**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

| **ý**                                                           |   | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT                OF 1934**      |
|----------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------|
|                                                                 |   |                                                                                                                                |
| **FOR                THE QUARTERLY PERIOD ENDED SEPTEMBER 28, 2007** |
|                                                                 |   |                                                                                                                                |
| **o**                                                                |   | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE                ACT OF 1934** |

**Commission      file number   000-04169**

**SYS**

| **California**                                                                              |   | **95-2467354**                                                    |
|---------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization) |   | (I.R.S.                EmployerIdentification                No.) |

| **5050                Murphy Canyon Road, Suite 200, San Diego,                California 92123** |
|--------------------------------------------------------------------------------------------------------|

**(858)      715-5500**

----

**SYS**

**FORM      10-Q**

**FOR      THE QUARTERLY PERIOD ENDED SEPTEMBER 28, 2007**

**INDEX**

| **PART                I.                FINANCIAL INFORMATION** |
|----------------------------------------------------------------------|

|                                          |   |                                                                                                                                                                          |
|-----------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Item                1.                        |   | Financial                Statements                                                                                                                                           |
|                                          |   |                                                                                                                                                                          |
|                                          |   | Condensed                Consolidated Balance Sheets as of September 28, 2007 and June 30,                2007                (unaudited)                                     |
|                                          |   |                                                                                                                                                                          |
|                                          |   | Condensed                Consolidated Statements of Operations for the Three Months Ended                September                28, 2007 and September 29, 2006 (unaudited) |
|                                          |   |                                                                                                                                                                          |
|                                          |   | Condensed                Consolidated Statements of Cash Flows for the Three Months Ended                September                28, 2007 and September 29, 2006 (unaudited) |
|                                          |   |                                                                                                                                                                          |
|                                          |   | Notes                to Condensed Consolidated Financial Statements                                                                                                           |
|                                          |   |                                                                                                                                                                          |
| Item                2.                        |   | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations                                                     |
|                                          |   |                                                                                                                                                                          |
| Item                3.                        |   | Quantitative                and Qualitative Disclosures About Market Risk                                                                                                     |
|                                          |   |                                                                                                                                                                          |
| Item                4.                        |   | Controls                and Procedures                                                                                                                                        |
|                                          |   |                                                                                                                                                                          |
| **PART                II. OTHER INFORMATION** |
|                                          |   |                                                                                                                                                                          |
| Item                1.                        |   | Legal                Proceedings                                                                                                                                              |
| Item                1A                        |   | Risk                Factors                                                                                                                                                   |
| Item                2.                        |   | Unregistered                Sales of Equity Securities and Use of Proceeds                                                                                                    |
| Item                3.                        |   | Defaults                Upon Senior Securities                                                                                                                                |
| Item                4.                        |   | Submission                of Matters to a Vote of Security Holders                                                                                                            |
| Item                5.                        |   | Other                Information                                                                                                                                              |
| Item                6.                        |   | Exhibits                                                                                                                                                                      |
|                                          |   | Signatures                                                                                                                                                                    |
|                                          |   | Exhibit                31.1                                                                                                                                                   |
|                                          |   | Exhibit                31.2                                                                                                                                                   |
|                                          |   | Exhibit                32.1                                                                                                                                                   |
|                                          |   | Exhibit                32.2                                                                                                                                                   |

----

**PART I.      FINANCIAL INFORMATION**

**Item      1. Financial      Statements**

| **SYS                AND SUBSIDIARIES****CONDENSED                CONSOLIDATED BALANCE SHEETS (UNAUDITED)****(amounts                in thousands, except par value amounts)** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                           |   | **September                28, 2007** |   |   | **June                30,****2007** |   |
| ASSETS                                                                                                                                                                         |   |   |   |   |   |   |
| Current                Assets:                                                                                                                                                 |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                       |   | $ | 2,399 |   |   | $ | 2,770 |   |
| Accounts                receivable, net                                                                                                                                        |   |   | 17,518 |   |   |   | 16,321 |   |
| Inventories,                net                                                                                                                                                |   |   | 562 |   |   |   | 599 |   |
| Prepaid                expenses                                                                                                                                                |   |   | 475 |   |   |   | 603 |   |
| Deferred                taxes                                                                                                                                                  |   |   | 761 |   |   |   | 275 |   |
| Total                current assets                                                                                                                                            |   |   | 21,715 |   |   |   | 20,568 |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Furniture,                equipment and leasehold improvements, net                                                                                                            |   |   | 2,068 |   |   |   | 1,951 |   |
| Intangible                assets, net                                                                                                                                          |   |   | 5,855 |   |   |   | 6,111 |   |
| Goodwill                                                                                                                                                                       |   |   | 23,107 |   |   |   | 23,477 |   |
| Other                assets                                                                                                                                                    |   |   | 250 |   |   |   | 276 |   |
| Total                assets                                                                                                                                                    |   | $ | 52,995 |   |   | $ | 52,383 |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| LIABILITIES                AND STOCKHOLDERS’ EQUITY                                                                                                                      |   |   |   |   |   |   |   |   |
| Current                Liabilities:                                                                                                                                            |   |   |   |   |   |   |   |   |
| Line                of credit                                                                                                                                                  |   | $ | 604 |   |   | $ | --  |   |
| Accounts                payable                                                                                                                                                |   |   | 4,806 |   |   |   | 5,270 |   |
| Accrued                payroll and related expenses                                                                                                                            |   |   | 2,656 |   |   |   | 3,887 |   |
| Income                taxes payable                                                                                                                                            |   |   | 1,192 |   |   |   | 194 |   |
| Other                accrued liabilities                                                                                                                                       |   |   | 1,257 |   |   |   | 1,474 |   |
| Current                portion of note payable                                                                                                                                 |   |   | 63 |   |   |   | --  |   |
| Deferred                revenue                                                                                                                                                |   |   | 1,692 |   |   |   | 1,552 |   |
| Total                current liabilities                                                                                                                                       |   |   | 12,270 |   |   |   | 12,377 |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Convertible                notes payable, related party                                                                                                                        |   |   | 975 |   |   |   | 975 |   |
| Convertible                notes payable                                                                                                                                       |   |   | 2,150 |   |   |   | 2,150 |   |
| Note                payable, net of current portion                                                                                                                            |   |   | 437 |   |   |   | 500 |   |
| Other                long-term liabilities                                                                                                                                     |   |   | 64 |   |   |   | 69 |   |
| Deferred                revenue, net of current portion                                                                                                                        |   |   | 37 |   |   |   | 210 |   |
| Deferred                taxes                                                                                                                                                  |   |   | 1,023 |   |   |   | 1,023 |   |
| Total                liabilities                                                                                                                                               |   |   | 16,956 |   |   |   | 17,304 |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Commitments                and Contingencies                                                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Stockholders'                Equity:                                                                                                                                           |   |   |   |   |   |   |   |   |
| 4%                convertible preferred stock, $.50 par value; 250 shares                                                                                                      |   |   |   |   |   |   |   |   |
| authorized;                none issued or outstanding                                                                                                                          |   |   | --  |   |   |   | --  |   |
| 9%                preference stock, $1.00 par value; 2,000 shares                                                                                                              |   |   |   |   |   |   |   |   |
| authorized;                none issued or outstanding                                                                                                                          |   |   | --  |   |   |   | --  |                  |
| Common                stock, no par value; 48,000 shares authorized;                                                                                                           |   |   |   |   |   |   |   |   |
| and                19,425 and 19,232 shares issued and outstanding                                                                                                             |   |   |   |   |   |   |   |   |
| as                of September 28, 2007 and June 30, 2007, respectively                                                                                                        |   |   | 36,356 |   |   |   | 35,903 |   |
| Accumulated                deficit                                                                                                                                             |   |   | (317 | ) |   |   | (824 | ) |
| Total                stockholders’ equity                                                                                                                                |   |   | 36,039 |   |   |   | 35,079 |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Total                liabilities and stockholders’ equity                                                                                                                |   | $ | 52,995 |   |   | $ | 52,383 |   |

----

| **SYS                AND SUBSIDIARIES****CONDENSED                CONSOLIDATED STATEMENTS OF OPERATIONS****THREE                MONTHS ENDED SEPTEMBER 28, 2007 AND SEPTEMBER 29,                2006**** (UNAUDITED)****(amounts                in thousands, except per share data)** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                         |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |
| Revenues                                                                                                                                                                                                                                                                                     |   | $ | 20,510 |   |   | $ | 16,243 |   |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Operating                costs and expenses:                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Cost                of revenues                                                                                                                                                                                                                                                              |   |   | 14,900 |   |   |   | 12,530 |   |
| Selling,                general and administrative expenses                                                                                                                                                                                                                                  |   |   | 3,377 |   |   |   | 3,054 |   |
| Research,                engineering and development expenses                                                                                                                                                                                                                                |   |   | 1,089 |   |   |   | 881 |   |
| Total                operating costs and expenses                                                                                                                                                                                                                                            |   |   | 19,366 |   |   |   | 16,465 |   |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Income                (loss) from operations                                                                                                                                                                                                                                                 |   |   | 1,144 |   |   |   | (222 | ) |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Other                (income) expense:                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |
| Other                income                                                                                                                                                                                                                                                                  |   |   | (39 | ) |   |   | (37 | ) |
| Interest                expense                                                                                                                                                                                                                                                              |   |   | 128 |   |   |   | 197 |   |
| Total                other (income) expense                                                                                                                                                                                                                                                  |   |   | 89 |   |   |   | 160 |   |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Income                (loss) before income taxes                                                                                                                                                                                                                                             |   |   | 1,055 |   |   |   | (382 | ) |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Income                tax provision (benefit)                                                                                                                                                                                                                                                |   |   | 529 |   |   |   | (267 | ) |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Net                income (loss)                                                                                                                                                                                                                                                             |   | $ | 526 |   |   | $ | (115 | ) |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Net                income (loss) per share:                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                        |   | $ | 0.03 |   |   | $ | (0.01 | ) |
| Diluted                                                                                                                                                                                                                                                                                      |   | $ | 0.03 |   |   | $ | (0.01 | ) |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Weighted                average shares outstanding:                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                        |   |   | 19,317 |   |   |   | 15,405 |   |
| Diluted                                                                                                                                                                                                                                                                                      |   |   | 19,396 |   |   |   | 15,405 |   |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |

----

| **SYS                AND SUBSIDIARIES****CONDENSED                CONSOLIDATED STATEMENTS OF CASH FLOWS****THREE                MONTHS ENDED SEPTEMBER 28, 2007 AND SEPTEMBER 29,                2006****(UNAUDITED)****(amounts                in thousands)** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                            |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                            |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                            |   |   |   |   |   |   |
| Cash                Flows from Operating Activities:                                                                                                                                                                                                            |   |   |   |   |   |   |
| Net                income (loss)                                                                                                                                                                                                                                |   | $ | 526 |   |   | $ | (115 | ) |
| Adjustments                to reconcile net income (loss) to net cash (used in) provided by                operating                activities:                                                                                                                 |   |   |   |   |   |   |   |   |
| Depreciation                and amortization                                                                                                                                                                                                                    |   |   | 474 |   |   |   | 441 |   |
| Share-based                compensation expense                                                                                                                                                                                                                 |   |   | 117 |   |   |   | 114 |   |
| Accretion                of debt discount                                                                                                                                                                                                                       |   |   | --  |   |   |   | 14 |   |
| Deferred                taxes                                                                                                                                                                                                                                   |   |   | --  |   |   |   | (267 | ) |
| Bad                debt expense                                                                                                                                                                                                                                 |   |   | 9 |   |   |   | 6 |   |
| Stock                contributed to employee benefit plan                                                                                                                                                                                                       |   |   | 245 |   |   |   | 248 |   |
| Loss                (gain) on disposition of equipment                                                                                                                                                                                                          |   |   | 1 |   |   |   | (4 | ) |
| Changes                in operating assets and liabilities:                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Accounts                receivable                                                                                                                                                                                                                              |   |   | (1,206 | ) |   |   | 1,332 |   |
| Inventories                                                                                                                                                                                                                                                     |   |   | 37 |   |   |   | 52 |   |
| Prepaid                expenses                                                                                                                                                                                                                                 |   |   | 128 |   |   |   | 10 |   |
| Other                assets                                                                                                                                                                                                                                     |   |   | 21 |   |   |   | --  |   |
| Accounts                payable                                                                                                                                                                                                                                 |   |   | (464 | ) |   |   | (480 | ) |
| Accrued                payroll and related expenses                                                                                                                                                                                                             |   |   | (1,231 | ) |   |   | (508 | ) |
| Income                taxes payable                                                                                                                                                                                                                             |   |   | 524 |   |   |   | --  |   |
| Other                accrued liabilities                                                                                                                                                                                                                        |   |   | 122 |   |   |   | (92 | ) |
| Other                long term liabilities                                                                                                                                                                                                                      |   |   | (5 | ) |   |   | --  |   |
| Deferred                revenue                                                                                                                                                                                                                                 |   |   | (33 | ) |   |   | 43 |   |
| Net                cash (used in) provided by operating activities                                                                                                                                                                                              |   |   | (735 | ) |   |   | 794 |   |
|                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Cash                Flows from Investing Activities:                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Purchases                of furniture, equipment and leasehold improvements                                                                                                                                                                                     |   |   | (332 | ) |   |   | (256 | ) |
| Cash                paid for acquisitions                                                                                                                                                                                                                       |   |   | --  |   |   |   | (19 | ) |
| Other                                                                                                                                                                                                                                                           |   |   | 1 |   |   |   | (29 | ) |
| Net                cash used in investing activities                                                                                                                                                                                                            |   |   | (331 | ) |   |   | (304 | ) |
|                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Cash                Flows from Financing Activities:                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Borrowings                from line of credit                                                                                                                                                                                                                   |   |   | 5,180 |   |   |   | 9,651 |   |
| Payments                on line of credit                                                                                                                                                                                                                       |   |   | (4,576 | ) |   |   | (10,202 | ) |
| Proceeds                from exercise of stock options and warrants                                                                                                                                                                                             |   |   | 91 |   |   |   | 31 |   |
| Net                cash provided by (used in) financing activities                                                                                                                                                                                              |   |   | 695 |   |   |   | (520 | ) |
|                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Net                decrease in cash and cash equivalents                                                                                                                                                                                                        |   |   | (371 | ) |   |   | (30 | ) |
|                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents at beginning of period                                                                                                                                                                                                 |   |   | 2,770 |   |   |   | 2,106 |   |
|                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents at end of period                                                                                                                                                                                                       |   | $ | 2,399 |   |   | $ | 2,076 |   |

----

| **SYS                AND SUBSIDIARIES****CONDENSED                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)****THREE                MONTHS ENDED SEPTEMBER 28, 2007 AND SEPTEMBER 29,                2006**** (UNAUDITED)****(amounts                in thousands)** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                              |   |   |   |   |   |
|                                                                                                                                                                                                                                                                              |   |   |   |   |   |
|                                                                                                                                                                                                                                                                              |   |   |   |   |   |
|                                                                                                                                                                                                                                                                              |   | **2007** |   |   | **2006** |
|                                                                                                                                                                                                                                                                              |   |   |   |   |   |
| Supplemental                disclosure of cash flow information:                                                                                                                                                                                                                  |   |   |   |   |   |
| Interest                paid                                                                                                                                                                                                                                                      |   | $ | 115 |   |   | $ | 176 |   |
|                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |
| Income                taxes paid                                                                                                                                                                                                                                                  |   | $ | 5 |   |   | $ | 3 |   |
|                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |
| Acquisition                of capital leases                                                                                                                                                                                                                                      |   | $ | --  |   |   | $ | 69 |   |
|                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |

----

**SYS      AND SUBSIDIARIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**1.      Basis of Financial Statement Preparation and Significant Accounting      Policies:**

**Use      of Estimates:**

**Indirect      Expense Rate Variance:**

**Reclassifications:**

**2.      New Accounting Pronouncements:**

FIN 
48”),*Accounting      for Uncertainty      in Income Taxes – an interpretation of FASB Statement No. 109,*which      provides a financial statement recognition threshold and measurement attribute      for a tax position taken or expected to be taken in a tax return. Under 
FIN 
48,      we may recognize the tax benefit      from an uncertain tax position only if it is more likely than not that the      tax      position will be sustained on examination by the taxing authorities, based      on      the technical merits of the position. The tax benefits recognized in the      financial statements from such a position should be measured based on the      largest benefit that has a greater than 50% likelihood of being realized upon      ultimate settlement. 
FIN 
48      also      provides guidance on derecognition of income tax assets and liabilities,      classification of current and deferred income tax assets and liabilities,      accounting for interest and penalties associated with tax positions, and income      tax disclosures. Upon adoption, we recognized a $19,000 charge to our beginning      accumulated deficit as a cumulative effect of a change in accounting principle.      See Note 10 – Income Tax.

In      February 2007, the FASB issued Statement No.      159, The Fair Value Option for Financial Assets and Financial Liabilities,      including an amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits      entities to choose to measure many financial instruments and certain other      items      at fair value that are not currently required to be measured at fair value.      SFAS      159 will be effective for the Company beginning July 1, 2008. The Company      is in the process of determining the impact of this statement on its      consolidated financial statements.

**3.  Share-Based      Compensation:**

----

|                                                     |   |       |   |   |         |   |   | **Weighted**                  |   |   |          |   |
|----------------------------------------------------------|--------|------------|--------|--------|--------------|--------|--------|-------------------------------|--------|--------|---------------|--------|
|                                                     |   |       |   |   | **Weighted** |   |   | **Average**                   |   |   |          |   |
|                                                     |   |       |   |   | **Average**  |   |   | **Remaining**                 |   |   | **Aggregate** |   |
|                                                     |   |       |   |   | **Exercise** |   |   | **Contractual**               |   |   | **Intrinsic** |   |
|                                                     |   | **Shares** |   |   | **Price**    |   |   | **Term                (Yrs)** |   |   | **Value**     |   |
| Balance                outstanding at June 30, 2007      |   |       | 2,132  |   |         | $      | 2.49   |                          |   |   |          |   |   |   |
| Granted                                                  |   |       | 324    |   |         |   | 2.19   |                          |   |   |          |   |   |   |
| Exercised                                                |   |       | (102   | )      |         |   | 1.25   |                          |   |   |          |   |   |   |
| Forfeited                                                |   |       | (32    | )      |         |   | 3.40   |                          |   |   |          |   |   |   |
| Expired                                                  |   |       | (50    | )      |         |   | 1.37   |                          |   |   |          |   |   |   |
| Balance                outstanding at September 28, 2007 |   |       | 2,272  |   |         | $      | 2.52   |                          |   |   | 2.78          |   |   | $ | 273 |   |
|                                                     |   |       |   |   |         |   |   |                          |   |   |          |   |   |   |   |   |
| Options                exercisable at September 28, 2007 |   |       | 1,324  |   |         | $      | 2.49   |                          |   |   | 2.00          |   |   | $ | 177 |   |
|                                                     |   |       |   |   |         |   |   |                          |   |   |          |   |   |   |   |   |

|                                        |   | **2007** |   |   | **2006** |   |
|---------------------------------------------|--------|----------|--------|--------|----------|--------|
| Stock                options                |   | $        | 68     |   |     | $      | 62 |   |
| Employee                stock purchase plan |   |     | 49     |   |     |   | 52 |   |
| Total                                       |   | $        | 117    |   |     | $      | 114 |   |

|                                     |   | **Stock                Options** |   |   | **ESPP** |   |
|------------------------------------------|--------|----------------------------------|--------|--------|----------|--------|
|                                     |   | **2007**                         |   |   | **2006** |   |   | **2007** |   |   | **2006** |   |
|                                     |   |                             |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Dividend                yield            |   |                             | 0.0    | %      |     |   | 0.0 | % |   |   | 0.0 | % |   |   | 0.0 | % |
| Expected                volatility       |   |                             | 41.0   | %      |     |   | 38.4 | % |   |   | 46.2 | % |   |   | 40.3 | % |
| Risk-free                interest rate   |   |                             | 4.4    | %      |     |   | 4.9 | % |   |   | 5.0 | % |   |   | 5.3 | % |
| Expected                lives (in years) |   |                             | 3.81   |   |     |   | 3.80 |   |   |   | 0.50 |   |   |   | 0.50 |   |

**4.      Accounts Receivable:**

|                                                |   | **September                28,** |   |   | **June                30,** |   |
|-----------------------------------------------------|--------|----------------------------------|--------|--------|-----------------------------|--------|
|                                                |   | **2007**                         |   |   | **2007**                    |   |
|                                                |   |                             |   |   |                        |   |   |   |
| Amounts                billed                       |   | $                                | 8,517  |   |                        | $      | 8,600 |   |
| Amounts                unbilled                     |   |                             | 9,439  |   |                        |   | 8,150 |   |
| Less                allowance for doubtful accounts |   |                             | (438   | )      |                        |   | (429 | ) |
| Totals                                              |   | $                                | 17,518 |   |                        | $      | 16,321 |   |

----

**5.      Inventories:**

|                                           |   | **September                28,** |   |   | **June                30,** |   |
|------------------------------------------------|--------|----------------------------------|--------|--------|-----------------------------|--------|
|                                           |   | **2007**                         |   |   | **2007**                    |   |
|   Raw                materials, net  |   | $                                | 493    |   |                        | $      | 473 |   |
|   Finished                goods, net |   |                             | 69     |   |                        |   | 126 |   |
|                                           |   | $                                | 562    |   |                        | $      | 599 |   |

**6.      Furniture, Equipment and Leasehold Improvements:**

|                                                          |   | **September                28,** |   |   | **June                30,** |   |
|---------------------------------------------------------------|--------|----------------------------------|--------|--------|-----------------------------|--------|
|                                                          |   | **2007**                         |   |   | **2007**                    |   |
|                                                          |   |                             |   |   |                        |   |
| Furniture                and equipment                        |   | $                                | 4,552  |   |                        | $      | 4,266 |   |
| Leasehold                improvements                         |   |                             | 455    |   |                        |   | 412 |   |
|                                                          |   |                             | 5,007  |   |                        |   | 4,678 |   |
|                                                          |   |                             |   |   |                        |   |   |   |
| Less                accumulated depreciation and amortization |   |                             | (2,939 | )      |                        |   | (2,727 | ) |
| Net                                                           |   | $                                | 2,068  |   |                        | $      | 1,951 |   |

**7.      Intangible Assets and Goodwill:**

|                                  |   | **Weighted**                    |   |   |         |   |   |             |   |   |    |   |
|---------------------------------------|--------|---------------------------------|--------|--------|--------------|--------|--------|------------------|--------|--------|---------|--------|
|                                  |   | **Average**                     |   |   | **Gross**    |   |   |             |   |   |    |   |
|                                  |   | **Amortization**                |   |   | **Carrying** |   |   | **Accumulated**  |   |   |    |   |
|                                  |   | **Period                (Yrs)** |   |   | **Value**    |   |   | **Amortization** |   |   | **Net** |   |
| **September                28, 2007** |   |                            |   |   |         |   |   |             |   |   |    |   |
| Technology                            |   |                            | 9      |   |         | $      | 2,550  |             |   | $      | (541    | )      |   | $ | 2,009 |   |
| Trade                name             |   |                            | 7      |   |         |   | 1,727  |             |   |   | (480    | )      |   |   | 1,247 |   |
| Customer                relationships |   |                            | 9      |   |         |   | 3,254  |             |   |   | (669    | )      |   |   | 2,585 |   |
| Patents                               |   |                            | -      |   |         |   | 29     |             |   |   | (29     | )      |   |   | --  |   |
| Other                intangibles      |   |                            | 1      |   |         |   | 697    |             |   |   | (683    | )      |   |   | 14 |   |
| Total                                 |   |                            |   |   |         | $      | 8,257  |             |   | $      | (2,402  | )      |   | $ | 5,855 |   |
|                                  |   |                            |   |   |         |   |   |             |   |   |    |   |   |   |   |   |
| **June                30, 2007**      |   |                            |   |   |         |   |   |             |   |   |    |   |   |   |   |   |
| Technology                            |   |                            | 9      |   |         | $      | 2,550  |             |   | $      | (464    | )      |   | $ | 2,086 |   |
| Trade                name             |   |                            | 7      |   |         |   | 1,727  |             |   |   | (407    | )      |   |   | 1,320 |   |
| Customer                relationships |   |                            | 9      |   |         |   | 3,254  |             |   |   | (569    | )      |   |   | 2,685 |   |
| Patents                               |   |                            | -      |   |         |   | 29     |             |   |   | (29     | )      |   |   | --  |   |
| Other                intangibles      |   |                            | 1      |   |         |   | 697    |             |   |   | (677    | )      |   |   | 20 |   |
| Total                                 |   |                            |   |   |         | $      | 8,257  |             |   | $      | (2,146  | )      |   | $ | 6,111 |   |
|                                  |   |                            |   |   |         |   |   |             |   |   |    |   |   |   |   |   |

----

| **Fiscal                Year**                  |   |   |   |
|-------------------------------------------------|--------|--------|--------|
| Nine                months ending June 30, 2008 |   | $      | 759    |   |
| 2009                                            |   |   | 920    |   |
| 2010                                            |   |   | 752    |   |
| 2011                                            |   |   | 662    |   |
| 2012                                            |   |   | 628    |   |
| Thereafter                                      |   |   | 2,134  |   |
| Total                                           |   | $      | 5,855  |   |

**Goodwill**

|                                                               |   | **DSG** |     |   | **PSSIG** |   |   | **Total** |   |
|--------------------------------------------------------------------|--------|---------|----------|--------|-----------|--------|--------|-----------|--------|
| Balance                June 30, 2007                               |   | $       | 11,344   |   |      | $      | 12,133 |      |   | $ | 23,477 |   |
| Miscellaneous                purchase price allocation adjustments |   |    | --  |   |      |   | (370   | )         |   |   | (370 | ) |
| Balance                September 28, 2007                          |   | $       | 11,344   |   |      | $      | 11,763 |      |   | $ | 23,107 |   |

**8.      Convertible Notes Payable and Other Debt:**

**9.      Net Income (Loss) Per Share:**

|                                                                                                                   |   | **2007** |   |   | **2006** |   |
|------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|
| Numerators:                                                                                                            |   |     |   |   |     |   |
| Net                income (loss)                                                                                       |   | $        | 526    |   |     | $      | (115 | ) |
|                                                                                                                   |   |     |   |   |     |   |   |   |
| Denominators:                                                                                                          |   |     |   |   |     |   |   |   |
| Weighted                average shares for basic net income (loss) per share                                           |   |     | 19,317 |   |     |   | 15,405 |   |
| Add                dilutive effect of assumed exercise of stock options using the treasury                stock method |   |     | 53     |   |     |   | --  |   |
| Add                dilutive effect of shares related to employee stock purchase                plan                    |   |     | 26     |   |     |   | --  |   |
| Weighted                average shares for basic  and diluted net income per common                share     |   |     | 19,396 |   |     |   | 15,405 |   |
|                                                                                                                   |   |     |   |   |     |   |   |   |
| Basic                net income (loss) per common share                                                                |   | $        | 0.03   |   |     | $      | (0.01 | ) |
| Diluted                net income (loss) per common share                                                              |   | $        | 0.03   |   |     | $      | (0.01 | ) |

**10.      Income Tax:**

FIN 
48,*Accounting      for Uncertainty in Income Taxes – an      interpretation of FASB Statement No. 109,* which provides a financial      statement recognition threshold and measurement attribute for a tax position      taken or expected to be taken in a tax return. Under 
FIN
48,      we may recognize the tax benefit from an uncertain      tax position only if it is more likely than not that the tax position will      be      sustained on examination by the taxing authorities, based on the technical      merits of the position. The tax benefits recognized in the financial statements      from such a position should be measured based on the largest benefit that has      a      greater than 50% likelihood of being realized upon ultimate settlement. 
FIN 
48      also provides guidance on      derecognition of income tax assets and liabilities, classification of current      and deferred income tax assets and liabilities, accounting for interest and      penalties associated with tax positions, and income tax      disclosures.

FIN 
48      had the following impact on      our financial statements: increased current deferred tax assets by $0.5 million,      current income tax payable by $0.5 million, and our accumulated deficit by      $19,000. As of July 1, 2007 and as of September 28, 2007, we had $1.1      million of unrecognized tax benefits, none of which if recognized, would affect      our effective tax rate. The Company recognizes interest accrued related to      unrecognized tax benefits in interest expense and penalties in operating      expenses. As of July 1, 2007 we had accrued interest related to uncertain      tax positions of $0.2 million on our balance sheet.

**11.      Legal Matters:**

**12.      Segment Information:**

|                                              |   | **2007** |   |   | **2006** |   |
|---------------------------------------------------|--------|----------|--------|--------|----------|--------|
| **Revenue:**                                      |   |     |   |   |     |   |
| DSG                                               |   | $        | 12,233 |   |     | $      | 12,360 |   |
| PSSIG                                             |   |     | 8,277  |   |     |   | 3,883 |   |
| **Totals**                                        |   | $        | 20,510 |   |     | $      | 16,243 |   |
|                                         |   |     |   |   |     |   |   |   |
| **Income                (loss) from operations:** |   |     |   |   |     |   |   |   |
| DSG                                               |   | $        | 570    |   |     | $      | 545 |   |
| PSSIG                                             |   |     | 574    |   |     |   | (767 | ) |
| **Totals**                                        |   | $        | 1,144  |   |     | $      | (222 | ) |
|                                              |   |     |   |   |     |   |   |   |

----

**Item      2.                 Management’s      Discussion and Analysis of Financial Condition and Results of      Operations**

*To      the extent that the information presented in this Quarterly Report on Form      10-Q      discusses financial projections, information or expectations about our business      plans, results of operations, products or markets, or otherwise makes statements      about future events, such statements are forward-looking.  Such      forward-looking statements can be identified by the use of words such as“intends”, “anticipates”, “believes”, “estimates”, “projects”, “forecasts”,“expects”, “plans” and “proposes”.*

*Although      we believe that the expectations reflected in the forward-looking statements      are      reasonable, we cannot guarantee future results, levels of activity, performance      or achievements. Moreover, neither we, nor any other person, assume      responsibility for the accuracy and completeness of the forward-looking      statements. We are under no obligation to update any of the forward-looking      statements after the filing of this Quarterly Report on Form 10-Q to conform      such statements to actual results or to changes in our      expectations.*

*The      following discussion should be read in conjunction with our unaudited condensed      consolidated financial statements and the related notes and other financial      information appearing elsewhere in this Form 10-Q. Readers are also urged to      review and consider the various disclosures made by us which advise interested      parties of the factors which affect our business, including without limitation      the disclosures made under the caption “Management’s Discussion and Analysis of      Financial Condition and Results of Operations,” under the caption “Risks Related      to Our Business,” and in the audited consolidated financial statements and      related notes included in our Annual Report filed on Form 10-K for the year      ended June 30, 2007 and other reports and filings made with the Securities      and      Exchange Commission.*

**Overview**

----

|                              |   | **2007** |   |   | **2006** |   |
|-----------------------------------|--------|----------|--------|--------|----------|--------|
|                              |   |     |   |   |     |   |   |   |
| Cost                reimbursement |   |     | 77     | %      |     |   | 75 | % |
| Time                and materials |   |     | 17     | %      |     |   | 14 | % |
| Fixed                price        |   |     | 6      | %      |     |   | 11 | % |
| Total                             |   |     | 100    | %      |     |   | 100 | % |

**Results      of Operations**

|                                                   |   | **2007** |   |   | **Percent** |   |   | **2006** |   |   | **Percent** |   |
|--------------------------------------------------------|--------|----------|--------|--------|-------------|--------|--------|----------|--------|--------|-------------|--------|
| Revenues                                               |   | $        | 20,510 |   |        |   | 100.0  | %        |   | $      | 16,243      |   |   |   | 100.0 | % |
| Costs                  of revenues                     |   |     | 14,900 |   |        |   | 72.6   | %        |   |   | 12,530      |   |   |   | 77.1 | % |
| Selling,                  general & administrative |   |     | 3,377  |   |        |   | 16.5   | %        |   |   | 3,054       |   |   |   | 18.8 | % |
| Research,                  engineering and development |   |     | 1,089  |   |        |   | 5.3    | %        |   |   | 881         |   |   |   | 5.4 | % |
| Income                  (loss) from operations         |   |     | 1,144  |   |        |   | 5.6    | %        |   |   | (222        | )      |   |   | (1.4 | )% |
| Other                  expense (income)                |   |     | 89     |   |        |   | 0.4    | %        |   |   | 160         |   |   |   | 0.9 | % |
| Income                  tax provision (benefit)        |   |     | 529    |   |        |   | 2.6    | %        |   |   | (267        | )      |   |   | (1.6 | )% |

*Revenues*

|                                      |   | **2007** |   |   | **2006** |   |   | **Change** |   |   | **%** |   |
|-------------------------------------------|--------|----------|--------|--------|----------|--------|--------|------------|--------|--------|-------|--------|
| DSG                                       |   | $        | 12,233 |   |     | $      | 12,360 |       |   | $      | (127  | )      |   |   | (1.0 | )% |
| PSSIG                                     |   |     | 8,773  |   |     |   | 3,883  |       |   |   | 4,394 |   |   |   | 113.2 | % |
|   Total                revenues |   | $        | 20,510 |   |     | $      | 16,243 |       |   | $      | 4,267 |   |   |   | 26.3 | % |

*Costs      of revenue.*

*Selling,      general and administrative expenses*

*Research,      engineering and      development expenses*

*Income      (loss) from operations. *

*Other      (income) expense*

*Income      tax provision (benefit). *

**Liquidity      and Capital      Resources**

*Cash      flows from operating activities*

*Cash      flows from investing activities*

*Cash      flows from financing activities*

**Commitments      (amounts in thousands)**

|                                 |   | **Total** |   |   | **2008                (2)** |   |   | **2009** |   |   | **2010** |   |   | **2011** |     |   | **2012** |   |     | **Thereafter** |   |
|--------------------------------------|--------|-----------|--------|--------|-----------------------------|--------|--------|----------|--------|--------|----------|--------|--------|----------|----------|--------|----------|--------|----------|----------------|--------|
| Convertible                notes (1) |   | $         | 3,554  |   |                        | $      | 234    |     |   | $      | 3,320    |   |   | $        | --  |   |     | $      | --  |           |   | $ | --  |   |   | $ | --  |   |
| Note                payable (1)      |   |      | 577    |   |                        |   | 33     |     |   |   | 283      |   |   |     | 261      |   |     |   | --  |           |   |   | --  |   |   |   | --  |   |
| Capital                leases (1)    |   |      | 73     |   |                        |   | 16     |     |   |   | 22       |   |   |     | 22       |   |     |   | 13       |           |   |   | --  |                  |   |   | --  |   |
| Operating                leases      |   |      | 4,237  |   |                        |   | 1,506  |     |   |   | 1,351    |   |   |     | 545      |   |     |   | 460      |           |   |   | 350 |   |   |   | 25 |   |
| Total                                |   | $         | 8,441  |   |                        | $      | 1,789  |     |   | $      | 4,976    |   |   | $        | 828      |   |     | $      | 473      |           |   | $ | 350 |   |   | $ | 25 |   |

|   | (2)                Nine months ending June 30, 2008. |
|--------|------------------------------------------------------|

**Off-Balance      Sheet Arrangements**

 off balance sheet arrangements, investments in special      purpose entities or undisclosed borrowings or debt. In addition, SYS has not      entered into any derivative contracts.

**Recent      Accounting      Pronouncements**

**Critical      Accounting Policies and Estimates**

----

**ITEM      3. Quantitative and Qualitative Disclosures about Market      Risk**

**ITEM      4. Controls and Procedures**

**Evaluation      of Disclosure Controls and Procedures**

**Limitations      on the Effectiveness of Internal Controls**

**Changes      in Internal Control Over Financial Reporting**

----

**PART      II - OTHER      INFORMATION**

**Item      1. Legal Proceedings**

**Item      1A. Risk Factors**

***There      are a large number of shares that are available for future sale, and the sale      of      these shares may depress the market price of our common      stock.***

***Future      sales of our common stock by existing shareholders under Rule 144 could decrease      the trading price of our common stock. ***

***Our      directors, executive officers and affiliated persons beneficially own a      significant amount of our stock, and their interests could conflict with      yours.***

*** ***

| ·   | elect                or defeat the election of our                directors; |
|--------------------|------------------------------------------------------------------------------|

| ·   | amend                or prevent amendment of our articles of incorporation or                bylaws; |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | effect                or prevent a merger; sale of assets or other corporate transactions;                and |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | control                the outcome of any other matters submitted to the shareholders for                vote. |
|--------------------|----------------------------------------------------------------------------------------------------------------|

**Item      2. Unregistered Sales Of Equity Securities And Use Of      Proceeds.**

----

**Item      3.Defaults      Upon Senior Securities**

|   | NONE |
|--------|------|

**Item      4. Submission of Matters to a Vote of Securities      Holders**

**Item      5. Other      Information**

----

**Item      6. Exhibits**

|   | Those                exhibits marked with a (*) refer to exhibits filed herewith. The                other                exhibits are incorporated herein by reference, as indicated in the                following list. Those exhibits marked with a (†) refer to management                contracts or compensatory plans or                arrangements. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Ex                No.** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|---------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1                       | Certificate                of Ownership filed with the California Secretary of State on November                28,                1979, filed as Exhibit 2.1 to SYS’s report on Form 10-K for the fiscal                year ended June 30, 1979 and incorporated by this                reference.                                                                                                                                                                                                       |
| 2.2                       | Certificate                of Ownership filed with the California Secretary of State on March                18,                1985, incident to change of name of SYS, filed as Exhibit 3.6 to                SYS’s                report on Form 10-K for the fiscal year ended June 30, 1985 and                incorporated by this reference.                                                                                                                                                        |
| 2.3                       | Testmasters,                Inc. Stock Purchase Agreement, filed as Exhibit 2.1 to SYS’s Registration                Statement on Form SB-2 dated May 24, 2002 (Commission file No. 333-88988),                and incorporated by this reference.                                                                                                                                                                                                                                                         |
| 2.4                       | Polexis                merger agreement, filed as Exhibit 2.2 to SYS’s Registration Statement on                Form SB-2 dated April 19, 2004 (Commission file No. 333-114606 ),                and                incorporated by this reference.                                                                                                                                                                                                                                                        |
| 2.5                       | Asset                Purchase and Sale Agreement effective as of December 15, 2004, by                and                between SYS and Xsilogy, Inc filed as Exhibit 2.5 to SYS’s report on Form                10-QSB filed February 7, 2005 (Commission file No. 001-32397), and                incorporated by this reference.                                                                                                                                                                        |
| 2.6                       | Agreement                and plan of merger effective as of January 3, 2005 among SYS, Shadow                I,                Inc., a wholly-owned subsidiary of SYS, Antin Engineering, Inc.,                and the                stockholders of Antin Engineering, Inc. filed as Exhibit 2.6 to SYS’s                report on Form 10-QSB filed February 7, 2005 (Commission file No.                001-32397), and incorporated by this reference.                                                |
| 2.7                       | Agreement                and Plan of Merger effective as of November 7, 2005 among SYS, Shadow                II,                Inc., a wholly owned subsidiary of SYS, Logic Innovations, Inc. and                the                stockholders of Logic Innovations, Inc., filed as Exhibit 2.7 to                SYS’s                report on Form 10-Q for the quarter ended December 30, 2005 (Commission                file No. 001-32397), and incorporated by this                reference. |
| 2.8                       | Asset                Purchase and Sale Agreement effective December 2, 2005 among SYS,                cVideo,                Inc. and certain of the stockholders of cVideo, Inc., filed as Exhibit                2.8                to SYS’s report on From 10-Q for the quarterly period ended December 30,                2005 (Commission file No. 001-32397), and incorporated by this                reference.                                                                                     |
| 2.9                       | Stock                Purchase Agreement effective as of April 2, 2006, between SYS and                Gary E.                Murphy (the sole stockholder of Reality Based IT Services, Ltd.),                filed as                Exhibit 2.9 to SYS’s Form 8-K filed April 6, 2006 (Commission file No.                001-32397), and incorporated by this reference.                                                                                                                                |
| 2.10                      | Agreement                and Plan of Merger Dated as of October 17, 2006 by and among SYS,                Shadow                IV, Inc., Ai Metrix, Inc., the Majority Stockholders of Ai Metrix,                Inc.,                and Victor E. Parker, as the Stockholder Representative, filed as                Exhibit                2.9 to SYS’s Form 8-K filed October 18, 2006 (Commission file No.                001-32397), and incorporated by this reference.                            |
| 3.1                       | Articles                of Incorporation for SYS, as amended, filed as Exhibit 3.1 to SYS’s                Registration Statement on Form SB-2, filed May 24, 2002 (Commission                file                No. 333-88988 ), and incorporated by this reference.                                                                                                                                                                                                                                     |
| 3.2                       | Bylaws                of SYS incorporated by reference SYS’s Registration Statement on Form SB-2                filed on May 24, 2002 (Commission file No. 333-88988 ), and incorporated                by this reference.                                                                                                                                                                                                                                                                                 |
| 4.1                       | Certificate                of Determination of Preferences of Preferred Shares of Systems Associates,                Inc., filed by SYS with the California Secretary of State on July                28,                1968, filed as Exhibit 3.2 to SYS’s report on Form 10-K for the fiscal                year ended June 30, 1981 and incorporated by this                reference.                                                                                                                 |
| 4.2                       | Certificate                of Determination of Preferences of Preference Shares of Systems                Associates, Inc., filed by SYS with the California Secretary of State                on                December 27, 1968, filed as Exhibit 3.3 to SYS’s report on Form 10-K for                the fiscal year ended June 30, 1981 and incorporated by this                reference.                                                                                                            |
| 4.3                       | Certificate                of Determination of Series B 9% Cumulative Convertible Callable Non-Voting                Preference Stock was filed by SYS with the California Secretary of                State                on August 15, 1996, and included in Exhibit 3.1 to SYS’s Registration                Statement on Form SB-2, filed May 24, 2002 (Commission file No.                333-88988), and incorporated by this reference.                                                            |
| 4.4                       | Form                of Subscription Agreement from the January 2002 Offering, filed as                Exhibit                4.1 to SYS’s Registration Statement on Form SB-2 dated May 24, 2002                (Commission file No. 333-88988), and incorporated by this                reference.                                                                                                                                                                                                        |
| 4.5                       | Form                of Convertible Note from the January 2002 Offering, filed as Exhibit                4.2                to SYS’s Registration Statement on Form SB-2 dated May 24, 2002                (Commission file No. 333-88988).                                                                                                                                                                                                                                                                 |
| 4.6                       | Form                of Subscription Agreement from the February 2004 Offering (Convertible                Note from December 2003 Offering included), filed as Exhibit 4.3                to SYS’s                Registration Statement on Form SB-2 dated April 19, 2004 (Commission                file                No. 333-114606), and incorporated by this reference.                                                                                                                             |
| 4.7                       | Securities                Purchase Agreement, from the May 27, 2005 offering, by and among                SYS and                the investor parties as identified on the signature pages thereto,                filed                as exhibit 10.1 to SYS’s Form 8-K filed on June 3, 2005 (Commission file                No. 001-32397), and incorporated by this reference.                                                                                                                        |
| 4.8                       | Registration                Rights Agreement, from the May 27, 2005, by and among SYS and the                investor                parties as identified on the signature pages thereto, filed as exhibit                10.3 to SYS’s Form 8-K filed on June 3, 2005 (Commission file No.                001-32397), and incorporated by this reference.                                                                                                                                                |
| 4.9                       | Form                of Warrant to be issued by SYS to the investors in connection with                the                Securities Purchase Agreement from May 27, 2005 Offering, filed as                exhibit                10.2 to SYS’s Form 8-K filed on June 3, 2005 (Commission file No.                001-32397), and incorporated by this reference.                                                                                                                                         |
| 4.10                      | Restricted                stock purchase agreement between SYS and Ben Goodwin dated August                16,                2005, filed as Exhibit 99.1 to SYS’s report on Form 8-K filed August 18,                2005 (Commission file No. 001-32397), and incorporated by this                reference.                                                                                                                                                                                             |
| 4.11                      | Form                of Subscription Agreement from the Company’s February 14, 2006 Offering,                filed as Exhibit 99.1 to SYS’s report on Form 8-K filed February 17, 2006                (Commission file No. 001-32397), and incorporated by this                reference.                                                                                                                                                                                                             |
| 4.12                      | Form                of Unsecured Subordinated Convertible Note from SYS’s February 14, 2006                Offering, filed as Exhibit 99.2 to SYS’s report on Form 8-K filed February                17, 2006 (Commission file No. 001-32397), and incorporated by this                reference.                                                                                                                                                                                                    |
| 4.13                      | Form                of Subordination Agreement from SYS’s February 14, 2006 Offering, filed as                Exhibit 99.3 to SYS’s report on Form 8-K filed February 17, 2006                (Commission file No. 001-32397), and incorporated by this                reference.                                                                                                                                                                                                                    |
| 10.1†               | SYS                1997 Incentive Stock Option and Restricted Stock Plan filed as Attachment                1 to SYS’s Proxy Statement filed on February 21, 1997 (Commission file No.                000-04169), and incorporated by this reference.                                                                                                                                                                                                                                                      |
| 10.2†               | SYS                2003 Stock Option Plan filed as Exhibit 10.2 to SYS’s report on Form S-8                filed on April 8, 2003 (Commission file No. 333-104372), and incorporated                by this reference.                                                                                                                                                                                                                                                                                     |
| 10.3†               | SYS                2003 Employee Stock Purchase Plan filed as Exhibit 10.3 to SYS’s report on                Form S-8 filed on April 8, 2003 (Commission file No. 333-104372),                and                incorporated by this reference.                                                                                                                                                                                                                                                           |
| 10.4†               | Employment                contract for Clifton L. Cooke, Jr., SYS’s Chief Executive Officer filed as                Exhibit 10.4 to SYS’s report on Form 10-Q for the quarter ended September                30, 2006, filed on November 13, 2006 (Commission file No. 001-32397),                and                incorporated by this reference.                                                                                                                                                 |
| 10.5†               | Employment                contract for Edward M. Lake, SYS’s Chief Financial Officer and Executive                Vice President of Financial Operations filed as Exhibit 10.5 to SYS’s                report on Form 10-Q for the quarter ended September 30, 2006, filed                on                November 13, 2006 (Commission file No. 001-32397), and incorporated                by                this reference.                                                                     |
| 10.6†               | Employment                contract for Michael W. Fink, SYS’s Secretary and Sr. Vice president of                Finance and Contracts filed as Exhibit 10.6 to SYS’s report on Form 10-Q                for the quarter ended September 30, 2006, filed on November 13, 2006                (Commission file No. 001-32397), and incorporated by this                reference.                                                                                                                     |
| 10.7†               | Employment                contract for Kenneth D. Regan, SYS’s Defense Solutions Group’s President                and Chief Operating Officer filed as Exhibit 10.7 to SYS’s report on Form                10-Q for the quarter ended September 30, 2006, filed on November                13, 2006                (Commission file No. 001-32397), and incorporated by this                reference.                                                                                         |
| 10.8†               | Restricted                stock purchase agreement between SYS and Ben Goodwin dated August                16,                2005, filed as Exhibit 99.1 to SYS’s Form 8-K filed August 18, 2005                (Commission file No. 001-32397), and incorporated by this                reference.                                                                                                                                                                                                       |
| 10.9†               | Employment                contract for Ben Goodwin, SYS’s Senior Vice President of Sales and                Marketing and President of the Public Safety, Security and Industrial                Products Group filed as Exhibit 10.9 to SYS’s report on Form 10-Q for the                quarter ended September 30, 2006, filed on November 13, 2006 (Commission                file No. 001-32397), and incorporated by this                reference.                                            |
| 10.10†*             | Employment                contract for Clifton L. Cooke, Jr., SYS’s Chief Executive                Officer.                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.11†*             | 2007                Restatement of SYS Technologies 401(k) Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 21.1                      | List                of all subsidiaries of SYS incorporated by reference from Exhibit                21.1 of                SYS’s report on Form 10-Q for the quarter ended September 30, 2006, filed                on November 13, 2006 (Commission file No. 001-32397).                                                                                                                                                                                                                                 |
| 31.1*                     | Certification                of Chief Executive Officer pursuant to Rule                13a-14(a)/15d-14(a)                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.2*                     | Certification                of Chief Financial Officer pursuant to Rule                13a-14(a)/15d-14(a)                                                                                                                                                                                                                                                                                                                                                                                                      |
| 32.1*                     | Certification                of Chief Executive Officer pursuant to Section 1350 of Title 18 of                the                United States Code                                                                                                                                                                                                                                                                                                                                                             |
| 32.2*                     | Certification                of Chief Financial Officer pursuant to Section 1350 of Title 18 of                the                United States Code                                                                                                                                                                                                                                                                                                                                                             |

----

**SIGNATURES**

|   |                                   | SYS          |                                        |
|--------|----------------------------------------|--------------|---------------------------------------------|
|   |                                   | (Registrant) |                                        |
|   |                                   |
|   |                                   |
| Date:  | November                9, 2007        |         | /s/                Clifton L. Cooke, Jr.    |   |
|   | Clifton                L. Cooke, Jr.   |
|   | Chief                Executive Officer |
|   |                                   |
|   |                                   |
| Date:  | November                9, 2007        |         | /s/                Edward M. Lake |   |
|   | Edward M. Lake               |
|   | Chief                Financial Officer |

----

**Exhibit      31.1**

**CERTIFICATION      OF CHIEF EXECUTIVE OFFICER**

|   | 1.                I have reviewed this Quarterly Report on Form 10-Q of                SYS; |
|--------|---------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | 2.                Based on my knowledge, this 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                report; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.                Based on my knowledge, the financial statements, and other financial                information included in this 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                report. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

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

|   |   |
|--------|--------|

|   | a)                Designed such disclosure controls and procedures, or caused such                disclosure controls and procedures to be designed under our supervision,                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 report is                being                prepared; and |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | b)                Evaluated the effectiveness of the registrant’s disclosure controls and                procedures and presented in this report our conclusions about the                effectiveness of the disclosure controls and procedures, as of the                end of                the period covered by this report based on such evaluation;                and |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | c)                 Disclosed in this report any change in the registrant’s internal control                over financial reporting that occurred during the registrant’s most recent                fiscal quarter (the registrant’s fourth fiscal quarter in the case of an                annual report) that has materially affected, or is reasonably likely                to                materially affect, the registrant’s internal control over financial                reporting; and |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | 5.                The registrant’s other certifying officer(s) and I have disclosed, based                on our most recent evaluation of internal control over financial                reporting, to the registrant’s auditors and the audit committee of                registrant’s board of directors (or persons performing the equivalent                functions): |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | a)                 All significant deficiencies and material weaknesses in the design                or                operation of internal control over financial reporting which are                reasonably likely to adversely affect the registrant’s ability to record,                process, summarize and report financial information;                and |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | b)                 Any fraud, whether or not material, that involves management or other                employees who have a significant role in the registrant’s internal control                over financial reporting. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Dated:                November 9, 2007 |   | By:    |  /s/              Clifton L. Cooke, Jr. |   |
|----------------------------------------|--------|--------|----------------------------------------------|--------|
|                                   |   |   | Clifton                L. Cooke, Jr.         |
|                                   |   |   | Chief                Executive Officer       |

----

**Exhibit      31.2**

**CERTIFICATION      OF CHIEF FINANCIAL OFFICER**

|   | 1.                I have reviewed this Quarterly Report on Form 10-Q of                SYS; |
|--------|---------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | 2.                Based on my knowledge, this 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                report; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | 3.                Based on my knowledge, the financial statements, and other financial                information included in this 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                report. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

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

|   |   |
|--------|--------|

|   | a)                Designed such disclosure controls and procedures, or caused such                disclosure controls and procedures to be designed under our supervision,                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 report is                being                prepared; and |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | b)                Evaluated the effectiveness of the registrant’s disclosure controls and                procedures and presented in this report our conclusions about the                effectiveness of the disclosure controls and procedures, as of the                end of                the period covered by this report based on such evaluation;                and |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | c)                Disclosed in this report any change in the registrant’s internal control                over financial reporting that occurred during the registrant’s most recent                fiscal quarter (the registrant’s fourth fiscal quarter in the case of an                annual report) that has materially affected, or is reasonably likely                to                materially affect, the registrant’s internal control over financial                reporting; and |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | 5.                The registrant’s other certifying officer(s) and I have disclosed, based                on our most recent evaluation of internal control over financial                reporting, to the registrant’s auditors and the audit committee of                registrant’s board of directors (or persons performing the equivalent                functions): |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | a)                All significant deficiencies and material weaknesses in the design                or                operation of internal control over financial reporting which are                reasonably likely to adversely affect the registrant’s ability to record,                process, summarize and report financial information;                and |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | b)                Any fraud, whether or not material, that involves management or other                employees who have a significant role in the registrant’s internal control                over financial reporting. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Dated:                November 9, 2007 |   | By:    | /s/                Edward M. Lake |   |
|----------------------------------------|--------|--------|---------------------------------------------|--------|
|                                   |   |   | Edward M. Lake                    |
|                                   |   |   | Chief                Financial Officer      |

----

**Exhibit      32.1**

**CERTIFICATION      OF CHIEF EXECUTIVE OFFICER**

|   | (1)                the Registrant’s Quarterly Report on Form 10-Q of the Registrant for the                quarter ended September 28, 2007 (the “Report”), to which this                statement is filed as an exhibit, fully complies with the requirements                of                Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as                amended; and |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | (2)                the information contained in the Report fairly presents, in all material                respects, the financial condition and results of operations of the                Registrant. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Dated:                November 9, 2007 |   | By:    | /s/                Clifton L. Cooke, Jr. |   |
|----------------------------------------|--------|--------|------------------------------------------|--------|
|                                   |   |   | Clifton                L. Cooke, Jr.     |
|                                   |   |   | Chief                Executive Officer   |

----

**Exhibit      32.2**

**CERTIFICATION      OF CHIEF FINANCIAL OFFICER**

|   | (1)                the Registrant’s Quarterly Report on Form 10-Q of the Registrant for the                quarter ended September 28, 2007 (the “Report”), to which this statement                is filed as an exhibit, fully complies with the requirements of Section                13(a) or 15(d) of the Securities Exchange Act of 1934, as amended;                and |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | (2)                the information contained in the Report fairly presents, in all material                respects, the financial condition and results of operations of the                Registrant. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Dated:                November 9, 2007 |   | By:    | /s/                Edward M. Lake |   |
|----------------------------------------|--------|--------|---------------------------------------------|--------|
|                                   |   |   | Edward M. Lake                    |
|                                   |   |   | Chief                Financial Officer      |