UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549


FORM
      10-QSB





x QUARTERLY
      REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF
      1934





For
      the
      quarterly period ended January 31, 2008





o
      TRANSITION REPORT UNDER
      SECTION 13 OR 15(d) OF THE EXCHANGE ACT





Commission
      File No. 1-8690





**DATAMETRICS
      CORPORATION**


(Exact
      name of small business issuer as specified in its charter)





**Delaware**
            **95-3545701**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                employer identification number)




**1717
      Diplomacy Row, Orlando, FL 32809**


(Address
      of principal executive offices)




**407.251.4577**


(Issuer's
      telephone number)




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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 o




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




Number
      of
      shares outstanding of the issuer's common stock, par value $.01, outstanding
      as
      of March 14 2008: 11,534,736 shares. Transitional Small Business Disclosure
      Format (Check one): YES o NO x









PagePart
                  I. Financial InformationItem
                  1 - Condensed Consolidated Financial Statements
                  (Unaudited)Condensed
                  Consolidated Balance Sheet - January 31, 2008
              
              
              3Condensed
                  Consolidated Statements of Operations —Three
                  months ended January 31, 2008 and 2007
              
              
              4Condensed
                  Consolidated Statement of Capital Deficit — Three
                  months ended January 31, 2008
              
              
              5Condensed
                  Consolidated Statements of Cash Flows — Three months ended January 31,
                  2008 and 2007
              
              
              6Notes
                  to Condensed Consolidated Financial Statements (Unaudited)
              
              
              7Item
                  2 - Management Discussion and Analysis
              
              
              9Item
                  3 - Controls and Procedures
              
              
              12Part
                  II - Other InformationItem
                  1 — Legal Proceedings
              
              
              13Item
                  2 — Unregistered Sales of Equity Securities and Use of Proceeds
              
              
              13Item
                  3 — Defaults upon Senior Securities
              
              
              13Item
                  4 — Submission of Matters to a Vote of Security Holders
              
              
              13Item
                  5 — Other Information
              
              
              13Item
                  6 — Exhibits
              
              
              13Signatures
              
              
              14Certifications
              
              
              15





2





**CONDENSED
      CONSOLIDATED BALANCE SHEET**


**JANUARY
      31, 2008**


**(Unaudited)**


**(in
      thousands, except per share data)**





**ASSETS****Current
                assets**Cash
            
            $
            -Accounts
                receivable, net of allowance for doubtful accounts of $66
            
            
            219Inventory,
                net of allowance for obsolete inventory of $5,739
            
            
            755Other
                current assets
            
            
            14Total
                current assets
            
            
            988**Property
                and equipment**Furniture,
                fixtures and computer equipment
            
            
            1,197Machinery
                and equipment
            
            
            555Total
                property and equipment
            
            
            1,752Less
                accumulated depreciation
            
            
            1,752Net
                property and equipment
            
            
            -Total
                Assets
            
            $
            988**LIABILITIES
                AND CAPITAL DEFICIT****Current
                liabilities**Accounts
                payable
            
            $
            625Accrued
                expenses
            
            
            225Accrued
                interest
            
            
            123Deposits
            
            
            90Warranty
                reserve
            
            
            47Notes
                payable - related parties
            
            
            855Short
                term debt
            
            
            481Total
                current liabilities
            
            
            2,446**Commitments
                and contingencies****Capital
                deficit**4%
                Cumulative preferred stock, ($1,500 aggregate liquidationpreference)
            
            
            10Common
                stock
            
            
            116Additional
                paid in capital
            
            
            64,782Accumulated
                deficit
            
            
            (66,366
            )Total
                capital deficit
            
            
            (1,458
            )Total
                Liabilities and Capital Deficit
            
            $
            988





The
      accompanying notes to condensed unaudited consolidated financial statements
      are
      an integral part of these statements .




3




**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**FOR
      THE THREE MONTHS ENDED JANUARY 31, 2008 AND 2007**


**(Unaudited)**


**(in
      thousands, except per share data)**





Three
                Months EndedJanuary
                312008
            
            2007**Sales**
            
            $
            581
            
            $
            1,121**Cost
                of sales**
            
            
            352
            
            
            677**Gross
                profit**
            
            
            229
            
            
            444**Selling,
                general and administrative****Personnel
                and related costs**
            
            
            227
            
            
            258**Other**
            
            
            173
            
            
            146**Total
                selling, general and administrative**
            
            
            402
            
            
            404**Income
                (loss) from operations**
            
            
            (173
            )
            
            40**Other
                expense**
            
            
            (17
            )
            
            -**Net
                income (loss)**
            
            $
            (190
            )
            $
            40**Earnings
                (loss) per share of common stock****Basic**
            
            $
            (0.016
            )
            $
            .003**Diluted**
            
            $
            (0.016
            )
            $
            .001**Weighted
                average number of common shares outstanding****Basic**
            
            
            11,535
            
            
            11,451**Diluted**
            
            
            11,535
            
            
            24,386







The
      accompanying notes to condensed unaudited consolidated financial statements
      are
      an integral part of these statements .




4




**CONDENSED
      CONSOLIDATED STATEMENT OF CAPITAL DEFICIT**


**FOR
      THE THREE MONTHS ENDED JANUARY 31, 2008**


**(Unaudited)**


**(in
      thousands)**





**Common
                Stock**
            
            **Ser.
                B Preferred**
            
            **Additional**
            
            
            
            **Total****Number**
            
            **Dollar**
            
            **Number**
            
            **Dollar**
            
            **Paid-In**
            
            **Accumulated**
            
            **Capital****of
                Shares**
            
            **Amount**
            
            **of
                Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Deficit****Balance,
                Oct. 31, 2007**
            
            
            11,535
            
            $
            116
            
            
            1,000
            
            $
            10
            
            $
            64,782
            
            $
            (66,176
            )
            $
            (1,268
            )**Net
                loss**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (190
            )
            
            (190
            )**Balance,
                January 31, 2008**
            
            
            11,535
            
            $
            116
            
            
            1,000
            
            $
            10
            
            $
            64,782
            
            $
            (66,366
            )
            $
            (1,458
            )




The
      accompanying notes to condensed unaudited consolidated financial statements
      are
      an integral part of these statements




5







**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**FOR
      THE THREE MONTHS ENDED JANUARY 31, 2008 AND 2007**


**(Unaudited)**


**(in
      thousands)**




2008
            
            2007**Cash
                flows from operating activities**Net
                (loss)/income
            
            $
            (190
            )
            $
            40Adjustments
                to reconcile net loss used in /net income provided by operating
                activities:Depreciation
            
            
            -
            
            
            6Loan
                fees paid by financing
            
            
            25
            
            
            -Bad
                debt
            
            
            3
            
            
            -Changes
                in current assets and liabilitiesAccounts
                receivable-net
            
            
            (76
            )
            
            (333
            )Inventory-net
            
            
            (299
            )
            
            (62
            )Other
                current assets
            
            
            (2
            )
            
            (8
            )Accounts
                payable
            
            
            132
            
            
            (25
            )Accrued
                expenses
            
            
            3
            
            
            42Accrued
                warranty expense
            
            
            (1
            )
            
            -Accrued
                interest expense
            
            
            23
            
            
            16Deposits
            
            
            (5
            )
            
            (1
            )Net
                cash used in operating activities
            
            
            (387
            )
            
            (325
            )**Cash
                flows from financing activities**Proceeds
                from short term debt
            
            
            525
            
            
            -Proceeds
                from notes payable - related parties
            
            
            115
            
            
            -Proceeds
                from issuance of series B preferred stock
            
            
            -
            
            
            300Payments
                on short term debt
            
            
            (185
            )
            
            -Payments
                on notes payable - related parties
            
            
            (70
            )
            
            -Net
                cash provided by financing activities
            
            
            385
            
            
            300**Net
                (decrease) increase in cash**
            
            
            (2
            )
            
            (25
            )**Cash**,
                beginning of period
            
            
            2
            
            
            319**Cash**,
                end of period
            
            $
            -
            
            $
            294**Supplemental
                disclosure of cash flow information:**Cash
                paid for interest
            
            $
            2
            
            $
            -Expenses
                paid with the issuance of notes payable
            
            $
            25
            
            $
            -Conversion
                of accrued interest into notes payable
            
            $
            100
            
            $
            -Issuance
                of common stock for series B preferred stock dividend
            
            $
            -
            
            $
            21





The
      accompanying notes to condensed unaudited consolidated financial statements
      are
      an integral part of these statements




6


**Notes
      to condensed consolidated financial statements
      (unaudited)**




**1.
      Organization and Summary of Significant Accounting
      Policies:**




**(a)
      Basis of Presentation —** The
      accompanying condensed consolidated financial statements are unaudited and
      have
      been prepared by the Company in accordance with the rules and regulations of
      the
      Securities and Exchange Commission (SEC). Accordingly, certain information
      and
      footnote disclosures usually found in financial statements prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America have been condensed or omitted. The financial statements should be
      read
      in conjunction with the consolidated financial statements and related notes
      included in the Company's Form 10-KSB/A, as filed with the SEC on January 31,
      2008.




The
      accompanying condensed consolidated financial statements reflect all adjustments
      (consisting of normal recurring adjustments) which, in the opinion of
      management, are necessary to present fairly the financial position and the
      results of operations for the interim periods presented. The results of
      operations for an interim period are not necessarily indicative of the results
      of operations for a full fiscal year.




(b)
      Use
      of Estimates — The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America, requires management to
      make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities, the disclosed amounts of contingent assets and liabilities at
      the
      date of the financial statements, and the amounts of revenues and expenses
      recognized during the reporting period. Actual results could differ from those
      estimates.




**2.
      Inventories**





Inventories
      are stated at the lower of cost or market and consist of raw materials,
      manufactured and purchased products. Cost is determined by the first-in,
      first-out method. Those parts not expected to be sold within one year are
      classified as non-current asset and fully reserved. The Company evaluates all
      inventories for obsolescence on a quarterly basis and records estimated reserves
      accordingly.





Inventories
                as of January 31, 2008 consist of the following (in
                thousands):Inventories
                Parts and sub-assemblies
            
            $
            472Work
                in Process
            
            
            283Obsolete
                Inventory
            
            
            5,739Total
                Inventory
            
            
            6,494Reserve
                for Obsolete Inventory
            
            
            (5,739
            )Net
                Inventory
            
            $
            755





**3.
      Short term debt**





Short
                term debt at January 31, 2008 consist of the following (in
                thousands):In
                December 1998, the Company closed a private placement of approximately
                $3.45 million 10% Subordinated Notes originally due in December 2000.
                Negotiations for settlement of this debt are ongoing. The Notes are
                unsecured and callable under certain conditions.
            
            $
            141In
                December 2007, the Company closed a credit line of $500,000; interest
                expense at prime plus 3% is to be paid monthly; principal and interest
                are
                due December 18, 2008. The note is secured by letters of credit guaranteed
                by affiliates of the Company.
            
            $
            340Total
                short term debt
            
            $
            481





7





**4.
      Related parties**




Notes
                payable - related parties at January 31, 2008 consist of the following
                (in
                thousands):Notes
                payable to investors; interest expense at 10% is to be paid monthly;
                principal and interest are due December 31, 2008. The note is secured
                by a
                first priority lien on all company assets.
            
            $
            855Accounts
                payable - related parties at January 31, 2008 consist of the following
                (in
                thousands):Included
                in accounts payable are amounts due to investors, directors and beneficial
                owners.
            
            $
            127




**5.
      Warranty reserves**




The
      Company provides an accrual for future warranty costs at the time of revenue
      recognition based upon the relationship of prior year’s sales to actual warranty
      costs. The warranty for the Company’s products generally covers defects in
      material and workmanship.




Warranty
                reserves as of January 31, 2008 consist of the following (in
                thousands):Beginning
                accrued warranty expense
            
            $
            48Warranty
                expense
            
            
            3Warranty
                payments
            
            
            (4
            )Ending
                accrued warranty expense
            
            $
            47




**6.
      Research and development expenses**




The
      Company expenses research and development costs as incurred. Research and
      development expense was $54,176 and $37,184 for the three month period ended
      January 31, 2008 and 2007 respectively.





**7.
      Earnings (loss) per share calculation**





2008
            
            2007Income
                (Numerator) 000’s
            
            Shares
                (Denominator) 000’s
            
            Per
                Share Amount
            
            Income
                (Numerator) 000’s
            
            Shares
                (Denominator) 000’s
            
            Per
                Share AmountNet
                (loss) income
            
            $
            (190
            )
            
            —
            
            
            —
            
            $
            40
            
            
            —
            
            
            —Less:
                Preferred dividends
            
            
            —
            
            
            —
            
            
            —
            
            
            (7
            )
            
            —
            
            
            —Basic
                earnings per share:Income
                available to common shareholders
            
            $
            (190
            )
            
            11,535
            
            
            (.016
            )
            $
            33
            
            
            11,451
            
            $
            .003Effect
                of dilutive securities:Warrants
                and options
            
            
            —
            
            
            14,817
            
            
            —
            
            
            —
            
            
            12,935
            
            
            —Dilutive
                earnings per share:Income
                available to common shareholders plus assumed conversions
            
            $
            (190
            )
            
            26,352
            
            $
            (.007
            )
            $
            33
            
            
            24,386
            
            $
            .001




Basic
      and
      diluted loss per share of common stock are computed using the weighted-average
      number of shares of common stock outstanding during the period. For the first
      fiscal quarter ended January 31, 2008 potentially dilutive securities have
      been
      excluded from the computation of diluted earnings per share, as their effect
      is
      anti-dilutive. If the Company had reported net income for the first fiscal
      quarter ended January 31, 2008, diluted earnings per share would have included
      the shares used in the computation of net loss per share plus common equivalent
      shares related to 14,817,000 for outstanding options and warrants for the first
      fiscal quarter ended January 31, 2008.




8


**8.
      Series B Preferred Stock Dividend**





As
      of
      January 31, 2008, the Company had $40,000 of Series B Preferred Stock dividends
      in arrears.





**9.
      Subsequent events**





On
      February 1, 2008, Mr. Edward Kroning resigned his position as V. P. Operations
      and Corporate Secretary of the Company. Ms. Tami Tharp was elected by the Board
      of Directors to serve as the interim Corporate Secretary until her successor
      is
      appointed.





**Item
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.**





The
      following discussion of the financial condition and results of operations should
      be read in conjunction with the consolidated financial statements and related
      notes thereto. The following discussion contains certain forward-looking
      statements that involve risk and uncertainties. Our actual results could differ
      materially from those discussed herein. Factors that could cause or contribute
      to such differences include, but are not limited to, risks and uncertainties
      related to the need for additional funds. We undertake no obligation to publicly
      release the results of any revisions to those forward-looking statements that
      may be made to reflect any future events or circumstances.




**Business
      Overview**





DataMetrics
      Corporation (the “Company”), which commenced operations in 1962, is a
      manufacturer of ruggedized information technology equipment, including
      computers, printers, workstations, monitors and chassis & enclosures, which
      are designed to work in harsh environments. The U.S. Military, major defense
      prime contractors, international military forces, commercial aviation, and
      heavy
      industry, such as mining, nuclear power generation, and oil & gas
      exploration, are the principal end-users of the Company’s products. The Company
      is primarily a customer driven, application-specific solutions provider. The
      Company has a core competency in the art and science of “ruggedization” that is
      at the base of everything it does.





While
      the
      specifics of *“* ruggedization *”* takes
      many forms, from strict MIL-specs to varied industrial requirements, its core
      competency can best be described by this definition: The Company market focus
      is
      the sale, design, development, and manufacture of electronic products into
      industries/applications where the readily-available commercial/industrial grade
      product would be subject to conditions/requirements that would render it
      ineffective or impractical for the user. The Company takes existing technology
      and applies “ruggedization” techniques to substantially increase life and/or
      usability in adverse user-defined conditions.





The
      Company has been in a multi-year transformation in an effort to refocus its
      core
      competencies. During this transformation process, it has made forays into new
      markets. During the quarter ended January 31, 2008, approximately 90% of its
      revenues came from military/defense applications. The Global War on Terror
      and
      other military operations continue to have a significant effect on the Company’s
      business. While much of the increase in the spending by the United States
      Department of Defense (the “DoD”) is in troop deployment and reconstruction, the
      Company has seen an increase in opportunities that are consistent with its
      activities. While there is no guarantee that these programs will be funded
      or
      that the Company will be the selected provider, it is an indicator of a shift
      in
      the focus of the DoD. The long design cycle for these programs creates an
      intangible cost in the form of rapid technological obsolescence. Some military
      programs that would have sought militarized equipment some years ago have
      modified the requirements to reflect a need for rugged or commercial products.
      This trend has tended to benefit sales of its rugged product line while
      impacting its sale of “ultra-rugged” MIL-spec equipment.





The
      Company has also made successful inroads into other industries which the Company
      hopes can benefit from its “ruggedization” core competency. For example, the
      Company designs, develops, and manufactures computers and peripheral equipment
      for mining, oil & gas exploration, nuclear power generation, and aggregate
      dredging, where reliable operation of the equipment in challenging environments
      is imperative.





**RESULTS
      OF OPERATIONS**





**For
      the Three Months Ended January 31, 2008**





Sales.
      We
      had sales of $581,000 for the three months ended January 31, 2008 compared
      to
      $1,121,000 for the comparable period in 2007, a decrease of $540,000 or 48.17%.
      The decrease in sales for the three months ended January 31, 2008 compared
      to
      the three months ended January 31, 2007 is attributable mainly to a decrease
      in
      the receipt of orders from our customers, including a contract where the Company
      was the sole supplier and, as a result, was able to obtain premium pricing
      during the three months ended January 31, 2007.




9





Cost
      of
      sales. We had cost of sales of $352,000 for the three months ended January
      31,
      2008, representing approximately 60.5% of sales, compared to cost of sales
      of
      $677,000 for the comparable period in 2007, which represented 60.39% of sales.
      The decrease of $339,000 or 50.07% was directly related to the decrease in
      sales
      volume of 48.17% as previously discussed.





Gross
      profit. We had gross profit of $229,000 for the three months ended January
      31,
      2008 representing approximately 39.5% of sales, compared to a gross profit
      of
      $444,000 for the comparable period in 2007, which represented 39.61% of sales.
      The decrease of $201,000 or 45.27% was primarily due to the decrease in sales
      as
      previously discussed.





Selling,
      general and administrative expenses. We had selling, general and administrative,
      “SG&A”, expenses for the three months ended January 31, 2008 of $402,000,
      approximately 69.19% of sales, compared to $404,000 for the comparable period
      in
      2007, which represented 36.04% of sales. This represents a decrease of $2,000
      or
      0.01% in SG&A and is attributable mainly to decreased personnel
      costs.





Loss
      from
      operations. We had loss from operations for the three months ended January
      31,
      2008 of $(173,000) compared to income from operations of $40,000 for the
      comparable period in 2007, a decrease of $213,000 or (532.00%). The increase
      in
      loss from operations is attributable mainly to a decreased sales volume of
      48.17% as discussed previously.





Other
      expense. We had other expense of $17,000 for the three months period ended
      January 31, 2008 compared to $0 for the comparable period in 2007. The increase
      in other expense is primarily attributable to director’s compensation and
      interest expense.




Net
      loss.
      We had a net loss for the three months ended January 31, 2008 of $(190,000)
      compared to net income of $40,000 for the comparable period in 2007. The
      decrease in net loss is due to a decrease in sales and an increase in other
      expense as discussed previously.





**LIQUIDITY
      AND CAPITAL RESOURCES**





The
      Company's principal capital requirements have been to fund working capital.
      The
      Company has relied primarily on shareholder loans, private placement proceeds,
      and subordinated debt to finance its operations. The Company has no material
      commitments for capital expenditures which would affect its
      liquidity.





Net
      cash
      used in operating activities was $387,000 and $325,000 during the first quarter
      of the fiscal years 2008 and 2007 respectively. The change from 2008 to 2007
      was
      primarily due to an increase in inventory levels to fulfill upcoming sales
      orders and as a result of the net loss.





Net
      cash
      provided by financing activities was $385,000 and $300,000 during the first
      fiscal quarter of the fiscal years 2008 and 2007, respectively. The change
      from
      2008 to 2007 was primarily related to proceeds received from short term notes
      payable.




The
      Company has generated much of its cash flow to sustain current operations
      through a combination of sales and through debt and equity
      transactions.





On
      December 4 and December 11, 2007, the Company signed agreements with SG DMTI,
      LLC (“SGD”) to increase the principal balance of that certain Secured Promissory
      Note issued to SGD on December 30, 2005, as amended (the “Secured Promissory
      Note”), by $100,000, and $50,000, respectively, to an aggregate of $800,000. The
      additional debt did not alter any of the rights and obligations with respect
      to
      the Secured Promissory Note other than increasing the principal amount of the
      loan. The entire principal and any accrued and unpaid interest (which accrues
      at
      a rate of 10% per annum) is due in full December 2008. The proceeds were used
      for general working capital.




10





On
      December 18, 2007, the Company executed a Master Revolving Note (the “Comerica
      Note”) in favor of Comerica Bank (“Comerica”) in the aggregate principal amount
      of $500,000 (the “Principal Amount”). The Comerica Note accrues interest at a
      rate equal to the prime rate plus three percent (3%). Pursuant to the Comerica
      Note, the Company has the right to request advances, from time to time, up
      to
      the Principal Amount. Accrued interest on the Note shall be payable monthly
      commencing in February 2008 until December 1, 2008 (the “Maturity Date”) at
      which time the payment of the then outstanding Principal Amount plus any accrued
      but unpaid interest shall be due and payable. So long as any amounts are due
      and
      payable under the Note, as the Company collects revenues from its account
      receivables, such revenues shall automatically be applied to repay any such
      amounts due under the Comerica Note. As security for the Comerica Note, two
      (2)
      letters of credit were issued to Comerica, each in the amount of $267,500 (the
      “Letters of Credit”). The Letters of Credit were supplied by Philip S. Sassower
      (“Sassower”) and JAG Multi Investments, LLC, a limited liability company (“JAG”)
      managed by Alexander Goren (“Alexander”)(Sassower and JAG are hereinafter
      collectively referred to as the “Guarantors”). Alexander is the father of Andrea
      Goren, who, along with Sassower, are the members of SG Phoenix Ventures LLC,
      the
      managing member of SGD. As consideration for the issuance of the Letters of
      Credit, the Company paid the Guarantors an aggregate fee of $25,000, which
      such
      amount was added to the principal amount of the Secured Promissory Note as
      described below. As additional consideration for the Guarantors issuing the
      Letters of Credit, the Company executed a secured demand promissory note in
      favor of the Guarantors in the aggregate maximum principal amount of $535,000
      (the “Guarantor Note”). The obligations of the Company under the Guarantor Note
      shall not take effect until such time, if ever, that Comerica enforces any
      of
      its rights by drawing funds against the Letters of Credit. At such time that
      Comerica enforces its rights against the Letters of Credit, then the Guarantor
      Note shall be in full force and effect to the extent of the amounts drawn
      against the Letters of Credit. The Guarantor Note is secured by substantially
      all of the assets of the Corporation and, pursuant to the terms of a side letter
      between, among others, the Guarantors and SGD, ranks *pari*  *passu* with the
      Secured Promissory Note. As of January 31, 2008 the Company has been advanced
      $525,000 of the principal amount of the Comerica note and $185,000 has been
      repaid on the principal amount of the Comerica note, resulting in a net
      borrowing $340,000. The funds received from the Comerica Note are being used
      for
      general working capital, including payroll.





On
      December 18, 2007, the Company signed an agreement to increase the principal
      balance of the Secured Promissory Note from $800,000 to $925,000, a net increase
      of $125,000, which includes $100,000 of accrued and unpaid interest on the
      Original Secured Promissory Note that is being converted to principal and
      $25,000 for facilitating the issuance of the Letters of Credit. The additional
      $125,000 did not alter any of the rights and obligations with respect to the
      Secured Promissory Note other than increasing the principal amount of the loan.
      In addition this agreement extends the original due date of the Secured
      Promissory Note to December 15, 2008.





On
      December 21, 2007, the Company paid an amount of $70,000 in principal and $211
      in interest against the Secured Promissory Note; thereby reducing the principal
      balance to $855,000.





Even
      though the Company has incurred losses over the past several years, Management
      has taken action to ensure the Company will continue as a going concern. In
      addition, the Company has a backlog of $1,150,161 at January 31, 2008. The
      Company believes that SGD, the holder of the Secured Promissory Note, all of
      the
      outstanding Series B Preferred Stock and the warrant exercisable for 50% of
      the
      Company’s outstanding common stock may be willing to provide the financial
      resources in the event of shortfalls while the Company invests in new products
      and infrastructure expenses based on the past investments made by SGD.
      Consequently, Management believes that these actions will enable the Company
      to
      continue as a going concern through October 31, 2008 but there is no assurance
      that SGD will continue to be willing to provide necessary
      financing.





**Off-Balance
      Sheet Arrangements**




We
      have
      no off-balance sheet arrangements to report.




11


**Item
      3.**  **CONTROLS
      AND PROCEDURES**





**(A)
      Evaluation of Disclosure Controls and Procedures**





As
      of the
      end of the period covered by this report, the Company carried out an evaluation,
      under the supervision and with the participation of the Company’s Principal
      Operating Officer and Principal Financial Officer of the effectiveness of the
      design and operation of the Company’s disclosure control and procedures. The
      Company’s disclosure controls and procedures are designed to provide a
      reasonable level of assurance of achieving the Company’s disclosure objectives.
      The Company’s Principal Operating Officer and Principal Financial Officer have
      concluded that the Company’s disclosure controls and procedures are in fact,
      effective at this reasonable assurance level as of the period covered. In
      addition, the Company reviewed its internal controls, and there have been no
      significant changes in its internal controls or in other factors that could
      significantly affect those controls subsequent to the date of their last
      evaluation or from the end of the reporting period to the date of this Form
      10-QSB.





**(B)
      Changes In Internal Controls Over Financial Reporting**





In
      connection with the evaluation of the Company’s internal controls during the
      three months ended January 31, 2008 the Company’s Principal Operating Officer
      and Principal Financial Officer have determined that there are no changes to
      the
      Company’s internal controls over financial reporting that has materially
      affected, or is reasonable likely to materially affect, the Company’s internal
      controls over financial reporting.




12


**PART
      II. Other Information**





**Item
      1. LEGAL PROCEEDINGS**





On
      November 5, 2007, Duos Technologies, Inc. filed a case in circuit court in
      Duval
      County, Florida against the Company, and its former President, Daniel Bertram.
      Duos claims damages of $90,000 which was paid to the Company pursuant to a
      letter of intent in 2007. Duos is proceeding on four separate counts: (1) breach
      of contract, (2) fraud in the inducement, (3) negligent misrepresentation and
      (4) unjust enrichment. The Company disputes these claims and believes them
      to be
      without merit. The Company is contesting the action and the parties are engaged
      in settlement discussions, but there can be no assurance as to the outcome
      of
      the litigation.





**Item
      2.**  **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**





None





**Item
      3. DEFAULTS UPON SENIOR SECURITIES**





The
      Company is in default on a certain unsecured subordinated note to the Rich
      Family Trust of $140,960 in principal; and $110,419 in unpaid interest as the
      monthly payments of $10,000 that were to commence September, 2006 for the unpaid
      interest have not been paid as scheduled per the agreement.




**Item
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**




No
      matters were submitted to a vote of security holders during the period ended
      January 31, 2008 through the solicitation of proxies or otherwise.




**Item
      5. OTHER INFORMATION**





None





**Item
      6. EXHIBITS AND OTHER INFORMATION**





Signatures





Certifications




13


**SIGNATURES**





In
      accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





Dated:  March
      17,
      2008





**DataMetrics
      Corporation**





Registrant







By */s/
      John Marceca*


John
        Marceca
 President
        & Chief Operating Officer





By */s/
      Tami Tharp*





Tami
      Tharp


Acting
      Chief Financial Officer





14