Form 10-Q Quarterly Report

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                  For the quarterly period ended March 31, 1998

                                       OR

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

     Commission File Number 0-22693


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


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


                                275 Marcus Blvd.
                              Hauppauge, N.Y. 11788
              (Address of Principal Executive Offices and Zip Code)

                                 (516) 273-3200
              (Registrant's telephone number, including area code)


     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

         Yes       X                No  ________

     Number of shares  outstanding of the issuer's Common Stock,  par value $.01
per share, as of May 4, 1998: 4,555,540 shares.

<PAGE>
                         Part I - FINANCIAL INFORMATION
                          Item 1. Financial Statements



<TABLE>
<CAPTION>

                        SYSCOMM INTERNATIONAL CORPORATION
                      Consolidated Statements of Operations
                                   (Unaudited)


                                               THREE MONTHS ENDED                SIX MONTHS ENDED
                                            3/31/98          3/31/97          3/31/98        3/31/97
<S>                                     <C>              <C>               <C>             <C>


Net sales                               $ 22,227,999     $ 17,876,338      $ 50,290,282    $ 39,158,875
Cost of sales                             20,354,849       15,246,989        45,602,875      33,890,028
                                        -------------    -------------     -------------    -------------
     Gross profit                          1,873,150        2,629,349         4,687,407       5,268,847
                                        -------------    -------------     -------------    -------------

Selling & administrative expenses          2,024,003        1,593,144         4,029,204       2,957,149
                                        -------------   --------------     -------------   --------------

Income (loss) from operations               (150,853)       1,036,205           658,203       2,311,698
                                        -------------   --------------     -------------   --------------
                                                             
Other income (expenses)
   Interest expenses                        (208,075)        (238,366)         (455,869)       (552,143)
   Other                                       3,788           56,934             6,294          57,560
                                        -------------  ---------------     -------------   --------------
   Total other expenses                     (204,287)        (181,432)         (449,575)       (494,583)
                                        -------------  ---------------    --------------  --------------

   Income (loss) from operations
     before income taxes                    (355,140)         854,773           208,628       1,817,115

Provision (benefit) for income taxes        (159,000)         364,100            88,000         766,800
                                        ---------------  --------------   -------------   ---------------

Net income (loss)                        $  (196,140)     $   490,673      $    120,628    $  1,050,315
                                        ==============   ==============    =============   =============

Net income (loss) per common share
         Basic                          $      (0.04)    $      0.15       $       0.03    $       0.33
         Diluted                        $      (0.04)    $      0.14       $       0.02            0.31

Weighted average number of common
shares outstanding
         Basic                              4,555,540        3,170,540        4,555,540        3,170,540
         Diluted                            4,981,619        3,442,915        4,987,451        3,429,487


     The accompanying notes are an integral part of these statements.


</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                        SYSCOMM INTERNATIONAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS



                                                      March 31, 1998            September 30, 1997
                                                       (Unaudited)                  (Audited)
<S>                                                  <C>                        <C>

                      ASSETS

Cash and cash equivalents                            $    624,409               $    437,594
Accounts and note receivable, net                      20,231,842                 23,209,156
Inventory                                               7,922,516                 12,644,343
Other                                                     607,445                    275,307
                                                    ---------------             ---------------
   Total current assets                                29,386,212                 36,566,400
                                                    -------------               ---------------
Property, plant and equipment, net                      3,060,978                  1,201,549
Other assets                                              345,120                    336,087
                                                    ---------------             ---------------
   Total assets                                      $ 32,792,310               $ 38,104,036
                                                    ===============             ===============

                 LIABILITIES AND
               STOCKHOLDERS' EQUITY

Supplier credit facility                            $   9,434,252               $ 10,614,838
Accounts payable and accrued liabilities               11,343,500                 15,052,319
Income taxes payable                                        ---                     499,214
Other current liabilities                                  39,617                    43,613
                                                    ---------------             ---------------
   Total current liabilities                           20,817,369                 26,209,984
Long-term liabilities                                      49,177                     66,416
                                                    ---------------             ---------------
   Total liabilities                                   20,866,546                 26,276,400
                                                    ---------------             ---------------
Stockholders' Equity:
         Preferred stock, $.01 par value                     -                         -
         Common stock, $.01 par value                      50,172                     50,172
         Additional paid-in capital                     5,610,452                  5,610,452
         Unrealized loss on available-for-
            sale securities                               (83,216)                   (60,716)
         Retained earnings                              6,490,526                  6,369,898
         Less: Treasury stock (at cost)                  (142,170)                  (142,170)
                                                    ----------------            ----------------
   Total stockholders' equity                          11,925,764                 11,827,636
                                                    ----------------            ----------------
   Total liabilities and
      stockholders' equity                          $  32,792,310               $ 38,104,036
                                                    ================            ================
</TABLE>


     The accompanying notes are an integral part of these statements.




<PAGE>

<TABLE>
<CAPTION>

                        SYSCOMM INTERNATIONAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                                     Six Months Ended March 31
                                                                        1998           1997
<S>                                                                     <C>            <C>


Cash Flows From Operating Activities
  Net Income                                                    $     120,628   $   1,050,315
  Adjustments to reconcile net income to net cash
      provided by operating activities
          Depreciation and amortization                               136,800          81,437
          Gain on disposition of fixed assets                          - 0 -           (2,570)
          Changes in assets and liabilities
              Accounts and note receivable                          2,977,314       7,177,650
              Inventory                                             4,721,827         233,831
              Other assets                                           (363,671)       (177,222)
              Accounts payable and accrued liabilities             (3,708,819)     (2,056,139)
              Income taxes payable                                   (499,214)       (968,702)
                                                                 --------------  --------------
                 Net Cash Provided by Operating Activities          3,384,865       5,338,600
                                                                 --------------  --------------

Cash Flows from Investing Activities
   Purchase of fixed assets                                        (1,996,229)       (221,016)
   Proceeds from disposition of fixed assets                             -0-            7,300
                                                                 --------------  --------------
        Net Cash Used in Investing Activities                      (1,996,229)       (213,716)
                                                                 --------------  ---------------

Cash Flows From Financing Activities
   Net payments under supplier credit facility                     (1,180,586)     (5,616,120)
   Payments of long-term liabilities                                  (21,235)        (17,217)
                                                                ---------------  ---------------
        Net Cash Used by Financing Activities                      (1,201,821)     (5,633,337)
                                                                ---------------  ---------------

        Net Increase (Decrease) in Cash and Cash Equivalents          186,815        (508,453)

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

Cash and Cash Equivalents at End of Period                      $     624,409   $     672,227
                                                                ===============  ===============

Supplemental Disclosures of Cash Flow Information
 Cash paid during the year for:
        Income taxes                                            $     788,500   $   1,735,528
        Interest                                                      455,869         552,143

Supplemental Schedules of Non-cash Investing and
   Financing Activities
   Acquisition of equipment:
        Cost of Equipment                                       $        -0-    $      49,125
           Less: Equipment financed                                      -0-          (49,125)
                                                                ---------------  ----------------
                Cash Paid for Capital Expenditures              $        -0-    $        -0-
                                                                ===============  ================
                                                                                    

</TABLE>
<PAGE>




                       SYSCOMM INTERNATIONAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


     1. The condensed consolidated financial statements of SysComm International
Corporation  (the  "Company")  are  unaudited  (except  for  the  balance  sheet
information  as of  September  30,  1997,  which is derived  from the  Company's
audited  financial  statements) and reflect all adjustments  (consisting only of
normal recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of the financial  position and operating results for the
interim periods. The condensed  consolidated financial statements should be read
in conjunction  with the  consolidated  financial  statements and notes thereto,
contained in the Company's  Annual  Report.  The results of  operations  for the
three and six months ended March 31, 1998 are not necessarily  indicative of the
results for the entire  fiscal year ending  September  30,  1998,  or any future
interim period.


     2. Commitments and Contingencies

     (A) Employment Agreements

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

     (B) Litigation

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

<PAGE>


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

     Results of  Operations:  Three  Months Ended March 31, 1998  Compared  with
Three Months Ended March 31, 1997

     Net loss for the three months ended March 31, 1998 was $196,140 compared to
net income of $490,673  for the same period last year.  Basic loss per share was
$.04 for the three  months ended March 31, 1998  compared to Basic  earnings per
share of $.15 for the same  period  last  year.  Basic  earnings  per  share was
calculated using 4,555,540 common shares  outstanding for the three months ended
March 31, 1998 versus  3,170,540  common shares  outstanding for the same period
last year.

     Revenues:  Sales for the three months ended March 31, 1998 were $22,227,999
compared to $17,876,338  for the same period last year an increase of $4,351,661
or  24%.  Approximately  $3,100,000  of the  sales  increase  relates  to  sales
generated  by the  continued  improvement  of the  Company's  new  locations  in
Connecticut and New Jersey which began  operations in January 1997, and Buffalo,
New York which began operations in October 1997.

     Gross Profit:  Gross Profit as a percentage of sales  decreased to 8.4% for
the three months ended March 31, 1998 compared to 14.7% for the same period last
year.  This  reduction in gross profit  percentage  was due primarily to tighter
competition   especially  in  the  personal  computer  segment  of  the  market.
Additionally,  the Company did not meet vendor's quotas which limited the amount
of soft dollars or vendor rebates it received.  Also, in order to increase sales
volume, the Company took some large sales with relatively low margins.

     Selling &  Administrative  Expenses:  Selling and  administrative  expenses
increased by $430,859 or 27% to $2,024,003  from  $1,593,144 for the same period
last year.  The increase in expenses  relates to the costs  associated  with the
growth in the Connecticut;  New Jersey; and Buffalo, New York offices as well as
payroll  and  payroll  related  expenses  due to  the  hiring  of 20  additional
personnel.

     Interest  Expense:  Interest  expense for the three  months ended March 31,
1998 decreased  $30,291 or  approximately  13% to $208,075 from $238,366 for the
same period last year.  Although  the Company did use a majority of the proceeds
from the Company's 1997 public offering to reduce debt, the increase in accounts
receivables  due to the  increased  sales  volume  and  the  funding  of the new
facility actually  increased the amount of debt outstanding from the same period
last year.



<PAGE>



     Income  (loss) from  Operations  before  Income  Taxes:  Income (loss) from
operations before income taxes was a loss of $355,140 for the three months ended
March 31, 1998 compared to income of $854,773 for the same period last year. The
decrease is  attributable  to a decrease in gross profit  percentage  along with
increases in selling and administrative expenses.

     Taxes: The Company had a tax benefit of $159,000 for the three months ended
March 31, 1998  compared to a tax liability of $364,100 or an effective tax rate
of 42.6% for the same period last year.

     Six Months  Ended March 31, 1998  Compared  With Six Months Ended March 31,
1997.

     Net income for the six months ended March 31, 1998 decreased by $929,687 or
89% to $120,628 from  $1,050,315  for the same period last year.  Basic earnings
per share was $.03 for the six months ended March 31, 1998  compared to $.33 for
the same  period  last  year.  Basic  earnings  per share was  calculated  using
4,555,540  common  shares  outstanding  for the six months  ended March 31, 1998
versus  3,170,540  common shares  outstanding for the same period last year. The
decrease  in net  income  is  attributable  to the  reduction  in  gross  profit
percentage during the six months ended March 31, 1998.

     Revenues:  Sales for the six months  ended March 31, 1998 were  $50,290,282
compared to $39,158,875 for the same period last year an increase of $11,131,407
or 28%.  Approximately  $7,200,000  of the  sales  increases  relates  to  sales
generated by the Company's new locations in  Connecticut  and New Jersey,  which
began operations in January 1997 and Buffalo, New York which began operations in
October 1997.

     Gross Profit:  Gross profit as a percentage  of sales  decrease to 9.3% for
the six months  ended  March 31,  1998 as  compared to 13.5% for the same period
last year. The reduction in gross profit is attributable  to a more  competitive
market, especially in the personal computer segment of the market. Additionally,
since the  Company  did not attain its  vendors  quotas,  the amount of money it
received is soft dollars and vendor rebate was reduced.  Also,  the Company , in
an effort to increase  its sales  volume,  had several  large  volume sales with
relatively low margins.

     Selling &  Administrative  Expenses:  Selling and  administrative  expenses
increased by $1,072,055 or 36% to $4,029,204 from $2,957,149 for the same period
last year.  The increases in expenses  relates to the cost  associated  with the
growth in the Connecticut;  New Jersey; and Buffalo,  New York locations as well
as payroll  and  payroll  related  expenses  due to the hiring of 20  additional
personnel and increased commissions on the increased sales volume.



<PAGE>



     Interest Expense:  Interest expense for the six months ended March 31, 1998
decreased  $96,274 or 17% to  $455,869  from  $552,143  for the same period last
year. The net decrease is primarily  attributable  to the reduction in debt as a
result of the use of proceeds for the Company's 1997 public offering.

     Income from Operations  before Income Taxes:  Income from operations before
income taxes  decreased  $1,608,487  or 89% to $208,628 for the six months ended
March 31, 1998 from  $1,817,115  for the same period last year.  The decrease is
primarily attributable to a decrease in the gross profit percentage.

     Taxes:  The Company's  effective tax rate is 42.2% for the six months ended
March 31, 1998 and 1997.

     Liquidity and Capital  Resources:  The Company's current ratio at March 31,
1998 and 1997 was 1.41 and 1.22, respectively. Working capital at March 31, 1998
was  $8,568,843  an increase of $4,351,723  over the same period last year.  The
increase was due to the proceeds of the  Company's  initial  public  offering in
1997.

     Cash  provided by  operating  activities  was  $3,384,865  and  $5,338,600,
respectively, for the six months ended March 31, 1998 and 1997 due to reductions
in both inventory and accounts  receivables.  Cash used in investing  activities
was  $1,996,229  and  $213,716 for the six months ended March 31, 1998 and 1997,
respectively, and was used to finance the building of the Company's new facility
in 1998  and  computer  equipment,  leasehold  improvements  and  furniture  and
fixtures  in  1997.  Cash  used  by  financing  activities  was  $1,201,821  and
$5,633,337 for the six months ended March 31, 1998 and 1997,  respectively,  and
included net payments made under the Financing Agreement.

     The Company has a credit arrangement with IBM Credit  Corporation  pursuant
to  which  it may  borrow  up to 85% of its  eligible  receivables  and  100% of
eligible  inventory to a maximum of  $27,500,000.  In addition to the  permanent
credit line,  there are various credit line uplifts  during the year,  which can
increase the line of credit by as much as 50%. As of March 31, 1998, interest on
outstanding  borrowings was prime or prime plus 6.5%, should the Company fail to
meet certain collateral requirements. Throughout fiscal 1997 and first six month
fiscal 1998,  the Company has been in a positive  collateral  position  with IBM
Credit and has had the ability to draw down its current line of credit  whenever
needed.


<PAGE>


     The  Company  believes  that its  present  line of credit  with IBM  Credit
Corporation  coupled with its current earnings  capacity and the proceeds of its
initial public  offering will be sufficient to meet its capital and  operational
requirements  for at least the next twelve months,  including but not limited to
establishing  a  new  headquarters,   distribution  and  assembly  facility  and
inventory and accounts receivable financing.

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


<PAGE>



                           PART II - OTHER INFORMATION

     Item 1. Legal Proceedings

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

     Item 2. Changes in Securities

     None

     Item 3. Defaults Upon Senior Securities

     None

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

     (a)  On  February  24,  1998,  the  Company  held  its  Annual  Meeting  of
Stockholders (the "Meeting").

     (b) At the  Meeting,  the  Stockholders  of the Company  elected  Dennis R.
Wilson, Lee Adams and Cornelia Eldridge as Class III directors.

     (c) At the Meeting,  the  Stockholders  approved the selection of Albrecht,
Viggiano,  Zureck & Company,  P.C. as the Company's independent auditors for the
fiscal year ended September 30, 1998.

     (d) In  addition  to  electing  directors  and  approving  the  independent
auditors at the Meeting,  the  Stockholders of the Company approved the adoption
of the Company's 1998 Stock Option Plan.


<PAGE>


     (e) The following sets forth results of voting on each matter voted upon at
the Meeting:
<TABLE>
<CAPTION>

                  1.       Election of Directors

                                                                       For              Against
                           <S>                                         <C>              <C>

                           Dennis R. Wilson                            4,307,390        4,500
                           Lee Adams                                   4,307,390        4,500
                           Cornelia Eldridge                           4,307,390        4,500

</TABLE>

                  2.       Adoption of the Company's 1998 Stock Option Plan

                                    For              Against

                                    3,331,620        30,400

         3.       Selection of Albrecht, Viggiano, Zureck & Company, P.C. as the
                  Company's independent auditors for the fiscal year ended
                  September 30, 1998

                                    For              Against

                                    4,306,690        1,500

     Item 5. Other Information

     None

     Item 6. Exhibits and Reports on Form 8-K

     (a) Exhibits

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

     (b) Reports on Form 8-K

     None.
________________________________________________________________________
*Incorporated by reference from the Registrant's  Registration  Statement on 
Form S-1, Registration No. 333-25593

<PAGE>




                                   Signatures


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                            SYSCOMM INTERNATIONAL CORPORATION
                                                     (Registrant)



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



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