================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                  FORM 10-QSB/A


[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
            Act of 1934 for the quarterly period ended July 29, 2001


                                       or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
         Act of 1934 for the Transition Period from ________ to _________

                          Commission File Number 1-8690

                             Datametrics Corporation
          ------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                           95-3545701
           --------                                           ----------
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                         Identification Number)

             1717 Diplomacy Row
              Orlando, Florida                                     32809
             ------------------                                     -----
   (Address of principal executive offices)                     (Zip Code)

                                 (407) 251-4577
                                 --------------
              (Registrant's telephone number, including area code)

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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.



Common Stock, $.01 Par Value - 20,512,227 shares as of 10/9/01


================================================================================


                                     1 of 13
<PAGE>

                    DATAMETRICS CORPORATION AND SUBSIDIARIES
                              Index to Form 10-QSB

                                                                        Page No.
                                                                        --------
Part I - Financial Information
      Item 1. Financial Statements (unaudited):

            Consolidated Balance Sheet as of July 29, 2001 ..............   3
            Consolidated  Statements of Operations  for the Three and
              Six Months Ended July 29, 2001 and July 30, 2000 ..........   4
            Consolidated Statements of Cash Flows for the Six
              Months  Ended  July 29, 2001 and July 30, 2000 ............   5

            Notes to Consolidated Financial Statements ..................   6

      Item 2. Management's Discussion and Analysis of Financial
                Condition and Results of Operations .....................   9

Part II - Other Information
      Item 1. Legal Proceedings .........................................  12
      Item 2. Changes in securities and uses of funds. ..................  12
      Item 3. Defaults upon Senior Securities ...........................  12
      Item 4. Submission of matters to a vote of security holders .......  12
      Item 5. Other Information .........................................  12
      Item 6. Exhibits and Reports on Form 8-K ..........................  12

Signatures ..............................................................  13


                                     2 of 13
<PAGE>

                    DATAMETRICS CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEET (Unaudited)
                      (in thousands, except per share data)


                                                                       July 29,
                                                                        2001
                                                                      ---------

                                     ASSETS
Current assets:
        Cash and cash equivalents                                   $       351
        Accounts receivable, net of allowance for doubtful
        accounts of $50                                                     865
        Inventories, net                                                  1,142
        Prepaid expenses and other current assets                            42
                                                                    -----------

             Total current assets                                         2,400
                                                                    -----------
Property and equipment, at cost:
        Land                                                                420
        Building and improvements                                         1,042
        Machinery and equipment                                           2,652
        Furniture, fixtures and computer equipment                        2,402
                                                                    -----------
                                                                          6,516

        Less: Accumulated depreciation and amortization                  (4,710)
                                                                    -----------

        Net property and equipment                                        1,806
                                                                    -----------
             Total Assets                                           $     4,206
                                                                    ===========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
        Current maturities of long-term debt                                 26
        Accounts payable                                                    776
        Payroll related liabilities                                          73
        Other accrued expenses                                            1,476
                                                                    -----------
             Total current liabilities                                    2,351
                                                                    -----------
        Long-term debt, less current maturities                           7,244
        Loan payable                                                      3,527
        Senior priority convertible notes                                 1,025
                                                                    -----------
             Total liabilities                                           14,147

Minority interest                                                            --
Stockholders' equity
        Preferred stock, $.01 par value; 5,000,000                           --
          shares authorized, none issued
        Common stock, $.01 par value; 40,000,000 shares
          authorized 20,512,227 shares issued and outstanding               205
        Additional paid-in capital                                       44,033
        Accumulated deficit                                             (54,179)
                                                                    -----------
             Total stockholders' deficit                                 (9,941)
                                                                    -----------
                                                                    $     4,206
                                                                    ===========



          See accompanying notes to consolidated financial statements.


                                     3 of 13


<PAGE>

                    DATAMETRICS CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                     (in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                    (Unaudited)                      (Unaudited)
                                                                Three months ended                Nine months ended
                                                            July 29,           July 30,        July 29,         July 30,
                                                             2001               2000            2001             2000
                                                           ----------------------------        -------------------------
<S>                                                         <C>              <C>              <C>              <C>
Sales                                                       $  1,180         $    316         $  2,810         $  2,635
                                                            --------         --------         --------         --------

      Cost of sales                                           (1,070)          (1,095)          (3,176)          (3,977)
      Selling, general and administrative                       (147)            (597)          (1,573)          (1,780)
      Write-down of inventory                                 (2,265)            (750)          (3,215)            (750)
      Provision for lease abandonment                             --               --             (250)              --
      Provision for loss on website development costs             --               --             (194)              --
      Provision for contract adjustment                          (50)              --              (50)              --
                                                            --------         --------         --------         --------
Income (loss) from operations                                 (2,352)          (2,126)          (5,648)          (3,872)
Life insurance proceeds                                                                          1,046
Interest expense, net                                           (316)            (467)            (904)          (1,379)
                                                            --------         --------         --------         --------
Income (loss) before minority interest                        (2,668)          (2,593)          (5,506)          (5,251)

Minority interest                                                 --               --               --               18
                                                            --------         --------         --------         --------
      Net income (loss)                                     $ (2,668)        $ (2,593)        $ (5,506)        $ (5,233)
                                                            ========         ========         ========         ========
Loss per share of common stock:
      Basic and diluted                                     $  (0.13)        $  (0.14)        $  (0.27)        $  (0.28)
                                                            ========         ========         ========         ========
Weighted average number of shares outstanding:
      Basic and diluted                                       20,435           18,997           20,435           18,997
                                                            ========         ========         ========         ========

</TABLE>

          See accompanying notes to consolidated financial statements.


                                     4 of 13
<PAGE>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                              NINE MONTHS ENDED
                                                                                            JULY 30,       JULY 30,
                                                                                              2001           2000
                                                                                           ---------      ---------
<S>                                                                                         <C>          <C>
Cash Flows from Operating Activities:
      Net loss                                                                              $(5,506)     $(5,233)
      Adjustments to reconcile net loss to net cash used in operating activities:
           Depreciation and amortization                                                        225          270
           Non-card interest and financing costs                                                             681
           Minority interest                                                                      0          (18)
           Write down of inventory                                                            3,215          750
           Provision for lease abandonment                                                      250
           Provision for loss on website development costs                                      194
           Provision for contract adjustment                                                     50
           Capitalized interest expense                                                          82

      Changes in assets and liabilities:
           Accounts receivable                                                                 (792)       2,124
           Inventory                                                                            114           65
           Prepaid expenses and other current assets                                            285         (328)
           Other assets                                                                          54          289
           Accounts payable                                                                     113          149
           Accrued expenses                                                                      56          218
                                                                                            -------      -------
                Net cash used in operating activities                                        (1,660)      (1,033)

Cash Flows from Investing Activities:
      Proceeds from sale of equity                                                                0        1,200
      Capital expenditures for Property, Plant & Equipment                                      (21)        (362)
                                                                                            -------      -------
                Net cash provided by (used in) investing activities                             (21)         838

Cash Flows from Financing Activities:
      Net borrowings (Payments) on revolving line of credit                                                   45
      Borrowings (Payments) on long-term debt                                                   (13)          63
      Borrowing on loan payable                                                                 926           77
      Borrowings (Payments) on senior priority convertible notes                              1,025
      Proceeds from Issuance of Common Stock and warrants                                        66
                                                                                            -------      -------
                Net cash provided by financing activities                                     2,004          185
                                                                                            -------      -------
      Net increase (decrease) in cash and cash equivalents                                      323          (10)

      Cash and cash equivalents at the beginning of the period                                   28          137
                                                                                            -------      -------
      Cash and cash equivalents at the end of the period                                    $   351      $   127
                                                                                            =======      =======
      Supplemental Disclosures of Cash Flow Information:

Non Cash Transactions

           Debt refinancing                                                                 $ 2,601

      Conversion of Accrued Interest to 12% Subordinated
        Convertible Secured Notes Due 2000                                                        0          248

      Interest Paid                                                                             445          348

</TABLE>

          See accompanying notes to consolidated financial statements.


                                     5 of 13
<PAGE>

                             DATAMETRICS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (in thousands, except for per share data)


                                  July 29, 2001
                                   (Unaudited)


1. The  consolidated  financial  statements  include the accounts of Datametrics
Corporation and its wholly-and majority-owned  subsidiaries  (collectively,  the
"Company").

      The consolidated  financial  statements included herein have been prepared
by the Company,  without  audit,  pursuant to the rules and  regulations  of the
Securities and Exchange  Commission for the requirements of the Quarterly Report
on Form 10-QSB. Certain information and footnote disclosure normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles   have  been  condensed  or  omitted   pursuant  to  such  rules  and
regulations,  although the Company believes that the disclosures are adequate to
make the  information  presented  not  misleading.  It is  suggested  that these
consolidated financial statements be read in conjunction with the statements and
notes thereto  included in the  Company's  latest Annual Report on Form 10-K for
the fiscal year ended October 29, 2000 as filed with the Securities and Exchange
Commission.


      The information  reflects all adjustments  (consisting of normal recurring
adjustments)  which are, in the opinion of  management,  necessary  to present a
fair statement of the results of operations for the interim periods. Much of the
Company's business is longer term and involves varying development,  production,
and  delivery  schedules.  Accordingly,  results  of  a  particular  quarter  or
quarter-to-quarter  comparisons  of  recorded  sales  and  profits  may  not  be
indicative of future operating  results,  including  results for the fiscal year
ending  October  29,  2000.  The  accompanying  financial  statements  have been
prepared  assuming  the  Company  will  continue  as a going  concern and do not
include any adjustments that may result should the Company be unable to continue
as a going concern.

      2. INVENTORIES  Stockroom  inventories consist primarily of materials used
by the Company for existing and anticipated contracts and materials and finished
assemblies  which are held to satisfy spare parts  requirements of the Company's
customers. Those parts not expected to be sold within one year are classified as
a non-current  asset.  The Company  evaluates all inventory for obsolescence and
realizability on a periodic basis and records  estimated  reserves  accordingly.
Inventories as of July 29, 2001 consist of the following:

         Inventories of parts and sub-assemblies              $  10,869
         Work in process                                            239
         Finished Goods                                             199
                                                              ---------
                  Inventories, gross                          $  11,307

                  Current inventories                             1,142
                                                              ---------
                  Total Current Inventories                   $   1,142

                  Non-current inventories                        10,165
                  Less reserve for obsolescence                 (10,165)
                                                              ---------
                  Total Non-Current Inventories               $       0
                                                              ---------
                    Inventories, net                          $   1,142
                                                              =========

      Due to the Company's  emphasis on military products coupled with a lack of
orders for the  industrial  equipment,  it was deemed  prudent to  increase  the
provision for  obsolescence  for these products.  Much of this was classified as
non-current inventory and determined to require a provision following a detailed
review of the inventory on hand.  During the quarter  ended  July 29, 2001,  the
Company provided an additional reserve for inventory obsolescence of $3,215,000.



                                     6 of 13
<PAGE>

3. DEBT STRUCTURE

      Loan Payable

In December  2000, an investment  group headed by the  Company's  chairman,  and
including the six investors who advanced bridge loans )("Bridge  Financings") to
the Company during 2000,  formed DMTR, LLC, a New York limited liability company
("DMTR").  DMTR  has  satisfied  the  $1,496,140  due to the  guarantors  of the
Company's Senior Bank Facility  ("Senior Bank Loan") and has taken an assignment
of the loan documents and the collateral  securing that loan. In addition,  DMTR
has repaid in December all of the Company's  Bridge  Financings in the aggregate
amount of $1,305,000  plus interest  thereon and taken an assignment of the loan
documents  evidencing the Bridge  Financings and an assignment of the collateral
securing the Bridge Financings.

      Effective  January 31, 2001, DMTR and the Company  executed loan documents
to provide the Company  with a line of credit in the maximum  amount of $798,860
(the "Line of Credit").  Accordingly, the Company (assuming a draw of the entire
Line of Credit)  is  obligated  to DMTR in the  aggregate  amount of  $3,600,000
(comprised  of  $1,496,140  on the Senior  Bank Loan,  $1,305,000  on the Bridge
Financings  and  $798,860  on the Line of Credit and  subject to the  agreement,
described below, to exchange a portion of the Bridge Financings for Common Stock
of the  Company).  The Line of  Credit  has a term of two  years  with  interest
(payable  monthly) at the Base Rate of Citibank,  N.A. plus 100 basis points and
is secured by all assets of the Company, and a pledge of the Company's stock and
assets of its  subsidiary.  To the extent  such  assets and stock are pledged to
secure the Senior Bank Loan and the Bridge Financings, the security for the Line
of Credit is subject  to such  prior  security  interests.  The  Company is also
obligated to make  mandatory  prepayments of the principal of the Line of Credit
on a monthly  basis to the extent the  Company has  available  cash in excess of
$200,000  Simultaneously  with the  closing of the Line of Credit,  DMTR and the
Company modified the terms of the Senior Bank Loan and the Bridge  Financings to
conform  those terms to the terms of the Line of Credit.  Therefore,  the Senior
Bank Loan and the Bridge  Financings mature on January 31, 2003, accrue interest
(payable  monthly) at the Base Rate of Citibank  N.A.  plus 100 basis points and
are  subject  to the  mandatory  prepayment  provision  set forth in the Line of
Credit.  As additional  consideration  for the financings  provided by DMTR, the
Company intends to issue a Warrant to DMTR to acquire up to 7,000,000  shares of
the Common Stock of the Company ("Common Stock") on a fully diluted basis giving
effect to a proposed  reverse stock split described below with an exercise price
of $.125 per share,  exercisable  through January 31, 2007.  Further,  DMTR will
exchange  $700,000 in principal amount of the Bridge Financings for the issuance
of 700,000 shares of Common Stock (with demand registration rights), such number
of shares  determined  on the basis of and giving  effect to a proposed  reverse
stock split  described  below.  The Company will recognize  certain charges upon
execution of these intended  transactions  including  approximately  $600,000 in
loss  relating to the  exchange of $700,000 in debt to equity and  approximately
$620,000 in original issue discount  relating to the estimated  valuation of the
warrant to acquire 7,000,000 shares of Common Stock.  Approximately  $461,000 of
advances were made to the Company  under the  provisions of this note during the
second fiscal quarter.

      Long-term debt

      The  Company  is  currently  negotiating  with  the  holders  of  its  10%
Subordinated Notes dated December 24, 1998 in the aggregate principal amount of
$3,524,000  as of  December  31,  2000  (the  "10%  Notes")  and its 12%  Senior
Subordinated  Convertible  Secured  Notes dated August 2, 1999 in the  aggregate
principal  amount of  $2,835,607  as of  December  31,  2000 (the 12% Notes") to
restructure such indebtedness.  In each case, the negotiations have assumed that
the  Company  will  amend its  Certificate  of  Incorporation  to  increase  its
authorized  capital  stock and to effect a 1 for 20  reverse  stock  split.  The
current Chairman and a director of the Company hold certain of the 10% Notes and
12% Notes and have  investment  discretion  over  certain  accounts of the other
noteholders.


      The Company has reached an agreement  in principle  with a majority of the
Holders of the 10% Notes,  subject to the  execution  and delivery of definitive
Documents,  to exchange each $1.00 face amount of the  outstanding 10% Notes for
$1.5050 face amount of a new series of step-up coupon convertible two-year Notes
(the "New  Notes").  The  following  describes the terms of the New Notes if the
exchange is completed.  The holders of the 10% Notes will waive accrued interest
owing  since  March 2000 and all other  amounts,  whether  principal,  interest,
premium  or  penalty,  owing in  respect  of the 10%  Notes  or any  instruments
delivered  in  connection  with the 10%  Notes.  The New Notes  will not  accrue
interest  until the  second  year  after  issuance.  Interest  will then be paid
semi-annually,  with the first payment at a rate of 12% per annum and the second
payment at a rate of 16% per  annum.  The  holders of the New Notes may  convert
amounts  owing under the New Notes to Common Stock at a price of up to $3.00 per
share.  The Company may force conversion to Common Stock of up to twenty percent
(20%) of the  aggregate  principal  of the New Notes each quarter if the trading
price of the Common Stock  averages $3.25 or more (with an average daily trading
volume of 30,000  shares) for twenty or thirty  trading days during such quarter
and the  Company may force  conversion  to Common  Stock of up to fifty  percent
(50%) of the  aggregate  principal  of the New Notes each quarter if the trading
price of Common Stock  averages  $4.50 or more for twenty of thirty trading days
during such quarter.


                                     7 of 13
<PAGE>

      The  Company may redeem the New Notes for cash at 85% of par up to the six
month  anniversary  of  their  issuance,  at  90%  of  par  from  the  six-month
anniversary  through the first  anniversary  of their issuance and thereafter at
95% of par  through  the  first  interest  payment  date.  The  Company  will be
obligated  to redeem 20% of the  original  principal  amount of the New Notes on
each of the first  anniversary of their issuance and the first interest  payment
date.  Such  redemption may be effected by payment of cash or forced  conversion
into Common Stock if the Company is then permitted so to convert the New Notes.

      The Company is also  negotiating with the holders of the 12% Notes and the
Company has reached an  agreement in  principle,  subject to the  execution  and
delivery of  definitive  documents,  with a majority of such holders to exchange
1.1 shares of the Common Stock for each $1.00 in  principal  of the  outstanding
12% Notes.  If the  exchange is  consummated,  the holders of the 12% Notes will
waive accrued interest owing since January 2001 and all other amounts whether of
principle,  interest,  premium or penalty,  owing in respect of the 12% Notes or
any instruments delivered in connection with the 12% Notes.

      The  Company  seeks to effect  the  exchange  on  substantially  the terms
described above.  Although the Company has received  commitments from a majority
of the  holders  of the 10% Notes  (94%  received  as of April  29,  2001) and a
majority  of the holders of the 12% Notes (89%  received as of April 29,  2001),
the  closing of the  exchange  is  subject  to the  execution  and  delivery  of
definitive  documents  and  the  amendment  of  the  Company's   Certificate  of
Incorporation to increase the Company's authorized capital and to effect a 1 for
20 reverse  stock  split.  Further any holder may accept or reject the  proposed
exchange as to his 10% Note or 12% Note,  as the case may be, and  preserve  his
claims under his Notes regardless of acceptance of the exchange by any number of
other holders. The Company expects to obtain the consents of the required number
of  stockholders  under  Delaware law for the  amendment and reverse stock split
described  above and such  consents  shall be  effective  twenty (20) days after
proper notice of the actions  covered by such consents has been delivered to all
nonconsenting  stockholders.  In the unlikely event that stockholder approval is
not obtained  for the  amendment  and stock split noted  above,  the 10% and 12%
Noteholders  would retain their  rights  under the  original  Notes,  whether of
principal,  interest, premium or significant penalty. This would have a material
adverse effect on the financial position of the Company.

      The reverse stock splits and the conversion of the subordinated  notes has
not occurred as of the date of this report.  However,  management  has proceeded
with requesting  consents of the stockholders to effectuate these  transactions,
which are anticipated to occur in the fourth quarter of this fiscal year.

SENIOR PRIORITY CONVERTIBLE NOTES

      Pursuant to a private  placement  offering,  the Company has  approved the
issuance of up to $1,200,000 in Senior Priority  Convertible Notes ("Convertible
Notes")  convertible  into shares of Common Stock with a first  priority lien on
all the  Company's  assets  and  Warrants  as  described  below.  Such  security
interests shall be senior to the interests of DMTR pursuant to an  intercreditor
agreement;  however,  the  Convertible  Notes will not  restrict  the  Company's
ability to incur additional secured or unsecured  indebtedness  provided that in
all events all liens shall be junior to those of the holders of the  Convertible
Notes. The Convertible Notes mature two years from the date of issue and bear an
interest  rate of 10% per  annum;  interest  shall  accrue  and be  payable in a
balloon payment at maturity.  Further,  the holder(s) of the  Convertible  Notes
will be issued Warrants to purchase that number of shares of Common Stock which,
upon exercise thereof and conversion of all Convertible Notes, would provide the
holder(s)  with  ownership of fifty (50%)  percent of the  adjusted  outstanding
shares of the  Common  Stock.  Proceeds  from the  offering  will be used by the
Company for working capital purposes.


      The Convertible Notes will be convertible into Common Stock at any time at
the sole  discretion of the Company.  However,  there is no assurance  that such
conversion will be implemented by the Company.  If all of the Notes are sold and
ultimately  converted to Common Stock and all Warrants are  exercised for Common
Stock,  such Common Stock would  represent  50% of the issued  Common Stock on a
fully  diluted  basis.  During  the  second  fiscal  quarter,  $225,000  of  the
Convertible Notes were sold. An additional $800,000 of the aforementioned Senior
Subordinated  Convertible  Notes  were sold  during the  beginning  of the third
fiscal quarter.



                                     8 of 13
<PAGE>


4. SEGMENT DATA. The Company has two reportable segments: industrial printer and
internet. The industrial printer segment designs,  develops and sells industrial
printers for defense  contractors  and commercial  users.  The internet  segment
consists  primarily of a subsidiary engaged in the fulfillment of customized and
personalized products primarily for the business-to-business  e-commerce market.
The  reportable  segments  are  strategic  business  units that offer  different
products and services. Results for the two reportable segments are as follows:

<TABLE>
<CAPTION>
                                              Printers    INTERNET       TOTAL       Printers    INTERNET     TOTALS
                                              Nine months ended July 29, 2001       Three months ended July 29, 2001
<S>                                           <C>          <C>          <C>          <C>              <C>        <C>
Sales                                         $ 2,810      $    --      $ 2,810      $ 1,180          --     $ 1,180

Cost of Sales                                  (3,161)         (15)      (3,176)      (1,070)         --      (1,070)

Other                                          (5,018)        (264)      (5,282)      (2,462)         --      (2,462)
                                              -------      -------      -------      -------      ------     -------

Loss from operations                           (5,369)        (279)      (5,648)      (2,352)         --      (2,352)

Life Insurance proceeds                         1,046           --        1,046           --          --          --

Total other expenses, net                        (904)          --         (904)        (316)         --        (316)
                                              -------      -------      -------      -------      ------     -------
Loss before minority interest                 $(5,227)     $  (279)     $(5,506)     $(2,668)         --     $(2,668)
                                              =======      =======      =======      =======      ======     =======
</TABLE>

      There was no internet  segment data for the comparable periods ended  July
29, 2000. The internet segment has no recorded assets.

5. COMMITMENTS AND CONTINGENCIES

      In connection with a Mutual Release and Settlement  Agreement  between the
Company and the owner of premises formerly leased in California,  the Company is
required to issue an additional  approximate  2.7 million shares of Common Stock
in  accordance  with the  terms of the  agreement,  which  shares  have not been
issued.

6. MANAGEMENT FOCUS

The new management team under Daniel Bertram, CEO, has made significant steps to
sharpen the focus of the Company.  A 10 point recovery plan has been created and
implemented  leading to  reduction of costs and the  introduction  of team based
management philosophy to deal with issues and opportunities. Key elements of Mr.
Bertram's  plan  included   significant   reductions  in  personnel  costs,  the
integration of all corporate  functionality  into its Orlando,  FL headquarters,
and planned divestiture of the Orlando property owned by the company. Offices in
Parsippany, NJ and Waynesboro, PA have been closed, and plans to open offices in
California and U.K. have been shelved.  On August 6, 2001, Mr. Bertram announced
that the company had signed an agreement with DAC International  Inc. of Austin,
TX to exclusively distribute cockpit printers manufactured by Datametrics to the
airline  industry  worldwide.  He has also  established a Vizzix Systems team to
concentrate  on  commercial  printing  opportunities,  particularly  the Digital
License Plate market.  "The combination of sales growth,  increased  efficiency,
and a clear plan for the future bodes very well for our  company",  Mr.  Bertram
said.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS


                 THREE MONTH PERIOD ENDED JULY 29, 2001 COMPARED
                    TO THREE MONTH PERIOD ENDED JULY 30, 2000

Sales  for the  three-month  period  ended  July 29,  2001 were  $1,180,000,  an
increase of $864,000 or 273%, compared with sales of $316,000 in the same period
in the prior fiscal year. The backlog of military orders has provided  increased
production requirements,

Cost of sales  for the third  quarter  of fiscal  2001 was  $3,385,000  (287% of
sales),  an increase of $1,540,000 or 83%,  compared  with  $1,845,000  (584% of
sales) for the same period in the prior  fiscal  year.  The  increase in cost of
sales is due  mainly to  additional  write off of  inventory  during  the period
($2,265,000) and a provision for contract claim ($50,000).

Selling,  general and administrative  (SG&A) expenses for the three month period
ended July 29, 2001 were  $147,000 (12% of sales),  an decrease of $450,000,  or
75%,  compared  with  $597,000  (189% of sales) for the same period in the prior
fiscal  year.  The  decrease is due to recovery  plan to minimize  non-essential
expenses.

Net interest  expense amounted to $316,000 for the three month period ended July
29, 2001 compared  with net interest  expense of $467,000 for the same period in
the prior year. The decrease resulted from an refinancing of debt earlier in the
period.

The net loss  for the  three  month  period  ended  July 29,  2001  amounted  to
$2,668,000,  an increase of $75,000 over the net loss of $2,593,000 for the same
period  in the  prior  year.  The loss for the  current  three  month  period is
attributable to additional  writedown of inventory as obsolete and an additional
provision for a contract claim as noted above.

                 NINE MONTH PERIOD ENDED JULY 29, 2001 COMPARED
                    TO NINE MONTH PERIOD ENDED JULY 30, 2000

Sales for the nine month period ended July 29, 2001 was $2,810,000,  an increase
of $175,000 or 7%,  compared  with sales of $2,635,000 in the same period in the
prior fiscal  year.  The  increase  was a result of meeting  increased  delivery
requirements to the Department of the Army.

Cost of sales for the first nine months of fiscal 2001 was  $6,635,000  (236% of
sales),  an increase of $1,908,000 or 40%,  compared  with  $4,727,000  (179% of
sales) for the same period in the prior fiscal year primarily because of a write
off of inventory as obsolete and the creation of a provision for contract claim.



                                     9 of 13
<PAGE>


Selling,  general &  administrative  (SG&A)  expenses  for the nine month period
ended July 29, 2001 were $1,823,000 (65% of sales),  an increase of $43,000,  or
2%,  compared  with  $1,780,000  (68% of sales) for the same period in the prior
fiscal year.  The increase is mostly due to the  provision of $250,000 for lease
abandonment in Florham Park, NJ.

Net Interest  expense  amounted to $904,000 for the nine month period ended July
29, 2001 compared with net interest expense of $1,379,000 for the same period in
the prior year.  This  decrease is due change in debt  structure as indicated in
Note 3.

The net loss  for the  nine  month  period  ended  July  29,  2001  amounted  to
$5,506,000 an increased loss of $273,000  compared with a net loss of $5,233,000
for the same  period in the prior  year.  The loss for the  current  nine  month
period is  attributable  to a lead time in  building  the backlog in the defense
contracting arena and the increased provisions of $3,215,000 for slow-moving and
obsolete inventory, lease abandonment,  writeoff of development site and reserve
for contract claim.



                                    10 of 13
<PAGE>


Management has determined  that, based on the Company's  historical  losses from
recurring operations, the Company will not recognize its net deferred tax assets
at July 29, 2001. Ultimate recognition of these tax assets is dependent, to some
extent, on future revenue levels and margins.  It is the intention of management
to assess the appropriate level for the valuation allowance each quarter.


The contract  process in which  products  are offered for sale is generally  set
before costs are incurred, and prices are based on estimates of the costs, which
include the anticipated impact of inflation.


The Company's  backlog of funded  orders not yet  recognized as revenue at  July
29,  2001 was  approximately  $1,892,484.  All of the  backlog is expected to be
delivered during the next twelve months.


                         LIQUIDITY AND CAPITAL RESOURCES

The Company's  principal capital  requirements have been to fund working capital
needs,  capital  expenditures and the payment of long term debt. The Company has
recently  relied  primarily on internally  generated  funds,  private  placement
proceeds, subordinated debt and other bank debt to finance its operation.

The Company's liquidity and cash resources are significantly impaired by ongoing
losses and significant  reductions in revenues. The Company has substantial debt
due for repayment  during fiscal 2002,  which debt cannot be repaid from cash or
other proceeds from operations.  As a result,  significant  additional equity or
other capital are required to meet its debt  obligations  and satisfy  operating
expenses in the short and long term.

The Company  expects  that such debt can be repaid in whole or in part only from
the  proceeds  of  additional   financings  of  its  business  or  that  of  its
subsidiaries,  the sale of some or all of its interests in its subsidiaries,  or
from  the  proceeds  of  sale of its  common  stock,  directly  or  through  the
conversion of outstanding warrants or other rights to purchase common stock.

      The Company anticipates that it will need to raise additional financing in
the future in the form of debt, or equity or both and has, during the second and
third quarter of 2001 raised  $225,000 and $800,000  respectively  pursuant to a
private  placement  debt  proceeds  as  discussed  in  Note 3 to  the  financial
statements.


                                    11 of 13
<PAGE>

FORWARD LOOKING STATEMENTS-CAUTIONARY FACTORS

Except for the historical  information and statements  contained in this report,
the matters  set forth in this  report are  "forward  looking  statements"  that
involve  uncertainties  and risks,  some of which are  discussed at  appropriate
points in this report and the Company's  other SEC filings and the  availability
of funding for the Company's on-going operations.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

      The Company is, from time to time, the subject of legal litigation, claims
and assessments  arising out of matters occurring during the normal operation of
the Company's  business.  In the opinion of management,  the liability,  if any,
under such  current  litigation,  claims and  assessments  would not  materially
affect the  financial  position or the  results of  operations  of the  Company,
except as disclosed therein.

      In connection with a Mutual Release and Settlement  Agreement  between the
Company and the owner of premises formerly leased in California,  the Company is
required to issue an additional 2.7 million shares of Common Stock in accordance
with the terms of the agreement, which shares have not been issued.

ITEM 2. CHANGES IN SECURITIES AND USES OF PROCEEDS.

      None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

      The  Company  has failed to repay  when due  amounts  owing  under its 12%
Subordinated  Convertible  Secured Notes and 10% Subordinated Notes. The Company
is currently  negotiating  an exchange of such 12% Notes and 10% Notes for other
securities of the Company and a simultaneous waiver of all amounts and penalties
owing under the 12% Notes and the 10% Notes.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.

ITEM 5. OTHER INFORMATION. None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

      Exhibits: None.

      Reports on Form 8-K.


      None.



                                    12 of 13
<PAGE>

                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
Registrant  has duly  caused  this Form 10-QSB to be signed on its behalf by its
duly authorized representatives.

                                                     DATAMETRICS CORPORATION
                                                     -----------------------
                                                     (Registrant)


Dated: October 9, 2001                               /s/ DANIEL BERTRAM
                                                     ---------------------------
                                                     Daniel Bertram
                                                     Chief Executive Officer

Dated: October 9, 2001                               /s/ PHILLIP E. LAMBERT
                                                     ---------------------------
                                                     Phillip E. Lambert,
                                                     Chief Accounting Officer



                                    13 of 13