UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, 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, 2010oro

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
    (Do not check if a smaller reporting company)

Smaller reporting
    company þ   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K




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##### 





SYNERGETICS
    USA, INC.FORM 10-K
    FOR THE FISCAL YEAR ENDED JULY 31, 2010
    TABLE OF CONTENTS
  
  PagePART IItem 1.

Business


3Item 1A.

Risk Factors


16Item 1B.

Unresolved Staff Comments


25Item 2.

Properties


25Item 3.

Legal Proceedings


26Item 4.

[Removed and Reserved]


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


40Item 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


41PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


41Item 11.

Executive Compensation


42Item 12.

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


42Item 13.

Certain Relationships and Related
    Transactions, and Director Independence


42Item 14.

Principal Accountant Fees and Services


42PART IVItem 15.

Exhibits and Financial Statement
    Schedules


43Signatures


44Index to Exhibits


46   2




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##### 



SYNERGETICS
    USA, INC.
  PART I
  Item 1.
    Business  Overview
        ® ® ® ®
     3




---



##### 



Summary
    of Financial Information
    NET SALES
    BY CATEGORY
  Fiscal Year Ended July 31,2010


Mix


2009


MixOphthalmic

$
31,689



60.9
%

$
29,981



56.6
%Direct Neurosurgery


8,175



15.7
%


13,968



26.4
%Marketing Partners(1)


4,204



8.1
%






Total Neurosurgery


12,379



23.8
%


13,968



26.4
%Original Equipment Manufacturers (OEM)(2)


7,878



15.1
%


8,538



16.1
%Other


129



0.2
%


478



0.9
%Total

$
52,075






$
52,965     (1)
    
    Marketing partners sales include disposable bipolar
    forceps and disposable ultrasonic instrument tips and
    accessories which were previously sold by our direct
    neurosurgery sales force and our distribution partners, which
    have been transitioned to our marketing partners.(2)
    
    Revenues from OEM represent sales of generators, related
    accessories and certain laser probes to Stryker, Codman and
    Iridex Corporation (Iridex).      RESULTS
    OF OPERATIONS
  Fiscal Year Ended July 31,Increase2010

2009

(Decrease)Net Sales

$
52,075


$
52,965



(1.7
)%Gross Profit(3)


29,909



29,415



1.7
%Gross Profit Margin%


57.4
%


55.5
%


3.4
% 4




---



##### 



Fiscal Year Ended July 31,Increase2010

2009

(Decrease)Commercial ExpensesSelling


11,958



14,262



(16.2
)%G&A


8,903



9,030



(1.4
)%R&D


3,008



2,998



0.3
%Operating Income


6,040



3,125



93.3
%Operating Margin


11.6
%


5.9
%


96.6
%EBITDA(4)


11,248



5,093



120.9
%EBITDA from Operations(4)


8,033



5,093



57.7
%Net Income


5,733



1,595



259.4Net Income from Operations(4)


3,678



1,595



130.6
%Earnings per share


0.23



0.07



228.6
%Earnings per share from Operations(4)


0.15



0.07



114.3
%Operating Return on average equity(4)


8.9
%


4.3
%


107.0
%Operating Return on average assets(4)


6.4
%


4.0
%


60.0
%   (3)
    
    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.(4)
    
    EBITDA, EBITDA from operations, net income from operations,
    earnings per share from operations, operating return on average
    equity and operating return on average 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. EBITDA from operations is defined as net income
    (net of one-time events) before interest expense, income taxes,
    depreciation and amortization. Net income from operations and
    earnings per share from operations are also net of one-time
    events. Operating return on equity is defined as net income (net
    of one-time events) divided by average equity. Operating return
    on assets is defined as net income (net of one-time events) plus
    interest expense divided by average assets. See disclosure
    following regarding the use of non-GAAP financial measures.  Fiscal Year EndedJuly 31,


July 31,2010


2009Net income

$
5,733


$
1,595Interest


491



763Income taxes


3,092



775Depreciation


1,053



1,052Amortization


879



908EBITDA

$
11,248


$
5,093Pre-Tax Income from One-Time EventsIncome from Stryker Gain

$
817



Income from Alcon settlement


2,398



TOTAL Pre-Tax Income from One-Time Events


3,215



EBITDA from Operations

$
8,033


$
5,093   5




---



##### 



July 31,


July 31,2010


2009Net income

$
5,733


$
1,595After-Tax Income from One-Time EventsIncome from Stryker Gain

$
522



Income from Alcon Settlement


1,533



TOTAL After-Tax Income from One-Time Events


2,055



Net Income from Operations

$
3,678



1,595Average Equity:July 31, 2010

$
44,226July 31, 2009


38,130


$
38,130July 31, 2008






36,357Average Equity

$
41,178


$
37,243Return on Average Equity


8.9
%


4.3
%Net income from Operations

$
3,678


$
1,595Interest


491



763Net income from Operations + interest expense

$
4,169


$
2,358Average Assets:July 31, 2010

$
73,095July 31, 2009


58,080


$
58,080July 31, 2008






58,396Average Assets

$
65,588


$
58,238Return on Average Assets


6.4
%


4.0
%   Non-GAAP Financial
    Measures
        Strategy
  mission
 6




---



##### 



fiscal 2010 strategies
  Improve Profitability and Cash Efficiency through:
    Lean Manufacturing
  Component Cost Savings
  Supply Chain Management
  Human Resource Rationalization
  Cash Management
 7




---



##### 



Accelerate
    growth through:
      Assess
    Distribution Alternatives:
    Improve
    Sales Force Productivity:
    fiscal 2011 driving strategic priorities
      Research
    and Development Strategy
  tm ® tm
  ®
 8




---



##### 



tm
  Fiscal Year EndedJuly 31,


July 31,


July 31,2010


2009


2008R&D Expenditures (in thousands)

$
3,008


$
2,998


$
2,654Percentage of net sales


5.8
%


5.7
%


5.3
%       Marketing
  Ophthalmic
    and Vitreoretinal
  Markets
       9




---



##### 



tm tm tm
    Marketing
    and Sales Force
  tm tm tm tm tm
  non-U.S. distributors non-U.S. distributors non-U.S. end-user
  Competition
  tm
  Marketing
    Partner and OEM Markets
     10




---



##### 



®
        ® ®
       11




---



##### 



Competition
  ® tm tm
  Operations
  Manufacturing
    and Supplies
  tm tm tm tm tm
       12




---



##### 



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




---



##### 



Safety
    Approvals
  and/or
  Intellectual
    Property
  ® tm tm
    non-U.S. countries.
    Form 10-K
  Backlog
   14




---



##### 



Employees
    Executive
    Officers of the Registrant
  Form 10-K,
  Name

Age

Position(s) with the CompanyDavid M. Hable


55


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


50


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


78


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


47


Executive Vice President, Chief Financial Officer, Treasurer
    & Secretary           Available
    Information
  Form 10-K, Form 10-Q, Form 8-K
 15




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##### 



www.synergeticsusa.com
  Special
    Note Regarding Forward-Looking Information
        Form 10-K
  Item 1A.
    Risk
    Factors  Form 10-K,
  We are
    exposed to risks associated with world-wide economic slowdowns
    and related political uncertainties.
     16




---



##### 



If any
    of our single source suppliers were to cease providing
    components, we may not be able to produce certain
    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.  Our
    industry is experiencing greater scrutiny and regulation by
    governmental authorities, which may lead to greater governmental
    regulation in the future.
   17




---



##### 



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;
    obtain regulatory approval for new products;
    achieve positive clinical outcomes;
    commercialize new products in a cost-effective and timely manner;
    manufacture and deliver products in sufficient volumes on time;
    differentiate our products from those of our competitors;
    satisfy the increased demands by health care payers, providers
    and patients for lower-cost procedures and shorter hospital
    stays and recovery times;
    innovate and develop 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. 18




---



##### 



Quality
    problems with our processes, goods and services could harm our
    reputation for producing high quality products and erode our
    competitive advantage.
  sub-assemblies
  Our
    operating results may fluctuate.
    
    general economic uncertainties and political concerns;
    timing of customer capital availability and other selling and
    general expenditures;
    receipt of necessary regulatory approvals;
    the introduction of new products or 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;
    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; and
    product returns.  The
    recent U.S. healthcare reform legislation could adversely affect
    our revenue and financial condition.
   19




---



##### 




    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 payers of hospital services, including
    Medicare, Medicaid and private health care insurers, are
    currently scrutinizing and challenging the coverage of new
    products and the level of reimbursement for covered products
    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 adopted which will
    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.
    There have been initiatives by third-party payers 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 regulatory
    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




---



##### 



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 may
    be unable 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.
   21




---



##### 



non-U.S. countries.
    The
    intellectual property rights of others may adversely affect our
    ability to introduce new products or continue to sell existing
    products.
      We may
    have product liability claims, and our insurance may not cover
    all claims.
   22




---



##### 



The
    loss of key personnel could harm our business.
  employees-at-will,
  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 operations 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 approvals 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
 23




---



##### 



Our
    cash is maintained with a regional bank which may not be fully
    insured.
    Efforts
    to acquire additional companies or product lines may consume
    managerial resources and we may incur or assume additional
    liabilities or experience integration problems.
    
    difficulties integrating any acquired products into our existing
    business;
    delays in realizing the benefits of the acquired
    products; or
    diversion of our managements time and attention to ongoing
    business.  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 conditions, 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.
   24




---



##### 



Material
    increases in interest rates could potentially be a detriment to
    sales.
  non-U.S. distributorships
  We
    face risks associated with our collaborative and marketing
    partner relationships.
    Because
    we do not require training for users of our products, there
    exists a 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.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties     25




---



##### 



Item 3.
    Legal
    Proceedings    Item 4.
    [Removed
    and Reserved] 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, 2009Quarter ended October 29, 2008

$
3.24


$
1.06Quarter ended February 3, 2009

$
1.59


$
0.70Quarter ended May 4, 2009

$
1.17


$
0.74Quarter ended July 31, 2009

$
1.80


$
0.97Year ended July 31, 2010Quarter ended October 31, 2009

$
1.83


$
1.15Quarter ended January 31, 2010

$
1.63


$
1.19Quarter ended April 30, 2010

$
3.19


$
1.15Quarter ended July 31, 2010

$
3.02


$
2.27      26




---



##### 



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.
    
 27




---



##### 



Item 6.
    Selected
    Financial Data  Form 10-K.
  For the Fiscal Years Ended July 31,2010

2009*

2008

2007

2006(In thousands, except per share data)Statements of Income Data:Sales

$
52,075


$
52,965


$
50,063


$
45,945


$
38,246Cost of Sales


22,166



23,550



20,101



18,943



14,238Gross profit


29,909



29,415



29,962



27,002



24,008Operating Income


6,040



3,125



5,208



1,518



5,004Net income


5,733



1,595



2,663



845



3,081Earnings per common share  Basic

$
0.23


$
0.07


$
0.11


$
0.03


$
0.15
**Earnings per common share  Diluted

$
0.23


$
0.07


$
0.11


$
0.03


$
0.15
**     *
    
    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.**
    
    The fiscal year 2006 has not been adjusted to reflect the
    4.59 shares received by the private company shareholders
    for each share of private company stock at the time of the
    reverse merger between Valley Forge and Synergetics forming
    Synergetics USA, Inc.  As of Fiscal Years Ended July 31,2010

2009

2008

2007

2006(In thousands)Balance Sheets Data:Cash and cash equivalents

$
18,669


$
160


$
500


$
167


$
243Current assets


41,066



25,358



24,549



24,010



21,594Total assets


73,095



58,080



58,396



58,616



51,329Current liabilities


6,349



11,948



11,865



13,657



8,996Long-term liabilities


22,520



8,002



10,174



11,524



10,028Retained earnings


19,319



13,586



11,991



9,328



8,483Stockholders equity


44,226



38,130



36,357



33,435



32,305  28




---



##### 



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  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
  mission
  New
    Product Sales
  24-month
  Growth
    in Minimally Invasive Surgery Procedures
   29




---



##### 



®
  Demand
    Trends
      Pricing
    Trends
    Economic
    Trends
    Our
    Business Strategy
  fiscal 2011 driving
    strategic priorities
 30




---



##### 



Results
    of Operations
  Year
    Ended July 31, 2010 Compared to Year Ended July 31,
    2009
  Net
    Sales
    Fiscal Year EndedJuly 31,


% Increase2010


2009


(Decrease)Ophthalmic

$
31,689


$
29,981



5.7
%Direct Neurosurgery


8,175



13,968



(41.5
)%Marketing Partners


4,204







N/MTotal Neurosurgery


12,379



13,968



(11.4
)%OEM


7,878



8,538



(7.7
)%Other


129



478



(73.0
)%Total

$
52,075


$
52,965



(1.7
)%         Fiscal Year Ended July 31,2010


2009


% DecreaseUnited States (including sales to marketing partners)

$
35,417


$
36,047



(1.7
)%International (including Canada)


16,658



16,918



(1.5
)%Total

$
52,075


$
52,965



(1.7
)%   non-U.S. distributors
  Gross
    Profit
   31




---



##### 



Operating
    Expenses
  Fiscal Year EndedJuly 31, 2010


July 31, 2009


July 31, 2008R&D Expenditures (in thousands)

$
3,008


$
2,998


$
2,654Percentage of net sales


5.8
%


5.7
%


5.3
%           Other
    Income/Expense
  ®
 32




---



##### 



®
  Operating
    Income, Income Taxes and Net Income
        Year
    Ended July 31, 2009 Compared to Year Ended July 31,
    2008
  Net
    Sales
    Fiscal Year EndedJuly 31,


% Increase2009


2008


(Decrease)Ophthalmic

$
29,981


$
28,019



7.0
%Direct Neurosurgery


13,968



12,925



8.1
%OEM (Codman, Stryker and Iridex)


8,538



8,347



2.3
%Other


478



772



(38.1
)%Total

$
52,965


$
50,063



5.8
%       Year Ended July 31,2009


2008


% IncreaseUnited States (including sales to OEM customers)

$
36,047


$
35,838



0.6
%International (including Canada)


16,918



14,225



18.9
%Total

$
52,965


$
50,063



5.8
%  33




---



##### 



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




---



##### 



Liquidity
    and Capital Resources
        ®
  ®
  lines-of-credit lines-of-credit lines-of-credit
 35




---



##### 



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:
    Contractual
    Obligations
    Payments Due by PeriodLess than








More thanContractual Obligations

Total


1 Year


1-3 Years


4-5 Years


5 YearsRevenue Bonds Payable(1)

$
1,728,000


$
1,728,000











Malis®

    Tradename Note Payable(2)


911,000



598,000


$
313,000







Settlement Obligation(3)


1,600,000



800,000



800,000







Operating Leases(4)


638,000



308,000



323,000


$
7,000



Total Contractual Obligations

$
4,877,000


$
3,434,000


$
1,436,000


$
7,000


$
     (1)
    
    Amount represents the expected cash payments for our revenue
    bonds payable through December 1, 2011. The Company expects
    to retire this bond in the next twelve months. 36




---



##### 



(2)
    
    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.(3)
    
    Amount represents the expected cash payment on the settlement
    obligation to Iridex. The note includes interest at an imputed
    rate of 8.0 percent.(4)
    
    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
    Revenue
    Recognition
        Deferred
    Revenue
    Inventories
  first-in,
 37




---



##### 



Amortization
    Periods
  Impairment of Long-Lived
    Assets
  Allowance
    for Doubtful Accounts
    Patents
    and Research and Development
    Goodwill
    350-20-35.
 38




---



##### 



Other
    Intangibles
  ® ® ®
  Impairment
    of Long-Lived Assets
    Tax
    Assets and Liabilities
     39




---



##### 



Stock-Based
    Compensation
    Recent
    Accounting Pronouncements
    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk      non-U.S. revolving
  non-U.S. currency non-U.S. currencies, non-U.S. currencies non-U.S. currency.
  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
 40




---



##### 



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 Form 10-K
  Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K
   41




---



##### 



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 FutureIssuanceNumber of Securities





Under Equityto be Issued Upon


Weighted Average


Compensation PlansExercise 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


576,695


$
2.08



790,404Equity Compensation Plans Not Approved By Security Holders










Total


576,695


$
2.08



790,404   Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   42




---



##### 



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
   43




---



##### 



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, 2010, 2009 and 2008


F-2Consolidated Balance Sheets as of July 31,
    2010 and 2009


F-3Consolidated Statements of Income for the years
    ended July 31, 2010, 2009 and 2008


F-4Consolidated Statements of Stockholders
    Equity for the years ended July 31, 2010, 2009 and 2008


F-5Consolidated Statements of Cash Flows for the
    years ended July 31, 2010, 2009 and 2008


F-6Notes to Consolidated Financial Statements


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


F-24  F-1




---



##### 



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




---



##### 



Synergetics
    USA, Inc. and SubsidiariesConsolidated Balance Sheets
    July 31, 2010 and 2009
  2010


2009(Dollars in thousands, except share and per share data)ASSETSCurrent AssetsCash and cash equivalents

$
18,669


$
160Accounts receivable, net of allowance for doubtful accounts of
    $282 and $330, respectively


9,056



9,105Inventories


11,891



15,025Prepaid expenses


792



414Deferred income taxes


658



654Total current assets


41,066



25,358Property and equipment, net


8,044



7,914Intangible and other assetsGoodwill


10,690



10,690Other intangible assets, net


12,353



13,135Deferred expenses






2Patents, net


870



918Cash value of life insurance


72



63Total assets

$
73,095


$
58,080LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesExcess of outstanding checks over bank balance

$



$
75Lines-of-credit






5,035Current maturities of long-term debt


1,398



1,856Current maturities of revenue bonds payable


116



249Accounts payable


1,800



1,822Accrued expenses


2,624



2,874Income taxes payable


11



37Deferred revenue


400



Total current liabilities


6,349



11,948Long-Term LiabilitiesLong-term debt, less current maturities


939



2,665Revenue bonds payable, less current maturities


1,612



3,414Deferred revenue


18,630



Deferred income taxes


1,339



1,923Total long-term liabilities


22,520



8,002Total liabilities


28,869



19,950Commitments and contingencies (Notes 10 and 17)Stockholders EquityCommon stock at July 31, 2010 and July 31, 2009,
    $0.001 par value, 50,000,000 shares authorized;
    24,772,155 and 24,454,256 shares issued and outstanding,
    respectively


25



24Additional paid-in capital


24,905



24,520Retained earnings


19,319



13,586Accumulated other comprehensive loss:Foreign currency translation adjustment


(23
)


Total stockholders equity


44,226



38,130Total liabilities and stockholders equity

$
73,095


$
58,080    F-3




---



##### 



Synergetics
    USA, Inc. and SubsidiariesConsolidated Statements of Income
    Years Ended July 31, 2010, 2009 and 2008
  2010


2009


2008(Dollars in thousands, except share and per share data)Net sales

$
52,075


$
52,965


$
50,063Cost of sales


22,166



23,550



20,101Gross profit


29,909



29,415



29,962Operating expensesResearch and development


3,008



2,998



2,654Selling


11,958



14,262



12,601General and administrative


8,903



9,030



9,49923,869



26,290



24,754Operating income


6,040



3,125



5,208Other income (expenses)Investment income


38



5



6Interest expense


(491
)


(763
)


(1,129
)Settlement gain


2,398







Gain on sale of product line


817







Miscellaneous


23



3



172,785



(755
)


(1,106
)Income before provision for income taxes


8,825



2,370



4,102Provision for income taxes


3,092



775



1,439Net income

$
5,733


$
1,595


$
2,663Earnings per share:Basic

$
0.23


$
0.07


$
0.11Diluted

$
0.23


$
0.07


$
0.11Basic weighted average common shares outstanding


24,618,403



24,459,749



24,321,713Diluted weighted average common shares outstanding


24,672,605



24,493,263



24,474,840    F-4




---



##### 



Synergetics
    USA, Inc. and SubsidiariesConsolidated Statements of Stockholders
    Equity
    Years Ended July 31, 2010, 2009 and 2008
  Additional





OtherCommon


Paid in


Retained


ComprehensiveStock


Capital


Earnings


Income (Loss)


Total(Dollars in thousands, except share data)Balance, August 1, 2007

$
24


$
24,083


$
9,328


$



$
33,435Net income










2,663







2663Restricted stock grants






125











125Stock-based compensation






99











99Proceeds from stock options exercised






30











30Tax benefit associated with stock option exercises






5











5Balance, July 31, 2008


24



24,342



11,991







36,357Net income










1,595







1,595Restricted stock grants






40











40Stock-based compensation






138











138Balance, July 31, 2009


24



24,520



13,586







38,130Net income










5,733







5,733Foreign currency translation adjustment














(23
)


(23
)Total comprehensive income


















5,710Restricted stock grants


1



114











115Stock-based compensation






172











172Proceeds from stock options exercised






68











68Tax benefit associated with stock option exercises






31











31Balance, July 31, 2010

$
25


$
24,905


$
19,319


$
(23
)

$
44,226    F-5




---



##### 



Synergetics
    USA Inc. and SubsidiariesConsolidated Statements of Cash Flows
    Years Ended July 31, 2010, 2009 and 2008
 2010


2009


2008(Dollars in thousands, except share data)Cash Flows from Operating ActivitiesNet income

$
5,733


$
1,595


$
2,663Adjustments to reconcile net income to net cash provided by
    operating activitiesDepreciation


1,053



1,052



1,013Amortization


879



908



977Provision for doubtful accounts receivable


(48
)


88



23Stock-based compensation


287



178



224Deferred income taxes


(588
)


(427
)


(407
)(Gain) loss on sale of equipment


(16
)


2



5(Gain) on sale of product line


(817
)






Changes in assets and liabilities(Increases) decreases in:Accounts receivable


(265
)


(600
)


(352
)Income taxes receivable










473Inventories


3,016



(457
)


(318
)Prepaid expenses


(389
)


(53
)


(31
)(Decrease) increase in:Accounts payable


(87
)


(1,015
)


474Accrued expenses


(453
)


255



(80
)Income taxes payable


(26
)


(1,034
)


1,071Deferred revenue


19,030







Net cash provided by operating activities


27,309



492



5,735Cash Flows from Investing ActivitiesAcquisition of a business






(40
)


(40
)Proceeds on the sale of equipment


16



1



19Purchase of property and equipment


(1,133
)


(749
)


(957
)Acquisition of patents and other intangibles


(64
)


(20
)


(199
)Proceeds from the sale of
    Omni®

    product line


1,527







Increase in cash value of life insurance


(9
)


(8
)


(9
)Net cash provided (used) in investing activities


337



(816
)


(1,186
)Cash Flows from Financing ActivitiesExcess of outstanding checks over bank balance


(75
)


75



(531
)Net borrowings (repayments) on
    lines-of-credit


(5,035
)


1,748



(2,428
)Principal payments on revenue bonds payable


(1,935
)


(228
)


(249
)Proceeds from long-term debt










823Principal payments on long-term debt


(1,620
)


(1,080
)


(1,366
)Tax benefit associated with the exercise of non-qualified stock
    options


31







5Payment on debt incurred for acquisition of trademark


(564
)


(531
)


(500
)Proceeds from the issuance of common stock


68







30Net Cash (used in) financing activities


(9,130
)


(16
)


(4,216
)Foreign exchange rate effect on cash and cash equivalents


(7
)






Net (decrease) increase in cash and cash equivalents


18,509



(340
)


333Cash and cash equivalentsBeginning


160



500



167Ending

$
18,669


$
160


$
500Supplemental Disclosures of Cash Flow InformationCash paid for:Interest

$
510


$
781


$
1,145Income taxes paid


3,692



2,237



299Supplemental Schedule of Non-cash Investing and Financing
    ActivityPurchase of equipment included in accounts payable


65



61



161Transfer from prepaid expense to patents










13Amount owed on acquisition of business










40    F-6




---



##### 



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




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Property and equipment:
  Useful LivesBuilding and improvements


7-39Machinery and equipment


5-7Furniture and fixtures


5-7Software


3-5   Goodwill and other intangibles:
  Patents:
  Deferred revenue:
  Impairment of long-lived assets (excluding goodwill and
    other intangibles):
  Product warranty:
  Income taxes:
 F-8




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      non-U.S. income
  Fair value of financial
    instruments:
    Foreign currency translation: non-U.S. subsidiaries
  Revenue recognition:
     F-9




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Advertising:
  Royalties:
  Stock compensation:
  Earnings per share:
  Year Ended July 31,2010

2009

2008Numerator:Net Income

$
5,733


$
1,595


$
2,663Denominator:Weighted average common shares and denominator for basic
    calculation


24,618,403



24,459,749



24,321,713Stock options and restricted stock


54,202



33,514



153,127Denominator for diluted calculation


24,672,605



24,493,263



24,474,840Net income per share  basic

$
0.23


$
0.07


$
0.11Net income per share  diluted

$
0.23


$
0.07


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




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Note 3.
    Marketing
    Partner Agreements    Codman &
    Shurtleff, Inc. (Codman)
  ®
      July 31,


July 31,


July 31,2010


2009


2008Net Sales

$
6,823


$
5,334


$
6,041Percent of net sales


13.1
%


10.1
%


12.1
%   Stryker
    Corporation (Stryker)
    ® ®
 F-11




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    July 31,


July 31,


July 31,2010


2009


2008Net Sales

$
4,811


$
2,618


$
2,008Percent of net sales


9.2
%


4.9
%


4.0
%     Note 4.
    Inventories    2010


2009Raw material and component parts

$
5,225


$
6,058Work in progress


2,050



2,723Finished goods


4,616



6,244$
11,891


$
15,025     Note 5.
    Property
    and Equipment    2010


2009Land

$
730


$
730Building and improvements


5,929



5,782Machinery and equipment


6,136



5,363Furniture and fixtures


736



720Software


363



336Construction in progress


232



16614,126



13,097Less accumulated depreciation


6,082



5,183$
8,044


$
7,914    F-12




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Note 6.
    Other
    Intangible Assets    Gross Carrying


AccumulatedValue


Amortization


NetJuly 31, 2010Proprietary know-how

$
4,057


$
1,544


$
2,513Trademark


5,923







5,923Licensing agreement


5,834



1,917



3,917Patents


1,387



517



870$
17,201


$
3,978


$
13,223   July 31, 2009Proprietary know-how

$
4,057


$
1,295


$
2,762Trademark


5,923







5,923Licensing agreement


5,834



1,384



4,450Patents


1,335



417



918$
17,149


$
3,096


$
14,053       Note 7.
    Accrued
    Expenses    2010


2009Payroll, commissions and employee benefits

$
790


$
966Royalties


180



243Interest


42



61Warranty


15



15Other


1,597



1,589$
2,624


$
2,874   Note 8.
    Pledged
    Assets, Short and Long-Term Debt  Revolving Credit Facility:
 F-13




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Non-U.S. Receivables
    Revolving Credit Facility: non-U.S. receivables non-U.S. receivables.
  Equipment Line of Credit:
    2010


2009Note 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

$



$
984Note 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 $959,424 including the effects of imputing interest,
    due December 2011, collateralized by the
    Malis®

    trademark


911



1,475Settlement 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 $1,600,000 including the effects of
    imputing interest, due April 15, 2012


1,426



2,0622,337



4,521Less current maturities


1,398



1,856Long-term portion

$
939


$
2,665     Year Ending July 31,

Amount2011

$
1,3982012


939$
2,337   Note 9.
    Revenue
    Bonds Payable   F-14




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
          Year Ending July 31,

Amount2011

$
1162012


1162013


1162014


1162015


116Thereafter


1,148$
1,728   Note 10.
    Operating
    Leases      Year Ending July 31,

Amount2011

$
3082012


2082013


922014


232015


7$
638    F-15




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Note 11.
    Income
    Tax Matters    2010


2009Deferred tax assets:Accounts receivable

$
68


$
98Inventories


252



155Accrued liabilities


146



181Other


192



219Loss on foreign subsidiaries


1,262



7461,920



1,399Deferred tax liabilityProperty and equipment


306



373Other intangible assets


2,295



2,2952,601



2,668$
( 681
)

$
( 1,269
)     2010


2009Current assets

$
658


$
654Long-term liabilities


(1,339
)


(1,923
)$
(681
)

$
(1,269
)     2010


2009


2008Current payable

$
3,680


$
1,202


$
1,846Deferred


(588
)


(427
)


(407
)$
3,092


$
775


$
1,439     2010


2009


2008Computed at the statutory rate


34.0
%


34.0
%


34.0
%State taxes, net of federal tax benefit


3.0



3.0



4.5Production deductions for domestic manufactures


(2.0
)


(3.3
)


(1.3
)Research and experimentation


(0.6
)


(6.9
)


(3.5
)Other


0.6



5.9



1.435.0
%


32.7
%


35.1
%  F-16




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Note 12.
    Employee
    Benefit Plan    Note 13.
    Stock-Based
    Compensation Plans  Stock
    Option Plans
      Weighted Average


Weighted AverageShares


Exercise Price


Fair ValueOptions outstanding as of 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


$
1.74For the period from August 1, 2009 through July 31,
    2010:Granted


127,500


$
1.37


$
1.10Forfeited


(14,770
)

$
0.94


$
0.78Exercised


(63,770
)

$
1.07


$
0.93Options outstanding, July 31, 2010


576,695


$
2.08


$
1.71Options exercisable, July 31, 2010


462,737


$
2.27


$
1.87  F-17




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Weighted AverageShares

Grant Date ValueUnvested options, Beginning of period


72,386


$
1.01Granted


127,500


$
1.37Vested


85,928


$
0.90Unvested options, period end


113,958


$
1.31     Fiscal Year EndedJuly 31,

July 31,

July 31,2010

2009

2008Proceeds of options exercised

$
68


$



$
30Related tax benefit recognized


31







5Intrinsic value of options exercised


59







41     Options

ExercisableOutstanding

OptionsNumber


576,695



462,737Weighted average exercise price

$
2.08


$
2.27Aggregate intrinsic value

$
986


$
866Weighted average contractual term


5.9 years



5.1 years     Options Outstanding

Exercisable OptionsWeighted Average



Weighted AverageRemaining



RemainingShares

Contractual Life

Shares

Contractual Life(In years)



(In years)<$1.00


45,000



8.3 years



45,000



8.3 years$1.00  $2.00


315,695



6.3 years



201,737



4.7 years$2.00  $5.00


216,000



4.7 years



216,000



4.7 yearsTotal


576,695



5.9 years



462,737



5.1 years    F-18




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Fiscal Year Ended July 31,2010

2009

2008Expected average risk-free interest rate


2.35
%


2.25
%


3.5
%Expected average life (in years)


10



10



10Expected volatility


77.8
%


80.5
%


69.2
%Expected dividend yield


0.0
%


0.0
%


0.0
%     Restricted
    Stock Plans
        Weighted AverageNumber of


Grant Date FairShares


ValueRestricted stock awards at August 1, 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


$
2.95Granted


176,885


$
1.36Forfeited


2,000


$
3.04286,961


$
2.04  F-19




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    July 31,


July 31,


July 31,2010


2009


2008Stock Options:Directors

$
34


$
52


$
74Employees


28



20



38Total

$
62


$
72


$
112Restricted StockEmployees

$
114


$
40


$
25Advisors


111



66



87Total


225



106



112Total Compensation Expense

$
287


$
178


$
224Income Tax benefits from Share-based Compensation

$
100


$
58


$
79   Note 14.
    Stockholders
    Equity  2 3
  1 3 2 3
  Note 15.
    Research
    and Development Costs   F-20




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Note 16.
    Enterprise-wide
    Sales Information    Fiscal Year Ended July 31,2010


2009


2008Net SalesOphthalmic

$
31,689


$
29,981


$
28,019Neurosurgery- Direct


8,175



13,968



12,925Marketing Partners (Codman, Stryker)


4,204







OEM (Codman, Stryker, Iridex Corporation)


7,878



8,538



8,347Other (ENT and Dental)


129



478



772Total

$
52,075


$
52,965


$
50,063Net SalesDomestic

$
35,417


$
36,047


$
35,838International


16,658



16,918



14,225Total

$
52,075


$
52,965


$
50,063     Note 17.
    Commitments
    and Contingencies       F-21




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Note 18.
    Quarterly
    Financial Data (Unaudited)  Form 10-Q
  July 31, 2010

April 30, 2010

January 31, 2010

October 31, 2009Quarters ended:New Sales

$
13,056


$
13,859


$
13,014


$
12,146Gross Profit


7,536



8,031
(1)


7,415
(1)


6,927
(1)Operating Income


1,472



2,045
(1)


1,544
(1)


979
(1)Settlement Gain






2,398







Gain on sale of product line






893
(1)


(37
)(1)


(39
)(1)Net Income


1,005



3,309



877



542Earnings per shareBasic

$
0.04


$
0.13


$
0.04


$
0.02Diluted

$
0.04


$
0.13


$
0.04


$
0.02Basic weighted average common shares outstanding


24,735,422



24,701,260



24,584,393



24,458,089Diluted weighted average common shares outstanding


24,827,641



24,740,304



24,614,628



24,496,554   July 31, 2009

May 4, 2009

February 3, 2009

October 29, 2008Quarters ended:New Sales

$
13,906


$
13,161


$
13,652


$
12,246Gross Profit


7,093
(2)


7,401



7,841



7,080Operating Income


176
(2)


879



907



1,163Net Income


87
(2)


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     (1)
    
    Certain reclassifications have been made to the first and second
    quarters quarterly financial statements to conform with
    the third quarters presentation which increased gross
    profit margin by $197,000, increased operating income by $76,000
    and decreased the gain on the sale of the product line by
    $76,000.(2)
    
    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.  Note 19.
    Recent
    Accounting Pronouncements   F-22




---



##### 



Synergetics
    USA Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
          No. 2010-06,
   F-23




---



##### 



Note 20.
    Valuation
    Allowances and Qualifying Accounts Schedule II 
    Valuation Allowances and Qualifying Accounts Balance at


Charges to


Charges to


DeductionBeginning


Cost and


Other


from


Balance atClassifications

of Year


Expenses


Accounts


Reserves(1)


End of Year(Dollars in thousands)Year 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


$



$
(126
)

$
330Allowance for Excess and Obsolete Inventory

$
65


$



$



$
(26
)

$
39Year ended July 31, 2010Allowance for Doubtful Accounts & Returned Goods

$
330


$
48


$



$
(96
)

$
282Allowance for Excess and Obsolete Inventory

$
39


$



$



$
(1
)

$
38     (1)
    
    Adjustments represent write-offs of uncollectible accounts
    receivable. F-24




---



##### 



SIGNATURES    Synergetics USA, Inc.
    
       
        
        
        
      
     44




---



##### 



45




---



##### 



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(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(1)

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(1)

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(1)

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(1)

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(1)

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(1)

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(1)

Change in Control Agreement effective as of August 1, 2009
    by and between Kurt Gampp and Synergetics USA, Inc. (Filed as
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on December 15, 2009).10
.9(1)

Change in Control Agreement effective as of August 1, 2009
    by and between Jerry Malis, MD and Synergetics USA, Inc. (Filed
    as Exhibit 10.2 to the Registrants Current Report on
    Form 8-K
    filed on December 15, 2009).10
.10(1)(2)

Change in Control Agreement effective as of by and between
    Pamela G. Boone and Synergetics USA, Inc. 46




---



##### 



ExhibitNumber

Description10
.11(1)

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
.12(1)

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.)10
.13(1)

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
.14

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
.15

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
.16

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
.17

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
.18

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
.19

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
.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 to Registration Statement on
    Form S-4,
    Registration
    No. 333-125521
    and incorporated herein by reference.)10
.22

Amendment to Agreement of Lease between Liberty Property Limited
    Partnership and Synergetics USA, Inc. dated March 26, 2009
    (Filed as Exhibit 10.23 to the Registrants Annual
    Report on
    Form 10-K
    for the year ended July 31, 2009 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.) 47




---



##### 



ExhibitNumber

Description10
.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.)10
.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(1)

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.) 48




---



##### 



ExhibitNumber

Description10
.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

Second 2008 Amended and Restated Revolving Note from
    Synergetics, Inc. and Synergetics USA, Inc. in favor of Regions
    Bank, dated 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).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.) 49




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##### 



ExhibitNumber

Description10
.54

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.)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

Third 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 4, 2009.10
.57(3)

Seventh 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 November 30, 2009
    (Filed as Exhibit 10.1 to the Registrants Current
    Report on
    Form 8-K
    filed on December 3, 2009 and incorporated herein by
    reference).10
.58

Fourth Amendment to Credit and Security 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
    November 30, 2009 (Filed as Exhibit 10.2 to the
    Registrants Current Report on
    Form 8-K
    filed on December 3, 2009 and incorporated by reference).10
.59

Confidential Settlement and License Agreement between
    Synergetics USA, Inc. and Alcon, Inc., Alcon Laboratories, Inc.
    and Alcon Research Ltd. (filed as Exhibit 10.1 to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended April 30, 2010 and incorporated
    herein by reference).10
.60

Supply Agreement between Synergetics, Inc. and Alcon Research
    Ltd. (filed as Exhibit 10.2 to the Companys Quarterly
    Report on
    Form 10-Q
    for the quarter ended April 30, 2010 and incorporated
    herein by reference).10
.61

Agreement dated October 19, 2009 by and among Synergetics
    USA, Inc., Steven R. Becker, BC Advisors, LLC, SRB Management,
    L.P., SRB Greenway Opportunity Fund, L.P. and SRB Greenway
    Capital (Q.P.), L.P. (Filed as Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed on October 20, 2009 and incorporated herein by
    reference).10
.62

Amendment executed April 19, 2010 by and among Synergetics
    USA, Inc., Steven R. Becker, BC Advisors, LLC, SRB Management,
    L.P., SRB Greenway Opportunity Fund, L.P. and SRB Greenway
    Capital (Q.P.), L.P. (filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed on April 22, 2010 and incorporated herein by
    reference).21(2)


Subsidiaries of Registrant.23
.1(2)

Consent of UHY, LLP.31
.1(2)

Certification of the Registrants Principal Executive
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.31
.2(2)

Certification of the Registrants Chief Financial Officer
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
.1(2)

Certification of the Registrants Principal Executive
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.32
.2(2)

Certification of the Registrants Chief Financial Officer
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     (1)
    
    Management contract or compensatory plan or arrangement.(2)
    
    Filed herewith.(3)
    
    The Company did not enter into a sixth amendment to credit
    agreement. 50