UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                           FORM 10-QSB/A AMENDMENT #1

{X}   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the quarterly period ended April 30, 2006

                                       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 __  No  X

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

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

Common Stock. $.01 Par Value -- 11,359,849 shares as of July 20, 2006.

This amendment is filed to update financial statement headings to read:
DataMetrics Corporation and Subsidiary, and to update the notes to the financial
statements footer to read: The accompanying "Notes to Consolidated Financial
Statements" form an integral part of these statements.

<page>

Index to Form 10-QSB
                                                                           Page
                                                                           No.
Part I - Financial Information                                             -----
         Item 1. Financial Statements (unaudited):

            Consolidated Balance Sheet as of April 30, 2006                   3
            Consolidated Statement of Changes in Stockholders' Equity
                     for the Six Months Ended April 30, 2006                  4
            Consolidated Statement of Changes in Stockholders' Deficit
                     For the Six Months Ended April 30, 2005                  5
            Consolidated Statements of Operations for the Three and
                     Six Months Ended April 30, 2006 and April 30, 2005       6
            Consolidated Statements of Cash Flows for the Six Months
                     Ended April 30, 2006 and April 30, 2005                7-8


Notes to Consolidated Financial Statements                                 9-11

         Item 2. Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                        12
         Results of Operations                                            13-14
         Liquidity and Capital Resources                                     15
Item 3. Controls and Procedures                                              16


Part II - Other Information
         Item 1.  Legal Proceedings                                          17
         Item 2.  Unregistered Sales of Equity Securities and uses of funds  17
         Item 3.  Defaults upon Senior Securities                            17
         Item 4.  Submission of matters to a vote of security holders.       17
         Item 5.  Other Information                                          17
         Item 6.  Exhibits and Reports on Form 8-K                           17

Certifications                                                            18-22

Signatures                                                                   23

                                       2
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                          April 30,
                                                                                            2006
                                                                                          --------
<S>                                                                                       <C>
ASSETS
Current Assets
           Cash                                                                           $    634
           Accounts receivable, net of allowance for doubtful accounts of $0                   234
           Inventory, net of allowance for obsolete inventory of $6,070                        665
           Other Current Assets                                                                 49
                                                                                          --------
                                     Total current assets                                    1,582

Property and Equipment
           Furniture, fixtures and computer equipment                                        1,195
           Machinery and equipment                                                             547
                                                                                          --------
                      Total Property and Equipment                                           1,742
                      Less Accumulated Depreciation                                         (1,742)
                                                                                          --------
                                     Net Property and Equipment                                 --

                                     Total Assets                                         $  1,582
                                                                                          ========

LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
           Accounts Payable                                                               $    230
           Accrued Expenses                                                                    329
           Warranty Reserve                                                                     40
           Notes Payable                                                                       641
                                                                                          --------
                                     Total Current Liabilities                               1,240

Stockholders Equity:
           4% Cumulative Preferred Stock, $.01 par value ($750 aggregate liquidation
                      preference); 5,000,000 Authorized; 500,000 issued and outstanding          5
           Common Stock, $.01 par value; 70,000,000 shares
                      Authorized; 10,859,849 issued and outstanding                            109
           Additional Paid In Capital                                                       67,811
           Accumulated Deficit                                                             (67,583)
                                                                                          --------

                                     Total Stockholders Equity                                 342

                                     Total Liabilities and Stockholders Equity            $  1,582
                                                                                          ========
</TABLE>

 The accompanying "Notes to Consolidated Financial Statements" form an integral
                           part of these statements.

                                       3
<PAGE>

                     DATAMETRICS CORPORATION AND SUBSIDIARY
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
                     For the six months ended April 30, 2006
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                Common Stock         Ser. A Preferred     Ser. B Preferred                                 Total
                            ------------------     -------------------  -------------------       Add'l                    Stock
                             Number     Dollar       Number     Dollar    Number      Dollar      Paid-In        Accum     holders
                            of Shares   Amount     of Shares    Amount    of Shares   Amount      Capital       Deficit    Equity
                            ------------------------------------------------------------------------------------------------------
<S>                          <C>        <C>                    <C>       <C>        <C>           <C>           <C>      <C>
Balances at Oct. 31, 2005    1,070,403    $ 11      892,652      $  9            -          -       $58,452     $(61,754)  $(3,282)

Conversion of DMTR loan
  of $2.9 million plus
  accrued interest           8,157,872      82                                                        2,998                  3,080

Conversion of Series A
  Preferred into


  Common Stock               1,631,574      16     (892,652)       (9)                                   (7)                     -

Conversion of 12% Bridge
  loan into Series B
  Preferred Stock                                                          500,000       $  5           495                    500

Warrants for the purchase
  of 386,314,860 shares
  of Common Stock                                                                                     5,873                  5,873

Net Loss                                                                                                          (5,829)   (5,829)

                            ------------------------------------------------------------------------------------------------------
Balances at April 30, 2006  10,859,849   $ 109            -         -      500,000       $  5       $67,811     $(67,583)    $ 342

Shares of Common Stock have been adjusted retroactively to reflect the reverse
stock split that occurred in April 2006.
</TABLE>


 The accompanying "Notes to Consolidated Financial Statements" form an integral
                           part of these statements.

                                       4
<PAGE>

                     DATAMETRICS CORPORATION AND SUBSIDIARY
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS DEFICIT
                     For the six months ended April 30, 2005
                        (in thousands, except share data)



<TABLE>
<CAPTION>
                                    Common Stock         Ser. A Preferred                                  Total
                                --------------------    -------------------     Add'l                      Stock
                                Number       Dollar      Number      Dollar     Paid-In       Accum.       holders
                                of Shares    Amount     of Shares    Amount     Capital      Deficit       Deficit
                                ---------    -------    ---------    ------   ----------   ---------    ------------
<S>                            <C>          <C>                                 <C>          <C>           <C>
Balances at October 31, 2004    1,070,403    $   11       892,652    $    9    $  58,452   $ (61,171)   $   (2,699)

Net Loss                                                                                        (789)         (789)

Balances at April 30, 2005      1,070,403    $   11       892,652    $    9    $  58,452   $ (61,960)   $   (3,488)


Shares of Common Stock have been adjusted retroactively to reflect the reverse
stock split that occurred in April 2006.
</TABLE>

 The accompanying "Notes to Consolidated Financial Statements" form an integral
                           part of these statements.

                                       5
<PAGE>

                     DATAMETRICS CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)
                      (in thousands, except per share data)
<TABLE>
<CAPTION>

                                                        Three Months Ended       Six Months Ended
                                                       April 30,   April 30,   April 30,   April 30,
                                                         2006        2005        2006        2005
                                                       --------    --------    --------    --------
<S>                                                    <C>         <C>         <C>         <C>
Sales                                                  $  1,052    $    396    $  2,207    $    993

Cost of Sales                                               773         373       1,544         805
                                                       --------    --------    --------    --------
Gross Profit                                           $    279    $     23    $    663    $    188
                                                       --------    --------    --------    --------

Selling, General and Administrative
           Personnel and Related Costs                 $    205    $    292    $    401    $    584
           Other                                            158          90         457         167
                                                       --------    --------    --------    --------
           Total Selling, General and Administrative   $    363    $    382    $    858    $    751
                                                       --------    --------    --------    --------

Loss from Operations                                   $    (84)   $   (359)   $   (195)   $   (563)

Other income and expense                                     13        (105)     (5,634)       (226)
                                                       --------    --------    --------    --------

           Net Income (Loss)                           $    (71)   $   (464)   $ (5,829)   $   (789)
                                                       ========    ========    ========    ========


Loss per share of common stock;
           basic and diluted                           $ (0.007)   $ (0.434)   $ (0.537)   $ (0.737)
                                                       ========    ========    ========    ========

Weighted avg. no. of shares outstanding
           basic and diluted                             10,860       1,070      10,860       1,070
                                                       ========    ========    ========    ========
</TABLE>

Adjusted to reflect reverse stock split that occurred in April 2006.

 The accompanying "Notes to Consolidated Financial Statements" form an integral
                           part of these statements.

                                       6
<PAGE>


                     DATAMETRICS CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                              For the six months ended
                                                                                April 30    April 30
                                                                                 -------    -------
                                                                                  2006       2005
<S>                                                                             <C>         <C>
Cash Flows from Operating Activities:
         Net Loss                                                                (5,829)      (789)
         Adjustments to reconcile net loss to net cash used
                in operating activities:
         Gain on Sale of Building                                                  (216)        --
         Depreciation expense                                                         4         30
         Amortization of Refinancing Costs                                           --        104
         Expenses Paid from Debt Financing                                          249         --
         Options Issued to Investors during restructuring                         5,873         --

Changes in assets and liabilities:
         Accounts receivable                                                         36        492
         Inventories                                                                242       (162)
         Prepaid expenses and other current assets                                   45        (22)
         Accounts payable                                                          (262)       133
         Other Current Liabilities                                                   --        (20)
         Accrued expenses                                                          (167)        93
         Deferred Revenue                                                            --        (46)
                                                                                -------    -------
                Net cash used in operating activities                               (25)      (187)

Cash Flows from Investing Activities:
         Proceeds from Sale of Building                                           1,445         --
         Capital expenditures for property and equipment                             --         (4)
                                                                                -------    -------
                Net cash provided by (used in) investing activities               1,445         (4)

Cash Flows from Financing Activities:
         Proceeds from loan payable                                                 248        139
         Payments on Long Term Debt                                              (1,180)       (30)
                                                                                -------    -------
                Net cash provided by (used in) financing activities                (932)       109

                Net (decrease) increase in cash                                     488        (82)
                Cash at the beginning of the period                                 146         91
                                                                                -------    -------
                Cash at the end of the period                                       634          9
                                                                                -------    -------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period
for:
         Interest, net                                                          $    72    $    80

NONCASH INVESTING / FINANCING ACTIVITIES
         Restructuring incentive expenses paid by issuing
                stock options                                                   $ 5,873         --

         Conversion of long term debt and related accrued
                interest into common stock                                      $ 3,081         --

         Conversion of long term debt and related accrued
                interest into Series B preferred stock                          $   500         --

         Conversion of Series A preferred stock into
                common stock                                                    $   489         --

         Expenses paid with the issuance of notes payable                       $   249         --

         Payment of short term bridge loan by issuing
                new note payable                                                $   200         --

         Forgiveness of debt as part of the sale of building                    $    30         --

</TABLE>

 The accompanying "Notes to Consolidated Financial Statements" form an integral
                           part of these statements.


                                       7
<PAGE>

                             DATAMETRICS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 April 30, 2006
                                   (Unaudited)

1. The financial statements include the accounts of DataMetrics Corporation.

The  accompanying  condensed  financial  statements  are unaudited and have been
prepared  by the Company in  accordance  with the rules and  regulations  of the
Securities and Exchange  Commission  relating to interim  financial  statements.
These condensed financial  statements do not include all disclosures provided in
the company's annual financial  statements.  The condensed financial  statements
should be read in  conjunction  with the financial  statements and notes thereto
for the year ended October 31, 2005 contained in the company's Form 10-KSB filed
with  the  Securities  and  Exchange  Commission.  All  adjustments  of a normal
recurring nature, which, in the opinion of management,  are necessary to present
a fair  statement  of  results  for the  periods  have  been  made.  Results  of
operations are not necessarily  indicative of the results to be expected for the
full year.

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 and fully reserved.  The Company  evaluates all inventories
for obsolescence on a periodic basis and records estimated reserves accordingly.

Inventories as of April 30, 2006 consist of the following:

Inventories Parts and sub-assemblies                                      594
Work in Process                                                           135
Obsolete Inventory                                                      6,006
                                                                     ---------
Total Inventory                                                         6,735
Reserve for Obsolete Inventory                                        (6,070)
                                                                     ---------
Net Inventory                                                             665


3.       NOTES PAYABLE

Notes Payable at April 30, 2006 consist of the following:

Notes Payable to investors; interest expense at 10% is paid
quarterly; principal and unpaid interest is due in full in
December 2006. The note is secured by a first priority
lien on all Company assets.                                               500


Subordinated notes, originally due in December 2000, accruing
interest at 10%. The notes are unsecured. Negotiations for
repayment have begun with the holders of these notes and
are ongoing at this time                                                  141
                                                                     ---------
Total                                                                     641


                                       8
<PAGE>

All notes are current.

4.        STOCK BASED COMPENSATION

The fair value of the option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions:

      Risk free interest rate of 3 percent;  dividend yield of 0%, expected life
of 10 years and volatility of 50%.

      A summary of the  status of the  Company's  stock  options as of April 30,
2006, and changes during the quarter are presented below.  This summary reflects
the 30:1 reverse stock split that occurred in April 2006:
<TABLE>
<CAPTION>

                                                                      Shares    Weighted Average
                                                                      (000s)    Exercise Price
                                                                  ------------- ---------------
<S>                                                                         <C>         <C>
     Outstanding at Beginning of Year                                       58          $39.20
     Granted                                                            12,877           $0.30
     Exercised                                                               0
     Expired / Canceled                                                      0
                                                                  ------------- ---------------
     Outstanding and Fully Exercisable at
          the End of the Year                                           12,935           $0.47
                                                                  ------------- ---------------

     Weighted  Average Fair Value of Options  Granted  During the
     Year                                                                                $0.01
                                                                  ------------- ---------------
</TABLE>

For all options issued, the exercise price was less than the market price of the
stock and $5,873,000 of stock based cost was recorded.

      Significant  option  groups  outstanding  at April  30,  2006 and  related
weighted average price and life information is as follows. This summary reflects
the 30:1 reverse stock split that occurred in April 2006:



                                    Number          Weighted
                                Outstanding and     Average
                                    Fully          Remaining
                   Exercise      Exercisable      Contractual
                    Price          (000s)         Life (YEARS)
                   ------------------------------------------
                    $42.00            50             5.55
                     30.00             5             1.11
                      1.65             3             1.50
                      0.30        12,877             9.75
                                  ------
                      Total       12,935
                                  ======

Weighted average exercise price is $0.473 per option.

                                       9
<PAGE>

5.    REVERSE STOCK SPLIT


On April 11, 2006, the Company elected to effect a Stock  combination  through a
30:1 reverse stock split.  Details of the split are described on Schedule 14C as
filed with the Securities and Exchange Commission on March 2, 2006.

All amounts reported for the three and six months ended April 30, 2005 have been
retroactively restated to reflect this split.

6.    Basic and Diluted Net Loss per Common Share

Basic and diluted  net loss per share are  computed  using the  weighted-average
number of shares of common  stock  outstanding  during the  period.  Potentially
dilutive  securities have been excluded from the computation of diluted earnings
per share,  as their  effect is  antidilutive.  If the Company had  reported net
income,  diluted  earnings per share would have  included the shares used in the
computation  of net loss per share  plus  common  equivalent  shares  related to
12,934,659  outstanding  options  and  warrants  as of April  30,  2006 and 2005
respectively.

                                       10
<PAGE>
ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

      This  report  contains  certain  statements  of a  forward-looking  nature
relating to future events or the future performance of the Company.  Prospective
investors are cautioned  that such  statements  are only  predictions  and those
actual events or results may differ materially.

                                MANAGEMENT FOCUS

      The Company designs,  develops,  and  manufactures  computers and computer
peripheral equipment for military,  industrial and commercial applications where
reliable  operation of the equipment in challenging  environments is imperative.
The systems and  equipment are  qualified  for use in airborne,  shipboard,  and
ground based applications.  The Company's product lines include a broad range of
computers, computer workstations, servers, printers, plotters and monitors.

      The Company  offers  military  specified and  ruggedized  versions of flat
panel monitors and other peripheral  equipment (including  computers,  printers,
keyboards and trackballs) encased in shock,  vibration and temperature resistant
chassis.  The chassis  produced by the Company are used in conjunction  with its
product by the military to house this sensitive ruggedized  equipment.  The Navy
P3 Orion, Air Force AWACS and Army Fire-Finder  programs all require rugged rack
enclosures to protect the equipment from shock, vibration and other damage which
may be experienced in a harsh operating  environment.  DataMetrics  continues to
increase its presence in the military  arena  including  United States Air Force
avionics  and  ground-based  systems  as  well  as  United  States  Army  system
diagnostics. DataMetrics' equipment is designed and qualified for use as part of
commercial airlines cockpit systems.

      For the quarter ended April 30, 2006, the Company  experienced slower than
expected receipt of orders. Many of the military programs from which the Company
anticipates generating its revenue have been rescheduled and military priorities
have been  reconsidered to account for short,  medium,  and long-term needs. The
Company  expects to see an increase in order activity in the following  quarters
and attributes the delay in orders due to a focus on budget  spending for troops
and munitions in the war effort in Afghanistan and Iraq. The following phases in
this war and  projected  increase in overall  military / defense  spending  will
likely entail more sophisticated  surveillance  techniques and equipment,  which
will require data  processing  and  peripheral  equipment much like we currently
supply for the AWACS, P3 Orions aircraft and the armed forces.

                                       11
<PAGE>


                              RESULTS OF OPERATIONS

                Three Month Period Ended April 30, 2006 Compared
                   To Three Month Period Ended April 30, 2005

      Sales for the quarter ended April 30, 2006 were  $1,052,000 an increase of
$656,000  or 166%,  compared  with sales of  $396,000  in the same period in the
prior  fiscal  year.  The increase in sales for the three months ended April 30,
2006 is attributable  mainly to execution of  substantially  large orders booked
and shipped in the current period.

      Cost of sales for the quarter  ended April 30, 2006 was  $773,000  (73% of
sales),  an increase of $400,000 or 107%,  compared with $373,000 (94% of sales)
for the same period in the prior fiscal year. Cost of sales  increased  compared
to  the  same  period  in  the  prior  fiscal  year  primarily  because  of  the
corresponding  increase in variable  manufacturing  costs  related to  increased
sales for the period.

      Selling,  general and  administrative  ("SG&A")  expenses  for the quarter
ended April 30, 2006 were $363,000 (34% of sales) a decrease of $19,000,  or 5%,
compared  with  $382,000  (96% of sales) for the same period in the prior fiscal
year. SG&A expenses,  stated as a percentage of sales,  decreased  substantially
between years due to a drastic  increase in sales for 2006 when compared to 2005
and the relatively fixed nature of SG&A expenses in dollar terms.

      Net interest  expense  amounted to $16,000 for the quarter ended April 30,
2006 compared  with net interest  expense of $122,000 for the same period in the
prior year. The significant  decrease in interest  expense for the quarter ended
April 30, 2006 compared to the same period of the prior year is  attributable to
the reorganization  which occurred early in fiscal year 2006. As a result of the
said reorganization, the majority of long term loans were either paid in full or
converted into equity of DataMetrics Corporation.

      The net loss for the quarter ended April 30, 2006  amounted to $71,000,  a
decrease in loss of $393,000  compared  with a net loss of $464,000 for the same
period in the prior year.  The  improvement  is  attributable  primarily  to the
increased sales volume in the quarter.

                 Six Month Period Ended April 30, 2006 Compared
                    To Six Month Period Ended April 30, 2005

      Sales for the six months ended April 30, 2006 were  $2,207,000 an increase
of $1,214,000 or 122%, compared with sales of $993,000 in the same period in the
prior fiscal year. The increase in sales for the six months ended April 30, 2006
is attributable  mainly to a substantial  increase in receipt of orders from the
U.S. Government and major Defense Contractors.

      Cost of sales for the six months ended April 30, 2006 was $1,544,000  (70%
of sales), an increase of $739,000 or 92%, compared with $805,000 (81% of sales)
for the same period in the prior fiscal year. Cost of sales  increased  compared
to  the  same  period  in  the  prior  fiscal  year  primarily  because  of  the
corresponding  increase in variable  manufacturing  costs  related to  increased
sales in the current six month period.

                                       12
<PAGE>

      Selling,  general and administrative  ("SG&A") expenses for the six months
ended April 30, 2006 were  $858,000  (39% of sales) an increase of $107,000,  or
14%,  compared  with  $751,000  (76% of sales) for the same  period in the prior
fiscal year.  While the dollar amount of SG&A expenses for 2006 increased by 14%
over the  amount  reported  in 2005  due to  restructuring  costs  in the  first
quarter, SG&A expenses, stated as a percentage of sales, decreased substantially
between years due to a drastic increase in sales for 2006 when compared to 2005.

      Net  interest  expense  amounted to $76,000 for the six months ended April
30, 2006 compared  with net interest  expense of $243,000 for the same period in
the prior year. The dramatic  decrease in interest  expense for six months ended
April 30, 2006  compared  to the same  period of the prior year is  attributable
mainly to the Corporate reorganization which occurred early in fiscal year 2006.
As a result of the said  reorganization,  the  majority  of long term loans were
either paid in full or converted into equity of DataMetrics Corporation.

      The net  loss  for  the six  months  ended  April  30,  2006  amounted  to
$5,829,000 compared with a net loss of $789,000 for the same period in the prior
year. While the Company's loss from operations has improved  significantly  over
the same period in the prior fiscal year due to higher sales from large  orders,
total  net loss for the  current  period  is much  larger  due to the  effect of
issuing options valued at $5,873,000 during the  restructuring  that occurred in
the first quarter.

      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 April 30, 2006. 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.

                                       13
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Although  the Company  has  generated  much of the cash flow to sustain  current
operations  through  a  combination  of  revenues  from  sales  and from  equity
transactions, the debt obligations of previous periods were still outstanding at
the end of fiscal year 2005. As a result,  additional  capital and a significant
restructuring were required to meet its prior period debt obligations.

The details of the restructuring are described with the filing of the definitive
information  statement on Schedule 14C as filed with the Securities and Exchange
Commission on March 2, 2006.  This  includes a description  of the reverse stock
split that occurred on April 11, 2006.

On April 11,  2006,  the  Company  effected a Stock  combination  through a 30:1
reverse stock split.  Details of the split are described in the above referenced
Schedule 14C.

As part of the  restructuring,  SG DMTI, LLC ("SGD") purchased 500,000 shares of
the Company's  Series B Preferred  Stock in exchange for the  cancellation of an
aggregate  of  $499,563  in  principal  and $467 in accrued  interest on certain
promissory  notes (the "Notes")  issued by the Company and held by SGD. DMTR LLC
("DMTR")  converted debt owed to DMTR by the Company (which debt consisted of an
aggregate principal amount of $2,900,000 and accrued, but unpaid interest on the
unpaid  principal  amount)  into common  stock.  The  Company  also issued SGD a
warrant 50% of the then  issued and  outstanding  shares of common  stock of the
Company on a fully  diluted  basis for a period of ten (10) years at an exercise
price of $.01 (before giving effect to the one-for 30 reverse stock split).

      On December  30, 2005,  the Company  also issued SGD a secured  promissory
note in the principal amount of $500,000 (the "Secured Note").  The Secured Note
accrues  interest  at a rate of ten  (10%)  percent  per annum  and  matures  on
December 31, 2006.  Accrued interest on the Secured Note shall be paid quarterly
commencing  March 31, 2006. The Secured Note is secured by a first priority lien
on all of the Company's assets, which lien was placed on the Company's assets at
the time of issuance of the $200,000 note (the "Bridge Note"), which the Company
previously  issued to SGD on November 7, 2005.  The Company used the proceeds of
the Secured Note to (i) repay the Bridge Note and all accrued interest  thereon,
(ii) pay interest on the Notes exchanged for the Series B Preferred Stock, (iii)
pay for certain expenses  incurred in connection with the transactions  with SGD
and (iv) for general working capital.

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 are discussed at appropriate  points in
this report and the Company's other SEC filings. Others are included in the fact
that the Company has been  engaged in  supplying  equipment  and services to the
U.S.  government defense programs which are subject to special risks,  including
dependence on government  appropriations,  contract  termination  without cause,
contract  re-negotiations  and the intense  competition  for  available  defense
business.



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<PAGE>

Item 3.  CONTROLS AND PROCEDURES

      (a) Disclosure Controls and Procedures. Under the supervision and with the
participation of our management, including our principal executive and financial
officer,  we have evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as such term is defined in Rule 13a-15(e) or
Rule  15d-15(e)  under the U.S.  Securities  Exchange  Act of 1934,  as amended)
within 90 days of the filing date of this  quarterly  report and, based on their
evaluation,  our principal  executive and financial  officer have concluded that
these  controls and  procedures  are working now and our current  period reports
will be filed on time once we have  finished  filing the  backlog of  delinquent
reports.   Disclosure  controls  and  procedures  include,  without  limitation,
controls  and  procedures  designed  to ensure that  information  required to be
disclosed  by us in the reports that we file under the Exchange Act is recorded,
processed,  summarized  and reported,  within the time periods  specified in the
Securities and Exchange  Commission's rules and forms, and that such information
is  accumulated  and  communicated  to our  management,  including our principal
executive  and  financial  officer,  as  appropriate  to allow timely  decisions
regarding required disclosure.

      (b) Changes in Internal  Control Over Financial  Reporting.  There were no
significant changes in our internal control over financial reporting  identified
in connection  with the  evaluation  required by Exchange Act Rule  13a-15(d) or
Rule 15d-15(d) that occurred during the period covered by this quarterly report,
or to our knowledge in other  factors,  that have  materially  affected,  or are
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.

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<PAGE>

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.

         The Company is, from time to time, the subject of 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, that are material, have
been properly accrued.


Item 2.  Unregistered Sales of Equity Securities and Uses of Proceeds.

         None.

Item 3.  Defaults upon Senior Securities

         The Company  was in default on certain  unsecured  indebtedness  of
         approximately $141,000 in principal and $90,000 in unpaid interest.


Item 4.  Submission of Matters to a Vote of Security Holders.

         None.

Item 5.  Other Information.

         None.

Item 6.  Exhibits

         (a) Exhibits:

             31.1  Certification   of  CEO   Pursuant  to  Section  302  of  the
                   Sarbanes-Oxley Act of 2002

             31.2  Certification   of  CFO   Pursuant  to  Section  302  of  the
                   Sarbanes-Oxley Act of 2002

             32    Certification of CEO and CFO  Pursuant  to Section 906 of the
                   Sarbanes-Oxley Act of 2002


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