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, 2004
                                       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 ( )

     State issuer's revenues for its most recent fiscal year: $21,790,000

     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 7, 2004 was $10,092,830

     As of December 13, 2004,  the  Registrant  had  5,136,862  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,  audio-video,  communication energy management,  intercom,  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
Dallas, Texas.

     Synergx conducts its business in New York principally through Casey Systems
Inc.  ("Casey") its wholly owned subsidiary located in Long Island, New York and
in Texas  through  General Sound (Texas)  Company  ("General  Sound") its wholly
owned subsidiary in Dallas, Texas.

Synergx  Products

     Synergx designs,  manufactures,  markets and sells its own proprietary life
safety and communication  systems and also engineers,  distributes,  markets and
sells systems and products manufactured by other parties.  Synergx's proprietary
product  line  features  the COMTRAK  1720 and 2000 Life Safety  Systems and the
TELTRAK Communications System.

     In 1973,  New York  City  passed  Local  Law 5  requiring  that all  office
buildings  of 100 feet or more be  outfitted  with smoke  detectors,  manual and
audio  communicating  systems for life safety and fire  reporting  purposes.  In
anticipation of the demand that this legislation  would create for equipment and
systems employing  improved  technology and design features,  Synergx engaged in
extensive  research and development  which led to its  proprietary  COMTRAK 1720
Life Safety  System  which has been  installed in numerous  buildings  since the
early 1980's.

     To meet the challenges of more stringent code  requirements  and a sluggish
market for new construction,  Synergx  developed its new generation  proprietary
COMTRAK 2000 Life Safety System which utilizes the latest technology to not only
meet the  current  code  requirements,  and  satisfy  the "wish list" of current
COMTRAK customers,  but many likely future code requirements as well. One of the
improvements  incorporated into the COMTRAK 2000 is a Fire Command Station which
offers a color CRT display  system along with three  sectional  displays.  These
features  provide the operator  with a wide  variety of  pertinent  information,
allowing for quicker response,  which is critical in an emergency.  In addition,
the expanded memory  capability of the new Fire Command Station enables a single
station to control  multi-building  projects and permits  simplified  operation.
COMTRAK 1720 and 2000 Systems are  operating in  approximately  100 buildings in
New York City. Synergx has approvals from FM Approvals and various New York City
agencies for the COMTRAK 1720 and COMTRAK 2000 System.  Synergx has contracts or
otherwise supports numerous additional  buildings featuring third party systems.
Casey is a strategic partner with Edwards Systems Technology  ("EST"), a leading
manufacturer  of fire and  security  systems.  Most of Casey's  new life  safety
system  sales now feature EST  products  and systems or  interfaced  COMTRAK-EST
systems.

     FM Approvals is an independent testing and certification laboratory similar
to  Underwriters  Laboratory.  In order for Synergx to sell and  maintain  their
proprietary  fire alarm  systems,  certification  from an  approved  independent
testing  agency is required.  Without this  certification,  Synergx would not be
allowed to produce and maintain its fire systems for its existing customer base,
as well as new customers.

     Neither Synergx,  nor its officers or directors has any affiliation with FM
Approvals.

     TELTRAK   Communications   Systems.  In  the  early  1980s,  Synergx  began
investigating  the  intercom  market  and the  possibilities  of  utilizing  its
computerized multiplex technology for this market.  Significant  construction of
new  high-rise  housing  occurred  in the  1970s and  1980s  and  increased  the
potential demand for  technologically  advanced intercom  systems.  To meet this
demand,  Synergx  developed a  micro-processor-based  combination  intercom  and
security system using Casey's multiplex  technology.  The TELTRAK I intercom and
security  system is capable of a variety of  accessory  functions in addition to
its basic intercom and security  function.  Synergx added video  capabilities to
its TELTRAK I technology and created the TELTRAK II, for  installation in luxury
condominium,  cooperative and apartment buildings.  Over 16,000 TELTRAK I and II
units have been sold.  In 1991,  the  redesigned  TELTRAK III  intercom/security
station  was  introduced,   with  enhanced   features  to  expand  its  use  and
competitiveness  in the face of the  reduced  market  for  these  products.  New
features,  such as public  address,  enable  important  messages  to be given to
building occupants either locally or by groups in case of emergency.

     Multiplex  technology  is a term that is used in the industry to define the
systems  architecture of the Company's  equipment.  All multiplex technology has
basically the same concept with variation for specific equipment.

Other Products

     In the past eight years  Synergx has sought to diversify  its product lines
to establish a greater base to absorb product support,  R & D and other overhead
and to provide product and customer  diversification.  To that end,  Synergx 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,  commercial
establishments,  hospitals,  educational facilities and transit facilities (e.g.
subway  stations).  Synergx has  developed  a focused  unit with a high level of
experience  to  penetrate  this  niche  market  with  significant  success  as a
substantial  portion of Synergx's  order position  derives from this effort.  In
addition,   Synergx  organized  new  marketing  units  to  focus  on  marketing,
engineering  and servicing  systems and products  manufactured by third parties,
particularly national manufacturers.  These marketing units are service oriented
organizations  which  focus  on  close  relationships  with  customers  and  key
suppliers.  During the last three years,  Synergx has added marketing  personnel
and new security products from other  manufacturers to accelerate its focus into
the  security  market  for the sale of  products  and  services  in the New York
Metropolitan area.

     In 1993,  Synergx  acquired  assets of a  company  which  manufactured  and
marketed  sophisticated  products and  on-board  information  and  communication
systems  with  applications  for  municipal   transit  carriers,   long-distance
passenger  carriers  and bus and train  builders.  Synergx has  integrated  this
operation  into its New  York  division  and has to date  supplied  products  to
customers such as Bombardier,  Nippon Sharyo, Sumitomo,  Kawasaki, Motive Power,
Siemens,  the New York City Transit  Authority and AMTRAK.  These customers have
supplied  Synergx's  equipment to the  Baltimore  MTA, the Bi-State  Development
Agency  (St  Louis),  the  Boston  MBTA,  CONRAIL,  the San Diego  Trolley,  the
Washington   Metropolitan  Transit  Authority  (Washington,   D.C.),  and  METRA
(Chicago).  Recently  Synergx  began to  integrate  its on  board  communication
products  with  products  supplied  by  other  manufacturers.  These  integrated
products include electronic signage and automatic announcement systems.

Service

     Synergx  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 are intensifying  efforts to market
service to COMTRAK,  EST and other Synergx  projects  coming out of warranty and
the renewal of such contracts. To improve customer service, Synergx maintains an
office in New York City which houses its New York service management.

General Sound (Texas) Company

     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 market and
schools. 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  has 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, 2004 and 2003,  Synergx spent
approximately $160,000 and $155,000,  respectively, for research and development
of Synergx's life safety and communication systems.

Customers and Suppliers

     For the  fiscal  years  ended  September  30,  2004 and 2003,  no  customer
accounted for more than 10% of Synergx's revenues. One supplier accounted for 9%
and 11% of  Synergx's  cost of sales in the years ended  September  20, 2004 and
2003, 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  control and  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

     Synergx and its subsidiaries have 128 full time employees, including 41 New
York hourly  employees  that are covered by a  Collective  Bargaining  Agreement
expiring July 2005.


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   15,700   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 $13,966
during  the first and  second  years of the  initial  term and with 3.3%  yearly
increases for the third through seventh years.

     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 they 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, 2002 through  September 30, 2004 which quotations were
obtained from the National  Association of Securities Dealers Inc. (adjusted for
a 2 for 1 stock split in July 2003)

  Common Stock                 Bid                             Ask
  Quarter Ended         High          Low              High          Low

December 31, 2002       .725         .500              .750          .565
March 31, 2003         1.225         .570             1.275          .580
June 30, 2003          1.500        1.100             1.550         1.125
September 30, 2003     4.175        2.550             4.350         2.650
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



     The above  quotations  represent  prices  between  dealers,  do not include
retail  markups,   markdowns  or  commissions  and  may  not  represent   actual
transactions. As of December 13 2004, there were 442 record holders of Synergx's
Common Stock.

     On  December 7, 2004,  the closing bid and ask prices for the Common  Stock
were $3.850 and $3.790, 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.

     On September  30,  2002,  the Company  sold  340,000  units  ("Units") in a
private  placement  to an  unaffiliated  investor  for $.70 per Unit.  Each Unit
consists  of one  share of Common  Stock  and one  warrant  (the  "Warrant")  to
purchase an  additional  share of Common Stock at $.70 for a period of 24 months
from  September 30, 2002.  These warrants were exercised in August and September
2004.

     On May 29,  2003 the  Company  acquired  25% of Secure 724 LP by issuing to
Nafund Inc., a Toronto  based  private  equity fund  affiliated  with two of the
Company's  Directors,  300,000  shares of Common  Stock and warrants to purchase
50,000 shares of Common Stock at $1.15 share until May 29, 2005. The acquisition
also called for the issuance of an additional  150,000 shares of Common Stock if
Secure 724 LP  satisfies  certain  development  milestones  by a target date and
Nafund  provides  certain  funding.  The  requirement to issue these  additional
shares expired as the milestones were not achieved by the target date.

Registration of Shares of Common Stock

     The Company filed a Form S-3 registration statement, which became effective
June 27,  2003.  The  registration  statement  was for an aggregate of 1,220,000
shares which provided for the  registration of 680,000 in the private  placement
noted above and for 200,000  shares in connection  the  investment in Secure 724
LP, and 340,000 shares to two other private investors.

     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.

<PAGE>



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

LIQUIDITY AND CAPITAL RESOURCES

     In October 2003, the Company entered into a new $3 million revolving credit
facility with Hudson United Bank (the "Credit  Facility").  This credit facility
has an  interest  rate of prime plus 1/4% and expires in October  2005.  Initial
proceeds  from the new credit  facility  were used to pay off a credit  facility
with Citizens  Business Credit.  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, 2004, 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, 2004, $1,916,000 was owed under the Credit Facility.

     Net cash used by operations for the year ended  September 30, 2004 amounted
to  $319,000  as compared  to cash  provided  by  operations  of $57,000 for the
comparable  prior  year.  The  increase  in cash  being used by  operations  was
primarily due to an increase in working capital requirements to fund an increase
in accounts  receivable  resulting from  significantly  higher sales in 2004 and
from an  increase  in  inventory  for  projects  expected  to be  shipped  after
September 30, 2004. The net cash outflow of $319,000 from operations during 2004
coupled  with  equipment  purchases  of  $232,000  were funded by an increase of
$660,000 in bank borrowing. In addition,  financing activities included $316,200
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 to
purchase common stock under the Company's stock option plan.

     The ratio of the Company's current assets to current liabilities  increased
to  approximately  3.45 to 1 at  September  30,  2004  compared  to 2.65 to 1 at
September 30, 2003.  The increase in the current ratio is due to an  improvement
in cash flow due to continued  profitable  operations  in 2004 from  $616,000 of
proceeds from the exercise of warrants and employees  stock options,  and from a
$599,000 increase in accounts  receivable in 2004.  Working capital increased by
$1.8 million to $7.5 million at September  30, 2004  compared to $5.7 million at
September 30, 2003  (including  $635,000  from an increase in cash);  while bank
borrowing increased by only $660,000 since September 30, 2004.


RESULTS OF OPERATIONS

Revenues and Gross Profit

                                            For the years ended September 30,
                                              2004                  2003
                                                     (In thousands)
Product Sales                               $16,720               $14,720
Subcontract Sales                               590                   643
Service Revenue                               4,480                 4,451
                                             ------               -------
       Total Revenue                        $21,790               $19,814

Product Gross Margin                       $  5,630              $  5,081
Subcontract Gross Margin                        106                   116
Service Gross Margin                          1,291                 1,298
                                              -----                 -----
        Total Gross Margin                 $  7,027              $  6,495

Gross Profit Product %                          34%                   35%
Gross Profit Subcontractor %                    18%                   18%
Gross Profit Service %                          29%                   29%
                                                ---                   ---
         Total Gross Profit %                   32%                   33%



Revenues

     The increase in product revenues  resulted from improved  economic activity
in both the  Company's  principal  New York City  market and its  Dallas,  Texas
market.  The majority of the increase came from our Dallas,  Texas market as the
Company experienced  exceptionally  strong product revenues compared to very low
2003 levels,  improved product revenues from New York City transit projects that
resulted  from  releases  from our  customers,  and from higher sales of railcar
communication  products.  In the Dallas,  Texas market,  higher product revenues
resulted from certain cost reduction initiatives implemented during the last two
years,  which  allowed the  Company to price  aggressively  in that  competitive
market.  The Company is continuing to quote  business  aggressively  in both the
Dallas, Texas and New York City metropolitan area.

     Subcontract  revenue  decreased  during 2004 as the Company was responsible
for  various  small  electrical  installations  in 2004  which in the  aggregate
accounted  for less  revenue  than two large  electrical  installation  projects
generated in 2003.

     Service  revenues  increased 1% during 2004 primarily due to higher service
revenue from  service  contracts  which offset a decrease in call-in  service on
fire alarm systems (replacement parts and service required by buildings).  Lower
call-in service resulted in part from certain  customers  converting to "all in"
contracts that covers call-in service.


Gross Profit

     Gross profit margin from product  revenues  increased 11% to $5,630,000 due
to higher  product sales (noted  above) and related  gross margin.  Gross profit
margin as a percentage  of product  revenues was 34% in 2004  compared to 35% in
2003.  This decline in gross profit  percentage  was due to  aggressive  pricing
necessary to obtain higher sales.

     Gross profit margin related to  subcontract  revenues for 2004 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  decreased  slightly during 2004
due to lower call-in service revenue. Gross profit is normally higher on call in
maintenance service for fire alarm systems.

Selling, General and Administrative Expenses

     Selling,  General and Administrative Expenses ("S G &A") increased by 5% in
2004 over 2003 primarily as a result of the Company's continued expansion of its
marketing programs for new products and from higher insurance costs.  During the
last two  years  additional  staffing  was  added to  address  the  markets  for
audio/visual  and security  products.  Previously in 2001 the Company  increased
staffing in the railcar transit  communication group as it addressed a marketing
opportunity  for future  business over the next several years.  These  marketing
initiatives  helped  to  improve  total  sales  in 2004.  Consequently,  S G & A
expenses  as a  percentage  of sales  decreased  2% to 27% in 2004 due to higher
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  improvement in income before income taxes during 2004 is primarily due
to the increase in gross profit  caused by higher  product  revenues.  Partially
offsetting  the  improvement in overall gross profit was an increase in selling,
general and administrative expenses of 5% during 2004 from additional management
and sales staff to support product expansion  directed at increased sales levels
and from higher  insurance  costs.  Unfavorably  affecting  income before income
taxes were increases in interest  expense of 34% in 2004 due to higher borrowing
levels during 2004 and from higher depreciation and amortization.  For 2004, the
Company also recorded a loss of $52,000 on its equity in the  operating  loss of
Secure 724 LP compared to a loss of $35,000 in 2003.


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 $12.8 million at
September  30, 2004  compared to the $16.5  million level at September 30, 2003.
The Company expects to fulfill a significant  portion of its order position over
the next twelve months.  The order position reflects recent large new orders for
several subway  complexes,  which will be deliverable  over several years as the
projects are released.  The order  position  includes $1.6 million of orders for
communication and announcement  systems from several transit car  manufacturers,
that will be shippable over the next 24 month period.  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 the booking 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 is
responsible for management of the project as well as electrical installation.

Plan of Operations

     During  fiscal  2005,  management  intends  to  continue  to  focus  on its
intensified  marketing  programs  that  were  begun in 1998 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 General Manager has recently
been added 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.  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.  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.
Enhancements  in recent years 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
2005.

     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. Secure 724 is pursing
various routes to finance this stage including possible new investors and/or
strategic relationships with prospective customers. There can be no assurance
that Secure724 will secure the funding its 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 2002, the Company and its union agreed to
a new three year contract that provides for wage/benefits increases of
approximately 5% in each year. During 2001, under terms of the previous union
contract, 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 5% 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.



<PAGE>



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.

Independent Registered Public Accounting Firm's Report                       F1

Audited Consolidated Financial Statements

Consolidated Balance Sheet  September 30, 2004                          F2 - F3

Consolidated Statements of Operations
    Years Ended September 30, 2004 and 2003                                  F4

Consolidated Statements of Stockholders' Equity
    Years Ended September 30, 2004 and 2003                                  F5

Consolidated Statements of Cash Flows
     Years Ended September 30, 2004 and 2003                                 F6

Notes to Consolidated Financial Statements                             F7 - F24


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.


<PAGE>



                                    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 AND REPORTS ON FORM 8-K

     (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)

10.1 Credit  Facility  dated  October 9, 2003  between  Synergx  Systems Inc. as
     borrower and Hudson United Bank as lender. (5)

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)

10.10Form of  Subscription  Agreement and Investment  Letter dated September 30,
     2002 between Synergx Systems and Investors Money Management (4)

10.11Form 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)

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 16, 2004

     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 16, 2004
/s/ Daniel S. Tamkin         Chief Executive Officer
Daniel S. Tamkin             and Director

/s/ Joseph Vitale            President, Chief Operating
Joseph Vitale                Officer and Director            December 16, 2004

/s/ John A. Poserina         Chief Financial Officer         December 16, 2004
--------------------         (Principal Accounting and
John A. Poserina             Financial Officer), Secretary,
                             and Director


/s/ Henry Schnurbach         Director                        December 16, 2004
--------------------
Henry Schnurbach

/s/ Dennis P. McConnell      Director                        December 16, 2004
-----------------------
Dennis P. McConnell

/s/ Mark Litwin              Director                        December 16, 2004
---------------
Mark Litwin

/s/ J. Ian Dalrymple         Director                        December 16, 2004
--------------------
J. Ian Dalrymple


<PAGE>



             Report of Independent Registered Public Accounting Firm

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

We have audited the accompanying  consolidated  balance sheet of Synergx Systems
Inc. and its subsidiaries as of September 30, 2004 and the related  consolidated
statements of  operations,  stockholders'  equity,  and cash flows for the years
ended  September  30,  2004  and  2003.  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
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall consolidated  financial statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated 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, 2004 and the consolidated  results
of their  operations and their cash flows for the years ended September 30, 2004
and 2003, in conformity with U. S. generally accepted accounting principals.

December 2, 2004                      /s/ MARCUM & KLIEGMAN LLP
New York, NY


<PAGE>
                      SYNERGX SYSTEMS INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                               SEPTEMBER 30, 2004


ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                         $   929,000
  Accounts receivable, principally trade, less allowance
     for doubtful accounts of $324,000                                6,393,000
  Inventories                                                         2,662,000
  Deferred taxes                                                        260,000
  Prepaid expenses and other current assets                             278,000
                                                                    -----------
               TOTAL CURRENT ASSETS                                  10,522,000
                                                                    -----------


PROPERTY AND EQUIPMENT -at cost, less
   accumulated depreciation and amortization of $1,499,000              509,000

OTHER ASSETS                                                            678,000
                                                                    -----------
               TOTAL ASSETS                                         $11,709,000
                                                                    ===========

See accompanying Notes to the Consolidated Financial Statements

<PAGE>

SYNERGX SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2004


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

   Notes and capital leases payable - current portion         $     47,000
   Accounts payable and accrued expenses                         2,507,000
   Deferred revenue                                                506,000
                                                              ------------
               TOTAL CURRENT LIABILITIES                         3,060,000


   Note payable to bank                                          1,916,000
   Notes and capital leases payable - less current portion          20,000
   Deferred taxes                                                   65,000
                                                              ------------
               TOTAL LIABILITIES                                 5,061,000
                                                              ------------
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 5,136,862 shares              5,000
  Capital in excess of par                                       6,732,000
  Accumulated deficit                                              (89,000)
                                                              ------------
TOTAL STOCKHOLDERS' EQUITY                                       6,648,000
                                                              ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $ 11,709,000
                                                              ============

See accompanying Notes to the Consolidated Financial Statements
<PAGE>

SYNERGX SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

                                                For the Year Ended September 30,
                                                       2004         2003
                                                   -----------   -----------

Product sales                                      $16,719,000   $14,720,000
Subcontract sales                                      590,000       643,000
Service revenue                                      4,481,000     4,451,000
                                                   -----------   -----------
Total revenues                                      21,790,000    19,814,000
                                                   -----------   -----------


Cost of product sales                               11,090,000     9,639,000
Cost of subcontract sales                              484,000       527,000
Cost of service                                      3,189,000     3,154,000
Selling, general and administrative                  5,989,000     5,729,000
Interest expense                                        87,000        64,000
Depreciation and amortization                          171,000       154,000
Loss on equity  investment                              52,000        35,000
                                                   -----------   -----------
                                                    21,062,000    19,302,000
                                                   -----------   -----------

Income before provision for income taxes               728,000       512,000
                                                   -----------   -----------
Provision for income taxes:
   Current                                             225,000       180,000
   Deferred                                             83,000        50,000
                                                   -----------   -----------
                                                       308,000       230,000

                                                   -----------   -----------
Net Income                                         $   420,000   $   282,000
                                                   ===========   ===========
Earnings Per Common Share
  Basic Earnings Per Share                         $      0.09   $      0.07
                                                   ===========   ===========
  Diluted Earnings Per Share                       $      0.09   $      0.06
                                                   ===========   ===========

Weighted average number of common shares
  outstanding                                        4,671,701     3,850,811

Weighted average number of common and dilutive
   common share equivalents outstanding              4,912,203     4,433,735

See accompanying Notes to the  Consolidated Financial Statements
<PAGE>

SYNERGX SYSTEMS INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

FOR THE YEARS ENDED SEPTEMBER 30, 2004 and 2003

<TABLE>
<CAPTION>

                                          TOTAL                                       CAPITAL
                                        STOCKHOLDERS'         COMMON STOCK           IN EXCESS       ACCUMULATED
                                         EQUITY          SHARES         AMOUNT        OF PAR          (DEFICIT)
                                        ---------      ---------     ----------     ----------     ------------
<S>                                    <C>             <C>           <C>            <C>            <C>
Balance at October 1, 2002             $4,734,000      3,748,860     $    4,000     $5,521,000     ($ 791,000)

Issuance of shares from
   investment in Secure 724               405,000        300,000                       405,000

Issuance of warrants for investment
   in Secure 724                           28,000                                       28,000

Exercise of employee stock options          6,000         12,284                         6,000

Tax benefit of stock option exercise       11,000                                       11,000

Net earnings                              282,000                                                     282,000
                                       ----------     ----------     ----------     ----------     ----------
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)
</TABLE>

See accompanying Notes to the Consolidated Financial Statements

                SYNERGX SYSTEMS INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                      For the Year Ended September 30,
                                                                            2004              2003
                                                                       -----------       -----------
<S>                                                                   <C>                <C>
OPERATING ACTIVITIES
Net income                                                            $   420,000        $   282,000
 Adjustments to reconcile net income to net cash
     (used in) provided by operating activities:
         Depreciation and amortization                                    171,000            154,000
         Deferred  tax                                                     83,000             49,000
         Provision for doubtful accounts                                  (88,000)           (17,000)
         Loss on equity investment                                         52,000             35,000
         Tax benefit from employee stock plans                            146,000              6,000
  Changes in operating assets and liabilities:
    Accounts receivable                                                  (511,000)          (747,000)
    Inventories                                                          (213,000)           (11,000)
    Prepaid expenses and other current assets                             154,000             85,000
    Other assets                                                          (38,000)           (41,000)
    Accounts payable and accrued expenses                                (566,000)           273,000
    Deferred revenue                                                       71,000            (11,000)
                                                                      -----------        -----------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                      (319,000)            57,000
                                                                      -----------        -----------
INVESTING ACTIVITIES
  Notes receivable from Secure 724 LP                                                       (143,000)
  Purchases of property and equipment                                    (232,000)          (164,000)
                                                                      -----------        -----------
NET CASH (USED IN) INVESTING ACTIVITIES                                  (232,000)          (307,000)
                                                                      -----------        -----------
FINANCING ACTIVITIES
  Principal payments on notes payable and capital lease obligations       (90,000)          (149,000)
  Proceeds from notes payable and capital lease obligations                                   79,000
  Payments and proceeds from revolving line of credit - net               660,000            407,000
  Proceeds from exercise of stock options and warrants                    617,000              6,000
                                                                      -----------        -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                               1,187,000            343,000
                                                                      -----------        -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                 636,000             93,000

Cash and cash equivalents at beginning of period                          293,000            200,000
                                                                      -----------        -----------
Cash and cash equivalents at end of period                            $   929,000        $   293,000
                                                                      ===========        ===========
SUPPLEMENTAL CASH FLOW INFORMATION:

     Income taxes                                                     $   266,000             94,000
     Interest                                                         $    95,000             67,000
</TABLE>

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

In the year ended  September  30,  2003,  Synergx  purchased  from Nafund Inc. a
24.99%  investment in Secure 724 in exchange for 300,000  shares of Common Stock
and  warrants to purchase  50,000  shares of Common  Stock,  with an  aggregated
market value of $432,500, which is included in OTHER ASSETS (See Note 7)

See accompanying Notes to the Consolidated Financial Statements
<PAGE>
                              SYNERGX SYSTEMS INC.

                  Notes to Consolidated Finanacial Statements

1. Summary of Significant Accounting Policies

Business

The  Company  operates  in  one  industry  segment:  the  design,   manufacture,
distribution,  marketing and service of a variety of data communications product
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, 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 "Company").  The
principal  operating  subsidiaries  are: Casey Systems Inc.  ("Casey"),  General
Sound  (Texas)  Company  ("GenSound"),  and  Systems  Service  Technology  Corp.
("SST"). 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 (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
is recognized,  using the  percentage-of-completion  method of  accounting.  The
Company  utilizes a units-of-work  performed  method to measure progress towards
completion  of the  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,  2004 and 2003 and have been  included in
accounts  receivable.  There was no  billing  in  excess of costs and  estimated
profits at September 30, 2004 and 2003.

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.


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 U.S.  generally
accepted  accounting  principles  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
September  30, 2004,  and reported  amounts of revenues and expenses  during the
fiscal year. Actual results could differ from those estimates.

Accounts Receivable

Accounts receivable are reported net of an allowance for doubtful accounts.  The
allowance was determined by management to be adequate 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.

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 their economic useful life, whichever is shorter.

Other Assets

Other assets consists  principally of the 2003 investment in Secure 724 LP which
is comprised of notes  receivable of $143,000 and 25% ownership in Secure 724 LP
of  $432,500,  less the 25%  equity in the  operating  loss of Secure  724 LP of
$87,000.  This investment includes the excess of cost over the fair value of the
assets acquired on the date of acquisition of $359,500. (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.

Advertising Costs

Advertising  Costs are expensed as incurred during the year.  Advertising  Costs
for the years ended September 30, 2004 and 2003 amounted to $25,000 and $27,000,
respectively.

Research and Development Costs

Research  and  development  costs are  expensed  as  incurred  during  the year.
Research and  development  costs for the years ended September 30, 2004 and 2003
amounted to $160,000 and $155,000, 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 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.

Cash Equivalents

The Company  considers all highly liquid  investments  with  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  84% of  such
outstanding  receivables  at  September  30, 2004 are due from  customers in New
York. The Company does not require  collateral to support financial  instruments
subject to credit risk.

At September 30, 2004, the Company had cash of approximately  $768,000,  that is
subject to 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 FASB issued SFAS No. 148 ("SFAS 148"),  Accounting for
Stock-Based  Compensation-Transition  and  disclosure.  SFAS 148 amends SFAS No.
123, to provide an  alternative  method of  transition  to SFAS 123's fair value
method of accounting for stock based employee compensation. SFAS 148 also amends
the disclosure  provisions of SFAS 123 and Accounting  Principles  Board ("APB")
Opinion No. 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 123 to require  companies to account for
employee stock options using the fair value method, the disclosure provisions of
SFAS 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 123,  or the  intrinsic  value  method of APB Opinion No. 25. The
adoption  of SFAS 148 did not have an  impact  on net  income  or pro  forma net
income  applying  fair value  method as the  Company  did not have  stock  based
compensation for the years ended September 30, 2004 and 2003.


2. Property and Equipment

Property and equipment (including those arising from capital leases) are
summarized as follows:

                                                             September 30,
                                                                 2004
                                                           --------------
      Machinery and equipment                                 $1,770,000
      Furniture and fixtures                                     176,000
      Leasehold improvements                                      62,000
                                                           --------------
                                                               2,008,000
      Less accumulated depreciation and amortization
                                                               1,499,000
                                                           --------------
                                                                $509,000
                                                           ==============

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

Depreciation and amortization  expense related to these assets were $141,000 and
$138,000 for the years ended September 30, 2004 and 2003, respectively.

3. Investment in Secure 724 L.P.

On May 29, 2003, the Company (through a special purpose Nova Scotia  subsidiary)
acquired  25% of the  equity of Secure  724 LP  ("Secure  724 LP"),  an  Ontario
limited partnership, from Nafund Inc. ("Nafund") in consideration of (a) 300,000
shares of Common Stock;  (b) warrants to purchase  50,000 shares of Common Stock
at $1.15 per share for 24 months; (c) agreeing to provide secured loans of up to
Cdn$300,000  (which was  approximately  $231,000  U.S. at September 30, 2004) to
Secure 724 LP pro rata with  equity/loans  to be  provided by Nafund and tied to
certain  development  milestones  and (d) 150,000  shares of Common  Stock to be
issued in the future upon Secure 724 LP  satisfying  the  milestones by a target
date.  Either the Company and/or Nafund could have elected to provide all or any
part of the above funding  (regardless  of whether the milestones are attained).
The milestones  were not attained by the target date.  Accordingly,  there is no
futher obligation to issue the 150,000 shares of Common Stock.

The 25%  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,  2004  and  2003,  respectively,  a  $52,000  and  $35,000
adjustment  to the equity  investment  was recorded to reflect the Company's 25%
portion of the net loss of Secure 724 LP.

In connection with initial capital  contribution per the partnership  agreement,
the Company advanced $18,000  (Cdn$25,000) to Secure 724 LP in May 2003 and upon
reaching milestones advanced $125,089  (Cdn$175,000) in August 2003.  Subsequent
to September 30, 2004 an additional  advance of $8,000  (Cdn$10,000) was made to
Secure 724 LP. These notes  receivable  bear interest at a rate of 4% and mature
in May 2006, August 2006, and October 2007, respectively.

This  transaction was submitted to the stockholders of Synergx (as two directors
of Synergx are directors of Secure 724 LP) and approved at its Annual Meeting on
March 26, 2003.

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

4.  Long-Term Debt

On October 9, 2003, the Company entered into a new $3 million  revolving  credit
facility with Hudson United Bank (the "Credit  Facility").  The Credit  Facility
has an  interest  rate of prime  plus  1/4% on  outstanding  balances  (4.75% at
September 30, 2004) and expires in October 2005. 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 receivables and inventory.

Initial  proceeds  from the new  Credit  Facility  were used to pay off a former
credit facility with Citizens  Business  Credit Company.  At September 30, 2004,
the full amount of the Credit  Facility was available  under the borrowing  base
calculation and $1,916,000 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, 2004 the Company was
not in default with any of its financial covenants.

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


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

        2005                             $47,000                  $47,000
        2006       $1,916,000             20,000                1,936,000
                   ----------    ----------------------        -----------
        Total      $1,916,000            $67,000               $1,983,000
                   ==========    ======================        ===========

5.  Leases

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.  The rental  schedule  provides for monthly rent of $14,000 during the
first and second  years of the initial term and with 3.3% yearly  increases  for
the third through seventh years. This lease expires in June 2007.

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 an office and warehouse  facility 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, 2004:

                                       Total Operating
                                           Leases

2005                                        333,000
2006                                        343,000
2007                                        300,000
2008                                        155,000
2009                                        159,000
2010                                         73,000
                                      -----------------
Total minimum lease payments             $1,363,000
                                      =================

Rental   expense   amounted  to  $346,000   and  $314,000  for  2004  and  2003,
respectively.

6. Significant Customers and Suppliers

During fiscal 2004 and 2003,  no customer  accounted for more than 10% of sales.
One  supplier  accounted  for 9% and 11% of the  Company's  cost of sales during
fiscal 2004 and 2003, respectively.


7. Income Taxes

During the years ended  September 30, 2004 and 2003, the Company  recorded a tax
provision of $308,000  and  $230,000,  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,
                                                                 2004              2003
                                                             ---------------------------------
<S>                                                            <C>                <C>
Statutory federal income tax rate                                    34%                34%
Computed expected tax from income                              $247,000           $174,000
Increase in taxes resulting from:
   State and local income taxes, net of Federal tax benefit      51,000             47,000
   Nondeductible expenses                                         2,000             11,000
Other                                                             8,000             (2,000)
                                                             ---------------------------------
Provision                                                      $308,000           $230,000
                                                             =================================
</TABLE>


The Company  provided  $12,000 and  $13,000  for state and local  franchise  and
capital  taxes for the years ended  September  30, 2004 and 2003,  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, 2004 and 2003 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, 2004 and
2003 consist of the following:

Deferred Tax Assets                              2004                    2003
-------------------                              ----                    ----
Allowance for doubtful accounts                $130,000                $165,000
Inventory reserve                               112,000                 112,000
Net operating loss carryforward                  18,000                  18,000
                                               --------                --------
Total deferred tax asset                       $260,000                $295,000
                                               ========                ========

Deferred Tax Liabilities
Depreciation and amortization                   $65,000                 $18,000
                                                -------                 -------
Total deferred tax liability                    $65,000                 $18,000
                                                =======                 =======


8. Earnings Per Share

Shown below is a table that presents for 2004 and 2003 the computation of basic
earnings per share, diluted earnings per share, weighted shares outstanding, and
weighted average shares after potential dilution.

                                                 Year Ended September 30
Basic EPS Computation                           2004                 2003
---------------------
    Net income available to common
       stockholders                            $ 420,000          $282,000
    Weighted average outstanding shares        4,671,701         3,850,811

    Basic earnings per share                        $.09              $.07
                                                    ====              ====

Diluted EPS Computation
-----------------------
    Income available to common
         stockholders                          $ 420,000          $282,000

    Weighted-average shares                    4,671,701         3,850,811
      Plus:  Incremental shares from
                assumed conversions

          Employee Stock Options                  73,872            106,453
          Warrants                               166,630            476,471
          Dilutive  common shares                240,502            582,924
                                                 -------            -------
    Adjusted weighted-average shares           4,912,203          4,433,735
                                               ---------          ---------
    Diluted earnings per share                      $.09               $.06
                                                    ====               ====

9.  Stockholders' Equity

On July 7, 2003, the Company's Board of Directors declared a 2-for-1 stock split
of its outstanding  stock.  The stock split took the form of a dividend  whereby
the Company  issued on July 25, 2003 to each  stockholder of record at the close
of business on July 18, 2003 one  additional  share for every share held on that
date.

The Company filed a Form S-3 registration statement, which became effective June
27,  2003.  The  registration  statement  provided for the  registration  of the
1,220,000  shares  that  covered  680,000  shares  that were issued in a private
placement in 2002 of 340,000 units to an unaffiliated investor for $.70 per unit
(each unit  consists of one share of Common Stock and one warrant to purchase an
additional  share of Common Stock at $.70 until  September  30,  2004),  and for
200,000  shares in connection  the investment in Secure 724 LP (see footnote 3),
and 340,000 shares to two other private  investors.  The warrants were exercised
in August and September 2004 for $238,000.

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.

10.  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 option
is granted.  The number of shares of Common  Stock that may be issued  shall not
exceed an aggregate of up to 10% of its 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 prior 1997 nonqualified stock option plan.

Transactions involving stock options are summarized as follows:

                                                               Weighted Average
                                                              Exercise Price of
                                Stock Options Outstanding    Options Outstanding
Balance September 30, 2002               203,582                   .53
   Options exercised                     (12,284)                  .52
                                       ---------
Balance September 30, 2003               191,298                   .52
   Options exercised                    (115,718)                  .54
                                       ---------
Balance September 30, 2004                75,580                   .51

There were 75,580 exercisable options at September 30, 2004 and 178,073
exercisable options at September 30, 2003.
..
During the years ended September 30, 2004 and 2003 employees exercised stock
options to purchase 115,718 and 6,334 shares, of Common Stock, respectively, for
a total consideration of $62,000 and $14,000, respectively.

The following table summarizes  information concerning currently outstanding and
exercisable stock options.

                   Outstanding at         Weighted Average     Exercisable at
Exercise Price   September 30, 2004      Contractual Life     September 30, 2004
--------------    ------------------     ----------------    ------------------
    .52              42,922                 1.3 years             42,922
    .50              32,658                 1.3 years             32,658



In 1998, the Company granted  Genterra  Inc.("Genterra")  (formerly  Mirtronics,
Inc. an Ontario  publicly-held  corporation) 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.

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.  (See Note - 9  Stockholders  Equity) 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 are  exercisable at $1.15 per share of
Common Stock until May 29, 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, 2002           960,000                           .58
   Warrants issued                    50,000                          1.15
                                 -----------
Balance September 30, 2003         1,010,000                           .61
   Warrants exercised               (960,000)                          .58
                                 ------------
Balance September 30, 2004            50,000                          1.15

All of these warrants were exercisable at the end of the periods indicated in
the above schedule.

The following table summarizes information concerning currently outstanding and
exercisable non-employee warrants.

                    Outstanding at       Weighted Average       Exercisable at
Exercise Price    September 30, 2004      Contractual Life    September 30, 2004
--------------    ------------------     ----------------    -------------------
    1.15                50,000               .7 years              50,000

11. 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 material item
exists that will affect the Company's business or financial condition.


12. Other

Approximately  24%  of  the  Company's   employees  are  covered  by  collective
bargaining agreements. On July 20, 2002, the union representing hourly employees
and the Company  ratified a Collective  Bargaining  Agreement  expiring  July 9,
2005, providing for an increase in salaries and benefits averaging approximately
4 1/2% 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  2004 and 2003.  a profit
sharing  contribution of $43,000 and $29,000,  respectively,  was authorized and
charged to expense.

13. 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.

For certain financial  instruments,  including cash and cash equivalents,  trade
receivables and payables,  and short-term debt, it was assumed that the carrying
amount  approximated  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.

14.  Report Business Solutions

The Company's  Board of Directors  approved,  in November 2003, to enter into an
agreement to organize a new Ontario  limited  partnership to acquire and operate
the business of RePort  Business  Solutions  ("RePort") in partnership  with NSC
Holdings Inc.  ("NSCH") and Nafund Inc.  ("Nafund").  The Company has terminated
these discussions and will not proceed with the investment.
<PAGE>