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
1934For the quarterly period ended December 31, 2002 | 
| | --- | --------------------------------------------------------------------------------------------------------------------------------------- | 

OR

| | [  ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934For the transition period from ____________ to ________________ | 
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------- | 

Commission File No.: 0-22693

SYSCOMM INTERNATIONAL CORPORATION(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction ofincorporation or organization) | 11-2889809(I.R.S. EmployerIdentification No.)
|--------------------------------------------------------------------- | ---------------------------------------------

7 Kingsbridge Road, Fairfield, New Jersey 07004
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code:  (973) 227-8772

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 [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
      Yes [  ]      No [X]

The number of shares outstanding of each class of our common equity as of February 6, 2003 is as follows:

| | Class of Common EquityCommon Stock, par value $.01 | Number of Shares4,895,998
| | -------------------------------------------------- | -------------------------

SYSCOMM INTERNATIONAL CORPORATIONTABLE OF CONTENTS

|Item           | Description                                                                           | Page | 
|-------------- | ------------------------------------------------------------------------------------- | ---- | 
|               | PART I  FINANCIAL INFORMATION                                                        |      | 
|1.             | Condensed Financial Statements                                                        |      | 
|               | Consolidated Condensed Balance Sheets                                                |      | 
|               | December 31, 2002 (unaudited) and September 30, 2002                                  | 3    | 
|               | Consolidated Condensed Statements of Operations                                      |      | 
|               | Three Months ended December 31, 2002 and 2001 (unaudited)                             | 4    | 
|               | Consolidated Condensed Statement of Stockholders Equity                             |      | 
|               | Three Months ended December 31, 2002 (unaudited)                                      | 5    | 
|               | Consolidated Condensed Statements of Cash Flows                                      |      | 
|               | Three Months ended December, 2002 and 2001 (unaudited)                                | 6    | 
|               | Notes to Consolidated Condensed Financial Statements (unaudited)                      | 7    | 
|2.             | Managements Discussion and Analysis of Financial
Condition and Results of Operations | 8    | 
|3.             | Quantitative and Qualitative Disclosures About Market
Risk                            | 12   | 
|4.             | Controls and Procedures                                                               | 12   | 
|               | PART II  OTHER INFORMATION                                                           |      | 
|6.             | Exhibits and Reports on Form 8-K                                                      | 13   | 
|               |                                                                                       |     
|SIGNATURE      | 14                                                                                    |     
|CERTIFICATIONS | 15                                                                                    |     
|EXHIBITS       | 17                                                                                    |     

2

PART I        FINANCIAL INFORMATION
        ITEM 1.     FINANCIAL STATEMENTS

|SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
|--------------------------------------------------
|CONSOLIDATED CONDENSED BALANCE SHEETS             
|(In thousands except par value)                   

|                                                                              | Assets                               |             |                   |       |                    |       |       |      
|----------------------------------------------------------------------------- | ------------------------------------ | ----------- | ----------------- | ----- | ------------------ | ----- | ----- | -----
|                                                                              |                                      |             | December 31, 2002 |       | September 30, 2002 |      
|Current Assets                                                                |                                      | (Unaudited) |                   |       |                    |       |      
|Cash and cash equivalents                                                     |                                      | $           | 2,601             |       | $                  |       | 3,398 |      
|Accounts receivable (net of allowance for doubtful accounts of                |                                      | 2,094       |                   |       |                    | 1,913 |      
|                                                                              | $174 and $208)                       |             |                   |       |                    |       |       |      
|Inventories                                                                   |                                      |             | 50                |       |                    |       | 91    |      
|Deferred tax assets                                                           |                                      |             | 13                |       |                    |       | 42    |      
|Other current assets                                                          |                                      |             | 285               |       |                    |       | 135   |      
|                                                                              |                                      |             |                   |       |                    |       |       |      
|                                                                              | Total Current Assets                 |             |                   | 5,043 |                    |       |       | 5,579
|Property, equipment and improvements, net                                     |                                      | 473         |                   |       |                    | 524   |      
|Goodwill, net                                                                 |                                      |             | 2,154             |       |                    |       | 2,154 |      
|Other assets                                                                  |                                      |             | 1,670             |       |                    |       | 1,500 |      
|                                                                              |                                      |             |                   |       |                    |       |       |      
|Total Assets                                                                  |                                      | $           | 9,340             |       | $                  |       | 9,757 |      
|                                                                              |                                      |             |                   |       |                    |       |       |      
|                                                                              | Liabilities and Stockholders' Equity |             |                   |       |                    |       |       |      
|Current Liabilities                                                           |                                      |             |                   |       |                    |       |       |      
|Current maturities of capital lease obligation                                | $                                    | 21          |                   |       | $                  | 21    |      
|Amounts due to Parent Company                                                 |                                      |             | 146               |       |                    |       | 127   |      
|Accounts payable                                                              |                                      |             | 158               |       |                    |       | 190   |      
|Accrued expenses and other liabilities                                        |                                      | 980         |                   |       |                    | 1,160 |      
|                                                                              |                                      |             |                   |       |                    |       |      
|                                                                              | Total Current Liabilities            |             |                   | 1,305 |                    |       |       | 1,498
|Capital lease obligation                                                      |                                      |             | 16                |       |                    |       | 21    |      
|                                                                              |                                      |             |                   |       |                    |       |       |      
|                                                                              | Total Liabilities                    |             |                   | 1,321 |                    |       |       | 1,519
|                                                                              |                                      |             |                   |       |                    |       |       |      
|Commitments and Contingencies                                                 |                                      |             |                   |       |                    |       |       |      
|Stockholders Equity                                                          |                                      |             |                   |       |                    |       |       |      
|Preferred shares:                                                             |                                      |             |                   |       |                    |       |       |      
|Authorized 5,000 shares, no par value; none issued                            |                                      | -           |                   |       |                    | -     |      
|Common shares:                                                                |                                      |             |                   |       |                    |       |       |      
|Authorized 80,000 shares of $.01 par value; 5,757 shares issued; 4,896 shares |                                      | 58          |                   |       | 58                 |      
|outstanding                                                                   |                                      |             |                   |       |                    |       |       |      
|Additional paid-in capital                                                    |                                      |             | 6,653             |       |                    |       | 6,653 |      
|Retained earnings                                                             |                                      |             | 2,226             |       |                    |       | 2,445 |      
|Treasury stock (861 shares, carried at cost)                                  |                                      | (918)       |                   |       |                    | (918) |      
|                                                                              |                                      |             |                   |       |                    |       |      
|                                                                              | Total Stockholders Equity           |             |                   | 8,019 |                    |       |       | 8,238
|                                                                              |                                      |             |                   |       |                    |       |       |      
|Total Liabilities and Stockholders' Equity                                    | $                                    | 9,340       |                   | $     |                    | 9,757 |      
|                                                                              |                                      |             |                   |       |                    |       |      

---

|See the accompanying notes to consolidated condensed financial statements. | 3
|-------------------------------------------------------------------------- | -

|SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
|--------------------------------------------------
|CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS   
|(In thousands except per share data)(Unaudited)   

|                                             | For The Three MonthsEnded December 31, |       
|-------------------------------------------- | -------------------------------------- | ------
|                                             |                                        |       
|                                             | 2002                                   |       
|                                             |                                        |       
|Revenue:                                     |                                        |       
|Product revenue                              | $                                      | 2,386 
|Service revenue                              |                                        | 494   
|                                             |                                        |       
|Total revenue                                |                                        | 2,880 
|                                             |                                        |       
|Cost of sales:                               |                                        |       
|Cost of products sold                        |                                        | 1,967 
|Cost of services sold                        |                                        | 269   
|                                             |                                        |       
|Total cost of products and services sold     |                                        | 2,236 
|                                             |                                        |       
|Gross profit                                 |                                        | 644   
|Selling, general and administrative expenses |                                        | 942   
|Depreciation and amortization                |                                        | 57    
|                                             |                                        |       
|Loss from operations                         |                                        | (355) 
|Other income                                 |                                        | (2)   
|Interest expense                             |                                        | 7     
|                                             |                                        |       
|Loss before income tax benefit               |                                        | (360) 
|Income tax benefit                           |                                        | (141) 
|                                             |                                        |       
|Net loss applicable to common stockholders   | $                                      | (219) 
|                                             |                                        |       
|                                             |                                        |       
|Net loss per common share  basic            | $                                      | (0.04)
|                                             |                                        |       
|                                             |                                        |       
|Weighted average number of common            |                                        |       
|shares outstanding  basic                   |                                        | 4,896 
|                                             |                                        |       

---

|See the accompanying notes to consolidated condensed financial statements. | 4
|-------------------------------------------------------------------------- | -

|SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES                                                          
|------------------------------------------------------------------------------------------------------------
|CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Three Month Period Ended December 31, 2002
|(In Thousands)(Unaudited)                                                                                   

|                           | Preferred Stock |              | Common Stock |        | AdditionalPaid-In |  | Retained    |  | Treasury Stock |  | Total Stockholders'
|-------------------------- | --------------- | ------------ | ------------ | ------ | ----------------- |  | ----------- |  | -------------- |  | -------------------
|                           | Number          | Amount       |              | Number | Amount            |  | Capital     |  | Earnings       |  | Number             
|                           |                 |              |              |        |                   |  |             |  |                |  |                    
|Balance, October 1, 2002   |                | $           |              | 5,757  | $        58       |  | $     6,653 |  | $     2,445    |  | (861)              
|Net loss                   |                |             |              |       |                  |  |            |  | (219)          |  |                   
|                           |                 |              |              |        |                   |  |             |  |                |  |                    
|Balance, December 31, 2002 |                | $           |              | 5,757  | $        58       |  | $     6,653 |  | $     2,226    |  | (861)              
|                           |                 |              |              |        |                   |  |             |  |                |  |                    

---

|See the accompanying notes to consolidated condensed financial statements. | 5
|-------------------------------------------------------------------------- | -

|SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
|--------------------------------------------------
|CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS   
|(In Thousands)(Unaudited)                         

|                                                                                     | For The Three MonthsEnded December 31, |      
|------------------------------------------------------------------------------------ | -------------------------------------- | -----
|                                                                                     |                                        |      
|                                                                                     |                                        | 2002 
|Cash flows from operating activities                                                 |                                        |      
|Net loss                                                                             | $                                      | (219)
|Adjustments to reconcile net loss to cash provided by (used in) operating activities |                                        |      
|Depreciation and amortization                                                        |                                        | 57   
|Deferred income taxes                                                                |                                        | (141)
|Change in assets and liabilities:                                                    |                                        |      
|(Increase) decrease in accounts receivable                                           |                                        | (181)
|Decrease in inventories                                                              |                                        | 41   
|(Increase) decrease in other current assets                                          |                                        | (168)
|Decrease in accounts payable and accrued expenses                                    |                                        | (212)
|                                                                                     |                                        |      
|Net cash (used in) provided by operating activities                                  |                                        | (823)
|                                                                                     |                                        |      
|Cash flows from investing activities                                                 |                                        |      
|Capital expenditures                                                                 |                                        | (6)  
|Payments received on notes receivable                                                |                                        | 18   
|                                                                                     |                                        |      
|Net cash provided by (used in) investing activities                                  |                                        | 12   
|                                                                                     |                                        |      
|Cash flows from financing activities                                                 |                                        |      
|Payments on capital lease obligation                                                 |                                        | (5)  
|Net borrowings (payments) on Parent Company line of credit                           |                                        | 19   
|                                                                                     |                                        |      
|Net cash provided by (used in) financing activities                                  |                                        | 14   
|                                                                                     |                                        |      
|Net (decrease) increase in cash and cash equivalents                                 |                                        | (797)
|Cash and cash equivalents - beginning of period                                      |                                        | 3,398
|                                                                                     |                                        |      
|Cash and cash equivalents - end of period                                            | $                                      | 2,601
|                                                                                     |                                        |      

---

|See the accompanying notes to consolidated condensed financial statements. | 6
|-------------------------------------------------------------------------- | -

|SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES  
|----------------------------------------------------
|NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
|(In thousands, except per share data)(Unaudited)    

1.      Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated condensed financial statements reflect
all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of
SysComm International Corporation (the "Company") and its wholly-owned subsidiaries, as of December 31, 2002,
their results of operations for the three months ended December 31, 2002 and 2001, their changes in stockholders'
equity for the three months ended December 31, 2002 and their cash flows for the three months ended December 31,
2002 and 2001. Information included in the consolidated condensed balance sheet as of September 30, 2002 has been
derived from the audited consolidated balance sheet included in the Company's Annual Report on Form 10-K for the
year ended September 30, 2002 (the "10-K") previously filed with the Securities and Exchange Commission (the
"SEC"). Pursuant to the rules and regulations of the SEC, certain information and disclosures normally included in
financial statements prepared in accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted from these consolidated condensed financial statements unless significant
changes have taken place since the end of the most recent fiscal year. Accordingly, these unaudited consolidated
condensed financial statements should be read in conjunction with the consolidated financial statements, notes to
consolidated financial statements and the other information in the 10-K.

The consolidated results of operations for the three months ended December 31, 2002 are not necessarily
indicative of the results to be expected for the full year ending September 30, 2003.

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, 2002 and September 30, 2002 consists of:

|                                       | December 31,2002 |  | September 30,2002
|-------------------------------------- | ---------------- |  | -----------------
|                                       |                  |  |                  
|Finished goods                         | $         90     |  |                  
|Allowance for excess and absolenscence | (40)             |  |                  
|                                       |                  |  |                  
|                                       | $         50     |  |                  
|                                       |                  |  |                  

4.      Loss Per Share

As further explained in Note 1 of the notes to the Company's audited financial statements included in the
Company's Form 10-K for the year ended September 30, 2002 previously filed with the SEC, the Company presents
basic earnings (loss) per share and, if appropriate, diluted earnings per share in accordance with the provisions
of Statement of Financial Standards No. 128, " Earnings per Share".

Since the Company had net losses for the three months ended December 31, 2002 and 2001, the assumed effects
of the exercise of employee stock options outstanding for the purchase of 4,670 and
2,595 common shares at December 31, 2002 and 2001, respectively, and warrants for the purchase of 300,000 common shares at $0.5775 per
share outstanding at December 31, 2002 would have been anti-dilutive.

7

|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 condensed 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, 2002.  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 Forward-Looking
Statements and Associated Risk section later in this Item.

##### RECENT DEVELOPMENTS

##### Headcount Reductions

Due to market conditions
resulting in weak sales and reduced margins, we needed to reduce our headcount. In
October 2002 and again in January 2003 we reduced portions of our workforce by a
total of 8 employees in order to reduce expenses and improve profitability.
There was no significant impact on the results of operations in the current
quarter as a result of these reductions, however, we expect annual savings of
approximately $550,000 resulting from the reduced salary and benefit costs.

BUSINESS DESCRIPTION(in $'000 unless otherwise noted)

We are a Delaware corporation incorporated in 1997.  Through our two wholly-owned subsidiaries, Information
Technology Services, Inc., and InfoTech USA, Inc., we provide professional
services in the area of systems integration, information technology procurement and logistics, and technology
strategy in the New York City metropolitan area and New Jersey.  Doing business as "InfoTech", we are a full
service provider of information technology solutions and products.  We specialize in tailoring our approach to
the individual customer needs of medium to large size entities .  We provide information technology consulting,
networking, procurement, deployment, integration, migration and security services and solutions.  We also provide
on-going system and network maintenance services.  The company is controlled by its 53% majority stockholder,
Applied Digital Solutions, Inc.

##### RESULTS OF OPERATIONS

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.

8

The following table sets forth, for the periods indicated, the percentage relationship to total revenue of
certain items in our consolidated condensed statements of operations.

|                                             | Relationship to Revenue        | 
|-------------------------------------------- | ------------------------------ | 
|                                             |                                | 
|                                             | Three Months EndedDecember 31, | 
|                                             |                                | 
|                                             | 2002                           | 
|                                             | %                              | 
|Product revenue                              | 82.8                           | 
|Service revenue                              | 17.2                           | 
|                                             |                                | 
|Total product and service revenue            | 100.0                          | 
|                                             |                                | 
|Cost of products sold                        | 68.3                           | 
|Cost of services sold                        | 9.3                            | 
|                                             |                                | 
|Total cost of products and services sold     | 77.6                           | 
|                                             |                                | 
|Gross profit                                 | 22.4                           | 
|Selling, general and administrative expenses | 32.7                           | 
|Depreciation and amortization                | 2.0                            | 
|Interest expense                             | 0.2                            | 
|                                             |                                | 
|Loss before income tax benefit               | (12.5)                         | 
|Income tax benefit                           | (4.9)                          | 
|                                             |                                | 
|Net loss applicable to common stockholders   | (7.6)                          | 
|                                             |                                | 

Three Months Ended December 31, 2002 Compared to the Three Months Ended December 31, 2001(in $'000 unless otherwise noted)

Revenue for the first quarter of 2003  decreased  $2,461,  or 46.1% from $5,341 for the first quarter of 2002.
The decrease in revenue was a result of a continued  soft market in both product sales and service  sales  combined
with our  decision in April 2002 to cease  selling  some of our lower  margin  computer  hardware  and focus on the
higher margin  products and related  technical  services.  Product  revenue for the three months ended December 31,
2002 decreased $2,210, or 48.1% and service revenue decreased $251, or 33.7% for the same period last year.

Gross  profit  declined  by $266,  or 29.2% in the first  quarter of fiscal year 2003 to $644 from $910 in the
first  quarter of fiscal year 2002.  The  decrease in gross  profit was  primarily  due to the overall  decrease in
revenue.  However,  overall  gross margin  increased  from 17.0% in the first quarter of 2002 to 22.4% in the first
quarter of 2003.  This was  primarily a result of our strategy to cease  selling some of our lower margin  computer
hardware and to focus our efforts on selling  higher  margin  products as well as on increasing  the  proportion of
higher margin  technical  services  sales.  Product  gross margin rose to 17.6% for the quarter ended  December 31,
2002  compared to 11.6% for the same quarter last year.  Service  gross margin  declined  slightly to 45.5% for the
quarter ended December 31, 2002 from 50.3% for the quarter ended December 31, 2001.

Selling,  general and  administrative  expenses were $942 for the quarter ended December 31, 2002,  down $285,
or 23.2%,  from the $1,227  reported for the same period last year.  The  reduction in expense was primarily due to
headcount  reduction,  the  elimination of expenses  related to the Shirley,  New York facility,  which was sold in
January 2002, reduced commissions on lower sales and other cost control programs.

Depreciation  and  amortization  expense for the current  quarter was $57, a decrease of $6, or 9.5%, from $63
for the same quarter last year.  Interest  expense for the quarter  ended  December 31, 2002  declined 92% to $7
compared  to $88 for the same  quarter  last  year due to the  payoff  of the  mortgage  on the  Shirley,  New York
facility in January of 2002 and the repayment of certain notes to Applied Digital Solutions in August of 2002.

9

Loss before income taxes for the quarter  decreased to $360 for the quarter ended  December 31, 2002 from $468
for the same period last year an  improvement  of 23.1%.  Our effective tax rate for the current  quarter was 39.2%
compared to 39.9% for the same quarter last year.

Our net loss for the quarter  ended  December 31, 2002 was $219 an  improvement  of 22.1% over the net loss of
$281 reported the same period last year.

##### Liquidity and Capital Resources

Our current ratio at December 31, 2002 was up slightly to 3.9 compared to 3.7 at September 30, 2002.
Working capital at December 31, 2002 was down slightly to $3,738 from $4,081 at September 30, 2002, a decrease of
$343.

Cash used in operating activities in the first three months of fiscal year 2003 was $823 compared to cash
provided by operating activities in the first three months of fiscal year 2002 of $606.   The cash used in
operating activities in the current quarter was a result of our net loss for the quarter plus increases in
accounts receivable and other assets, combined with a reduction in accounts payable.  The cash provided by
operating activities during the first quarter of last fiscal year was a result of large reductions in accounts
receivable and reductions in inventory, which were largely offset by a decrease in accounts payable and our net
loss for the first quarter last fiscal year.

Cash provided by investing activities was $12 for the current quarter compared to cash used in investing
activities of $3 for the same quarter last year.  Cash provided by investing activities of $12 for the quarter
ended December 31, 2002 was primarily a result of payments received on notes receivable, which was somewhat
offset by capital expenditures.  The cash used in investing activities of $3 in the quarter ended December 31,
2001 was a result of capital expenditures, which was largely offset by payments received on notes receivable.

Net cash provided by financing activities was $14 for the quarter ended December 31, 2002 versus cash used
in financing activities of $534 for the quarter ended December 31, 2001.  The $14 of cash provided by financing
activities in the first quarter of this year was primarily a result of the increase in net borrowings on our line
of credit with Applied Digital Solutions.  This was somewhat offset by payments made on long-term debt.  The $534
of cash used in financing activities in the first quarter of last year was primarily due to paying down our line
of credit with Applied Digital Solutions.

Our business activities are capital intensive and, consequently, we finance our accounts receivable and
inventory.  Failure to obtain adequate product financing on a timely basis could have a material adverse affect
on our business, results of operations, financial condition and cash flows.  Our current financing agreements
with IBM Credit Corporation provide financing on inventory purchases up to $3,350.  Borrowing for purchases is
based upon 75% of all eligible receivables due within 90 days and up to 100% of all eligible inventories.  The
line is subject to temporary increases, thereby increasing the line of credit up to $4,350 when needed for high
volume sale opportunities.  Interest for balances not paid within the interest free period provided in the
agreements accrues at prime plus 6.5%.

Combined  borrowings  under the financing  arrangements  described above amounted to $187 and $236 at December
31, 2002 and September 30, 2002,  respectively,  and are included in either  accounts  payable or accrued  expenses
and other liabilities.

On January 31, 2002, and again on February 27, 2002, Applied Digital Solutions entered into amendments
to their prior credit agreement with IBM Credit Corporation.  These amendments extended the principal and
interest payments, which were currently due, to April 2, 2002, including principal payments that were initially
due on July 1, 2001.  Effective March 27, 2002, Applied Digital Solutions entered into a new credit agreement
with IBM Credit Corporation.  Applied Digital Solutions' credit agreement with IBM Credit Corporation contains
covenants relating to Applied Digital Solutions' financial position and performance, as well as the financial
position and performance of Digital Angel Corporation, an affiliate of Applied Digital Solutions. The principal
amount outstanding bears interest at an annual rate of 17% and matures on February 28, 2003.  The agreement
contains provisions to extend the maturity date beyond February 28, 2003; however, if all amounts are not repaid
by February 28, 2003, the unpaid amount will accrue interest at an annual rate of 25%.  If all amounts are not
repaid by February 28, 2004, the interest rate increases to 35%.  In addition, Applied Digital Solutions' shares
of our common stock are pledged as collateral for amounts outstanding under the credit agreement.  IBM Credit
Corporation has a security interest in our receivables and inventories, up to the amount advanced from Applied
Digital Solutions under the line of credit.  Any amounts we owe to Applied Digital Solutions bear interest at the
same rate as paid by Applied Digital Solutions to IBM Credit Corporation.

10

At June 30, 2002, Applied
Digital Solutions and Digital Angel Corporation were not in compliance with
certain covenants and other provisions under the credit agreement. On August 21,
2002, IBM Credit Corporation provided Applied Digital Solutions with a waiver of
such non-compliance. On September 30, 2002 and again on November 1, 2002,
Applied Digital Solutions entered into amendments to its credit agreement with
IBM Credit Corporation, which amendments revised certain financial covenants
related to the financial performance of Applied Digital Solutions and the
financial position and performance of Digital Angel Corporation. Applied
Digital Solutions and Digital Angel corporation have not finalized their
operating results for the year ended December 31, 2002, however, management understands that
Applied Digital Solutions expects to be in compliance with the revised covenants
under the IBM Credit Agreement. Management also understands that Digital Angel Corporation does not expect to have maintained compliance
with the revised financial performance covenants under the IBM Credit Agreement. Applied Digital Solutions and Digital Angel
Corporation are currently in the process of negotiating with IBM Credit to
restructure the IBM Credit Agreement to extend the payment terms and to modify
other provisions of the IBM Credit Agreement. Applied Digital Solutions has indicated that it believes it will be
successful in restructuring the IBM Credit Agreement. There can
be no assurance, however, that their ongoing discussions with IBM Credit
concerning the restructuring will be successful.  Management understands that Applied Digital Solutions does not have the funds available to make
the payment due on February 28, 2003.

The failure of Applied Digital Solutions
and Digital Angel Corporation to maintain their covenants imposed by the IBM Credit Agreement and the failure of Applied Digital Solutions
to comply with the payment terms would constitute a default under the IBM Credit Agreement, allowing
IBM Credit to terminate its commitments to Applied Digital Solutions and to accelerate the maturity of all amounts owed to them by
Applied Digital Solutions, including any amounts advanced to us by Applied Digital Solutions.  Additionally, the
credit agreement further prohibits Applied Digital Solutions from borrowing funds from other lenders and does not
provide for any additional advances from IBM Credit Corporation. Due to these circumstances, future borrowings
may not be available to us from Applied Digital Solutions.  As of December 31, 2002, we had  $146 due to Applied
Digital Solutions.  The acceleration of this payment to Applied Digital Solutions would not materially affect our
business operations or the amount available to us under our inventory financing arrangements with IBM Credit Corporation.

We believe that our present financing arrangements with IBM Credit Corporation and current cash position
will be sufficient to fund our operations and capital expenditures for at least twelve months without utilizing
any additional loans from IBM Credit Corporation through the Applied Digital Solutions credit facility.  Our
long-term capital needs may require additional sources of credit, however, any change in financing arrangements
requires the consent of Applied Digital Solutions and IBM Credit Corporation.  There can be no assurances that
these consents will be given, or that we will be successful in our ability to negotiate additional sources of
credit.  Our inability to have continuous access to such financing at reasonable costs would materially and
adversely impact our long-term financial condition, results of operations and cash flows.

##### FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK

Certain statements in this report, 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:  the ability to hire and retain key personnel; the continued
development of our technical, 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;  our ability to
maintain available sources of financing;  and changes in our capital structure and cost of capital.  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.

11

##### 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.  For Information Technology Services, Inc., borrowings under the
financing agreement with IBM Credit Corporation are at zero percent interest for the first 30 days, thereafter
the interest rate is the prime rate plus 6.5%. For InfoTech USA, borrowings under the financing agreement with
IBM Credit Corporation are at zero percent interest for the first 10 days, thereafter the interest rate is the
prime rate plus 6.5%. 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.

##### ITEM 4.     CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our principal executive
officer and principal financial officer, we have evaluated the effectiveness of the design and operation of our
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 within 90 days of the filing date of this
quarterly report.  Based upon their evaluation, our principal executive officer and principal financial officer
have concluded that our disclosure controls and procedures are effective in timely alerting them to material
information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC
filings.  There were no significant changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.

12

##### PART II     OTHER INFORMATION

##### ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

Exhibits (listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K).

13

##### 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
|-------------------------- | ---------------------------------
|Dated:   February 14, 2003 | By:                              
|                           |                                  

14

##### CERTIFICATIONS

I, Kevin McLaughlin, certify that:

1.        I have reviewed this quarterly report on form 10-Q of SysComm International Corporation;

2.        Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this quarterly report;

3.        Based on my knowledge, the financial statements, and other financial information included in this
quarterly report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this quarterly report;

4.         The registrant's other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:

| | a)        Designed such disclosure controls and procedures to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report is being prepared;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b)        Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within
         90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c)        Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls
         and procedures based on our evaluation as of the Evaluation Date.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.        The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to
the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the
equivalent function):

| | a)        All significant deficiencies in the design or operation of internal controls which could adversely
         affect the registrant's ability to record, process, summarize and report financial date and have
         identified for the registrant's auditors any material weaknesses in internal controls; and
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b)        Any fraud, whether or not material, that involves management or other employees who have a significant
         role in the registrant's internal controls; and
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6.        The registrant's other certifying officers and I have indicated in this quarterly report whether or not
there were significant changes in internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

Date:     February 14, 2003

| | /s/ Kevin McLaughlin                                                                                                                                                                                                             
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Kevin McLaughlin, President, Chief Executive
                                                              Officer, Chief Operating Officer, Secretary and
                                                              Director

15

I, J. Robert Patterson, certify that:

1.        I have reviewed this quarterly report on form 10-Q of SysComm International Corporation;

2.        Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this quarterly report;

3.        Based on my knowledge, the financial statements, and other financial information included in this
quarterly report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this quarterly report;

4.         The registrant's other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:

| | a)        Designed such disclosure controls and procedures to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report is being prepared;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b)        Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within
         90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c)        Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls
         and procedures based on our evaluation as of the Evaluation Date.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.        The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to
the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the
equivalent function):

| | a)        All significant deficiencies in the design or operation of internal controls which could adversely
         affect the registrant's ability to record, process, summarize and report financial date and have
         identified for the registrant's auditors any material weaknesses in internal controls; and
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b)        Any fraud, whether or not material, that involves management or other employees who have a significant
         role in the registrant's internal controls; and
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6.        The registrant's other certifying officers and I have indicated in this quarterly report whether or not
there were significant changes in internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

Date:     February 14, 2003

| | /s/ J. Robert Patterson                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------
| | J. Robert Patterson, Vice President, Chief
                                                              Financial Officer and Treasurer

16

##### EXHIBITS

|ExhibitNumber | 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 | Amendment to the Third Amended And Restated Term Credit Agreement dated as of November 1, 2002
               (incorporated by reference to Exhibit 10.22 to Applied Digital Solutions, Inc. Post-Effective
               Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-98799) filed with the
               Commission on November 5, 2002).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17