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

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

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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 June 30, 2001

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.: 0-22693

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

|Delaware                                                      |  | 11-2889809                         
|------------------------------------------------------------- |  | -----------------------------------
|(State or Other Jurisdiction ofIncorporation or Organization) |  | (I.R.S. EmployerIdentification 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 August 13, 2001 is as follows:

|Class of Common Equity       |  | Number of Shares
|---------------------------- |  | ----------------
|Common Stock, par value $.01 |  | 4,895,998       

##### SYSCOMM INTERNATIONAL CORPORATION

TABLE OF CONTENTS

|Item      | Description                                                                                                              | Page
|--------- | ------------------------------------------------------------------------------------------------------------------------ | ----
|          |                                                                                                                         
|          | PART I - FINANCIAL INFORMATION                                                                                           |     
|          |                                                                                                                         
|1.        | Financial StatementsConsolidated Balance Sheets -                                                                        | 3   
|          | June 30, 2001 (unaudited) and September 30, 2000
            Consolidated Statements of Operations -                     | 4   
|          | Three and Six Months ended June 30, 2001 and 2000 (unaudited)
            Consolidated Statement of Stockholders' Equity | 5   
|          | Six Months ended June 30, 2001(unaudited)
            Consolidated Statements of Cash Flows -                            | 6   
|          | Six Months ended June 30, 2001 and 2000 (unaudited)
            Notes to Consolidated Financial Statements (unaudited)   | 7   
|2.        | Management's Discussion and Analysis of Financial Condition
and Results of Operations                                    | 11  
|3.        | Quantitative and Qualitative Disclosures About Market Risk                                                               | 16  
|          |                                                                                                                         
|          | PART II - OTHER INFORMATION                                                                                              |     
|          |                                                                                                                         
|1.        | Legal Proceedings                                                                                                        | 17  
|2.        | Changes In Securities                                                                                                    | 17  
|3.        | Defaults Upon Senior Securities                                                                                          | 17  
|4.        | Submission of Matters to a Vote of Security Holders                                                                      | 17  
|5.        | Other Information                                                                                                        | 17  
|6.        | Exhibits and Reports on Form 8-K                                                                                         | 18  
|          |                                                                                                                         
|SIGNATURE | 19                                                                                                                      
|EXHIBITS  | 20                                                                                                                      

2

PART I        FINANCIAL INFORMATION
ITEM 1.        FINANCIAL STATEMENTS

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

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|Assets                                                                                                                                                                                                      | June 30, 2001(Unaudited) |  | September 30, 2000
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ |  | ------------------
|Current Assets                                                                                                                                                                                              |                          |  |                   
|Cash and cash equivalents                                                                                                                                                                                   | $     2,861              |  | $     1,039       
|Accounts receivable (net of allowance for doubtful accounts of
     $568 at June 30, 2001 and $133 at September 30, 2000)                                                                                   | 5,141                    |  | 9,802             
|Inventories                                                                                                                                                                                                 | 313                      |  | 404               
|Notes receivable                                                                                                                                                                                            | 102                      |  | -                 
|Due from affiliate                                                                                                                                                                                          | 152                      |  | -                 
|Other current assets                                                                                                                                                                                        | 655                      |  | 241               
|Total Current Assets                                                                                                                                                                                        | 9,244                    |  | 11,486            
|Property And Equipment, net                                                                                                                                                                                 | 3,278                    |  | 3,298             
|Goodwill, net                                                                                                                                                                                               | 2,213                    |  | -                 
|Other Assets                                                                                                                                                                                                | 938                      |  | 846               
|Total Assets                                                                                                                                                                                                | $  15,653                |  | $   15,630        
|Liabilities and Stockholders' Equity                                                                                                                                                                        |                          |  |                   
|Current Liabilities                                                                                                                                                                                         |                          |  |                   
|Current maturities of long-term debt                                                                                                                                                                        | $       952              |  | $       279       
|Accounts payable and accrued expenses                                                                                                                                                                       | 3,469                    |  | 5,144             
|Total Current Liabilities                                                                                                                                                                                   | 4,421                    |  | 5,423             
|Long-Term Debt                                                                                                                                                                                              | 2,723                    |  | 999               
|Total Liabilities                                                                                                                                                                                           | 7,144                    |  | 6,422             
|Commitments And Contingencies                                                                                                                                                                               | -                        |  | -                 
|Stockholders' Equity                                                                                                                                                                                        |                          |  |                   
|Preferred shares:                                                                                                                                                                                           |                          |  |                   
|Authorized 5,000 shares at June 30, 2001 and 1,000 shares at September 30, 2000; none issued                                                                                                                | -                        |  | -                 
|Common shares:                                                                                                                                                                                              |                          |  |                   
|Authorized 80,000 shares at June 30, 2001 and 40,000 shares at
September 30, 2000,          of $.01 par value; 5,757 shares issued at June 30, 2001         
 and 5,555 shares issued at September 30, 2000 | 58                       |  | 56                
|Additional paid-in capital                                                                                                                                                                                  | 6,582                    |  | 6,502             
|Retained earnings                                                                                                                                                                                           | 2,787                    |  | 3,562             
|Treasury stock (carried at cost)                                                                                                                                                                            | (918)                    |  | (912)             
|Total Stockholders' Equity                                                                                                                                                                                  | 8,509                    |  | 9,208             
|Total Liabilities and Stockholders' Equity                                                                                                                                                                  | $   15,653               |  | $  15,630         

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See the accompanying notes to consolidated financial statements.

3

SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share date)(Unaudited)

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|                                                               | Three Months EndedJune 30, | Nine Months EndedJune 30,
|-------------------------------------------------------------- | -------------------------- | -------------------------
|                                                               | 2001                       | 2000                     
|Product revenue                                                | $     6,474                | $   10,832               
|Service revenue                                                | 991                        | -                        
|Total revenue                                                  | 7,465                      | 10,832                   
|Cost of product sold                                           | 5,992                      | 9,798                    
|Cost of service sold                                           | 477                        | -                        
|Cost of product and service sold                               | 6,469                      | 9,798                    
|Gross profit                                                   | 996                        | 1,034                    
|Selling, general and administrative expenses                   | 1,306                      | 1,497                    
|Depreciation and amortization                                  | 153                        | 75                       
|Other income                                                   | (29)                       | (47)                     
|Interest expense                                               | 76                         | 39                       
|Loss before benefit for income taxes                           | (510)                      | (530)                    
|Benefit for income taxes                                       | (186)                      | -                        
|Net loss available to common stockholders                      | $         (324)            | $        (530)           
|Net loss per common share - basic                              | $         (0.07)           | $        (0.11)          
|Net loss per common share - diluted                            | $         (0.07)           | $        (0.11)          
|Weighted average number of common shares outstanding - basic   | 4,896                      | 4,683                    
|Weighted average number of common shares outstanding - diluted | 4,896                      | 4,683                    

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See the accompanying notes to consolidated financial statements.

4

SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Nine Month Period Ended June 30, 2001(In Thousands)(Unaudited)

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|                            | Preferred Stock |         | Common Stock |        | AdditionalPaid-InCapital |  | Retained Earnings |  | Treasury Stock |  | TotalStockholders'Equity
|--------------------------- | --------------- | ------- | ------------ | ------ | ------------------------ |  | ----------------- |  | -------------- |  | ------------------------
|                            | Number          | Amount  |              | Number | Amount                   |  |                   |  |                |  | Number                  
|Balance, September 30, 2000 | -               | $     - |              | 5,555  | $    56                  |  | $   6,502         |  | $   3,562      |  | (852)                   
|Net loss                    | -               | -       |              | -      | -                        |  | -                 |  | (775)          |  | -                       
|Sale of common stock        | -               | -       |              | 202    | 2                        |  | 80                |  | -              |  | -                       
|Purchase of treasury shares | -               | -       |              | -      | -                        |  | -                 |  | -              |  | (9)                     
|Balance, June 30, 2001      | -               | $     - |              | 5,757  | $     58                 |  | $   6,582         |  | $   2,787      |  | (861)                   

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See the accompanying notes to consolidated financial statements.

5

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

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|                                                                                                                             | For the Nine MonthsEnded June 30,
|---------------------------------------------------------------------------------------------------------------------------- | ---------------------------------
|                                                                                                                             | 2001                             
|Cash flows from operating activities                                                                                         |                                  
|Net loss                                                                                                                     | $    (775)                       
|Adjustments to reconcile net loss to cash provided by
(used in) operating activities
          Depreciation and amortization | 401                              
|Deferred tax benefit                                                                                                         | (326)                            
|Change in assets and liabilities:                                                                                            |                                  
|Decrease in accounts receivable                                                                                              | 8,760                            
|Decrease in inventories                                                                                                      | 513                              
|(Increase) decrease in other current assets                                                                                  | (5)                              
|Decrease in other assets                                                                                                     | 31                               
|Decrease in accounts payable and accrued expenses                                                                            | (3,629)                          
|Net cash provided by (used in) operating activities                                                                          | 4,970                            
|Cash flows from investing activities                                                                                         |                                  
|Payments for costs of business acquisitions                                                                                  | (1,966)                          
|Payments for property and equipment                                                                                          | (89)                             
|Net cash used in investing activities                                                                                        | (2,055)                          
|Cash flows from financing activities                                                                                         |                                  
|Net amounts paid on notes payable                                                                                            | (914)                            
|Payments on long-term debt                                                                                                   | (255)                            
|Sale of common stock                                                                                                         | 82                               
|Purchase of treasury stock                                                                                                   | (6)                              
|Net cash used in financing activities                                                                                        | (1,093)                          
|Net increase (decrease)  in cash and cash equivalents                                                                        | 1,822                            
|Cash and cash equivalents - beginning of period                                                                              | 1,039                            
|Cash and cash equivalents - end of period                                                                                    | $   2,861                        
|Supplemental Disclosures of Cash Flow Information                                                                            |                                  
|Cash paid during period for:                                                                                                 |                                  
|Interest                                                                                                                     | $      130                       
|Income taxes                                                                                                                 | 19                               
|Supplemental Schedules of Noncash Financing Activities                                                                       |                                  
|Acquisition of business:                                                                                                     |                                  
|Notes payable issued for acquisition                                                                                         | $   2,652                        

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See the accompanying notes to consolidated financial statements.

6

SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)
(Unaudited)

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##### 1.         Basis of Presentation

The accompanying unaudited  consolidated financial statements of SysComm International  Corporation (the "Company") as of June
30, 2001 and September  30, 2000 and for the three and nine months ended June 30, 2001 and 2000 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 under 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 nine months  ended June 30, 2001 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 June 30, 2001 and September 30, 2000 consists of:

| |                                       | June 30,2001 |  | September 30,2000
| | ------------------------------------- | ------------ |  | -----------------
| | Finished goods                        | $     494    |  | $     654        
| | Allowance for excess and obsolescence | (181)        |  | (250)            
| |                                       | $     313    |  | $     404        

7

##### 4.        Loss Per Share

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

|                                                               | Three Months EndedJune 30, | Nine Months EndedJune 30,
|-------------------------------------------------------------- | -------------------------- | -------------------------
|                                                               | 2001                       | 2000                     
|Numerator:                                                     |                            |                          
|Net loss available to common stockholders                      | $     (324)                | $     (530)              
|                                                               |                           
|Denominator:                                                   |                            |                          
|Denominator for basic loss per share - Weighted-average shares | 4,896                      | 4,683                    
|Denominator for diluted loss per share  (1)                    | 4,896                      | 4,683                    
|Basic loss per share                                           | $     (0.07)               | $     (0.11)             
|Diluted loss per share                                         | $     (0.07)               | $     (0.11)             

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|(1) | The weighted average shares of the employee stock options for the three months
and nine months ended June 30, 2001, were not included in the computation of
diluted loss per share because to do so would have been anti-dilutive for the
periods presented.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

##### 5.         Mergers and Acquisitions

The following represents acquisitions which occurred in the first nine months of fiscal 2001:

|                                                | Date ofAcquisition | PercentAcquired | AcquisitionPrice | CashConsideration | NotesIssued | BusinessDescription                               
|----------------------------------------------- | ------------------ | --------------- | ---------------- | ----------------- | ----------- | --------------------------------------------------
|First Quarter 2001 Acquisitions                 |                    |                 |                  |                   |             |                                                   
|Information ProductsCenter, Inc., Fairfield, NJ | 12/01/2000         | 100%            | $4,550           | $1,899            | $2,652      | Systems integratorand networkingsolutions provider

On December 14, 2000, we acquired  fifty-one  percent (51%) of the outstanding  shares of common stock of Information  Products
Center, Inc., a New Jersey corporation  ("Information  Products"),  from Applied Digital Solutions,  Inc. ("ADSX").  The purchase price
for the shares of  Information  Products was $2,075,  payable  $1,821 in cash and $254 by  promissory  note.  On December 15, 2000,  we
acquired the remaining  forty-nine  percent (49%) of the outstanding  shares of common stock of Information  Products for approximately
$2,400,  payable by  promissory  note.  The  purchase  price of  Information  Products  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 10
years.

8

Unaudited  pro forma  results of  operations  for the nine months  ended June 30, 2001 and 2000 are included  below.  Such pro
forma information assumes that the above transaction occurred as of October 1, 2000 and 1999, respectively.

|                                | Nine Months EndedJune 30, |              
|------------------------------- | ------------------------- | -------------
|                                | 2001                      | 2000         
|Revenues                        | $  29,868                 | $   47,383   
|Net loss                        | $      (721)              | $    (1,315) 
|Loss per common share - basic   | $     (0.15)              | $      (0.28)
|Loss per common share - diluted | $     (0.15)              | $      (0.28)

##### 6.        Change in Control

On December 14, 2000, ADSX 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 ADSX by the following persons and in the following amounts:

|Selling Shareholders        | Number of Shares Held | Percent Ownership
|--------------------------- | --------------------- | -----------------
|John H. Spielberger         | 1,920,000             |                  
|Catherine Spielberger       | 50,000                |                  
|Bearpen Limited Partnership | 600,000               |                  
|Total                       | 2,570,000             |                  

ADSX acquired the shares listed above for $4,500 by issuing  approximately  1.7 million shares of its common stock,  valued at
approximately  $2,750, to the selling  shareholders listed above and upon payment of an aggregate amount of cash equal to approximately
$1,750 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                                 

9

##### 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,  because we had not maintained a minimum bid price for our stock of $1.00 over the prior
30  consecutive  trading  days.  The matter was  considered  by the NASDAQ  Listing  Qualifications  Panel at a hearing on December 14,
2000.  The Panel was  unwilling to grant us an  extension  of time to satisfy the minimum bid  requirement,  and the  delisting  became
effective on January 9, 2001.  Our Common Stock is now traded on the OTC Bulletin Board.

10

##### 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 Forward-Looking Statements and Associated Risk section later in this Item.

##### BUSINESS DESCRIPTION

We are a Delaware  corporation  incorporated in 1987. We conduct  business through our wholly owned  subsidiaries  Information
Technology  Services,  Inc.  ("InfoTech")  and Information  Products  Center,  Inc. These two  organizations  combined create the "new"
InfoTech,  a leading  network  consulting  company  specializing  in the design,  implementation,  and  maintenance of complex  network
solutions.  Through our newly defined "GO2 Service  Strategy",  we transform our customers'  strategic  business  objectives into sound
technology  solutions.  As a market driven  Information  Technology  ("IT")  solutions  provider,  we deliver best of breed service and
customer care in our marketplace.

We strive to partner with our customers to consistently and cost-effectively  plan, execute and deliver high-quality  services
and results. Our consultants are seasoned  professionals who build long-term,  trusted  relationships and bring a high level of energy,
integrity,  experience  and value to the  customers  whom  they  serve.  Our  established  partnerships/alliances  with  other  leading
technology providers enables us to remain objective in our selection of the most appropriate  hardware,  software and services required
to meet the business technology needs of our customers.

##### Change in Control

As described above under Note 6 - Change in Control, on December 14, 2000, ADSX acquired approximately 55% of our issued and
outstanding common shares, resulting in a change in control of the Company.

Acquisition of Assets(in $'000 unless otherwise noted)

On December 14, 2000, we acquired from ADSX fifty-one  percent (51%) of the outstanding  shares of common stock of Information
Products.  The  purchase  price for the  shares of  Information  Products  was  $2,075,  payable  $1,821  in cash and $254  million  by
promissory note.

On December  15,  2000,  we acquired the  remaining  forty-nine  percent  (49%) of the  outstanding  shares of common stock of
Information Products.  The purchase price for the shares of Information Products was approximately $2,400, payable by promissory note.

11

##### RECENT DEVELOPMENTS

On July 13, 2001,  Anat  Ebenstein,  our  President  and former Chief  Operating  Officer,  was  appointed to Chief  Executive
Officer.  Mr. Loppert left the company to pursue other opportunities.

##### 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.

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

|                                             | Relationship to Revenue   
|-------------------------------------------- | --------------------------
|                                             | Three Months EndedJune 30,
|                                             | 2001                      
|                                             | %                         
|Product revenue                              | 86.7                      
|Service revenue                              | 13.3                      
|Total revenue                                | 100.0                     
|Cost of product sold                         | 80.3                      
|Cost of service sold                         | 6.4                       
|Cost of product and service sold             | 86.7                      
|Gross profit                                 | 13.3                      
|Selling, general and administrative expenses | 17.5                      
|Depreciation and amortization                | 2.0                       
|Other income                                 | (0.4)                     
|Interest expense                             | 1.0                       
|Loss before benefit for income taxes         | (6.8)                     
|Benefit for income taxes                     | (2.5)                     
|Net loss available to common stockholders    | (4.3)                     

Three Months Ended June 30, 2001 Compared to the Three Months Ended June 30, 2000(in $'000 unless otherwise noted)

Revenue for the third quarter of 2001 decreased  $3,367,  or 31.1%,  to $7,465 from $10,832 for the third quarter of 2000. The
decrease in revenue was a result of a soft market  especially in product  sales,  which  declined by $4,358,  or 40.2%,  to $6,474 from
$10,832.  This was somewhat  offset by increased  service  revenue of $991 primarily from  Information  Products,  acquired in December
2000.

Gross  profit was $996 for the quarter  ended June 30,  2001,  a slight  decrease  of $38, or 3.7%,  compared to $1,034 in the
third  quarter of 2000.  Product  gross profit  percentage  was 7.4% in 2001  compared to 9.5% in 2000.  The decrease in product  gross
profit  percentage  in the third  quarter of 2001 from the same  period  last year was due to some large  sales at low margin made to a
major  customer.  Service gross profit  percentage  was 51.9% in the third quarter of 2001.  There was no service  revenue in the third
quarter of 2000.  Total  gross  profit  percentage  was 13.3% in the third  quarter of 2001  compared  to 9.5% in the third  quarter of
2000. The increase in the gross profit  percentage was due to the higher margin service  revenue  contributed by Information  Products.
Information Products services and hardware business historically produces a higher margin than we have historically experienced.

12

Selling,  general and administrative  expenses were $1,306 for the quarter ended June 30, 2001, down $191, or 12.8%, from the
$1,497  reported  for the same  period  last year.  The  reduction  in expense  was  primarily  due to layoffs  and other cost  control
programs,  reduced  commissions on lower sales, and staff reductions  associated with redirecting  marketing efforts implemented in the
4th quarter of 2000.  This was offset somewhat by additional SG & A from Information Products included in the current quarter's SG&A.

Depreciation  and  amortization  expense for the current  quarter was $153,  an increase of $78 or 104.0% over the $75 for the
quarter  ended June 30, 2000.  The increase was  primarily due to the  amortization  of goodwill  associated  with the  acquisition  of
Information Products in December 2000, as well as the additional depreciation expense from Information Products.

Other  income for the third  quarter  was $29 in 2001,  down $18,  or 38.3%,  from the $47 in the third  quarter of 2000.  The
decrease was primarily a result of  miscellaneous  credits that were booked in 2000.  Interest  expense was $76 in 2001 compared to $39
in 2000,  an  increase  of $37,  or 94.9%.  The  increase  in  interest  expense  was  primarily  due to the debt  associated  with the
acquisition of Information Products.

Loss before  income taxes for the quarter  decreased  $20, or 3.8%,  to $510 in 2001  compared to a loss of $530 in 2000.  The
slight  reduction in the loss before income taxes in spite of the drop in sales is  attributable to the higher gross profit margins and
the efforts made to reduce the SG&A expense.

Our net loss for the quarter  ended June 30,  2001  decreased  to $324 from $530 for the same period last year,  due to higher
gross  profit  coupled with the  reduction  in SG&A  expense.  Additionally,  for the quarter  ended June 30, 2001 there was a deferred
income tax benefit of $186, and for the quarter ended June 30, 2000 there was no deferred income tax benefit recorded.

Nine Months Ended June 30, 2001 Compared to the Nine Months Ended June 30, 2000(in $'000 unless otherwise noted)

Sales for the nine months ended June 30, 2001 decreased  approximately  $7,761, or 24.3%, to $24,134 from $31,895 for the same
period last year. The decrease in revenue was a result of lower product sales,  which  declined by $10,158,  or 31.8%,  to $21,737 from
$31,895,  offset by increased  service revenue of $2,397 primarily from Information  Products,  acquired in December 2000. There was no
service  revenue in the nine months ended June 30, 2000.  The decrease in product  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  during the first
quarter of 2001.  Additionally,  the industry has suffered  from a very soft market which began in February of 2001.  This was somewhat
offset by the 7 months of incremental sales contributed by Information Products.

Gross  profit was $4,323 for the nine months ended June 30, 2001,  an increase of $694,  or 19.1%,  compared to $3,629 for the
same period last year.  Product gross profit  percentage was 13.6% in 2001 compared to 11.4% in 2000.  Service gross profit  percentage
was 57.2% in the nine months ended June 30,  2001.  There was no service  revenue in the nine month  period ended June 30, 2000.  Total
gross  profit  percentage  was 17.9% in the nine month  period  ended June 30, 2001  compared to 11.4% in the same period in 2000.  The
substantial  increase in the gross profit and the gross profit  percentage,  despite lower revenue,  was primarily  attributable to the
acquisition of Information  Products in December 2000.  Information  Products  product and services  business  produced a significantly
higher margin during the period than the Company has historically experienced.

13

Selling,  general and  administrative  expenses for the nine months ended June 30, 2001 were $4,811 down $618, or 11.4%, from
the $5,429  reported  for the same  period  last year.  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
fourth  quarter of 2000.  This was  somewhat  offset by the seven  months of  additional  SG&A costs of  Information  Products  Center,
acquired in December 2000, that were included in the period.

Depreciation  and  amortization  expense was $401 for the period,  an increase of $176,  or 78.2%,  over the $225 for the nine
months ended June 30,  2000.  The increase was  primarily  due to the  amortization  of goodwill  associated  with the  acquisition  of
Information Products in December 2000, and the additional depreciation expense from Information Products.

Other  income was $75 for the nine months ended June 30, 2001,  down $45, or 37.5%,  from $120 the same period last year.  The
decrease was primarily a result of $50 in  miscellaneous  credits that were booked in the nine months ended 2000.  Interest expense was
$199 in 2001  compared to $119 in 2000,  an increase of $80, or 67.2%.  The increase in interest  expense was primarily due to the debt
associated with the acquisition of Information Products.

Loss before income taxes for the nine months ended June 30, 2001 decreased  $1,011,  or 50.0%, to $1,013 compared to $2,024 in
2000.  The  reduction in the loss before  income taxes is  attributable  to a higher gross profit and reduced  SG&A.  This was somewhat
offset by higher  depreciation and amortization  expense,  and higher interest expense.  Our effective tax rate was a negative 23.5% in
fiscal year 2001 and a negative 13.6% in fiscal year 2000.

Our net loss for the nine  months  ended June 30,  2001  decreased  to $775 from  $1,748 in the same  period  last year due to
higher gross profit coupled with the reduction in SG&A expense.

##### Liquidity and Capital Resources

Our current ratios at June 30, 2001 and September 30, 2000 were 2.1 and 2.1,  respectively.  Working  capital at June 30, 2001
was $4,803, a decrease of $1,260 from the $6,063 at September 30, 2000.

Cash provided by operating  activities in the first nine months of 2001 was $4,970  compared to $276 of cash used in operating
activities  in the first six  months of 2000.  The cash  provided  by  operating  activities  during  2001 was a result of a very large
reduction in accounts  receivable and a reduction in inventory.  This was offset by a large  reduction in accounts  payable and the net
loss for the nine months.  The cash used in operating  activities  in 2000 was as a result of  reductions  in accounts  payable and the
net loss for the nine months.  This was largely offset by reductions in accounts receivable and inventory.

Cash used in  investing  activities  was $2,055 and $311 in 2001 and 2000,  respectively.  The large use of cash in  investing
activities  in 2001 was  primarily to acquire our interest in  Information  Products in the first  quarter of 2001.  Additionally  cash
was used in to finance capital expenditures in both 2001 and 2000.

14

Net cash used in  financing  activities  was  $1,093  and $431 in 2001 and 2000,  respectively.  The net cash used in 2001 was
primarily  due to  Information  Products  paying down its line of credit with ADSX.  Other net cash used in  financing in 2001 and 2000
were for payments on notes payable and long-term debt and the re-purchase of our common stock.

Advances under our Agreement for Wholesale  Financing from IBM Credit  Corporation  totaling $1,958 and $4,411 are included in
accounts  payable at June 30, 2001 and September 30, 2000,  respectively,  and were offset against the maximum credit available at that
time from IBM Credit Corporation.

As a result of ADSX having  acquired a majority  interest in us, we have  established a line of credit with ADSX. ADSX has its
own credit  facility with IBM Credit  Corporation.  Borrowings  from ADSX are at ADSX's  borrowing  rate from IBM Credit,  which is the
30-day LIBOR rate plus 3.25%. In addition,  we have  guaranteed  repayment of ADSX's  borrowings  from IBM Credit,  up to the amount we
have borrowed from ADSX. Our guarantee is  collateralized  by  substantially  all of our assets.  At June 30, 2001, we had no borrowings
outstanding under our line of credit with ADSX.

ADSX has announced that it may not be in compliance,  as of June 30, 2001, with certain  financial  covenants under its credit
agreement  with  IBM  Credit.  ADSX  has  advised  us that it is  currently  conducting  discussions  with IBM  Credit  concerning  the
restructuring  of its  credit  arrangements.  In the  event  our line of  credit  with  ADSX  becomes  unavailable, we believe  we have  sufficient
collateral to obtain  alternative  financing.  We believe that this alternative  financing and our available cash will be sufficient to
fund our operations and capital expenditures for at least the next twelve months.

At June 30, 2000, we had outstanding  approximately  $937 of mortgage  indebtedness  with an unaffiliated  entity.  At June 30,
2001, we were in default in respect to one of the covenants under the terms of the mortgage,  which default was subsequently  waived by
the lender.

##### 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:  our  continued  ability to sustain  our growth  through  product
development and future business  acquisitions;  the successful  completion and integration of future acquisitions;  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.

15

The risk factors  included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2000,  filed with the SEC
on December 29, 2000, should be read in conjunction with this report.

##### 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 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 July 2001, the Financial
Accounting Standards Board (FASB) issued FAS No. 141 Business
Combinations and FAS No. 142 Goodwill and other Intangible Assets.
FAS 141 requires, among other items, business combinations initiated after June
30, 2001 to be accounted for using the purchase method of accounting and
establishes specific criteria for the recognition of intangible assets separate
from goodwill. FAS 142 states (1) goodwill and indefinite lived intangible
assets will no longer be amortized; (2) goodwill will be tested for impairment
at least annually; (3) intangible assets deemed to have an indefinite life will
be tested for impairment at least annually and (4) the amortization period of
intangible assets with finite lives will no longer be limited to forty years. We
will adopt the provisions of these statements at the beginning of our fiscal
year beginning October 1, 2001. We have not fully assessed the impact of these
statements.

##### 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  from ADSX are at ADSX's  borrowing  rate from IBM  Credit,  which is the  30-day  LIBOR rate plus  3.25%.  As
indicated  above,  ADSX has advised us that it is currently  conducting  discussions  with IBM Credit  concerning the  restructuring of
these credit  arrangements  and, as a result,  the interest rate under our line of credit with ADSX may change.  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.

16

##### PART II          OTHER INFORMATION

##### ITEM 1.        LEGAL PROCEEDINGS

None.

##### ITEM 2.        CHANGES IN SECURITIES

##### Recent Sales of Unregistered Securities

There were no unregistered securities sold by us from April 1, 2001 through June 30, 2001.

##### ITEM 3.         DEFAULTS UPON SENIOR SECURITIES

Not applicable.

##### ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

An annual meeting of shareholders of the Company was held on March 29, 2001 to:

(a)        
Elect seven directors.            (b)
        Approve the increase in the number of authorized shares of stock.            (c)        
Ratify the appointment of Albrecht, Viggiano, Zureck & Company, P.C. as independent auditors of the Company for the year
              ending September 30, 2001; and            (d)
        Approve the 2001 Flexible Stock Plan.

The results of the votes were as follows:

|                               |                     | For       | Against   | Abstain
|------------------------------ | ------------------- | --------- | --------- | -------
|Election of directors:         |                     |           |          
|                               | Garrett A. Sullivan | 4,753,859 | 15,188    | --     
|                               | David A. Loppert    | 4,753,859 | 15,188    | --     
|                               | Anat Ebenstein      | 4,753,859 | 15,188    | --     
|                               | Charles L. Doherty  | 4,753,859 | 15,188    | --     
|                               | Ashok Rametra       | 2,026,359 | 2,742,688 | --     
|                               | Scott Silverman     | 4,753,859 | 15,188    | --     
|                               | Donald H. Swift     | 4,753,859 | 15,188    | --     
|Increase in  authorized shares | 3,124,454           | 98,692    | 1,438    
|Appointment of auditors        | 4,708,957           | 58,817    | 1,273    
|2001 Flexible Stock Plan       | 3,126,761           | 96,450    | 1,373    

##### ITEM 5.        OTHER INFORMATION

None

17

##### 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

None.

18

##### 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:   August 13, 2001 | By:/s/  J. ROBERT PATTERSON                                              
|                         | J. Robert Paterson
Chief Financial Officer (Principal Accounting Officer)

19

##### LIST OF 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          | 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 Form 10-K for the fiscal year ended September 30, 2000 filed with the Commission
on December 29, 2000)
|10.2          | Agreement for  Wholesale  Financing  (Security  Agreement),  dated January 5, 2001,  between the
               Company's subsidiary, Information Technology Services, Inc., and IBM Credit Corporation                                                                                                                                                                       
|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)                                                                                                                                                                                                  
|10.5*         | 2001  Flexible  Stock Plan  (incorporated  herein by  reference  to  Exhibit A to the  Company's
               definitive Proxy Statement filed with the Commission on February 28, 2001)                                                                                                                                                                                    
|10.6          | Collateralized Guaranty dated May 23, 2001 between the Company, its subsidiaries,
Information Technology Services, Inc. and Information Products Center, Inc. and IBM Credit Corporation                                                                                                                                                                                      

---

*         Management contract or compensatory plan.

20