UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20459





FORM
10-K


(Mark
One)





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





For the
fiscal year ended September 30, 2009


OR





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


Commission
File Number 0-17580





SYNERGX
SYSTEMS INC.


(Exact
name of Small Business Issuer in its charter)








Delaware
            11-2941299(State or
      other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)





209
Lafayette Drive, Syosset, New York  11791


(Address  of
principal executive offices) (zip code)





Issuer's
telephone number, including area code:  (516) 433-4700





Securities
registered pursuant to Section 12(b) of the Act: None





Securities
registered pursuant to Section 12(g) of the Act:





Common
Stock, $.001 par value per share


(Title of
Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes [  ] No [X]





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act. Yes [  ] No [X]





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [X] No [  ]





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (229.405 of this chapter) is not contained herein, and will not
be contained, to the best of Registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes [  ] No
[  ]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer,”
“non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):





Large
      accelerated filer [  ]
            
            
            
            Accelerated
      filer [  ]Non-accelerated
      filer [  ]
            
            
            
            Smaller
      reporting company [X](Do
      not check if a smaller reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [  ] No [X]





As of
December 28, 2009, the latest practicable date, 5,210,950 shares of the
Registrant’s common stock were issued and outstanding. The aggregate market
value of shares held by non-affiliates of the Registrant on March 31, 2009 was
$2,232,374 based on the last sale price on March 31, 2009 of $.62 per
share.











SYNERGX
SYSTEMS INC.





TABLE OF
CONTENTS





PART
      IITEM
      1.
            BUSINESS
            1ITEM
      1A
            RISK
      FACTORS
            5ITEM
      2.
            PROPERTIES
            5ITEM
      3.
            LEGAL
      PROCEEDINGS
            5ITEM
      4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
            5PART
      IIITEM
      5.
            MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
            6ITEM
      6.
            SELECTED
      FINANCIAL DATA
            7ITEM
      7.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
            7ITEM
      7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            12ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTAL DATA
            12ITEM
      9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
            13ITEM
      9A(T)
            CONTROLS
      AND PROCEDURES
            13ITEM
      9B.
            OTHER
      INFORMATION
            14PART
      IIIITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
            15ITEM
      11.
            EXECUTIVE
      COMPENSATION
            18ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
            20ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE
            21ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
            22ITEM
      15.
            EXHIBITS
            23SIGNATURES
            25

















FORWARD-LOOKING
STATEMENTS




This
annual report contains forward-looking statements.  These are
statements that relate to future periods and include statements regarding our
future strategic, operational and financial plans, anticipated for projected
revenues, expenses and operational growth, markets and potential customers for
our products and services, plans related to sales strategies and efforts, the
anticipated benefits of our relationships with strategic partners, our ability
to compete, the adequacy of our current facilities and the performance of our
current and future products and services.




You can
identify forward-looking statements by those that are not historical in nature,
particularly those that use terminology such as “may”, “should”, “expects”,
“anticipates”, “estimates”, “believes”, ”plans”, or “projects”.  Our
actual results may differ materially from any forward-looking
statements.  We caution you not to place undue reliance on these
forward-looking statements.  The forward-looking events discussed in
this annual report may not occur, and actual events and results may differ
materially and are subject to risks and uncertainties.  The
forward-looking statements speak only as of the date hereof, and we expressly
disclaim any obligation to publicly revise these forward-looking statements to
reflect events or circumstances after the date of this filing.




PART
I




ITEM
1.          BUSINESS




OVERVIEW.Synergx
Systems Inc. ("Synergx" or the "Company") is a Delaware corporation organized in
October 1988 to acquire controlling interests in companies engaged in the
design, manufacture, distribution, sale and servicing of fire, life safety,
security, energy management, intercom, audio-video communication and other
systems. Reference to Synergx or the Company include operations of each of its
subsidiaries except where the context otherwise requires.




Synergx's
business is conducted through subsidiaries in the New York City metropolitan
area. Synergx conducts its business in New York principally through Casey
Systems Inc. (“Casey”) its wholly owned subsidiary located in New York City and
Long Island, New York.




CASEY
SYSTEMS.  Synergx’s principal operating subsidiary is
Casey.  Casey has been in the business of designing, servicing and
maintaining building communication systems since 1970.  Today Casey is
a diversified systems integrator which, in addition to its own proprietary line
of life safety and building protection products, also is a premier low-voltage
systems provider for a broad range of video, teleconferencing/ multimedia, audio
visual, public address, customer information, access control, intercoms,
security, closed circuit TV (CCTV) and professional sound systems.  In
addition, Casey designs, markets and supports these systems for the rail and
mass transit industries.




PRINCIPAL
PRODUCTS AND SERVICES




Fire and Life
Safety.  For over 30 years Casey has been providing fire and
smoke signaling and detection systems for institutional, municipal, commercial
and residential buildings in the New York City metropolitan
area.  Casey provides services primarily as a sub-contractor to
electrical and general contractors.  Casey also acts as a general
contractor from time to time as well as engages in direct sales of products and
services to building owners, managers and other users.  New and
modified systems must be installed and maintained in compliance with local law
requirements.  New York City in particular maintains a very
comprehensive and detailed body of regulations to govern the installation and
operation of fire alarm and life safety systems.  Casey markets its
expertise in putting systems on line and servicing such systems in compliance
with these regulations.








1




Casey has
developed and markets its own proprietary signaling and fire detection
technology known as Comtrak, and also acts as a strategic distributor for
national manufacturers such as Edwards Systems Technology, a General Electric
company.  Casey has installed a number of generations of Comtrak and
other systems in hundreds of facilities in the New York metropolitan
area.  Comtrak and other such systems sold by Casey control and
monitor smoke detectors, pull stations and other devices, supervise other
building systems such as elevators and fans and provide dedicated audio
communication channels for building and emergency personnel.  In many
cases after installation and fire department approval thereof, Casey continues
to provide products and services to such facilities related to the changing
requirements of tenants in such buildings (e.g. smoke detectors and other
devices when tenant spaces are altered) or service contracts to building owners
or managers.




Transit.  Since
1991 Casey has designed, installed and maintained sound, life safety and
security systems for over one hundred transit facilities in the New York City
metropolitan area.  Casey has expanded its capabilities to handle all
low voltage systems and fiber communications systems for mass transit
facilities.  Our staff consists of experienced sales engineers,
project managers, field technicians and administrative support staff who are
experienced with the specialized technical, documentary and critical path
requirements of this market.  Casey markets its products and services
to prime contractors and electrical contractors to serve as the required systems
integrator on projects for the New York City Transit Authority, Metro-North, The
Long Island Railroad, New Jersey Transit, Amtrak and other
agencies.  In nearly all cases the systems integrator hired by the
prime or electrical contractor must be approved by the relevant agency.Our
communications engineers are approved by the New York City Transit Authority and
other agencies.  Casey and its engineers are also certified in most
cases as the sole or one of only a limited number of manufacturers of numerous
systems specified by these agencies.




Effective
November 2009, the Company decided to withhold bidding on major transit-related
projects since these projects extend over long periods of time and historically
have been subject to extensive delays in equipment approval and acceptance
(which is problematic in the need for maintaining staffing levels and project
profitability) and are subject to changes in funding by the related agencies for
these projects (which requires the Company to maintain a large bank line of
credit). However, the Company will continue to bid on projects of very short
duration that could be completed quickly, and make box type sales that do not
require extensive engineering labor. At September 30, 2009, outstanding orders
to electrical contractors (to New York City Transit Authority) for transit
projects totaled $5.5 million and completion of these projects is dependent on
release and completion dates requested by the transit authority. One project's
completion could extend to 2011.  Sales of transit projects
represented 12% or $2,341,000 and 24% or $4,605,000 respectively of the total
sales in the years ended September 30, 2009 and September 30, 2008.




Engineered Sound
Systems.  Casey has augmented its established position in
marketing engineered life safety systems (proprietary and third party) by
developing a significant business in engineered sound systems for application to
a variety of users including airline terminals, hospitals, educational
facilities and transit facilities (e.g. commuter terminals and subway
stations).  Casey has developed a focused unit with a high level of
experience to penetrate this niche market with significant success as a
substantial portion of Casey’s revenues and order position derives from this
effort.  Casey offers simple analog paging systems as well as
state-of-the-art computerized systems that emphasize speech intelligibility and
high quality music reproduction.  Casey is an authorized dealer for
many leading manufacturers.




Audio-Visual.  Casey’s
engineering and sales team work with consultants, architects and construction
managers to design, install and integrate audio visual systems in buildings in
the New York metropolitan areas.  These facilities include museums,
auction houses, advertising agencies, houses of worship, health care and
educational facilities, financial institutions and law firms.  On
these projects Casey oversees software integration, selects hardware and
oversees all aspects of the project installation and
activation.  Systems include audio and video conferencing, video
projection systems, media streaming and command and control
centers.  Casey is an authorized supplier of numerous high quality
national product lines.








2





The
Company will complete certain audio/visual projects in 2010 and does not expect
to participate in sellingtheseproductsinthefuture. AtSeptember30,2009,ordersforaudio/visualproductsamounted to $129,000.
Sales of audio/visual products represented 16% or $3,019,000 and 11% or
$2,288,000 respectively of the total sales in the years ended September 30, 2009
and September 30, 2008.  The Company’s two audio/visual salespeople
and two project engineers are no longer with the Company.  The
Company does not believe it can find qualified replacements for these
employees.  The Company’s inability to find qualified employees, coupled
with historical low gross margins on audio/visual sales, has resulted in the
Company being unable to pursue audio/visual projects in 2010. 
The Company will complete certain audio/visual projects in 2010 but does not
expect to participate in future audio/visual sales.


Security.  Casey
provides integrated security systems for institutional, municipal, commercial
and residential buildings handling design and engineering, product
specification, installation, maintenance and personnel
training.  Customers include commercial and apartment buildings,
transportation and educational facilities and medical
centers.  Products include indoor-outdoor, perimeter, pan-tilt-zoom
cameras, monitors, wireless command and remote control and transmission
technology.  Casey designs and installs a full range of card access
control systems including scrambled pad-biometrics, smart cards, swipe cards and
proximity readers. Casey has worked with many network technologies including
encrypted networks.




Service.  Casey
continues to put an increasing priority on the development of an integrated and
efficient service organization. Sales personnel have been dedicated to securing
service contracts and to market service of Comtrak and other projects coming out
of warranty and the renewal of such contracts. To provide efficient and
productivecustomer
service, Casey maintains an office in New York City which houses its New York
service management and offers 24/7 customer support with over 30
manufacturer-trained field service technicians




COMPETITION.  Synergx’s
industry is competitive; some of Synergx's competitors may have greater
financial resources and may offer a broader line of fire and life safety
products. Synergx also faces competition in the servicing of systems which it
sells. Accordingly, even though Synergx may sell and install a fire and life
safety and/or communications system, it may not receive the contract to service
that system. Synergx, however, believes that it can effectively compete with any
entity which conforms to applicable rules and regulations.




CUSTOMERS AND
SUPPLIERS.For
the fiscal year ended September 30, 2009, no customer accounted for more than
10% of Synergx's revenues and at September 30, 2009, no customer accounted for
more than10% of Synergx’ s accounts receivable.  Only one supplier
accounted for more than 10% of Synergx's cost of sales (amounting to 19%) during
the year ended September 30, 2009.




For the
fiscal year ended September 30, 2008, no customer accounted for more than 10% of
Synergx's revenues and at September 30 2008, one customer accounted for more
than10% of Synergx’ s accounts receivable (amounting to 10.4%).  Only
one supplier accounted for more than 10% of Synergx's cost of sales (amounting
to 16%) during the year ended September 30, 2008.




The
Company does business directly and indirectly through electrical contractors to
New York City Transit Authority.  Sales to this authority represented
approximately 12% and 24% respectively of the total sales in the years ended
September 30, 2009 and September 30, 2008.




PATENTS AND
TRADEMARKS.The Company does not have any patents on its
systems, but, it uses proprietary technology which it seeks to protect as trade
secrets. The "Firetector," "Casey Systems" and "COMTRAK" trademarks are
registered with the United States Patent and Trademark Office.






3






REGULATIONS.  Synergx
believes that it complies with applicable building codes, zoning ordinances,
occupational, safety and hazard standards and other Federal, state and local
ordinances and regulations governing its business activities. Environmental
regulations do not have a material effect on any of our businesses.




RESEARCH AND
DEVELOPMENT.  During the fiscal years ended September 30, 2009
and 2008, Synergx spent approximately $329,000 and $335,000, respectively, for
research and development of Synergx's life safety and communication
systems.




EMPLOYEES.  As
of September 30, 2009, Synergx and its subsidiaries had 70 full time employees,
including 29 New York hourly employees that are covered by a Collective
Bargaining Agreement expiring March 2012.




BUSINESS
CONDITIONS.  Synergx believes that its labor and material
sources are sufficient and that other than normal competitive factors, and what
is discussed above or under "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS", Synergx's operations and industry do not
have any special characteristics which may have a material impact upon its
future financial performance other than those items discussed
above.  Due to the current economic climate, however, the Company
expects to have difficulty instituting price increases to offset increased
costs.




RELATIONSHIP WITH
FIRECOM, INC.  At September 30, 2007, Firecom, Inc. (“Firecom”)
(a privately owned company involved in the fire alarm business) owned 1,352,544
shares or approximately 26% of the Company’s outstanding shares of common
stock.  In June 2008, Firecom purchased an additional 225,568 shares
and in January 2009, Firecom purchased another 490,000 shares increasing its
beneficial ownership to 2,068,112 shares equal to approximately 40% of the
Company’s outstanding common stock.




Mr. Paul
Mendez, the Company’s President and Chief Executive Officer also serves as
Chairman of the Board of Directors and Chief Executive Officer of Firecom. On
June 10, 2008, the Company entered into an employment agreement with Mr. Mendez
under which the Company will pay Mr. Mendez an annual base salary of $20,000,
not including any performance bonuses or equity compensation that may be
approved by the Board of Directors and its compensation
committee.  The employment agreement was modified in January 2009 to
increase Mr. Mendez’s salary, retroactive to October 1, 2008, to an annual base
salary of $250,000.  Pursuant to the employment agreement, either the
Board of Directors of the Company or Mr. Mendez may terminate his employment
without cause and at any time. Mr. Mendez devotes approximately 50% of his time
to the affairs of the Company. In the employment agreement with the Company, Mr.
Mendez has agreed to certain non-competition and confidentially
provisions.


Firecom
also provides the Company with a full time employee who serves as President of
the Company’s fire alarm products and services activities. For the year ended
September 30, 2009 the Company paid Firecom $191,000 for the services of this
individual, which includes reimbursement for salary, payroll taxes and other
employee benefits.  These expenses are included in cost of service
revenue.  For the year ended September 30, 2008 the Company paid
Firecom $135,000 for the same services.  For the year ended September
30, 2009 the Company paid $50,000 to Firecom for another employee who serves in
a fire alarm administrative function, no money was paid for this employee during
the year ended September 30, 2008 as the employee began work for the Company in
January 2009.




The
Company and Firecom have entered into several transactions in the ordinary
course of business that are not material to the revenues, gross profit or net
income of the Company.  Firecom has provided certain sales leads to
the Company for products Firecom does not sell. These sales leads have resulted
in additional sales of products to customers. The Company has paid Firecom 2%
sales commissions related to these sales which amounted to $6,000 for the year
ended September 30, 2009 and there were no such transactions for the year ended
September 30, 2008.  Firecom has manufactured and sold to the Company
certain fire alarm equipment made to the Company’s specifications. The cost of
this equipment to the Company was $22,000 and $35,000 during the years ended
September 30, 2009 and 2008, respectively. The Company from time to time has
purchased and sold certain products used in Firecom’s
business.  During the years ended September 30, 2009 and 2008 these
products were sold to Firecom for $395,000 and $85,000, respectively. The
Company has a consulting agreement with Firecom pursuant to which Firecom
provides certain hardware and software engineering and field trouble-shooting
services.  The Company has not incurred any expense for these services
during the years ended September 30, 2009 and 2008. In offering these services,
Firecom has agreed to keep information confidential and refrain from use of the
information in its business.








4






Effective
October 1, 2009, the Company entered into a lease with Firecom to lease 1,500
square feet of office space and 500 square feet of warehouse space and use of
common areas at Firecom’s facility in Woodside, NY.  This facility
will serve as the Company’s new service center for New York City.  The
lease became effective October 1, 2009 and ends December 31,
2014.  Lease payments begin January 1, 2010 with base rent of $2,500
per month ($30,000 per year) and additional rent of approximately $15,000 per
year to cover capital improvements and building taxes.  The rent
payments begin January 1, 2010, and there are no charges for utilities and
services.




ITEM 
1A.  RISK FACTORS.




As a
smaller reporting company as defined by Rule 12b-2 of the Exchange Act, the
Company is not required to provide the information required under this
item




ITEM
2.          PROPERTIES




The
Company leases approximately 16,400 square feet of office, manufacturing and
warehouse space in Syosset, New York under a seven year lease that was to expire
in June 2007.  In 2006, the lease was extended on similar terms to
expire June 30, 2012.The rental schedule provides for monthly rent of $19,000
during 2009 with 3.3% yearly increases through the remainder of the term of the
lease.




The
Company has a lease for its service center in New York City that became
effective August 2002 and runs through December 31, 2009. The lease is for
office and warehouse space and the yearly rental for 2009, including taxes, fees
and escalation amounted to $103,000. In October 2009, the Company began the
process of exiting this facility andentered into a new lease
with Firecom, Inc. (“Firecom”), a related party (see related party information
in Item 1 above) to rent 1,500 square feet of office space and 500 square feet
of warehouse space and the use of common areas at Firecom’s facility in
Woodside, NY. This facility will serve as the Company’s new service center for
New York City.  The lease became effective October 1, 2009 and runs
through December 31, 2014.  Lease payments begin January 1, 2010 and
the annual cost to cover base rent, capital improvements, and utilities and
services will be approximately $45,000 per year.




Management
believes there is sufficient space at these facilities for its current and
intended business.




ITEM
3.          LEGAL
PROCEEDINGS




In the
normal course of its operations, the Company has been, or from time to time may
be, named in legal actions seeking monetary damages.  While the
outcome of these matters cannot be estimated with certainty, and certain matters
are in early or discovery stages of litigation, management does not expect,
based upon consultation with legal counsel and insurance coverage, that such
actions will have a material effect on the Company's business or financial
condition.




ITEM
4.          SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS




The
information called for by this item, with respect to our Annual Meeting of
Stockholders held on July 28, 2009, is incorporated by reference to our
disclosure in Part II, Item 4 of our Quarterly Report on Form 10-Q for the
period ended June 30, 2009 filed with the SEC on August 14, 2009.










5






PART
II




ITEM
5.          MARKET FOR
REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERSAND ISSUER PURCHASES OF EQUITY
SECURITIES




Our
common stock has been quoted on the Pink Sheets using the “SYNX.PK” symbol since
our delisting from the Nasdaq Capital Market, or Nasdaq, on August 17, 2009 for
failure to comply with the $1 per share minimum bid price requirement under
Marketplace Rule 4310(c)(4).  Prior to its delisting on August 17,
2009, Synergx's  Common Stock has been traded on NASDAQ since April
11, 1989 under the "FTEC" symbol and since May 2002 under the “SYNX”
symbol.The
following table shows the high and low bid and ask quotations for each fiscal
quarter from October 1, 2007 through August 16, 2009 which quotations were
obtained from the National Association of Securities Dealers Inc.  The
bid and ask quotations from August 17, 2009 to September 30, 2009 were obtained
from the Pink OTC Markets Inc. and reflects inter-dealer prices, without retail
mark-up, mark-down or commission, and may not represent actual
transactions.




Ask
              
              
              BidQuarter
      Ended
              
              High
              
              
              Low
              
              
              High
              
              
              LowFiscal
      Year Ended September 31, 2008December
      31, 2007
              
              
              2.20
              
              
              
              1.22
              
              
              
              2.30
              
              
              
              1.25March
      31, 2008
              
              
              1.32
              
              
              
              0.01
              
              
              
              2.13
              
              
              
              0.66June
      30, 2008
              
              
              1.03
              
              
              
              0.25
              
              
              
              1.43
              
              
              
              0.58September
      30, 2008
              
              
              0.87
              
              
              
              0.25
              
              
              
              1.00
              
              
              
              0.26Fiscal
      Year Ended September 30,
      2009December
      31, 2008
              
              
              0.38
              
              
              
              0.16
              
              
              
              0.74
              
              
              
              0.25March
      31, 2009
              
              
              0.78
              
              
              
              0.27
              
              
              
              1.80
              
              
              
              0.33June
      30, 2009
              
              
              0.73
              
              
              
              0.31
              
              
              
              0.82
              
              
              
              0.39September
      30, 2009
              
              
              0.41
              
              
              
              0.16
              
              
              
              0.49
              
              
              
              0.16


The above
quotations represent prices between dealers, do not include retail markups,
markdowns or commissions and may not represent actual
transactions.  As of December 28, 2009, there were approximately
250record holders
of Synergx's Common Stock.


On April
21, 2008 the Company received a letter from the NASDAQ Stock Market notifying
the Company that for the last 30 days, the bid price of the Company’s common
stock has closed below the minimum $1.00 per share requirement for continued
inclusion in the NASDAQ Stock Market.




Due to
extraordinary market conditions NASDAQ decided to suspend enforcement of the bid
price and market value of publicly held shares requirements through January 2009
and again through August 2009.


On August
6, 2009, the Company received a letter from the NASDAQ Listing Qualification
Department (“NASDAQ”) stating that the Company had not regained compliance with
the minimum bid price requirement by August 5, 2009 and, as a result, its common
stock would be subject to delisting from The NASDAQ Capital Market unless the
“Company requested an appeal before the NASDAQ Hearing Panel. Accordingly unless
the Company requested an appeal, trading of the Company’s common stock would be
suspended at the opening of business on August 17, 2009 and the Company’s common
stock will be removed from listing and registration on the NASDAQ Stock
Market.




After
consideration of its options, the Company did not request a hearing before the
Panel and its common stock was delisted from NASDAQ at the opening of business
on August 17, 2009. The Company determined that it would be unlikely that it
would be able to meet the NASDAQ Stock Market’s listing criteria on an ongoing
basis and it would be in the best interest of the Company and its shareholders
to allow its common stock to be delisted.






6






The
Company has not paid any cash dividends on its Common Stock. Payment of cash
dividends in the foreseeable future is not contemplated by the Company. Whether
dividends are paid in the future will depend on the Company's earnings, capital
requirements, financial condition along with economic and market conditions,
industry standards and other factors considered relevant to the Company's Board
of Directors. Payment of dividends is restricted in certain cases by the
Company's credit facilities. Accordingly, no assurance can be given as to the
amount or timing of future dividend payments, if any.




ITEM
6.         SELECTED FINANCIAL
DATA




As a
smaller reporting company as defined by Rule 12b-2 of the Exchange Act, the
Company is not required to provide the information required under this
item




ITEM
7.         MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS




References
to 2009 and 2008 within the Management’s Discussion and Analysis of Financial
Condition and Results of Operations refers to the fiscal years ended September
30, 2009 and September 30, 2008, respectively.




Liquidity and Capital
Resources




The ratio
of the Company’s current assets to current liabilities (current ratio) decreased
to approximately 1.73 to 1 at September 30, 2009 compared to 1.83 to 1 at
September 30, 2008. Working capital declined to $3.2 million at September 30,
2009 compared to $3.8 million at September 30, 2008. This decline in working
capital and the decrease in the current ratio are principally related to the
classification of the $1,497,000 balance drawn on the Company’s $2.5 million
dollar revolving credit facility (the “Credit Facility”) as a current liability
at September 30, 2009 compared to being a non-current liability at September 30,
2008.




The
Company had a $2.5 million revolving credit facility (the “Credit Facility”)
with TD Banknorth (“the Bank”).  As of September 30, 2009 and 2008,
$1,497,000 and $518,000, respectively, was owed to the bank.  The Credit
Facility had an annual interest rate of prime plus 2% on outstanding balances
(5.25% at September 30, 2009) and expired on October 1, 2009. Certain events of
default existed under the loan agreement.  The bank has not called the loan
and has advised the Company that it will not advance any additional funds. 
In connection with ongoing discussions with the bank, the Company made a $15,000
principal payment on December 15, 2009.
  The
obligation to the bank is currently payable upon demand.  The Company is
negotiating with the Bank to provide for a temporary extension of the facility.
where the bank will not demand repayment, which provides the Company, among
other things, time to satisfy its obligation to the bank. The Company has also
sought financing from other lenders. To date, the Company has not entered into
any agreement to accomplish the foregoing.  Further, there can be no
assurance that the Company will be successful in extending the facility or
obtaining alternative financing.
 
 The
Company’s debt to the bank is secured by all assets of the Company and all of
its operating subsidiaries.  Outstanding debt to the bank is measured
against a borrowing base, which is calculated based on eligible accounts
receivable and inventories.
 
 The
credit facility includes certain restrictive covenants, which among other
things, impose limitations on declaring or paying dividends, acquisitions, and
making capital expenditures.  The Company is also required to maintain
certain financial ratios and tangible net worth covenants.  As of September
30, 2009, the Company was not in compliance with certain of its
covenants.
  As
discussed in the accompanying financial statements, the Company has continued to
incur losses from operations. In addition, in an attempt to achieve
profitability and positive cash flow, management has instituted a cost reduction
program that included a reduction in labor and other costs. Further, due to the
uncertain economic conditions, recurring losses, and the current unfavorable
lending climate, there can be no assurance that the Company will be able to
generate sufficient cash flow to pay off its entire bank line or that it will be
successful in arranging a new line of credit on acceptable terms for an amount
sufficient to continue its operations successfully. As a result, these factors
raise substantial doubt with respect to the Company’s ability to continue as a
going concern.






7




The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
of liabilities that may result should the Company be unable to continue as a
going concern.




Cash
Flows




Net cash
provided by operations for 2009 was $306,000 as compared to $1,739,000 for the
comparable prior year period, a year-over-year decrease of
$1,443,000.  This $1,443,000 decrease in cash provided by operations
was primarily due to $2,041,000 less cash generated by net reductions in
operating assets and liabilities in 2009 which was partially offset by a net
loss in 2009 that was $881,000 lower than the net loss for the comparable period
in 2008. The reduction in operating assets and liabilities in 2009 was
negatively affected by an increase of approximately $600,000 in inventories for
certain projects that will be delivered after September 30, 2009. The reduction
in operating assets and liabilities in 2008 primarily resulted from $1,195,000
in collection of accounts receivable due to the timing of payments on long
standing projects involving retainage.




In 2009,
the net cash inflow of $306,000 from operations less investing activities for
equipment purchases of $18,000 (compared to $225,000 of equipment purchases in
2008) and financing activities for note payments of $28,000 resulted in net cash
inflow of $260,000. This $260,000 inflow plus additional bank borrowing of
$979,000 increased the Company’s cash balance to $1,502,000 at September 30,
2009.  In 2008, the Company primarily used cash provided from a
reduction in its operating assets and operating liabilities to reduce its bank
borrowing to $518,000 at September 30, 2008 and had $263,000 as its cash balance
at September 30, 2008.




The
current economic recession is making it very difficult to maintain revenue
levels and margins as projects are being postponed and customers are asking for
price reductions. Since the beginning of the 2009 calendar year, we have
incurred losses as a result of slower economic activity and delays in the
release of transit project shipments requested by New York City Transit. These
delays in transit project shipments continue to affect our revenues, income and
liquidity. To offset these price reductions and shipment delays, management has
implemented reductions in staffing levels and overheads in order to lower
operating expenses and return to profitability.  These cost reductions
took effect at different periods during 2009, the last being in August 2009, and
are expected to approximate $1,700,000 on an annualized basis.




In
addition, effective November 2009, the Company decided to withhold bidding on
major transit related projects since these projects extend over long periods of
time and historically have been subject to extensive delays in equipment
approval and acceptance (which is problematic in the need for maintaining
staffing levels and project profitability) and are subject to changes in funding
by the related agencies for these projects (which requires the Company to
maintain a large bank line of credit). However, the Company will continue to bid
on projects of very short duration that could be completed quickly, and make box
type sales that do not require extensive engineering labor.




Results
of Operations





Revenues
and Gross
Profit





For
      the years ended September 30,2009
            
            
            
            2008(In
      thousands)Product
      Sales
            
            $
            11,997
            
            
            $
            13,075Subcontract
      Sales
            
            
            1,662
            
            
            
            1,728Service
      Revenue
            
            
            5,169
            
            
            
            5,301Total
      Revenue
            
            $
            18,828
            
            
            $
            20,104Product
      Gross Margin
            
            $
            2,074
            
            
            $
            2,314Subcontract
      Gross Margin
            
            
            343
            
            
            
            246Service
      Gross Margin
            
            
            1,924
            
            
            
            2,584Total
      Gross Margin
            
            $
            4,341
            
            
            $
            5,144Gross
      Profit Product %
            
            
            17
            %
            
            
            18
            %Gross
      Profit Subcontractor %
            
            
            21
            %
            
            
            14
            %Gross
      Profit Service %
            
            
            37
            %
            
            
            49
            %Total
      Gross Profit %
            
            
            23
            %
            
            
            26
            %





Revenues





Product
sales decreased $1,078,000 or 8% to $11,997,000 compared to $13,075,000 in 2008.
The decrease in product sales resulted from significantly lower shipments of
security and communication products in 2009, which primarily resulted from
delays in the release of subway station security and communication projects by
New York City Transit Authority. These delays contributed to an overall $2.2
million decrease in product sales in 2009. However, this decrease was offset in
part by product sales from installation of a large display system at a
convention center ($862,000 of product sales in 2009) and from the installation
of the Company’s new Comtrak system upgrade at a large building in New York City
($292,000 of product sales in 2009). Revenue from this building upgrade began in
December 2008 and is ongoing and is expected to be completed in
2012.





Subcontract
sales decreased during 2009 due to a decline in subcontract work related to the
completion of installation of a fire alarm system at a major new retail outlet
center ($532,000 of sales in 2009) in our Long Island, NY territory involving a
building owner and tenants (which project had begun in 2008) and due to fewer
projects requiring installation by the Company compared to 2008. In addition
during 2009, the Company was responsible as prime contractor for the electrical
installation of a large display signage at a convention center ($132,000 of
subcontract sales). Jobs of this size and nature are unusual for this area and
are not expected to occur often.





Service
revenues decreased 2% to $5,169,000 in 2009 primarily due to a decrease in
call-in service on fire alarm systems (replacement parts and service required by
buildings).









8







Gross
profit margin from product sales decreased 10% to $2,074,000. The decline in
absolute gross profit margin was primarily attributable to a major decrease in
product revenue from security products in 2009, caused by delay in releases of
projects by New York City Transit Authority. Gross profit margin as a percentage
of product sales was 17% in 2009 (18% in 2008). In spite of significantly lower
product sales in 2009 to absorb overhead, the gross profit percentage only
declined 1% to17% due to certain reductions in project engineering and direct
labor staff in 2009.





Gross
profit margin related to subcontract sales for 2009 increased 39% or $97,000 in
absolute terms to $343,000 and as a percentage of sales increased 7% to 21% due
to the Company being responsible for the installation of a large display signage
at a convention center and completion of fire alarm installations for tenants at
a major retail outlet center in 2009 (noted above). The higher gross margin
percentage in 2009 is due to a higher margin percentage received on tenant work
at the major retail outlet center project.





Gross
profit margin from service revenues decreased $660,000 or 26% in absolute terms
during 2009 due to a decrease in call-in-service on fire alarm systems (noted
above) and for the negative affect of additions in the number of service
technicians as the Company increased its customer support staffing levels
(during 2009) and rebalanced its staff to better serve customer requirements. In
addition, the Company added certain service administration staff, which included
a dedicated operating executive (full year in 2009 and part of 2008) whose
expenses are included in cost of service. Gross margin as a percentage of
revenues primarily declined due to the additional costs of service
administration staff in 2009.





Selling,
General and Administrative Expenses





Selling,
General and Administrative Expenses (“S G & A”) decreased $1,377,000 in 2009
over 2008 primarily due to cost reduction efforts to lower overhead expenses.
Savings of $830,000 from this effort came from reductions in personnel in sales,
administration, information technology, and research and development and from
lower costs for professional fees, insurance premiums (due to negotiated
reductions), commissions (due to lower sales). The remainder of the decrease
relates to a $547,000 provision in 2008 for separation costs for the resignation
of both the Chief Executive Officer and the President of Casey
Systems.  In 2009, SG&A as a percentage of sales declined 5.3% to
23.3% due to the savings noted above. The Company maintained a high level of
developmental costs for modernizing components of the Company’s proprietary
Comtrak fire alarm system. This program is expected to generate future revenue
and is designed to allow a building owner to enhance the capabilities of its
fire alarm system at a fraction of the cost of a new system replacement and is
expected to generate future revenues to the Company as well as extend the useful
life of the installed base of the Company’s proprietary Comtrak
system.





(Loss)
Before Tax





The
$555,000 decrease in loss from operations during 2009 is primarily due to the
above noted $1,377,000 reduction in selling, general and administration expenses
compared to 2008 (which included a $547,000 provision for separation costs noted
above). This improvement in SG&A expenses in 2009 was offset by $803,000 of
lower gross profit and $19,000 of higher depreciation expenses related to a new
computer system. The decline in gross profit was primarily related to a $660,000
decrease in gross profit margin from service revenues caused by a decline in
call-in-service on fire alarm systems (replacement parts and service required by
buildings) and from an increase in number of service technicians as the Company
increased its customer support staffing levels (in 2009) and rebalanced its
staff to better serve customer requirements. In addition the Company added
certain service administration staff in 2009, which included a dedicated
operating executive whose expenses are included in cost of service.





Interest
expense decreased $47,000 during 2009 due to the effect of lower average
borrowing levels.








9





Critical
Accounting Policies





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period.  Actual results could differ from those
estimates.





The
Company believes that the estimates and assumptions that are most important to
the portrayal of our financial condition and results of operations, in that they
require subjective or complex judgments, form this basis for the accounting
policies deemed to be most critical to us.  These relate to inventory
valuation and revenue recognition.  We believe estimates and
assumptions are related to these critical accounting policies are appropriate
under the circumstances.  However, should future events or occurrences
result in unanticipated consequences, there could be a material impact on our
future financial conditions or results of operations.





Order
Position





Synergx’s
order position, excluding service was $9.0 million at September 30, 2009
compared to $12.5 million level at September 30, 2008. The Company expects to
fulfill a significant portion of its order position over the next twelve months.
Due to the fact that some of the Company's products are sold and installed as
part of larger construction or mass transit projects, there is typically a delay
between the booking of the contract and its revenue realization. The order
position includes, and the Company continues to bid on, projects that include
subcontractor labor, (electrical installation performed by others). The Company
expects to be active in seeking orders where the Company would act as a prime
contractor and be responsible for management of the project as well as
electrical installation. However, the Company has not been successful in
obtaining any significant new mass transit contracts and in November 2009
decided to withhold bidding on work involving transit authorities (See Plan of
Operations).





Plan of
Operations





During
fiscal 2010, management intends to maintain its cost reduction initiatives and
to focus on marketing programs for the sale of fire alarm and security products
and to further develop its service contract business. During 2010, management’s
focus on sale of security products will be to schools and hotels.







10






Effective
November 2009, the Company decided to withhold bidding on major transit related
projects since these projects extend over long periods of time and historically
have been subject to extensive delays in equipment approval and acceptance
(which is problematic in the need for maintaining staffing levels and project
profitability) and are subject to changes in funding by the related agencies for
these projects (which requires the Company to maintain a large bank line of
credit). However, the Company will continue to bid on projects of very short
duration that could be completed quickly, and make box type sales that do not
require extensive engineering labor. At September 30, 2009, outstanding orders
to electrical contractors (to New York City Transit Authority) for transit
projects totaled $5.5 million and completion of these projects are dependent on
release and completion dates requested by the transit authority.  One
of these project’s completion could extend to 2011. Sales of transit projects
represented 12% or $2,341,000 and 24% or $4,605,000 respectively of the total
sales in the years ended September 30, 2009 and September 30, 2008.





The
Company’s two audio/visual salespeople and two project engineers are no longer
with the Company.  The Company does not believe it can find
qualified replacements for these employees.  The Company’s inability to
find qualified employees, coupled with historical low gross margins on
audio/visual sales, has resulted in the Company being unable to pursue
audio/visual projects in 2010.  The Company will complete certain
audio/visual projects in 2010 but does not expect to participate in future
audio/visual sales.




At
September 30, 2009 orders for audio/visual products amounted to
$129,000.




Special
Committee to Explore Strategic Opportunities




Our
credit facility with the Bank expired on October 1, 2009.  The bank
has not called the loan and has advised the Company that it will not advance any
additional funds. The obligation to the bank is currently payable upon
demand.  The Company is negotiating with the Bank to provide for a
temporary extension of the facility and has sought financing from other lenders.
However, to date, the Company has not entered into any agreement to accomplish
the foregoing.  Further, there can be no assurance that the Company will be
successful in extending the facility or obtaining alternative financing. As
a result, there is a significant uncertainty with respect to the Company’s
ability to continue as a going concern without implementing a strategic
alternative, including, among other things, raising capital through the
incurrence of additional debt or the issuance of additional equity capital, the
sale of one or more of the Company’s lines of business, or the sale of the
Company.
 In
October 2009, with consideration to the Company’s working capital requirements,
our Board of Directors formed a Special Committee of independent outside
directors to explore and consider various strategic alternatives including
proposals for additional debt or the issuance of additional equity capital, the
sale of one or more of the Company’s lines of business or the sale of the
Company in an effort to enhance stockholder value. The Special Committee is
authorized to negotiate on behalf of the Board of Directors and to consider,
pursue and accept or reject any proposals received, subject to required
stockholder approval and other terms that the Special Committee
determines.
  The
Special Committee’s members include Harris Epstein and Ronald P. Fetzer. The
Special Committee has retained Ladenburg Thalmann as its independent financial
advisor to assist it in its evaluation of strategic alternatives. The
Special Committee has also retained independent legal counsel. There is no
assurance that the Special Committee will procure or receive offers for a
strategic alternative to address the Company’s capital needs, and if it does,
that an agreement for a transaction will be reached, approved or consummated.
The Company does not intend to provide ongoing disclosure with respect to the
progress of its work unless a definitive agreement is approved and executed, or
unless the Company believes disclosure is otherwise appropriate.


Inflation





The
impact of inflation on the Company's business operations has not been material
in the past.  Casey's labor costs are normally controlled by union
contracts covering a period of three years and its material costs have remained
relatively stable.






11







However,
in March of 2009, the Company and its union agreed to a new contract, which
expires in March 2012, that provides for wage/benefits increases of
approximately 4% in each year, but with no increase in the first year of the
contract.  Under terms of previous union contracts, certain union
members, upon passing certain test requirements, began moving up to higher
paying categories that have multiple salary steps per year in excess of the 4%
contractual level. In addition, the demand for highly skilled professionals has
resulted in the need to assess salary levels in order to remain competitive. The
Company will try to mitigate the effect of any increases in labor costs by
efficiency initiatives and expense reductions.  Due to the current
economic conditions, the Company expects to have difficulty instituting price
increases to offset increased costs.





Off-Balance
Sheet Arrangements





As of
September 30, 2009,  the Company did not have any off-balance sheet
debt nordid it have
any material transactions, arrangements, obligations (including contingent
obligations) or other relationships with any unconsolidated entities or other
persons that may have a material current or future effect on financial
condition, changes in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant resources or significant
components of revenue or expenses.





ITEM
7A        QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK





As a
smaller reporting company as defined by Rule 12b-2 of the Exchange Act, the
Company is not required to provide the information required under this
item.





ITEM
8.          FINANCIAL
STATEMENTS





Our
financial statements together with accompanying notes and the report of our
independent registered public accounting firms are set forth on the pages
indicated below.





Report
      of Independent Registered Public Accounting Firm
              F-1Audited
      Consolidated Financial StatementsConsolidated
      Balance Sheets as of September 30, 2009 and 2008
              F-2Consolidated
      Statements of Operations for the Years Ended  September
      30, 2009 and 2008
              F-3Consolidated
      Statements of Stockholders’ Equity for the Years Ended  September
      30, 2009 and 2008
              F-4Consolidated
      Statements of Cash Flows for the Years Ended  September
      30, 2009 and 2008
              F-5Notes
      to Consolidated Financial Statements
              F-6
      – F-21










12











REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM






To the
Board of Directors and





Stockholders
of Synergx Systems Inc.




We have
audited the accompanying consolidated balance sheets of Synergx Systems, Inc.
and subsidiaries (the “Company”) as of September 30, 2009 and 2008, and the
related consolidated statements of operations, stockholders’ equity and cash
flows for the years then ended.  The Company’s management is responsible
for these financial statements. Our responsibility is to express an opinion on
these financial statements based on our audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.




In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of September
30, 2009 and 2008, and the results of its operations and its cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company’s recurring losses from operations and the status of the
loan agreement with its bank raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 1. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.








/s/
NUSSBAUM YATES BERG KLEIN & WOLPOW, LLP





Melville,
New York











December
29, 2009












F-1







SYNERGX
SYSTEMS INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS






September
      30,
                2009
              
              
              September30,
                2008ASSETSCURRENT
      ASSETSCash
              
              $
              1,502,000
              
              
              $
              263,000Accounts
      receivable, principally trade, less allowance for doubtful accounts of
      $297,000 and $302,000, respectively
              
              
              4,031,000
              
              
              
              5,271,000Inventories
              
              
              1,831,000
              
              
              
              1,948,000Prepaid
      expenses and other current assets
              
              
              313,000
              
              
              
              988,000TOTAL
      CURRENT ASSETS
              
              
              7,677,000
              
              
              
              8,470,000PROPERTY
      AND EQUIPMENT -at cost, less accumulated depreciation and amortization of
      $2,354,000 and $2,091,000, respectively
              
              
              559,000
              
              
              
              816,000OTHER
      ASSETS
              
              
              186,000
              
              
              
              250,000TOTAL
      ASSETS
              
              $
              8,422,000
              
              
              $
              9,536,000LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESNotes
      payable to bank
              
              $
              1,497,000
              
              
              $
              -Notes
      payable – current portion
              
              
              25,000
              
              
              
              27,000Accounts
      payable and accrued expenses
              
              
              1,882,000
              
              
              
              2,994,000Deferred
      revenue
              
              
              1,045,000
              
              
              
              1,613,000TOTAL
      CURRENT LIABILITIES
              
              
              4,449,000
              
              
              
              4,634,000Note
      payable to bank
              
              
              -
              
              
              
              518,000Notes
      payable - less current portion
              
              
              31,000
              
              
              
              57,000TOTAL
      LIABILITIES
              
              
              4,480,000
              
              
              
              5,209,000STOCKHOLDERS'
      EQUITYPreferred
      stock, 2,000,000 shares authorized, $.01 par vlaue
                -
      none issued and outstanding
              
              
              -
              
              
              
              -Common
      stock, 10,000,000 shares authorized, $.001 par value;
                issued
      and outstanding 5,210,950 shares
              
              
              5,000
              
              
              
              5,000Additional
      Paid in Capital
              
              
              6,862,000
              
              
              
              6,850,000Accumulated
      deficit
              
              
              (2,925,000
              )
              
              
              (2,528,000
              )TOTAL
      STOCKHOLDERS' EQUITY
              
              
              3,942,000
              
              
              
              4,327,000TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              8,422,000
              
              
              $
              9,536,000








See
accompanying Notes to the Consolidated Financial Statements










F-2











SYNERGX
SYSTEMS INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS










For
      the years ended September 30,2009
              
              
              
              2008REVENUESProduct
      sales
              
              $
              11,997,000
              
              
              $
              13,075,000Subcontract
      sales
              
              
              1,662,000
              
              
              
              1,728,000Service
      revenue
              
              
              5,169,000
              
              
              
              5,301,000Total
      revenues
              
              
              18,828,000
              
              
              
              20,104,000COSTS
      AND EXPENSESCost
      of product sales
              
              
              9,923,000
              
              
              
              10,761,000Cost
      of subcontract sales
              
              
              1,319,000
              
              
              
              1,482,000Cost
      of service revenue
              
              
              3,245,000
              
              
              
              2,717,000Selling,
      general and administrative
              
              
              4,382,000
              
              
              
              5,759,000Depreciation
      and amortization
              
              
              278,000
              
              
              
              259,000Total
      costs and operating expenses
              
              
              19,147,000
              
              
              
              20,978,000(Loss)
      from operations
              
              
              (319,000
              )
              
              
              (874,000
              )OTHER
      INCOME AND EXPENSEInterest
      expense
              
              
              (63,000
              )
              
              
              (110,000
              )Gain
      on equity investment
              
              
              -
              
              
              
              6,000(63,000
              )
              
              
              (104,000
              )(Loss)
      before provision for income taxes
              
              
              (382,000
              )
              
              
              (978,000
              )(Benefit)
      provision for income taxesCurrent
              
              
              15,000
              
              
              
              (30,000
              )Deferred
              
              
              -
              
              
              
              330,00015,000
              
              
              
              300,000Net
      (Loss)
              
              $
              (397,000
              )
              
              $
              (1,278,000
              )(Loss)
      per ShareBasic
      and diluted (loss) per Share
              
              $
              (0.08
              )
              
              $
              (0.25
              )Basic
      and diluted weighted average number of common shares
      outstanding
              
              
              5,210,950
              
              
              
              5,210,950












F-3






SYNERGX
SYSTEMS INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
 YEARS
ENDED SEPTEMBER 30, 2009 and 2008




TOTAL
                  STOCKHOLDERS'
                
                
                COMMON
      STOCK
                
                
                ADDITIONAL
                  PAID
      IN
                
                
                ACCUMULATEDEQUITY
                
                
                SHARES
                
                
                AMOUNT
                
                
                CAPITAL
                
                
                DEFICITBalance
      at September 30, 2007
                
                $
                5,587,000
                
                
                
                5,210,950
                
                
                $
                5,000
                
                
                $
                6,832,000
                
                
                $
                (1,250,000
                )Net
      (Loss)
                
                
                (1,278,000
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,278,000
                )Stock-based
      compensation
                
                
                18,000
                
                
                
                -
                
                
                
                -
                
                
                
                18,000Balance
      at September 30, 2008
                
                
                4,327,000
                
                
                
                5,210,950
                
                
                
                5,000
                
                
                
                6,850,000
                
                
                
                (2,528,000
                )Net
      (Loss)
                
                
                (397,000
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (397,000
                )Stock-based
      compensation
                
                
                12,000
                
                
                
                -
                
                
                
                -
                
                
                
                12,000Balance
      at September 30, 2009
                
                $
                3,942,000
                
                
                
                5,210,950
                
                
                $
                5,000
                
                
                $
                6,862,000
                
                
                $
                (2,925,000
                )














F-4




SYNERGX
SYSTEMS INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS


For
      the years ended September 30,2009
              
              
              2008OPERATING
      ACTIVITIESNet
      (Loss)
              
              $
              (397,000
              )
              
              $
              (1,278,000
              )Adjustments
      to reconcile net (loss) to net cash (used in) provided by operating
      activities:Depreciation
      and amortization *
              
              
              306,000
              
              
              
              288,000Deferred
      taxes
              
              
              -
              
              
              
              330,000Bad
      debt expense
              
              
              48,000
              
              
              
              -Stock-based
      compensation
              
              
              12,000
              
              
              
              18,000Loss
      on disposal of equipment
              
              
              10,000
              
              
              
              -Changes
      in operating assets and liabilities:Accounts
      receivable, net
              
              
              1,192,000
              
              
              
              1,195,000Inventories
              
              
              117,000
              
              
              
              93,000Prepaid
      expenses and other current assets
              
              
              675,000
              
              
              
              (174,000
              )Other
      assets
              
              
              23,000
              
              
              
              (44,000
              )Accounts
      payable and accrued expenses
              
              
              (1,112,000
              )
              
              
              528,000Deferred
      revenue
              
              
              (568,000
              )
              
              
              783,000NET
      CASH PROVIDED BY OPERATING ACTIVITIES
              
              
              306,000
              
              
              
              1,739,000INVESTING
      ACTIVITIESProceeds
      from sale of equity investment
              
              
              -
              
              
              
              6,000Proceeds
      from note receivable
              
              
              -
              
              
              
              68,000Purchases
      of property and equipment, net
              
              
              (18,000
              )
              
              
              (224,000
              )NET
      CASH (USED IN) INVESTING ACTIVITIES
              
              
              (18,000
              )
              
              
              (150,000
              )FINANCING
      ACTIVITIESPrincipal
      payments on notes payable
              
              
              (28,000
              )
              
              
              (26,000
              )Payments
      and proceeds from note payable bank - net
              
              
              979,000
              
              
              
              (1,553,000
              )NET
      CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
              
              
              951,000
              
              
              
              (1,579,000
              )NET
      INCREASE IN CASH
              
              
              1,239,000
              
              
              
              10,000Cash
      at beginning of the year
              
              
              263,000
              
              
              
              253,000Cash
      at end of the year
              
              $
              1,502,000
              
              
              $
              263,000SUPPLEMENTAL
      CASH FLOW INFORMATION:Cash
      paid during the period for:Income
      taxes
              
              $
              12,000
              
              
              $
              23,000Interest
              
              $
              49,000
              
              
              $
              106,000




NON-CASH
INVESTING AND FINANCING
ACTIVITIES








*
Depreciation of $29,000 is included in cost of product and service sales for
both years ended September 30, 2009 and 2008.





During
the year ended September 30, 2008, the Company purchased equipment of $22,000
through financing.












F-5






Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008





1.
Summary of Significant Accounting Policies





Going
Concern Uncertainty




As
discussed in the accompanying financial statements, the Company has continued to
incur losses from operations. In addition, as discussed in Note 3, the Company’s
$2.5 million revolving credit facility with its bank expired on October 1, 2009
and the Company was in default of certain covenants in its loan agreement. The
bank has not called the loan and has advised the Company that it will not
advance any additional funds. The obligation to the bank is currently payable
upon demand.  The Company is negotiating with the Bank to provide for a
temporary extension of the facility. However, to date, the Company has not
entered into any agreement to accomplish the foregoing.  Further, there can
be no assurance that the Company will be successful in extending the facility
or obtaining alternative financing. As a result, these factors raise
substantial doubt with respect to the Company’s ability to continue as a going
concern.
 
 In an
attempt to achieve profitability and positive cash flow, management has
instituted a cost reduction program that included a reduction in labor and other
costs. The Company’s current working capital collateral is in excess of its
present and anticipated credit line. However, due to the uncertain economic
environment, recurring losses, and the current unfavorable credit market, there
can be no assurance that the Company will be able to generate sufficient cash
flow to pay off its entire bank line or that it will be successful in arranging
a new line of credit on acceptable terms for an amount sufficient to continue
its operations successfully.




The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
of liabilities that may result should the Company be unable to continue as a
going concern.





Business





Synergx
Systems Inc. and Subsidiaries (the “Company”) operates in one business segment:
the design, manufacture, distribution, marketing and service of a variety of
data communications products and systems with applications in the fire alarm,
life safety, transit, security and communications industry.  The
Company conducts its business principally in the New York Metropolitan
area.





Principles
of Consolidation





The
consolidated financial statements are prepared in conformity with U.S. generally
accepted accounting principles (GAAP).  The consolidated financial
statements include the accounts of Synergx Systems Inc. and its subsidiaries,
all of which are wholly owned. The principal operating subsidiaries are: Casey
Systems Inc. (“Casey”), Systems Service Technology Corp. (“SST”), Casey Fire
Systems Inc. (its operations commenced October 1, 2009), and Casey Systems
Technologies Inc. (its operations commenced October 1, 2009).  In
addition, the Company has a payroll disbursing subsidiary FT Clearing Inc. and
an inactive subsidiary Comco Technologies Inc.  All significant
intercompany items and transactions have been eliminated in
consolidation.








F-6






Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008


1.
Summary of Significant Accounting Policies (continued)





Revenue
Recognition





Product
sales include sales of systems, which are similar in nature, that involve fire
alarm, life safety and security (CCTV and card access), transit (train station
platforms) and communication (paging, announcement and
audio/visual).  Product sales represent sales of products along with
the integration of technical services at a fixed price under a contract with an
electrical contractor or end user customer (building owner or tenant), or
customer agent.  Product sales for long term contracts are recognized,
using the percentage-of-completion method of accounting.  The effects
of changes in contract terms are reflected in the accounting period in which
they become known.  Contract terms provide for billing schedules that
differ from revenue recognition and give rise at the reporting dates to costs
and estimated profits in excess of billings, and billings in excess of costs and
estimated profits.  Costs and estimated profits in excess of billing
were $103,000 and $640,000 at September 30, 2009 and September 30, 2008,
respectively and have been included in prepaid expenses and other current
assets.  Billings in excess of costs and estimated profits were
$323,000 and $841,000 at September 30, 2009 and September 30, 2008, respectively
and have been included in deferred revenue.  Product sales for short
term contracts are recognized when the services are performed or the product has
been delivered, which is when title to the product and risk of loss have been
substantially transferred to the customer and collection is reasonably
assured.





Subcontract
sales principally represent revenues related to electrical installation of
wiring and piping performed by others for the Company when the Company acts as
the prime contractor and sells its products along with electrical
installation.  Revenue is recognized when these services are performed
at the job site.





Service
revenue from separate maintenance contracts is recognized on a straight-line
basis over the terms of the respective contract, which is generally one
year.  The unearned service revenue from these contracts is included
in current liabilities as deferred revenue.  Non-contract service
revenue is recognized when services are performed.





Use of
Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.  The most significant estimates include inventory valuation
and obsolescence and percentage of completion on long-term
contracts.





Accounts
Receivable





Accounts
receivable are reported net of an allowance for doubtful accounts. We perform
on-going credit evaluations of our customers and adjust credit limits based upon
payment history and the customer’s current credit worthiness, as determined by
our review of current credit information. We estimate bad debt expense based
upon specifically identified customer collection issues to adjust the carrying
amount of the related receivable to its estimated realizable value.




F-7




Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008






1.
Summary of Significant Accounting Policies (continued)





Inventories





Inventories
are stated at the lower of cost (first–in, first–out) or market and consist
primarily of raw materials and parts for service.  The cost elements
of inventories include materials, labor and overhead.  In evaluating
whether inventories are stated at the lower of cost or market, the Company
considers such factors as the amount of inventory on hand, estimated time
required to sell or use such inventory and current and expected market
conditions.  Based on this evaluation, the Company records an
adjustment to cost of goods sold to reduce inventories to net realizable value,
and at September 30, 2009 and September 30, 2008 are reported net of inventory
write downs of $710,000 and $613,000 respectively, for slow movement and
obsolescence.





Property
and Equipment





Property
and equipment are stated at historical cost.  Depreciation of
machinery and equipment and furniture and fixtures is provided primarily by the
straight–line method over their estimated useful lives (3 to 10 years).
Amortization of leasehold improvements is provided by the straight-line method
over the life of the lease or the economic useful life, whichever is
shorter.





Other
Assets





Other
assets primarily consist of $107,000 of database software acquired on September
30, 2009, which will be amortized over three years beginning October 1, 2009,
security deposits of $23,000, goodwill related to the acquisition of Casey
Systems of approximately $34,000, and deferred costs of $22,000 related to
required independent approval for the upgrade to the Company’s Comtrak fire
alarm system, which is being amortized over the estimated period of sales (five
years).




The
Company does not amortize goodwill but evaluates whether the carrying value of
goodwill has become impaired. This evaluation is performed on an annual basis
each fiscal year end. The Company has determined that there was no impairment of
goodwill at September 30, 2009 and 2008.





Advertising
Costs





Advertising
costs are expensed as incurred. Advertising costs for the years ended September
30, 2009 and 2008 amounted to $1,000 and $8,000, respectively.





Research
and Development Costs





Research
and development costs are expensed as incurred.  Research and
development costs for the years ended September 30, 2009 and 2008 amounted to
$329,000 and $335,000, respectively.  These costs are included in
Selling, General and Administrative expenses.








F-8




Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008





1.
Summary of Significant Accounting Policies (continued)





Income
Taxes





The
Company accounts for income taxes using the asset and  liability
method to determine deferred tax assets and liabilities based on the differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.





Loss Per
Share





“GAAP”
requires companies to report basic and diluted earnings (loss) per share
computations.  The basic calculation excludes dilution and is based on
the weighted-average common shares outstanding and the diluted calculation gives
effect to potential dilution of securities that could share in the results of
the Company. For the years ended September 30, 2009 and 2008, the impact of
employees’ options was anti-dilutive, therefore these options were excluded from
the diluted weighted average common shares.





Restricted
Cash





At
September 30, 2008, the Company classified $125,000 of restricted cash within
Other Assets in connection with the Credit Facility with its bank. At September
30, 2009, this cash balance is no longer restricted and has been reclassified
and included in Cash.





Concentration
of Credit Risk




The
Company grants credit to its customers, principally all of which are general or
specialized construction contractors, of which no customer accounted for more
than 10% of the outstanding receivables at September 30, 2009 and one customer
accounted for approximately 10% of outstanding receivables at September 30,
2008.  The Company does not require collateral to support financial
instruments subject to credit risk.  However, on certain public works
projects the Company can proceed against bonds if payment is not forthcoming
from its customers.





On
October 14, 2008, the FDIC announced its temporary Transaction Account Guarantee
Program, which provides full coverage for non-interest bearing transaction
deposit accounts at FDIC-insured institutions that agree to participate in the
program.  The Company’s bank has announced that it has elected to
participate in this program through December 31, 2009.






F-9




Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008





1.
Summary of Significant Accounting Policies (continued)





Stock
Options and Similar Equity Instruments





Effective
October 1, 2006, the Company adopted the fair value recognition provision of
GAAP using the modified-prospective-transition method for stock options and
similar equity instruments (collectively, “Options”) issued to
employees.  As a result, the Company recorded stock based compensation
expense of $12,000 and $18,000 during the years ended September 30, 2009 and
2008, respectively.  The Company has $10,000 of deferred stock based
compensation expense remaining to be expensed over the period from October 2009
through January 2012.





The
Black-Scholes option valuation model was used to estimate the fair value of the
options granted.  The model includes subjective input assumptions that
can materially affect the fair value estimates. The model was developed for use
in estimating the fair value of traded options that have no vesting restrictions
and that are fully transferable.  The expected volatility is estimated
based on the most recent historical period of time equal to the weighted average
life of the options granted. Principal assumptions used in applying the
Black-Scholes model along with the results from the model are as
follows:





Assumptions:


Risk-free
      interest rate
              4.77%Dividend
              0Expected
      life in years
              5
      yearsExpected
      volatility
              154%





2.
Property and Equipment





Property
and equipment  at September 30, 2009 and 2008 are summarized as
follows:





2009
            
            
            2008Machinery
      and equipment
            
            $
            2,597,000
            
            
            $
            2,593,000Furniture
      and fixtures
            
            
            171,000
            
            
            
            171,000Leasehold
      improvements
            
            
            145,000
            
            
            
            143,0002,913,000
            
            
            
            2,907,000Less
      accumulated depreciation and amortization
            
            
            2,354,000
            
            
            
            2,091,000$
            559,000
            
            
            $
            816,000




Depreciation
expense related to these assets were $265,000 and $261,000 for the years ended
September 30, 2009 and 2008, respectively.








F-10







Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008




3.  Note
Payable to Bank





The
Company had a $2.5 million revolving credit facility (the “Credit Facility”)
with TD Banknorth (“the Bank”).  As of September 30, 2009 and 2008,
$1,497,000 and $518,000, respectively, was owed to the bank.  The Credit
Facility had an annual interest rate of prime plus 2% on outstanding balances
(5.25% at September 30, 2009) and expired on October 1, 2009. Certain events of
default existed under the loan agreement.  The bank has not called the loan
and has advised the Company that it will not advance any additional funds. 
In connection with ongoing discussions with the bank, the Company made a $15,000
principal payment on December 15, 2009.
 
 The
obligation to the bank is currently payable upon demand.  The Company is
negotiating with the Bank to provide for a temporary extension of the facility.
where the bank will not demand repayment, which provides the Company, among
other things, time to satisfy its obligation to the bank. To date, the Company
has not entered into any agreement to accomplish the foregoing.  Further,
there can be no assurance that the Company will be successful in extending the
facility or obtaining alternative financing.
 
 The
Company’s debt to the bank is secured by all assets of the Company and all of
its operating subsidiaries.  Outstanding debt to the bank is measured
against a borrowing base, which is calculated based on eligible accounts
receivable and inventories.
 
 The
agreement with the bank includes certain restrictive covenants, which among
other things, impose limitations on declaring or paying dividends, acquisitions,
and making capital expenditures.  The Company is also required to maintain
certain financial ratios and tangible net worth covenants.  As of September
30, 2009, the Company was not in compliance with certain of its
covenants.


4. Long
Term Debt – Notes Payable





As of
September 30, 2009, the Company had notes payable (with interest rates ranging
from 0% to 5.9%) associated with purchases of certain equipment.  This
equipment serves as collateral for the related debt, which matures as
follows:





2010
            
            $
            25,0002011
            
            
            25,0002012
            
            
            5,0002013
            
            
            1,000Total
            
            $
            56,000







F-11




Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008








5.  Lease
Commitments





The
Company leases certain office and warehouse space under non-cancelable operating
leases expiring at various dates. The Company’s lease for office, manufacturing
and warehouse space in Syosset, New York expires on June 30,
2012.  The lease provides for monthly rent of $19,000 during 2009 with
3.3% yearly increases through the expiration of the lease in June
2012.





The
Company has a non-cancelable lease for its service center in New York City
that  runs through December 31, 2009.  The lease is for
office and warehouse space and the yearly rental for 2009, including taxes, fees
and escalation amounted to $103,000.  In October 2009 the Company
began the process of exiting this facility andentered into a new lease
with Firecom, Inc. (“Firecom”), a related party (see Note 11) to rent 1,500
square feet of office space and 500 square feet of warehouse space and the use
of common areas at Firecom’s facility in Woodside, NY. This facility will serve
as the Company’s new service center  for New York City.  The
lease became effective October 1, 2009 and runs through December 31,
2014.  Lease payments begin January 1, 2010 and the annual cost to
cover base rent, capital improvements, and utilities will be approximately
$45,000 per year.





The
following is a schedule of future minimum payments, by year and in the
aggregate, under operating leases with initial or remaining terms of one year or
more at September 30, 2009:





Total
      Operating Leases2010
            
            $
            288,0002011
            
            
            283,0002012
            
            
            228,0002013
            
            
            45,0002014
            
            
            45,000Thereafter
            
            
            11,000Total
      minimum lease payments
            
            $
            900,000





Rental
expense amounted to $352,000 and $342,000, for the years ended
September 30, 2009 and 2008, respectively.




F-12






Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008


6.
Significant Customers and Suppliers





During
fiscal 2009 and 2008, no customer accounted for more than 10% of sales and one
supplier accounted for more than 10% of the Company’s cost of sales (amounting
to 19% and 16%, respectively).  At September 30, 2009, no customer
accounted for more than 10% of accounts receivable.  At September 30,
2008, one customer accounted for 10.4% of accounts receivable.




The
Company does business directly and indirectly through electrical contractors to
the New York City Transit Authority.  Sales to this authority
represented approximately 12%  or $2,341,000 and  24% or
$4,605,000 respectively of the total sales in the years ended September 30, 2009
and September 30, 2008.




7.  Income
Taxes





A
reconciliation of the provision (benefit) for income taxes with the amounts
computed by applying the statutory federal income tax rate is as
follows:





Year
      Ended September 30, 20092009
            
            
            2008Statutory
      federal income tax rate
            
            
            34
            %
            
            
            34
            %Computed
      expected tax (benefit) from (loss) before  income
      tax
            
            $
            (130,000
            )
            
            $
            (333,000
            )Increase
      (decrease)in taxes resulting from:State
      and local income tax (benefit), net of Federal income tax
            
            
            10,000
            
            
            
            4,000Nondeductible
      expenses
            
            
            13,000
            
            
            
            22,000Valuation
      allowance
            
            
            120,000
            
            
            
            674,000Other
            
            
            2,000
            
            
            
            (67,000
            )Income
      tax expense
            
            $
            15,000
            
            
            $
            300,000





Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes and for net operating losses that are
available to offset future taxable income.  At September 30, 2009, the
Company had net operating loss carryforwards for federal income tax purposes of
approximately $1.7 million that may be used to offset future taxable
income.  These loss carryforwards will expire in the years 2026
through 2029.








F-13






Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008


7.  Income
Taxes (continued)





The
components of deferred tax assets and liabilities for the years ended September
30, 2009 and 2008  consist of the following:




Deferred Tax Assets (current
      portion)2009
              
              
              2008Allowance
      for doubtful accounts
              
              $
              119,000
              
              
              $
              121,000Inventory
      reserves
              
              
              315,000
              
              
              
              244,000Deferred
      Compensation
              
              
              35,000
              
              
              
              56,000Total
      Deferred Tax Asset
              
              
              469,000
              
              
              
              421,000Valuation
      allowance
              
              
              (469,000
              )
              
              
              (421,000
              )Net
      Deferred Tax Asset
              
              $
              0
              
              
              $
              0Deferred
      Tax Asset/Liability (non-current portion)
              
              2009
              
              
              2008Net
      operating loss carryforward (through 2029)
              
              $
              683,000
              
              
              $
              623,000Capital
      loss carryforward (through 2013)
              
              
              20,000
              
              
              
              25,000Depreciation
      and amortization
              
              
              (77,000
              )
              
              
              (125,000
              )Other
              
              
              29,000
              
              
              
              60,000Total
      Non Current Deferred Tax Asset
              
              
              655,000
              
              
              
              583,000Valuation
      allowance
              
              
              (655,000
              )
              
              
              (583,000
              )Net
      Non-Current Deferred Tax Asset
              
              $
              0
              
              
              $
              0





As of
September 30, 2009 and 2008, the Company has recorded an aggregate valuation
allowance of $1,124,000 and $1,004,000, respectively against deferred tax
assets.  Due to the net operating losses during the last four years,
management has not anticipated profitable operations to resume at a level that
will result in the utilization of any of the deferred tax assets.





Effective
October 1, 2007, the Company adopted the provisions of FASB Interpretation No.
48, Accounting for Uncertainty
in Income Taxes, an interpretation of FASB Statement No. 109 (“FIN No.
48”).  FIN No. 48 provides that a tax benefit from an uncertain tax
position may be recognized when it is more likely than not that the position
will be sustained upon examination, including resolutions of any related appeals
or litigation processes, based on the technical merits.  In addition,
it provides additional requirements regarding measurement, recognition,
disclosure, interest and penalties and classification.  The Company’s
policy is to recognize interest and penalties relating to uncertain tax
positions in income tax expense.  At September 30, 2009 and 2008,
there was no accrued interest related to income taxes. As of September 30, 2009
and 2008, the company does not have any unrecognized tax benefits related to
various federal and state income tax matters.





The
Company is subject to U.S. federal income tax, as well as various state
jurisdictions.  The Company is currently open to audit under the
statute of limitations by the federal and state jurisdictions for the years
ending September 30, 2006 through 2008.  The Company does not
anticipate any material amount of unrecognized tax benefits within the next 12
months.









F-14




Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008






In March
2004, the Company and its stockholders adopted a nonqualified stock option plan
(“2004 Plan”), which expired on March 10, 2009, except as to options outstanding
under a prior 1997 Plan. Under the 2004 Plan, the Board of Directors may grant
options to eligible employees at exercise prices not less than 100% of the fair
market value of the common shares at the time the options are granted. The
number of shares of Common Stock that may be issued shall not exceed an
aggregate of up to 10% of the Company’s issued  and outstanding shares
from time to time.  Options vest at a rate of 20% per year commencing
one year after date of grant.  Issuances under the 2004 Plan are to be
reduced by options outstanding under the prior 1997 nonqualified stock option
plan.





A summary
of the option activity and changes during the years ended September 30, 2009 and
2008 are presented below:







WeightedWeighted
              
              
              Average
              
              
              WeightedAverage
              
              
              Remaining
              
              
              AverageExercise
              
              
              Contractual
              
              
              Grant
      DateShares
              
              
              Price
              
              
              Term
      (Years)
              
              
              Fair
      ValueOutstanding
      October 1, 2007
              
              
              116,000
              
              
              $
              2.43
              
              
              
              2.8
              
              
              $
              1.24Forfeited
              
              
              (59,000
              )
              
              
              2.50
              
              
              
              2.0
              
              
              
              1.21Outstanding
      September 30, 2008
              
              
              57,000
              
              
              
              2.43
              
              
              
              1.8
              
              
              
              1.24Forfeited
              
              
              (5,000
              )
              
              
              2.50
              
              
              
              1.0
              
              
              
              1.21Outstanding
      September 30, 2009
              
              
              52,000
              
              
              
              2.43
              
              
              
              0.7
              
              
              
              1.24Exercisable
      at September 30, 2009
              
              
              37,600
              
              
              $
              2.45
              
              
              
              0.7
              
              
              $
              1.21




A summary
of the option activity of nonvested shares at September 30, 2008 and 2009, and
changes during the years ended September 30, 2008 and 2009 is presented
below:




Weighted

                Average

                  Grant
      Date

                    Fair ValueNonvested
      at September 30, 2007
              
              
              73,600
              
              
              $
              1.25Vested
              
              
              (11,400
              )
              
              
              1.25Forfeited
              
              
              (35,400
              )
              
              
              1.21Nonvested
      at September 30, 2008
              
              
              26,800
              
              
              
              1.24Vested
              
              
              (11,400
              )
              
              
              1.25Forfeited
              
              
              (1,000
              )
              
              
              1.21Nonvested
      at September 30, 2009
              
              
              14,400
              
              
              $
              1.24


F-15








Synergx
Systems Inc. and Subsidiaries


Notes to
Consolidated Financial Statements


Years
ended September 30, 2009 and 2008






9.
Contingencies





In the
normal course of its operations, the Company has been, or from time to time may
be, named in legal actions seeking monetary damages.  While the
outcome of these matters can not be estimated with certainty, and certain
matters are in the early or discovery stages of litigation, management does not
expect, based upon consultation with legal counsel and insurance coverage, that
any item exists that will have a significant impact on the Company’s business or
financial condition.


10.  Collective
Bargaining Agreements





Approximately
41% of the Company’s employees are covered by collective bargaining agreements.
On March 9, 2009, the Company and its union agreed to a new contract, which
expires in March 2012, that provides for wage/benefits increases of
approximately 4% in each year, but with no increase in the first year of the
contract.





The
Company contributes benefits to union employees under the provisions of
collective bargaining agreement.  The plan requires the Company to
make contributions thereto as negotiated in such collective bargaining
agreement.  The Company contributed $645,000 and $622,000 to this plan
for the years ended September 30, 2009 and 2008, respectively.





The
Company has a 401(k) plan for non-union employees. The plan includes a profit
sharing provision at the discretion of the Board of Directors.  There
was no profit sharing contribution in 2009 and 2008.





11.  Related
Party Transactions





At
September 30, 2007, Firecom (a privately owned company involved in the fire
alarm and life safety business) owned 1,352,544 shares or approximately 26% of
the Company’s outstanding shares of common stock.  In June 2008,
Firecom purchased an additional 225,568 shares and in January 2009, Firecom
purchased another 490,000 shares increasing its beneficial ownership to
2,068,112 shares, equal to approximately 40% of the Company’s outstanding common
stock.





Mr. Paul
Mendez, the Company’s President and Chief Executive Officer also serves as
Chairman of the Board of Directors and Chief Executive Officer of Firecom. On
June 10, 2008, the Company entered into an employment agreement with Mr. Mendez
under which the Company would pay Mr. Mendez an annual base salary of
$20,000.  The employment agreement was modified in January 2009 to
increase Mr. Mendez’s salary, retroactive to October 1, 2008, to an annual base
salary of $250,000. Mr. Mendez does not participate in the Company’s health-care
or other benefit  plans.  Pursuant to the employment
agreement, either the Board of Directors of the Company or Mr. Mendez may
terminate his employment without cause and at any time. Mr. Mendez devotes
approximately 50% of his time to the affairs of the Company. In the employment
agreement with the Company, Mr. Mendez has agreed to certain non-competition and
confidentiality provisions.






F-16




Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008


11.  Related
Party Transactions (continued)





Firecom
also provides the Company with a full time employee who serves as President of
the Company’s fire alarm products and services activities. For the year ended
September 30, 2009 the Company paid Firecom $191,000 for the services of this
individual, which includes reimbursement for salary, payroll taxes and other
employee benefits.  These expenses are included in cost of service
revenue.  For the year ended September 30, 2008 the Company paid
Firecom $135,000 for the same services.  For the year ended September
30, 2009 the Company paid $50,000 to Firecom for another employee who serves in
a fire alarm administrative function.  No reimbursement for this
employee was made during the year ended September 30, 2008 as the employee began
work for the Company in January 2009.





The
Company and Firecom have entered into several transactions that are not
financially material to the revenues, gross profit or net income (loss) of the
Company.  Firecom has provided certain sales leads to the Company for
products Firecom does not sell. These sales leads have resulted in additional
sales of products to customers. The Company has paid Firecom a 2% sales
commission related to these sales which amounted to $6,000 for the year ended
September 30, 2009 and there were no such transactions for the year ended
September 30, 2008.  Firecom has manufactured and sold to the Company
certain fire alarm equipment made to the Company’s specifications. The cost of
this equipment to the Company was $22,000 and $35,000 for the years ended
September 30, 2009 and 2008, respectively.  The Company from time to
time has purchased and sold certain products used in Firecom’s
business.  During the years ended September 30, 2009 and 2008, these
products were sold to Firecom for $395,000 and $85,000,
respectively.  The Company has a consulting agreement with Firecom
pursuant to which Firecom provides certain hardware and software engineering and
field trouble-shooting services.  The Company has not incurred any
expenses during the years ended September 30, 2009 and 2008.  In
offering these services, Firecom has agreed to keep information confidential and
refrain from use of the information in its business.





As of
September 30, 2009 and 2008, the Company owed Firecom $24,000 and $3,000,
respectively, which is included in Accounts Payable. As of September 30, 2009
and 2008, Firecom owed the Company $63,000 and $34,000 respectively, which is
included in Accounts Receivable.





Effective
October 1, 2009, the Company entered into a lease with Firecom to lease 1,500
square feet of office space and 500 square feet of warehouse space and use of
common areas at Firecom’s facility in Woodside, NY.  This facility
will serve as the Company’s new service center for New York City.  The
lease became effective October 1, 2009 and ends December 31,
2014.  Lease payments begin January 1, 2010 with base rent of $2,500
per month ($30,000 per year) and additional rent of approximately $15,000 per
year to cover capital improvements and building taxes.  The rent
payments begin January 1, 2010, and there are no charges for utilities and
services.






F-17


Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008




12.
NASDAQ Delisting





The
Company’s common stock was delisted from the NASDAQ Stock Market (“NASDAQ”) on
August 17, 2009 because the Company’s common stock did not meet the minimum bid
price requirements of NASDAQ. The Company determined that it would be unlikely
that it would be able to meet the NASDAQ Stock Market’s listing criteria on an
ongoing basis and it would therefore be in the best interest of the Company and
its shareholders to allow its common stock to be delisted.





Since the
delisting the Company common stock has traded on the pink sheet market under the
symbol SYNX.PK.





13.  Other
Events





In
February 2008, the President of Casey Systems resigned and in June 2008 the
Chief Executive Officer resigned.  The separation costs for these
resignations are included in selling, general and administrative expenses on the
Consolidated Statements of Operations in the amount of $547,000 for the year
ended September 30, 2008.





14. Fair
Value of Financial Instruments




GAAP
establishes a framework for measuring fair value and requires certain
disclosures about fair value measurements. Fair value is defined as the exchange
price that would be received for an asset or paid to transfer a liability (an
exit price) in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants on the
measurement date. GAAP also establishes a fair value hierarchy, which requires
an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. There are three levels of inputs
that may be used to measure fair value:




Level 1—Quoted
prices in active markets for identical assets or liabilities.




Level 2—Observable
inputs other than Level 1 prices, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other inputs
that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.




Level 3—Unobservable
inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities.





The
following tables set forth by level within the fair value hierarchy the
Company’s financial assets that were accounted for at fair value on a recurring
basis at September 30, 2009 according to the valuation techniques the Company
used to determine their fair values:





Fair
      Value Measurements Using Inputs Considered asFair
      Value at
              9/30/09
            
            
            Level 1
            
            
            Level 2
            
            
            Level 3Cash
            
            $
            1,502,000
            
            
            $
            1,502,000
            
            
            $
            -
            
            
            $
            -Total
            
            $
            1,502,000
            
            
            $
            1,502,000
            
            
            $
            -
            
            
            $
            -




F-18






Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008




15  New
Accounting Pronouncements





In
September 2007, the FASB issued a new standard on fair value measurements,
which defined fair value, established a framework for measuring fair value and
expanded disclosures about fair value measurements.  The fair value
standard clarified the definition of exchange price as the price between market
participants in an orderly transaction to sell an asset or transfer a liability
in the market in which the reporting entity would transact business for the
asset or liability, that is, the principal or most advantageous market for the
asset or liability.  Effective October 1, 2008, the Company partially
adopted the fair value standard but did not adopt it for non-financial assets
and liabilities which are not recognized or disclosed at fair value on a
recurring basis.  See Note 14 of the Notes to Consolidated Financial
Statements for additional information regarding fair value measurement
disclosures.  The Company will be required to adopt the fair value standard
for non-financial assets and liabilities which are not recognized or disclosed
at fair value on a recurring basis on October 1, 2009.  The adoption
of the remaining provisions of the fair value standard is not expected to have a
material impact on the Company’s consolidated financial statements.





In
December 2007, the FASB issued authoritative guidance regarding business
combinations (whether full, partial or step acquisitions) which will result in
all assets and liabilities of an acquired business being recorded at their fair
values. Certain forms of contingent consideration and certain acquired
contingencies will be recorded at fair value at the acquisition date. The
guidance also stated acquisition costs will generally be expensed as incurred
and restructuring costs will be expensed in periods after the acquisition date.
This guidance is effective for financial statements issued for fiscal years
beginning after December 15, 2008.  The Company does not believe
the impact of this amendment on its consolidated financial statements will be
material.




In
May 2009, the FASB issued authoritative guidance which modified the
definition of what qualifies as a subsequent event — those events or
transactions that occur following the balance sheet date, but before the
financial statements are issued, or are available to be issued — and required
companies to disclose the date through which it has evaluated subsequent events
and the basis for determining that date. The Company adopted this guidance in
the third fiscal quarter of 2009. In preparing these financial statements, the
Company's management has evaluated subsequent events through December 29, 2009,
the date the financial statements were issued, for appropriate accounting and
disclosure. See Note 16 in Notes to Consolidated Financial
Statements.


F-19
 Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008





15  New
Accounting Pronouncements (continued)





In
June 2009, the FASB issued an amendment to the accounting and disclosure
requirements for the consolidation of variable interest entities (“VIEs”). The
elimination of the concept of a qualifying special-purpose entity (“QSPE”)
removes the exception from applying the consolidation guidance within this
amendment. This amendment requires an enterprise to perform a qualitative
analysis when determining whether or not it must consolidate a VIE. The
amendment also requires an enterprise to continuously reassess whether it must
consolidate a VIE. Additionally, the amendment requires enhanced disclosures
about an enterprise’s involvement with VIEs and any significant change in risk
exposure due to that involvement, as well as how its involvement with VIEs
impacts the enterprise’s financial statements. Finally, an enterprise will be
required to disclose significant judgments and assumptions used to determine
whether or not to consolidate a VIE. This amendment is effective for financial
statements issued for fiscal years beginning after November 15, 2009. The
Company does not believe the impact of this amendment on its consolidated
financial statements will be material.





In
June 2009, the FASB issued the FASB Accounting Standards Codification (the
“Codification”). The Codification became the single source for all authoritative
GAAP recognized by the FASB to be applied for financial statements issued for
periods ending after September 15, 2009. The Codification does not change
GAAP and did not have a material impact on its consolidated financial
statements.





16.  Subsequent
Events





Transit Projects and
Audio/Visual Products




Effective
November 2009, the Company decided to withhold bidding on major transit related
projects since these projects extend over long periods of time and historically
have been subject to extensive delays in equipment approval and acceptance
(which is problematic in the need for maintaining staffing levels and project
profitability) and are subject to changes in funding by the related agencies for
these projects (which requires the Company to maintain a large bank line of
credit). However, the Company will continue to bid on projects of very short
duration that could be completed quickly, and make box type sales that do not
require extensive engineering labor. At September 30, 2009, outstanding orders
to electrical contractors (to New York City Transit Authority) for transit
projects totaled $5.5 million and completion of these projects is dependent on
release and completion dates requested by the transit authority. One project’s
completion could extend to 2011.  Sales of transit projects
represented 12% or $2,341,000 and  24% or $4,605,000, respectively, of
the total sales in the years ended September 30, 2009 and September 30,
2008.




The
Company’s two audio/visual salespeople and two project engineers are no longer
with the Company.  The Company does not believe it can find qualified
replacements for these employees.  The Company’s inability to find
qualified employees, coupled with historical low gross margins on audio/visual
sales, has resulted in the Company being unable to pursue audio/visual
projects in 2010.  The Company will complete certain audio/visual projects
in 2010 but does not expect to participate in future audio/visual sales. At
September 30, 2009 orders for audio/visual products amounted to $129,000. Sales
of audio/visual products represented 16% or $3,019,000 and  11% or
$2,288,000 respectively of the total sales in the years ended September 30, 2009
and September 30, 2008.


F-20
 Synergx
Systems Inc. and Subsidiaries
 Notes to
Consolidated Financial Statements
 Years
ended September 30, 2009 and 2008


16.  Subsequent
Events (continued)




Special Committee to
Consider Strategic Opportunities




The
Company’s credit facility with the Bank expired on October 1,
2009.  The bank has not called the loan and has advised the Company
that it will not advance any additional funds. The obligation to the bank is
currently payable upon demand.  The Company is negotiating with the Bank to
provide for a temporary extension of the facility. However, to date, the Company
has not entered into any agreement to accomplish the foregoing.  Further,
there can be no assurance that the Company will be successful in extending the
facility or obtaining alternative financing. As a result, there is a
significant uncertainty with respect to the Company’s ability to continue as a
going concern without implementing a strategic alternative, including, among
other things, raising capital through the incurrence of additional debt or the
issuance of additional equity capital, the sale of one or more of the Company’s
lines of business, or the sale of the Company.
 In
October 2009, with consideration to the Company’s working capital requirements,
the Company’s Board of Directors formed a Special Committee of independent
outside directors to explore and consider various strategic alternatives
including proposals for additional debt or the issuance of additional equity
capital, the sale of one or more of the Company’s lines of business or the sale
of the Company in an effort to enhance stockholder value. The Special Committee
is authorized to negotiate on behalf of the Board of Directors and to consider,
pursue and accept or reject any proposals received, subject to required
stockholder approval and other terms that the Special Committee
determines.
  The
Special Committee’s members include Harris Epstein and Ronald P. Fetzer. The
Special Committee has retained Ladenburg Thalmann as its independent financial
advisor to assist it in its evaluation of strategic alternatives. The
Special Committee has also retained independent legal counsel. There is no
assurance that the Special Committee will procure or receive offers for a
strategic alternative to address the Company’s capital needs, and if it does,
that an agreement for a transaction will be reached, approved or consummated.
The Company does not intend to provide ongoing disclosure with respect to the
progress of its work unless a definitive agreement is approved and executed, or
unless the Company believes disclosure is otherwise appropriate.







F-21





ITEM
9.          CHANGES IN
AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.





None





ITEM
9A.       CONTROLS AND
PROCEDURES





Evaluation of Disclosure
Controls and Procedures





At the
period end of this Annual Report on Form 10-K, the Company’s management,
including the Company’s Chief Executive Officer and Chief Financial Officer
evaluated the effectiveness of the design and operation of the Company’s
disclosure controls and procedures.  Based on that evaluation, the
Company’s Chief Executive Officer and Chief Financial Officer have concluded, as
of the end of the fiscal year covered by this report, that:





The
Company’s disclosure controls and procedures are designed to ensure that
information required to be disclosed by the Company in the reports it files or
submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified.





The
Company’s disclosure controls and procedures are effective to ensure that such
information is accumulated and communicated to the Company’s management, and
made known to the Company’s Chief Executive Officer and Chief Financial Officer,
to allow timely decision regarding the required disclosure.





There
have been no changes in the Company’s internal controls over financial reporting
that have materially affected, or is reasonably likely to materially affect the
Company’s internal controls over financial reporting during the period covered
by the Annual Report.





Management’s Report on
Internal Control Over Financial Reporting





We, the
Chief Executive Officer and Chief Financial Officer of Synergx Systems Inc. are
responsible for establishing and maintaining adequate internal control over
financial reporting of the Company, as such term is defined in Rules 13a-15(f)
and 15d-15(f) under the Securities Exchange Act of 1934.  The
Company’s internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles in the United States (“U.S.
GAAP”).





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.





We
evaluated the effectiveness of the Company’s internal control over financial
reporting as of September 30, 2009, using the criteria for effective internal
control established in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission.








13







Based on
our evaluation, we concluded that we did not maintain effective internal control
over financial reporting as of September 30, 2009 based on the specified
criteria.  We identified control deficiencies  regarding:
(1) lack of segregation of duties  (2) small size of dedicated
accounting and finance staff to keep abreast of developing U. S. GAAP and SEC
reporting matters.  We believe that these material weaknesses are due
to the fact that we are a small sized company.  During
the  fiscal year ending on September 30, 2010 we intend to develop
additional procedures to address these issues; however, the number of such
employees will still be limited and may prevent adequate controls in the future,
such as segregation of duties, due to cost/benefit of such
remediation.





The
control deficiencies that we identified could result in a misstatement of
account balances that would result in a reasonable possibility that a material
misstatement to our financial statements may not be prevented or detected on a
timely basis.  Accordingly, we have determined that these combined
control deficiencies constitute a material weakness.





In light
of this material weakness, we performed additional analyses and procedures in
order to conclude that our financial statements for the year ended September 30,
2009, included in this Annual Report on Form 10-K were fairly stated in
accordance with accounting principles generally accepted in the United
States.  Accordingly, we believe that despite our material weakness,
our financial statements for the year ended September 30, 2009 are fairly
stated, in all material respects, in accordance with accounting principles
generally accepted in the United States.





This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered  public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permit the Company to
provide only management’s report in this annual report.





ITEM
9B.       OTHER INFORMATION





None








14




PART
III





Item
10.          Directors, Executive
Officer and Corporate Governance





Our
Directors and Executive Officers and their respective ages and positions, as of
September 30, 2008, along with certain biographical information (based solely on
information supplied by them), are as follows:





NAME
            
            AGE
            
            OFFICE
            
            DATE
      SERVICE COMMENCEDPaul
      Mendez
            
            66
            
            Chief
      Executive Officer and Chairman
            
            June
      2008John
      A. Poserina
            
            69
            
            Treasurer,
      Vice President, Chief Financial Officer, Secretary and
      Director
            
            January
      1997Harris
      Epstein
            
            72
            
            Director
      and Audit Committee
            
            July
      2005Peter
      Barotz
            
            80
            
            Director
      and Audit Committee
            
            March
      2007Ronald
      Fetzer
            
            46
            
            Director
      and Audit Committee
            
            September
      2007





Paul
Mendez





Mr.
Mendez joined Synergx as Chairman of the Board and as President and Chief
Executive Officer in June 2008.  Mr. Mendez is the President and
Chairman of the Board of Firecom Inc. (“Firecom”) and Vice President of
Multiplex Electrical Services, Inc.  Mr. Mendez was elected Chairman
of the Board and President of Firecom in July 1991.





John
A. Poserina





Mr.
Poserina joined us as Treasurer, Vice President, Chief Financial Officer and
Director as of January 1, 1997. From December 1995 until he joined us, Mr.
Poserina was an independent financial consultant. Also, from July 1996 to
September 1996, Mr. Poserina was Chief Financial Officer of Happiness Express
Inc. Mr. Poserina was Chief Financial Officer of Dorne and Margolin Inc. from
November 1994 to December 1995. Prior to that, Mr. Poserina spent 15 years as
Vice President, Treasurer and Chief Financial Officer of Chryon Corporation,
which was a NYSE listed company registered under the Exchange Act. Mr. Poserina
holds a Bachelor of Science degree in accounting from the University of Rhode
Island and is a Certified Public Accountant.





Harris
Epstein





Mr.
Epstein founded the Lender Relationship Group in 1988 and has served as its
President since its inception.  The Lender Relationship Group provides
consulting services to the lending community with expertise in the areas of due
diligence, loan origination, manual preparation and general
consulting.  Mr. Epstein has over 50 years experience in banking and
asset lending working with international and national banks and financial
institutions.





Peter
Barotz





Mr.
Barotz has been the President of Panda Capital Corporation, a private financial
services company, for the past 27 years.  He has been a director
of General Bearing Corp. since December 30, 1997.








15








Ronald
P. Fetzer





Mr.
Fetzer was Vice President of NexCen Brands, Inc., an intellectual property
management and franchising company, and was responsible for financial reporting
and tax matters through December 2009.  From November, 1999 to July,
2007 Mr. Fetzer was Chief Financial Officer at Bill Blass, Ltd. , a fashion
manufacturing and licensing firm.  Prior to his employment at Bill
Blass, Mr. Fetzer was senior manager at the accounting firm of UHY, LLP
(previously known as Urbach Kahn & Werlin) from 1996 to 1999.  Mr.
Fetzer received an MBA in International Finance from Baruch College in 1991 and
a BA in Accounting from Queens College in 1985.





Directors
hold office for a period of one year from the Annual Meeting of Stockholders at
which they are elected or until their successors are duly elected and qualified.
Officers are appointed by the Board of Directors and hold office at the will of
the Board of Directors.





Family Relationships;
Involvement in Certain Legal Proceedings





There are
no family relationships between any Director or Executive Officer of Synergx and
any other Director or Executive Officer of Synergx.





Directors
hold office for a period of one year from the Annual Meeting of Stockholders at
which they are elected or until their successors are duly elected and qualified.
Officers are appointed by the Board of Directors and hold office at the will of
the Board.





Within
the last five years, no director, officer, significant employee or consultant
has been convicted in a criminal proceeding, exclusive of traffic violations or
violated any commodities or securities law. Similarly, no bankruptcy petitions
have been filed by or against any business or property of any director, officer,
significant employee or consultant nor has any bankruptcy petition been filed
against a partnership or business association where these persons were general
partners or executive officers. No director, officer, significant employee or
consultant has been permanently or temporarily enjoined, barred, suspended or
otherwise limited from involvement in any type of business, securities or
banking activity.





Section 16(a) Beneficial
Ownership Reporting Compliance





Section
16(a) of the Securities Exchange Act of 1934 requires our officers and
directors, and persons who own more than ten percent of a registered class of
our equity securities to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Officers, directors and greater than
ten-percent shareholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file.





Based on
its review of the copies of such forms received by it, we believe that, during
the fiscal year ended September 30, 2009, all filing requirements applicable to
its officers, directors and greater than ten-percent shareholders were
met.





Code of Business Conduct and
Ethics





On
January 24, 2005, we adopted a Code of Business Conduct and Ethics that applies
to our directors, officers and employees in the performance of their
responsibilities with respect to our business. Our Code of Business Conduct and
Ethics is available on our website at www.synergxsystems.com under the Corporate
Governance section, and is available in print to any shareholder upon written
request to our Secretary.






16




Board of Directors and
Committee Information





The Board
of Directors currently consists of five members. The Board has determined that
each of Mr. Barotz, Mr. Epstein and Mr. Fetzer is “independent”
as set forth in the rules and regulations of the Exchange Act.
  Audit
Committee
  The board
of directors has a standing audit committee, with a written charter, which
currently consists of Ronald P. Fetzer, Harris Epstein and Peter Barotz, each of
whom is independent under applicable independence requirements. The board of
directors has determined that Mr. Fetzer and Mr. Epstein each also satisfies the
definition of “audit committee financial expert” as promulgated by the
Securities and Exchange Commission.
  There is
no nominating, or compensation committee of the Board of Directors nor is there
any committee performing similar functions.
  Special
Committee to Explore Strategic Opportunities
  The
Company’s credit facility with the Bank expired on October 1,
2009.  The bank has not called the loan and has advised the Company
that it will not advance any additional funds. The obligation to the bank is
currently payable upon demand.  The Company is negotiating with the Bank to
provide for a temporary extension of the facility and has sought financing from
other lenders. However, to date, the Company has not entered into any agreement
to accomplish the foregoing.  Further, there can be no assurance that the
Company will be successful in extending the facility or obtaining
alternative financing. As a result, there is a significant uncertainty with
respect to the Company’s ability to continue as a going concern without
implementing a strategic alternative, including, among other things, raising
capital through the incurrence of additional debt or the issuance of additional
equity capital, the sale of one or more of the Company’s lines of business, or
the sale of the Company.
 In
October 2009, with consideration to the Company’s working capital requirements,
the Company’s Board of Directors formed a Special Committee of independent
outside directors to explore and consider various strategic alternatives
including proposals for additional debt or the issuance of additional equity
capital, the sale of one or more of the Company’s lines of business or the sale
of the Company in an effort to enhance stockholder value. The Special Committee
is authorized to negotiate on behalf of the Board of Directors and to consider,
pursue and accept or reject any proposals received, subject to required
stockholder approval and other terms that the Special Committee
determines.
  The
Special Committee’s members include Harris Epstein and Ronald P. Fetzer. The
Special Committee has retained Ladenburg Thalmann as its independent financial
advisor to assist it in its evaluation of strategic alternatives. The
Special Committee has also retained independent legal counsel. There is no
assurance that the Special Committee will procure or receive offers for a
strategic alternative to address the Company’s capital needs, and if it does,
that an agreement for a transaction will be reached, approved or consummated.
The Company does not intend to provide ongoing disclosure with respect to the
progress of its work unless a definitive agreement is approved and executed, or
unless the Company believes disclosure is otherwise appropriate.







17








Item
11.          Executive
Compensation





The
following table sets forth certain information with respect to compensation paid
or accrued by us for services rendered to it for each of the three fiscal years
ended September 30, 2009, as to Paul Mendez, our current Chief Executive
Officer; Daniel S. Tamkin, our former Chief Executive Officer; John A. Poserina,
our Chief Financial Officer and Secretary;  and Albert Koenig, the former
President of Casey Systems Inc.  None of our other Executive Officers
had aggregate remuneration in excess of $100,000.





Name
            Year
            
            Salary
      ($)
            
            
            Bonus
      ($)
            
            
            Stock
      Awards ($)
            
            
            Option
      Awards
              ($)
            
            
            Non-Equity
      Incentive Plan Compensation ($)
            
            
            Nonqualified
      Deferred Compensation Earnings ($)
            
            
            All
      Other
              Compensation
      ($)
            
            
            
            Total
              ($)Paul
      Mendez(1)
            2009
            
            
            250,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            
            250,000CEO
      and Chairman
            2008
            
            
            5,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            
            5,000Daniel
      S. Tamkin(2)
            2008
            
            
            141,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            341,000
            
            (4)
            
            
            482,0002007
            
            
            192,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            16,000
            
            (4)
            
            
            208,000John
      A. Poserina
            2009
            
            
            203,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            13,000
            
            (5)
            
            
            216,000Chief
      Financial Officer
            2008
            
            
            203,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            11,000
            
            (5)
            
            
            214,0002007
            
            
            195,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            11,000
            
            (5)
            
            
            206,000Albert
      Koenig (3)
            2008
            
            
            77,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            186,000
            
            (6)
            
            
            263,0002007
            
            
            197,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            13,000
            
            (6)
            
            
            210,000





(1) In
June 2008, we entered into an Employment Agreement with Mr. Mendez under
which Mr. Mendez will serve as our President and Chief Executive
Officer. The employment agreement was modified in January 2009 to increase
Mr. Mendez’s salary, retroactive to October 1, 2008, to an annual base salary of
$250,000.  Pursuant to the Employment Agreement, in effect until September
30, 2008, we paid Mr. Mendez a salary at an annual rate of
$20,000.





(2) Mr.
Tamkin resigned as our President and Chief Executive Officer June
2008.  We entered into a Separation Agreement and General Release (the
“Agreement”) with Mr. Tamkin, in satisfaction of mutual obligations, based
on the terms of Mr. Tamkin’s employment agreement.  The Agreement provided,
among other things, that we pay Mr. Tamkin compensation payments totaling
approximately $300,000.





(3) In
February 2008, Mr. Koenig resigned as President of our principal operating
subsidiary Casey Systems Inc.  We entered into a Separation Agreement
and General Release with Mr. Koenig, in satisfaction of mutual
obligations, which provided, among other things, that we pay Mr. Koenig his
annual salary for nine months.





(4)
      Includes the following:
            
            
            2009
            
            
            2008
            
            
            2007Auto
            
            $
            -
            
            
            $
            9,000
            
            
            $
            12,000Medical
            
            
            -
            
            
            
            4,000
            
            
            
            4,000Unused
      Vacation Reimbursement
            
            
            -
            
            
            
            5,000
            
            
            
            -Separation
      Costs
            
            
            -
            
            
            
            323,000
            
            
            
            -(5)
      Includes the following:
            
            
            2009
            
            
            2008
            
            
            2007Auto
            
            $
            7,000
            
            
            $
            7,000
            
            
            $
            7,000Medical
            
            
            6,000
            
            
            
            4,000
            
            
            
            4,000(6)
      Includes the following:
            
            
            2009
            
            
            2008
            
            
            2007Auto
            
            $
            -
            
            
            $
            -
            
            
            $
            12,000Medical
            
            
            -
            
            
            
            -
            
            
            
            1,000Unused
      Vacation Reimbursement
            
            
            -
            
            
            
            14,000
            
            
            
            -Separation
      Costs
            
            
            -
            
            
            
            172,000
            
            
            
            -








18







The
following table details, as of September 30, 2009, the number and value of
option exercises and value of unexercised in-the-money options held by Paul
Mendez, Daniel S. Tamkin, John A. Poserina, and Albert Koenig.  There
are no stock awards outstanding.





Option AwardsName
            
            Grant
      Date
            
            Number
      of Securities Underlying Unexercised Options (#)
    Exercisable
            
            Equity
      Incentive Plan Awards: Number of Securities Underlying Unexercised
      Unearned Options (#)
            
            Number
      of Securities Underlying Unexercised Options (#)
    Unexercisable
            
            
            Option
      Exercise Price
              ($)
            
            Option
      Expiration DatePaul
      Mendez
            
            -
            
            
            -
            
            -
            
            
            -
            
            
            
            -
            
            -Daniel
      S. Tamkin
            
            -
            
            
            -
            
            -
            
            
            -
            
            
            
            -
            
            -John
      A. Poserina
            
            2/10/2005
            
            
            16,000
            
            4,000
            
            
            
            
            
            $
            2.50
            
            2/9/2010Albert
      Koenig
            
            -
            
            
            -
            
            -
            
            
            -
            
            
            
            -
            
            -




In March
2004, Synergx’s Board of Directors and its stockholders adopted a nonqualified
stock option plan ("2004 Plan"), which expired on March 10, 2009, except as to
options outstanding under a prior 1997 Plan. Under the 2004 Plan, the Board of
Directors may grant options to eligible employees at exercise prices not less
than 100% of the fair market value of the common shares at the time the options
are granted. The number of shares of Common Stock that may be issued shall not
exceed an aggregate of up to 10% of our issued and outstanding shares from time
to time. Options vest at a rate of 20% per year commencing one year after date
of grant. Issuances under the 2004 Plan are to be reduced by options outstanding
under the prior 1997 nonqualified stock option plan.




In
December 1995, the Board of Directors voted to institute a 401(k) plan for
nonunion employees to be effective January 1, 1996. The plan includes a profit
sharing provision at the discretion of the board of directors. There was no
profit sharing contribution in 2009 or in 2008.





Employment
Agreements.  Each of our executive officers is covered by
Employment Agreements (each, an “Employment Agreement”).




In June
2008, we entered into an Employment Agreement with Paul Mendez under which Mr.
Mendez will serve as our President and Chief Executive Officer.  Under
the terms of the original employment agreement, Mr. Mendez received a salary of
$20,000.  On January 15, 2009, we entered into the Amendment to the
Employment Agreement with Paul Mendez, retroactive to October 1,
2008.  As a result, we paid Mr. Mendez an annual base salary of
$250,000 from October 1, 2008.  Pursuant to the Employment Agreement,
either our Board of Directors or Mr. Mendez may terminate his employment without
cause and at any time.


Mr.
Poserina’s Employment Agreement, executed January 1, 1997 provides that
if  Mr. Poserina is terminated without "Cause" (as such term is
defined in the Employment Agreement) by us he will be entitled to receive, for
up to six months (the “severance period”), his annual base salary reduced by the
compensation he may receive from any new employment. If there is a sale of all
or substantially all of our assets or equity, then the severance period shall be
12 months without regard to any other compensation he might receive from new
employment.






19






Director
Compensation.  Effective April 1, 2008, non-management
directors received a quarterly retainer of $5,000.  Directors also
receive $600 for each committee or special meeting attended by each
non-management director.  Each of our non-management directors were
paid $24,800 during the fiscal year ended September 30, 2009 and $29,200 during
the fiscal year ended September 30, 2008.




Item
12.          Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder
Matters





The
following table sets forth certain information known to us regarding beneficial
ownership of our outstanding Common Stock at December 28, 2009 of (i) each
beneficial owner of more than five percent of the Common Stock, (ii) each of our
Directors, and (iii) all of our Officers and Directors as a
group.  Unless otherwise indicated, the address of the below-listed
persons is our address, 209 Lafayette Drive, Syosset, NY
11791.





Common
Stock Beneficially Owned At December 28, 2009





Name
      and Address of
              Beneficial
      Owner
            
            Number
      of Shares
            
            
            Percent
      of SharesPaul
      Mendez (1)
            
            
            2,068,112
            
            
            
            39.9
            %John
      A. Poserina (2)
            
            
            48,334
            
            
            
            *Harris
      Epstein (3)
            
            
            5,000
            
            
            
            *Peter
      Barotz
            
            
            -
            
            
            
            *Ronald
      Fetzer
            
            
            -
            
            
            
            *All
      Executive Officers and Directors as a Group (5 persons)
            
            
            2,135,346
            
            
            
            40.8
            %Total
      Shares Issued and Outstanding
            
            
            5,210,950
            
            
            
            100
            %








(1)
Address is 3927 59th
Street, Woodside, N.Y. Mr. Paul Mendez is the Chairman of the Board of Directors
and controlling shareholder of Firecom, and for purposes of Rule 13d-3 may be
deemed the beneficial owner of such Shares deemed to be beneficially owned by
Firecom. Thus, Mr. Mendez may be deemed, for purposes of Rule 13d-3, to be the
beneficial owner of 2,068,112 Shares of the Issuer. Mr. Mendez has shared voting
power over 2,068.112 Shares of the Issuer and he has shared dispositive power
over 2,068.112 Shares. Mr. Mendez disclaims any economic interest or beneficial
ownership of these Shares.





(2)
Includes 16,000 shares of Common Stock issuable upon exercise of options granted
with exercise price of $2.50 per share.





(3)
Includes 5,000 shares of Common Stock issuable upon exercise of options
granted with exercise price of $2.50 per share.





*     
Less than 1%








20









Securities authorized for
issuance under equity compensation plans.





Equity
      Compensation Plan Information
              As
      of September 30, 2009Number
      of
              securities
      to be
              issued
      upon exercise
              of
      outstanding options,
              warrants
      and rights
            
            
            Weighted-average
              exercise
      price of
              outstanding
              options,
      warrants
              and
      rights
            
            
            Number
      of securities remaining
              available
              for
      future issuance under equity compensation plans (excluding securities
      reflected in column (a)Plan
      category
            
            (a)
            
            
            (b)
            
            
            (c)Equity compensation plans
      approved security  holders
            
            
            52,000
            
            
            $
            2.36
            
            
            
            282,997Equity
      compensation plans not  approved by security
      holders
            
            
            -
            
            
            
            
            
            
            
            -Total
            
            
            52,000
            
            
            $
            2.36
            
            
            
            282,997








Item
13.          Certain Relationships
and Related Transactions and Director Independence





At
September 30, 2007, Firecom (a privately owned company involved in the fire
alarm and life safety business) owned 1,352,544 shares or approximately 26% of
the Company’s outstanding shares of common stock.  In June 2008,
Firecom purchased an additional 225,568 shares and in January 2009, Firecom
purchased another 490,000 shares increasing its beneficial ownership to
2,068,112 shares, equal to approximately 40% of the Company’s outstanding common
stock.





Mr. Paul
Mendez, the Company’s President and Chief Executive Officer also serves as
Chairman of the Board of Directors and Chief Executive Officer of Firecom. On
June 10, 2008, the Company entered into an employment agreement with Mr. Mendez
under which the Company would pay Mr. Mendez an annual base salary of
$20,000.  The  employment agreement was modified in January
2009 to increase Mr. Mendez’s salary, retroactive to October 1, 2008, to an
annual base salary of $250,000. Mr. Mendez does not participate in the Company’s
health-care or other benefit plans.  Pursuant to the employment
agreement, either the Board of Directors of the Company or Mr. Mendez may
terminate his employment without cause and at any time. Mr. Mendez devotes
approximately 50% of his time to the affairs of the Company. In the employment
agreement with the Company, Mr. Mendez has agreed to certain non-competition and
confidentiality provisions.





Firecom
also provides the Company with a full time employee who serves as President of
the Company’s fire alarm products and services activities. For the year ended
September 30, 2009 the Company reimbursed Firecom $191,000 for the services of
this individual, which includes reimbursement for salary, payroll taxes and
other employee benefits.  These expenses are included in cost of
service revenue.  For the year ended September 30, 2008 the Company
paid Firecom $135,000 for the same services.  For the year ended
September 30, 2009 the Company paid $50,000 to Firecom for another employee who
serves in a fire alarm administrative function, no money was paid for this
employee during the year ended September 30, 2008 as the employee began work for
the Company in January 2009.






21






The
Company and Firecom have entered into several transactions that are not
financially material to the revenues, gross profit or net income (loss) of the
Company.  Firecom has provided certain sales leads to the Company for
products Firecom does not sell. These sales leads have resulted in additional
sales of products to customers. The Company has paid Firecom a 2% sales
commission related to these sales which amounted to $6,000 for the year ended
September 30, 2009 and there were no such transactions for the year ended
September 30, 2008.  Firecom has manufactured and sold to the Company
certain fire alarm equipment made to the Company’s specifications. The cost of
this equipment to the Company was $22,000 and $35,000 for the years ended
September 30, 2009 and 2008, respectively.  The Company from time to
time has purchased and sold certain products used in Firecom’s
business.  During the years ended September 30, 2009 and 2008, these
products were sold to Firecom for $395,000 and $85,000,
respectively.  The Company has a consulting agreement with Firecom
pursuant to which Firecom provides certain hardware and software engineering and
field trouble-shooting services. Firecom has not charged the Company for these
services. In offering these services, Firecom has agreed to keep information
confidential and refrain from use of the information in its
business.




As of
September 30, 2009 and 2008, the Company owed Firecom $24,000 and $3,000,
respectively, which is included in Accounts Payable.





As of
September 30, 2009 and 2008, Firecom owed the Company $63,000 and $34,000
respectively, which is included in Accounts Receivable.





Effective
October 1, 2009, the Company entered into a lease with Firecom to lease 1,500
square feet of office space and 500 square feet of warehouse space and use of
common areas at Firecom’s facility in Woodside, NY.  This facility
will serve as the Company’s new service center for New York City.





The lease
became effective October 1, 2009 and ends December 31, 2014.  Lease
payments begin January 1, 2010 with base rent of $2,500 per month ($30,000 per
year) and additional rent of approximately $15,000 per year to cover capital
improvements and building taxes.  The rent payments begin January 1,
2010 and there are no charges for utilities and services.





Item
14.          Principal Accountant
Fees and Services.





Audit
Fees.





The
aggregate fees billed to us by our principal accountants for services rendered
during the fiscal years ended September 30, 2009 and 2008 are set forth in the
table below:




September 30,
                2009
              
              
              September 30,
                2008Audit
      Fees(1)
              
              $
              75,000
              
              
              $
              125,000Tax
      Fees
              
              
              15,000
              
              
              
              25,000All
      Other Fees
              
              
              -
              
              
              
              11,000





(1) Audit
fees represent fees for professional services provided in connection with the
audit of our annual financial statements and review of our quarterly financial
statements and audit services provided in connection with other statutory or
regulatory filings.







22






Pre-Approval
Policy





The
charter of the Audit Committee was adopted by the board of directors in
May 2007. The charter of the Audit Committee provides that the Audit
Committee shall pre-approve all auditing and permitted non-audit services
(including the fees and terms thereof) to be performed for us by our independent
auditor, subject to the de minimus exception (the “de minimus exception”) for
non-audit services that are permitted by Section 10A(i)(1)(B) of the
Securities Exchange Act of 1934 and that are approved by the Audit Committee
prior to the completion of the audit.





ITEM
15.        EXHIBITS





(a)  Exhibits





Exhibit No.
              
              Description
      of Exhibit3.1
              
              Certificate
      of Incorporation of the Company, as amended (6)3.2
              
              By
      Laws of the Company (2)4.1
              
              Specimen
      Common Stock Certificate (2)10.1
              
              Credit
      Facility dated October 9, 2003 between Synergx Systems Inc. as borrower
      and Hudson United Bank as lender. (5)10.2
              
              Employment
      Agreement between Casey Systems Inc. and Al Koenig dated as of February
      17, 2005 (7)10.3
              
              Employment
      Agreement between Synergx Systems Inc. and Daniel S. Tamkin dated as of
      October 1, 2005 (7).10.4
              
              Second
      Amendment to Revolving Loan Agreement, Promissory Note and Other Loan
      Documents, between Synergx Systems Inc. and TD Banknorth, N.A., dated as
      of September 29, 2006. (8)10.8
              
              Form
      of Lease dated February, 2000 between Casey Systems as Tenant
      and  First Industrial L.P. as Landlord (3)10.9
              
              Form
      of Lease dated July 23rd, 2002 between Systems Service Technology Corp as
      Tenant and Balbo Realty LLC as Landlord (4)10.10.1
              
              Form
      of Limited Partnership Agreement dated May 29, 2003 between 3077118 Nova
      Scotia ULC (a Synergx Systems owned company) and Secure 724 LP
      (5)10.11
              
              Separation
      Agreement and General Release dated June 2, 2008, between
      Daniel  S. Tamkin and Synergx Systems Inc.
(9)10.12
              
              Employment
      Agreement, dated as of June 10, 2008, between Synergx Systems Inc and Paul
      Mendez*21
              
              Subsidiaries
      of the Registrant *23
              
              Consent
      of Nussbaum Yates Berg Klein & Wolpow, LLP Independent
      Registered  Public Accounting Firm *31.1
              
              Certification
      of Paul Mendez pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002*31.2
              
              Certification
      of John A. Poserina pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002*32
              
              Certification
      of Paul Mendez and  John A. Poserina pursuant
      to  Section 906 of the Sarbanes-Oxley Act of
    2002*


--------


* filed herewith








23







(1)
Reference is made to the correspondingly  numbered Exhibit to
Amendment No. 1 to
the  Company's  Registration  Statement on Form
S-2,  Registration  No. 33-51472,  filed with the
Commission on December 23, 1992, which is incorporated herein by
reference.





(2)
Reference is made to the correspondingly  numbered Exhibit to
Amendment No. 1 to
the  Company's  Registration  Statement on Form
S-1,  Registration  No. 22-26050,  filed with the
Commission on January 23, 1989,  which is incorporated herein by
reference.





(3)  Reference
is made to the correspondingly numbered Exhibit to the Company’s Annual Report
on Form 10-KSB for the Fiscal Year Ended September 30, 2001,which Exhibit is
incorporated herein by reference.





(4)  Reference
is made to the correspondingly numbered Exhibit to the Company’s Annual Report
on Form 10-KSB for the Fiscal Year Ended September 30, 2002,  which
Exhibit is incorporated herein by reference.





(5)
Reference is made to the correspondingly numbered Exhibit to the Company’s
Annual Report on Form 10-KSB for the Fiscal Year Ended September 30, 2003 which
Exhibit is incorporated herein by reference.





(6)
Reference is made to the correspondingly numbered Exhibit to the Company’s
Amendment to Annual Report  on Form 10-KSB/A for the Fiscal Year Ended
September 30, 2002 which Exhibit is incorporated herein by
reference.





(7)  Reference
is made to the correspondingly numbered Exhibit to the
company’s  Annual Report on Form 10-KSB for the Fiscal Year Ended
September 30, 2005 which Exhibit is incorporated herein by
reference.




(8)  Reference
is made to the correspondingly numbered Exhibit to the
company’s  Annual Report on Form 10-KSB for the Fiscal Year Ended
September 30, 2006 which Exhibit is incorporated herein by
reference.





(9)  Reference
is made to the correspondingly numbered Exhibit to the
company’s  Annual Report on Form 10-KSB for the Fiscal Year Ended
September 30, 2008 which Exhibit is incorporated herein by
reference.








24





SIGNATURES





Pursuant  to
the  requirements  of  Section  13 or
15(d) of the  Securities Exchange  Act of
1934,  the  Company has duly caused this Report to be signed
on its behalf by the undersigned, hereunto duly authorized.




SYNERGX
      SYSTEMS INC.
                (Registrant)Dated:
      December 29, 2009
              By:
              /s/ Paul  MendezPaul  Mendez,Chief
      Executive Officer and Director








In
accordance  with the Exchange Act, this report has been signed below
by the
following  persons on behalf of the Company and in the capacities and
on the dates
indicated.






SIGNATURE
            
            TITLE
            
            DATE/s/ Paul
      Mendez
              Paul Mendez
            
            Chairman, Chief
      Executive Officer and Director
            
            December 29,
      2009/s/ John
      A. Poserina
              John A.
      Poserina
            
            Chief
      Financial Officer
              (Principal
      Accounting and Financial Officer), Secretary,
              and
      Director
            
            December 29,
      2009/s/
      Harris Epstein
              Harris Epstein
            
            Director
            
            December 29,
      2009/s/ Peter
      Barotz
              Peter Barotz
            
            Director
            
            December 29,
      2009/s/
      Ronald P. Fetzer
              Ronald P. Fetzer
            
            Director
            
            December 29,
      2009