AS FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION

ON APRIL ___, 2006

REGISTRATION NO. _____________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

SYS

(Exact Name of Registrant as Specified in its Charter)

CALIFORNIA	95-2467354
(State or Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

5050 Murphy Canyon Road, Suite 200

San Diego, CA 92123

(858) 715-5500

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Edward M. Lake, Chief Financial Officer

SYS

5050 Murphy Canyon Road, Suite 200

San Diego, CA 92123

(858) 715-5500

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

COPIES TO:

Otto E. Sorensen, Esq.

Carrie H. Darling, Esq.

Luce, Forward, Hamilton & Scripps LLP

600 West Broadway, Suite 2600

San Diego, CA 92101

(619) 236-1414

(619) 232-8311 (Facsimile)

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO

THE PUBLIC: AS SOON AS PRACTICABLE AFTER THE

EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ___

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  X  

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ___

If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ___

If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ___

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered(1)		Proposed Maximum Offering Price Per Unit(2)		Proposed Maximum Aggregate Offering Price(2)		Amount of Registration Fee
Common Stock, no par value		10,677,626	$	3.83	$	40,895,308	$	5,181
TOTAL(3)		10,677,626	$	3.83	$	40,895,308	$	5,181

(1)Represents 6,375,513 shares of common stock that are currently outstanding, 1,802,485 shares that are issuable upon the exercise of outstanding convertible notes, 493,401 shares that are issuable upon the exercise of outstanding warrants, 100,000 shares that are issuable upon the exercise of conditionally issuable warrants and 1,906,227 shares that are conditionally issuable pursuant to prior acquisition related agreements (The conditionally issuable shares are shares that may be issued upon achievement of performance criteria).

(2)Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(c) of the Securities Act. Calculated based on the average high and low sales price of the Common Stock on the American Stock Exchange on April 10, 2006.

(3)Also includes an indeterminable number of additional shares of Common Stock which may be issued as a result of stock splits, stock dividends or similar transactions, in each case in accordance with Rule 416 and Rule 457 of the Securities Act of 1933.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this Prospectus is not complete and may be changed. The Selling Shareholders named herein may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED APRIL  11, 2006

PROSPECTUS

SYS

10,677,626 Shares of Common Stock

This Prospectus relates to the resale by the Selling Shareholders named in this Prospectus of up to 10,677,626 shares of our common stock, 6,375,513 of which are currently outstanding, 1,802,485 of which are issuable upon the exercise of outstanding convertible notes, 593,401 of which are issuable upon the exercise of outstanding and conditionally issuable warrants (see previous page) and 1,906,227 of which that are conditionally issuable (see previous page). The Selling Shareholders, or their pledgees, donees, transferees or distributees, or other successors-in-interest, may offer the shares from time to time through public or private transactions, on or off the American Stock Exchange, at prevailing market prices or at privately negotiated prices. They may make sales directly to purchasers or to or through agents, broker-dealers or underwriters. We will not receive any proceeds from the resale of any of the shares of our common stock in this offering. We will, however, receive proceeds if the Selling Shareholders pay cash to exercise some or all of the warrants owned by them and we may benefit from the reduction of indebtedness.

Our common stock is registered under Section 12(g) of the securities Act of 1934 and is listed and traded on the American Stock Exchange under the symbol “SYS.” The closing sales price of our common stock on April 7, 2006 as reported by the American Stock Exchange was $3.89.

We urge you to carefully consider the Risk Factors beginning on page 2 of this Prospectus before purchasing shares of our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

The date of this Prospectus is _________________, 2006.

Prospective investors may rely only on the information contained in this Prospectus. We have not authorized anyone to provide prospective investors with different or additional information. This Prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this Prospectus is current as of the date of this Prospectus, regardless of the time of the delivery of this Prospectus or any sale of these securities.

TABLE OF CONTENTS

Section	Page
BUSINESS SUMMARY	1
RISK FACTORS	3
We depend upon a depend single customer, the U.S. Government, for the majority of our revenues, and a decrease in its demand for our services, or pricing modifications by prime contractors, might harm our operating results.	3
A significant number of our customers are government agencies which are subject to unique political and budgetary constraints and have special contracting requirements   that may affect our ability to obtain other new government customers.	3
Our inability to adequately retain or protect our employees, customer relationships and proprietary technology could harm our ability to compete.	4
The departure of certain key personnel could affect the financial condition of SYS due to the loss of their expertise and customer relationships.	4
We face numerous competitors, and as a result, we may not get the business we seek.	4
We must comply with numerous U.S. Government regulations.	5
Inaccuracy in our indirect billing rates could cause us to lose money.	5
We rely on subcontractors whose performance could have an adverse impact on our relationships with our customers and our operating results.	5
If we are unable to obtain or maintain security clearances, we may not be able to perform certain work.	5
There are risks associated with our planned growth, such as a possible inability to manage our growth.	6
We have very limited funds upon which to rely for adjusting to business variations and for growing new businesses.	6
We have very limited funds upon which to rely for adjusting to business variations and for growing new businesses.	6
There are a large number of shares that are available for future sale, and the sale of these shares may depress the market price of our common stock.	7
There is a limited market for our common stock which could impact your ability to sell your shares.	7
Future sales of our common stock by existing shareholders under Rule 144 could decrease the trading price of our common stock.	7
Our directors, executive officers and affiliated persons beneficially own a significant amount of our stock, and their interests could conflict with yours.	7
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	8
RECENT FINANCINGS	8
RECENT TRANSACTIONS	9
USE OF PROCEEDS	9
SELLING SHAREHOLDERS	9
PLAN OF DISTRIBUTION	19
LEGAL MATTERS	21
EXPERTS	21
WHERE YOU CAN FIND MORE INFORMATION	21
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE	21

EXHIBITS

OPINION OF LUCE, FORWARD, HAMILTON & SCRIPPS LLP

CONSENT OF LUCE, FORWARD, HAMILTON & SCRIPPS LLP

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM-KPMG LLP

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM-GOODMAN & COMPANY

INDEX TO FINANCIAL STATEMENTS

BUSINESS SUMMARY

This summary highlights selected information and does not contain all the information that is important to you. We urge you to carefully read this entire Prospectus and the documents we have referred you to in “Incorporation of Certain Documents by Reference” on page 15 for more information about us and our financial statements. We urge you to pay special attention to the risks of investing in our common stock discussed under “Risk Factors.” Except where the context otherwise requires, the terms “we,” “us,” “our” or “SYS” refer to the business of SYS and its consolidated subsidiaries.

SYS Technologies (AMEX: SYS), is a provider of information connectivity solutions that capture, analyze and present real-time information to decision makers. Our tailored solutions deliver enhanced decision-making and asset management tools, as well as improved response times, to our customers, which include the Department of Defense (DoD), U.S. Department of Homeland Security (DHS) and large industrial, energy and transportation companies.

Built upon standards-based interoperable platforms, SYS solutions utilize sensors, wireless communications networks, decision-support tools and net-centric technologies.

For the DoD, we provide command and control systems to operational commanders. For the DHS and various state agencies, we provide real-time safety and security products and services, including sensor networking products and end-to-end solutions. Large industrial customers in the telecommunications, utilities, construction, chemical, and biomedical industries use our products and services to intelligently and profitably manage remote assets.

Historically, our revenues have been generated by providing contract engineering services to the DoD. We have increased our revenues by establishing new business units with experienced senior executives who have the ability to grow these business units and to expand our customer base and by acquiring other companies. Our objective is to continue to grow our revenues organically and through acquisitions and to continue to develop a mix of services and products based revenues. We intend to continue to selectively acquire businesses and technologies which complement and enhance our existing businesses and which will allow us to broaden our customer base. While we are continuing to grow our DoD business, we also have an expanding revenue base with other U.S. Government agencies, including the DHS, the Defense Advanced Research Program Administration (DARPA), and the Defense Systems Information Agency (DISA), municipal and state governments, and Fortune 1000 companies in the industrial marketplace.

We deliver our solutions through two operating segments. The Defense Solutions Group (DSG) focuses on engineering and technical services to U.S. Federal Government agencies. The Public Safety, Security and Industrial Solutions Group (PSSIG) focuses on sensor networking technologies and public safety and security solutions for both commercial and government customers.

Our principal executive offices are located at 5050 Murphy Canyon Road, Suite 200, San Diego, California, 92123, and we have additional offices in California, Virginia and Washington, DC. For additional information, please visit www.systechnologies.com.

Page 1

The Offering

Common stock offered by Selling Shareholders (including shares underlying convertible notes and warrants)	10,677,626 shares assuming full conversion of the outstanding convertible notes and warrants associated with this offering. This number represents 59% of our outstanding stock.
Common stock to be outstanding after the offering, assuming full conversion of the outstanding convertible notes and warrants associated with this offering.	18,133,209 shares(1)
Proceeds to Company	We will not receive proceeds from the resale of shares by the Selling Shareholders. However, we will receive a reduction of approximately $5,224,563 in short and long-term indebtedness to the extent that convertible notes are converted subsequent to the effectiveness of the registration statement of which this Prospectus is a part. To the extent that 313,401 warrants issued in our May 27, 2005 Offering are exercised at their $2.50 exercise price on other than a cashless basis, the Company would receive $783,503 in cash proceeds. To the extent that 110,000 warrants issued in payment for services rendered are exercised at their $4.00 exercise price on other than a cashless basis, the Company would receive $440,000 in cash proceeds. Effective as of September 27, 2005, we acquired certain assets of Lomasoft Corporation - for $50,000, 50,000 warrants, and a contingent obligation to issue up to 100,000 warrants in the future. To the extent that the 50,000 warrants issued to Lomasoft are exercised at their $3.85 exercise price on other than a cashless basis, we would receive $192,500 in cash proceeds. To the extent that the 100,000 warrants which may be issued to Lomasoft are exercised at their $3.87 exercise price on other than a cashless basis, the Company would receive $387,000 in cash proceeds.
American Stock Exchange Symbol	SYS

(1)Based on 13,831,096 shares of common stock outstanding as of March 15, 2006 plus 1,555,522 shares issuable upon the conversion of convertible notes from private placements of securities completed in 2004 and 2006; 246,963 shares issuable upon the conversion of convertible notes from acquisitions; 493,401 shares issuable upon the exercise of warrants associated with a private placement of securities and in connection with acquisitions completed in 2005; up to approximately 100,000 shares that are issuable upon the exercise of conditionally issuable warrants under certain provisions in the Lomasoft transaction, and up to 1,906,227 shares contingently issuable under earn-out provisions in various acquisition transactions.

Page 2

RISK FACTORS

Investing in our Common Stock involves a high degree of risk. In addition to the other information contained and incorporated by reference in this Prospectus, we urge you to carefully consider the following risk factors before purchasing any of the securities offered under this Prospectus. Risks and uncertainties, in addition to those we describe below, that are not presently known to us or that we currently believe are immaterial may also impair our business operations. If any of the following risks occur, our business and financial results could be harmed, and the price of our common stock could decline. We believe the following are our material risks:

We depend upon a single customer, the U.S. Government, for the majority of our revenues, and a decrease in its demand for our services, or pricing modifications by prime contractors, might harm our operating results.

Currently, a substantial part of our business is work we do for the DoD. Even though the amount of business we receive from this customer is growing and we have negotiated multiple-year contracts that include option and award years, budget changes in Congress or the DoD could have a significant and adverse effect on us. In addition, we do not know whether the U.S. Government will exercise each option or award year available on a contract. Depending on the contract, we may perform as a prime contractor or as a subcontractor to another prime contractor. In cases where we perform as a subcontractor, we may be subject to price modifications required by the prime contractor. Such price modifications, if not mitigated by a corresponding reduction of costs, could have a negative impact on our profitability.

A significant number of our customers are government agencies which are subject to unique political and budgetary constraints and have special contracting requirements that may affect our ability to obtain other new government customers.

A significant number of our customers are government agencies, principally DoD agencies. These agencies often do not set their own budgets and therefore have little control over the amount of money they can spend. In addition, these agencies experience political pressure that may dictate the manner in which they spend money. Due to political and budgetary processes and other scheduling delays that frequently occur in the contract or bidding process, some government agency orders may be canceled or substantially delayed, and the receipt of revenues or payments may be substantially delayed.

In addition, future sales to government agencies will depend on our ability to meet government contracting requirements, certain of which may be onerous or impossible to meet, resulting in our inability to obtain particular contracts. Common requirements in government contracts include bonding, provisions permitting the purchasing agency to modify or terminate at will the contract without penalty and provisions permitting the agency to perform investigations or audits of our business practices.

The U.S. Government has a program that encourages and sometimes requires large prime contractors to use small businesses. The U.S. Government restricts the competition on some contracts to qualifying small businesses. Some of our contracts and subcontracts have been awarded based on our eligibility as a small business. The definition of a small business depends on the type of product or service being provided. The U.S. Government uses North American Industry Classification System (NAICS) codes to classify the small business size standards for all industries. One of our primary NAICS codes was for engineering services, and beginning in fiscal year 2005, we no longer qualified as a small business using this code. However, we still qualify as a small business using several other NAICS codes. In addition, the small business contracts currently held by us do not terminate as a result of our no longer qualifying as a small business under any specific NAICS Code, and any option years on these contracts are also not affected by a change in small business status. Nevertheless, it is possible that our future revenues may be adversely impacted by our recent growth and consequent failure to qualify as a small business under certain NAICS codes.

Page 3

Our inability to adequately retain or protect our employees, customer relationships and proprietary technology could harm our ability to compete.

Our future success and ability to compete depends in part upon our employees and their customer relationships, as well as our proprietary technology and trademarks, which we attempt to protect with a combination of patent, copyright, trademark and trade secret claims, as well as with our confidentiality procedures and employee contract provisions. These legal protections afford only limited protection and are time-consuming and expensive to obtain and/or maintain. Further, despite our efforts, we may not prevent third parties from soliciting our employees or customers or infringing upon or misappropriating our intellectual property. Our employees, customer relationships and intellectual property may not provide us with a competitive advantage adequate to prevent competitors from entering the markets for our products and services. Additionally, our competitors could independently develop non-infringing technologies that are competitive with, and equivalent or superior to, our technology. Monitoring infringement and/or misappropriation of intellectual property can be difficult, and it is possible that we would not detect an infringement or misappropriation of our proprietary rights. Even if we were to detect an infringement or misappropriation of our proprietary rights, litigation to enforce these rights would be costly and would cause us to divert financial and other resources from our normal business operations.

The departure of certain key personnel could affect the financial condition of SYS due to the loss of their expertise and customer relationships.

Certain key employees, such as Clifton L. Cooke, Jr., Edward M. Lake, and Kenneth D. Regan, are intimately involved in our business and have day-to-day relationships with critical customers. Competition for highly skilled business, product development, technical and other personnel is intense, and we may not be successful in recruiting new personnel or in retaining our existing personnel. A failure on our part to retain the services of these key personnel could have a material adverse effect on our operating results and financial condition. We do not maintain key man life insurance on any of our employees.

We face numerous competitors, and as a result, we may not get the business we seek.

We have many competitors with comparable characteristics and capabilities that compete for the same group of customers. Our competitors are competent and experienced and are continuously working to take projects away from us. Many of our competitors have greater financial, technical, marketing and other resources than we do. Our ability to compete effectively may be adversely affected by the ability of these competitors to devote greater resources to the sale and marketing of their products and services than are available to us.

Page 4

We must comply with numerous U.S. Government regulations.

As a government contractor, we must comply with, and we are affected by, various government regulations. Changes in these regulations could affect our operating results, and we could be subject to penalties for failure to comply with them. Among the most significant of these regulations are:

·   the Federal Acquisition Regulations, and agency regulations supplemental to the Federal Acquisition Regulations, which comprehensively regulate the formation, administration and performance of government contracts;

·   the Truth in Negotiations Act, which requires certification and disclosure of all cost and pricing data in connection with contract negotiations;

·   government accounting regulations, which impose accounting requirements that govern our right to reimbursement under certain cost-based government contracts; and

·   laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.

Inaccuracy in our indirect billing rates could cause us to lose money.

Our indirect billing rates are approved at least annually by the Defense Contract Management Agency (DCMA) after being reviewed by the Defense Contract Audit Agency (DCAA). These rates can differ from our actual indirect rates. We budget to have our actual indirect rates as close as possible to our government approved indirect rates at fiscal year end. Throughout the year, management assesses how these rates compare to forecasted rates for the year. If our actual indirect billing rates are expected to exceed the amount to be billed, provisions for such variance are recognized at that time.

We rely on subcontractors whose performance could have an adverse impact on our relationships with our customers and our operating results.

We regularly employ subcontractors to assist us in satisfying our contractual obligations. We could have disputes with subcontractors concerning a number of issues, including the quality and timeliness of their work, a decision on our part not to extend task orders or issue new task orders under a subcontract, or our hiring of former personnel of a subcontractor. A failure by one or more of our subcontractors to satisfactorily deliver agreed-upon services on a timely basis could materially and adversely impact our ability to perform our obligations as a prime contractor. In extreme cases, such subcontractor performance deficiencies could result in the government terminating our contract for default. A default termination could expose us to liability for excess costs of procurement by the government and have a material adverse effect on our ability to compete for future contracts and task orders.

If we are unable to obtain or maintain security clearances, we may not be able to perform certain work.

If we cannot obtain the necessary security clearances, we may not be able to perform classified work for the government and our revenues may suffer. Certain government contracts require our facilities and some of our employees to maintain security clearances. If we lose or are unable to obtain security clearances required for a particular contract, the client can terminate the contract or decide not to renew it upon its expiration. As a result, to the extent we cannot obtain the required security clearances for our employees working on a contract, we may not derive the revenue anticipated from that contract. Any such reduction in revenue, if not replaced with revenue from other contracts, could seriously harm our operating results.

Page 5

Security breaches in sensitive government systems could result in the loss of clients and negative publicity. Many of the systems we develop involve managing and protecting information involved in national security and other sensitive government functions. A security breach in one of these systems could cause serious harm to our business, could result in negative publicity and could prevent us from having further access to such critically sensitive systems or other similarly sensitive areas for other government clients.

There are risks associated with our planned growth, such as a possible inability to manage our growth.

We plan to grow our revenues and profits by adding to our existing customer base through internal growth and by the acquisition of other government services and government or commercial technology related companies. Over the past five years we have hired senior management personnel capable of establishing new business units within SYS. Rapid expansion through internal growth has required additional capital resources. We plan to continue this approach to building our business. We are uncertain whether this approach will result in increased profitability in the future.

We believe that we can also grow through the acquisition of other government services companies and government or commercial technology related companies that have product offerings which may be sold to both commercial and government customers. The acquisition of other companies and growing those businesses is uncertain and contains a variety of business risks, including: integration, cultural differences, the retention of key personnel, competition, protection of intellectual property, profitability, industry changes and others. Although we do not have an agreement to acquire any specific company at this time, we intend to attempt to expand our operations through the acquisition of other companies. Acquisitions and attempted acquisitions may place a strain on our limited personnel, financial and other resources. Our ability to manage this growth, should it occur, will require expansion of our capabilities and personnel. We may not be able to find qualified personnel to fill additional positions or be able to successfully manage a larger organization. Further, we intend to finance these transactions through a combination of cash, equity and debt. Our ability to use our stock as an acquisition currency may be limited because the trading volume in our stock has been low, our stock price has been volatile, and our stock may not maintain a price sufficient to support transactions without excessive dilution.

We have very limited funds upon which to rely for adjusting to business variations and for growing new businesses.

While we are likely to look for new funding to assist in the acquisition of other profitable businesses, it is uncertain whether such funds will be available. Our substantial reliance on our revolving line of credit facility with Comerica Bank - California imposes certain limitations on us, such as complying with the financial covenants. If we are to grow and expand our operations, we will need to raise significant amounts of additional capital. We cannot be certain that we will be successful in raising additional capital, or if we are successful, that we will be able to raise capital on reasonable terms. If we do raise additional capital, our existing shareholders may incur substantial and immediate dilution.

Page 6

There are a large number of shares that are available for future sale, and the sale of these shares may depress the market price of our common stock.

As of March 15, 2006, we had issued 13,831,096 shares of common stock. Up to 2,333,200 shares of common stock were issuable upon the exercise of employee stock options at prices ranging from $1.00 to $4.90 per share, 687,522 shares were issuable upon the conversion of convertible notes from the February 2004 Offering at $2.20 per share, 168,563 shares were issuable upon the conversion of convertible notes from the acquisition of Polexis at $2.32 per share, 78,400 shares were issuable upon the conversion of the convertible note payable from the Antin acquisition at $2.50 per share, 313,401 shares were issuable upon the exercise of warrants issued in connection with the May 27, 2005 Offering at $2.50 per share, 50,000 shares were issuable upon the exercise of warrants issued in connection with the acquisition of the Lomasoft technology at $3.85 per share, 100,000 shares were conditionally issuable upon the exercise of warrants issued in connection with the acquisition of the Lomasoft technology at $3.87 per share, 868,000 shares were issuable upon the conversion of convertible notes from the February 14, 2006 Offering at $3.60 per share, 110,000 shares were issuable upon the exercise of warrants issued in connection with various transactions at $4.00 per share, and up to 1,906,227 shares contingently issuable under earn-out provisions in various acquisition transactions. The sale of shares issued upon any conversion of our outstanding convertible notes or the exercise of outstanding options, warrants or the stock purchase agreement could adversely affect the market price of our common stock.

There is a limited market for our common stock which could impact your ability to sell your shares.

Our common stock is traded on the American Stock Exchange. Trading in our common stock has been sporadic, and at present, there is a limited market for the stock. We do not know whether a stronger market will develop. Even if such a market does develop, it may not be sustained. There are no analysts currently covering the Company.

Future sales of our common stock by existing shareholders under Rule 144 could decrease the trading price of our common stock.

As of March 15, 2006, a total of 6,634,590 shares of our outstanding common stock were “restricted securities” and could be sold in the public markets only in compliance with Rule 144 adopted under the Securities Act of 1933 or other applicable exemptions from registration. Rule 144 provides that a person holding restricted securities for a period of one year may thereafter sell, in brokerage transactions, an amount not exceeding in any three-month period the greater of either (i) 1% of the issuer’s outstanding common stock or (ii) the average weekly trading volume in the securities during a period of four calendar weeks immediately preceding the sale. Persons who are not affiliated with the issuer and who have held their restricted securities for at least two years are not subject to the volume limitation. Possible or actual sales of our common stock by present shareholders under Rule 144 could have a depressive effect on the price of our common stock.

Our directors, executive officers and affiliated persons beneficially own a significant amount of our stock, and their interests could conflict with yours.

As of March 15, 2006, our directors, executive officers and affiliated persons were the beneficial owners of approximately 25.5% of our common stock, including stock options exercisable within 60 days of March 15, 2006. As a result, our executive officers, directors and affiliated persons will have a significant ability to:

·   elect or defeat the election of our directors;

·   amend or prevent amendment of our articles of incorporation or bylaws;

·   effect or prevent a merger, sale of assets or other corporate transaction; and

·   control the outcome of any other matter submitted to the shareholders for vote.

Page 7

As a result of their ownership and positions, our directors, executive officers, and affiliated persons, collectively, are able to significantly influence all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. In addition, sales of significant amounts of shares held by our directors and executive officers and affiliated persons, or the prospect of these sales, could adversely affect the market price of our common stock. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our shareholders from realizing a premium over our stock price.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995, (the “Reform Act”), provides a safe harbor for forward-looking statements made by us or on our behalf. We and our representatives may, from time to time, make written or verbal forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission, including this Prospectus, and in our reports to shareholders. Generally, the inclusion of the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” and similar expressions identify statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that are intended to come within the safe harbor protection provided by those sections. All statements addressing operating performance, events, or developments that we expect or anticipate will occur in the future, including statements relating to sales growth, earnings or earnings per share growth, and market share, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements within the meaning of the Reform Act.

The forward-looking statements are and will be based upon our management’s then-current views and assumptions regarding future events and operating performance and are applicable only as of the dates of such statements. Except as required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. By their nature, all forward-looking statements involve risks and uncertainties. Actual results, including our revenues from our segments, expenses, gross margins, cash flows, financial condition, and net income, as well as factors such as our competitive position, the demand for our products and services and our customer base, may differ materially from those contemplated in the forward-looking statements or those currently being experienced by us for a number of reasons, including but not limited to the risk factors set forth above under “Risk Factors.”

The risk factors described in the Risk Factors section are what we believe to be all our material risks. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial also may adversely impact us. Should any risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition, and results of operations. For these reasons, we caution you not to place undue reliance on our forward-looking statements.

RECENT FINANCINGS

On February 14, 2006, we completed a private Offering pursuant to Section 4(2) of the Securities Act of 1933 of $6.25 million in units, each unit consisting of 6,944 restricted shares of SYS Common Stock at $3.60 per share and a three-year $25,000 unsecured subordinated convertible note bearing interest, at 10% per annum, payable quarterly. The investor can convert all but not part of this note, at any time prior to maturity, into shares of SYS common stock at $3.60 per share or keep the note until maturity. SYS has a conversion option commencing one year from the date of issuance whereby, if our stock trades at $5.40 per share for at least five consecutive trading days, we can force the conversion of the notes then outstanding.

We issued 868,000 shares of common stock pursuant to this offering. An additional 868,049 shares could be issued if all of the notes are converted into common stock.

Page 8

RECENT TRANSACTIONS

On April 2, 2006, SYS acquired all of the outstanding stock of Reality Based IT Services, Ltd. (RBIS) a privately held, Maryland-based information systems consultancy for approximately $9.5 million in cash and stock. The transaction was completed pursuant to a stock purchase agreement between SYS and the principal shareholder of RBIS. As a result of the acquisition, RBIS became a wholly-owned subsidiary of SYS, and therefore, its financial results will be included in the consolidated financial results of SYS for periods subsequent to March 31, 2006.

As a provider of Information Technology (IT) security engineering, RBIS develops, implements and maintains convergent security services that are delivered by consultants, engineers and help desk personnel with high-level U.S. government clearances.

The purchase consideration consisted of $5.6 Million in cash and 963,277 shares of SYS common stock with a market value of approximately $3.9 million at closing.

USE OF PROCEEDS

This Prospectus relates to 10,677,626 shares of our common stock, which may be sold from time to time by the Selling Shareholders. We will not receive any part of the proceeds of the sale of common stock by the Selling Shareholders. We will receive approximately $5,224,563 of relief from indebtedness if the Selling Shareholders convert all of their convertible notes into common stock. To the extent that 313,401 warrants issued in our May 27, 2005 Offering are exercised at their $2.50 exercise price on other than a cashless basis, the Company would receive $783,503 in cash proceeds. To the extent that 110,000 warrants issued in payment for services rendered are exercised at their $4.00 exercise price on other than a cashless basis, the Company would receive $440,000 in cash proceeds. To the extent that 50,000 warrants issued to Lomasoft (see “The Offering” section for more information) for an asset purchase are exercised at their $3.85 exercise price on other than a cashless basis, the Company would receive $192,500 in cash proceeds; in addition, Lomasoft could receive up to 100,000 warrants that are conditionally issuable at their $3.87 exercise price on other than a cashless basis, the Company could receive up to $387,000 in cash proceeds.

SELLING SHAREHOLDERS

We are registering for resale shares of our common stock held by the Selling Shareholders identified below. On April 2, 2006, we issued 963,277 shares of common stock to the principal shareholder of RBIS in exchange for all of the outstanding shares of RBIS. The remaining Selling Shareholders either (i) acquired shares of common stock or convertible notes from us in separate private placement transactions completed on February 14, 2006, June 2, 2005, January 2004 and January 2002, (ii) acquired shares of common stock pursuant to other business combinations, or (iii) have been issued warrants in connection with the June 2, 2005 financing or in connection with a business combination. Certain of the Selling Shareholders may also sell shares which may be issued upon the achievement of certain earnout provisions associated with business combinations.

We have filed with the U.S. Securities and Exchange Commission a registration statement, of which this Prospectus forms a part, with respect to the resale of the shares of our common stock from time to time, under Rule 415 of the Securities Act of 1933, on the American Stock Exchange, in privately negotiated transactions, in underwritten offerings or by a combination of these methods for sale.

With respect to the shares issued in the acquisition of RBIS, we have agreed to use commercially reasonable efforts to keep the Registration Statement of which this Prospectus is a part effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which the former RBIS stockholder may sell all of his registrable securities without restriction pursuant to Rule 144 promulgated under the 1933 Act or (ii) the date on which the former RBIS stockholder has sold all of his registrable securities.

Page 9

With respect to the shares issued in previous business combinations, our registration obligation ranges from utilizing our best efforts to maintain effectiveness to agreeing to use commercially reasonable efforts to keep the Registration Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which the Selling Shareholders may sell all of the registrable securities covered by the Registration Statement without restriction pursuant to Rule 144 promulgated under the 1933 Act or (ii) the date on which the Selling Shareholders have sold all of their registrable securities or (iii) up to one year after the maturity of the convertible notes in the case of the 2002 and 2004 private placements.

With respect to the shares issued in the separate private placement transactions, we have agreed pursuant to separate purchase agreements to keep the Registration Statement effective until the later of (i) the fifth anniversary of the date on which the original registration statement was declared effective or (ii) such time as all of the registrable securities covered by the Registration Statement have been publicly sold by the holders or (iii) such time as all the registrable securities covered by the Registration Statement may be sold by the holders pursuant to Rule 144(k). In addition, with respect to the private placement in June 2005, in the event we fail to maintain an effective registration statement for a period greater than 30 trading days, under the terms of the separate purchase agreements with the investors in that private placement transaction, we have agreed to pay as liquidated damages an amount equal to 2% of the aggregate amount invested by each investor in such private placement transaction, provided, however, that the Company shall not be required to pay more than an aggregate of 18% of the investment amount in liquidated damages.

Set forth below is information provided to us by the Selling Shareholders with respect to the number of shares of our common stock owned by each of them. Except as described in the table below, none of the Selling Shareholders has any position, office or other material relationship with us or any of our affiliates beyond their investment in, or receipt of, our securities. Beneficial ownership has been determined in accordance with the rules of the U.S. Securities and Exchange Commission, and includes voting or investment power with respect to the shares. Unless otherwise indicated in the table below, to our knowledge, all persons named in the table below have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by spouses under applicable law. Our registration of these shares does not necessarily mean that the Selling Shareholders will sell any or all of the shares covered by this Prospectus. The Selling Shareholders may be deemed to be underwriters.

The number of shares of common stock that may be actually purchased by the Selling Shareholders under the convertible notes and warrants and the number of shares of common stock that may be actually sold by each Selling Shareholder will be determined by such Selling Shareholder. Because each Selling Shareholder may sell all, some or none of the shares of common stock which can be purchased under the convertible notes and warrants and each Selling Shareholder may sell all, some or none of the shares of common stock which each holds, and because the offering contemplated by this Prospectus is not currently being underwritten, no estimate can be given as to the number of shares of common stock that will be held by the Selling Shareholders upon termination of the offering. The information set forth in the following table regarding beneficial ownership after resale of the covered shares is based on the premises that each Selling Shareholder will purchase the maximum number of shares of common stock provided for by the convertible notes and warrants owned by the Selling Shareholder and that each Selling Shareholder will sell all of the shares of common stock owned by that Selling Shareholder and covered by this Prospectus.

Page 10

The following table sets forth certain information with respect to the Selling Shareholders as of March 15, 2006. The shares of our common stock offered by this Prospectus may be offered from time to time by the persons or entities named below:

Name	Shares of Common Stock Issuable Upon Conversion of Notes, Exercise of Warrants or Contingently Issuable	Beneficial Ownership Before the Offering (1)	Shares of Common Stock Included in Prospectus	Beneficial Ownership After the Offering(1)(2)	Percentage of Common Stock Owned After Offering(1)(2)	Description of the Transaction
David Almilli	-	3,056	329	2,727	0.02%	(5)
Theo H. Aukerman and Charlene A. Aukerman, JT	13,706	28,753	28,753	-	0.00%	(9)
Babbush Family Trust (14)	11,364	99,612	40,625	58,987	0.43%	(3)(4)
Randall M. Babbush	13,888	13,888	13,888	-	0.00%	(8)
Bard Micro-Cap Value Fund, L.P. (15)	6,944	6,944	6,944	-	0.00%	(8)
Barrington Investors, L.P. (16)	281,549	557,656	540,656	17,000	0.12%	(6)(8)
Barrington Partners, A California Limited Partnership (17)	106,615	225,552	218,552	7,000	0.05%	(6)(8)
BASHM (18)	11,364	15,625	15,625	-	0.00%	(4)
John Benassi	452	1,433	1,433	-	0.00%	(5)
Benchmark Partners, L.P. (19)	131,664	341,664	341,664	-	0.00%	(6)(8)
James M. Bennett	-	32,675	31,428	1,247	0.01%	(7)
Wyatt Bertel	-	329	329	-	0.00%	(5)
Jason Bertellotti	-	3	3	-	0.00%	(5)
Rebecca Blankinship	3,421	7,198	7,198	-	0.00%	(9)
Bluegrass Growth Fund LTD (20)	9,574	-	-	-	0.00%	(6)
Bluegrass Growth Fund LP (21)	9,574	-	-	-	0.00%	(6)
Ralph A. L. Bogan Trust	6,944	6,944	6,944	-	0.00%	(8)
Bourquin Family Trust (22)	6,944	6,944	6,944	-	0.00%	(8)
Suzana Cid Brady	8,224	17,244	17,244	-	0.00%	(9)
Richard Brehm	5,682	7,813	7,813	-	0.00%	(4)
BridgeWest, LLC (23)	-	18,653	18,653	-	0.00%	(5)
Brobeck, Phleger & Harrison (24)	1,131	3,794	3,794	-	0.00%	(5)
Anne R. Brown Trust	6,944	6,944	6,944	-	0.00%	(8)
Elizabeth D. Burns Trust	9,154	3,472	3,472	-	0.00%	(4)(8)
John Burns	5,682	38,588	14,063	24,525	0.18%	(3)(4)
Keith Cannon	13,888	13,888	13,888	-	0.00%	(8)
Joseph J. Cohen Separate Property Trust	11,364	15,625	15,625	-	0.00%	(4)
Clifton L. Cooke, Jr. & Janet S. Cooke Family Trust	45,456	996,487	512,500	483,987	3.50%	(3)(4)
Clifton L. and Ruth J. Cooke Family Trust	50,504	59,026	59,026	-	0.00%	(4)(8)
Cooke Charitable Remainder Unitrust (25)	69,440	69,440	69,440	-	0.00%	(8)
Carol Clark Coolidge Trust	6,944	6,944	6,944	-	0.00%	(8)
cVideo, Inc. (56)	668,750	-	-	-	0.00%	(55)

 

Page 11

 

Name Shares of Common Stock Issuable Upon Conversion of Notes, Exercise of Warrants or Contingently Issuable Beneficial Ownership Before the Offering (1) Shares of Common Stock Included in Prospectus Beneficial Ownership After the Offering(1)(2) Percentage of Common Stock Owned After Offering(1)(2) Description of the Transaction

Dale T. Derby	11,364	-	-	-	0.00%	(4)
Derby Family Trust (26)	22,728	47,750	31,250	16,500	0.12%	(4)
Katharine Bard Dickson & Marck A. Dickson, JTWROS	13,888	13,888	13,888	-	0.00%	(8)
Charles H. Dock	52,400	69,444	69,444	-	0.00%	(4)(8)
Christopher M. Dock	11,364	15,625	15,625	-	0.00%	(4)
George Driver	6,944	6,944	6,944	-	0.00%	(8)
John D. Dunaway	-	31,428	31,428	-	0.00%	(7)
EBLW Associates (27)	6,944	6,944	6,944	-	0.00%	(8)
ECI Employees Pension Plan (28)	11,364	15,625	15,625	-	0.00%	(4)
Ellumina, LLC (29)	-	164,998	164,998	-	0.00%	(5)
Phillip A. England and Lisa K. England, JT	13,706	28,753	28,753	-	0.00%	(9)
Christopher Exline	-	5,279	329	4,950	0.04%	(5)
Gary R. Fairhead	6,944	6,944	6,944	-	0.00%	(8)
Marco Fiorello & Karen Fiorello, JT	3,472	55,186	3,472	51,714	0.37%	(8)
Richard L. Firth	3,472	28,472	15,972	12,500	0.09%	(3)(8)
Flatow Living Trust (30)	5,682	7,813	7,813	-	0.00%	(4)
Albert J. Ford	-	31,428	31,428	-	0.00%	(5)
Benjamin and Linda Frankel, JT	13,888	13,888	13,888	-	0.00%	(8)
Michael Gehlen and Dwityani S. Gehlen, JT	13,706	28,753	28,753	-	0.00%	(9)
Gladehill Development Corporation	-	37,068	37,068	-	0.00%	(5)
Michael Glasgow	41,445	129,221	129,221	-	0.00%	(5)
Goodwin Trust (31)	104,160	104,160	104,160	-	0.00%	(8)
Timothy D. Green and Kellie L. Green, JT	6,864	14,396	14,396	-	0.00%	(9)
Pericles Haleftiras	-	31,428	31,428	-	0.00%	(7)
Betty S. Hamlin	5,682	20,313	14,063	6,250	0.05%	(3)(4)
Laurie M. Harmon Trust	6,944	6,944	6,944	-	0.00%	(8)
Darren Hardy	-	329	329	-	0.00%	(5)
John Helewa	-	98	98	-	0.00%	(5)
Herman Family Trust (32)	-	329	329	-	0.00%	(5)
Leonard M. Herman Trust	13,888	13,888	13,888	-	0.00%	(8)
Sidney N. Herman	6,944	6,944	6,944	-	0.00%	(8)
John R. Hicks & Susan C. Hicks Revocable Trust	62,502	85,938	85,938	-	0.00%	(4)
Susan C. Hicks	11,364	15,625	15,625	-	0.00%	(4)
Hightower Family Trust (33)	11,364	15,625	15,625	-	0.00%	(4)
John D. Hightower	18,308	22,569	22,569	-	0.00%	(4)(8)
James Hinrichs	12,626	14,757	14,757	-	0.00%	(4)(8)
Colin Hirayama	22,728	31,250	31,250	-	0.00%	(4)
Kimberly Holly	-	11	11	-	0.00%	(5)
Robert A. Holmes	29,672	88,194	38,194	50,000	0.36%	(4)(8)
Kevin D. Hoyle	6,944	6,944	6,944	-	0.00%	(8)
Hoyle Cohen Inc., 401(k) PSP (34)	11,364	15,625	15,625	-	0.00%	(4)

 

Page 12

 

Name Shares of Common Stock Issuable Upon Conversion of Notes, Exercise of Warrants or Contingently Issuable Beneficial Ownership Before the Offering (1) Shares of Common Stock Included in Prospectus Beneficial Ownership After the Offering(1)(2) Percentage of Common Stock Owned After Offering(1)(2) Description of the Transaction

T. Michael Johnson & Patricia Johnson, JTWROS	6,944	6,944	6,944	-	0.00%	(8)
William B. Johnson Trust	6,944	6,944	6,944	-	0.00%	(8)
Stephen Jones and Nicole L. Jones, JT	13,706	28,753	28,753	-	0.00%	(9)
Richard Kadel	41,445	83,251	83,251	-	0.00%	(5)
Keller Family Trust (35)	6,944	6,944	6,944	-	0.00%	(8)
Dale F. Keller, Jr.	5,682	7,813	7,813	-	0.00%	(4)
Frederick J. Kokaska and Barbara L. Kokaska, JT	13,706	28,753	28,753	-	0.00%	(9)
Scott R. Laidig	18,308	7,369	7,369	-	0.00%	(4)(8)
Scott R. Laidig Revocable Trust	-	25,000	25,000	-	0.00%	(3)
Edward M. Lake	18,308	22,569	22,569	-	0.00%	(4)(8)
William Lansing	-	329	329	-	0.00%	(5)
Andrew M. Leitch	18,308	22,569	22,569	-	0.00%	(4)(8)
Harry J. Little Trust	11,364	15,625	15,625	-	0.00%	(4)
Lomasoft Corporation (36)	150,000	-	-	-	0.00%	(10)
Nicholas Loter	-	163	163	-	0.00%	(5)
Lyle Family Trust (37)	22,728	31,250	31,250	-	0.00%	(4)
Lysaught Family Trust (38)	11,364	-	-	-	0.00%	(4)
John Bard Manulis	6,944	6,944	6,944	-	0.00%	(8)
John Marsh	41,445	131,421	131,421	-	0.00%	(5)
Kevin R. McIver and Rene C. McIver, JT	3,421	7,198	7,198	-	0.00%	(9)
Michael J. McManus	6,944	6,944	6,944	-	0.00%	(8)
Susan W. McMillan Trust	6,944	6,944	6,944	-	0.00%	(8)
Nasser Mecklai	25,252	129,513	79,513	50,000	0.36%	(3)(4)(8)
Michael Miljour	-	146	146	-	0.00%	(5)
Janathin A. Miller	78,400	443,132	443,132	-	0.00%	(7)
Monarch Capital Group LLC (39)	40,000	-	-	-	0.00%	(11)
Matthew Moog	6,944	6,944	6,944	-	0.00%	(8)
David Moolenaar	-	163	163	-	0.00%	(5)
Amir Moussavian	-	27,159	27,159	-	0.00%	(5)
Mrdjenovich Family Trust (40)	92,544	194,150	194,150	-	0.00%	(9)
Gary E. Murphy (41)	775,000	963,277	963,277	-	0.00%	(57)
Kyle R. Myers	13,706	28,753	28,753	-	0.00%	(9)
Albert L. C. Nelson II	11,364	15,625	15,625	-	0.00%	(4)
Nextreme Ventures, LLC (42)	-	152,080	152,080	-	0.00%	(5)
Joseph Ortiz	-	329	329	-	0.00%	(5)
David Overskei	-	11	11	-	0.00%	(7)
Page Trust (43)	73,232	190,276	140,276	50,000	0.36%	(3)(4)(8)
Pershing Family Trust (44)	11,364	-	-	-	0.00%	(4)
Carlos Persichetti	41,445	92,421	92,421	-	0.00%	(5)
Pierrepont MSP 32 Trust (45)	6,944	6,944	6,944	-	0.00%	(8)
William A. Preston	11,364	15,625	15,625	-	0.00%	(4)
Christopher Priebe	-	7,086	361	6,725	0.05%	(5)
Jerry Qassar	69	232	232	-	0.00%	(5)
Radcliffe Investment Partners I (46)	18,308	22,569	22,569	-	0.00%	(4)(8)

 

Page 13

 

Name Shares of Common Stock Issuable Upon Conversion of Notes, Exercise of Warrants or Contingently Issuable Beneficial Ownership Before the Offering (1) Shares of Common Stock Included in Prospectus Beneficial Ownership After the Offering(1)(2) Percentage of Common Stock Owned After Offering(1)(2) Description of the Transaction

RCR Resources (47)	11,364	15,625	15,625	-	0.00%	(4)
Robert & Audrey Recchia Family Trust	6,944	6,944	6,944	-	0.00%	(8)
Regan, Kenneth D.	18,308	52,933	47,569	5,364	0.04%	(3)(4)(8)
Barrett Richey	-	916	11	905	0.01%	(7)
Dean Rosenberg	5,682	7,813	7,813	-	0.00%	(4)
Anne H. Ross	6,944	6,944	6,944	-	0.00%	(8)
Jennifer Ross	-	54	54	-	0.00%	(5)
Roth Capital Partners, LLC (48)	60,000	-	-	-	0.00%	(11)
Rene Savalle and Maureen B. Savalle, JT	13,706	28,753	28,753	-	0.00%	(9)
Scripps Ventures, Inc. (49)	-	45,950	45,950	-	0.00%	(3)
M. Edward Sellers & Suzan D. Boyd, JTWROS	6,944	6,944	6,944	-	0.00%	(8)
Adham Shaaban	-	163	163	-	0.00%	(5)
Steven Sharp	-	329	329	-	0.00%	(5)
Sherman Family Trust (50)	36,616	45,138	45,138	-	0.00%	(4)(8)
Billie J. Shutters	-	84,845	25,000	59,845	0.43%	(3)
John Silva	11,364	106,683	-	106,683	0.77%	(4)
David and Karen Sixt Family Trust	11,364	15,625	15,625	-	0.00%	(4)
SmallCap Corporate Advisors, LLC (51)	30,000	-	-	-	0.00%	(11)(12)
Judith L. Smith	-	32,509	31,428	1,081	0.01%	(7)
Dale F. Snavely	6,944	6,944	6,944	-	0.00%	(8)
Gerald M. Starek Trust	11,364	15,625	15,625	-	0.00%	(4)
Rosemary Steinbaum	6,944	6,944	6,944	-	0.00%	(8)
Daniel Sturtz	-	163	163	-	0.00%	(5)
Restated Szeles Family Trust (52)	11,364	15,625	15,625	-	0.00%	(4)
Kerry Tarlov	-	163	163	-	0.00%	(5)
Hayden Trubitt	1,131	616	616	-	0.00%	(5)
Melinda Udell	14,836	19,097	3,472	15,625	0.11%	(4)(8)
Henry J. Underwood Trust	6,944	6,944	6,944	-	0.00%	(8)
Defrees & Fiske Retirement Trust FBO Henry J. Underwood	6,944	6,944	6,944	-	0.00%	(8)
John A. Vince	13,888	38,888	13,888	25,000	0.18%	(8)
Robert E. Whalen	6,944	6,944	6,944	-	0.00%	(8)
Whiffletree Partners, L.P. (53)	38,297	106,559	106,559	-	0.00%	(6)
Paul D. White	-	31,428	31,428	-	0.00%	(7)
Konstantin R. Wilms and Catherine L. Wilms, JT	2,061	4,311	4,311	-	0.00%	(9)
Victor M. Wilson	-	34,982	31,428	3,554	0.03%	(7)
Richard Yumul	-	163	163	-	0.00%	(5)
Xsilogy, Inc. (54)	250,000	80,000	80,000	-	0.00%	(13)
Totals	4,302,113	7,437,682	6,375,513	1,062,169

Page 14

(1)	The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rule, beneficial ownership includes any shares as to which the selling shareholder has sole or shared voting power or investment power and also any shares the selling shareholder has the right to acquire within 60 days.
(2)	Assumes that all securities offered hereby will be sold.
(3)	Shares purchased by investors that participated in the Company’s January 2002 Offering. During the period from October, 2001 through January, 2002, SYS sold 40 units to investors, pursuant to subscription agreements. Each unit consisted of (i) 25,000 shares of the Company's common stock at a price of one dollar ($1.00) per share and (ii) a $25,000 10% unsecured convertible note, which is convertible into 25,000 shares of common stock. As of March 15, 2006, all of the notes had converted to common stock at $1.00 per share. As of March 15, 2006, there were 720,950 shares related to this subscription offering that are included in this registration statement.
(4)	Shares and convertible notes purchased by investors that participated in the Company’s February 2004 Offering. During the period from December, 2003 through February, 2004, SYS sold 64 units to investors, pursuant to subscription agreements. Each unit consisted of (i) 15,625 shares of the Company's common stock at a price of one dollar and sixty cents ($1.60) per share and (ii) a $25,000 10% unsecured convertible note, which is convertible into 11,364 shares of common stock. As of March 15, 2006, a note had been converted to 11,364 shares. The notes bear interest at 10% and are convertible into our common stock at $2.20 a share. The notes are due and payable on December 31, 2006. As of March 15, 2006, there were 844,179 shares related to this subscription offering that are included in this registration statement and 687,522 shares issuable with the conversion of the notes.
(5)	Shares and convertible notes provided to Polexis, Inc. (Polexis) shareholders in exchange for their equity holdings in Polexis. On March 31, 2004, SYS acquired all of the outstanding stock of Polexis a privately held, San Diego-based provider of advanced data management software for approximately $6.5 million in cash, stock, notes, and assumption of debt. The transaction was completed pursuant to an agreement and plan of merger among SYS, Shadow Research International, Inc., a wholly owned subsidiary of SYS and Polexis, and Polexis' principal shareholders. As a result of the acquisition, Polexis became a wholly owned subsidiary of SYS and, therefore, is in the consolidated financial results of SYS effective for periods subsequent to March 31, 2004. As of March 15, 2006, there were 846,652 shares related to this acquisition that are included in this registration statement and 168,563 shares issuable with the conversion of the notes.
(6)	Shares and warrants purchased by investors that participated in the Company’s May 27, 2005 Offering under Section 4(2) that closed on June 2, 2005. On May 27, 2005, SYS entered into a securities purchase agreement pursuant to which the Company agreed to sell to certain institutional investors in a private placement transaction under Section 4(2) an aggregate of 1,427,655 shares of common stock at an aggregate purchase price of approximately $3,355,000 (or $2.35 per share). As part of the transaction, the Company also agreed to issue to the investors, warrants to purchase an aggregate of 428,289 shares of common stock at an exercise price of $2.50 per share. The transaction was closed on June 2, 2005. As of March 15, 2006, there were 313,401 warrants that had not been exercised and 943,559 shares outstanding from this offering; the warrants and outstanding shares are included in this registration statement.
(7)	Shares provided to Antin Engineering, Inc. (Antin) shareholders in exchange for their equity holdings in Antin. On January 6, 2005, SYS completed its acquisition of all of the outstanding securities of Antin; the effective date of the acquisition was January 3, 2005. The transaction was completed pursuant to an agreement and plan of merger by and among the Company, Shadow I, Inc. (a wholly-owned subsidiary of the Company), Antin, and all of Antin's stockholders. (Antin is a defense contractor that provides information technology, and technical support services.) The aggregate initial purchase price for the outstanding securities of Antin was approximately $1,342,000, which consisted of $354,000 in cash; $988,000 of common stock for which the Company issued 323,971 shares of common stock to the stockholders of Antin, the fair value of which was based on an average of the closing price of the Company's stock three days prior to the acquisition date. An additional 314,027 shares were issued to an escrow agent, on behalf of the Antin stockholders; of these shares, 157,015 shares with a value of $408,000 have been issued to the Antin shareholders.  The remaining escrow shares are contingently issuable to the Antin stockholders based upon the future operating performance of Antin through June 30, 2006. As of March 15, 2006, there were 663,128 shares related to this acquisition that are included in this registration statement and 78,400 shares issuable with the conversion of the notes.

 

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(8)	Shares and notes purchased by investors that participated in the Company’s private Offering that closed on February 14, 2006. On February 14, 2006, SYS completed a private placement under Section 4(2) of $6.25 million in a subscription offering of units consisting of common stock and unsecured subordinated convertible notes. Each unit consists of 6,944 restricted shares of SYS Common Stock at $3.60 per share and a three-year $25,000 unsecured subordinated convertible note bearing interest, at 10% per annum, payable quarterly. The investor has the option to convert all but not part of this note, at any time prior to maturity, into shares of SYS common stock at $3.60 per share, or keep the note until maturity. SYS has a conversion option commencing one year from the date of issuance whereby if the Company’s stock trades at $5.40 per share for at least five consecutive trading days, SYS can force the conversion of the notes then outstanding. As of March 15, 2006, there were 868,000 shares related to this private offering that are included in this registration statement and 868,000 shares issuable with the conversion of the notes.
(9)	Shares provided to Logic Innovations, Inc. (Logic) shareholders in exchange for their equity holdings in Logic. Effective November 7, 2005, SYS acquired all of the outstanding stock of Logic, a privately held, San Diego-based provider of solutions that ensure the fast and efficient delivery of digital audio, video and data to the broadcasting, communications and consumer electronics industries, for approximately $4.0 million in cash and stock. The transaction was completed pursuant to an Agreement and Plan of Merger by and among SYS, Shadow II, Inc. (a wholly-owned subsidiary of SYS), Logic and all of the stockholders of Logic. As a result of the acquisition, Logic was merged into Shadow II and became a wholly owned subsidiary of SYS. The merger consideration consisted of $2,000,000 in cash and 445,768 shares of restricted SYS common stock with a value of $2,031,000 based on the average closing price of $4.56. Additional consideration may be earned subject to achieving future revenue and profitability targets. As of March 15, 2006, there were 445,768 shares related to this acquisition that are included in this registration statement and 212,477 shares contingently issuable provided certain earn-out provisions are met.
(10)	On September 27, 2005, the Company entered into an agreement to purchase certain technology and intellectual property rights related to the ForceViz Technology of Lomasoft Corporation, a software development company. The purchase price consisted of $50,000 cash and warrants to purchase 50,000 shares of the Company’s stock at a price of $3.85 per share. The agreement provides for 100,000 additional contingent shares of SYS common stock at a price equal to $3.87 per share for each of the two revenue-based milestones for the years ending June 30, 2006 and 2007. As of March 15, 2006, there were 50,000 issued warrants and 100,000 contingently issuable warrants that are included in this registration statement.
(11)	In connection with item (6) above, warrants were earned.
(12)	Warrants for 20,000 shares for services provided.
(13)	Shares provided to Xsilogy, Inc. shareholders as part of the earn out of the Asset Purchase Agreement between the Company and Xsilogy.
(14)	The natural person who controls the voting and disposition of our shares for the Babbush Family Trust is Robert A. Babbush, Trustee.
(15)	The natural person who controls the voting and disposition of our shares for Bard Micro-Cap Value Fund, L.P. is Timothy Johnson.
(16)	The natural person who controls the voting and disposition of our shares for Barrington Investors, L.P. is Russell B. Faucett.
(17)	The natural person who controls the voting and disposition of our shares for Barrington Partners, A California Limited Partnership, is Russell B. Faucett.
(18)	The natural person who controls the voting and disposition of our shares for BASHM is Howard Weiss.
(19)	The natural person who controls the voting and disposition of our shares for Benchmark Partners, L.P. is Richard Whitman.
(20)	Mr. Brian Shatz is a director of Bluegrass Growth Fund, Ltd. and has delegated authority from the shareholders of Bluegrass Growth Fund, Ltd. with respect to the shares of common stock owned by Bluegrass Growth Fund, Ltd. Mr. Shatz may be deemed to have voting and dispositive power over the shares of common stock owned by Bluegrass Growth Fund, Ltd. Mr. Shatz disclaims beneficial ownership of such shares of our common stock and has no legal right to maintain such delegated authority.

 

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(21)	Bluegrass Growth Fund Partners, LLC is the general partner of Bluegrass Growth Fund LP. By virtue of such relationship, Bluegrass Growth Fund Partners, LLC may be deemed to have voting and dispositive power over the shares owned by Bluegrass Growth Fund LP. Bluegrass Growth Fund Partners, LLC disclaims beneficial ownership of such shares. Mr. Brian Shatz has delegated authority from the partners of Bluegrass Growth Fund Partners, LLC with respect to the shares of common stock owned by Bluegrass Growth Fund LP. Mr. Shatz may be deemed to have voting and dispositive power over the shares of common stock owned by Bluegrass Growth Fund LP. Mr. Shatz disclaims beneficial ownership of such shares of our common stock and has no legal right to maintain such delegated authority.
(22)	The natural person who controls the voting and disposition of our shares for the Bourquin Family Trust is Kent R. Bourquin.
(23)	The natural person who controls the voting and disposition of our shares for BridgeWest, LLC is Massih Tayebi.
(24)	The natural person who controls the voting and disposition of our shares for Brobeck, Phleger & Harrison is Ronald Greenspan, Chapter 7 Trustee.
(25)	The natural person who controls the voting and disposition of our shares for the Cooke Charitable Remainder Unitrust is Clifton L. Cooke, Jr., Trustee.
(26)	The natural person who controls the voting and disposition of our shares for the Derby Family Trust is David Derby, Trustee.
(27)	The natural person who controls the voting and disposition of our shares for EBLW Associates is Benjamin Frankel.
(28)	The natural person who controls the voting and disposition of our shares for the ECI Employees Pension Plan is Kenneth R. Hartstein, Trustee.
(29)	The natural person who controls the voting and disposition of our shares for Ellumina, LLC is Ziyad Abduljawad.
(30)	The natural person who controls the voting and disposition of our shares for the Flatow Living Trust is Richard Flatow, Trustee.
(31)	The natural person who controls the voting and disposition of our shares for the Goodwin Trust is Ben Goodwin, Trustee.
(32)	The natural person who controls the voting and disposition of our shares for the Herman Family Trust is Jeffrey Herman, Trustee.
(33)	The natural person who controls the voting and disposition of our shares for the Hightower Family Trust is John D. Hightower.
(34)	The natural person who controls the voting and disposition of our shares for HoyleCohen Inc., 401(k) PSP is Kevin D. Hoyle.
(35)	The natural person who controls the voting and disposition of our shares for the Keller Family Trust is Dale Keller, Trustee.
(36)	The natural person who controls the voting and disposition of our shares for Lomasoft Corporation is James R. Gambale, Jr.
(37)	The natural person who controls the voting and disposition of our shares for the Lyle Family Trust is Don M. Lyle, Trustee.
(38)	The natural person who controls the voting and disposition of our shares for the Lysaught Family Trust is Jeffrey P. Lysaught.
(39)	The natural person who controls the voting and disposition of our shares for Monarch Capital Group LLC is Michael Potter.
(40)	The natural person who controls the voting and disposition of our shares for the Mrdjenovich Family Trust is Charles Mrdjenovich, Trustee.
(41)	Although the table is dated March 15, 2006, these are holdings as of April 3, 2006. The natural person who controls the voting and disposition of our shares for Gary E. Murphy is Gary E. Murphy.
(42)	The natural person who controls the voting and disposition of our shares for Nextreme Ventures, LLC is Massih Tayebi.
(43)	The natural person who controls the voting and disposition of our shares for the Page Trust is Thomas Page, Trustee
(44)	The natural person who controls the voting and disposition of our shares for the Pershing Family Trust is Richard W. Pershing, Trustee.

 

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(45)	The natural person who controls the voting and disposition of our shares for the Pierrepont MSP 32 Trust is R. Pierrepont, Trustee.
(46)	The natural person who controls the voting and disposition of our shares for Radcliffe Investment Partners I is Donald Radcliffe.
(47)	The natural person who controls the voting and disposition of our shares for RCR Resources is Randy Rortvedt.
(48)	The natural person who controls the voting and disposition of our shares for Roth Capital Partners, LLC is Gordon J. Roth. Roth is a registered broker-dealer. Roth acquired its shares in the ordinary course of business and, at the time of purchase of the securities, they had no agreements or understandings, directly or indirectly, with any person to distribute the securities. No other selling shareholders are broker-dealers.
(49)	The natural person who controls the voting and disposition of our shares for Scripps Ventures, Inc. is John M. Burns.
(50)	The natural person who controls the voting and disposition of our shares for the Sherman Family Trust is Glenn H. Sherman, Trustee.
(51)	The natural person who controls the voting and disposition of our shares for SmallCap Corporate Advisors, LLC is Michael McManus.
(52)	The natural person who controls the voting and disposition of our shares for the Restated Szeles Family Trust is Joseph J. Szeles, Trustee.
(53)	The natural person who controls the voting and disposition of our shares for Whiffletree Partners, L.P. is Jack Feiler.
(54)	The natural person who controls the voting and disposition of our shares for Xsilogy, Inc. is Richard Kriss.
(55)	Contingently issuable shares that the shareholders of cVideo, Inc. may earn. On December 2, 2005, SYS acquired all of the assets and assumed certain specified liabilities of cVideo, Inc., a San Diego based provider of interactive video and information analysis products for business surveillance and security applications. As of March 15, 2006, there were 668,750 contingently issuable shares that are included in this registration statement.
(56)	The natural person who controls the voting and disposition of our shares for cVideo, Inc. is Alfonso Tumini.
(57)	Shares provided to RBIS shareholders in exchange for their equity holdings in RBIS. Please review the RECENT TRANSACTIONS section for additional information.

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PLAN OF DISTRIBUTION

General

The Selling Stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares:

·   ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

·   block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

·   purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

·   an exchange distribution in accordance with the rules of the applicable exchange;

·   privately negotiated transactions;

·   to cover short sales made after the date that this Registration Statement is declared effective by the Commission;

·   broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;

·   through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

·   a combination of any such methods of sale; and

·   any other method permitted pursuant to applicable law.

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this Prospectus.

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of Common Stock from time to time under this Prospectus, or under an amendment to this Prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this Prospectus.

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Upon the Company being notified in writing by a Selling Stockholder that any material arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this Prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such Selling Stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of Common Stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this Prospectus, and (vi) other facts material to the transaction. In addition, upon the Company being notified in writing by a Selling Stockholder that a donee or pledgee intends to sell more than 500 shares of Common Stock, a supplement to this Prospectus will be filed if then required in accordance with applicable securities law.

The Selling Stockholders also may transfer the shares of Common Stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this Prospectus.

The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions commissions and similar selling expenses, if any, that can be attributed to the sale of securities will be paid by the Selling Stockholder and/or the purchasers. Each Selling Stockholder has represented and warranted to the Company that it acquired the securities subject to this registration statement in the ordinary course of such Selling Stockholder’s business and, at the time of its purchase of such securities such Selling Stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.

The Company has advised each Selling Stockholder that it may not use shares registered on this Registration Statement to cover short sales of Common Stock made prior to the date on which this Registration Statement shall have been declared effective by the Commission. If a Selling Stockholder uses this Prospectus for any sale of the Common Stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M as applicable to such Selling Stockholders in connection with resales of their respective shares under this Registration Statement.

The Company is required to pay all fees and expenses incident to the registration of the shares, but the Company will not receive any proceeds from the sale of the Common Stock. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities pursuant to the terms of the Registration Rights Agreement.

Supplements. To the extent required, we will set forth in a supplement to this Prospectus filed with the U.S. Securities and Exchange Commission the number of shares to be sold, the purchase price and public offering price, any new Selling Shareholders, the name or names of any agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offering.

State Securities Law. Under the securities laws of some states, the Selling Shareholders may only sell the shares in those states through registered or licensed brokers or dealers. In addition, in some states the Selling Shareholders may not sell the shares unless they have been registered or qualified for sale in that state or an exemption from registration or qualification is available and is satisfied.

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LEGAL MATTERS

The validity of the shares of common stock being offered hereby will be passed upon for us by Luce, Forward, Hamilton & Scripps LLP, San Diego, California.

EXPERTS

                The consolidated financial statements of SYS and subsidiaries as of June 30, 2005 and 2004, and for each of the years in the two-year period ended June 30, 2005, have been incorporated by reference herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

               The financial statements of Reality Based IT Service, Ltd. for the years ended December 31, 2005 and 2004 have been incorporated by reference herein in reliance upon the report of Goodman & Company LLC, independent public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other information with the U.S. Securities and Exchange Commission. You may read and copy any document we file at the U.S. Securities and Exchange Commission’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the U.S. Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the public reference room. Our Securities and Exchange Commission filings are also available to the public from the Securities and Exchange Commission’s web site at: http://www.sec.gov. You can also inspect reports and other information we file at the offices of the American Stock Exchange, 86 Trinity Place, New York, NY, 10006.

This Prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission. The registration statement contains more information than this Prospectus regarding us and our common stock, including certain exhibits. You can obtain a copy of the registration statement from the Securities and Exchange Commission at the address listed above or from the Securities and Exchange Commission’s web site listed above.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The U.S. Securities and Exchange Commission allows us to “incorporate by reference” some of the documents we file with it into this Prospectus, which means:

·   we can disclose important information to you by referring you to those documents;

·   the information incorporated by reference is considered to be part of this Prospectus; and

·   later information that we file with the U.S. Securities and Exchange Commission will automatically update and supersede this information.

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We incorporate by reference the documents listed below:

(1) our Annual Report on Form 10-KSB for the fiscal year ended June 30, 2005 filed on September 28, 2005;

(2) Our Quarterly Reports on Form 10-Q for the quarters ended December 30, 2005, filed on February 14, 2006, and September 30, 2005, filed on November 14, 2005.

(3) our Current Reports on Form 8-K, including amendments thereto, filed with the U.S. Securities and Exchange Commission, other than any information furnished pursuant to Item 2.02 or Item 7.01, dated from September 28, 2005 to the present; and

(4) the description of our common stock contained in the Registration Statement on Form 8-A filed with the U.S. Securities and Exchange Commission on December 9, 1992, and any amendment or report filed for the purpose of updating such description.

All documents filed under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, other than information furnished pursuant to Item 2.02 or Item 7.01 of Form 8-K, after the date of this Prospectus and prior to the termination of this offering shall be deemed to be incorporated by reference in this Prospectus and to be part of this Prospectus from the date they are filed. In addition, all documents filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, other than information furnished pursuant to Item 2.02 or Item 7.01 of Form 8-K, after the date of the initial registration statement and prior to the effectiveness of the registration statement of which this Prospectus forms a part shall be deemed to be incorporated by reference in this Prospectus and to be part of this Prospectus from the date they are filed.

The information appearing in this Prospectus is current as of the date of this Prospectus. Our business, financial position and results of operations may have changed since that date.

We will provide without charge to each person, including any beneficial owner, to whom a Prospectus is delivered, upon written or oral request of that person, a copy of any and all of the information that has been incorporated by reference in this Prospectus. Please direct requests to us at the following address:

SYS

5050 Murphy Canyon Road, Suite 200

San Diego, California 92123

Attn: Edward M. Lake, Chief Financial Officer

(858) 717-5500

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  Until the completion of the resale of the common stock included in this Prospectus, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.           The Resale of 10,677,626 Shares of Common Stock Offered by Shareholders             SYS       PROSPECTUS       Subject to Completion, April 11, 2006

We have not authorized any dealer, salesperson or other person to give you written information other than this Prospectus or to make representations as to matters not stated in this Prospectus. You must not rely on unauthorized information. This Prospectus is not an offer to sell these securities or our solicitation of your offer to buy the securities in any jurisdiction where that would not be permitted or legal. Neither the delivery of this Prospectus nor any of the sales made hereunder after the date of this Prospectus shall create an implication that the information contained herein or our affairs have not changed since the date hereof.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.Other Expenses of Issuance and Distribution

The estimated expenses in connection with the offering are as follows:

Securities and Exchange Commission Registration Fee	$	5,181
Accounting Fees and Expenses	$	10,000
Legal Fees and Expenses	$	15,000
Printing and Related Expenses	$	1,500
Total	$	31,681

All amounts except the U.S. Securities and Exchange Commission registration fee are estimated. All costs, expenses and fees in connection with the registration of the shares will be borne by us.

ITEM 15.Indemnification of Directors and Officers

Section 204 of the California General Corporation Law permits a corporation to include in its Articles of Incorporation provisions eliminating or limiting the personal liability of directors for monetary damages in an action brought by or in the right of the corporation for breach of a director’s fiduciary duties, subject to certain limitations. Section 317 of the California General Corporation Law requires a corporation to indemnify its directors and other agents to the extent they incur expenses in successfully defending lawsuits brought against them by reason of their status as directors or agents. Section 317 also permits a corporation to indemnify its directors and other agents to a greater extent than specifically required by law.

Our Articles of Incorporation, as amended, eliminate the personal liability of directors of the Company for monetary damages to the fullest extent permissible under California law. Article VI of our Bylaws requires that the Company, to the maximum extent permitted by California law, indemnify each of its agents against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact such person is or was an agent of SYS. The term “agent” includes any person who (i) is or was a director, officer, employee or other agent of SYS; (ii) is or was serving at the request of SYS, as a director, officer, employee or agent of another business entity; or (iii) was a director, officer, employee or agent of a corporation which was a predecessor corporation of SYS or of another enterprise at the request of such predecessor corporation.

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The effect of these provisions in our Articles of Incorporation and Bylaws is to eliminate our ability and that of our shareholders (through shareholder derivative suits) to recover monetary damages against a director except as limited by California law. These provisions do not limit or eliminate the rights of SYS or those of any shareholder to seek non-monetary relief. In any proceeding arising by reason of the fact a person is or was an agent of SYS, the agent will be indemnified if he or she acted in good faith and in a manner the person reasonably believed to be in the best interests of the corporation and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of the person was unlawful. There can be no indemnification with respect to any matter as to which the agent is adjudged to be liable to SYS, unless and only to the extent that the court in which such proceeding was brought determines upon application that, in view of all of the circumstances of the case, the agent is fairly and reasonably entitled to indemnity for expenses as the court shall deem proper.

Insofar as indemnification for liabilities arising under the Securities Act, may be permitted to our directors, officers or controlling persons, under the foregoing provisions or otherwise, we have been advised that, in the opinion of the U.S. Securities and Exchange Commission, this indemnification is against public policy as expressed in the Securities Act of 1933, and is therefore unenforceable. In the event that a claim for indemnification against these liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of ours in the successful defense of any suit or proceeding) is asserted by a director, officer or controlling person of ours in connection with the securities being registered hereunder, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

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ITEM 16.Exhibits

Exhibit No.	Document
2.1	Certificate of Ownership filed with the California Secretary of State on November 28, 1979, filed as Exhibit 2.1 to the Company’s report on Form 10-K for the fiscal year ended June 30, 1979, and incorporated by this reference.
2.2	Certificate of Ownership filed with the California Secretary of State on March 18, 1985, incident to a change of the name of the Company, filed as Exhibit 3.6 to this Company’s report on Form 10-K for the fiscal year ended June 30, 1985, and incorporated by this reference.
2.3	Testmasters, Inc. Stock Purchase Agreement, filed as Exhibit 2.1 to this Company’s registration statement on Form SB-2 dated May 24, 2002, and incorporated by this reference.
2.4	Polexis Merger Agreement, filed as Exhibit 2.2 to this Company’s Registration Statement on Form SB-2 dated April 19, 2004, and incorporated by this reference.
2.5	Asset Purchase and Sale Agreement effective as of December 15, 2004, by and between SYS and Xsilogy, Inc. filed as Exhibit 2.5 to this Company’s report on Form 10-QSB dated February 7, 2005, and incorporated by this reference.
2.6	Agreement and Plan of Merger, effective as of January 3, 2005, among SYS, Shadow I, Inc., a wholly-owned subsidiary of SYS, Antin Engineering, Inc., and the stockholders of Antin Engineering, Inc. filed as Exhibit 2.6 to this Company’s report on Form 10-QSB dated February 7, 2005, and incorporated by this reference.
2.7	Agreement and Plan of Merger, effective as of November 7, 2005, among SYS, Shadow II, Inc., a wholly-owned subsidiary of SYS, Logic Innovations, Inc. and the stockholders of Logic Innovations, Inc., filed as Exhibit 2.7 to the Company’s report on Form 10-Q for the quarter ended December 30, 2005, and incorporated by this reference.
2.8	Asset Purchase and Sale Agreement effective December 2, 2005 among SYS, cVideo, Inc. and certain of the stockholders of cVideo, Inc., filed as Exhibit 2.8 to the Company’s report on Form 10-Q for the quarterly period ended December 30, 2005, and incorporated by this reference.
2.9	Stock Purchase Agreement effective as of April 2, 2006, between SYS and Gary E. Murphy (the sole stockholder of Reality Based IT Services, Ltd.), incorporated by reference from the Form 8-K dated April 6, 2006.
3.1	Articles of Incorporation for SYS, as amended, filed as Exhibit 3.1 to the Company’s registration statement on Form SB-2, filed May 24, 2002, and incorporated by this reference.
4.1	Certificate of Determination of Preferences of Preferred Shares of Systems Associates, Inc., filed by the Company with the California Secretary of State on July 28, 1968, filed as Exhibit 3.2 to the Company’s report on Form 10-K for the fiscal year ended June 30, 1981, and incorporated by this reference.

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4.2	Certificate of Determination of Preferences of Preference Shares of Systems Associates, Inc., filed by the Company with the California Secretary of State on December 27, 1968, filed as Exhibit 3.3 to the Company’s report on Form 10-K for the fiscal year ended June 30, 1981, and incorporated by this reference.
4.3	Certificate of Determination of Series B 9% Cumulative Convertible Callable Non-Voting Preference Stock was filed by the Company with the California Secretary of State on August 15, 1996, and included in Exhibit 3.1.
4.4	Form of Subscription Agreement from the January 2002 Offering, filed as Exhibit 4.1 to this Company’s registration statement on Form SB-2 dated May 24, 2002, and incorporated by this reference.
4.5	Form of Convertible Note from the January 2002 Offering, filed as Exhibit 4.2 to this Company’s registration statement on Form SB-2 dated May 24, 2002, and incorporated by this reference.
4.6	Form of Subscription Agreement from the February 2004 Offering (Convertible Note from December 2003 Offering included), filed as Exhibit 4.3 to this Company’s registration statement on Form SB-2 dated April 19, 2004, and incorporated by this reference.
4.7	Securities Purchase Agreement, from the May 27, 2005 Offering, by and among SYS and the investor parties as identified on the signature pages thereto, filed as Exhibit 10.1 to the Company’s report on Form 8-K filed on June 3, 2005, and incorporated by this reference.
4.8	Registration Rights Agreement, from the May 27, 2005 Offering, by and among SYS and the investor parties as identified on the signature pages thereto, filed as Exhibit 10.3 to the Company’s report on Form 8-K filed on June 3, 2005, and incorporated by this reference.
4.9	Form of Warrant issued by SYS to the investors in connection with the Securities Purchase Agreement from the May 27, 2005 Offering, filed as Exhibit 10.2 to the Company’s report on Form 8-K filed on June 3, 2005, and incorporated by this reference.
4.10	Form of Subscription Agreement from the Company’s February 14, 2006 Offering, filed as Exhibit 99.1 to the Company’s report on Form 8-K dated February 14, 2006, and incorporated by this reference.
4.11	Form of Unsecured Subordinated Convertible Note from the Company’s February 14, 2006 Offering, filed as Exhibit 99.2 to the Company’s report on Form 8-K dated February 14, 2006 and incorporated by this reference.
4.12	Form of Subordination Agreement from the Company’s February 14, 2006 Offering, filed as Exhibit 99.3 to the Company’s report on Form 8-K dated February 14, 2006, and incorporated by this reference.

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5.1	Opinion of Luce, Forward, Hamilton & Scripps LLP.
23.1	Consent of Independent Registered Public Accounting Firm-KPMG LLP.
23.2	Consent of Luce, Forward, Hamilton & Scripps LLP (included in Exhibit 5.1).
23.3	Consent of Independent Public Accounting Firm-Goodman & Company LLP
24.1	Power of Attorney of certain officers and directors of SYS.

ITEM 17.Undertakings

(a)The undersigned registrant hereby undertakes:

(1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii)to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information in this registration statement. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii)to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (i), (ii) and (iii) do not apply if the registration statement is on Form S-3 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement. (2)That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof, and

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(3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b)The undersigned registrant hereby undertakes that, for purposes of determining liability under the Securities Act of 1933, to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(c)Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel, the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(d)The undersigned registrant hereby undertakes that, for purposes of determining liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, SYS certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, hereunto duly authorized, in the City of San Diego, State of California, on the 11th day of April, 2006.

SYS

By:/s/ Clifton L. Cooke

Clifton L. Cooke

President, Chief Executive Officer and Director

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

SIGNATURE	TITLE	DATE
/s/ Clifton L. Cooke Clifton L. Cooke	President and Chief Executive Officer (principal executive officer)	April 11, 2006
/s/ Edward M. Lake Edward M. Lake	Executive Vice President and Chief Financial Officer (principal financial officer and principal accounting officer)	April 11, 2006
/s/ Michael W. Fink Michael W. Fink	Secretary	April 11, 2006
/s/ John M. Burns John M. Burns	Director	April 11, 2006
/s/ David A. Derby David A. Derby	Director	April 11, 2006
/s/ General Al Gray, USMC (Ret.) General Al Gray, USMC (Ret.)	Director	April 11, 2006
/s/ John R. Hicks John R. Hicks	Director	April 11, 2006
/s/ Gail K. Naughton Gail K. Naughton	Director	April 11, 2006
/s/ Thomas A. Page Thomas A. Page	Director	April 11, 2006
/s/ Charles E. Vandeveer Charles E. Vandeveer	Director	April 11, 2006

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