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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934for the fiscal year ended July 31, 2008
 or
 o
    
    Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934for the transition period from  to
 Commission file number 001-10382
 SYNERGETICS USA, INC.
  Delaware
    
    20-5715943(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)3845 Corporate Centre DriveOFallon, Missouri
    
    63368(Address of principal executive offices)
    
    (Zip Code)
   Title of each class
    
    Name of each exchange on which registeredCommon stock
    
    The Nasdaq Capital Market
   (Title of class)
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



PagePART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    15Item 1B. Unresolved Staff Comments
    
    
    24Item 2. Properties
    
    
    24Item 3. Legal Proceedings
    
    
    25Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    26Item 6. Selected Consolidated Financial Data
    
    
    28Item 7. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    29Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    41Item 8. Financial Statements and Supplementary Data
    
    
    42Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
    
    
    42Item 9A. Controls and Procedures
    
    
    42Item 9B. Other Information
    
    
    43PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    43Item 11. Executive Compensation
    
    
    43Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    44Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    44Item 14. Principal Accountant Fees and Services
    
    
    44PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    45Signatures
    
    
    46Index to Exhibits
    
    
    47Exhibit 21Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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SYNERGETICS USA, INC.
  The Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act), provide a safe harbor for forward-looking
statements made by or on behalf of the Company. The Company and its representatives may from time
to time make written or oral statements that are forward-looking, including statements contained
in this report and other filings with the Securities and Exchange Commission (SEC) and in our
reports to stockholders. In some cases forward-looking statements can be identified by words such
as believe, expect, anticipate, plan, potential, continue or similar expressions. Such
forward-looking statements include risks and uncertainties and there are important factors that
could cause actual results to differ materially from those expressed or implied by such
forward-looking statements. These factors, risks and uncertainties can be found in Part I, Item 1A,
Risk Factors.
 Although we believe the expectations reflected in our forward-looking statements are
based upon reasonable assumptions, it is not possible to foresee or identify all factors that could
have a material effect on the future financial performance of the Company. The forward-looking
statements in this report are made on the basis of managements assumptions and analyses, as of the
time the statements are made, in light of their experience and perception of historical conditions,
expected future developments and other factors believed to be appropriate under the circumstances.
 In addition, certain market data and other statistical information used throughout this
report are based on independent industry publications. Although we believe these sources to be
reliable, we have not independently verified the information and cannot guarantee the accuracy and
completeness of such sources.
 Except as otherwise required by the federal securities laws, we disclaim any obligation
or undertaking to publicly release any updates or revisions to any forward-looking statement
contained in this annual report on Form 10-K and the information incorporated by reference in this
report to reflect any change in our expectations with regard thereto or any change in events,
conditions or circumstances on which any statement is based.
 
 PART I
 
  Overview
   3




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Other Recent Events
     4




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Strategy
  
    
    continuous improvement and development of our people,
    
    continuous improvement and development of our manufacturing facilities,
    
    continuous improvement of our systems; and
    
    continuous improvement of our research and development initiatives.
    5




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Products and Services
  Year Ended July 31,
    
    
    % Increase2008
    
    
    2007
    
    
    (Decrease)Ophthalmic
    
    $
    28,019
    
    
    $
    24,522
    
    
    
    14.3
    %Neurosurgery
    
    
    12,925
    
    
    
    10,241
    
    
    
    26.2
    %OEM (Codman, Stryker and Iridex)
    
    
    8,347
    
    
    
    10,266
    
    
    
    (18.7
    %)Other
    
    
    772
    
    
    
    916
    
    
    
    (15.7
    %)Total
    
    $
    50,063
    
    
    $
    45,945
    
    
    
    9.0
    %
 Ophthalmic and Vitreoretinal Surgical Market
     6




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TM TM TM TM
 TM TM TM TM
 TM TM TM TM TM TM TM
  Neurosurgery Market
   7




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® ®
 ® ® ® ®
  TM
  OEM Markets
   8




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®
   Manufacturing and Supplies
 ® TM TM TM ® TM
   9




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Marketing and Sales
  Ophthalmic and Vitreoretinal Surgical Market
 TM TM TM TM
  Neurosurgery Market
 ® TM ® TM ® ® ® TM
 Competition
   10




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Ophthalmic and Vitreoretinal Surgical Market
 TM TM
 Neurosurgery Market
 ® TM TM TM
 Research and Development
 ® TM ® TM ®
 ® TM
   11




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Government Regulations
        12




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Safety Approvals
  Intellectual Property
 ® TM TM ®
   13




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Employees
  Executive Officers of the Registrant
  Name
    
    Age
    
    Position(s) with the CompanyKurt W. Gampp, Jr.
    
    
    48
    
    
    Executive Vice President, Chief Operating Officer & DirectorJerry L. Malis
    
    
    76
    
    
    Executive Vice President, Chief Scientific Officer & DirectorPamela G. Boone
    
    
    45
    
    
    Executive Vice President,
Chief Financial Officer, Treasurer & Secretary
    14




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Available Information
 www.synergeticsusa.com
 
   A
significant part of our OEM sales comes from a single customer, which makes us
vulnerable to the loss of that customer.
 TM TM
 If any of our single source suppliers were to cease providing components, we may not be able to
produce our products.
 ® ® TM
 TM
  15




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The medical device industry is highly competitive, and we may be unable to compete effectively with
other companies.
   Our future results are dependent, in part, upon the successful market penetration of our fourth
generation multifunctional bipolar electrosurgical generators under the Malis ® trademark.
 ®
 
    
    their acceptance by surgeons;
    
    the recognition of hospitals and surgical centers that the new generator and
instruments offer sufficient advantages and benefits to warrant the cost of purchasing
one or more of the Malis® generators;
    
    our ability to create an effective distribution network;
    
    our ability to sustain our average selling price through this distribution
network; and
    
    the reaction of our competitors in this market.
 Our products may not be accepted in the market.
   16




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
    
    convince third-party distributors and customers that our technology is an
attractive alternative to other technologies;
 
    
    manufacture products in sufficient quantities and at acceptable costs; and
 
    
    supply and service sufficient quantities of our products directly or through
marketing alliances.
 If we do not introduce new commercially successful products in a timely manner, our products may
become obsolete over time, thereby decreasing our revenue and profitability.
  
    
    properly identify and anticipate customer needs;
    
    commercialize new products in a cost-effective and timely manner;
    
    manufacture and deliver products in sufficient volumes on time;
    
    obtain regulatory approval for new products;
    
    differentiate our products from those of our competitors;
    
    achieve positive clinical outcomes;
    
    satisfy the increased demands by health care payors, providers and patients for
lower-cost procedures and shorter hospital stays and recovery times;
    
    innovate and develop new materials, product designs and surgical techniques; and
    
    provide adequate medical and/or customer education relating to new products and
attract key surgeons to advocate these new products.
   17




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Our operating results may fluctuate.
  
    
    the introduction of new product lines;
    
    product modifications;
    
    the level of market acceptance of new products;
    
    the timing of research and development and other expenditures;
    
    timing of the receipt of orders from, and product shipments to, distributors and
customers;
    
    timing of capital and other selling and general expenditures;
    
    changes in the distribution arrangements for our products;
    
    manufacturing or supply delays;
    
    the time needed to educate and train additional sales personnel;
    
    costs associated with product introductions;
    
    product returns; and
    
    receipt of necessary regulatory approvals.
 Changes in the health care industry may require us to decrease the selling price for our products
or could result in a reduction in the size of the market for our products, each of which could have
a negative impact on our financial performance.
   
    
    there has been a consolidation among health care facilities and purchasers of
medical devices in the United States who prefer to limit the number of suppliers from
whom they purchase medical products and these entities may decide to stop purchasing
their products or demand discounts on our prices;
 
    
    major third-party payors of hospital services, including Medicare, Medicaid and
private health care insurers could substantially revise their payment methodologies or
could impose reimbursement cutbacks that could create downward price pressure on our
products;
 
    
    recently, there has been an FDA provided incentive for surgeons to move certain
procedures from hospitals to ambulatory surgical centers, which may impact the demand
for and distribution of our surgical products;
 
    
    numerous legislative proposals have been considered that, if adopted, would
result in major reforms in the United States health care system that could have an
adverse effect on our business;
  18




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
    
    there is economic pressure to contain health care costs in international markets;
and
 
    
    there have been initiatives by third-party payors to challenge the prices charged
for medical products that could affect our ability to sell products on a competitive
basis.
  Delays in the receipt or failure to receive clearances or approvals, the loss of previously
received clearances or approvals, or failure to comply with existing or future regulatory
requirements could have a material adverse effect on our business, financial condition, results of
operations and future growth prospects.
      19




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We may be subject to penalties and may be precluded from marketing our products if we fail to
comply with extensive governmental regulations.
  
    
    Warning letters;
 
    
    Fines, injunctions and civil penalties against us;
 
    
    Recall or seizure of our products;
 
    
    Operating restrictions, partial suspension or total shutdown of our production;
 
    
    Refusing our requests for premarket clearance or approval of new products;
 
    
    Withdrawing product approvals already granted; and
 
    
    Criminal prosecution.
  We
may be unable to maintain our ISO certification or CE mark which allows us to sell our
products in the European medical market.
  We will first need to obtain electrical safety approval to market our applicable products under
development.
  Our intellectual property rights may not provide meaningful commercial protection for our products,
which could adversely affect our ability to compete in the market.
   20




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We may have product liability claims, and our insurance may not cover all claims.
  The loss of key personnel could harm our business.
   21




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If we are unable to hire, train and retain additional sales, marketing, manufacturing, engineering
and finance personnel, our growth could be impaired.
  We plan to expand our international sales and distribution operations, and the success of our
international expansion is subject to significant uncertainties.
  
    
    difficulties and costs of staffing and managing international operations;
    
    fluctuations in currency exchange rates;
    
    unexpected changes in regulatory requirements, including imposition of currency
exchange controls;
    
    longer accounts receivable collection cycles;
    
    import or export licensing requirements;
    
    potentially adverse tax consequences;
    
    political and economic instability;
    
    obtaining regulatory approval for our products;
    
    end-market and/or regional competition that may have competitive advantages;
  22




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
    
    potentially reduced protection for intellectual property rights; and
    
    subjectivity of other countries laws.
 We have international suppliers of various products, including the Omni ® ultrasonic
aspirator console and handpieces.
 ®
 Our cash and lines-of-credit facilities are maintained with a regional bank which given the current
financial crisis may not be fully insured or available.
  The market price of our stock may be highly volatile.
  
    
    our ability to successfully commercialize our products;
    
    the execution of new agreements and material changes in our relationships with
companies with whom we contract;
    
    quarterly fluctuations in results of operations;
    
    announcements regarding technological innovations or new commercial products by
us or our competitors or the results of regulatory filings;
    
    market reaction to trends in sales, marketing and research and development and
reaction to acquisitions;
    
    sales of common stock by existing shareholders;
    
    changes in key personnel;
    
    economic and political conditions, including worldwide geopolitical events; and
    
    fluctuations in the United States financial markets.
  23




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Synergetics USA has anti-takeover defenses that could delay or prevent an acquisition and could
adversely affect the price of its common stock.
  Material increases in interest rates could potentially be a detriment to sales.
  Because we do not require training for users of our products, and sell our products to
non-physicians, there exists an increased potential for misuse of our products, which could harm
our reputation and our business.
  If our facilities were to experience catastrophic loss, our operations would be seriously harmed.
  
   
    24




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PART II
 
   High
    
    
    LowYear ended July 31, 2007Quarter ended October 29, 2006
    
    $
    5.95
    
    
    $
    3.77Quarter ended January 30, 2007
    
    $
    4.85
    
    
    $
    3.74Quarter ended April 30, 2007
    
    $
    5.15
    
    
    $
    3.36Quarter ended July 31, 2007
    
    $
    4.75
    
    
    $
    3.35
 High
    
    
    LowYear ended July 31, 2008Quarter ended October 29, 2007
    
    $
    4.06
    
    
    $
    3.52Quarter ended January 31, 2008
    
    $
    3.69
    
    
    $
    2.00Quarter ended April 30, 2008
    
    $
    2.67
    
    
    $
    1.94Quarter ended July 31, 2008
    
    $
    3.29
    
    
    $
    1.97
    26




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STOCK PERFORMANCE GRAPH
 The following graph is not soliciting material, is not deemed filed with the SEC, and is not
to be incorporated by reference into any of the Companys filings under the Securities Act of 1933
or the Securities Exchange Act of 1934, as amended, respectively.
  
 Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
  Purchases of Equity Securities by the Issuer and Affiliated Purchasers
   27




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For the Fiscal Years Ended July 31,2008
    
    
    2007
    
    
    2006
    
    
    2005*
    
    
    2004*(in thousands, except per share data)Statements of Income Data:Net Sales
    
    $
    50,063
    
    
    $
    45,945
    
    
    $
    38,246
    
    
    $
    21,792
    
    
    $
    16,887Cost of Sales
    
    
    20,101
    
    
    
    18,943
    
    
    
    14,238
    
    
    
    8,289
    
    
    
    6,514Gross profit
    
    
    29,962
    
    
    
    27,002
    
    
    
    24,008
    
    
    
    13,503
    
    
    
    10,373Operating Income
    
    
    5,208
    
    
    
    1,518
    
    
    
    5,004
    
    
    
    2,383
    
    
    
    1,690Net income
    
    
    2,663
    
    
    
    845
    
    
    
    3,081
    
    
    
    1,458
    
    
    
    1,094Earnings per common share  Basic
    
    $
    0.11
    
    
    $
    0.03
    
    
    $
    **0.15
    
    
    $
    **0.43
    
    
    $
    **0.32Earnings per
common share  Diluted
    
    $
    0.11
    
    
    $
    0.03
    
    
    $
    **0.15
    
    
    $
    **0.42
    
    
    $
    **0.32
 
 *
    
    This tabular information reflects Synergetics results only and does not reflect the effect of
the combination of Synergetics and Valley Forge.**
    
    The fiscal years 2006, 2005 and 2004 have not been adjusted to reflect the 4.59 shares
received by the private company shareholders at the time of the reverse merger between Valley
Forge and Synergetics forming Synergetics USA, Inc. As of Fiscal Years Ended July 31,2008
    
    
    2007
    
    
    2006
    
    
    2005*
    
    
    2004*(in thousands)Balance Sheets Data:Cash and cash equivalents
    
    $
    500
    
    
    $
    167
    
    
    $
    243
    
    
    $
    1,817
    
    
    $
    1,540Current assets
    
    
    24,549
    
    
    
    24,010
    
    
    
    21,594
    
    
    
    12,757
    
    
    
    9,563Total assets
    
    
    58,396
    
    
    
    58,616
    
    
    
    51,329
    
    
    
    20,116
    
    
    
    14,474Current liabilities
    
    
    11,865
    
    
    
    13,657
    
    
    
    8,996
    
    
    
    3,969
    
    
    
    2,862Long-term liabilities
    
    
    10,174
    
    
    
    11,524
    
    
    
    10,028
    
    
    
    6,008
    
    
    
    3,113Retained earnings
    
    
    11,991
    
    
    
    9,328
    
    
    
    8,483
    
    
    
    5,402
    
    
    
    3,944Stockholders equity
    
    
    36,357
    
    
    
    33,435
    
    
    
    32,305
    
    
    
    10,139
    
    
    
    8,499
 
 *
    
    This tabular information reflects Synergetics results only and does not reflect the effect of the
combination of Synergetics and Valley Forge.  28




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Overview
  
    
    Our Business  a general description of the key drivers that affect our business
and the industries in which we operate.
    
    Our Business Strategy  a description of the strategic initiatives on which we
focus and the goals we seek to achieve.
    
    Results of Operations  an analysis of the Companys results of operations for
the three years presented in our financial statements.
    
    Liquidity and Capital Resources  an analysis of cash flows, sources and uses of
cash, currency exchange and an overview of our financial position.
    
    Contractual Obligations  an analysis of contracts entered into in the normal
course of business that will require future payments.
    
    Use of Estimates and Critical Accounting Policies  a description of critical
accounting policies including those that affect the more significant judgments and
estimates used in the preparation of our consolidated financial statements.
 Our Business
  New Product Sales
   29




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Growth in Minimally Invasive Surgery Procedures
 TM TM ® ®
 Demand Trends
  Pricing Trends
 TM ®
  30




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Our Business Strategy
  
    
    continuous improvement and development of our people,
 
    
    continuous improvement and development of our manufacturing facilities,
 
    
    continuous improvement of our systems; and
 
    
    continuous improvement of our research and development initiatives.
      31




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Results of Operations
 Year Ended July 31, 2008 Compared to Year Ended July 31, 2007
   Year Ended July 31,
    
    
    % Increase2008
    
    
    2007
    
    
    (Decrease)Ophthalmic
    
    $
    28,019
    
    
    $
    24,522
    
    
    
    14.3
    %Neurosurgery
    
    
    12,925
    
    
    
    10,241
    
    
    
    26.2
    %OEM (Codman, Stryker and Iridex)
    
    
    8,347
    
    
    
    10,266
    
    
    
    (18.7
    %)Other
    
    
    772
    
    
    
    916
    
    
    
    (15.7
    %)Total
    
    $
    50,063
    
    
    $
    45,945
    
    
    
    9.0
    %
 TM ® TM
  Year Ended July 31,2008
    
    
    2007
    
    
    % IncreaseUnited States (including OEM sales)
    
    $
    35,838
    
    
    $
    35,214
    
    
    
    0.2
    %International (including Canada)
    
    
    14,225
    
    
    
    10,731
    
    
    
    32.5
    %Total
    
    $
    50,063
    
    
    $
    45,945
    
    
    
    9.0
    %
 ® TM ® ® TM
  32




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Year Ended July 31, 2007 Compared to Year Ended July 31, 2006
   Year Ended July 31,
    
    
    % Increase2007
    
    
    2006*
    
    
    (Decrease)Ophthalmic
    
    $
    24,522
    
    
    $
    22,709
    
    
    
    8.0
    %Neurosurgery
    
    
    10,241
    
    
    
    6,745
    
    
    
    51.8
    %OEM (including Codman and Stryker)
    
    
    10,266
    
    
    
    8,005
    
    
    
    28.2
    %Other
    
    
    916
    
    
    
    787
    
    
    
    16.4
    %Total
    
    $
    45,945
    
    
    $
    38,246
    
    
    
    20.1
    %
 *
    
    This tabular information includes the net sales of the reverse merger with Valley Forge
Scientific Corp. from September 22, 2005 through July 31,
2006.
  34




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TM ®
  Year Ended July 31,2007
    
    
    2006*
    
    
    % IncreaseUnited States (Including OEM sales)
    
    $
    35,214
    
    
    $
    30,090
    
    
    
    17.0
    %International (including Canada)
    
    
    10,731
    
    
    
    8,156
    
    
    
    31.6
    %Total
    
    $
    45,945
    
    
    $
    38,246
    
    
    
    20.1
    %
 *
    
    This tabular information includes the net sales of the reverse merger with Valley Forge
Scientific Corp. from September 22, 2005 through July 31,
2006.
 ® ® ® TM
    TM ® ® TM
   35




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Liquidity and Capital Resources
        37




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Revolving Credit Facility:
 Non-U.S. Receivables Revolving Credit Facility
 Equipment Line of Credit
  Contractual Obligations
  Payments due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsRevolving Line of Credit (1)
    
    $
    3,328,000
    
    
    $
    3,328,000
    
    
    $
    
    
    
    $
    
    
    
    $
    Non-U.S. Receivables Line (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2008 Equipment Line (3)
    
    
    1,602,000
    
    
    
    556,000
    
    
    
    1,046,000
    
    
    
    
    
    
    
    Revenue Bonds Payable (4)
    
    
    4,269,000
    
    
    
    429,000
    
    
    
    666,000
    
    
    
    527,000
    
    
    
    2,647,000Malis® Tradename Note Payable (5)
    
    
    2,239,000
    
    
    
    640,000
    
    
    
    1,599,000
    
    
    
    
    
    
    
    Settlement Obligation (6)
    
    
    3,200,000
    
    
    
    800,000
    
    
    
    2,400,000
    
    
    
    
    
    
    
    Operating Leases (7)
    
    
    867,000
    
    
    
    346,000
    
    
    
    423,000
    
    
    
    98,000
    
    
    
    Total Contractual Obligations
    
    $
    15,505,000
    
    
    $
    6,099,000
    
    
    $
    6,134,000
    
    
    $
    625,000
    
    
    $
    2,647,000
 (1)
    
    Amount represents the expected cash payment of the outstanding borrowings of $3.3 million on
our $9.5 million revolving credit facility, including interest at prime less 0.75 percent
through the expiration of the revolving credit facility on December 1, 2008.(2)
    
    Amount represents the expected cash payment of the outstanding borrowings of $0.00 on our
$2.5 million non-U.S. receivables line through the expiration of the revolving credit facility
on June 4, 2009.  38




---



##### Table of Contents



(3)
    
    Amount represents the cash payment for our equipment term loan entered into in July 2008,
including interest at prime lending rate.(4)
    
    Amount represents the expected cash payments for our revenue bonds payable, including
interest at the established fixed rates through September 1, 2009 and December 1, 2011.(5)
    
    Amount represents the expected cash payment on the note payable to the estate of the late Dr.
Leonard I. Malis. The note includes interest at an imputed rate of 6.0 percent.(6)
    
    Amount represents the expected cash payment on the settlement obligation to Iridex. The
note includes interest at an imputed rate of 8.0 percent.(7)
    
    We enter into operating leases in the normal course of business. Some lease agreements
provide us with the option to renew the lease. Our future cash payment would change if we
exercised these renewal options or if we entered into additional operating lease agreements. Use of Estimates and Critical Accounting Policies
  Principles of consolidation
  Revenue Recognition
     39




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##### Table of Contents



Inventories
  Amortization Periods
 Impairment of
Long-Lived Assets
 Allowance for Doubtful Accounts
  Patents and Research and Development
  Goodwill and Other Intangibles
    40




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##### Table of Contents



Impairment of Long-Lived Assets
  Deferred Tax Assets and Liabilities
  Stock-Based Compensation
  Recent Accounting Pronouncements
  
     41




---



##### Table of Contents



Evaluation of Disclosure Controls and Procedures
 Managements Annual Report on Internal Control over Financial Reporting
   42




---



##### Table of Contents



Changes in Internal Control Over Financial Reporting 
 Attestation Report of Registered Public Accounting Firm
 
   
 PART III
 
    www.synergeticsusa.com
  
    43




---



##### Table of Contents



EXISTING EQUITY COMPENSATION PLAN INFORMATION
  Number of SecuritiesAvailablefor Future IssuanceNumber of Securities
    
    
    
    
    
    
    Under Equityto be
    
    
    Weighted Average
    
    
    Compensation PlansIssued Upon Exercise of
    
    
    Exercise Price of
    
    
    (Excluding SecuritiesOutstanding Options,
    
    
    Outstanding Options,
    
    
    Reflected in the FirstPlan Category
    
    Warrants and Rights
    
    
    Warrants and Rights
    
    
    Column)Equity Compensation Plans Approved
By Security Holders
    
    
    436,735
    
    
    $
    2.23
    
    
    
    1,072,480Equity Compensation Plans Not
Approved 
By Security Holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    436,735
    
    
    $
    2.23
    
    
    
    1,072,480
 
   
    44




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##### Table of Contents



PART IV
 
  (a)
    
    The following documents are filed as part of this report.
 1.
    
    Financial StatementsThe consolidated financial statements and supplemental schedule of
Synergetics USA, Inc. and Subsidiaries, together with the reports
thereon of registered public accounting firms, are included following
Item 15 of this annual report on Form 10-K. See Index to Financial
Statements and Financial Statement Schedules on page F-1, herein.2.
    
    Financial Statement SchedulesSchedule II  Valuation Allowances and Qualifying Accounts is
included in Note 20 to the consolidated financial statements, which
are included following Item 15 of this annual report on Form 10-K.
See Index to Financial Statements and Financial Statement Schedules on
page F-1, herein.3.
    
    ExhibitsThe exhibits required to be filed as part of this annual report on
Form 10-K are listed in the attached Index to Exhibits.
 (b)
    
    The exhibits filed with this annual report on Form 10-K are listed in the attached
Index to Exhibits.
 (c)
    
    None.
  45




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##### Table of Contents



INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
 Audited Financial StatementsReport of Independent Registered Public Accounting Firm on the Consolidated Financial Statements for July 31, 2008 and 2007
    
    
    F-2Report of Independent Registered Public Accounting Firm on Internal Control over Financial
Reporting
    
    
    F-3Report of Prior Independent Registered Public Accounting Firm on the Consolidated Financial
Statements for July 31, 2006
    
    
    F-4Consolidated Balance Sheets as of July 31, 2008 and 2007
    
    
    F-5Consolidated Statements of Income for the years ended July 31, 2008, 2007 and 2006
    
    
    F-6Consolidated Statements of Stockholders Equity for the years ended July 31, 2008, 2007 and 2006
    
    
    F-7Consolidated Statements of Cash Flows for the years ended July 31, 2008, 2007 and 2006
    
    
    F-8Notes to Consolidated Financial Statements
    
    
    F-9Financial Statement SchedulesSchedule II
 Valuation Allowances and Qualifying Accounts
    
    
    F-26
  F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Internal Control over Financial Reporting  Guidance
for Smaller Public Companies issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO)
  
  F-2




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control over Financial Reporting  Guidance for
Smaller Public Companies issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
    Internal
Control over Financial Reporting  Guidance for Smaller Public Companies issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
   
  F-3




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##### Table of Contents



(LOGO) 
 Report of Independent Registered Public Accounting Firm
 
    /s/ McGladrey & Pullen, LLP 
  F-4




---



##### Table of Contents



Synergetics USA, Inc. and Subsidiaries
 
 Consolidated Balance Sheets
 July 31, 2008 and 2007
(Dollars in thousands, except share and per share data)
 2008
    
    
    2007AssetsCurrent AssetsCash and cash equivalents
    
    $
    500
    
    
    $
    167Accounts receivable, net of allowance for
doubtful accounts 2008, $250; 2007, $227
    
    
    8,593
    
    
    
    8,264Income taxes receivable
    
    
    
    
    
    
    473Inventories
    
    
    14,568
    
    
    
    14,247Prepaid expenses
    
    
    361
    
    
    
    343Deferred income taxes
    
    
    527
    
    
    
    516Total current assets
    
    
    24,549
    
    
    
    24,010Property and equipment, net
    
    
    8,159
    
    
    
    8,192Intangible and other assetsGoodwill
    
    
    10,690
    
    
    
    10,660Other intangible assets, net
    
    
    13,946
    
    
    
    14,782Deferred expenses
    
    
    6
    
    
    
    55Patents, net
    
    
    991
    
    
    
    871Cash value of life insurance
    
    
    55
    
    
    
    46Total assets
    
    $
    58,396
    
    
    $
    58,616Liabilities and Stockholders EquityCurrent LiabilitiesExcess of outstanding checks over bank balance
    
    $
    
    
    
    $
    531Lines-of-credit
    
    
    3,287
    
    
    
    5,715Current maturities of long-term debt
    
    
    1,823
    
    
    
    2,161Current maturities of revenue bonds payable
    
    
    249
    
    
    
    249Accounts payable
    
    
    2,776
    
    
    
    2,262Accrued expenses
    
    
    2,659
    
    
    
    2,739Income taxes payable
    
    
    1,071
    
    
    
    Total current liabilities
    
    
    11,865
    
    
    
    13,657Long-Term LiabilitiesLong-term debt, less current maturities
    
    
    4,309
    
    
    
    5,014Revenue bonds payable, less current maturities
    
    
    3,642
    
    
    
    3,891Deferred income taxes
    
    
    2,223
    
    
    
    2,619Total long-term liabilities
    
    
    10,174
    
    
    
    11,524Total liabilities
    
    
    22,039
    
    
    
    25,181Commitments and contingencies (Notes 10 and 17)Stockholders EquityCommon stock at July 31, 2008 and July 31,
2007, $0.001 par value, 50,000,000 shares
authorized; 24,354,295 and 24,265,500 shares
issued and outstanding, respectively
    
    
    24
    
    
    
    24Additional paid-in capital
    
    
    24,342
    
    
    
    24,083Retained earnings
    
    
    11,991
    
    
    
    9,328Total stockholders equity
    
    
    36,357
    
    
    
    33,435Total liabilities and stockholders equity
    
    $
    58,396
    
    
    $
    58,616
   F-5




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##### Table of Contents



Synergetics USA, Inc. and Subsidiaries
 
 Consolidated Statements of Income
 Years Ended July 31, 2008, 2007 and 2006
(Dollars in thousands, except share and per share data)
 2008
    
    
    2007
    
    
    2006Net sales
    
    $
    50,063
    
    
    $
    45,945
    
    
    $
    38,246Cost of sales
    
    
    20,101
    
    
    
    18,943
    
    
    
    14,238Gross profit
    
    
    29,962
    
    
    
    27,002
    
    
    
    24,008Operating expensesResearch and development
    
    
    2,654
    
    
    
    2,584
    
    
    
    1,655Selling
    
    
    12,601
    
    
    
    11,124
    
    
    
    9,002General and administrative
    
    
    9,499
    
    
    
    11,776
    
    
    
    8,34724,754
    
    
    
    25,484
    
    
    
    19,004Operating income
    
    
    5,208
    
    
    
    1,518
    
    
    
    5,004Other income (expense)Investment income
    
    
    6
    
    
    
    1
    
    
    
    19Interest expense
    
    
    (1,129
    )
    
    
    (974
    )
    
    
    (575
    )Miscellaneous
    
    
    17
    
    
    
    28
    
    
    
    53(1,106
    )
    
    
    (945
    )
    
    
    (503
    )Income before
provision for income
taxes
    
    
    4,102
    
    
    
    573
    
    
    
    4,501Provision for income taxes
    
    
    1,439
    
    
    
    189
    
    
    
    1,420Provision for re-enactment of
the research and
experimentation credit
    
    
    
    
    
    
    (461
    )
    
    
    1,439
    
    
    
    (272
    )
    
    
    1,420Net income
    
    $
    2,663
    
    
    $
    845
    
    
    $
    3,081Earnings per share:Basic
    
    $
    0.11
    
    
    $
    0.03
    
    
    $
    0.15Diluted
    
    $
    0.11
    
    
    $
    0.03
    
    
    $
    0.15Basic weighted average
common shares outstanding
    
    
    24,321,713
    
    
    
    24,220,507
    
    
    
    20,657,256Diluted weighted average
common shares outstanding
    
    
    24,474,840
    
    
    
    24,404,653
    
    
    
    20,821,394
   F-6




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##### Table of Contents



Synergetics USA, Inc. and Subsidiaries
 
 Consolidated Statements of Stockholders Equity
 Years Ended July 31, 2008, 2007 and 2006
(Dollars in thousands, except share data)
 AdditionalCommon
    
    
    Paid-in
    
    
    Retained
    
    
    TreasuryStock
    
    
    Capital
    
    
    Earnings
    
    
    Stock
    
    
    TotalBalance, July 31, 2005
    
    $
    59
    
    
    $
    4,986
    
    
    $
    5,402
    
    
    $
    (308
    )
    
    $
    10,139Elimination of treasury
shares
    
    
    
    
    
    
    (308
    )
    
    
    
    
    
    
    308
    
    
    
    Establish par value of
$0.001 on outstanding
shares
    
    
    (35
    )
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    Establish fair value of
Valley Forge common
stock on date of merger
    
    
    
    
    
    
    17,987
    
    
    
    
    
    
    
    
    
    
    
    17,987Restricted stock grants
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    15Stock-based compensation
    
    
    
    
    
    
    442
    
    
    
    
    
    
    
    
    
    
    
    442Tax benefit associated
with stock option
exercises
    
    
    
    
    
    
    223
    
    
    
    
    
    
    
    
    
    
    
    223Proceeds from stock
option exercises
    
    
    
    
    
    
    418
    
    
    
    
    
    
    
    
    
    
    
    418Net income
    
    
    
    
    
    
    
    
    
    
    3,081
    
    
    
    
    
    
    
    3,081Balance, July 31, 2006
    
    
    24
    
    
    
    23,798
    
    
    
    8,483
    
    
    
    
    
    
    
    32,305Restricted stock grants
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    
    
    
    
    89Stock-based compensation
    
    
    
    
    
    
    146
    
    
    
    
    
    
    
    
    
    
    
    146Proceeds from stock
option exercises
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    37Tax benefit associated
with stock option
exercises
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    13Net income
    
    
    
    
    
    
    
    
    
    
    845
    
    
    
    
    
    
    
    845Balance, July 31, 2007
    
    
    24
    
    
    
    24,083
    
    
    
    9,328
    
    
    
    
    
    
    
    33,435Restricted stock grants
    
    
    
    
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    122Stock-based compensation
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    102Proceeds from stock
option exercises
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    30Tax benefit associated
with stock option
exercises
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5Net income
    
    
    
    
    
    
    
    
    
    
    2,663
    
    
    
    
    
    
    
    2,663Balance, July 31, 2008
    
    $
    24
    
    
    $
    24,342
    
    
    $
    11,991
    
    
    $
    
    
    
    $
    36,357
   F-7




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##### Table of Contents



Synergetics USA Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows
 Years Ended July 31, 2008, 2007 and 2006
(Dollars in thousands, except share data)
 2008
    
    
    2007
    
    
    2006Cash Flows from Operating ActivitiesNet income
    
    $
    2,663
    
    
    $
    845
    
    
    $
    3,081Adjustments to reconcile net income to net cash
provided by (used in) operating activitiesDepreciation
    
    
    1,013
    
    
    
    887
    
    
    
    738Amortization
    
    
    977
    
    
    
    747
    
    
    
    436Provision for doubtful accounts receivable
    
    
    23
    
    
    
    49
    
    
    
    28Stock-based compensation
    
    
    224
    
    
    
    235
    
    
    
    457Deferred income taxes
    
    
    (407
    )
    
    
    (264
    )
    
    
    (315
    )Loss on sale of equipment
    
    
    5
    
    
    
    
    
    
    
    (2
    )Change in assets and liabilities, net of mergers and acquisitions (Note 2):(Increase) decrease in:Sales (purchases) of trading securities
    
    
    
    
    
    
    50
    
    
    
    (21
    )Accounts receivables
    
    
    (352
    )
    
    
    (1,506
    )
    
    
    (2,788
    )Income taxes receivable
    
    
    473
    
    
    
    (213
    )
    
    
    (118
    )Inventories
    
    
    (318
    )
    
    
    (1,004
    )
    
    
    (5,129
    )Prepaid expenses
    
    
    (31
    )
    
    
    79
    
    
    
    (144
    )(Decrease) increase in:Accounts payable
    
    
    474
    
    
    
    849
    
    
    
    6Accrued expenses
    
    
    (80
    )
    
    
    (55
    )
    
    
    1,414Deferred expenses
    
    
    
    
    
    
    (16
    )
    
    
    (92
    )Income taxes payable
    
    
    1,071
    
    
    
    253
    
    
    
    (258
    )Net cash provided by (used in) operating
activities
    
    
    5,735
    
    
    
    936
    
    
    
    (2,707
    )Cash Flows from investing activitiesAcquisition of a business
    
    
    (40
    )
    
    
    
    
    
    
    Net decrease in notes receivable, officer-stockholder
    
    
    
    
    
    
    20
    
    
    
    13Increase in deferred expense
    
    
    
    
    
    
    (105
    )
    
    
    Proceeds on the sale of equipment
    
    
    19
    
    
    
    
    
    
    
    Purchase of property and equipment
    
    
    (957
    )
    
    
    (421
    )
    
    
    (3,038
    )Acquisition of patents and other intangibles
    
    
    (199
    )
    
    
    (2,771
    )
    
    
    (265
    )Cash paid for reverse merger costs
    
    
    
    
    
    
    
    
    
    
    (503
    )Cash acquired through reverse merger
    
    
    
    
    
    
    
    
    
    
    2,024Increase in cash value of life insurance
    
    
    (9
    )
    
    
    (14
    )
    
    
    (3
    )Net cash used in investing activities
    
    
    (1,186
    )
    
    
    (3,291
    )
    
    
    (1,772
    )Cash Flows from financing activitiesExcess of outstanding checks over bank balance
    
    
    (531
    )
    
    
    294
    
    
    
    237Net borrowings (repayments) on lines-of-credit
    
    
    (2,428
    )
    
    
    2,385
    
    
    
    2,506Principal payments on revenue bonds payable
    
    
    (249
    )
    
    
    (249
    )
    
    
    (249
    )Proceeds from long-term debt
    
    
    823
    
    
    
    919
    
    
    
    1,427Principal payments on long-term debt
    
    
    (1,366
    )
    
    
    (649
    )
    
    
    (1,161
    )Tax benefit associated with the exercise of
non-qualified stock options
    
    
    5
    
    
    
    13
    
    
    
    223Payment on debt incurred for acquisition of trademark
    
    
    (500
    )
    
    
    (471
    )
    
    
    (496
    )Proceeds from the issuance of common stock
    
    
    30
    
    
    
    37
    
    
    
    418Net cash (used in) provided by financing
activities
    
    
    (4,216
    )
    
    
    2,279
    
    
    
    2,905Net (decrease) increase in cash and cash equivalents
    
    
    333
    
    
    
    (76
    )
    
    
    (1,574
    )Cash and cash equivalentsBeginning
    
    
    167
    
    
    
    243
    
    
    
    1,817Ending
    
    $
    500
    
    
    $
    167
    
    
    $
    243Supplemental Disclosures of Cash Flow InformationCash paid for:Interest (Capitalized as a part of property 2008,
None; 2007, None; 2006, $28)
    
    $
    1,145
    
    
    $
    913
    
    
    $
    588Income taxes paid (refunded)
    
    
    299
    
    
    
    (74
    )
    
    
    1,881Supplemental Schedule of Non-cash Investing and Financing
ActivitiesTransfer from deferred expenses to property, plant
and equipment
    
    
    161
    
    
    
    
    
    
    
    Licensed intangible assets financed by settlement
obligations
    
    
    
    
    
    
    3,194
    
    
    
    Transfer from prepaid expenses to patents
    
    
    13
    
    
    
    
    
    
    
    Amount owed on acquisition of a business
    
    
    40
    
    
    
    
    
    
    
    
   F-8




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##### Table of Contents



Synergetics USA Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements
 Note 1. Nature of Business and Significant Accounting Policies
 Nature of business
  Use of estimates in the preparation of financial statements
 Principles of consolidation
 Cash and cash equivalents
 Accounts receivable
 Concentration of credit risk
 Accounting for Taxes Collected from Customers and Remitted to Governmental Authorities
  F-9




---



##### Table of Contents



Inventories
 Property and equipment
 Useful livesBuilding and improvements
    
    
    7-39Machinery and equipment
    
    
    5-7Furniture and fixtures
    
    
    5-7Software
    
    
    3-5
 Goodwill and other intangibles
 Patents
 Accounting for settlement agreement
  F-10




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##### Table of Contents



Impairment of long-lived assets (excluding goodwill and other intangibles)
 Product warranty
 Deferred income taxes
 Accounting for Uncertainties in Income Taxes
  Fair value of financial instruments
 Revenue recognition
  F-11




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##### Table of Contents



Advertising
 Royalties
 Stock compensation
  F-12




---



##### Table of Contents



Earnings per share
 Year Ended2008
    
    
    2007
    
    
    2006Numerator:Net income
    
    $
    2,663
    
    
    $
    845
    
    
    $
    3,081Denominator:Weighted average common shares and
denominator for basic calculation
    
    
    24,321,713
    
    
    
    24,220,507
    
    
    
    20,657,256Stock options and restricted stock
    
    
    153,127
    
    
    
    184,146
    
    
    
    164,138Denominator for diluted calculation
    
    
    24,474,840
    
    
    
    24,404,653
    
    
    
    20,821,394Net income per share  basic
    
    $
    0.11
    
    
    $
    0.03
    
    
    $
    0.15Net income per share  diluted
    
    $
    0.11
    
    
    $
    0.03
    
    
    $
    0.15
 Segment reporting Disclosures about Segments of an Enterprise and Related
Information
 Reclassifications
 Note 2. Mergers and Acquisitions
 Valley Forge Scientific Corporation
   Twelve MonthsEndedJuly 31,2006Net sales
    
    $
    39,118Net income
    
    
    2,941Basic earnings per share
    
    
    0.13Diluted earnings per share
    
    
    0.13
   F-13




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##### Table of Contents



Medimold, Inc.
  Note 3. Distribution Agreements
  Codman and Shurtleff, Inc. (Codman)
 ®
  Note 4. Inventories
  2008
    
    
    2007Raw materials and component parts
    
    $
    5,379
    
    
    $
    6,754Work in progress
    
    
    2,772
    
    
    
    1,948Finished goods
    
    
    6,417
    
    
    
    5,545$
    14,568
    
    
    $
    14,247
  F-14




---



##### Table of Contents



Note 5. Property and Equipment
  2008
    
    
    2007Land
    
    $
    730
    
    
    $
    730Building and improvements
    
    
    5,720
    
    
    
    5,436Machinery and equipment
    
    
    4,959
    
    
    
    4,428Furniture and fixtures
    
    
    680
    
    
    
    610Software
    
    
    332
    
    
    
    115Construction in progress
    
    
    30
    
    
    
    3412,451
    
    
    
    11,353Less accumulated depreciation
    
    
    4,292
    
    
    
    3,322$
    8,159
    
    
    $
    8,031
  Note 6. Other Intangible Assets
  GrossCarrying
    
    
    AccumulatedValue
    
    
    Amortization
    
    
    NetJuly 31, 2008Proprietary know-how
    
    $
    4,057
    
    
    $
    1,017
    
    
    $
    3,040Trademark
    
    
    5,923
    
    
    
    
    
    
    
    5,923Licensing agreements
    
    
    5,834
    
    
    
    851
    
    
    
    4,983Patents
    
    
    1,315
    
    
    
    324
    
    
    
    991$
    17,129
    
    
    $
    2,192
    
    
    $
    14,937
 July 31, 2007Proprietary know-how
    
    $
    4,057
    
    
    $
    740
    
    
    $
    3,317Trademark
    
    
    5,923
    
    
    
    
    
    
    
    5,923Licensing agreements
    
    
    5,834
    
    
    
    292
    
    
    
    5,542Patents
    
    
    1,103
    
    
    
    232
    
    
    
    871$
    16,917
    
    
    $
    1,264
    
    
    $
    15,653
   Note 7. Accrued Expenses
  2008
    
    
    2007Payroll, commissions and employee benefits
    
    $
    890
    
    
    $
    675Royalties
    
    
    316
    
    
    
    204Interest
    
    
    79
    
    
    
    83Warranty
    
    
    15
    
    
    
    15Other
    
    
    1,359
    
    
    
    1,762$
    2,659
    
    
    $
    2,739
  F-15




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##### Table of Contents



Note 8. Pledged Assets, Short and Long-Term Debt
 Revolving Credit Facility:
 Non-U.S. Receivables Revolving Credit Facility
 Equipment Line of Credit:
  2008
    
    
    2007Note payable to bank, due in monthly installments
of $1,139 plus interest at prime rate plus 1.0
percent (an effective rate of 9.25 percent as of
July 31, 2007), remaining balance due September
2007, collateralized by second deed of trust
    
    $
    
    
    
    $
    151Note payable, due in monthly installments of $509
including interest at 4.9 percent, remaining
balance due May 2008, collateralized by a vehicle
    
    
    
    
    
    
    3Note payable to bank, due in monthly principal
installments of $39,642 beginning November 2005
plus interest at a rate of 8.25 percent, remaining
balance due September 30, 2010, collateralized by
substantially all assets of the Company
    
    
    
    
    
    
    555Note payable to bank, due in monthly principal
installments of $19,173 beginning December 2006
plus interest at rate of 8.25 percent, remaining
balance due on November 14, 2010 collateralized by
substantially all assets of the Company
    
    
    
    
    
    
    766Note
payable to bank, due in monthly principal
installments of $41,022 beginning August 2008
plus interest at a rate of 5.0 percent, remaining
balance due July 31, 2011, collateralized by
substantially all assets of the Company
    
    
    1,477
    
    
    
    Note payable to the estate of the late Dr. Leonard
I. Malis, due in quarterly installments of $159,904
which includes interest at an imputed rate of 6.00
percent, remaining balance of $2,238,656 including
the effects of imputing interest, due December
2011, collateralized by the Malis®
trademark
    
    
    2,006
    
    
    
    2,506Settlement obligation to Iridex Corporation, due in
annual installments of $800,000 which includes
interest at an imputed rate of 8.00 percent,
remaining balance of $3,200,000 including the
effects of imputing interest, due April 15, 2012
    
    
    2,649
    
    
    
    3,1946,132
    
    
    
    7,175Less current maturities
    
    
    1,823
    
    
    
    2,161Long-term portion
    
    $
    4,309
    
    
    $
    5,014
  F-16




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##### Table of Contents



Year Ending July 31,:
    
    Amount2009
    
    $
    1,8232010
    
    
    1,6442011
    
    
    1,7262012
    
    
    9392013
    
    
    $
    6,132
 Note 9. Revenue Bonds Payable
     F-17




---



##### Table of Contents



Year Ending July 31,:
    
    Amount2009
    
    $
    2492010
    
    
    2492011
    
    
    2492012
    
    
    2492013
    
    
    249Thereafter
    
    
    2,646$
    3,891
 Note 10. Operating Leases
   Year Ending July 31,:
    
    Amount2009
    
    $
    3462010
    
    
    2512011
    
    
    1722012
    
    
    962013
    
    
    2$
    867
  Note 11. Income Tax Matters
  2008
    
    
    2007Deferred tax assets:Accounts receivable
    
    $
    83
    
    
    $
    84Inventories
    
    
    176
    
    
    
    180Accrued liabilities
    
    
    110
    
    
    
    111Other
    
    
    158
    
    
    
    67Loss on foreign subsidiaries
    
    
    302
    
    
    
    Research and experimentation tax
credit carryforward
    
    
    
    
    
    
    74829
    
    
    
    516Deferred tax liabilities:Property and equipment
    
    
    288
    
    
    
    309Other intangible assets
    
    
    2,237
    
    
    
    2,3102,525
    
    
    
    2,619$
    (1,696
    )
    
    $
    (2,103
    )
  F-18




---



##### Table of Contents



2008
    
    
    2007Current assets
    
    $
    527
    
    
    $
    516Long-term liabilities
    
    
    (2,223
    )
    
    
    (2,619
    )$
    (1,696
    )
    
    $
    (2,103
    )
  2008
    
    
    2007
    
    
    2006Currently payable (Domestic)
    
    $
    1,846
    
    
    $
    (8
    )
    
    $
    1,735DeferredDomestic
    
    
    (302
    )
    
    
    (264
    )
    
    
    (315
    )Foreign
    
    
    (105
    )
    
    
    
    
    
    
    $
    1,439
    
    
    $
    ( 272
    )
    
    $
    1,420
  2008
    
    
    2007
    
    
    2006Computed at the statutory rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State taxes, net of federal tax benefit
    
    
    4.5
    
    
    
    4.0
    
    
    
    4.6Extraterritorial income exclusion
    
    
    
    
    
    
    (9.2
    )
    
    
    (3.0
    )Production deduction for domestic
manufacturers
    
    
    (1.3
    )
    
    
    (3.4
    )
    
    
    (3.5
    )Research and development
    
    
    (3.5
    )
    
    
    (80.5
    )
    
    
    Other
    
    
    1.4
    
    
    
    7.6
    
    
    
    (0.6
    )35.1
    %
    
    
    (47.5
    )%
    
    
    31.5
    %
  Note 12. Employee Benefit Plan
  Note 13. Stock Based Compensation Plans
 Stock Option Plans
   F-19




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##### Table of Contents



WeightedAverage
    
    
    WeightedExercise
    
    
    AverageShares
    
    
    Price
    
    
    Fair ValueOptions outstanding as of July 31, 2005
    
    
    58,500
    
    
    $
    2.33
    
    
    $
    2.97Exercised prior to September 21, 2005
    
    
    (20,500
    )
    
    
    
    
    
    $
    3.92Options outstanding, September 21, 2005
    
    
    38,000
    
    
    $
    4.64
    
    
    $
    2.46Conversion ratio applied at September 21, 2005
    
    
    4.59
    
    
    
    4.59
    
    
    
    Converted options
    
    
    174,420
    
    
    $
    1.01
    
    
    $
    2.46Existing options assumed under the Valley
Forge Stock option plan
    
    
    441,500
    
    
    $
    2.18
    
    
    $
    1.88For the period from September 22, 2005
through July 31, 2006:Granted
    
    
    20,000
    
    
    $
    5.00
    
    
    $
    3.32Forfeited
    
    
    (9,180
    )
    
    $
    1.09
    
    
    $
    0.91Exercised
    
    
    (214,990
    )
    
    $
    1.87
    
    
    $
    1.62Options outstanding, July 31, 2006
    
    
    411,750
    
    
    $
    1.98
    
    
    $
    1.63For the period from August 1, 2006 through
July 31, 2007:Granted
    
    
    55,000
    
    
    $
    3.72
    
    
    $
    2.98Forfeited
    
    
    (4,590
    )
    
    $
    1.09
    
    
    $
    0.91Exercised
    
    
    (33,425
    )
    
    $
    0.96
    
    
    $
    0.82Options outstanding, July 31, 2007
    
    
    428,735
    
    
    $
    2.18
    
    
    $
    1.79For the period from August 1, 2007 through
July 31, 2008:Granted
    
    
    40,000
    
    
    $
    2.95
    
    
    $
    2.45Forfeited
    
    
    (17,000
    )
    
    $
    2.85
    
    
    $
    2.05Exercised
    
    
    (15,000
    )
    
    $
    1.99
    
    
    $
    1.80Options outstanding, July 31, 2008
    
    
    436,735
    
    
    $
    2.23
    
    
    $
    1.84Options exercisable, July 31, 2008
    
    
    375,207
    
    
    $
    2.49
    
    
    $
    2.11
  Weighted Average GrantShares
    
    
    Date ValueUnvested options, beginning of period
    
    
    66,535
    
    
    $
    1.60Granted
    
    
    40,000
    
    
    $
    2.95Forfeited
    
    
    17,000
    
    
    $
    2.85Vested
    
    
    45,007
    
    
    $
    2.95Unvested options, period end
    
    
    61,528
    
    
    $
    1.49
  F-20




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##### Table of Contents



Fiscal Year EndedJuly 31, 2008
    
    
    July 31, 2007
    
    
    July 31, 2006Proceeds of options exercised
    
    $
    30
    
    
    $
    37
    
    
    $
    418Related tax benefit recognized
    
    
    5
    
    
    
    13
    
    
    
    223Intrinsic value of options exercised
    
    
    41
    
    
    
    32
    
    
    
    362
  Options
    
    
    ExercisableOutstanding
    
    
    OptionsNumber
    
    
    436,735
    
    
    
    375,207Weighted average exercise price
    
    $
    2.23
    
    
    $
    2.49Aggregate intrinsic value
    
    $
    846
    
    
    $
    792Weighted average contractual term
    
    5.5 years
    
    
    6.1 years
  Options Outstanding
    
    
    Exercisable OptionsWeighted Average
    
    
    
    
    
    
    Weighted AverageRemaining
    
    
    
    
    
    
    RemainingContractual Life
    
    
    
    
    
    
    Contractual LifeShares
    
    
    (in Years)
    
    
    Shares
    
    
    (in Years)< $1.00
    
    
    23,950
    
    
    2.3 years
    
    
    
    23,950
    
    
    2.8 years$1.00 - $2.00
    
    
    194,785
    
    
    4.3 years
    
    
    
    146,590
    
    
    4.0 years$2.00 - $5.00
    
    
    218,000
    
    
    6.8 years
    
    
    
    204,667
    
    
    7.9 yearsTotal
    
    
    436,735
    
    
    5.5 years
    
    
    
    375,207
    
    
    6.1 years
  Expected average risk-free interest rate
    
    
    3.5
    %Expected average life (in years)
    
    
    5Expected volatility
    
    
    69.2
    %Expected dividend yield
    
    
    0.0
    %
   F-21




---



##### Table of Contents



Restricted Stock Plans
    Number of
    
    
    Weighted Average Grant DateShares
    
    
    Fair ValueRestricted Stock awards at July 31, 2006
    
    
    
    
    
    
    Granted
    
    
    14,601
    
    
    $
    5.48Forfeited
    
    
    1,500
    
    
    $
    5.48Balance as of July 31, 2007
    
    
    13,101
    
    
    $
    5.48Granted
    
    
    40,706
    
    
    $
    3.38Forfeited
    
    
    
    
    
    
    Balance as of July 31, 2008
    
    
    53,807
    
    
    $
    3.89
 Note 14. Stockholders Equity
   Note 15. Research and Development Costs
   F-22




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##### Table of Contents



Note 16. Enterprise Wide Information
  Fiscal Years Ended July 31,2008
    
    
    2007
    
    
    2006Net salesOphthalmic
    
    $
    28,019
    
    
    $
    24,522
    
    
    $
    22,709Neurosurgery
    
    
    12,925
    
    
    
    10,241
    
    
    
    6,745OEM (Codman, Stryker and Iridex)
    
    
    8,347
    
    
    
    10,266
    
    
    
    8,005Other
    
    
    772
    
    
    
    916
    
    
    
    787Total
    
    $
    50,063
    
    
    $
    45,945
    
    
    $
    38,246
 Fiscal Years Ended July 31,2008
    
    
    2007
    
    
    2006Net SalesDomestic
    
    $
    35,838
    
    
    $
    35,214
    
    
    $
    30,090International
    
    
    14,225
    
    
    
    10,731
    
    
    
    8,156Total
    
    $
    50,063
    
    
    $
    45,945
    
    
    $
    38,246
  Note 17. Commitments and Contingencies
      F-23




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##### Table of Contents



Note 18. Quarterly Financial Data (Unaudited)
  Quarters Ended
    
    July 31, 2008
    
    
    April 30, 2008
    
    
    January 31, 2008
    
    
    October 29, 2007Net Sales
    
    $
    14,457
    
    
    $
    13,500
    
    
    $
    11,636
    
    
    $
    10,469Gross Profit
    
    
    8,351
    
    
    
    8,332
    
    
    
    6,754
    
    
    
    6,525Income from Operations
    
    
    2,036
    
    
    
    2,155
    
    
    
    238
    
    
    
    785Net Income
    
    
    1,203
    
    
    
    1,117
    
    
    
    (54
    )
    
    
    397Earnings per ShareBasic
    
    $
    0.05
    (1)
    
    $
    0.05
    (1)
    
    $
    0.00
    (1)
    
    $
    0.02
    (1)Diluted
    
    $
    0.05
    (1)
    
    $
    0.05
    (1)
    
    $
    0.00
    (1)
    
    $
    0.02
    (1)Basic weighted
average common shares
outstanding
    
    
    24,340,902
    
    
    
    24,321,274
    
    
    
    24,312,930
    
    
    
    24,296,309Diluted weighted
average common shares
outstanding
    
    
    24,480,702
    
    
    
    24,396,183
    
    
    
    24,387,064
    
    
    
    24,433,288
 Quarters Ended
    
    July 31, 2007
    
    
    April 30, 2007
    
    
    January 30, 2007
    
    
    October 29, 2006Net Sales
    
    $
    13,203
    
    
    $
    11,482
    
    
    $
    11,353
    
    
    $
    9,906Gross Profit
    
    
    7,633
    
    
    
    6,545
    
    
    
    6,518
    (2)
    
    
    6,306
    (2)Income from Operations
    
    
    665
    
    
    
    (47
    )
    
    
    182
    
    
    
    718Net Income
    
    
    379
    
    
    
    (92
    )
    
    
    182
    
    
    
    377Earnings per ShareBasic
    
    $
    0.02
    (1)
    
    $
    0.00
    (1)
    
    $
    0.01
    (1)
    
    $
    0.02
    (1)Diluted
    
    $
    0.02
    (1)
    
    $
    0.00
    (1)
    
    $
    0.01
    (1)
    
    $
    0.02
    (1)Basic weighted
average common shares
outstanding
    
    
    24,237,350
    
    
    
    24,219,507
    
    
    
    24,214,322
    
    
    
    24,210,680Diluted weighted
average common shares
outstanding
    
    
    24,417,030
    
    
    
    24,423,364
    
    
    
    24,410,302
    
    
    
    24,412,468
 (1)
    
    The accumulation of four quarters in fiscal years 2008 and 2007 for earnings per share does
not equal the related per share amounts for the year ended July 31, 2008 and 2007 due to
rounding differences.(2)
    
    During the second and third quarters of the fiscal year ended July 31, 2007, the Company
reclassified the cost of labor, material, overhead and rework costs of production prior to
final validation of new products from cost of goods sold to research and development costs for
the previous two quarters. Note 19. Recent Accounting Pronouncements
   F-24




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##### Table of Contents



F-25




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##### Table of Contents



Note 20. Valuation Allowances and Qualifying Accounts
 
 Schedule II  Valuation Allowances and Qualifying Accounts
 Balance at
    
    
    Charged to
    
    
    Charged to
    
    
    DeductionsBeginning of
    
    
    Cost and
    
    
    Other
    
    
    From
    
    
    Balance at EndClassifications
    
    Year
    
    
    Expenses
    
    
    Accounts
    
    
    Reserves(2)
    
    
    of YearYear ended July 31, 2006Allowance for
Doubtful Accounts
    
    $
    135
    
    
    $
    146
    
    
    $
    16
    (1)
    
    $
    (118
    )
    
    $
    179Allowance for
Excess and Obsolete
Inventory
    
    $
    
    
    
    $
    75
    
    
    $
    
    
    
    $
    
    
    
    $
    75Year ended July 31, 2007Allowance for
Doubtful
Accounts/Returned
Goods
    
    $
    179
    
    
    $
    88
    
    
    $
    
    
    
    $
    (40
    )
    
    $
    227Allowance for
Excess and Obsolete
Inventory
    
    $
    75
    
    
    $
    (49
    )
    
    $
    
    
    
    $
    
    
    
    $
    26Year ended July 31, 2008Allowance for
Doubtful
Accounts/Returned
Goods
    
    $
    227
    
    
    $
    69
    
    
    $
    
    
    
    $
    (46
    )
    
    $
    250Allowance for
Excess and Obsolete
Inventory
    
    $
    26
    
    
    $
    39
    
    
    $
    
    
    
    $
    
    
    
    $
    65
 
 (1)
    
    Allowance for Doubtful Accounts recorded by Valley Forge Scientific Corp. as of September 22,
2005.(2)
    
    Adjustments represent write-offs of uncollectible accounts receivable.  F-26




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##### Table of Contents



SIGNATURES
  Synergetics USA, Inc.

(registrant)October 14, 2008/s/ Pamela G. Boone

Pamela G. Boone, Executive Vice President,
Chief Financial Officer, Secretary and Treasurer
  October 14, 2008
    
    /s/ Robert DickRobert Dick, Chairman of the Board of Directors(Principal Executive Officer) and DirectorOctober 14, 2008
    
    /s/ Pamela G. BoonePamela G. Boone, Executive Vice President,
Chief Financial Officer, Secretary and Treasurer
(Principal Financial and Accounting Officer)October 14, 2008
    
    /s/ Lawrence C. CardinaleLawrence C. Cardinale, DirectorOctober 14, 2008
    
    /s/ Kurt W. Gampp, Jr.Kurt W. Gampp, Jr., DirectorOctober 14, 2008
    
    /s/ Guy GuarchGuy Guarch, DirectorOctober 14, 2008
    
    /s/ Juanita H. HinshawJuanita H. Hinshaw, DirectorOctober 14, 2008
    
    /s/ Jerry L. MalisJerry L. Malis, Director
  46




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##### Table of Contents



Index to Exhibits
 ExhibitNumber
    
    Description2.1
    
    
    Agreement and Plan of Merger by and among Valley Forge
Scientific Corp. (Valley Forge), Synergetics Acquisition
Corporation and Synergetics, Inc. dated May 2, 2005. (Filed as
Exhibit 2.1 to Valley Forges Current Report on Form 8-K filed
on May 4, 2005 and incorporated herein by reference.)2.2
    
    
    Amendment No. 1 to Agreement and Plan of Merger by and among
Valley Forge, Synergetics Acquisition Corporation and
Synergetics, Inc. dated June 2, 2005. (Filed as Exhibit 2.1 to
Valley Forges Current Report on Form 8-K filed on June 3, 2005
and incorporated herein by reference.)2.3
    
    
    Amendment No. 2 to Agreement and Plan of Merger by and among
Valley Forge, Synergetics Acquisition Corporation and
Synergetics, Inc. dated July 15, 2005. (Filed as Exhibit 2.1 to
Valley Forges Current Report on Form 8-K filed on July 15, 2005
and incorporated herein by reference.)2.4
    
    
    Agreement and Plan of Reincorporation Merger, dated as of
September 22, 2005, between Valley Forge and VFSC Delaware, Inc.
(Filed as Exhibit 2.1 to the Registrants Current Report on Form
8-K filed on September 27, 2005 and incorporated herein by
reference.)3.1
    
    
    Amended and Restated Certificate of Incorporation of the
Registrant. (Filed as Exhibit 3.1 to the Registrants Current
Report on Form 8-K filed on September 27, 2005 and incorporated
herein by reference.)3.2
    
    
    Amended and Restated Bylaws of the Registrant. (Filed as Exhibit
3.2 to the Registrants Current Report on Form 8-K filed on
September 27, 2005 and incorporated herein by reference.)4.1
    
    
    Form of common stock certificate of the Registrant. (Filed as
Exhibit 4.1 to the Registrants Current Report on Form 8-K filed
on September 27, 2005 and incorporated herein by reference.)10.1
    
    
    Amended and Restated Synergetics USA, Inc. 2001 Stock Plan.
(Filed as Exhibit 10.1 to the Registrants Quarterly Report on
Form 10-Q for the quarter ended April 30, 2006 and incorporated
herein by reference.)10.2
    
    
    Valley Forge Scientific Corp. 2000 Non-Employee Directors Stock
Option Plan. (Filed as Exhibit 4.3 to Valley Forges
Registration Statement on Form S-8, Registration No. 333-72134
and incorporated herein by reference.)10.3
    
    
    Valley Forge Scientific Corp. 1988 Non-Qualified Employee Stock
Option Plan, as amended. (Filed as Exhibit 10.1 to Valley
Forges Registration Statement on Form S-8, Registration No.
333-63637 and incorporated herein by reference).10.4
    
    
    Amended and Restated Synergetics USA, Inc. 2005 Non-Employee
Directors Stock Option Plan. (Filed as Exhibit 10.3 to the
Registrants Quarterly Report on Form 10-Q for the quarter ended
April 30, 2006 and incorporated herein by reference.)10.5
    
    
    401(k) and Profit-Sharing Plan. (Filed as Exhibit 10(x) to
Valley Forges Registration Statement on Form S-18, Registration
No. 33-35668-NY and incorporated herein by reference.)10.6
    
    
    Employment Agreement, dated as of September 21, 2005, between
Valley Forge and Gregg D. Scheller. (Filed as Exhibit 10.1 to
the Registrants Current Report on Form 8-K filed on September
27, 2005 and incorporated herein by reference.)10.7
    
    
    Employment Agreement, dated as of September 21, 2005, between
Valley Forge and Jerry L. Malis. (Filed as Exhibit 10.2 to the
Registrants Current Report on Form 8-K filed on September 27,
2005 and incorporated herein by reference.)10.8
    
    
    Employment Agreement, dated as of September 21, 2005, between
Valley Forge and Kurt W. Gampp, Jr. (Filed as Exhibit 10.3 to
the Registrants Current Report on Form 8-K filed on September
27, 2005 and incorporated herein by reference.)
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##### Table of Contents



ExhibitNumber
    
    Description10.9
    
    
    Employment Agreement, dated as of August 1, 2007, between
Synergetics USA, Inc. and Pamela G. Boone. (Filed as Exhibit
10.1 to the Registrants Current Report on Form 8-K filed on
August 6, 2007 and incorporated herein by reference.)10.10
    
    
    Letter Agreement dated December 10, 2007, between Synergetics
USA, Inc. and Dave Dallam. (Filed as Exhibit 10.1 to the
Registrants Current Report on Form 10-Q for the quarter ended
October 29, 2007 and incorporated herein by reference.)10.11
    
    
    Shareholders Agreement, dated as of September 21, 2005, between
Valley Forge and each of Gregg D. Scheller, Donna M. Scheller,
Kurt W. Gampp, Jr., Jerry L. Malis and the Leonard Malis and
Ruth Malis Family Limited Partnership, individually and/or
through revocable trusts or family partnerships. (Filed as
Exhibit 10.4 to the Registrants Current Report on Form 8-K
filed on September 27, 2005 and referenced in the Registrants
Current Report on Form 8-K filed on October 18, 2005 and
incorporated herein by reference.)10.12
    
    
    Assignment of
Know-How Agreement, dated June 30, 1989. (Filed as
Exhibit 10(i) to Valley Forges Registration Statement on Form
S-18, Registration No. 33-35668-NY and incorporated herein by
reference.)10.13
    
    
    Assignment of Patents  Bipolar Electrosurgical Systems, June
30, 1989. (Filed as Exhibit 10(h) to Valley Forges Registration
Statement on Form S-18, Registration No. 33-31008-NY and
incorporated herein by reference.)10.14
    
    
    Assignment of Patents  Binocular Magnification System, June 30,
1989. (Filed as Exhibit 10(i) to Valley Forges Registration
Statement on Form S-18, Registration No. 33-31008-NY and
incorporated herein by reference.)10.15
    
    
    Assignment of Malis® trademark, dated June 30, 1989. (Filed as
Exhibit 10(j) to Valley Forges Registration Statement on Form
S-18, Registration No. 33-31008-NY and incorporated herein by
reference.)10.16
    
    
    Option Agreement for Malis® Trademark with Leonard I. Malis
dated October 22, 2004. (Filed as Exhibit 10.14 to Valley
Forges Annual Report on Form 10-K for the year ended September
30, 2004 and incorporated herein by reference.)10.17
    
    
    Promissory Note from the Company and Synergetics IP, Inc. to the
Estate of Dr. Leonard I. Malis dated October 12, 2005 in the
Principal Amount of $3,997,600. (Filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K filed on October 18,
2005 and incorporated herein by reference.)10.18
    
    
    Agreement with Codman & Shurtleff, Inc. dated October 15, 2004.
(Filed as Exhibit 10.12 to Valley Forges Annual Report on Form
10-K for the year ended September 30, 2004 and incorporated
herein by reference.)10.19
    
    
    Amendment No. 1 to the Agreement dated as of October 1, 2004
between Valley Forge and Codman & Shurtleff, Inc. (Filed as
Exhibit 10(a) to Valley Forges Current Report on Form 8-K filed
on March 16, 2005 and incorporated herein by reference.)
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##### Table of Contents



ExhibitNumber
    
    Description10.20
    
    
    Supply and Distribution Agreement with Stryker Corporation dated
October 25, 2004. (Filed as Exhibit 10.13 to Valley Forges
Annual Report on Form 10-K for the year ended September 30, 2004
and incorporated herein by reference.)10.21
    
    
    Agreement of Lease between Liberty Property Limited Partnership
and Valley Forge. (Filed as Exhibit 10.16 to Valley Forges
Registration Statement on Form S-4, Registration No. 333-125521
and incorporated herein by reference.)10.22
    
    
    Agreement for Sale of Commercial Real Estate between Diversified
Electronics Co., Inc. and Steve Smith, dated April 21, 2005.
(Filed as Exhibit 10.17 to Valley Forges Registration Statement
on Form S-4, Registration No. 333-125521 and incorporated herein
by reference.)10.23
    
    
    Loan Agreement between The Industrial Development Authority of
St. Charles County, Missouri and Synergetics Development
Company, L.L.C. dated as of September 1, 2002. (Filed as
Exhibit 10.25 to the Registrants Annual Report on Form 10-K for
the year ended July 31, 2005 and incorporated herein by
reference.)10.24
    
    
    Promissory Note from Synergetics Development Company, L.L.C. to
The Industrial Development Authority of St. Charles County,
Missouri dated September 1, 2002 in the Principal Amount of
$2,645,000 (Filed as Exhibit 10.26 to the Registrants Annual
Report on Form 10-K for the year ended July 31, 2005 and
incorporated herein by reference.)10.25
    
    
    Security Agreement (Equipment) dated as of September 1, 2002
from Synergetics, Inc. for the benefit of The Industrial
Development Authority of St. Charles County, Missouri. (Filed
as Exhibit 10.27 to the Registrants Annual Report on Form 10-K
for the year ended July 31, 2005 and incorporated herein by
reference.)10.26
    
    
    Future Advance Deed of Trust and Security Agreement dated as of
September 1, 2002 between Synergetics Development Company,
L.L.C. and Victor Zarrilli, as trustee, and The Industrial
Development Authority of St. Charles County, Missouri. (Filed
as Exhibit 10.28 to the Registrants Annual Report on Form 10-K
for the year ended July 31, 2005 and incorporated herein by
reference.)10.27
    
    
    Guaranty Agreement dated as of September 1, 2002 by and among
William L. Bates, Gregg D. Scheller and Kurt W. Gampp, Jr. and
Synergetics, Inc. and The Industrial Development Authority of
St. Charles County, Missouri. (Filed as Exhibit 10.29 to the
Registrants Annual Report on Form 10-K for the year ended July
31, 2005 and incorporated herein by reference.)10.28
    
    
    Guaranty of Unassigned Issuers Rights dated as of September 1,
2002 by and among William L. Bates, Gregg D. Scheller and Kurt
W. Gampp, Jr. and Synergetics, Inc. and The Industrial
Development Authority of St. Charles County, Missouri. (Filed
as Exhibit 10.30 to the Registrants Annual Report on Form 10-K
for the year ended July 31, 2005 and incorporated herein by
reference.)10.29
    
    
    Bond Purchase Agreement dated as of September 1, 2002 by and
among The Industrial Development Authority of St. Charles
County, Missouri, Union Planters Bank, N.A. and Synergetics
Development Company, L.L.C. (Filed as Exhibit 10.31 to the
Registrants Annual Report on Form 10-K for the year ended July
31, 2005 and incorporated herein by reference.)10.30
    
    
    First Supplemental Loan Agreement between The Industrial
Development Authority of St. Charles County, Missouri and
Synergetics Development Company, L.L.C. dated as of December 1,
2004. (Filed as Exhibit 10.32 to the Registrants Annual Report
on Form 10-K for the year ended July 31, 2005 and incorporated
herein by reference.)10.31
    
    
    Promissory Note from Synergetics Development Company, L.L.C. to
The Industrial Development Authority of St. Charles County,
Missouri dated December 1, 2004 in the Principal Amount of
$2,330,000. (Filed as Exhibit 10.33 to the Registrants Annual
Report on Form 10-K for the year ended July 31, 2005 and
incorporated herein by reference.)10.32
    
    
    First Supplemental Future Advance Deed of Trust and Security
Agreement dated as of December 1, 2004 between Synergetics
Development Company, L.L.C. and Victor Zarrilli, as trustee, and
The Industrial Development Authority of St. Charles County,
Missouri. (Filed as Exhibit 10.34 to the Registrants Annual
Report on Form 10-K for the year ended July 31, 2005 and
incorporated herein by reference.)
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ExhibitNumber
    
    Description10.33
    
    
    First Supplemental Guaranty of Unassigned Issuers Rights dated
as of December 1, 2004 by and between Synergetics, Inc. and the
Industrial Development Authority of St. Charles County,
Missouri. (Filed as Exhibit 10.35 to the Registrants Annual
Report on Form 10-K for the year ended July 31, 2005 and
incorporated herein by reference.)10.34
    
    
    Bond Purchase Agreement dated as of December 1, 2004 by and
among The Industrial Development Authority of St. Charles
County, Missouri, Union Planters Bank, N.A. and Synergetics
Development Company, L.L.C. (Filed as Exhibit 10.36 to the
Registrants Annual Report on Form 10-K for the year ended July
31, 2005 and incorporated herein by reference.)10.35
    
    
    Form of Employee Restricted Stock Agreement for the Amended and
Restated Synergetics USA, Inc. 2001 Stock Plan (Filed as Exhibit
10.2 to the Registrants Quarterly Report on Form 10-Q for the
quarter ended April 30, 2006 and incorporated herein by
reference).10.36
    
    
    Letter Agreement between Synergetics, Inc. and Regions Bank,
dated February 22, 2006 (Filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K filed on March 2, 2006
and incorporated herein by reference.)10.37
    
    
    Credit and Security Agreement among Synergetics USA, Inc.,
Synergetics, Inc. and Regions Bank, dated March 13, 2006.
(Filed as Exhibit 10.1 to the Registrants Current Report on
Form 8-K filed on March 15, 2006 and incorporated herein by
reference.)10.38
    
    
    First Amendment to Credit and Security Agreement by and among
Synergetics, Inc., Synergetics USA, Inc., Regions Bank, as Agent
and Lender, and Wachovia Bank, National Association, as Lender,
dated September 26, 2006. (Filed as Exhibit 10.52 to the
Registrants Annual Report on Form 10-K for the fiscal year
ended July 31, 2006 and incorporated herein by reference.)10.39
    
    
    Second Amendment to Credit and Security Agreement by and among
Synergetics, Inc., Synergetics USA, Inc., Regions Bank, as Agent
and Lender, and Wachovia Bank, National Association, as Lender,
dated December 8, 2006 (Filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K filed on December 8,
2006 and incorporated herein by reference.)10.40
    
    
    Third Amendment to Credit and Security Agreement by and among
Synergetics, Inc., Synergetics USA, Inc. and Regions Bank, as
Lender, dated June 7, 2007. (Filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K filed on June 8, 2007
and incorporated herein by reference.)10.41
    
    
    Revolving Note from Synergetics USA, Inc. and Synergetics, Inc.
in favor of Regions Bank, dated March 13, 2006 (Filed as Exhibit
10.2 to the Registrants Current Report on Form 8-K filed on
March 15, 2006 and incorporated herein by reference.)10.42
    
    
    Revolving Note from Synergetics USA, Inc. and Synergetics, Inc.
in favor of Regions Bank, dated September 26, 2006. (Filed as
Exhibit 10.53 to the Registrants Annual Report on Form 10-K for
the fiscal year ended July 31, 2006 and incorporated herein by
reference.)10.43
    
    
    Amended and Restated Revolving Note from Synergetics USA, Inc.
and Synergetics, Inc. in favor of Regions Bank, dated December
8, 2006. (Filed as Exhibit 10.2 to the Registrants Current
Report on Form 8-K filed on December 8, 2006 and incorporated
herein by reference.)10.44
    
    
    Amended and Restated Revolving Note from Synergetics USA, Inc.
and Synergetics, Inc. in favor of Regions Bank, dated June 7,
2007. (Filed as Exhibit 10.3 to the Registrants Current Report
on Form 8-K filed on June 8, 2007 and incorporated herein by
reference.)10.45
    
    
    Letter Agreement between Synergetics, Inc. and Regions Bank,
dated September 28, 2006. (Filed as Exhibit 10.55 to the
Registrants Annual Report on Form 10-K for the fiscal year
ended July 31, 2006 and incorporated herein by reference.)
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##### Table of Contents



ExhibitNumber
    
    Description10.46
    
    
    Foreign Accounts Credit and Security Agreement dated June 20,
2007 by and among Synergetics, Inc., Synergetics USA, Inc.,
Synergetics Germany, GmbH, and Synergetics Italia, Srl as
Borrowers and Regions Bank as Lender. (Filed as Exhibit 10.1 to
the Registrants Current Report on Form 8-K filed on June 26,
2007 and incorporated herein by reference.)10.47
    
    
    Foreign Accounts Revolving Note from Synergetics, Inc.,
Synergetics USA, Inc., Synergetics Germany, GmbH, and
Synergetics Italia, Srl in favor of Regions Bank, dated June 20,
2007. (Filed as Exhibit 10.2 to the Registrants Current Report
on Form 8-K filed on June 26, 2007 and incorporated herein by
reference.)10.48
    
    
    Fourth Amendment to Credit and Security Agreement by and among
Synergetics, Inc. and Synergetics USA, Inc. as Borrowers and
Regions Bank as Lender, dated as of January 31, 2008. (Filed as
Exhibit 10.1 to the Registrants Current Report on Form 8-K
filed on March 11, 2008 and incorporated herein by reference.)10.49
    
    
    Amended and Restated Revolving Note from Synergetics USA, Inc.
and Synergetics, Inc. in favor of Regions Bank, dated as of
January 31, 2008. (Filed as Exhibit 10.2 to the Registrants
Current Report on Form 8-K filed on March 11, 2008 and
incorporated herein by reference.)10.50
    
    
    First Amendment to Foreign Accounts Credit Agreement by and
among Synergetics, Inc., Synergetics USA, Inc., Synergetics
Germany, GmbH and Synergetics Italia, Srl as Borrowers and
Regions Bank as Lender, dated as of January 31, 2008. (Filed as
Exhibit 10.3 to the Registrants Current Report on Form 8-K
filed on March 11, 2008 and incorporated herein by reference.)10.51
    
    
    Amended and Restated Foreign Accounts Revolving Note from
Synergetics, Inc., Synergetics USA, Inc., Synergetics Germany,
GmbH and Synergetics Italia, Srl in favor of Regions Bank, dated
as of January 31, 2008. (Filed as Exhibit 10.4 to the
Registrants Current Report on Form 8-K filed on March 11, 2008
and incorporated herein by reference.)10.52
    
    
    Second Amendment to Foreign Accounts Credit Agreement by and
among Synergetics, Inc., Synergetics USA, Inc., Synergetics
Germany, GmbH, Synergetics Italia, Srl and Synergetics France,
SARL as Borrowers and Regions Bank as lender dated as of June 5,
2008. (Filed as Exhibit 10.1 to the Registrants Current Report
on Form 8-K filed on June 10, 2008 and incorporated herein by
reference.)10.53
    
    
    Second Amended and Restated Foreign Accounts Revolving Note from
Synergetics, Inc., Synergetics USA, Inc., Synergetics Germany,
GmbH, Synergetics Italia, Srl and Synergetics France, SARL, in
favor of Regions Bank, dated as of June 5, 2008. (Filed as
Exhibit 10.2 to the Registrants Current Report on Form 8-K
filed on June 10, 2008 and incorporated herein by reference.)21
    *
    
    Subsidiaries of Registrant.23.1
    *
    
    Consent of UHY, LLP.23.1
    *
    
    Consent of McGladrey and Pullen, LLP.31.1
    *
    
    Certification of the Registrants Principal Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    *
    
    Certification of the Registrants Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    *
    
    Certification of the Registrants Principal Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    *
    
    Certification of the Registrants Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith  51