESULTS

         We have incurred operating losses for each of the last three fiscal
years, and our future financial results are uncertain. There can be no
assurance that we will return to profitability, and we may continue to
operate at a loss for the foreseeable future. Profitability depends upon
many factors, including the success of our various marketing programs, the
maintenance or reduction of expense levels and our ability to successfully
coordinate the efforts of the different divisions of our business.

SIGNIFICANT FLUCTUATIONS IN QUARTERLY RESULTS

         Our quarterly operating results have fluctuated in the past and may
continue to do so in the future. Quarterly operating results may fluctuate
as a result of a variety of factors, including: the timing of the our
delivery of significant orders, the ability of manufacturers to deliver, in
a timely fashion, products for which we have received orders, the length of
the sales cycle, receipt of volume discounts, the demand for products and
services we offer, the introduction or announcements by IBM and other
manufacturers relating to new products, the hiring and training of
additional personnel, as well as general business conditions.

                                      15


<PAGE>
<PAGE>

         Historically, the size and timing of our sales transactions have
varied substantially from quarter to quarter, and we expect such variations
to continue in future periods, including the possibility of losses in one or
more fiscal quarters. The fluctuations may be caused by delays in shipping
certain computer systems for we receive orders that we expect to deliver
during that quarter. In addition, our collection periods have fluctuated due to
periodic unavailability of product, which resulted in delayed payment from
certain customers until their entire orders were shipped. Accordingly, it is
likely that in one or more future fiscal quarters, our operating results may be
below the expectations of public market analysts and investors. As a result,
the market price of our Common Stock would be materially adversely affected.

PRINCIPAL MARKETS AND CUSTOMERS

         Since 1994, we have sold and delivered computer systems, network
products, software, maintenance and system support services to more than 800
customers throughout the United States and in more than 20 countries
worldwide. Based on its installed customer base, we believe we are a leading
IBM supplier/systems integrator of mid-range and computer/network systems in
the northeastern United States. In fiscal years 1998, 1999 and 2000, our top
customer accounted for approximately 6.8%, 8.6% and 25.0%, respectively, of
our total revenues. In fiscal year 1999, the Company's top five customers (3
of which were new) accounted for approximately 24.7% of total revenues. In
fiscal year 2000, the Company's top five customers (1 of which was new)
accounted for approximately 48.0% of total revenues.

DEPENDENCE ON MAJOR CUSTOMERS; RISK OF INDUSTRY CONCENTRATION

         For the last three fiscal years, 1998, 1999, and 2000, a
significant portion (21%, 25% and 48%, respectively) of our revenues were
derived from sales to five principal customers, which customers varied
annually, and encompass markets where the demands of any one customer may
vary greatly. In addition, we do not have any exclusive long-term
arrangements with our customers for the continued sales of computer systems.
The number of customers who purchased at least $250,000 of computer systems
from us decreased from 67 in 1999 to 29 in 2000. Our failure to acquire a
significant or principal customer or to maintain its relationship could have
a material adverse effect on our operations.

         In the fiscal year ended September 30, 2000, approximately 10.9% of
our sales of computer systems were to customers in the banking, financial
and securities industry based in the Northeastern United States. Although we
are striving to broaden our market focus to include sales to other markets,
such as educational institutions, government agencies, healthcare and
insurance companies, in the immediate future we expect that we will continue
to derive a substantial percentage of our sales of computer systems from
such banking, financial and securities businesses. Accordingly, unfavorable
economic conditions or factors that relate to these industries, particularly
any such conditions that might result in reductions in capital expenditures
or changes in such companies' information processing system requirements,
could have a material adverse affect on our results of operations.

GOODWILL WRITE-OFF'S WILL REDUCE OUR EARNINGS

         As a result of the December 2000 acquisition of Information
Products Center, we have approximately $2,400 of goodwill which will be
amortized over 20 years at the rate of approximately $120 per year, which
reduces our net income and our earnings per share. In addition, future
acquisitions may also increase our existing goodwill and the amount of
annual amortization, further reducing net income and earnings per share. As
required by Statement of Financial Accounting Standards No. 121, we will
periodically review our goodwill for impairment based on expected future
discounted cash flows. If we determine that there is such impairment, we
would be required to write down the amount of goodwill accordingly, which
would also reduce our earnings.

                                      16


<PAGE>
<PAGE>

NEED FOR ADDITIONAL CAPITAL

         We may require additional capital to fund growth of our current
business as well as to make future acquisitions. However, we may not be able
to obtain capital from outside sources. Even if we obtain capital from
outside sources, it may not be on terms favorable to us. Our current credit
agreement with IBM Credit Corporation may hinder our ability to raise
additional debt capital. If we raise additional capital by issuing equity
securities, these securities may have rights, preferences or privileges
senior to those of our common stockholders.

DEPENDENCE ON KEY INDIVIDUALS

         Our future success is highly dependent upon our ability to attract
and retain qualified key employees. We are organized with a small senior
management team, with each of our separate operations under the day-to-day
control of local managers. If we were to lose the services of any members of
our central management team, our overall operations could be adversely
affected, and the operations of any of our individual facilities could be
adversely affected if the services of the local managers should be
unavailable.

CONTROL BY PRINCIPAL STOCKHOLDER

         As of September 30, 2000, John H. Spielberger, our former Chairman
of the Board, President and Chief Executive Officer, beneficially owned
approximately 55% of our outstanding common stock. As a result of his stock
ownership as of September 30, 2000, Mr. Spielberger had effective control of
the Company and the power to control the outcome of matters submitted to a
vote of the stockholders, such as the election of at least a majority of the
members of the our Board of Directors and to direct the future operations of
the Company.

         On December 14, 2000, Mr. Spielberger and certain affiliates sold
their controlling interest in the Company to Applied Digital Solutions which
now has effective control of the Company and the power to control the
outcome of matters submitted to a vote of the stockholders, such as the
election of at least a majority of the members of our Board of Directors and
to direct the future operations of the Company.

         Such concentration may have the effect of discouraging, delaying or
preventing a future change in control of the Company.

ANTI-TAKEOVER PROVISIONS

         Certain provisions of our Amended and Restated Certificate of
Incorporation, Amended and Restated By-laws and Delaware law may be deemed
to have an anti-takeover effect. Our certificate of incorporation provides
that our Board of Directors may issue additional shares of Common Stock or
establish one or more classes or series of Preferred Stock with such
designations, relative voting rights, dividend rates, liquidation and other
rights, preferences and limitations that the Board of Directors fixes
without stockholder approval. Moreover, our certificate of incorporation and
by-laws provide that our Board of Directors is divided into three classes
serving staggered three year terms, resulting in approximately one-third of
the directors being elected each year and also contain certain other
provisions relating to voting and the removal of the officers and directors.
In addition, we are subject to the anti-takeover provisions of Section 203
of the Delaware General Corporation Law. In general, the statute prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date
of the transaction in which the person became an interested stockholder,
unless the business combination is approved in a prescribed manner. Each of
the foregoing provisions may have the effect of rendering more difficult,
delaying, discouraging, preventing or rendering more costly an acquisition
of the Company or a change in control of the Company.

                                      17


<PAGE>
<PAGE>

RISKS THAT THE VALUE OF OUR INVENTORY MAY DECLINE

         We purchase and warehouse inventory. As a result, we assume
inventory risks and price erosion risks for these products. These risks are
especially significant because computer equipment generally is characterized
by rapid technological change and obsolescence. These changes affect the
market for refurbished or excess inventory equipment. Our success will
depend on our ability to purchase inventory at attractive prices relative to
its resale value and our ability to turn our inventory rapidly through
sales. If we pay too much or hold inventory too long, we may be forced to
sell our inventory at a discount or at a loss or write down its value, and
our business could be materially adversely affected.

LACK OF DIVIDENDS ON COMMON STOCK; ISSUANCE OF PREFERRED STOCK

         We do not have a history of paying dividends on our common stock,
and there can be no assurance that such dividends will be paid in the
foreseeable future. Pursuant to certain restrictions under our financing
agreement with IBM Credit Corporation, there are restrictions on the
declaration and payment of dividends. We intend to use any earnings which
may be generated to finance the growth of our businesses. Our Board of
Directors has the right to authorize the issuance of preferred stock,
without further shareholder approval, the holders of which may have
preferences over the holders of the common stock as to payment of dividends.

POSSIBLE VOLATILITY OF STOCK PRICE

         Our common stock is quoted on the Nasdaq SmallCap Stock Market(R),
which has experienced, and is likely to experience in the future,
significant price and volume fluctuations which could adversely affect the
market price of our common stock without regard to our operating
performance. In addition, we believe that factors such as the significant
changes to our business resulting from continued acquisitions and
expansions, quarterly fluctuations in our financial results or cash flows,
shortfalls in earnings or sales below expectations, changes in the
performance of other companies in our same market sectors and the
performance of the overall economy and the financial markets could cause the
price of our common stock to fluctuate substantially. During the 12 month
period prior to February 9, 2001, the price per share of our common stock
has ranged from a high of $3.47 to a low of $0.41.

YEAR 2000 COMPLIANCE

         We have not experienced any significant Year 2000 related problems.
During 1998 and 1999, we implemented a company wide program to ensure that
we would be compliant prior to the Year 2000 failure dates. We experienced
no problems on either January 1, 2000 or February 29, 2000. However we
cannot make any assurances that unforeseen problems may not arise in the
future.

         We do not believe that the Year 2000 problem has had or will
continue to have a material adverse effect on our business, results of
operations or cash flows. The estimate of the potential impact on our
financial position, overall results of operations or cash flows for the Year
2000 problem could change in the future. Our ability to achieve Year 2000
compliance and the level of incremental costs associated therewith, could be
adversely impacted by, among other things, the availability and cost of
programming and testing resources, vendors' ability to modify proprietary
software, and unanticipated problems identified in the ongoing compliance
review. The discussion of our efforts, and management's expectations,
relating to Year 2000 compliance are forward-looking statements.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1998, the Financial Accounting Standards Board (FASB)
issued FAS 133, Accounting for Derivative Instruments and Hedging
Activities, which provides a comprehensive and consistent standard for the
recognition and measurement of derivatives and hedging activities. The
statement is effective for fiscal years commencing after June 15, 2000. In
June 2000, the FASB issued FAS 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities - an Amendment of FAS statement
133, which addresses implementation issues experienced by those companies
that adopted FAS 133 early. We

                                      18


<PAGE>
<PAGE>

will adopt FAS 133, as well as its amendments and interpretations, in fiscal
year 2001. We do not believe that FAS 133 will have a material impact on our
results of operations, cash flows and financial condition.

         In December 1999, the SEC issued Staff Accounting Bulletin (SAB)
No. 101, Revenue Recognition in Financial Statements. This Staff Accounting
Bulletin summarizes certain of the staff's views on applying Generally
Accepted Accounting Principles to revenue recognition in financial
statements. On June 26, 2000, the SEC staff issued SAB No. 101B, which
delays the implementation date of SAB 101 until no later than the fourth
fiscal quarter of fiscal years beginning after December 15, 1999. Therefore,
we will adopt this statement no later than the fourth quarter of fiscal
2001. We do not believe that SAB 101 will have a material impact on our
results of operations, cash flows and financial condition.

         In September 2000, the EITF reached a consensus in EITF Issues
00-10, "Accounting for Shipping and Handling Fees and Costs," agreeing that
shipping and handling fees must be classified as revenues and comparable
prior periods should be restated. Further, they agreed that shipping and
handling costs can be classified anywhere in the statement of earnings,
except they cannot be netted against sales. If shipping and handling costs
are not included in costs of goods sold, the amount and classification of
these expenses must be disclosed in the footnotes to the financial
statements. This consensus must be adopted no later than the fourth quarter
of fiscal years beginning after December 15, 1999. Therefore, we will adopt
EITF Issue 00-10 in the fourth quarter of 2001. We do not anticipate that
the adoption of EITF Issue 00-10 will have a material impact on our results
of operations, cash flows and financial condition.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We presently do not use any derivative financial instruments to
hedge our exposure to adverse fluctuations in interest rates, foreign
exchange rates, fluctuations in commodity prices or other market risks, nor
do we invest in speculative financial instruments. Borrowings under the
financing agreement with IBM Credit Corporation are at the prime rate. Our
interest income is sensitive to changes in the general level of U. S.
interest rates, particularly since the majority of our investments are in
short-term investments.

         Due to the nature of our borrowings and our short-term investments,
we have concluded that there is no material market risk exposure and,
therefore, no quantitative tabular disclosures are required.

                                      19


<PAGE>
<PAGE>

PART II  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         We are party to one legal action as defendant. In the opinion of
management, this proceeding will not have a material adverse effect on the
financial position, cash flows or overall trends in our results. The
estimate of the potential impact on our financial position, overall results
of operations or cash flows for this proceeding could change in the future.
We are not subject to any environmental or governmental proceedings.

ITEM 2.  CHANGES IN SECURITIES

         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable

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

Exhibits

         See List of Exhibits filed as part of this annual report on
         Form 10-Q.

Reports on Form 8-K

         On December 22, 2000, we filed a Current Report on Form 8-K
         reporting (a) a change in control of the Registrant and (b) the
         acquisition of Information Products Center, Inc.

         On February 9, 2001, we filed an Amendment No. 1 to the Current
         Report on Form 8-K we filed on December 22, 2000 including the
         required financial statements and pro forma financial information
         required to be filed in connection with our acquisition of
         Information Products Center, Inc.

                                      20


<PAGE>
<PAGE>

                                  SIGNATURE

         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)

Dated:   February 13, 2001               By:      /S/ DAVID A. LOPPERT
                                             ---------------------------------
                                                    David A. Loppert
                                                 Chief Executive Officer


                                      21



<PAGE>
<PAGE>

LIST OF EXHIBITS



Exhibit
Number                               Description
------                               -----------

3.1           Amended and Restated Certificate of Incorporation (incorporated
              herein by reference to Exhibit 3.1 to the Company's Registration
              Statement on Form S-1 (File No. 333-25593) filed with the
              Commission on April 22, 1997)

3.2           Amended and Restated By-Laws (incorporated herein by reference to
              Exhibit 3.2 to the Company's Registration Statement on Form S-1
              (File No. 333-25593) filed with the Commission on April 22, 1997)

10.1          Inventory and Working Capital Financing Agreement, dated
              September 24, 1996 between the Company's subsidiary, Information
              Technology Services, Inc., and IBM Credit Corporation
              (incorporated herein by reference to Exhibit 10.2. to the
              Company's Registration Statement on Form S-1/A (File No.
              333-25593) filed with the Commission on June 12, 1997)

10.2          Agreement for Wholesale Financing (Security Agreement), dated
              November 27, 2000 between the Company's subsidiary, Information
              Technology Services, Inc., and IBM Credit Corporation
              (incorporated herein by reference to Exhibit 10.2 to the
              Company's Annual Report on 10-K for the fiscal year ended
              September 30, 2000 filed with the Commission on December 29, 2000)

10.3*         1998 Incentive Stock Option Plan, as Amended (incorporated
              herein by reference to Exhibit 99 to the Company's definitive
              Proxy Statement filed with the Commission on December 27, 1999)

10.4*         1999 Employee Stock Purchase Plan (incorporated herein by
              reference to Exhibit A to the Company's definitive Proxy
              Statement filed with the Commission on December 28, 1998)

[FN]
-----------
*             Management contract or compensatory plan.


                                      22