SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20459

                                   FORM 10-KSB

   (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, 2005
                                       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 (I.R.S. Employer
               incorporation or organization) 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  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 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 is not contained herein, and will not be contained, to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements by reference in Part III of this Form 10-KSB ( )

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in rule 12b-2 of the Exchange Act) YES  ( )   NO (X)

     State issuer's revenues for its most recent fiscal year: $20,787,000

     The aggregate  market value of the voting stock held by  non-affiliates  of
the Registrant,  based upon the average bid and ask prices for the  Registrant's
Common Stock, $.001 par value per share, as of December 14, 2005 was $4,815,231

     As of December 14, 2005,  the  Registrant  had  5,192,118  shares of Common
Stock outstanding.

Documents Incorporated by Reference: Definitive Proxy Statement to be filed.
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

The Company  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 and in Dallas/Ft.  Worth, Texas. 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 and in Texas
through  General  Sound (Texas)  Company its wholly owned  subsidiary in Dallas,
Texas ("General  Sound").

CASEY SYSTEMS.  Synergx's largest subsidiary is Casey Systems. 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.

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 but
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.

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.

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 a  authorized  supplier  of  numerous  high  quality
national product lines.

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.

Transit. Casey designs,  manufactures (through third party sources), markets and
services  sophisticated  information and communication systems with applications
for transit  facilities and carriers.  Casey's transit products and services are
in use by  agencies  such  as the  New  York  City  Transit  Authority,  AMTRAK,
Baltimore MTA, the Bi-State  Development Agency (St Louis), the Boston MBTA, New
Jersey  Transit,  the San Diego  Trolley,  the Washington  Metropolitan  Transit
Authority (Washington, D.C.), and METRA (Chicago).

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 productive customer service,  Casey maintains an office in
New York  City  which  houses  its New York  service  management  offering  24/7
customer support with over 30 manufacturer-trained field service technicians.

GENERAL  SOUND.  Synergx  conducts  business in Texas  through  its  subsidiary,
General Sound (Texas) Company, which distributes, services, installs and designs
a variety of sound, fire alarm,  intercom and security systems in the Dallas/Ft.
Worth, Texas area. General Sound concentrates its sales effort on the commercial
and school markets.  General Sound provides its customers,  primarily electrical
contractors, with engineered systems, assistance in design, installation support
and  post-installation  service.  General Sound has  non-exclusive  distribution
agreements  for the  Dallas/Ft.  Worth  area with  Notifier,  Dukane,  and other
manufacturers.  The product mix and  dependence on individual  suppliers  varies
from year to year depending on customer requirements and market trends.

SECURE  724 LP.  Synergx  holds a 25%  investment  in Secure  724 LP, a Canadian
research,  development  and marketing  group which has  developed  technology to
transmit  alarm and other  data from a secured  site to a command  center and to
multiple  Blackberry  wireless  handheld  devices and/or  cellular phones and to
transmit  commands or  programming  instructions  to a wide  variety of building
systems.  Casey is evaluating  methods of integrating  this  technology into its
existing  products  and  systems to offer  customers  a  wireless  communication
solution.

RESEARCH AND  DEVELOPMENT.  During the fiscal years ended September 30, 2005 and
2004,  Synergx spent  approximately  $121,000 and $160 ,000,  respectively,  for
research and development of Synergx's life safety and communication systems.

CUSTOMERS AND SUPPLIERS. For the fiscal years ended September 30, 2005 and 2004,
no customer  accounted  for more than 10% of  Synergx's  revenues.  One supplier
accounted for 10% and 9% of Synergx's cost of sales in the years ended September
30, 2005 and 2004, respectively.

REGULATIONS.  Synergx believes that it is in compliance with applicable building
codes,  zoning ordinances,  occupational,  safety and hazard standards and other
Federal,  state and local  ordinances  and  regulations  governing  its business
activities. .

COMPETITION.  Synergx business 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 with applicable rules and regulations.

EMPLOYEES.  As of September 30, 2005,  Synergx and its subsidiaries had 122 full
time  employees,  including 39 New York hourly  employees  that are covered by a
Collective  Bargaining  Agreement expiring March 2009. In November 2005, certain
personnel cost reduction  initiatives were implemented that resulted in 112 full
time  employees  with 33 New York  hourly  employees  covered by the  collective
bargaining  agreement.  The goal of this cost reduction initiative is to achieve
annualized savings of $650,000.

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 OPERATION", Synergx's operations and industry do not have any special
characteristics  which may have a  material  impact  upon its  future  financial
performance.

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.

ITEM 2. DESCRIPTION OF PROPERTY

     The   Company   leases   approximately   16,400   square  feet  of  office,
manufacturing and warehouse space in Syosset,  New York under a seven year lease
expiring  June 2007.  The rental  schedule  provides for monthly rent of $16,026
during 2005 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 provides for yearly rental of $84,000 during the
first year plus expenses with yearly escalation of 2% each year thereafter.

     The Company  leases a 7,700  square foot office and  warehouse  facility in
Richardson,  Texas, a suburb of Dallas, pursuant to a lease that was extended in
October,  1997 and  extended  again in August,  2002 to expire on June 30,  2010
providing  for annual  rent on a net basis of  $50,152  escalating  annually  to
$64,016 in the final year of the lease.

     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, management does not
expect, based upon consultation with legal counsel,  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 SECURITIES HOLDERS

         None.



                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Synergx's  Common  Stock has been  traded on the  National  Association  of
Securities  Dealer's Inc. Automated  Quotation System ("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 December 31, 2003 through  September 30, 2005 which quotations were
obtained from the National Association of Securities Dealers Inc.

  Common Stock                    Bid                            Ask
  Quarter Ended          High            Low             High            Low

December 31, 2003       4.000           2.860           4.000           2.970
March 31, 2004          6.010           2.470           6.100           2.700
June 30, 2004           9.820           2.810           9.950           2.830
September 30, 2004      4.090           1.750           4.110           1.810
December 31, 2004       4.370           2.490           4.470           2.690
March 31, 2005          3.580           1.440           3.680           1.460
June 30, 2005           1.670           1.000           1.680           1.200
September 30, 2005      6.250           1.240           6.250           1.310



     The above  quotations  represent  prices  between  dealers,  do not include
retail  markups,   markdowns  or  commissions  and  may  not  represent   actual
transactions. As of December 14 2005, there were 439 record holders of Synergx's
Common Stock.

     On December 14,  2005,  the closing bid and ask prices for the Common Stock
were $1.82 and $1.83, respectively.

     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  standard  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.



Registration of Shares of Common Stock

     The Company filed a Form S-8 registration statement, which became effective
July 22, 2003.  The  registration  statement  provided for the  registration  of
404,885 shares issueable under the 1997 Non-Qualified Stock Option Plan.

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

     The Company has a $3 million  revolving  credit facility with Hudson United
Bank (the "Credit  Facility").  This credit facility has an annual interest rate
of prime plus 1/4% and expires in June 2007.  Advances under the Credit Facility
are measured  against a borrowing base  calculated on eligible  receivables  and
inventory.  The Credit  Facility is secured by all assets of the Company and all
of its operating subsidiaries.

     The Credit Facility includes various  covenants,  which among other things,
impose  limitations on declaring or paying  dividends,  acquisitions and capital
expenditures.  The Company is also required to maintain certain financial ratios
and tangible net worth covenants.  At September 30, 2005, the Company was not in
default with any of its financial  covenants and at such time the full amount of
the Credit  Facility was available  under the  borrowing  base  calculation.  At
September 30, 2005, $1,449,000 was owed under the Credit Facility.

     Net cash  provided  by  operations  for the year ended  September  30, 2005
amounted to $418,000 as compared to cash used by  operations of $319,000 for the
comparable  prior year.  The increase in cash being  provided by operations  was
primarily due to a reduction in the working capital component in 2005 as funding
requirements  declined to $99,000 in line with lower sales in 2005. In contrast,
the  working  capital  component  increased  in 2004 by $1.1  million to fund an
increase in accounts receivable  resulting from higher sales in 2004 and from an
increase in inventory from projects  expected to be shipped after  September 30,
2004.  The net cash inflow of $418,000  from  operations  during 2005 along with
cash on hand was used to purchase  $288,000 of capital  assets  (primarily for a
new management information system) and to reduce bank borrowings by $466,000. In
addition,  2005  financing  activities  included  $28,000 from exercise of stock
options by employees to purchase  common stock under the Company's  stock option
plan. In contrast,  in 2004,  financing activities included $316,000 of proceeds
from exercise of warrants to purchase common stock by Genterra Inc., $238,000 of
proceeds from exercise of warrants to purchase  common stock by an  unaffiliated
investor and $62,000 from exercise of stock options by employees.

     The ratio of the Company's current assets to current liabilities  decreased
to  approximately  3.04 to 1 at  September  30,  2005  compared  to 3.45 to 1 at
September 30, 2004. Working capital decreased by approximately  $400,000 to $7.1
million at September  30, 2005  compared to $7.5 million at September  30, 2004.
The decrease in the current  ratio and working  capital is primarily  due to the
use of cash  flow  to  reduce  bank  borrowings  (a non  current  liability)  by
$466,000.


RESULTS OF OPERATIONS

Revenues and Gross Profit

                                               For the years ended September 30,
                                                 2005              2004
                                                    (In thousands)
Product Sales                                  $15,517          $16,720
Subcontract Sales                                  475              590
Service Revenue                                  4,795            4,480
       Total Revenue                           $20,787          $21,790

Product Gross Margin                           $ 4,826          $ 5,630
Subcontract Gross Margin                            91              106
Service Gross Margin                             1,673            1,291
        Total Gross Margin                     $ 6,590          $ 7,027

Gross Profit Product %                             31%              34%
Gross Profit Subcontractor %                       19%              18%
Gross Profit Service %                             35%              29%
         Total Gross Profit %                      32%              32%



Revenues

     The decrease in product  revenues  resulted  primarily  from slow  economic
activity  in the  Company's  Dallas,  Texas  market as the  Company  experienced
significantly lower product revenues compared to strong 2004 levels. The Company
has put into effect  certain  cost  reduction  initiatives  with a view  towards
pricing business  aggressively in both the Dallas/Ft  Worth,  Texas and New York
City metropolitan area.

     Subcontract revenue decreased during 2005 as the Company was responsible as
prime  contractor for less electrical  installations in 2005 compared to similar
projects in 2004.

     Service  revenues  increased 7% during 2005 primarily due to higher service
revenue from new service contracts which offset a decrease in call-in service on
fire alarm systems as certain customers converted to (all in) contracts to cover
call in service  (replacement  parts and  service  required by  buildings).  The
service contract base of customers has increased due to new customers in our New
York City and Long Island, New York area.


Gross Profit

     Gross profit margin from product  revenues  decreased 14% to $4,826,000 due
to lower product  sales (noted  above) and related  gross  margin.  Gross profit
margin as a percentage  of product  revenues was 31% in 2005  compared to 34% in
2004.  This decline in gross profit  percentage  was due to  aggressive  pricing
necessary to obtain sales.

     Gross profit margin related to  subcontract  revenues for 2005 decreased in
absolute terms as the Company was responsible for a smaller amount of electrical
installation by third parties (subcontract work).

     Gross profit  margin from  service  revenues  increased  during 2005 due to
higher service revenue which resulted from an increase in service contracts base
noted  above.  Gross  profit  margin  was also  favorably  affected  by  certain
reductions  in the number of service  technicians  and a decrease  in the use of
overtime in 2005.

Selling, General and Administrative Expenses

     Selling,  General and Administrative Expenses ("S G &A") increased slightly
($11,000)  in 2005 over 2004  primarily as a result of the  Company's  continued
expansion of its marketing  programs for new  products.  This increase is net of
certain  reductions in salary related costs for non sales personnel.  During the
last two  years  additional  staffing  was  added to  address  the  markets  for
audio/visual  and  security  products.  Consequently,  S  G & A  expenses  as  a
percentage  of sales  increased  1.4% to 28.9% in 2005 due to lower sales volume
compared to the relative fixed nature of these costs.  The Company will continue
to invest in staff to secure and support sales of new products in future years.

Income Before Tax

     The decline in income  before  income taxes during 2005 is primarily due to
the  decrease  in gross  profit  caused  by lower  product  revenues.  Partially
offsetting the decrease in gross profit from product revenues was an increase in
gross  profit from service  revenues  noted above.  While  selling,  general and
administrative  expenses  remained  basically the same in 2005,  these  expenses
remain  at a  level  geared  to  support  higher  product  sales.  In  addition,
unfavorably affecting income before income taxes was an increase in depreciation
expense  in  2005  related  to  the  recent  investment  in a new  computer  and
management  information  system.  For 2005,  the Company also recorded a loss of
$76,000 on its equity in the operating  loss of Secure 724 LP compared to a loss
of $52,000 in 2004.


Tax Provision

     The Company's current income tax provision  represents  federal,  state and
local income  taxes.  Deferred  taxes  represent  the net change in deferred tax
assets and  noncurrent  deferred tax  liability as it related to certain  timing
differences of book and tax deductions.

Order Position

     Synergx's order position,  excluding service,  decreased to $8.8 million at
September  30, 2005  compared to the $12.8  million level at September 30, 2004.
The Company expects to fulfill a significant  portion of its order position over
the next twelve months. While quotation activity is brisk, there is no assurance
when orders will be received and whether the order position will  increase.  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  theooking  of the  contract  and its  revenue  realization.  The  order
position  from  time to time  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 responsible for management of the project as
well as electrical installation.

Plan of Operations

     During  fiscal  2006,  management  intends  to  continue  to  focus  on its
intensified  marketing  programs  and to  continue  to contain or monitor  fixed
overhead as well as to reduce  variable  costs through  improved  efficiency and
productivity.  Specifically  management  is  pursuing a strategy  of  aggressive
marketing  of products  and systems to drive more  revenue  through  established
channels of  distribution.  A new President  has recently been  appointed to our
management  staff to focus on these  initiatives  with a focus on reducing costs
thereby  enhancing the Company's  competitiveness  which  combined with improved
sales and marketing  techniques  should result in increased  revenues over time.
Certain  personnel cost reduction  initiatives were implemented in November 2005
with a goal of  annualized  savings of $650,000 per year.  However,  competition
remains  severe in many of the Company's  product  categories and demand remains
sporadic in the Dallas market area.  Longer term,  management  expects increased
demand  for the  Company's  audio-visual,  public  address,  security  and other
communication products.  Recent enhancements to Synergx's management information
systems and methods of approving  and  monitoring  project  costs have  improved
management's ability to pinpoint waste and/or third party (supplier or customer)
cost  responsibility.  Further  enhancements in theses areas will be in progress
during 2006.

     The Company will continue to evaluate the  performance and potential of its
investment  in  Secure  724.  Secure  724  currently  has a  very  low  overhead
structure, however to fully capitalize and realize on its technology, Secure 724
must accelerate  into the marketing phase of its development  which will require
additional staff,  product  development and production.  Management is analyzing
how to  integrate  the  Secure  724  technology  into its  marketing  efforts by
offering a wireless feature to augment existing new products and systems. Secure
724 is pursing  various  routes to finance  this stage  including  possible  new
investors and/or strategic relationships with prospective customers. In December
2005,  Secure 724 entered into a license  agreement in a foreign  country  which
will provide license fees.  There can be no assurance that Secure724 will secure
all the funding it requires to fully  capitalize  on its  technology or that the
Company's investment in Secure 724 will be profitable.

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. However, in July of 2005, the Company and its union agreed to
a new three year nine month contract that provides for  wage/benefits  increases
of  approximately  4% in each year.  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.  It is expected that required salary adjustments will exceed
normal  increases given in the past. The Company will try to mitigate the effect
of these increases in labor costs by price increases,  if possible,  and expense
reductions.


ITEM 7.  FINANCIAL STATEMENTS

     Our financial statements together with accompanying notes and the report of
Marcum & Kliegman LLP, our independent  registered  public  accounting firm, are
set forth on the pages indicated below.

Report of Independent Registered Public Accounting Firm                      F1

Audited Consolidated Financial Statements

Consolidated Balance Sheet  September 30, 2005                          F2 - F3

Consolidated Statements of Operations
    Years Ended September 30, 2005 and 2004                                  F4

Consolidated Statements of Stockholders' Equity
    Years Ended September 30, 2005 and 2004                                  F5

Consolidated Statements of Cash Flows
     Years Ended September 30, 2005 and 2004                                 F6

Notes to Consolidated Financial Statements                             F7 - F19


ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

                  None

ITEM 8A.  Controls and Procedures

Evaluation  of  disclosure  controls and  procedures.  At the period end of this
Annual Report on Form 10-KSB, 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.

That 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.

                                    PART III

Item 9. Directors,  Executive Officer, Promoters and Control Persons: Compliance
with Section 16(a) of the Exchange Act.

The  information  required by this Item is  incorporated  by reference  from our
definitive Proxy Statement for the 2005 Annual Meeting of Stockholders.

Item 10.  Executive Compensation

The  information  required by this Item is  incorporated  by reference  from our
definitive Proxy Statement for the 2005 Annual Meeting of Stockholders.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

The  information  required by this Item is  incorporated  by reference  from our
definitive Proxy Statement for the 2005 Annual Meeting of Stockholders.

Item 12.  Certain Relationships and Related Transactions

The  information  required by this Item is  incorporated  by reference  from our
definitive Proxy Statement for the 2005 Annual Meeting of Stockholders.

ITEM 13.  EXHIBITS

     (a)  Exhibits

Exhibit No.            Description of Exhibit

3.1  Certificate of Incorporation of the Company, as amended

3.2  By-Laws of the Company (2)

4.1  Specimen Common Stock Certificate (2)

5.1  Opinion of  Dolgenos  Newman & Cronin LLP as to the  legality of the shares
     being registered*

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

10.3 Employment  Agreement  between  Synergx  Systems  Inc. and Daniel S. Tamkin
     dated as of October 1, 2005.

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 Form of Limited  Parnership  Agreement  dated May 29, 2003 between 3077118
     Nova Scotia ULC (a Synergx Systems owned company) and Secure 724 LP (5)

22.1 Subsidiaries of the Registrant (Exhibit 22.1)(1)

23.1 Consent of Marcum & Kliegman LLP, Independent  Registered Public Accounting
     Firm

23.2 Consent of Dolgenos Newman & Cronin LLP (Included in Exhibit 5.1)*

31.1 Certification  of Daniel S. Tamkin  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*

32.1 Certification of Daniel S. Tamkin and John A. Poserina  pursuant to Section
     906 of the Sarbanes-Oxley Act of 2002*

- --------
         * filed herewith

     (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.

     (b)  Reports on Form 8-K
                  none

Item 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The  information  required by this Item is  incorporated  by reference  from our
definitive Proxy Statement for the 2005 Annual Meeting of Stockholders.

<PAGE>

                                   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)
                                       By:/s/Daniel S. Tamkin
                                       Daniel S. Tamkin,
                                       Chief Executive Officer and Director

Dated: December 20, 2005

     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

                             Chairman,                         December 20, 2005
/s/Daniel S. Tamkin          Chief Executive Officer
Daniel S. Tamkin             and Director


/s/John A. Poserina          Chief Financial Officer           December 20, 2005
John A. Poserina             (Principal Accounting and
                             Financial Officer), Secretary,
                             and Director

/s/Joseph Vitale             Director                          December 20, 2005
Joseph Vitale


/s/Harris Epstein            Director                          December 20, 2005
Harris Epstein

/s/Dennis P. McConnell       Director                          December 20, 2005
Dennis P. McConnell

/s/Mark Litwin               Director                          December 20, 2005
Mark Litwin

/s/J. Ian Dalrymple          Director                          December 20, 2005
J. Ian Dalrymple
<PAGE>

             Report of Independent Registered Public Accounting Firm

To the Audit Committee of the Board of Directors of
Synergx Systems Inc.

We have audited the accompanying  consolidated  balance sheet of Synergx Systems
Inc. and its  subsidiaries  (the  "Company")  as of  September  30, 2005 and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows  for the  years  ended  September  30,  2005  and  2004.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  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 are we engaged to  perform,  an audit of its  internal  control  over
financial reporting.  Our audits 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 control over financial  reporting.
Accordingly,  we express no 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 consolidated financial position of Synergx
Systems Inc. and its  subsidiaries as of September 30, 2005 and the consolidated
results of their  operations and their cash flows for the years ended  September
30, 2005 and 2004, in conformity with accounting  principles  generally accepted
in the United States of America.

December 9, 2005                      /s/ MARCUM & KLIEGMAN LLP
New York, NY
                                       F1
<PAGE>
                      SYNERGX SYSTEMS INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET




                                                                   September 30,
                                                                       2005
                                                                    -----------
ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                      $   590,000
  Accounts receivable, principally trade, less allowance
     for doubtful accounts of $324,000                             7,093,000
  Inventories                                                      2,408,000
  Deferred taxes                                                     278,000
  Prepaid expenses and other current assets                          268,000
                                                                  -----------
         TOTAL CURRENT ASSETS                                     10,637,000
                                                                  -----------


PROPERTY AND EQUIPMENT -at cost, less
   accumulated depreciation and amortization of $1,656,000           641,000

OTHER ASSETS                                                         596,000

                                                                  -----------
         TOTAL ASSETS                                            $11,874,000
                                                                  ===========

See accompanying Notes to the  Consolidated Financial Statements.
                                      F2
<PAGE>

                      SYNERGX SYSTEMS INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET




                                                             September 30,
                                                                  2005
                                                             -------------
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Notes and capital leases payable - current portion        $    32,000
   Accounts payable and accrued expenses                       2,912,000
   Deferred revenue                                              554,000
                                                              -----------
         TOTAL CURRENT LIABILITIES                             3,498,000



   Note payable to bank                                        1,449,000
   Notes and capital leases payable - less current portion         6,000
   Deferred taxes                                                 90,000
                                                              -----------
         TOTAL LIABILITIES                                     5,043,000
                                                              -----------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

  Preferred stock, 2,000,000 shares authorized,
     none issued and outstanding                                      --
  Common stock, 10,000,000 shares authorized, $.001
     par value; issued and outstanding 5,192,118 shares            5,000
  Capital in excess of par                                     6,785,000
  Retained earnings                                               41,000
                                                              -----------
TOTAL STOCKHOLDERS' EQUITY                                     6,831,000
                                                              -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $11,874,000
                                                              ===========

See accompanying Notes to the  Consolidated Financial Statements.
                                      F3
<PAGE>

                      SYNERGX SYSTEMS INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

                                                              For the Years  Ended September 30,
                                                                     2005                          2004
                                                                -----------                   -----------
<S>                                                            <C>                           <C>
Product sales                                                  $15,517,000                   $16,720,000
Subcontract sales                                                  475,000                       590,000
Service revenue                                                  4,795,000                     4,480,000
                                                                -----------                   -----------
Total revenues                                                  20,787,000                    21,790,000
                                                                -----------                   -----------

Cost of product sales  *                                        10,691,000                    11,090,000
Cost of subcontract sales                                          385,000                       484,000
Cost of service revenue                                          3,122,000                     3,189,000
Selling, general and administrative                              6,000,000                     5,989,000
Interest expense                                                    84,000                        87,000
Depreciation and amortization                                      189,000                       171,000
Loss on equity investment                                           76,000                        52,000
                                                                -----------                   -----------
                                                                20,547,000                    21,062,000
                                                                -----------                   -----------

Income before provision for income taxes                           240,000                       728,000
                                                                -----------                   -----------
Provison for income taxes:
   Current                                                         103,000                       225,000
   Deferred                                                          7,000                        83,000
                                                                -----------                   -----------
                                                                   110,000                       308,000

                                                                -----------                   -----------
Net  Income                                                       $130,000                      $420,000
                                                                ===========                   ===========
Earnings Per Common Share:
  Basic  Earnings Per Share                                          $0.03                         $0.09
                                                                     =====                         =====
  Diluted Earnings Per Share                                         $0.03                         $0.09
                                                                     =====                         =====

Weighted average number of common shares outstanding             5,171,721                     4,671,701

Weighted average number of common and dilutive
   common share equivalents outstanding                          5,193,276                     4,912,203
</TABLE>


*Excludes  depreciation  and  amortization  of $40,000 and $51,000 for the years
ended September 30, 2005 and 2004, respectively

See accompanying Notes to the Consolidated Financial Statements.
                                       F4

<PAGE>

                      SYNERGX SYSTEMS INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                 FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004
<TABLE>
<CAPTION>
                                                                                                   (ACCUMULATED
                                          TOTAL                                       CAPITAL       DEFICIT)/
                                       STOCKHOLDERS'         COMMON STOCK            IN EXCESS      RETAINED
                                          EQUITY         SHARES        AMOUNT         OF PAR        EARNINGS
---------------------------------------------------------------------------------------------------------------
<S>                  <C> <C>           <C>             <C>           <C>            <C>            <C>
Balance at September 30, 2003          $5,466,000      4,061,144     $    4,000     $5,971,000     ($ 509,000)

Exercise of employee stock options         62,000        115,718                        62,000

Exercise of warrants                      554,000        960,000          1,000        553,000

Tax benefit of stock option exercise      146,000                                      146,000

Net earnings                              420,000                                                     420,000
                                        ----------     ----------     ----------     ----------      ----------
Balance at September 30, 2004           6,648,000      5,136,862          5,000      6,732,000        (89,000)

Exercise of employee stock options         28,000         55,256                        28,000

Tax benefit of stock option exercise       25,000                                       25,000

Net Income                                130,000                                                     130,000
                                       ----------     ----------     ----------     ----------     ----------
Balance at September 30, 2005          $6,831,000      5,192,118     $    5,000     $6,785,000     $   41,000
                                       ==========     ==========     ==========     ==========     ==========
</TABLE>


See accompanying Notes to the Consolidated Financial Statements.
                                      F5
<PAGE>

                 SYNERGX SYSTEMS INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                       For the Years Ended September 30,
                                                                           2005           2004
                                                                       -----------    ------------
OPERATING ACTIVITIES
<S>                                                                   <C>            <C>
Net  income                                                           $   130,000    $   420,000
 Adjustments to reconcile net  income to net cash
     provided by (used in) operating activities:
         Depreciation and amortization                                    189,000        171,000
         Deferred taxes                                                     7,000         83,000
         Provision for doubtful accounts                                       --        (88,000)
         Provision for inventory allowance                                 90,000             --
         Loss on equity investment                                         76,000         52,000
         Tax benefit from employee stock option exercise                   25,000        146,000
  Changes in operating assets and liabilities:
    Accounts receivable                                                  (700,000)      (511,000)
    Inventories                                                           164,000       (213,000)
    Prepaid expenses and other current assets                              11,000        154,000
    Other assets                                                          (27,000)       (38,000)
    Accounts payable and accrued expenses                                 405,000       (566,000)
    Deferred revenue                                                       48,000         71,000
                                                                      -----------    -----------
NET CASH PROVIDED BY(USED IN) OPERATING ACTIVITIES                        418,000       (319,000)
                                                                      -----------    -----------
INVESTING ACTIVITIES
  Purchases of property and equipment                                    (288,000)      (232,000)
                                                                      -----------    -----------
NET CASH (USED IN) INVESTING ACTIVITIES                                  (288,000)      (232,000)
                                                                      -----------    -----------
FINANCING ACTIVITIES
  Principal payments on notes payable and capital lease obligations       (29,000)       (90,000)
  Payments and proceeds from note payable bank - net                     (467,000)       660,000
  Proceeds from exercise of stock options and warrants                     28,000        616,000
                                                                      -----------    -----------
NET CASH (USED IN)PROVIDED BY FINANCING ACTIVITIES                       (468,000)     1,186,000
                                                                      -----------    -----------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                     (338,000)       635,000

Cash and cash equivalents at beginning of the year                        928,000        293,000
                                                                      -----------    -----------
Cash and cash equivalents at end of the year                          $   590,000    $   928,000
                                                                      ===========    ===========
SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid during the year for:
     Income taxes                                                     $     7,000    $   266,000
     Interest                                                         $    89,000    $    95,000
</TABLE>


See accompanying Notes to the Consolidated Financial Statements.

                                       F6
<PAGE>

                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements


1. Summary of Significant Accounting Policies

Business

Synergx Systems Inc. and Subsidiaries  (the "Company")  operates in one industry
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 and
in Dallas/Ft. Worth, Texas.

Principles of Consolidation

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"),  General Sound (Texas)
Company ("General  Sound"),  and Systems Service  Technology Corp.  ("SST").  In
addition the Company has a payroll disbursing  subsidiary FT Clearing Inc. and a
subsidiary that holds the investment in Secure 724 LP, Comco  Technologies  Inc.
Significant   intercompany  items  and  transactions  have  been  eliminated  in
consolidation.

Revenue Recognition

Product sales include sale of systems, which are similar in nature, that involve
fire alarm,  life safety and security  (CCTV and card  access),  transit  (train
station platforms and on board systems) and communication (paging,  announcement
and  audio/visual).  Product  sales  represent  sales of product  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 are  allocated  using a constant  gross  profit
percentage   over  the  entire   contract,   and  are   recognized,   using  the
percentage-of-completion   method  of   accounting.   The  Company   utilizes  a
units-of-work  performed  method to measure  progress  towards  completion  of a
contract.  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 to costs and
estimated  profits  in  excess  billings,  and  billings  in excess of costs and
estimated  profits.  Costs and  estimated  profits in excess of billing were not
material  at  September  30,  2005 and 2004 and have been  included  in accounts
receivable.  There were no billings in excess of costs and estimated  profits at
September 30, 2005 and 2004.

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. Subcontract sales are also recognized during the entire
project  using the  percentage-of-completion  method of accounting as electrical
installation is performed at the job site.
<PAGE>

                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

Revenue Recognition (continued)

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.

Accounts Receivable

Accounts receivable are reported net of an allowance for doubtful accounts.  The
adequacy of the allowance is determined by management based on a periodic review
of the status of the individual accounts receivable.

Inventories

Inventories are priced at the lower of cost (first-in,  first-out) or market and
consist  primarily  of raw  materials  and at  September  30,  2005  reflects an
inventory allowance of $370,000.

Property and Equipment

Property  and  equipment  are stated at  historical  cost.  Leases  meeting  the
criteria for  capitalization  are recorded at the present  value of future lease
payments.

Depreciation  and  amortization  of machinery  and  equipment  and furniture and
fixtures are provided primarily by the straight-line method over their estimated
useful lives. The Company depreciates  machinery and equipment over periods of 3
to 10 years and  amortizes  leasehold  improvements  and assets  acquired  under
capitalized leases utilizing the straight-line method over the life of the lease
or the economic useful life, whichever is shorter.
<PAGE>
                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

Other Assets

Other assets  consist  principally  of the  investment in Secure 724 LP which is
comprised of notes  receivable  of $163,000 and a 25% ownership in Secure 724 LP
of  $432,500,  less the 25% equity in the  operating  losses of Secure 724 LP of
$163,000.  (see Note 3 -  Investment  in Secure 724 LP) Also  included  in other
assets is the excess of cost over the fair value of the assets  acquired  in the
1990 acquisition of General Sound of approximately $103,000.

The Company does not amortize  goodwill but evaluates whether the carrying value
of goodwill has become  impaired.  This  evaluation is performed on annual basis
each fiscal year end.

Advertising Costs

Advertising  costs are  expensed as  incurred.  Advertising  costs for the years
ended September 30, 2005 and 2004 amounted to $35,000 and $25,000, respectively.

Research and Development Costs

Research  and  development   costs  are  expensed  as  incurred.   Research  and
development  costs for the years ended  September  30, 2005 and 2004 amounted to
$121,000 and $160,000, respectively.

Income Taxes

The Company  accounts for income taxes under  Statement of Financial  Accounting
Standards  ("SFAS") No. 109,  "Accounting for Income Taxes." Under SFAS No. 109,
the asset and  liability  method is used 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.

Earnings Per Share

SFAS No. 128 "Earnings Per Share" requires companies to report basic and diluted
earnings per share  ("EPS")  computations.  Basic EPS  excludes  dilution and is
based on the  weighted-average  common shares  outstanding and diluted EPS gives
effect to potential  dilution of securities  that could share in the earnings of
the Company. Diluted EPS reflects the assumed issuance of shares with respect to
the Company's employee stock options, non-employee stock options, and warrants.
<PAGE>
                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements


Cash Equivalents

The Company  considers all investments with original  maturities of three months
or less when purchased to be cash equivalents.

Concentration of Credit Risk

The Company's  operations  are located in two large U.S.  cities (New York City,
New York and Dallas, Texas), each of which is an independent market. The Company
grants  credit  to its  customers,  principally  all of  which  are  general  or
specialized construction  contractors,  none of which individually constitutes a
significant  portion  of  outstanding  receivables.  Approximately  88% of  such
outstanding  receivables  at  September  30, 2005 are due from  customers in New
York. The Company does not require  collateral to support financial  instruments
subject to credit risk.

At September 30, 2005, the Company had cash of approximately  $265,000,  that is
in excess of insured amount limitations.

Stock Options and Similar Equity Instruments

The Company adopted the disclosure requirements of SFAS No. 123, "Accounting for
Stock-Based  Compensation,"  for stock  options and similar  equity  instruments
(collectively,  "Options")  issued  to  employees;  however,  the  Company  will
continue to apply the  intrinsic  value based method of  accounting  for options
issued to employees  prescribed by Accounting  Principles  Board ("APB") Opinion
25, "Accounting for Stock Issues to Employees," rather than the fair value based
method of  accounting  prescribed  by SFAS No. 123. SFAS No. 123 also applies to
transactions  in which an entity issues its equity  instruments to acquire goods
or services from  non-employees.  Those transactions must be accounted for based
on the fair value of the consideration  received or the fair value of the equity
instruments issued, whichever is more reliably measured.

On December 31, 2002, the Financial  Accounting  Standards Board issued SFAS No.
148, Accounting for Stock-Based Compensation-Transition and Disclosure. SFAS No.
148 amends SFAS No. 123, to provide an alternative  method of transition to SFAS
No. 123's fair value method of accounting for stock based employee compensation.
SFAS  No.148  also  amends  the  disclosure  provisions  of SFAS No. 123 and APB
Opinion 28, "Interim Financial  Reporting," to require disclosure in the summary
of  significant  accounting  policies of the  effects of an entity's  accounting
policy with respect to stock-based employee  compensation on reported net income
and earnings  per share in annual and interim  financial  statements.  While the
statement  does not amend  SFAS No.  123 to require  companies  to  account  for
employee stock options using the fair
<PAGE>
                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

Stock Options and Similar Equity Instruments (continued)

value method,  the  disclosure  provisions of SFAS No. 123 are applicable to all
companies  with stock based  employee  compensation,  regardless of whether they
account for that  compensation  using the fair value  method of SFAS No. 123, or
the  intrinsic  value method of APB Opinion 25. As required  under SFAS No. 148,
the following  table  presents pro forma net income and diluted net earnings per
share as if the fair value-based method had been applied to all awards.

                                                     Years Ended September 30,
                                                       2005             2004
Net Income
                                                     $130,000        $420,000
Less: Fair Value of Options issued to
      employees and directors, net of income tax      (13,000)             --
                                                      --------       ---------
Pro Forma Net Income                                 $117,000        $420,000
                                                      ========       =========
Weighted Average Basic Shares                       5,171,721       4,671,701

Weighted Average Diluted Shares                     5,193,276       4,912,203

Basic Net Income Per Share as Reported                 $.03             $.09
Basic Pro Forma Net Income per share                   $.02             $.09

Diluted Net Income Per Share as Reported               $.03             $.09
Diluted Pro Forma Net Income per share                 $.02             $.09

The Black-Scholes  option valuation model was used to estimate the fair value of
the options  granted  during the year ended  September  30, 2005.  There were no
options granted to employees during the year ended September 30, 2004. 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 for the year ended  September  30, 2005 were as
follows:

Assumptions:

Risk-free interest rate                        3.58%
Dividend                                          0
Expected life in years                        5 years
Expected volatility                              84%
<PAGE>
                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

2. Property and Equipment

Property and  equipment  (including  $3,000  arising  from  capital  leases) are
summarized as follows:

                                                                September 30,
                                                                    2005
                                                                 ----------
      Machinery and equipment                                   $2,052,000
      Furniture and fixtures                                       176,000
      Leasehold improvements                                        69,000
                                                                 ----------
                                                                 2,297,000
      Less accumulated depreciation and amortization
                                                                 1,656,000
                                                                 ----------
                                                                $  641,000
                                                                 ==========

Annual  amortization  of equipment under capital leases of $300 is included with
depreciation and amortization expense.

Depreciation and amortization  expense related to these assets were $157,000 and
$141,000 for the years ended September 30, 2005 and 2004, respectively.

3.  Investment in Secure 724 L.P.

On May 29,  2003,  the  Company  acquired  25% of the  equity of  Secure  724 LP
("Secure 724 LP"), an Ontario limited partnership.  The investment in Secure 724
L.P. for 300,000  shares of Common Stock and warrants to purchase  50,000 shares
of Common  Stock was  valued at  $432,500.  This  investment  is  accounted  for
utilizing  the equity  method and is included in OTHER  ASSETS.  The  underlying
equity  of this  investment  on the date of the  transaction  was  approximately
$73,000;  resulting  in goodwill of  approximately  $359,500;  which will not be
amortized but will be tested for  impairment.  For the years ended September 30,
2005 and 2004, an  adjustment  to the equity  investment of $76,000 and $52,000,
respectively  was recorded to reflect the  Company's 25% portion of the net loss
of Secure 724 LP. The cumulative impact that was recorded for the 25% portion of
the net loss from inception amounts to $163,000.

In  connection  with  the  initial  capital  contribution  per  the  partnership
agreement, the Company advanced $18,000 ($25,000CA) to Secure 724 LP in May 2003
and upon reaching  milestones  advanced  $125,089  ($175,000CA)  in August 2003.
Additional  advances  were  made to  Secure  724 LP in  October  2004 of  $7,969
($10,000CA) and in December 2004 of $12,140 ($15,000CA).  These notes receivable
bear interest at a rate of 4% per annum and mature in May 2006, August 2006, and
October 2007, respectively.
<PAGE>
                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

3.  Investment in Secure 724 L.P.(continued)

There  can be no  assurance  that  the  investment  in  Secure  724 LP  will  be
profitable.

4.  Long-Term Debt

The Company has a $3 million  revolving  credit facility with Hudson United Bank
(the "Credit  Facility").  The Credit  Facility has an annual  interest  rate of
prime  plus 1/4% on  outstanding  balances  (6.75% at  September  30,  2005) and
expires  in June  2007.  The  Credit  Facility  is  secured by all assets of the
Company  and all of its  operating  subsidiaries.  Advances  under  this  Credit
Facility are measured  against a borrowing base calculated on eligible  accounts
receivable and inventories.

At September  30,  2005,  the full amount of the Credit  Facility was  available
under the borrowing base  calculation and $1,449,000 was outstanding  under this
facility.

The Credit Facility includes certain  restrictive  covenants,  which among other
things, impose limitations on declaring or paying dividends,  acquisitions,  and
capital expenditures. The Company is also required to maintain certain financial
ratios and tangible net worth  covenants.  At September 30, 2005 the Company was
not in default with any of its financial covenants.

Annual  maturities of Notes Payable to Bank and Notes and Capital Leases Payable
are as follows:


                Note Payable         Other Notes and             Total
                    Bank          Capital Leases Payable
               ----------------------------------------------------------------

        2006                              $32,000               $   32,000
        2007      $1,449,000                6,000                1,455,000
               ----------------------------------------------------------------
        Total     $1,449,000              $38,000               $1,487,000
               ================================================================

<PAGE>
                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

5.  Lease Commitments

The Company  leases  certain  office and  warehouse  space under non  cancelable
operating  leases  expiring at various times through 2010. In February 2000, the
Company signed a lease for office, manufacturing and warehouse space in Syosset,
New  York.  An  additional  700  square  feet of space was added to the lease in
August 2004.  The rental  schedule  provides for monthly rent of $16,000  during
2005 with 3.3%  yearly  increases  through the  expiration  of the lease in June
2007.

The Company has a  non-cancelable  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  provides  for yearly  rental of $84,000
during the first  year plus  expenses  with  yearly  escalation  of 2% each year
thereafter.

The  Company  leases an office and  warehouse  facility  under a  non-cancelable
operating  lease in Richardson,  Texas, a suburb of Dallas,  pursuant to a lease
that was extended in August 2002 to expire on June 30, 2010 providing for annual
rent on a net basis of $50,000 escalating  annually to $64,000 in the final year
of the lease.

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, 2005:

                                             Total Operating
                                                 Leases

2006                                            $352,000
2007                                             307,000
2008                                             155,000
2009                                             159,000
2010                                              73,000
                                               ----------
Total minimum lease payments                  $1,046,000
                                               ==========

Rental  expense   amounted  to  $361,000  and  $346,000,   for  2005  and  2004,
respectively.

6. Significant Customers and Suppliers

During fiscal 2005 and 2004,  no customer  accounted for more than 10% of sales.
One  supplier  accounted  for 10% and 9% of the  Company's  cost of sales during
fiscal 2005 and 2004, respectively.
<PAGE>
                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements


7.  Income Taxes

During the years ended  September 30, 2005 and 2004, the Company  recorded a tax
provision of $110,000  and  $308,000,  respectively.  A  reconciliation  of such
provision with the amounts computed by applying the statutory federal income tax
rate is as follows:
<TABLE>
<CAPTION>

                                                                    Year Ended September 30,
                                                                     2005              2004
                                                                 -------------------------------
<S>                                                                  <C>                <C>
Statutory federal income tax rate                                    34%                34%
Computed expected tax from income                                 $82,000            $247,000
Increase in taxes resulting from:
  State and local income taxes, net of Federal tax benefit         25,000              51,000
  Nondeductible expenses                                            2,000               2,000
Other                                                               1,000               8,000
                                                                 ------------------------------
Provision                                                        $110,000            $308,000
                                                                 ==============================
</TABLE>


The  Company  provided  $6,000 and  $12,000  for state and local  franchise  and
capital  taxes for the years ended  September  30, 2005 and 2004,  respectively.
These  expenses  have been  included  in  selling,  general  and  administrative
expenses for each of the years presented.

The Company has recorded a current deferred tax asset and a non current deferred
tax liability at September 30, 2005 and 2004 related to certain  accelerated tax
deductions or book  provisions to be deducted in future tax returns.  Management
anticipates profitable operations to continue at a level that will result in the
utilization of the entire deferred tax asset.

The components of deferred tax assets and  liabilities at September 30, 2005 and
2004 consist of the following:

Deferred Tax Assets                         2005                    2004
Allowance for doubtful accounts           $130,000               $130,000
Inventory reserve                          148,000                112,000
Net operating loss carryforward                                    18,000
                                           -------                -------
Total deferred tax asset                  $278,000               $260,000
                                           =======                =======
Deferred Tax Liabilities
Depreciation and amortization             $ 90,000               $ 65,000
Total deferred tax liability              $ 90,000               $ 65,000
                                           =======                =======
<PAGE>
                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements


8. Earnings Per Share

The  computation  of basic  earnings  per  share,  diluted  earnings  per share,
weighted  shares  outstanding,  and  weighted  average  shares  after  potential
dilution is as follows:

                                                     Year Ended September 30
Basic EPS Computation                                 2005              2004
                                                    --------          --------
 Net income                                         $130,000          $420,000
 Weighted average outstanding shares               5,171,721         4,671,701

 Basic earnings per share                               $.03              $.09
                                                        ====              ====

Diluted EPS Computation

    Net income                                     $ 130,000          $420,000

    Weighted average outstanding shares            5,171,721         4,671,701
      Plus:  Incremental shares from
                assumed conversions

          Employee Stock Options                      14,036            73,872
          Warrants                                     7,520           166,630
                                                      ------           -------
             Dilutive  common shares                  21,555           240,502
                                                      ------           -------
    Adjusted weighted-average shares               5,193,276         4,912,203

    Diluted earnings per share                          $.03              $.09
                                                        ====              ====
9.  Employee Stock Options and Warrants

In March 2004, the Company and its  stockholders  adopted a  nonqualified  stock
option  plan  ("2004  Plan"),  which will expire  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 Compnay'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.
<PAGE>
                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

9.  Employee Stock Options and Warrants (continued)

In  February  2005,  the Board of  Directors  approved a grant of 130,000  stock
options with a fair market value of $157,094 to certain employees,  officers and
directors  of the Company  under the 2004 Plan.  The stock  options vest ratably
over five years and are exercisable at $2.50 per share, which exercise price was
above the market price at the time of grant. There were no stock options granted
during the year ended September 30, 2004.

Transactions involving stock options are summarized as follows:

                                                           Weighted Average
                                    Stock Options         Exercise Price of
                                     Outstanding         Options Outstanding
Balance September 30, 2003             191,298                 $ .52
   Options exercised                  (115,718)                  .54
Balance September 30, 2004              75,580                   .51
   Options granted                     130,000                  2.50
   Options exercised                   (55,256)                  .50
Balance September 30, 2005             150,324                  2.23

There  were  20,324  exercisable  options  at  September  30,  2005  and  75,580
exercisable options at September 30, 2004.

During the years ended  September 30, 2005 and 2004,  employees  exercised stock
options to purchase 55,256 and 115,718 shares of Common Stock, respectively, for
total consideration of $28,000 and $62,000, respectively.

Outstanding and exercisable stock options are as follows:

                     Outstanding at      Weighted Average     Exercisable at
Exercise Price    September 30, 2005    Contractual Life     September 30, 2005
 $ .52                   10,668             .3 years              10,668
   .50                    9,656             .3 years               9,656
  2.50                  130,000            4.5 years                   -

In  1998,  the  Company   granted   Genterra  Inc.  (an  Ontario   publicly-held
corporation)  ("Genterra")  warrants to purchase 620,000 shares of the Company's
common stock at an exercise  price of $.51 per share at any time until  December
31, 2003. In December 2003, Genterra exercised these warrants for $316,200.
<PAGE>
                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements


9.  Employee Stock Options and Warrants (continued)

On September 30, 2002, the Company issued 340,000  warrants in connection with a
private  placement that were exercisable at $.70 per share of Common Stock until
September 30, 2004. All of these warrants were exercised in August and September
2004 for $238,000.

In May 2003,  the Company  issued  50,000  warrants in  connection  with its 25%
investment  in Secure 724 LP. The  warrants  expired in May 2005.  (See Note 3 -
Investment in Secure 724 LP)

Transactions involving non-employee stock  warrants are summarized as follows:
                                                              Weighted Average
                                          Warrants           Exercise Price of
                                        Outstanding         Warrants Outstanding
Balance September 30, 2003           1,010,000                       $.61
   Warrants exercised                 (960,000)                       .58
Balance September 30, 2004              50,000                       1.15
   Warrants expired                    (50,000)                      1.15
Balance September 30, 2005                   0
                                            ===
10. 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.  Management does
not expect,  based upon  consultation  with legal counsel,  that any item exists
that will have a  significant  impact on the  Company's  business  or  financial
condition.

11. Other

Approximately  32%  of  the  Company's   employees  are  covered  by  collective
bargaining agreements. On July 10, 2005, the union representing hourly employees
and the Company  ratified a Collective  Bargaining  Agreement  expiring March 9,
2009, providing for an increase in salaries and benefits averaging approximately
4% per year over the life of the contract.

Effective  January 1, 1996,  the Board of  Directors  instituted a 401K plan for
nonunion  employees.  The  plan  includes  a  profit  sharing  provision  at the
discretion  of the Board of  Directors.  In  September  2005 and 2004.  a profit
sharing  contribution of $41,000 and $43,000,  respectively,  was authorized and
charged to expense.
<PAGE>
                      Synergx Systems Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

12. Fair Value of Financial Instruments

SFAS No. 107, "Disclosures about Fair Values of Financial Instruments," requires
disclosing fair value to the extent practicable for financial  instruments which
are  recognized  or  unrecognized  in the balance  sheet.  The fair value of the
financial instruments disclosed herein is not necessarily  representative of the
amount  that  could be  realized  or  settled,  nor does the fair  value  amount
consider the tax consequences of realization or settlement.

The  carrying  amount  of cash  and  cash  equivalents,  trade  receivables  and
payables, and short-term debt,  approximates fair value because of the near term
maturities of such obligations.  The fair value of long-term debt was determined
based on current  rates at which the Company  could  borrow  funds with  similar
remaining maturities, which amount approximates its carrying value.

13  New Accounting Pronouncement

In December 2004, the Financial  Accounting  Standards Board issued SFAS No. 123
(revised  2004),  "Shared-Based  Payment,"  which  addresses the  accounting for
share-based  payment  transactions  in which  an  enterprise  receives  employee
services  in  exchange  for (a)  equity  instruments  of the  enterprise  or (b)
liabilities  that  are  based  on the  fair  value  of the  enterprise's  equity
instruments  or that may be settled by the issuance of such equity  instruments.
SFAS No. 123  (revised  2004)  requires an entity to  recognize  the  grant-date
fair-value  of stock  options  and  other  equity-based  compensation  issued to
employees  in the  income  statement.  SFAS No.  123  (revised  2004)  generally
requires that an entity account for such transactions using the fair-value-based
method, and eliminates the intrinsic value method of accounting in APB 25, which
was permitted under SFAS No. 123, as originally  issued.  The revised  statement
also  requires  entities  to  disclose  information  about  the  nature  of  the
share-based  payment  transactions and the effects of those  transactions on the
financial  statements.  SFAS No.  123  (revised  2004) is  effective  for  small
business  issuers  for the first  annual  reporting  period  that  begins  after
December 15,  2005.  The Company is  currently  evaluating  the impact that this
statement will have on its financial  condition,  results of operations and cash
flows.