##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal
    year ended July 31, 2009oro

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.
 (Exact name of registrant as
    specified in its charter)
  Delaware

20-5715943(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer Identification
    No.)3845 Corporate Centre Drive
    OFallon, Missouri(Address of principal
    executive offices)

63368(Zip Code)   Registrants telephone number, including area code
 (636)
    939-5100
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon stock

The Nasdaq Capital Market   Securities registered pursuant to Section 12(g) of the
    Act:
 None
 (Title of class)
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large Accelerated
    Filer o

Accelerated
    Filer o

Non-Accelerated
    Filer o

Smaller Reporting
    Company þ(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K




---



##### 





SYNERGETICS
    USA, INC.FORM 10-K
    FOR THE FISCAL YEAR ENDED JULY 31, 2009
  TABLE OF
    CONTENTS
   
 PagePARTIItem 1.


Business


4Item 1A.


Risk Factors


16Item 1B.


Unresolved Staff Comments


25Item 2.


Properties


25Item 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


28Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


39Item 8.


Financial Statements and Supplementary
    Data


40Item 9.


Changes in and Disagreements With Accountants
    on Accounting and Financial Disclosure


40Item 9A.


Controls and Procedures


40Item 9B.


Other Information


40PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


41Item 11.


Executive Compensation


41Item 12.


Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters


41Item 13.


Certain Relationships and Related
    Transactions, and Director Independence


42Item 14.


Principal Accountant Fees and Services


42PART IVItem 15.


Exhibits and Financial Statement
    Schedules


42Signatures


43Index to Exhibits


45Exhibit 21Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2EX-10.23EX-21EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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##### Table of Contents



SYNERGETICS
    USA, INC.
  STATEMENT
    REGARDING FORWARD-LOOKING INFORMATION
  The Private Securities Litigation Reform Act of 1995 and
    Section 27A of the Securities Act of 1933, as amended, and
    Section 21E of the Securities and Exchange Act of 1934, as
    amended, 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.
 3




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##### Table of Contents



PART I  Item 1.
    Business  Mission
  mission
  Overview
      Summary
    of Financial Information
    NET SALES
    BY CATEGORY
  Year Ended July 31,2009


Mix


2008


MixOphthalmic

$
29,981



56.6
%

$
28,019



56.0
%Neurosurgery


13,968



26.4
%


12,925



25.8
%OEM Marketing Partners(1)


8,538



16.1
%


8,347



16.7
%Other


478



0.9
%


772



1.5
%Total

$
52,965






$
50,063  4




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##### Table of Contents



RESULTS
    OF OPERATIONS
  Year Ended July 31,


Increase2009


2008


(Decrease)Net Sales

$
52,965


$
50,063



5.8
%Gross Profit(2)


29,415



29,962



(1.8
)%Gross Profit Margin%


55.5
%


59.8
%


(7.2
)%Commercial ExpensesSelling


14,262



12,601



13.2
%G&A


9,030



9,499



(4.9
)%R&D


2,998



2,654



13.0
%Operating Income


3,125



5,208



(40.0
)%Operating Margin


5.9
%


10.4
%


(43.3
)%EBITDA(3)


5,093



7,221



(29.5
)%Net Income

$
1,595


$
2,663



(40.1
)%Earnings per share


0.07



0.11



(36.4
)%Return on equity(4)


4.3
%


7.6
%


(43.4
)%Return on assets(5)


4.0
%


6.5
%


(35.5
%)     (1)
    
    Sales from our marketing partners are primarily neurosurgery and
    pain control revenues.(2)
    
    In the fourth quarter of fiscal 2009, the Company recorded an
    adjustment of approximately $975,000 (or approximately $.03
    earnings per share, net of tax) primarily due to excess and
    discontinued inventory which was either contributed to a
    charitable organization or was discarded.(3)
    
    EBITDA, return on equity and return on assets are not financial
    measures recognized by U.S. generally accepted accounting
    principles (GAAP). EBITDA is defined as net income
    before interest expense, income taxes, depreciation and
    amortization. Return on equity is defined as net income divided
    by average equity. Return on assets is defined as net income
    plus interest expense divided by average assets. See disclosure
    following regarding the use of non-GAAP financial measures.  July 31,


July 31,2009


2008Net income

$
1,595


$
2,663Interest


763



1,129Income taxes


775



1,439Depreciation


1,052



1,013Amortization


908



977EBITDA

$
5,093


$
7,221Net income

$
1,595


$
2,663Average Equity:July 31, 2009

$
38,130July 31, 2008


36,357


$
36,357July 31, 2007






33,435Average Equity

$
37,243


$
34,896Return on Equity


4.3
%


7.6
%Net income

$
1,595


$
2,663Interest


763



1,129Net income + interest expense


2,358



3,792 5




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##### Table of Contents



July 31,


July 31,2009


2008Average Assets:July 31, 2009

$
58,080July 31, 2008


58,396


$
58,396July 31, 2007






58,616Average Assets

$
58,238


$
58,506Return on Assets


4.0
%


6.5
%   Non-GAAP Financial
    Measures
          Other
    Recent Events
  No. 4-08CV-609-Y ® ® ®
   6




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##### Table of Contents



Strategy
          Lean Manufacturing 
  Plastic Molding 
  Supply Chain Management 
  Human Resource Rationalization 
  Cash Management 
    Research & Development
    (R&D) 
 7




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##### Table of Contents



New Business Development 
          Marketing
  Ophthalmic
    and Vitreoretinal
  Markets
        tm
 8




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##### Table of Contents



tm tm tm
  tm tm tm tm
  tm
  tm tm tm tm tm tm
    Marketing
    and Sales Force
  tm tm tm tm
  non-U.S. distributors non-U.S. distributors non-U.S. end-user
 9




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##### Table of Contents



Competition
  tm tm
  Neurosurgery
  Markets
      ® ®
  ® ® ® ®
    tm
   10




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##### Table of Contents



Marketing
    and Sales Force
    Competition
  ® tm tm
  OEM
    Markets
    ®
     11




---



##### Table of Contents



Operations
  Manufacturing
    and Supplies
  ® tm tm tm ® tm
       12




---



##### Table of Contents



Government
    Regulations
  non-U.S. governmental
          Form 10-K.
   13




---



##### Table of Contents



Safety
    Approvals
  and/or
  Research
    and Development
  ® TM ® TM ®
  ® TM
      24-month
  Intellectual
    Property
   14




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##### Table of Contents



® tm tm ®
    non-U.S. countries.
    Form 10-K
  Employees
    Executive
    Officers of the Registrant
  Form 10-K,
  Name

Age

Position(s) with the CompanyDavid M. Hable


54


President, Chief Executive Officer & DirectorKurt W. Gampp, Jr.


49


Executive Vice President, Chief Operating Officer & DirectorJerry L. Malis


77


Executive Vice President, Chief Scientific Officer &
    DirectorPamela G. Boone


46


Executive Vice President, Chief Financial Officer, Treasurer
    & Secretary  15




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##### Table of Contents



Available
    Information
  Form 10-K, Form 10-Q, Form 8-K www.synergeticsusa.com
  Item 1A.
    Risk
    Factors  Form 10-K,
  We are
    exposed to risks associated with world-wide economic slowdowns
    and related political uncertainties.
     16




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##### Table of Contents



If any
    of our single source suppliers were to cease providing
    components, we may not be able to produce our
    products.
  tm
  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
    transition of our neurosurgical products to our marketing
    partners.
    
    their acceptance by our marketing partners;
    their acceptance by the surgeon;
    our ability to respond to our marketing partners needs; and
    the reaction of our marketing partners competitors in this
    market. 17




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##### Table of Contents



Our
    industry is experiencing greater scrutiny and regulation by
    governmental authorities, which may lead to greater governmental
    regulation in the future.
    A
    significant part of our neurosurgical products sales comes from
    a single customer, which makes us vulnerable to the loss of that
    customer.
  tm tm
  Our
    products may not be accepted in the market.
      
    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; 18




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##### Table of Contents




    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.    Quality
    problems with our processes, goods and services could harm our
    reputation for producing high quality products and erode our
    competitive advantage.
    Our
    operating results may fluctuate.
    
    the introduction of new product lines;
    product modifications;
    the level of market acceptance of new products;
    the timing of R&D and other expenditures;
    timing of the receipt of orders from, and product shipments to,
    distributors and customers;
    timing of customer capital availability 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;
    costs associated with defending our intellectual property;
    product returns; and
    receipt of necessary regulatory approvals. 19




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##### Table of Contents



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;
    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.
       20




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##### Table of Contents



We may
    be subject to penalties and may be precluded from marketing our
    products if we fail to comply with extensive governmental
    regulations.
  non-U.S. regulatory Form 10-K
  
    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.  non-U.S. regulations,
  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.
  non-U.S. countries.
 21




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##### Table of Contents



We may
    have product liability claims, and our insurance may not cover
    all claims.
    The
    loss of key personnel could harm our business.
  employees-at-will,
 22




---



##### Table of Contents



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.
  non-U.S. affiliates.
  
    difficulties and costs of staffing and managing international
    operations;
    fluctuations in currency exchange rates;
    unexpected changes in international or local market 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;
    potentially reduced protection for intellectual property
    rights; and
    subjectivity of
    non-U.S. laws.  We
    have international suppliers of various products.
  non-U.S. suppliers, non-U.S. economic non-U.S. laws ®
  Our
    cash is maintained with a regional bank which given the current
    financial crisis may not be fully insured.
   23




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##### Table of Contents



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 R&D and
    reaction to acquisitions;
    sales of common stock by existing shareholders;
    changes in key personnel;
    economic and political condition, including worldwide
    geopolitical events; and
    fluctuations in the United States financial markets.  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.
  non-U.S. distributorships
  Because
    we do not require training for users of our products, 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




---



##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties          Item 3.
    Legal
    Proceedings  No. 08-CIV-003669.
    No. 4-08CV-609-Y, ® ® ®
 25




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##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  mark-ups,
  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


$
1.97Year ended July 31, 2009Quarter ended October 29, 2008

$
3.22


$
1.14Quarter ended February 3, 2009

$
1.50


$
0.80Quarter ended May 4, 2009

$
1.09


$
0.79Quarter ended July 31, 2009

$
1.69


$
0.99      26




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##### Table of Contents



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.
    Stock
    Performance Graph
  
  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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##### Table of Contents



Item 6.
    Selected
    Consolidated Financial Data  Form 10-K.
  For the Fiscal Years Ended July 31,2009*

2008

2007

2006

2005**(In thousands, except per share data)Statements of Income Data:Sales

$
52,965


$
50,063


$
45,945


$
38,246


$
21,792Cost of Sales


23,550



20,101



18,943



14,238



8,289Gross profit


29,415



29,962



27,002



24,008



13,503Operating Income


3,125



5,208



1,518



5,004



2,383Net income


1,595



2,663



845



3,081



1,458Earnings per common share  Basic

$
0.07


$
0.11


$
0.03


$
0.15
***

$
0.43
***Earnings per common share  Diluted

$
0.07


$
0.11


$
0.03


$
0.15
***

$
0.42
***     *
    
    In the fourth quarter of fiscal 2009, the Company recorded an
    adjustment of approximately $975,000 or approximately $0.03
    earnings per share, net of tax, primarily due to excess and
    discontinued inventory which was either contributed to a
    charitable organization or was discarded.**
    
    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 and 2005 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 31,2009

2008

2007

2006

2005*(In thousands)Balance Sheets Data:Cash and cash equivalents

$
160


$
500


$
167


$
243


$
1,817Current assets


25,358



24,549



24,010



21,594



12,757Total assets


58,080



58,396



58,616



51,329



20,116Current liabilities


11,948



11,865



13,657



8,996



3,969Long-term liabilities


8,002



10,174



11,524



10,028



6,008Retained earnings


13,586



11,991



9,328



8,483



5,402Stockholders equity


38,130



36,357



33,435



32,305



10,139     *
    
    This tabular information reflects Synergetics results only
    and does not reflect the effect of the combination of
    Synergetics and Valley Forge.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview
   28




---



##### Table of Contents




    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
  mission
  New
    Product Sales
  24-month
  Growth
    in Minimally Invasive Surgery Procedures
  tm tm
 29




---



##### Table of Contents



® ®
  Demand
    Trends
    Pricing
    Trends
    Economic
    Trends
    Our
    Business Strategy
   30




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##### Table of Contents



Results
    of Operations
  Year
    Ended July 31, 2009 Compared to Year Ended July 31,
    2008
  Net
    Sales
    Year Ended July 31,


% Increase2009


2008


(Decrease)Ophthalmic

$
29,981


$
28,019



7.0
%Neurosurgery


13,968



12,925



8.1
%Marketing partners (Codman, Stryker and Iridex)


8,538



8,347



2.3
%Other


478



772



(38.1
)%Total

$
52,965


$
50,063



5.8
%   tm ®
    Year Ended July 31,2009


2008


% IncreaseUnited States (including sales to marketing partners)

$
36,047


$
35,838



0.6
%International (including Canada)


16,918



14,225



18.9
%Total

$
52,965


$
50,063



5.8
%   non-U.S. distributors
  Gross
    Profit
    Operating
    Expenses
   31




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##### Table of Contents



Other
    Expense
    Operating
    Income, Income Taxes and Net Income
   32




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##### Table of Contents



Year
    Ended July 31, 2008 Compared to Year Ended July 31,
    2007
  Net
    Sales
    Year Ended July 31,


% Increase2008


2007


(Decrease)Ophthalmic

$
28,019


$
24,522



14.3
%Neurosurgery


12,925



10,241



26.2
%Marketing partners (Codman, Stryker and Iridex)


8,347



10,266



(18.7
)%Other


772



916



(15.7
)%Total

$
50,063


$
45,945



9.0
%       Year Ended July 31,2008


2007


% IncreaseUnited States (including sales to marketing partners)

$
35,838


$
35,214



0.2
%International (including Canada)


14,225



10,731



32.5
%Total

$
50,063


$
45,945



9.0
%   ® tm ® ® tm
 33




---



##### Table of Contents



Gross
    Profit
    Operating
    Expenses
        Other
    Expense
    Operating
    Income, Income Taxes and Net Income
   34




---



##### Table of Contents



Liquidity
    and Capital Resources
             35




---



##### Table of Contents



Revolving Credit Facility:
  The facility has two financial covenants:
  Non-U.S. Receivables
    Revolving Credit Facility: non-U.S. receivables.
  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)

$
4,829,000


$
4,829,000


$



$



$
Equipment Line of Credit(2)


266,000



266,000Non-U.S.
    Receivables Line(3)


















2008 Equipment Line(4)


1,032,000



522,000



510,000







Revenue Bonds Payable(5)


3,806,000



354,000



784,000



498,000



2,170,000Malis®

    Tradename Note Payable(6)


1,599,000



640,000



959,000







Settlement Obligation(7)


2,400,000



800,000



1,600,000







Operating Leases(8)


888,000



311,000



575,000



2,000



Total Contractual Obligations

$
14,820,000


$
7,722,000


$
4,428,000


$
500,000


$
2,170,000     (1)
    
    Amount represents the expected cash payment of the outstanding
    borrowings of $4.8 million on our $9.5 million
    revolving credit facility, including interest at one-month LIBOR
    plus 3.0 percent through the expiration of the revolving
    credit facility on November 30, 2009. 36




---



##### Table of Contents



(2)
    
    Amount represents the expected cash payment of the outstanding
    borrowings of $263,000 on our $1.0 million equipment line
    through the expiration of the revolving credit facility on
    November 30, 2009.(3)
    
    Amount represents the expected cash payment of the outstanding
    borrowings of $0.00 on our $1.75 million
    non-U.S.
    receivables line through the expiration of the revolving credit
    facility on June 4, 2009.(4)
    
    Amount represents the cash payment for our equipment term loan
    entered into in July 2008, including interest at prime lending
    rate.(5)
    
    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.(6)
    
    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.(7)
    
    Amount represents the expected cash payment on the settlement
    obligation to the Iridex. The note includes interest at an
    imputed rate of 8.0 percent.(8)
    
    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
        Inventories
  first-in,
 37




---



##### Table of Contents



Amortization
    Periods
  Impairment of Long-Lived
    Assets
  Allowance
    for Doubtful Accounts
    Patents
    and Research and Development
    Goodwill
    and Other Intangibles
      Impairment
    of Long-Lived Assets
   38




---



##### Table of Contents



Deferred
    Tax Assets and Liabilities
    Stock-Based
    Compensation
    Recent
    Accounting Pronouncements
    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk    non-U.S. receivables
  non-U.S. currency non-U.S. currencies, non-U.S. currencies non-U.S. currency.
 39




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Form 10-K.
    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation of Disclosure Controls and
    Procedures
  Managements Annual Report on Internal Control over
    Financial Reporting
    Changes in Internal Control Over Financial
    Reporting  Rule 13a-15 15d-15
  Attestation Report of Registered Public Accounting
    Firm
  Item 9B.
    Other
    Information   40




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K
    www.synergeticsusa.com Form 8-K Regulation S-K
    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    EXISTING
    EQUITY COMPENSATION PLAN INFORMATION
    Number of SecuritiesAvailable for FutureIssuanceUnder EquityNumber of Securities

Weighted Average

Compensation Plansto be Issued 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


527,735


$
2.10



1,078,019Equity Compensation Plans Not Approved By Security
    Holders










Total


527,735


$
2.10



1,078,019  41




---



##### Table of Contents



Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules      Form 10-K. page F-1,
    Form 10-K. page F-1
    Form 10-K
  Form 10-K
   42




---



##### 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 the
    fiscal years ended July 31, 2009, 2008 and 2007

F-2Consolidated Balance Sheets as of July 31,
    2009 and 2008

F-3Consolidated Statements of Income for the years
    ended July 31, 2009, 2008 and 2007

F-4Consolidated Statements of Stockholders
    Equity for the years ended July 31, 2009, 2008 and 2007

F-5Consolidated Statements of Cash Flows for the
    years ended July 31, 2009, 2008 and 2007

F-6Notes to Consolidated Financial Statements

F-7Financial Statement SchedulesSchedule II  Valuation and
    Qualifying Accounts

F-24  F-1




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm            UHY
    LLP
    F-2




---



##### Table of Contents



Synergetics
    USA, Inc. and Subsidiaries
    Consolidated Balance Sheets
    July 31, 2009 and 2008  2009


2008(Dollars in thousands, except share and per share data)AssetsCurrent AssetsCash and cash equivalents

$
160


$
500Accounts receivable, net of allowance for doubtful accounts of
    $316 and $250, respectively


9,105



8,593Inventories


15,025



14,568Prepaid expenses


414



361Deferred income taxes


654



527Total current assets


25,358



24,549Property and equipment, net


7,914



8,159Intangible and other assetsGoodwill


10,690



10,690Other intangible assets, net


13,135



13,946Deferred expenses


2



6Patents, net


918



991Cash value of life insurance


63



55Total assets

$
58,080


$
58,396Liabilities and stockholders equityCurrent LiabilitiesExcess of outstanding checks over bank balance

$
75


$
Lines-of-credit


5,035



3,287Current maturities of long-term debt


1,856



1,823Current maturities of revenue bonds payable


249



249Accounts payable


1,822



2,776Accrued expenses


2,874



2,659Income taxes payable


37



1,071Total current liabilities


11,948



11,865Long-Term LiabilitiesLong-term debt, less current maturities


2,665



4,309Revenue bonds payable, less current maturities


3,414



3,642Deferred income taxes


1,923



2,223Total long-term liabilities


8,002



10,174Total liabilities


19,950



22,039Commitments and contingencies (Notes 10 and 17)Stockholders EquityCommon stock at July 31, 2009 and July 31, 2008,
    $0.001 par value, 50,000,000 shares authorized;
    24,454,256 and 24,354,295 shares issued and outstanding,
    respectively


24



24Additional paid-in capital


24,520



24,342Retained earnings


13,586



11,991Total Stockholders Equity


38,130



36,357Total liabilities and stockholders equity

$
58,080


$
58,396    F-3




---



##### Table of Contents



Synergetics
    USA, Inc. and SubsidiariesConsolidated Statements of Income
    Years Ended July 31, 2009, 2008 and 2007  2009


2008


2007(Dollars in thousands, except share and per share data)Net sales

$
52,965


$
50,063


$
45,945Cost of sales


23,550



20,101



18,943Gross profit


29,415



29,962



27,002Operating expensesResearch and development


2,998



2,654



2,584Selling


14,262



12,601



11,124General and administrative


9,030



9,499



11,77626,290



24,754



25,484Operating income


3,125



5,208



1,518Other income (expense)Investment income


5



6



1Interest expense


(763
)


(1,129
)


(974
)Miscellaneous


3



17



28(755
)


(1,106
)


(945
)Income before provision for income taxes


2,370



4,102



573Provision for income taxes


775



1,439



189Provision for re-enactment of the research and experimentation
    credit










(461
)775



1,439



(272
)Net income

$
1,595


$
2,663


$
845Earnings per share:Basic

$
0.07


$
0.11


$
0.03Diluted

$
0.07


$
0.11


$
0.03Basic weighted average common shares outstanding


24,459,749



24,321,713



24,220,507Diluted weighted average common shares outstanding


24,493,263



24,474,840



24,404,653    F-4




---



##### Table of Contents



Synergetics
    USA, Inc. and SubsidiariesConsolidated Statements of Stockholders
    Equity
    Years Ended July 31, 2009, 2008 and 2007  AdditionalCommon


Paid-in


RetainedStock


Capital


Earnings


Total(Dollars in thousands, except share data)Balance, August 1, 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







125Stock-based compensation






99







99Proceeds 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



36,357Restricted stock grants






40







40Stock-based compensation






138







138Net income










1,595



1,595Balance, July 31, 2009

$
24


$
24,520


$
13,586


$
38,130    F-5




---



##### Table of Contents



Synergetics
    USA Inc. and SubsidiariesConsolidated Statements of Cash Flows
    Years Ended July 31, 2009, 2008 and 2007  2009


2008


2007(Dollars in thousands, except share data)Cash Flows from Operating ActivitiesNet income

$
1,595


$
2,663


$
845Adjustments to reconcile net income to net cash provided by
    operating activitiesDepreciation


1,052



1,013



887Amortization


908



977



747Provision for doubtful accounts receivable


88



23



49Stock-based compensation


178



224



235Deferred income taxes


(427
)


(407
)


(264
)Loss on sale of equipment


2



5



Change in assets and liabilities:(Increase) decrease in:Sales of trading securities










50Accounts receivables


(600
)


(352
)


(1,506
)Income taxes receivable






473



(213
)Inventories


(457
)


(318
)


(1,004
)Prepaid expenses


(53
)


(31
)


79(Decrease) increase in:Accounts payable


(1,015
)


474



849Accrued expenses


255



(80
)


(55
)Deferred expenses










(16
)Income taxes payable


(1,034
)


1,071



253Net cash provided by operating activities


492



5,735



936Cash Flows from Investing ActivitiesAcquisition of a business


(40
)


(40
)


Net decrease in notes receivable, officer-stockholder










20Increase (decrease) in deferred expense










(105
)Proceeds on the sale of equipment


1



19



Purchase of property and equipment


(749
)


(957
)


(421
)Acquisition of patents and other intangibles


(20
)


(199
)


(2,771
)Increase in cash value of life insurance


(8
)


(9
)


(14
)Net cash used in investing activities


(816
)


(1,186
)


(3,291
)Cash Flows from Financing ActivitiesExcess of outstanding checks over bank balance


75



(531
)


294Net borrowings (repayments) on
    lines-of-credit


1,748



(2,428
)


2,385Principal payments on revenue bonds payable


(228
)


(249
)


(249
)Proceeds from long-term debt






823



919Principal payments on long-term debt


(1,080
)


(1,366
)


(649
)Tax benefit associated with the exercise of non-qualified stock
    options






5



13Payment on debt incurred for acquisition of trademark


(531
)


(500
)


(471
)Proceeds from the issuance of common stock






30



37Net cash (used in) provided by financing activities


(16
)


(4,216
)


2,279Net (decrease) increase in cash and cash equivalents


(340
)


333



(76
)Cash and cash equivalentsBeginning


500



167



243Ending

$
160


$
500


$
167Supplemental Disclosures of Cash Flow InformationCash paid for:Interest

$
781


$
1,145


$
913Income taxes paid (refunded)


2,237



299



(74
)Supplemental Schedule of Non-cash Investing and Financing
    ActivitiesPurchases of equipment included in accounts payable


61







Transfer from deferred expenses to property, plant and equipment






161



Licensed intangible assets financed by settlement obligations










3,194Transfer from prepaid expenses to patents






13



Amount owed on acquisition of a business






40



    F-6




---



##### 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: mission
    Use of estimates in the preparation of financial
    statements:
  Principles of consolidation:
  Cash and cash equivalents:
  Accounts receivable: non-U.S. accounts
  Concentration of credit risk:
  Inventories: first-in,
 F-7




---



##### Table of Contents



Property and equipment:
  Useful LivesBuilding and improvements


7-39Machinery and equipment


5-7Furniture and fixtures


5-7Software


3-5   Goodwill and other intangibles: straight-line
  Patents:
  Accounting for settlement agreement: cross-licensing
  Impairment of long-lived assets (excluding goodwill and
    other intangibles): long-lived
 F-8




---



##### Table of Contents



Product warranty:
  Deferred income taxes:
  Accounting for Uncertainties in Income
    Taxes:
  non-U.S. income
  Fair value of financial
    instruments:
  Revenue recognition:
      Advertising:
 F-9




---



##### Table of Contents



Royalties:
  Stock compensation:
  Earnings per share:
  Year Ended July 31,2009

2008

2007Numerator:Net income

$
1,595


$
2,663


$
845Denominator:Weighted average common shares and denominator for basic
    calculation


24,459,749



24,321,713



24,220,507Stock options and restricted stock


33,514



153,127



184,146Denominator for diluted calculation


24,493,263



24,474,840



24,404,653Net income per share  basic

$
0.07


$
0.11


$
0.03Net income per share  diluted

$
0.07


$
0.11


$
0.03   Segment
    reporting: 
  Subsequent events:
  Note 2.
    Mergers
    and Acquisitions   F-10




---



##### Table of Contents



Note 3.
    Distribution
    Agreements    Codman &
    Shurtleff, Inc. (Codman)
  ®
  July 31,

July 31,

July 31,2009

2008

2007Net sales

$
5,334


$
6,041


$
7,227Percent of net sales


10.1
%


12.1
%


15.7
%     Note 4.
    Inventories    2009


2008Raw materials and component parts

$
6,058


$
5,379Work in progress


2,723



2,772Finished goods


6,244



6,417$
15,025


$
14,568    F-11




---



##### Table of Contents



Note 5.
    Property
    and Equipment    2009


2008Land

$
730


$
730Building and improvements


5,782



5,720Machinery and equipment


5,363



4,959Furniture and fixtures


720



680Software


336



332Construction in progress


166



3013,097



12,451Less accumulated depreciation


5,183



4,292$
7,914


$
8,159     Note 6.
    Other
    Intangible Assets    GrossCarrying


AccumulatedValue


Amortization


NetJuly 31, 2009Proprietary know-how

$
4,057


$
1,295


$
2,762Trademark


5,923







5,923Licensing agreements


5,834



1,384



4,450Patents


1,335



417



918$
17,149


$
3,096


$
14,053   July 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      F-12




---



##### Table of Contents



Note 7.
    Accrued
    Expenses    2009


2008Payroll, commissions and employee benefits

$
966


$
890Royalties


243



316Interest


61



79Warranty


15



15Other


1,589



1,359$
2,874


$
2,659   Note 8.
    Pledged
    Assets, Short and Long-Term Debt  Revolving Credit Facility:
  The facility has two financial covenants:
  Non-U.S. Receivables
    Revolving Credit Facility non-U.S. receivables non-U.S. receivables.
  Equipment Line of Credit:
 F-13




---



##### Table of Contents



2009


2008Note 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

$
984


$
1,477Note 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 6.0 percent; remaining
    balance of $1,599,040 including the effects of imputing
    interest, due December 2011, collateralized by the
    Malis®

    trademark


1,475



2,006Settlement obligation to Iridex Corporation
    (Iridex), due in annual installments of $800,000
    which includes interest at an imputed rate of 8.0 percent;
    remaining balance of $2,400,000 including the effects of
    imputing interest, due April 15, 2012


2,062



2,6494,521



6,132Less current maturities


1,856



1,823Long-term portion

$
2,665


$
4,309     Year Ending July 31,

Amount2010

$
1,8562011


1,7262012


939$
4,521   Note 9.
    Revenue
    Bonds Payable       F-14




---



##### Table of Contents



Year Ending July 31,

Amount2010

$
2492011


2492012


2492013


2492014


249Thereafter


2,418$
3,663   Note 10.
    Operating
    Leases      Year Ending July 31,

Amount2010

$
3112011


2892012


2232013


632014


2$
888    F-15




---



##### Table of Contents



Note 11.
    Income
    Tax Matters    2009


2008Deferred tax assets:Accounts receivable

$
98


$
83Inventories


155



176Accrued liabilities


181



110Other


219



158Loss on foreign subsidiaries


746



302Research and experimentation tax credit carryforward






1,399



829Deferred tax liabilities:Property and equipment


373



288Other intangible assets


2,295



2,2372,668



2,525$
(1,269
)

$
(1,696
)     2009


2008Current assets

$
654


$
527Long-term liabilities


(1,923
)


(2,223
)$
(1,269
)

$
(1,696
)     2009


2008


2007Currently payable

$
1,202


$
1,846


$
(8
)Deferred


(427
)


(407
)


(264
)$
775


$
1,439


$
(272
)     2009

2008

2007Computed at the statutory rate


34.0
%


34.0
%


34.0
%State taxes, net of federal tax benefit


3.0



4.5



4.0Extraterritorial income exclusion










(9.2
)Production deduction for domestic manufacturers


(3.3
)


(1.3
)


(3.4
)Research and experimentation


(6.9
)


(3.5
)


(80.5
)Other


5.9



1.4



7.632.7
%


35.1
%


(47.5
)%    F-16




---



##### Table of Contents



Note 12.
    Employee
    Benefit Plan    Note 13.
    Stock-Based
    Compensation Plans  Stock
    Option Plans
      WeightedAverage


WeightedExercise


AverageShares


Price


Fair ValueOptions outstanding as of 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


$
1.84For the period from August 1, 2008 through July 31,
    2009:Granted


93,000


$
0.95


$
0.78Forfeited


(2,000
)

$
3.75


$
0.99Exercised










Options outstanding, July 31, 2009


527,735


$
2.10


$
1.74Options exercisable, July 31, 2009


455,349


$
2.27


$
1.88  F-17




---



##### Table of Contents



Weighted Average GrantShares


Date ValueUnvested options, beginning of period


61,528


$
1.49Granted


93,000


$
0.95Vested


82,142


$
1.31Unvested options, period end


72,386


$
1.01     Fiscal Year EndedJuly 31,

July 31,

July 31,2009

2008

2007Proceeds of options exercised

$

$
30


$
37Related tax benefit recognized




5



13Intrinsic value of options exercised




41



32     ExercisableOptions Outstanding

OptionsNumber


527,735



455,349Weighted average exercise price

$
2.10


$
2.27Aggregate intrinsic value

$
917


$
857Weighted average contractual term


5.4 years



4.9 years     Options Outstanding


Exercisable OptionsWeighted Average





Weighted AverageRemaining





RemainingContractual Life





Contractual LifeShares


(in Years)


Shares


(in Years)< $1.00


68,950



6.5 years



54,367



5.8 years$1.00  $2.00


242,785



4.6 years



184,982



3.4 years$2.00  $5.00


216,000



5.9 years



216,000



5.9 yearsTotal


527,735



5.4 years



455,349



4.9 years    F-18




---



##### Table of Contents



Fiscal Year Ended July 31,2009


2008


2007Expected average risk-free interest rate


2.25
%


3.5
%


4.0
%Expected average life (in years)


10



10



10Expected volatility


80.5
%


69.2
%


79.7Expected dividend yield


0.0
%


0.0
%


0.0
%     Restricted
    Stock Plans
        Weighted AverageNumber of Shares

Grant Date Fair ValueRestricted Stock awards at August 1, 2006





$
Granted


14,601


$
5.48Forfeited


1,500


$
5.48Balance as of July 31, 2007


13,101


$
5.48Granted


40,706


$
3.38Balance as of July 31, 2008


53,807


$
3.89Granted


110,065


$
2.78Forfeited


51,796


$
3.18Balance as of July 31, 2009


112,076


$
2.95  F-19




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##### Table of Contents



July 31,


July 31,


July 31,2009


2008


2007Stock Options:Directors

$
52


$
74


$
104Employees


20



38



25Total


72



112



129Restricted Stock:Employees


40



25



17Advisors


66



87



89Total


106



112



106Total Compensation Expense

$
178


$
224


$
235   Note 14.
    Stockholders
    Equity  2 3
  1 3 2 3
  Note 15.
    Research
    and Development Costs    Note 16.
    Enterprise-wide
    Information    Fiscal Year Ended July 31,2009


2008


2007Net salesOphthalmic

$
29,981


$
28,019


$
24,522Neurosurgery


13,968



12,925



10,241Marketing partners (Codman, Stryker Corporation and Iridex)


8,538



8,347



10,266Other


478



772



916Total

$
52,965


$
50,063


$
45,945   F-20




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##### Table of Contents



Fiscal Year Ended July 31,2009


2008


2007Net SalesDomestic

$
36,047


$
35,838


$
35,214International


16,918



14,225



10,731Total

$
52,965


$
50,063


$
45,945     Note 17.
    Commitments
    and Contingencies             F-21




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##### Table of Contents



Note 18.
    Quarterly
    Financial Data (Unaudited)  Form 10-Q
  July 31,


May 4,


February 3,


October 29,Quarters Ended

2009


2009


2009


2008Net Sales

$
13,906


$
13,161


$
13,652


$
12,246Gross Profit


7,093
(1)


7,401



7,841



7,080Operating Income


176
(1)


879



907



1,163Net Income


87
(1)


458



389



661Earnings per ShareBasic

$
0.00


$
0.02


$
0.02


$
0.03Diluted

$
0.00


$
0.02


$
0.02


$
0.03Basic weighted average common shares outstanding


24,454,256



24,470,755



24,451,904



24,440,861Diluted weighted average common shares outstanding


24,472,354



24,471,258



24,459,568



24,578,342   July 31,


April 30,


January 31,


October 29,Quarters Ended

2008


2008


2008


2007Net Sales

$
14,457


$
13,500


$
11,636


$
10,469Gross Profit


8,351



8,332



6,754



6,525Operating Income


2,036



2,155



238



785Net Income


1,203



1,117



(54
)


397Earnings per ShareBasic

$
0.05
(2)

$
0.05
(2)

$
0.00
(2)

$
0.02
(2)Diluted

$
0.05
(2)

$
0.05
(2)

$
0.00
(2)

$
0.02
(2)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     (1)
    
    In the fourth quarter of fiscal 2009, the Company recorded an
    adjustment of approximately $975,000 or $0.03 earnings per
    share, net of tax, primarily due to excess and discontinued
    inventory which was either contributed to a charitable
    organization or was discarded.(2)
    
    The accumulation of four quarters in fiscal year 2008 for
    earnings per share does not equal the related per share amounts
    for the year ended July 31, 2008 due to rounding
    differences.  Note 19.
    Recent
    Accounting Pronouncements  157-1 (FSP 157-1) FSP 157-2 (FSP 157-2). FSP 157-1 FSP 157-2 FSP 157-3,
 F-22




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##### Table of Contents



(FSP 157-3). FSP 157-3 FSP 157-4, (FSP 157-4). FSP 157-4 FSP 157-4
    ®
    FAS No. 142-3, (FSP 142-3). FSP 142-3 FSP 142-3 ® FSP 142-3 and/or FSP 142-3 FSP 142-3
  14-1, 14-1). 14-1 14-1 14-1
 F-23




---



##### Table of Contents



03-6-1, EITF 03-6-1) EITF 03-6-1 states EITF 03-6-1 EITF 03-6-1. EITF 03-6-1 EITF 03-6-1
  No. 107-1 28-1, (FSP 107-1). FSP 107-1 FSP 107-1 FSP 107-1
  FASB Accounting Standards Codification
   F-24




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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(1)

of Year(Dollars in Thousands)Year ended July 31, 2007Allowance for Doubtful Accounts

$
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






$



$
65Year ended July 31, 2009Allowance for Doubtful Accounts/Returned Goods

$
250


$
206






$
(140
)

$
316Allowance for Excess and Obsolete Inventory

$
65


$







$
(26
)

$
39     (1)
    
    Adjustments represent write-offs of uncollectible accounts
    receivable and excess inventories. F-25




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##### Table of Contents



SIGNATURES     Synergetics USA, Inc.
   
      
          
          
         
      43




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##### Table of Contents



44




---



##### 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

Amendment No. 1 to Amended and Restated Synergetics USA,
    Inc. 2005 Non-Employee Directors Stock Option Plan. (Filed
    as Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on January 29, 2009, and incorporated herein by
    reference).10
.6

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
.7

Change of Control Agreement between Synergetics USA, Inc. and
    David M. Hable (Filed as Exhibit 10.1 to Registrants
    Current Report on
    Form 8-K
    filed February 3, 2009), and incorporated herein by
    reference).10
.8

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
.9

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
.10

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.) 45




---



##### Table of Contents



ExhibitNumber

Description10
.11

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
.12

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
.13

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
.14

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
.15

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
.16

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
.17

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
.18

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
.19

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
.20

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.)10
.21

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
.22

Agreement of Lease between Liberty Property Limited Partnership
    and Valley Forge. (Filed as Exhibit 10.16 to Valley
    Forges to Registration Statement on
    Form S-4,
    Registration
    No. 333-125521
    and incorporated herein by reference.)10
.23*

Amendment to Agreement of Lease between Liberty Property Limited
    Partnership and Synergetics USA, Inc. dated March 26, 2009.10
.24

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
.25

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
.26

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.) 46




---



##### Table of Contents



ExhibitNumber

Description10
.27

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
.28

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
.29

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
.30

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
.31

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
.32

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
.33

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.)10
.34

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
.35

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
.36

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
.37

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
.38

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
.39

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.) 47




---



##### Table of Contents



ExhibitNumber

Description10
.40

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
.41

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
.42

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
.43

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
.44

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
.45

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
.46

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.)10
.47

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
.48

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
.49

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
.50

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
.51

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 4, 2008 and incorporated herein by
    reference.)10
.52

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
.53

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.) 48




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##### Table of Contents



ExhibitNumber

Description10
.54

Second Amended and Restated Foreign Accounts Revolving Note from
    Synergetics, Inc., Synergetics USA, Inc., Synergetics Germany,
    GmbH, Synergetics Italia, S 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.)10
.55

Fifth Amendment to Credit and Security Agreement by and among
    Synergetics, Inc. and Synergetics USA, Inc. as Borrowers and
    Regions Bank as Lender, dated December 1, 2008 (Filed as
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on December 3, 2008 and incorporated herein by
    reference.)10
.56

Second 2008 Amended and Restated Revolving Note from Synergetics
    USA, Inc. and Synergetics, Inc. in favor of Regions Bank, dated
    as of December 1, 2008 (Filed as Exhibit 10.2 to the
    Registrants Current Report on
    Form 8-K
    filed on December 3, 2008 and incorporated herein by
    reference.)21
*

Subsidiaries of Registrant.23
.1*

Consent of UHY, 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 49