**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
        10-KSB/A**





x ANNUAL
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF
      1934


For
      the
      annual period ended October 31, 2007





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


Commission
      File Number 0-8567





**DataMetrics
      Corporation**


(Exact
      name of small business issuer as specified in it s 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)





SECURITIES
      REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:


Title
                of class:
            
            Name
                of each exchange
              on
                which registered:Common
                Stock, par value $0.01
            
            OTC:BB




SECURITIES
      REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:


None





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





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this form 10-KSB 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




Issuer’s
      revenue for the most recent fiscal year: $3,165,936





The
      aggregate market value of voting common equity held by non-affiliates of the
      Registrant was $1,732,805 as of January 23, 2008 based upon the closing price
      of
      the Registrant’s common stock reported for January 23, 2008. The number of
      shares of common stock of the Registrant outstanding as of January 23, 2008
      is
      11,552,035.




Transitional
      Small Business Disclosure Format (Check one):  YES
࿠
NO
      x





This
          amendment is being filed to correct a typographical error on Exhibit 31.1
          (Certification of John Marceca, Chief Executive Officer) and Exhibit 31.2
          (Certification of Tami Tharp, Chief Financial Officer) whereby such
          certifications incorrectly referred to the Registrant’s year ended October 31,
          2006 as opposed to October 31, 2007.









**DATAMETRICS
      CORPORATION**




**FORM
      10-KSB**




**TABLE
      OF CONTENTS**




PART
                  IItem
                  1.Business
              
              2Item
                  2.Properties
              
              5Item
                  3.Legal
                  Proceedings
              
              5Item
                  4.Submission
                  of Matters to a Vote of Security Holders
              
              5PART
                  IIItem
                  5.Market
                  for Registrant’s Common Stock and Related Stockholder
                  Matters
              
              6Item
                  6.Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              
              6Item
                  7.Financial
                  Statements
              
              9Item
                  8.Changes
                  In and Disagreements with Accountants on Accounting and Financial
                  Disclosures
              
              23Item
                  8a.Controls
                  and Procedures
              
              23Item
                  8b.Other
                  Information
              
              23PART
                  IIIItem
                  9.Directors
                  and Executive Officers of the Registrant
              
              23Item
                  10.Executive
                  Compensation
              
              25Item
                  11.Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              
              27Item
                  12.Certain
                  Relationships and Related Transactions
              
              28PART
                  IVItem
                  13.Exhibits
                  and Reports on Form 8-K
              
              28Item
                  14.Principal
                  Accountant Fees and Services
              
              29




1




**SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**




This
      Annual Report on Form 10-KSB contains forward-looking statements that involve




·
            business
                and growth strategies;


·
            financial
                condition and results of
                operations;


·
            forecasts;
                and


·
            trends.




Forward-looking
      statements generally can be identified by the use of forward-looking terminology
      such as 'believes,' 'expects,' 'may,' 'will,' 'intends,' 'plans,' 'should,'
      'seeks,' 'pro forma,' 'anticipates,' 'estimates,' 'continues,' or other
      variations thereof (including their use in the negative), or by discussions
      of
      strategies, opportunities, plans or intentions. Such statements include but
      are
      not limited to statements under the captions 'Risk Factors,' 'Management's
      Discussion and Analysis of Financial Condition and Results of Operations, '
      'Business,' as well as captions elsewhere in this document. A number of factors
      could cause results to differ materially from those anticipated by such
      forward-looking statements, including those discussed under 'Risk Factors'
      and
      'Business.'




In
      addition, such forward-looking statements necessarily depend upon assumptions
      and estimates that may prove to be incorrect. Although we believe that the
      assumptions and estimates reflected in such forward-looking statements are
      reasonable, we cannot guarantee that our plans, intentions or expectations
      will
      be achieved. The information contained in this registration statement, including
      the section discussing risk factors, identifies important factors that could
      cause such differences.




PART
      I





ITEM
      1.
      BUSINESS - GENERAL




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 fiscal year ended October 31, 2007 approximately 50% 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.




BUSINESS
      STRATEGY





The
      Company’s goal is to continually improve its position as a supplier of
      ruggedized systems and equipment. Our strategies to achieve our objectives
      include:





·
            Leverage
                Incumbent Relationships. We intend to leverage our relationships
                with
                government and industry decision-makers by continuing to deliver
                high
                levels of performance on our existing contracts. Our experience has
                shown
                that strong performance on existing contracts greatly enhances our
                ability
                to obtain additional business with our existing customer base. To
                accomplish this, we intend to continue to position ourselves as a
“best
                value” provider for our customers. “Best value” is a DoD contracting theme
                which focuses supplier selection on a variety of criteria, including,
                but
                not limited to, suppliers’ past performance, rather than exclusively based
                on price.




2





·
            Develop
                and Expand Existing Technologies.**Through
                a combination of customer-funded research and development and our
                own
                internal research and development efforts, we intend to continue
                to focus
                on the further development of our products. Customer-funded development
                contracts enable us to work with our customers to design and manufacture
                new systems and components, while decreasing our financial
                risk.




The
      Company primarily uses a direct sales approach in the United States with several
      independent representatives in key areas. Internationally, the Company uses
      manufacturers’ representatives in key areas of Europe, Latin America and the Far
      East.




The
      Company strives to have its customers absorb most of the Company’s research and
      development and Non-Recurring Expenses (NRE). Despite limited resources, the
      Company makes a modest investment in research and development. This investment
      is not considered material at this time, though the impact for these products,
      such as commercial off-the-shelf (“COTS”) chassis and rugged mobile computers
      could be significant.





The
      Company’s commercial airline business unit continues to expand sales volume of
      its on-board electronic flight bag (EFB) computer which was introduced in 1996.
      In addition the Company has been sought out by airframe manufacturers to provide
      a new generation of products. As one of three main manufacturers of FAA
      certified printers in the world, the Company seeks to garner a greater market
      share in fiscal year 2008 by updating its current products to the current ARINC
      standards. The Company will invest to expand its product offering in fiscal
      year
      2008 and provide technology updates to its current product offering.




COMPETITION





The
      primary business of the Company is the design and manufacture of
      application-specific products for military/defense applications and programs.
      As
      such, the Company is often an exclusive provider of goods and services. The
      Company focuses on collaborating with its customers for products that meet
      applications rather than marketing specific products. As such, the company’s
      success is much more dependant on its collaborative efforts with its customers
      as opposed to bidding against competitors. Overall, because of the breadth
      of
      the Company’s product line, the Company competes with different companies for
      various products. For its chassis’ the Company competes with ELMA, Hybricon, AP
      Labs and Carlo Gavazzi. The Company competes with Barco and DRS for monitors
      and
      with Miltope for printers. In its industrial offering, the Company competes
      with
      JLT Mobile Computing and a host of rack-mounted computer manufacturers.





The
      Company's competitive position in its market segments have been guided by the
      experience of its technical personnel in their respective specialized fields
      of
      Rugged computer and peripheral product design; its broad range of products;
      its
      ability to design and manufacture its products to meet customers'
      specifications; its specialized manufacturing and testing facilities; its long
      association with many of its customers and its managerial and marketing
      expertise in dealing with commercial customers, prime Military/Defense
      contractors and the DoD. The Company believes that once a particular supplier's
      computer and/or peripheral products have been selected for incorporation in
      a
      military or commercial program, further competition by other vendors during
      the
      life cycle of that program is limited.





The
      extent of competition for any single project generally varies according to
      the
      complexity of the product and the dollar value of the anticipated award. The
      Company believes that it competes on the basis of:





·
            Its
                “closeness to the customer”; a cultural belief in building strong customerloyalty
                through personal contact and professional
                attentiveness;




·
            Accumulated
                technical knowledge and expertise;





·
            The
                performance, flexibility, and price of its
                products;





·
            Reputation
                for prompt and responsive contract performance;
                and





·
            Breadth
                of its product lines.





The
      success of the Company will largely depend upon its ability to leverage business
      within our existing customer base, establish new customers in both new and
      existing markets, and identify new program opportunities early enough to be
      in
      on the “ground floor”.




3




SOURCES
      OF SUPPLY





The
      Company is generally not dependent upon any one supplier for any raw material
      or
      component we purchase. There are available alternative sources for such raw
      materials and components which help the Company maintain its costs.





SIGNIFICANT
      CUSTOMERS AND MATTERS CONCERNING DOD BUSINESS





Most
      of
      the customers for the Company's products are the DoD and prime contractors
      operating under programs funded by the DoD. Because the Company's products
      are
      intended to function as subsystems, they are sold to customers which
      manufacture, sell or use data processing or data communication systems which
      utilize a processing, printing, recording or data entry function for which
      the
      Company's products are suited. While the Company may be a subcontractor on
      a
      government program with an aggregate budget of billions of dollars extending
      over as long as a ten-year period, the Company's share of the budget for any
      major program is relatively small, generally 1-10% of the budget, depending
      on
      the scope.





INTELLECTUAL
      PROPERTY RIGHTS





The
      Company's policy is to obtain appropriate proprietary rights protection for
      any
      potentially significant new technology acquired or developed by the Company.
      The
      Company has a trademark registration covering its "DmC"(R) logo and for the
      Condor and Harrier printer products.





In
      addition, the Company relies on copyright and trade secret laws to protect
      its
      proprietary rights. The Company attempts to protect its trade secrets and other
      proprietary information through agreements with customers and suppliers,
      proprietary information agreements with the Company's employees and consultants
      and other similar measures. There can be no assurance, however, that the Company
      will be successful in protecting its trade secrets and other proprietary
      information.





While
      management believes that the Company's trademarks, and other proprietary
      know-how have significant value, changing technology and COTS initiatives within
      the DoD, makes the Company's future success dependent principally upon its
      employees' technical competence and creative skills for continuing innovation
      and ability to adapt to the needs of its customers.





DEFENSE
      INDUSTRY





Contracts
      with the U.S. government as well as with U.S. government prime contractors
      are
      typically at a fixed price with a delivery cycle of 3 to 12 months. Contracts
      under any particular program are being subject to further funding and
      negotiation. The Company's defense contracts contain customary provisions
      permitting termination at any time at the convenience of the customer and
      providing for payment for work-in-progress should the contract be
      canceled.





During
      the fiscal year ended October 31, 2007, the Company's largest customers were
      the
      U.S. Government, Lockheed Martin and American Airlines which accounted for
      52%
      of sales. The loss of any one of these customers could have a material adverse
      impact on the Company’s operations and financial condition. The Company believes
      that it has a good reputation with its customers for quality and delivery of
      its
      products and services.





Companies
      that are engaged primarily in supplying equipment and services, directly or
      indirectly, to the U.S. government are subject to special risks including
      dependence on government appropriations, termination without cause, contract
      re-negotiation and competition for the available DoD business.





The
      Company believes that it will benefit from a trend of increasing DoD budget
      forecasts and spending. The Company's DoD related contracts provide the DoD
      the
      right to audit the Company's cost records and are subject to defective pricing
      regulation. Management does not believe that it has any material exposure of
      this sort on any such contracts. Accordingly, no provisions have been made
      in
      the Company's accounts in connection with defective pricing
      regulation.





SERVICE





Pursuant
      to maintenance agreements, repair orders or warranty provisions, the Company
      generally services its printers with its own employees at its facility. The
      Company sells in-house, non-warranty repairs and maintenance service. For both
      military and commercial products, the Company's standard warranty period is
      ninety days, although longer warranty periods are available for an additional
      charge.





The
      Company also sells spare parts and documentation, such as handbooks, operational
      manuals, schematics and other technical data to assist its customers in
      maintaining their own equipment.





RESEARCH
      AND DEVELOPMENT





For
      the
      year ended October 31, 2007 and 2006, we have incurred approximately $139,987
      and $40,401 respectively for research and development.




4




BACKLOG





The
      Company's backlog of funded orders not yet recognized as revenue at October
      31,
      2007 and October 31, 2006 was approximately $1,176,515 and $1,870,390
      respectively. Seventy nine percent (79%) of the backlog at October 31, 2006
      was
      realized during the fiscal year ended October 31, 2007. In fiscal year 2008,
      the
      Company hopes to realize the majority of this backlog as revenue.





MARKETING





The
      Company has an in-house marketing group that is comprised of experienced
      technical professionals who are familiar with the government agencies and
      companies that comprise our target markets. The Company also uses independent
      manufacturer sales representatives where it is deemed applicable and cost
      effective, both domestically and abroad.




HAZARDOUS
      MATERIALS, GOVERNMENT REGULATION AND ENVIRONMENTAL REGULATIONS




The
      Company’s operations necessarily involve the controlled use of hazardous
      materials and chemicals which are subject to various federal, state and local
      laws regulating the discharge of materials into the environment. Management
      believes the Company is in compliance with all material aspects of such rules
      and safety procedures for handling and disposing of such materials; however,
      the
      risk of accidental contamination or injury from these materials cannot be
      completely eliminated. Compliance has not had a material effect upon capital
      expenditures, earnings or the Company’s competitive position.





EMPLOYEES




The
      Company employed 32 persons on a full-time basis as of October 31, 2007,
      compared to 28 persons on a full-time basis as of October 31, 2006. None of
      our
      employees are covered by a collective bargaining agreement, nor have we
      experienced a strike or other adverse work stoppage due to organized labor.
      Management is not aware of any efforts by employees or outside organizers to
      create any type of labor union. Management believes that the employer/employee
      relationship environment is such that labor organization activities are unlikely
      to occur.




AVAILABLE
      INFORMATION




The
      Company’s internet address is: http://www.datametrics.com .
      The
      Company files reports with the Securities and Exchange Commission (“SEC”) as
      required by SEC rules and regulations on Form 10-QSB and Form 10-KSB these
      reports are available to the public to read and copy at the SEC’s Public
      Reference Room at 450 Fifth Street, N.W., Washington, D.C.




The
      Company is an electronic filer with the SEC and these reports are available
      through the SEC internet site ( http://www.sec.gov ).
      Copies
      of documents filed with the SEC are also available free of charge upon
      request.




ITEM
      2.
      PROPERTIES.





The
      Company's operations are conducted from a 43,000 square foot manufacturing
      facility in Orlando Florida, which the Company originally purchased in December
      1997 and later sold to SG DMTI Capital, LLC (“SGD”), one of the Company’s
      principal stockholders, for $1,500,000 effective November 1, 2005.
      Contemporaneously with the sale, SGD and the Company entered into a five-year
      triple net lease with an annual rent obligation of $150,000. The property is
      adequately insured. Property taxes are approximately $27,500 per year and are
      to
      be paid by the Company.




ITEM
      3.
      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, but there can be no
      assurance as to the outcome of the litigation.





ITEM
      4.
      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.




No
      matters were submitted to a vote of security holders during the year ended
      October 31, 2007 through the solicitation of proxies or otherwise.




5




PART
      II




ITEM
      5.
      MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS




EQUITY
      AND RELATED STOCKHOLDER MATTERS




Our
      common stock is traded on the Over the Counter Bulletin Board “OTC-BB” under the
      symbol 'DMCP’ we have issued no other classes of stock.




As
      of
      October 31, 2007, there were approximately 316 shareholders of record of our
      common stock and 11,552,035 shares outstanding.




The
      Company has not previously declared or paid any dividends on our common stock
      and does not anticipate declaring or paying any cash dividends in the
      foreseeable future. The payment of dividends, if any, is within the discretion
      of the Board of Directors and will depend on the Company's earnings, if any,
      its
      capital requirements, and financial condition and other such factors as the
      Board of Directors may consider.




The
      following table shows the high and low bid prices of our common stock as quoted
      on the OTC-BB, by quarter, during each of our last two fiscal years ended
      October 31, 2007 and 2006. These market quotations reflect inter-dealer prices,
      without retail mark-up, markdown or commissions and may not necessarily
      represent actual transactions.




Market
                PricesQuarter
            
            2007
            
            2006High
            
            Low
            
            High
            
            LowFirst
                quarter
            
            $
            0.15
            
            $
            0.15
            
            $
            0.99
            
            $
            0.45Second
                quarter
            
            
            0.36
            
            
            0.36
            
            
            0.90
            
            
            0.02Third
                quarter
            
            
            0.36
            
            
            0.21
            
            
            0.10
            
            
            0.10Fourth
                quarter
            
            
            0.30
            
            
            0.30
            
            
            0.12
            
            
            0.12




ITEM
      6.
      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, the rapid growth of the operations
      and
      our ability to operate profitably after the initial growth period is completed.
      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.




RESULTS
      OF OPERATIONS





Fiscal
      Year 2007 Compared With Fiscal Year 2006.





Sales.
      We
      had sales of $3,166,000 for the fiscal year ended October 31, 2007 compared
      to
      $3,204,000 in the comparable period in 2006, a decrease of $38,000 or 1%. The
      decrease in sales is attributable mainly to a decrease in the receipt of orders
      from our customers.




Cost
      of
      sales. We had cost of sales of $2,322,000 for the fiscal year ended October
      31,
      2007, representing approximately 73% of sales, compared to cost of sales of
      $2,550,000 in the comparable period in 2006, which represented 80% of sales.
      The
      decrease of $228,000 or 10% was primarily due to a reduction in manufacturing
      overhead and fixed costs that were recorded in the comparable period in 2006.




Gross
      profit. We had gross profit of $844,000 for the fiscal year ended October 31,
      2007 representing approximately 27% of sales, compared to a gross profit of
      $654,000 in the comparable period in 2006, which represented 20% of sales.
      The
      increase of $190,000 was primarily attributable to decrease in cost of sales
      as
      previously discussed.





Selling,
      general and administrative expenses. We had selling, general, and
      administrative, “SG&A”, expenses for the fiscal year ended October 31, 2007
      of $1,949,000 or approximately 62% of sales, compared to $1,564,000 in the
      comparable period in 2006, which represented 49% of sales. This represents
      an
      increase of $385,000 or 20% in SG&A and is attributable mainly to increased
      personnel and related costs associated with an increase in headcount for the
      year and increases in fixed costs.




6




Loss
      from
      operations. We had loss from operations of $(1,105,000) for the fiscal year
      ended October 31, 2007 compared to loss from operations of $(910,000) in the
      comparable period in 2006, an increase of $195,000 or 17%. The net loss from
      operations is attributable mainly to an increase in SG&A of 20% as discussed
      previously.





Other
      expense. We had other expense of $396,000 for the fiscal year ended October
      31,
      2007 compared to other expense of $1,990,000 in the comparable period in 2006,
      a
      decrease of $1,594,000 or 80%. The decrease was primarily due to the issuance
      to
      SGD of a warrant to purchase 386,314,860 shares of common stock (on a pre-one
      for thirty reverse split basis) during the fiscal year ending October 31, 2006
      (the “SGD Warrant”) in the amount of $2,186,000. The decrease is also due to a
      reduction in interest expense as a result of the debt restructuring that
      occurred on December 30, 2005 where the majority of long term loans were either
      paid in full or converted into equity of the Company.





Net
      loss.
      We had a net loss of $(1,501,000) for the fiscal year ended October 31, 2007
      compared to a net loss of $(2,900,000) in the comparable period in 2006. The
      large net loss in 2006 was due primarily to the issuance of the SGD Warrant.
      The
      exercise price for the SGD Warrant was less than the market price of the stock
      resulting in stock based cost in the amount of $2,186,000 being recorded.





Management
      has determined that, based on the Company's historical losses from recurring
      operations, the Company will most likely not recognize its net deferred tax
      assets at October 31, 2007. Ultimate recognition of these tax assets is
      dependent, to some extent, on the future revenue levels and margins of the
      Company. It is the intention of management to assess the appropriate level
      for
      the valuation allowance each quarter.





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 operations was $802,000 in 2007 as compared to $533,000 in 2006. The
      change from 2007 to 2006 was due primarily to net loss and lower than expected
      sales volume.





Net
      cash
      provided by investing activities in 2006 was $1,438,000. There were no investing
      activities in 2007. The change from 2007 to 2006 was due primarily to the sale
      of the building.





Net
      cash
      provided /used by financing activities were $485,000 and ($732,000) in 2007
      and
      2006, respectively. The change from 2007 to 2006 was primarily related to the
      refinancing of the Property located at 1717 Diplomacy Row, Orlando, FL., and
      the
      restructuring that took place on December 30, 2006 as described in Note 16
      to
      the accompanying financial statements.





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 6, 2006, the Company issued SGD 300,000 shares of Series B Preferred
      Stock for $300,000. As a result, an aggregate of 1,000,000 shares of Series
      B
      Preferred Stock, the total amount of shares issuable under the Series B
      Preferred Stock and Warrant Purchase Agreement dated December 30, 2005, have
      been issued to SGD. The proceeds of the sale of the 300,000 shares were used
      for
      general working capital.





On
      December 15, 2006 the Company issued 174,887 shares of Common Stock with a
      par
      value of $0.01 in the amount of $20,986 to SGD in lieu of the 4% annual
      cumulative dividend on the Series B Preferred Stock that was due on November
      30,
      2006.





On
      September 4, October 9, December 4, and December 11, 2007, the Company signed
      agreements with SGD to increase the principal balance of the Secured Promissory
      Note by $70,000, $60,000, $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.





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 23, 2008 the Company has been advanced
      $485,000 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 $300,000. The funds received from the Comerica Note are being used
      for
      general working capital, including payroll.




7




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 $1,176,515 at October 31, 2007. The
      Company believes that SGD, the holder of the Secured Debt, 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 to properly finance the growth of the Company. Based on the past
      investments made by SGD, Management believes SGD to be a long term investor
      that
      may be willing to provide financial resources in the event of shortfalls while
      the Company invests in new products and infrastructure. 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.





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 $106,895 in unpaid interest as the
      monthly payments of $10,000 that were to commence September, 2006.





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.




8




ITEM
      7.
      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




DATAMETRICS
      CORPORATION




Table
      of
      Contents


Reports
                  of Independent Registered Certified Public Accounting Firms
              9Condensed
                  Consolidated Balance Sheet
              10Condensed
                  Consolidated Statements of Operations
              11Condensed
                  Consolidated Statements of Capital Deficit
              12Condensed
                  Consolidated Statements of Cash Flows
              13Notes
                  to Condensed Consolidated Financial Statements
              14




Report
      of
      Independent Registered Public Accounting Firm




To
      the
      Audit Committee, Board of Directors and Stockholders


DataMetrics
      Corporation and Subsidiary


Orlando,
      Florida




We
      have
      audited the accompanying consolidated balance sheets of DataMetrics Corporation
      and Subsidiary as of October 31, 2007 and 2006, and the related consolidated
      statements of operations, capital deficit, and cash flows for the years then
      ended October 31, 2007 and October 31, 2006. These financial statements are
      the
      responsibility of the Company's management. Our responsibility is to express
      an
      opinion on these financial statements based on our audits.





We
      conducted our audits in accordance with the standards of The Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of DataMetrics Corporation
      and
      Subsidiary as of October 31, 2007 and 2006, and the results of its operations
      and its cash flows for the years then ended in conformity with accounting
      principles generally accepted in the United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 13 to the financial
      statements, the Company has incurred losses over the past several years and
      has
      accumulated and working capital deficits. These conditions raise substantial
      doubt about its ability to continue as a going concern. Management's plans
      regarding these matters are also described in Note 13. The financial statements
      do not include any adjustments that might result from the outcome of this
      uncertainty.





/s/
      Davis, Monk & Company





DAVIS,
      MONK & COMPANY





January
      25, 2008





9




**CONDENSED
                CONSOLIDATED BALANCE SHEETS****For
                the years ended October 31, 2007 and 2006****DataMetrics
                Corporation and Subsidiary****(in
                thousands)****2007**
            
            **2006****ASSETS****Current
                assets**Cash
            
            $
            2
            
            $
            319Accounts
                receivable (net of allowancefor
                doubtful accounts of $63 for 2007 and $0 for 2006)
            
            
            146
            
            
            80Inventory
                (net of allowance forobsolete
                inventory of $5,785 for 2007and
                $6,070 for 2006)
            
            
            456
            
            
            705Other
                current assets
            
            
            12
            
            
            43**Total
                current assets**
            
            
            616
            
            
            1,147**Property
                and equipment**Furniture,
                fixtures and computer equipment
            
            
            1,197
            
            
            1,197Machinery
                and equipment
            
            
            555
            
            
            555Total
                property and equipment
            
            
            1,752
            
            
            1,752Less
                accumulated depreciation
            
            
            (1,752
            )
            
            (1,745
            )Net
                property and equipment
            
            
            -
            
            
            7**Total
                Assets**
            
            $
            616
            
            $
            1,154**LIABILITIES
                AND CAPITAL DEFICIT****Current
                liabilities**Accounts
                payable
            
            $
            493
            
            $
            283Accrued
                expense
            
            
            222
            
            
            216Warranty
                reserve
            
            
            48
            
            
            40Accrued
                interest payable
            
            
            200
            
            
            134Deposits
            
            
            95
            
            
            6Notes
                payable - related parties
            
            
            685
            
            
            -Short
                term debt
            
            
            141
            
            
            141**Total
                current liabilities**
            
            
            1,884
            
            
            820**Long
                term liabilities**Notes
                payable - related parties
            
            
            -
            
            
            500**Total
                liabilities**
            
            
            -
            
            
            1,320**Capital
                deficit**4%
                Cumulative preferred stock, ($1,500 aggregate liquidation preference)
            
            
            10
            
            
            7Common
                stock
            
            
            116
            
            
            114Additional
                paid In capital
            
            
            64,782
            
            
            64,367Accumulated
                deficit
            
            
            (66,176
            )
            
            (64,654
            )**Total
                capital deficit**
            
            
            (1,268
            )
            
            (166
            )**Total
                Liabilities and Capital Deficit**
            
            $
            616
            
            $
            1,154




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




10




**CONDENSED
                CONSOLIDATED STATEMENT OF OPERATIONS****For
                the years ended October 31, 2007 and 2006****DataMetrics
                Corporation and Subsidiary**(in
                thousands, except per share data)




**2007**
            
            **2006****Sales**
            
            $
            3,166
            
            $
            3,204**Cost
                of sales**
            
            
            2,322
            
            
            2,550**Gross
                profit**
            
            
            844
            
            
            654**Selling,
                general and administrative expenses**Personnel
                and related costs
            
            
            995
            
            
            790Other
            
            
            954
            
            
            774Total
                selling, general and administrative
            
            
            1,949
            
            
            1,564**Loss
                from operations**
            
            
            (1,105
            )
            
            (910
            )**Other
                income and expense**Restructuring
                expense
            
            
            -
            
            
            (2,186
            )Inventory
                adjustment to market
            
            
            (360
            )
            
            -Interest
                expense
            
            
            (66
            )
            
            (109
            )Directors
                compensation
            
            
            (33
            )
            
            (54
            )Forgiveness
                of payables
            
            
            -
            
            
            80Other
                income
            
            
            63
            
            
            279Total
                other expense
            
            
            (396
            )
            
            (1,990
            )**Net
                loss**
            
            $
            (1,501
            )
            $
            (2,900
            )**Loss
                per share on common stock,****Basic
                and diluted**
            
            $
            (0.13
            )
            $
            (0.31
            )**Weighted
                average number of common shares outstanding,****Basic
                and diluted**
            
            
            11,514
            
            
            9,441




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




11




**CONDENSED
                CONSOLIDATED STATEMENT OF CAPITAL DEFICIT****For
                the years ended October 31, 2007 and 2006****DataMetrics
                Corporation and Subsidiary****(in
                thousands)**




**Common
                Stock**
            
            **Ser.A
                Preferred**
            
            **Ser.B
                Preferred****Number
                of**
              **Shares**
            
            **Dollar**
              **Amount**
            
            **Number
                of**
              **Shares**
            
            **Dollar**
              **Amount**
            
            **Number
                of**
              **Shares**
            
            **Dollar**
              **Amount**
            
            **Add'l**
              **Paid
                In**
              **Capital**
            
            **Accum**
              **Deficit**
            
            **Total
                Capital Deficit****Balance
                at October 31, 2005**
            
            
            1,070
            
            $
            11
            
            
            893
            
            $
            9
            
            
            -
            
            $
            -
            
            $
            58,452
            
            $
            (61,754
            )
            $
            (3,282
            )**Conversion
                of DMTR loan****of
                $2.9 million plus****accrued
                interest**
            
            
            8,158
            
            
            82
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,998
            
            
            
            
            
            3,080**Conversion
                of Series A Preferred Stock into Common Stock**
            
            
            1,632
            
            
            16
            
            
            (893
            )
            
            (9
            )
            
            
            
            
            
            
            
            (7
            )
            
            
            
            
            -**Conversion
                of 12% Bridge loan into Series B Preferred Stock**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            500
            
            
            5
            
            
            495
            
            
            
            
            
            500**Warrants
                for the purchase of****12,877,162
                shares of****Common
                Stock**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,186
            
            
            
            
            
            2,186**Issuance
                of Common Stock to officers & directors**
            
            
            500
            
            
            5
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            45
            
            
            
            
            
            50**Issuance
                of Series B****Preferred
                Stock**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            200
            
            
            2
            
            
            198
            
            
            
            
            
            200**Net
                Loss**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,900
            )
            
            (2,900
            )**Balance
                at October 31, 2006**
            
            
            11,360
            
            $
            114
            
            
            -
            
            $
            -
            
            
            700
            
            $
            7
            
            $
            64,367
            
            $
            (64,654
            )
            $
            (166
            )**Issuance
                of Series B Preferred Stock**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            300
            
            
            3
            
            
            297
            
            
            
            
            
            300**Issuance
                of Common stock for Series B Preferred Stock
                dividend**
            
            
            175
            
            
            2
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            19
            
            
            (21
            )
            
            -**Stock
                based compensation**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            99
            
            
            
            
            
            99**Net
                Loss**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,501
            )
            
            (1,501
            )**Balance
                at October 31,2007**
            
            
            11,535
            
            $
            116
            
            
            -
            
            $
            -
            
            
            1,000
            
            $
            10
            
            $
            64,782
            
            $
            (66,176
            )
            $
            (1,268
            )




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




12




**CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS****For
                the years ended October 31, 2007 AND 2006****DataMetrics
                Corporation and Subsidiary****(in
                thousands)**




**2007**
            
            **2006****Cash
                flows from operating activities**Net
                loss
            
            $
            (1,501
            )
            $
            (2,900
            )Adjustments
                to reconcile net loss to net cash used in operating
                activitiesGain
                on sale of building
            
            
            -
            
            
            (216
            )Bad
                debt expense
            
            
            63
            
            
            -Depreciation
            
            
            7
            
            
            4Write
                down of inventory
            
            
            360
            
            
            -Compensatory
                stock options
            
            
            99
            
            
            -Expenses
                paid with equity instruments
            
            
            -
            
            
            249Warrants
                issued to investors during restructuring
            
            
            -
            
            
            2,186Directors
                fee paid with Common Stock
            
            
            -
            
            
            50**Changes
                in assets and liabilities**Accounts
                receivable
            
            
            (129
            )
            
            190Inventories
            
            
            (111
            )
            
            202Prepaid
                expenses and other current assets
            
            
            31
            
            
            51Accounts
                payable
            
            
            210
            
            
            (209
            )Accrued
                expenses
            
            
            161
            
            
            (140
            )Accrued
                warranty expense
            
            
            8
            
            
            -Net
                cash used in operating activities
            
            
            (802
            )
            
            (533
            )**Cash
                flows from investing activities**Proceeds
                from sale of building
            
            
            -
            
            
            1,445Capital
                expenditures for equipment
            
            
            -
            
            
            (7
            )Net
                cash provided by investing activities
            
            
            -
            
            
            1,438**Cash
                flows from financing activities**Proceeds
                from issuance of Series B Preferred Stock
            
            
            300
            
            
            200Proceeds
                from notes payable -related party
            
            
            185
            
            
            248Payments
                on long-term debt
            
            
            -
            
            
            (1,180
            )Net
                cash provided by (used in) financing activities
            
            
            485
            
            
            (732
            )**Net
                (decrease) increase in Cash**
            
            
            (317
            )
            
            173**Cash,**Beginning
                of year
            
            
            319
            
            
            146**Cash,**End
                of year
            
            $
            2
            
            $
            319








**Supplemental
                Disclosure of Cash Flow Information**Cash
                paid for interest
            
            $
            -
            
            $
            72Mortgage
                Payable Paid by Loan from Related Party
            
            $
            -
            
            $
            751Restructuring
                Expenses Associated with Issuing Stock Warrants
            
            $
            -
            
            $
            2,186Conversion
                of Long Term Debt and Related Accrued Interest into Common
                Stock
            
            $
            -
            
            $
            3,081Conversion
                of Long Term Debt and Related Accrued Interest into Series B Preferred
                Stock
            
            $
            -
            
            $
            500Conversion
                of Long Term Debt and Related Accrued Interest into Series A Preferred
                Stock
            
            $
            -
            
            $
            489Expenses
                Paid with the Issuance of Notes Payable
            
            $
            -
            
            $
            249Payment
                of Short Term Bridge Loan by Issuing New Note Payable
            
            $
            -
            
            $
            200Forgiveness
                of Debt as part of the Sale of Building
            
            $
            -
            
            $
            30Payment
                of Director's Fees by Issuing Common Stock
            
            $
            -
            
            $
            50Common
                Stock issued for Preferred Stock Dividend
            
            $
            21
            
            $
            -




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




13




**DATAMETRICS
      CORPORATION**


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


OCTOBER
      31, 2007




NOTE
      1 - ORGANIZATION
      AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





a. *Corporate
      Organization* :
      The
      Company was incorporated in California in October 1962 and was reincorporated
      in
      Delaware in April 1987. The Company is engaged primarily in the design,
      development, manufacture and sale of high-speed, non-impact printers;
      high-resolution, non-impact printer/plotters; and ruggedized computers and
      computer workstations.




b.
      *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.




c . *Property
      and Equipment:* Property
      and equipment are recorded at cost. The Company provides for depreciation using
      the straight-line method over the estimated useful lives of the respective
      assets, which range from 5 to 39 years. Expenditures for repairs and maintenance
      are charged to operations as incurred.





d. *Revenue
      Recognition:* The
      Company recognizes revenue upon shipment of its product from its warehouse
      facilities. Revenue is generated primarily from the sales of high-speed,
      non-impact printers; high-resolution, non-impact printer/plotters; and
      ruggedized computers and computer workstations.





*e.
      Accounts Receivable:* Accounts
      receivable is stated at the amount management expects to collect from
      outstanding balances. Management provides for uncollectible amounts through
      a
      charge to earnings and a credit to a valuation allowance based on its assessment
      of the current status of individual accounts, past credit history with customers
      and their current financial condition. Balances that are still outstanding
      after
      management has used reasonable collection efforts are written off through a
      charge to the valuation allowance and a credit to trades accounts receivable.
      At
      October 31, 2007, the allowance for doubtful accounts was $62,578. The Company
      has no policy requiring collateral or security to support its account
      receivable. The Company does not have a policy of charging interest on overdue
      receivables. Because of uncertainties in the estimation process, it is at least
      reasonably possible that management’s estimate of account losses and the related
      allowance will change in the near term and could be material to the financial
      statements. For the years ended October 31, 2007 and 2006, bad debt expense
      was
      approximately $63,964 and $0 respectively.





f. *Advertising
      Costs:* Advertising and sales promotion costs are expensed as incurred and charged
      to
      selling, general and administrative costs. Total advertising and sales promotion
      expense amounted to approximately $25,830 and $25,084 in 2007 and 2006,
      respectively.





g. *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.





h. *Financial
      Instruments Fair Value, Concentration of Business and Credit
      Risks* ***:*** The
      carrying amount reported in the balance sheet for cash, accounts receivable,
      accounts payable and accrued expenses approximates fair value because of the
      immediate or short-term maturity of these financial instruments. The carrying
      amount reported in the accompanying balance sheet for long term debt
      approximates fair value because the actual interest rates do not significantly
      differ from current rates offered for instruments with similar characteristics.
      Financial instruments, which potentially subject the Company to concentrations
      of credit risk, consist principally of trade accounts receivable which amount
      to
      approximately $145,909. The Company performs periodic credit evaluations of
      its
      trade customers and generally does not require collateral.





i. *Income
      Taxes* ***:*** **** Deferred
      tax assets and liabilities are recognized for the future tax consequences
      attributable to differences between the financial statement carrying amounts
      of
      existing assets and liabilities and their respective tax bases. Deferred tax
      assets and liabilities are measured using enacted tax rates expected to apply
      to
      taxable income in the years in which those temporary differences are expected
      to
      be recovered or settled. The effect on deferred tax assets and liabilities
      of a
      change in tax rates is recognized in income in the period that includes the
      enactment date. Valuation allowances are established when necessary to reduce
      deferred tax assets to an amount more likely expected to be
      realized.




j. *Cash:* **** The
      Company maintains its cash in bank deposit accounts which, at times, may exceed
      federally insured limits. The Company believes it is not exposed to any
      significant risks on cash.




14




**DATAMETRICS
      CORPORATION**


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


OCTOBER
      31, 2007




k. *Accounting
      for the Impairment of Long-Lived Assets:*  **** The
      Company follows the guidance under Statement of Financial Accounting Standards
      No. 144 (SFAS 144) "Accounting for the Impairment of Long-Lived Assets to be
      Disposed of." SFAS 144 required impairment losses to be recorded on long-lived
      assets used in operations when indicators of impairment are present and the
      undiscounted cash flows estimated to be generated by those assets are less
      than
      the asset's carrying amount. SFAS 144 also addressed the accounting for
      long-lived assets that are expected to be disposed of. Management has determined
      that there is no impairment of long-lived assets as of October 31, 2007 and
      2006.




l. *Hazardous
      Materials:* The
      Company’s operations necessarily involve the controlled use of hazardous
      materials and chemicals which are subject to various federal, state and local
      laws regulating the discharge of materials into the environment. Management
      believes the Company is in compliance with all such rules and safety procedures
      for handling and disposing of such materials; however, the risk of accidental
      contamination or injury from these materials cannot be completely eliminated.
      Compliance has not had a material effect upon capital expenditures, earnings
      or
      the Company’s competitive position.





m. *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 anti-dilutive. 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
      14,825,000 and 12,935,000 outstanding options and warrants for the fiscal years
      2007 and 2006 respectively.





n. *Statement
      of Cash Flows:* For
      purposes of the statement of cash flows, the Company considers all highly liquid
      investments purchased with a maturity of three months or less to be cash
      equivalents.





o. *Shipping
      and Handling Charges:* The
      Company reports shipping and handling fees charged to customers as part of
      net
      sales and the associated expense as a part of cost of sales.





p. *Share
      based compensation:* The
      Company awards share based compensation to employees and directors under a
      Stock
      Incentive Plan adopted in 2006 and to others periodically, as compensation
      for
      services rendered. Effective November 2006, the Company adopted Statement of
      Financial Accounting Standard No. 123R, “Share Based and Payment” (“SFAS 123R”).
      The adoption of SFAS 123R did not have a material impact on our share based
      compensation expense for the year ended October 31, 2007. The Company recognizes
      compensation expense on a straight line basis over the period the award is
      earned.




NOTE
      2
      - ACQUISITION OF SUBSIDIARY





In
      2001,
      the Company formed Peripheral Equipment Acquisition Corporation (PEAC) to
      acquire 100% of the stock of Peripheral Equipment Corporation. PEAC changed
      its
      name to Peripheral Equipment Corporation following the merger of Peripheral
      Equipment Corporation into PEAC. Peripheral Equipment Corporation has been
      inactive since 2002. Consequently no income or expense from this subsidiary
      is
      reported for the years ended October 31, 2007 and 2006.




NOTE
      3 - NEW
      ACCOUNTING PRONOUNCEMENTS





In
      June
      2006, Financial Accounting Standards Board (“FASB”) issued FASB Interpretation
      (“FIN”) No. 48 *“Accounting
      for Uncertainty in Income Taxes”.* This
      interpretation clarifies the accounting for uncertainty in income taxes
      recognized in an enterprise’s financial statements in accordance with Statement
      of Financial Accounting Standard (“SFAS”) 109. This interpretation prescribes a
      recognition threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return. FIN No. 48 also provides guidance on recognition, classification,
      interest and penalties, accounting in interim periods, disclosure and
      transition. FIN No. 48 is effective for fiscal years beginning after December
      15, 2006. Management has not yet determined the impact this pronouncement will
      have on the Company’s financial statements.




In
      September 2006, the FASB issued SFAS 157, “Fair Value Measurements.” This
      standard defines fair value, establishes a framework for measuring fair value
      in
      accounting principles generally accepted in the United States (“GAAP”), and
      expands disclosures about fair value measurements. This standard is effective
      for financial statements issued for fiscal years beginning after November 15,
      2007. The Company is currently evaluating the requirements of SFAS 157 and
      has
      not yet determined the impact on the Company’s financial condition, results of
      operations or cash flows.





In
      February 2007, the FASB issued SFAS 159, “Fair Value Option for Financial Assets
      and Financial Liabilities - Including an amendment of FASB Statement No. 115”.
      SFAS 159 permits entities to choose to measure many financial instruments and
      certain other items at fair value. The statement is effective for fiscal years
      beginning after November 15, 2007. The Company is currently evaluating the
      requirements of SFAS 159 and has not yet determined the impact on the Company’s
      financial condition, results of operations or cash flows.




15




**DATAMETRICS
      CORPORATION**


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


OCTOBER
      31, 2007


NOTE
      4 - INVENTORIES




At
      October 31, 2007 and 2006 inventories consist of the following (in
      thousands):





**2007**
            
            **2006**Inventory
                Parts/Sub-Assemblies
            
            $
            648
            
            $
            599Work
                in Process
            
            
            168
            
            
            106Finished
                Goods
            
            
            0
            
            
            0Obsolete
                Inventory
            
            
            5,425
            
            
            6,070Total
                Inventory
            
            
            6,241
            
            
            6,775Adjustment
                for Market Value
            
            
            (5,785
            )
            
            (6,070
            )Net
                Inventory
            
            $
            456
            
            $
            705





Inventory
      parts and sub-assemblies 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.




NOTE
      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 sales to actual warranty
      costs. The warranty for the Company's products generally covers defects in
      material and workmanship. The table below outlines warranty accruals and related
      costs for the fiscal years ending October 31, 2007 and 2006 respectively (in
      thousands):





**2007**
            
            **2006**Beginning
                accrued warranty expense
            
            $
            40
            
            $
            40Warranty
                expense
            
            
            99
            
            
            10Warranty
                payments
            
            
            91
            
            
            10Ending
                accrued warranty expense
            
            $
            48
            
            $
            40




NOTE
      6 - SHORT-TERM
      DEBT




Short-term
      debt at October 31, 2007 and 2006 consists of the following (in
      thousands):





**2007**
            
            **2006**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.
            
            $
            141
            
            $
            141





16




**DATAMETRICS
      CORPORATION**


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


OCTOBER
      31, 2007




NOTE
      7
      - RELATED PARTIES





Notes
      payable -related parties at October 31, 2007 and 2006 consist of the following
      (in thousands):




**2007**
            
            **2006**Notes
                payable to investors; interest expense at 10% is paid monthly commencing
                January 31, 2007; principal and unpaid interest was due December,
                2007.
                The note is secured by a first priority lien on all company
                assets.
            
            $
            685
            
            $
            500




Accounts
      payable-related parties at October 31, 2007 and 2006 consist of the following
      (in thousands):




**2007**
            
            **2006**Included
                in accounts payable are amounts due to investors, directors and beneficial
                owners.
            
            $
            101
            
            $
            19





NOTE
      8 - COMMON
      STOCK





Relevant
      information for the Company’s common stock as of October 31, 2007 and 2006 is as
      follows (in thousands except par value):




**2007**
            
            **2006**Par
                Value per Share
            
            $
            .01
            
            $
            .01Authorized
            
            
            70,000
            
            
            70,000Issued
            
            
            11,535
            
            
            11,360Outstanding
            
            
            11,535
            
            
            11,360





Shares
      of
      Common Stock have been adjusted retroactively to reflect the reverse stock
      split
      that occurred in April 2006. In addition to the split, the stockholders approved
      an amendment to the Company’s Certificate of Incorporation to decrease the
      number of authorized shares of common stock to 70,000,000.





On
      December 15, 2006 the Company issued 174,887 shares of Common Stock with a
      par
      value of $0.01 in the amount of $20,986 ($0.12 per share) to SGD in lieu of
      the
      4% annual cumulative dividend on the Series B Preferred Stock that was due
      on
      November 30, 2006.




NOTE
      9 - PREFERRED
      STOCK





On
      December 6, 2006 the Company issued 300,000 shares of Series B Preferred Stock
      with a par value of $0.01 for gross proceeds of $300,000 to SGD. As a result,
      an
      aggregate of 1,000,000 shares of Series B Preferred Stock, the total amount
      of
      shares issuable under the Series B Preferred Stock and Warrant Purchase
      Agreement dated December 30, 2005, have been issued to SGD as of October 31,
      2007. The proceeds of the sale of the 300,000 shares were used for general
      working capital.





The
      Company had 1,000,000 shares of the 1,500,000 authorized shares of Series B
      Preferred Stock with a par value of $0.01 per share outstanding at October
      31,
      2007. The Series B Preferred Stock has a cumulative dividend of 4% per annum.
      The Company previously had 892,652 shares of Series A Preferred Stock with
      a par
      value of $0.01 per share, however, as part of the restructuring, on December
      30,
      2005, these shares were converted into 1,631,574 shares of the Company’s Common
      Stock, and thus there were no shares of Series A Preferred Stock outstanding
      at
      October 31, 2006.





17




**DATAMETRICS
      CORPORATION**


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


OCTOBER
      31, 2007




NOTE
      10 - STOCK
      BASED COMPENSATION





The
      Company periodically provides for the granting of options under a stock
      incentive plan to employees and directors as compensation for services rendered.
      The terms, including their exercise price and terms, are initiated solely at
      the
      discretion of the Board of Directors. These options and warrants generally
      vest
      over a three year period and shares are issued immediately with no restrictions
      upon exercise.





The
      plan
      limits the number of shares of common stock that can be issued in connection
      with the awards to 12.5% of fully diluted common shares
      outstanding.





In
      addition to the Stock Incentive Plan, options and warrants have been issued
      to
      others for various services and transactions. These instruments were fully
      vested and exercisable with no restrictions upon issuance.





The
      fair
      value of the options and warrants granted in 2007 and 2006 were estimated on
      the
      date of grant using the Black-Scholes option-pricing model with the following
      assumptions:





Risk
      free
      interest rate of 3 %; dividend yield of 0%, expected life of 10 years, discount
      rate of 5.25% and volatility of 121%.




2007
            
            2006Weighted
            
            
            
            WeightedAverage
            
            
            
            AverageExercise
            
            
            
            ExerciseShares
            
            Price
            
            Shares
            
            PriceOutstanding
                at beginning of year
            
            
            14,963
            
            $
            0.31
            
            
            58
            
            $
            39.30Granted
            
            
            322
            
            
            0.15
            
            
            14,905
            
            
            0.16Exercised
            
            
            -
            
            
            -
            
            
            -
            
            
            -Expired/forfeited
            
            
            468
            
            
            0.43
            
            
            -
            
            
            -Outstanding
                at the end of the year
            
            
            14,817
            
            $
            0.30
            
            
            14,963
            
            $
            0.31Exercisable
                at the end of the year
            
            
            13,583
            
            $
            0.32
            
            
            13,135
            
            $
            0.34





Significant
      option groups outstanding for fully vested options at October 31, 2007 and
      2006
      and related weighted average life information are as follows:




2007
            
            2006Number
            
            
            
            
            
            NumberOutstanding
            
            Weighted
            
            
            
            Outstanding
            
            Weightedand
            
            Average
            
            
            
            and
            
            AverageFully
            
            Remaining
            
            
            
            Fully
            
            RemainingExercise
            
            Exercisable
            
            Contractual
            
            Exercise
            
            Exercisable
            
            ContractualPrice
            
            (000s)
            
            Life
                (Years)
            
            Price
            
            (000s)
            
            Life(Years)$ 
                42.00
            
            
            50
            
            
            4.05
            
            $
            42.00
            
            
            50
            
            
            .050.17
            
            
            12,877
            
            
            9.00
            
            
            30.00
            
            
            5
            
            
            1.61-
            
            
            -
            
            
            -
            
            
            1.65
            
            
            3
            
            
            2.00-
            
            
            -
            
            
            -
            
            
            0.17
            
            
            12,877
            
            
            10.000.10
            
            
            656
            
            
            9.00
            
            
            0.10
            
            
            200
            
            
            10.00Total
            
            
            13,583
            
            
            
            
            
            Total
            
            
            13,135





18




**DATAMETRICS
      CORPORATION**


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


OCTOBER
      31, 2007




A
      summary
      and weighted average grant date fair value of options issued for which a vesting
      period applies is presented as follows:





2007
            
            2006Weighted
            
            
            
            WeightedAverage
            
            
            
            AverageShares
            
            Grant
                Date
            
            Shares
            
            Grant
                Date(000s)
            
            Fair
                Value
            
            (000s)
            
            Fair
                ValueNonvested
                at beginning of year
            
            
            1,827
            
            $
            0.095
            
            
            -
            
            $
            -Granted
                during the year
            
            
            322
            
            
            0.350
            
            
            1,827
            
            
            0.095Forfeited
                during the year
            
            
            (460
            )
            
            0.095
            
            
            -
            
            
            -Vested
                during the year
            
            
            (456
            )
            
            0.095
            
            
            -
            
            
            -Nonvested
                at end of year
            
            
            1,233
            
            
            0.162
            
            
            1,827
            
            
            0.095





Total
      compensation costs related to nonvested awards not yet recognized were $199,482
      and $174,000 at October 31, 2007 and 2006 respectively. These costs will be
      recognized over a three year period. The Company recognized compensation expense
      related to awards vesting in the amounts of $97,945 and $2,186,000 for the
      years
      ending October 31, 2007 and 2006 respectively.




NOTE
      11 - INCOME
      TAXES





A
      reconciliation between the Company’s effective tax rate and the U.S. statutory
      rate is as follows (in thousands):




2007
            
            2006Statutory
                rate applied to pre-tax loss
            
            $
            (597
            )
            $
            (1,154
            )Increase
                in income taxes resulting from
              permanent
                difference - value of warrants
            
            
            39
            
            
            871Change
                in valuation allowance
            
            $
            558
            
            $
            283Net
                Income Tax Benefit
            
            
            -
            
            
            -




The
      primary components of the Company’s deferred tax assets and liabilities are as
      follows (in thousands):





2007
            
            2006Deferred
                Tax Assets:Net
                Operating Loss Carry-Forwards
            
            $
            23,140
            
            $
            22481Accruals
                and Allowances, and other Temporary Differences
            
            
            3,276
            
            
            3,340Total
                Deferred Income Tax Asset
            
            
            26,416
            
            
            25,821Valuation
                Allowance for Deferred Income Tax Assets
            
            
            (26,416
            )
            
            (25,821
            )Net
                Deferred Income Tax Assets
            
            $
            -
            
            $
            -




Net
      operating loss carry-forwards of approximately $57.5 million for federal income
      tax purposes will expire at various times and in varying amounts between 2010
      and 2024.




19




**DATAMETRICS
      CORPORATION**


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


OCTOBER
      31, 2007




The
      provision for income taxes is comprised of the following (in
      thousands):





2007
            
            2006CurrentFederal
            
            $
            -
            
            $
            -State
            
            
            -
            
            
            -DeferredFederal
            
            
            (508
            )
            
            (241
            )State
            
            
            (87
            )
            
            (41
            )Increase
                in Valuation Allowance
            
            
            595
            
            
            282Net
            
            $
            -
            
            $
            -





The
      increase in the valuation allowance is provided against all deferred tax assets
      due to the uncertainty as to their future realization. Based upon management’s
      judgment and the losses incurred by the Company, the valuation allowance
      represents 100% of the Company’s net deferred income tax assets.




NOTE
      12
      - LOSS
      PER SHARE OF COMMON STOCK




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. 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, diluted earnings per share would have included the shares used in the
      computation of net loss per share plus common equivalent shares related to
      14,825,000 and 12,935,000 for outstanding options and warrants for the fiscal
      years 2007 and 2006 respectively.




NOTE
      13- GOING
      CONCERN





The
      Company’s financial statements have been presented on a going concern basis,
      which contemplates the realization of assets and the satisfaction of liabilities
      in the normal course of business. At October 31, 2007, the Company had a working
      capital deficit and a total capital deficit of $1,268,000 compared with a
      working capital deficit of $327,000 and total capital deficit of $166,000 in
      the
      prior year. As described herein the liquidity of the Company has been affected
      by net losses over the past several years, which raises doubt about the
      Company’s ability to continue as a going concern. Historically, the Company’s
      losses have been financed through shareholder loans, private placement proceeds
      and subordinated debt provided by SGD on terms that may have not been available
      from other sources.





The
      Company’s realization of assets and satisfactions of liabilities in the ordinary
      course of business are dependent upon several factors including the Company’s
      ability to secure additional funding through investment groups to provide
      liquidity, third party financing, and the generation of sufficient cash flow
      to
      satisfy its obligations on a timely basis.





The
      Company as part of its plan towards resolving these issues has taken the actions
      described below. Management believes that its current and future plans provide
      an opportunity to continue as a going concern. The accompanying consolidated
      financial statements do not include any adjustments relating to the
      recoverability and classification of recorded assets, or the amounts and
      classification of liabilities that may be necessary in the event the Company
      cannot continue as a going concern.





·
            The
                actions involve a major restructuring of the Company in 2006 which
                effectively paid off or converted all long-term debt into equity
                and made
                available the addition of more equity financing to the Company. Details
                of
                the restructuring are described in Note
                16.


·
            During
                the fiscal year ended October 31, 2007, the operations and processes
                of
                the Company have been analyzed and restructured to obtain greater
                efficiencies in production and distribution. Management continues
                to
                evaluate operations as well and has made several changes in management
                and
                personnel that are designed to improve product distribution, project




20




**DATAMETRICS
      CORPORATION**


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


OCTOBER
      31, 2007




·
            completion
                and on-time delivery. Management believes that these efficiencies
                have
                positioned the Company to experience increased sales
                volume.


·
            The
                Company's backlog of funded orders not yet recognized as revenue
                at
                October 31, 2007 was approximately $1,176,515, in fiscal year 2008;
                the
                company hopes to realize the majority of this backlog as
                revenue.


·
            Effective
                May 24, 2007, Mr. Daniel Bertram resigned his position as a member
                of the
                Board of Directors, Chief Executive Officer and President of the
                Company.
                Mr. John Marceca was elected to serve as President and Chief Operating
                Officer.


·
            On
                December 18, 2007, the Company was able to obtain third party financing
                in
                the form of a line of credit in the amount of $500,000 from Comerica
                Bank.


·
            During
                the fiscal year ended October 31, 2007 and in the first fiscal quarter
                of
                2008, SGD has increased the principal balance of the Secured Promissory
                Note by $425,000.





Based
      on
      the past investments made by SGD in the Company, Management believes SGD to
      be a
      long term investor that may be willing to provide financial resources in the
      event of shortfalls while the Company invests in new products and
      infrastructure. Consequently, management believes that these actions will enable
      the Company to continue as a going concern through October 31, 2008 and
      beyond.




NOTE
      14 - CONCENTRATIONS
      OF CREDIT RISK AND MAJOR CUSTOMERS





Approximately
      50% and 75% of the Company’s sales during fiscal years 2007 and 2006,
      respectively, were made to various U.S. government agencies under prime
      contracts or to prime contractors having sales to such agencies. Export sales
      to
      foreign customers amounted to $169,034 or 5.43% of total sales in fiscal year
      2007. Export sales to foreign customers amounted to $246,812 or 8% of sales
      in
      fiscal year 2006. The Company’s three largest customers accounted for 31%, 13%
      and 8% of the Company’s sales for the fiscal year ended October 31, 2007. Its
      three largest customers accounted for 39%, 28% and 2% of the Company’s sales for
      the fiscal year ended October 31, 2006. The Company’s three largest customers
      accounted for 0%, 37% and 3% of accounts receivable in the fiscal year ended
      October 31, 2007. The Company’s three largest customers accounted for 10%, 10%
      and 0% of account receivable in the fiscal year ended October 31, 2006.





The
      Company maintains its cash balances in one financial institution. The balances
      are insured by the Federal Deposit Insurance Corporation up to $100,000. The
      Company had no uninsured cash balances at October 31, 2007 compared to uninsured
      cash balance of $219,000 at October 31, 2006.




NOTE
      15 - COMMITMENTS
      AND CONTINGENCIES





In
      November 2005, the Company sold its office and manufacturing facility to a
      related party, SGD for $1,500,000. Concurrent with the sale, the Company leased
      the facility back under a 5 year lease agreement, with an additional 5 year
      renewal option. The lease requires monthly rentals of $12,500. The Company
      has
      agreed to pay for all taxes, assessments, utilities, insurance, and maintenance
      costs. Rent expense for the years ended October 31, 2007 and 2006 were $150,000
      and $150,000 respectively. Future minimum rentals under this lease are as
      follows:





2008
            
            $
            150,0002009
            
            $
            150,0002010
            
            $
            150,000




As
      permitted in the lease, the Company subleased a portion of the facility to
      an
      independent Company beginning in February 2006. The lease term ends October
      2010. The sublease requires monthly rentals of $4,688. Rental income reported
      for the years ended October 31, 2007 and 2006 were $56,266 and $42,199
      respectively. The sublease was terminated in November 2007 by the sub lessee;
      therefore, no future minimum rental incomes will be recognized under the
      sublease.





The
      Company is involved in a lawsuit with a former independent sales representative
      firm that is seeking $122,000 in actual damages for unpaid commissions owed
      plus
      interest. The Company disputes this claim and believes them to be without merit.
      The Company is contesting the action, but there can be no assurance as to the
      outcome of the litigation.





21




**DATAMETRICS
      CORPORATION**


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


OCTOBER
      31, 2007




NOTE
      16- RESTRUCTURING
      AND ISSUANCE OF WARRANTS




During
      the fiscal year ended October 31, 2006, the Company’s Board of Directors
      approved a proposal from SGD, an affiliated entity of two members of DMTR,
      LLC,
      who are also principal shareholders of the Company. Pursuant to the proposal,
      SGD acquired the Company’s real property in Orlando for $1,500,000 effective
      November 1, 2005. SGD and the Company entered into a five-year triple net lease
      with an annual rent obligation of approximately $150,000. In addition, the
      Company consummated a series of other transactions, including reaching an
      agreement with the holders of certain long-term debt and the holders of the
      Series A Preferred Stock, to convert those debt and equity securities plus
      related accrued interest expense into shares of common stock. The Company also
      issued Series B Preferred Stock to other holders of long-term debt in exchange
      for canceling that debt. The net effect of this restructuring was the
      elimination of approximately $4.8 million of long-term debt, notes payable
      and
      accrued interest and $250,000 of accounts payable and other accrued expenses
      reported in the financial statements during the year ended October 31, 2007.
      Additionally, the Company issued Warrants to SGD to purchase 386,314,860 shares
      of common stock (on a pre-split basis) at $0.01 per share. The Warrants expire
      in 10 years and were 100% vested upon issuance. The value and costs of these
      Warrants were $2,186,000 and are reported as Other Expense on the Consolidated
      Statement of Operations.




NOTE
      17 - RESEARCH
      AND DEVELOPMENT EXPENSES




For
      the
      year ended October 31, 2007 and 2006, we have incurred approximately $139,987
      and $40,401 respectively for research and development.





NOTE
      18- SUBSEQUENT
      EVENTS




On
      December 4, 2007, the Company signed an agreement to increase the principal
      balance of the Secured Promissory Note from $730,000 to $750,000, a net increase
      of $20,000. As part of the agreement the Company is required to repay this
      amount plus 10% interest on such amount from the date hereof no later that
      five
      business days from the establishment of a proposed line of credit with Comerica
      Bank. The additional $20,000 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.





On
      December 11, 2007, the Company signed an agreement to increase the principal
      balance of the Secured Promissory Note from $750,000 to $800,000, a net increase
      of $50,000. As part of the agreement the Company is required to repay this
      amount plus 10% interest on such amount from the date hereof no later that
      five
      business days from the establishment of a proposed line of credit with Comerica
      Bank. The additional $50,000 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.





On
      December 18, 2007, the Company executed a Master Revolving Note (the “Note”) in
      favor of Comerica Bank (“Comerica”) in the aggregate principal amount of
      $500,000 (the “Principal Amount”). The Note accrues interest at a rate equal to
      the prime rate plus three percent (3%). Pursuant to the 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 Note.





As
      security for the 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). SGD is the holder of (i) 1,000,000 shares of the Company’s Series B
      Preferred Stock, (ii) a warrant to purchase a number of shares of the Company’s
      common stock equal to fifty percent (50%) of the issued and outstanding shares
      on a fully diluted basis and (iii) the SGD Note (as defined below). As such,
      the
      Guarantors are affiliates of the Company.





As
      consideration for the issuance of the Letters of Credit, the Company agreed
      to
      pay the Guarantors an aggregate fee of $25,000, which such amount was added
      to
      the principal amount of that certain secured promissory note. 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
      SGD Note. As of January 23, 2008 the Company has been advanced $485,000 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 $300,000.
      The funds received from the Note are being used for general working capital,
      including payroll




22




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 $535,000 in standby letters of credit
      in support of the Comerica Bank $500,000 line 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.




ITEM
      8.
      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE





None





ITEM
      8A.
      CONTROLS AND PROCEDURES.





Disclosure
      Controls and Procedures. Under the supervision and with the participation of
      our
      management, including our principal operating 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 annual report and, based on their evaluation,
      our principal executive and financial officer have concluded that these controls
      and procedures are working. 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 operating and financial officer, as appropriate to allow timely
      decisions regarding required disclosure.





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
      annual 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.




ITEM
      8B.
      OTHER INFORMATION




PART
      III





ITEM
      9.
      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT; COMPLIANCE WITH SECTION
      16
      (a) OF THE EXCHANGE ACT.





The
      Board
      of Directors and executive officers of the Company and their respective ages
      are
      set forth in the table below. Also provided is a brief description of the
      business experience of each Director and executive officer during the past
      five
      years and an indication of directorships (if any) held by each Director in
      other
      companies subject to the reporting requirements under the Federal securities
      laws.





Name
            
            Age
            
            Position
                with the CompanyGary
                Herman
            
            43
            
            Chairman,
                DirectorMichael
                Rapisand
            
            48
            
            DirectorThomas
                Leonardis
            
            64
            
            DirectorSeth
                Lukash
            
            61
            
            DirectorJohn
                Marceca
            
            51
            
            Chief
                Operating OfficerTami
                Tharp
            
            49
            
            Chief
                Financial OfficerEdward
                Kroning
            
            47
            
            Secretary




23




ELECTION
      OF OFFICERS AND DIRECTORS





Management
      is vested in The Company' Board of Directors and officers. At each Annual
      Meeting, shareholders elect the Directors. Each newly elected Director holds
      office until the succeeding annual meeting and until the election and
      qualification of his or her successor. The officers of the Company hold office
      at the discretion of the Board of Directors. There was no annual meeting of
      shareholders in 2007.





BUSINESS
      EXPERIENCE





Gary
      Herman has been the Chairman of the Board since May 2005 and a director of
      the
      Company since August 2000. From August 2000 to May 2005 he was also the
      company’s Corporate Secretary. He is a Managing Member of Galloway Capital
      Management, LLC, as well as a Managing Director of Arcadia Securities, LLC.
      a
      New York based broker-dealer. Prior to this, he was an Associate Managing
      Director of Burnham Securities Inc., a New York based investment bank. Prior
      to
      joining Burnham, Mr. Herman was a managing partner of The Kingshill Group,
      Inc.,
      a merchant banking firm with offices in New York and Tokyo from 1993 to 1997.
      He
      is currently the chairman of the Board and Chief Executive Officer of Digital
      Creative Development Corporation as well as director of Shells Seafood
      Restaurants, Inc. He is a graduate of the State University of New York at
      Albany.





Michael
      J. Rapisand has been a director since October 2006. He has been the Chief
      Financial Officer and Secretary of Xplore Technologies Corp., a publicly traded
      manufacturer of rugged PC’s since August 2004. From 2002 through 2004, Mr.
      Rapisand was the Chief Financial Officer of TippingPoint Technologies, Inc,
      a
      publicly traded network-based security hardware manufacturer. From 2001 through
      2002 he was Chief Financial Officer and Vice President of Thinkwell Corporation,
      a private, development stage publisher of multi-media college textbook material.
      From 1997 through 2001, he held various positions as a Finance Director at
      Dell
      Corporation. Mr. Rapisand has also worked for PepsiCo, Inc. and KPMG. He
      graduated from the University of Texas at Austin and is an active Certified
      Public Accountant in the State of Texas.





Thomas
      Leonardis has been a director since November 2001. He is currently the President
      & CEO of Ember Industries, Inc., a contract manufacturing firm. He is a
      senior executive with experience with companies such as Staefa Control System
      and Time Energy. Management experiences span general management, sales and
      marketing, and operations. He has international business experience in Europe,
      Asia and Latin America. Mr. Leonardis graduated from Ohio Northern University
      and has completed Financial Management through Northwestern University as well
      as Executive Challenge through San Diego State University.





Seth
      Lukash has been a director since February 2007. Mr. Lukash has been CEO and
      a
      consultant to Food Automation Service Techniques, Inc. and Smart Commercial
      Kitchen, a manufacturer of appliance controls exclusively for the food service
      industry, since 2002. From 2001 through July 2002, Mr. Lukash served as
      Chairman, President and Chief Executive Officer of Progressive Software
      Inc., a designer and developer of software for the specialty retail and
      restaurant industries. From 1985 through 2001, Mr. Lukash served as Chairman,
      President and Chief Executive Officer of Tridex Corporation.  As
      of January 2007 to the present Mr. Lukash is employed by USi-Power Inc. in
      Corporate Business Development. Mr. Lukash received a B.A. in Finance from
      the
      University of Miami in 1968.





John
      Marceca, President and Chief Operating Officer. Mr. Marceca has been the
      President and Chief Operating Officer of the Company since May 2007. Mr. Marceca
      brings a twenty-eight year record of marketing, operations, quality assurance
      and engineering successes in the high-reliability industrial computer and VME
      electronic packaging industries to his position. Mr. Marceca has held positions
      of increasing responsibility from sales through president, and has been
      instrumental in both corporate startup and turnaround efforts. Most recently,
      Mr. Marceca was president of Dawn VME Products, a privately-owned manufacturer
      of VME and CompactPCI systems used in the military and industrial markets.
      Mr.
      Marceca holds undergraduate degrees in Business from St. John's University
      and
      Electronic Technology from New York Institute of Technology.




Tami
      Tharp **,** Chief
      Financial Officer. Ms. Tharp became Acting Chief Financial Officer in August,
      2007 after joining the Company in March 2007 as Controller. From 2005 to 2007,
      Ms. Tharp was the Chief Financial Officer of BP International, Inc. a publicly
      traded manufacturer of sporting goods equipment. From 2004 to 2005, Ms. Tharp
      was a CFO consultant providing accounting and finance services for various
      publicly held companies. From 2001 to 2004, Ms. Tharp was Chief Financial
      Officer of RMS Limited Partnerships, LLC a privately held company with over
      30
      subsidiaries. From 1998 to 2001 Ms. Tharp was the Corporate Controller of The
      UniMark Group, Inc., a wholly owned subsidiary of Del Monte Foods. Ms. Tharp
      graduated from the University of Texas at Dallas and is an active Certified
      Public Accountant in the State of Texas.





Edward
      Kroning, Corporate Secretary and Vice
      President of Operations. Mr. Kroning became Secretary in 2005 after joining
      the
      Company in 1998. A
      graduate of the University of Central Florida, Mr. Kroning came to the Company
      with over 14 years of experience in purchasing, inventory and material and
      production planning. Prior to his arrival at the Company, he was Director of
      Material and Planning at Tri-Tech Electronics, Inc., an industry leader in
      custom and build to print military and commercial interconnect
      systems.




24




BENEFICIAL
      OWNERSHIP REPORTING COMPLIANCE





Section
      16(a) of the Securities Exchange Act of 1934 requires the Company's officers,
      directors and persons who own more than ten percent of the Company's common
      shares to file reports of ownership with the SEC and to furnish the Company
      with
      copies of these reports. Based solely upon its review of reports received by
      it,
      or upon written representations from certain reporting persons that no reports
      were required, the Company believes that John Marceca, President and Chief
      Operating Officer and Tami Tharp, Chief Financial Officer did not timely file
      a
      Form 3 during the fiscal year ended October 31, 2007.




CODE
      OF
      ETHICS





The
      Code
      of Ethics is filed with the SEC as Exhibit 21.2. A copy of the Code of Ethics
      is
      available upon request, free of charge.




ITEM
      10.
      EXECUTIVE COMPENSATION





The
      following table provides certain summary information concerning the compensation
      paid or to be paid on an annualized basis to our Chief Operating Officer and
      Chief Executive Officer for all services to be rendered in all capacities to
      us
      during the fiscal years ended October 31, 2007, 2006, and 2005. We have no
      other
      executive officers whose cash and non-cash compensation exceeded
      $100,000.


Annual
                Compensation
            
            Long-Term
                CompensationName
                and Principal Position
            
            Fiscal
                Year
            
            Salary
                ($)
            
            Bonus
            
            Other
                Annual Compensation
            
            Restricted
                Stock Awards
            
            Restricted
                Option Awards
            
            All
                Other CompensationJohn
                Marceca (6)
            
            
            2007
            
            $
            80,000
            
            $
            -
            
            $
            6,600
            (3)
            $
            -
            
            $
            6,708
            (7)
            $
            -Daniel
                Bertram (1)
                (2) (5)
            
            
            2007
            
            
            86,000
            
            
            -
            
            
            4,200
            (3)
            
            -
            
            
            -
            
            
            -Daniel
                Bertram (1)
                (2) (5)
            
            
            2006
            
            
            144,000
            
            
            -
            
            
            7,200
            (3)
            
            25,000
            (4)
            
            -
            
            
            -Daniel
                Bertram (1)
                (2) (5)
            
            
            2005
            
            
            144,000
            
            
            -
            
            
            14,400
            (3)
            
            -
            
            
            -
            
            
            -





(1)
                Hired March 2001.(2)
                Promoted to CEO, June 2001.(3)
                Rent and car allowances.(4)
                Stock Bonus of 250,000 shares at $.10 per share in June
                2006(5)
                Resigned effective May 24, 2007(6)
                Promoted to President and Chief Operating Officer May
                2007.(7)
                Option awards for 175,000 shares were granted October 12, 2006. The
                options vest in three equal annual installments commencing as of
                October
                12, 2007 and are exercisable for a period of ten years from vesting.
                The
                options were valued at $0.115 per option as computed by Black Scholes.





The
      following table provides certain summary information concerning outstanding
      equity awards to our Chief Operating Officer, Chief Financial Officer, and
      other
      executive officers for the fiscal year ended October 31, 2007.





Outstanding
                Equity Awards at Year EndOption
                AwardsName
            
            Number
                of Securities Underlying Unexercised Options (#)
                Exercisable
            
            Number
                of Securities Underlying Unexercised Options (#)
                Unexercisable
            
            Option
                Exercise Price ($)
            
            Option
                Expiration DateJohn
                Marceca (1)
            
            
            58,333
            
            
            116,667
            
            $
            0.10
            
            
            October
                12, 2016Edward
                Kroning (1)
            
            
            58,333
            
            
            116,667
            
            $
            0.10
            
            
            October
                12, 2016Tami
                Tharp
            
            
            -
            
            
            -
            
            
            -
            
            
            -





(1)
      The
      options vest in two equal annual installments commencing as of October 12,
      2007
      and ending as of October 12, 2009.





25




INFORMATION
      CONCERNING THE BOARD OF DIRECTORS AND COMMITTEES THEREOF





DIRECTORS
      COMPENSATION





The
      Company pays each Independent Director $1,000 per fiscal quarter. The Board
      has
      periodically approved special compensation to Directors as services are
      performed. In that regard, Gary Herman received 250,000 shares valued at $0.10
      per share on June 14, 2006 for his work on the Company’s restructuring. The
      Company’s Directors are entitled to be reimbursed for reasonable and necessary
      expenses incurred on our behalf. The following table provides certain summary
      information concerning the compensation paid to each director for the fiscal
      year ended October 31, 2007.





Directors
                CompensationName
            
            Fees
                Earned ($)
            
            Stock
                Awards ($)
            
            Option
                Awards ($)
            
            Total
                $Gary
                Herman
            
            $
            14,200
            
            $
            25,000
                (1
            )
            $
            11,500
                (2
            )
            $
            50,700Thomas
                Leonardis
            
            
            9,000
            
            
            
            
            
            11,500
                (2
            )
            
            20,500Michael
                Rapisand
            
            
            9,400
            
            
            
            
            
            3,833
                (3
            )
            
            13,233Seth
                Lukash
            
            
            14,200
            
            
            
            
            
            11,667
                (4
            )
            
            25,867




(1)
            Stock
                Bonus of 250,000 shares at $.10 per share in June
                2006.


(2)
            Option
                awards for 100,000 shares were granted October 12, 2006. The options
                vested immediately and are exercisable for a period of ten years
                from
                vesting. The options were valued at $0.115 per option as computed
                by Black
                Scholes.


(3)
            Option
                awards for 100,000 shares were granted October 12, 2006. The options
                vest
                in three equal annual installments commencing as of October 12, 2007
                and
                are exercisable for a period of ten years from vesting. The options
                were
                valued at $0.115 per option as computed by Black
                Scholes.


(4)
            Option
                awards for 100,000 shares were granted February 8, 2007. The options
                vest
                in three equal annual installments commencing as of October 12, 2007
                and
                are exercisable for a period of ten years from vesting. The awards
                were
                valued at $0.35 per option as computed by Black Scholes.





AUDIT
      COMMITTEE





The
      Audit
      Committee of the Company is comprised of Thomas Leonardis and Michael Rapisand.
      Mr. Rapisand was appointed Chairman of the Audit Committee at the Board of
      Directors meeting in October of 2006. The Audit Committee members do not receive
      any fees for their services. None of the members of the Board of Directors
      are
      professionally engaged in the practice of accounting or auditing and with the
      exception of Mr. Rapisand are not experts in either of these fields or in
      auditor independence. Mr. Rapisand currently serves as the designated financial
      expert for the Committee.





The
      Company, acting through its management and Board of Directors, has the primary
      responsibility for the financial statements and reporting process, including
      the
      systems of internal accounting controls. Management is responsible for the
      preparation, presentation and integrity of the Company’s financial statements,
      the financial reporting process, and internal controls. Davis, Monk and Company,
      independent auditors engaged by the Company, are responsible for auditing the
      Company’s annual consolidated financial statements in accordance with the
      standards of Public Accounting Oversight Board (United States) and expressing
      an
      opinion on the conformity of those audited consolidated financial statements
      with generally accepted accounting principles in the United States.





COMPENSATION
      COMMITTEE





The
      compensation committee of the Company is comprised of Seth Lukash and Tom
      Leonardis. Mr. Lukash was appointed Chairman of the Compensation Committee
      at
      the Board of Directors meeting in February 2007. The Compensation Committee
      members do not receive any fees for their services. The Compensation Committee
      reviews the compensation of the executive officers of the Company and makes
      recommendations to the Board of Directors regarding such compensation.





EMPLOYMENT
      AGREEMENTS





On
      May
      24, 2007, Mr. Daniel Bertram resigned from his positions as a member of the
      Board of Directors, Chief Executive Officer and President of the Company. Mr.
      Bertram did not advise the Company that he had any disagreement with the Company
      over any policies (accounting or otherwise) of the Company.





Pursuant
      to an agreement with the Company dated May 24, 2007 the Company agreed to engage
      Mr. Bertram as an advisor and consultant for a period of six months from the
      date of this agreement. In consideration of this agreement the Company shall
      pay
      Mr. Bertram an amount of $74,160, which shall be payable in equal installments
      over six months in accordance with the Company’s normal payroll. The Company
      shall be responsible for the payment of any related insurance premiums for
      six
      months from the date of this agreement. Additionally, Mr. Bertram will receive
      an automobile allowance of $600 per month for six months from the date of this
      agreement. As of the date of this agreement Mr. Bertram shall be paid for
      accrued and unpaid vacation in the amount of $17,724 that shall be payable
      in
      two equal installments. In the event that during Mr. Bertram’s engagement as a
      consultant or within 30 days after the termination of Mr. Bertram’s engagement
      as a consultant, any order for purchase from the Company as identified by the
      agreement, the Company shall pay Mr. Bertram one percent (1%) of the gross
      amount collected from such order.




26




ITEM
      11.
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTER





The
      following table sets forth, as of January 17, 2008 the number and percentage
      of
      shares of the Company’s Common Stock owned beneficially, by class and on a
      combined basis, by (i) each current director, (ii) each executive officer,
      (iii)
      all executive officers and directors as a group, and (iv) each person who is
      known by us to own beneficially more than 5% of our Common Stock.





Except
      as
      otherwise indicated, the beneficial owners listed in the table have sole voting
      and investment powers with respect to the shares. The table below refers only
      to
      common stock.




Executive
                Officers & Directors
            
            
            
            Number
                of Shares
            
            Percent
                of SharesName
                of Beneficial Owner
            
            
            
            Beneficially
                Owned
            
            Beneficially
                OwnedGary
                Herman
            
            (2)
                (3) (5) (6)
            
            394,000
            
            1.55Edward
                Kroning
            
            (2)
                (4)
            
            183,535
            
            0.72John
                Marceca
            
            (2)
                (6)
            
            175,000
            
            0.69Michael
                Rapisand
            
            (2)
                (6)
            
            100,000
            
            0.39Thomas
                Leonardis
            
            (2)
                (6)
            
            100,000
            
            0.39Seth
                Lukash
            
            (2)
                (8)
            
            100,000
            
            0.39Tami
                Tharp
            
            (2)
            
            -
            
            -All
                Executive Officers & Directorsas
                a Group
            
            
            
            1,052,535
            
            4.13Beneficial
                Owners of More than 5%SG
                DMTI Capital, LLC
            
            (1)
                (7)
            
            13,052,049
            
            51.23Estate
                of Jacqueline Rosenthal
            
            
            
            1,538,614
            
            6.04Europa
                International Inc
            
            
            
            1,505,601
            
            5.91Goren
                Bros., LP
            
            
            
            1,589,792
            
            6.24Philip
                P. Sassower CRAT
            
            
            
            1,588,556
            
            6.23Triad
                Construction Concepts
            
            
            
            1,527,870
            
            6.00Total
                Beneficial Owners of more than 5%
            
            
            
            20,802,482





Notes:





(1)
            Giving
                effect to the post-split Warrant for 12,877,162 shares, the shareholder
                would own 50% of the common stock of the Company.


(2)
            The
                address of each of these persons is c/o DataMetrics Corporation,
                1717
                Diplomacy Row, Orlando, Florida
                32809.


(3)
            Includes
                4,000 shares of common stock issued to Digital Creative Development
                Corporation, of which Mr. Herman is Chairman and Chief Executive
                Officer.


(4)
            Includes
                486 shares of common stock jointly owned with Karen
                Kroning.


(5)
            Includes
                250,000 shares issued to Gary Herman on June 14,
                2006.


(6)
            Includes
                stock options issued to John Marceca, Gary Herman, Tom Leonardis
                and
                Michael Rapisand for 100,000 shares each of the Company’s common stock on
                October 12, 2006.


(7)
            Includes
                174,887 shares of common stock issued to SGD in lieu of the 4% annual
                cumulative dividend on the Series B Preferred Stock on December 15,
                2006.


(8)
            Includes
                stock options issued to Seth Lukash for 100,000 shares each of the
                Company
                common stock on February 8, 2007.





SECURITIES
      AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS:





Compensation
                Plan Category
            
            Number
                of Securities to be issued upon exercise of options
            
            Weighted-Average
                exercise price of outstanding options
            
            Number
                of securities remaining available for future issuance under equity
                compensation plansApproved
                by Shareholders
            
            
            1,890,000
            
            $
            0.11
            
            
            1,110,000




27




The
      Company does not know of any arrangements that may result in a change in control
      of the Company other than the warrant issued to SGD.





ITEM
      12.
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS





On
      December 6, 2006, the Company issued 300,000 shares of Series B Preferred Stock
      with a par value of $1.00 in the amount of $300,000 to a related party, SGD.
      As
      a result, an aggregate of 1,000,000 shares of shares of Series B Preferred
      Stock, the total amount of shares issuable under the Series B Preferred Stock
      and Warrant Purchase Agreement dated December 30, 2005, have been issued to
      SGD
      as of October 31, 2007. The proceeds of the sale of the 300,000 shares were
      used
      for general working capital.





On
      December 15, 2006 the Company issued 174,887 shares of Common Stock with a
      par
      value of $0.01 in the amount of $20,986 to a related party, SGD in lieu of
      the
      4% annual cumulative dividend on the Series B Preferred Stock that was due
      on
      November 30, 2006.





On
      September 4, 2007, the Company signed an agreement to increase the principal
      balance of the Secured Promissory Note from $500,000 to $570,000, a net increase
      of $70,000. The additional $70,000 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. The entire principal and any accrued and
      unpaid interest (which accrues at a rate of 10% per annum) is due to full in
      December 2008. The proceeds were used for general working capital.





On
      October 9, 2007, the Company signed an agreement to increase the principal
      balance of the Secured Promissory Note from $570,000 to $630,000, a net increase
      of $60,000. The additional $60,000 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. The entire principal and any accrued and
      unpaid interest (which accrues at a rate of 10% per annum) is due to full in
      December 2008. The proceeds were used for general working capital.





On
      October 30, 2007, the Company signed an agreement to increase the principal
      balance of the Secured Promissory Note from $630,000 to $730,000, a net increase
      of $100,000. The additional $100,000 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. The entire principal and any accrued and
      unpaid interest (which accrues at a rate of 10% per annum) is due to full in
      December 2008. The proceeds were used for general working capital.




PART
      IV





ITEM
      13.
      EXHIBITS OR REPORTS ON FORM 8-K





(a)
            Reports
                on Form 8-K





We
      filed
      the following current reports on Form 8-K during the fiscal year covered by
      this
      report:





i.
            On
                February 6, 2007, Rafik Moursalien resigned as Chief Financial Officer.
                Edward Kroning was appointed interim ChiefFinancial
                Officer.





ii.
            On
                May 24, 2007, Daniel Bertram resigned from all Officer & Director
                positions. John Marceca was appointed ChiefOperating
                Officer.





iii.
            On
                August 31, 2007 Edward Kroning resigned as interim Chief Financial
                Officer. Tami Tharp was appointed interimChief
                Financial Officer.





iv.
            On
                December 18, 2007, the Company executed a Master Revolving Note in
                favor
                of Comerica Bank in the aggregate principal amount of $500,000.





(b)
            Exhibits.
                The following exhibits are hereby filed with this
                report:





21.1
            Subsidiaries
                of the Registrant





1.
            MadeMYWay.Com
                (Became Inactive During the 2001 Fiscal Year and the Investment was
                written off.)


2.
            Peripheral
                Equipment Corporation




31.1
            Certification
                of Chief Operating Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.


31.2
            Certification
                of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.




28




ITEM
      14.
      PRINCIPAL ACCOUNTANT FEES AND SERVICES.




AUDIT
      FEES




These
      fees billed consist of professional services and expenses rendered for the
      audit
      of the Company’s financial statements and review of the interim financial
      statements included in quarterly reports and services that are normally provided
      in connection with statutory and regulatory filings or engagements. The
      aggregate fees billed for professional services rendered by Davis Monk and
      Company for the audit of the annual financial statements and the review of
      the
      quarterly financial statements was $48,621 for the audit of the October 31,
      2006
      annual financial statements and review of the quarters ended January 31, 2007,
      April 30, 2007 and July 31, 2007. The aggregate unbilled fees for the audit
      of
      the year ended October 31, 2007 is approximately $22,000.




AUDIT
      RELATED FEES




Consists
      of fees billed for assurance and related services that were related to the
      performance of the audit or review of the Company’s financial statements. There
      were no amounts billed to the Company by its independent registered accountants
      in fiscal year 2007.




TAX
      FEES




These
      fees billed consist of professional services rendered for tax compliance, tax
      advice, and tax planning. The amount billed to the Company by its independent
      certified public accountants and other tax consultants in fiscal year 2007
      were
      $4,600.




ALL
      OTHER
      FEES




These
      fees include attendance at meetings and advice rendered regarding contemplated
      actions. These fees totaled $3,300 in fiscal year 2007.




There
      were no fees billed by or paid the Company’s independent registered certified
      public accountants in fiscal 2007 in connection with products and services
      other
      than the services reported above.




PRE-APPROVAL
      POLICY FOR AUDIT SERVICES





The
      Company's Audit Committee has responsibility for the approval of all audit
      and
      non-audit services before the Company engages an accountant. All of the services
      rendered to the Company by Davis Monk and Company for the fiscal years ended
      October 31, 2007 and 2006 were pre-approved by the Audit Committee before the
      engagement of the auditors for such services. The Company and the Audit
      Committee are working with the Company's legal counsel to establish formal
      pre-approval policies and procedures for all future engagements of the Company's
      accountants. The Company's pre-approval policy will expressly provide for the
      annual pre-approval of all audit, audit-related and all non-audit services
      proposed to be rendered by the independent auditor for the fiscal year, as
      specifically described in the auditor's engagement letter, such annual
      pre-approval to be performed by the Audit Committee.




29




DATAMETRICS
      CORPORATION




SIGNATURES





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




Dated:January
              25, 2008DATAMETRICS
                CORPORATION*/s/
              John Marceca*John
              MarcecaChief
              Operating Officer




*/s/
              Tami Tharp*Tami
              TharpChief
              Financial Officer





Pursuant
      to the requirements of the Securities and Exchange Act of 1934, this report
      has
      been signed below by the following persons on behalf of the Registrant and
      in
      the capacities and on the dates indicated:





Dated:  January
      25, 2008,





DATAMETRICS
      CORPORATION




Name
              
              Title*/s/
                  Gary Herman*
              
              DirectorGary
                  Herman*/s/
                  Michael Rapisand*
              
              DirectorMichael
                  Rapisand*/s/
                  Thomas Leonardis*
              
              DirectorThomas
                  Leonardis*/s/
                  Seth Lukash*
              
              DirectorSeth
                  Lukash




30




**OFFICER’S
      CERTIFICATE**


**PURSUANT
      TO SECTION 302***





I,
      John
      Marceca, Chief Operating Officer, certify that:





1.
      I have
      reviewed this annual report on Form 10-KSB of DataMetrics Corporation





2.
      Based
      on my knowledge, this annual report does not contain any untrue statement of
      a
      material fact or omit to state a material fact necessary to make the statements
      made, in light of the circumstances under which such statements were made,
      not
      misleading with respect to the period covered by this annual report.





3.
      Based
      on my knowledge, the financial statements, and other financial information
      included in this annual report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the registrant
      as
      of, and for, the periods presented in this annual report.





4.
      The
      registrant’s other certifying officers and I are responsible for establishing
      and maintaining disclosure controls and procedures (as defined in Exchange
      Act
      Rules 13a-14 and 15d-14) for the registrant and have:





a)
            designed
                such disclosure controls and procedures to ensure that material
                information relating to the registrant, including its consolidated
                subsidiaries, is made known to us by others within those entities,
                particularly during the period in which this annual report is being
                prepared;





b)
            evaluated
                the effectiveness of the registrant’s disclosure controls and procedures
                as of a date within 90 days prior to the filing date of this annual
                report
                (the “Evaluation Date”); and





c)
            presented
                in this annual report our conclusions about the effectiveness of
                the
                disclosure controls and procedures based on our evaluation as of
                the
                Evaluation Date;





5.
      The
      registrant’s other certifying officers and I have disclosed, based on our most
      recent evaluation, to the registrant’s auditors and the audit committee of
      registrant’s board of directors (or persons performing the equivalent
      functions):





a)
            all
                significant deficiencies in the design or operation of internal controls
                which could adversely affect the registrant’s ability to record, process,
                summarize and report financial data and have identified for the
                registrant’s auditors any material weaknesses in internal controls;
                and





b)
            any
                fraud, whether or not material, that involves management or other
                employees who have a significant role in the registrant’s internal
                controls.





6.
      The
      registrant’s other certifying officers and I have indicated in this annual
      report whether or not there were significant changes in internal controls or
      in
      other factors that could significantly affect internal controls subsequent
      to
      the date of our most recent evaluation, including any corrective actions with
      regard to significant deficiencies and material weaknesses.





7.
      The
      annual report fully complies with the requirements of Section 13(a) or 15(d)
      of
      the Securities Exchange Act of 1934; and the information contained in the Report
      fairly presents, in all material respects, the financial condition and result
      of
      operations of the Company.




Date:
      January 25, 2008




*/
      s /
      John Marceca*





John
      Marceca,


Chief
      Operating Officer









I,
      Tami
      Tharp, Chief Financial Officer, certify that:





1.
      I have
      reviewed this annual report on Form 10-KSB of DataMetrics Corporation.





2.
      Based
      on my knowledge, this annual report does not contain any untrue statement of
      a
      material fact or omit to state a material fact necessary to make the statements
      made, in light of the circumstances under which such statements were made,
      not
      misleading with respect to the period covered by this annual report.





3.
      Based
      on my knowledge, the financial statements, and other financial information
      included in this annual report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the registrant
      as
      of, and for, the periods presented in this annual report.





4.
      The
      registrant’s other certifying officers and I are responsible for establishing
      and maintaining disclosure controls and procedures (as defined in Exchange
      Act
      Rules 13a-14 and 15d-14) for the registrant and have:





a)
            designed
                such disclosure controls and procedures to ensure that material
                information relating to the registrant, including its consolidated
                subsidiaries, is made known to us by others within those entities,
                particularly during the period in which this annual report is being
                prepared;





b)
            evaluated
                the effectiveness of the registrant’s disclosure controls and procedures
                as of a date within 90 days prior to the filing date of this annual
                report
                (the “Evaluation Date”); and





c)
            presented
                in this annual report our conclusions about the effectiveness of
                the
                disclosure controls and procedures based on our evaluation as of
                the
                Evaluation Date;





5.
      The
      registrant’s other certifying officers and I have disclosed, based on our most
      recent evaluation, to the registrant’s auditors and the audit committee of
      registrant’s board of directors (or persons performing the equivalent
      functions):





a)
            all
                significant deficiencies in the design or operation of internal controls
                which could adversely affect the registrant’s ability to record, process,
                summarize and report financial data and have identified for the
                registrant’s auditors any material weaknesses in internal controls;
                and





b)
            any
                fraud, whether or not material, that involves management or other
                employees who have a significant role in the registrant’s internal
                controls.





6.
      The
      registrant’s other certifying officers and I have indicated in this annual
      report whether or not there were significant changes in internal controls or
      in
      other factors that could significantly affect internal controls subsequent
      to
      the date of our most recent evaluation, including any corrective actions with
      regard to significant deficiencies and material weaknesses.





7.
      The
      annual report fully complies with the requirements of Section 13(a) or 15(d)
      of
      the Securities Exchange Act of 1934; and the information contained in the Report
      fairly presents, in all material respects, the financial condition and result
      of
      operations of the Company.




Date:
      January 25, 2008





*/
      s /
      Tami Tharp*





Tami
      Tharp,


Chief
      Financial Officer




*The
      introductory portion of paragraph 4 of the Section 302 certification that refers
      to the certifying officers’ responsibility for establishing and maintaining
      internal control over financial reporting for the company, as well as paragraph
      4(b), have been omitted in accordance with Release No. 33-8545 (March 2, 2005)
      because the compliance period has been extended for small business issuers
      until
      the first fiscal year ending on or after July 15, 2007.










**INDEX
                TO EXHIBITS**




**Exhibit
                Number**
            
            **Description**21.1.
            
            Subsidiaries
                of the Registrant.31.1.
            
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.31.2.
            
            Certification
                of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.