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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB

                                   (Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

                   For the Fiscal Year Ended October 29, 2000

OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

              For the Transition Period From-_________to-_________

                          Commission File Number 0-8567

                             DATAMETRICS CORPORATION

  -----------------------------------------------------------------------------
                    (Exact name of Small Business Registrant)

      Delaware                                          95-3545701
      --------                                          ----------
(State or other jurisdiction of                        (I.R.S. Employer
Incorporation or organization)                       Identification No.)

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

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class                 Name of each exchange on which registered
-------------------                 -----------------------------------------
Common Stock, .01 par value         Nasdaq Over the Counter Bulletin Board

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 Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements

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incorporated by reference in Part IV of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

State Issuer's revenues for its most recent fiscal year:   $2,844,000
                                                          -------------

State the aggregate market value of the voting stock held by non-affiliates of
the Registrant (based on the closing price of such stock as reported by the Over
the Counter Bulletin Board) on February 7, 2001: approximately $3,204,010.

State the number of shares outstanding of the Registrant's Common Stock ("Common
Stock"), as of the latest practicable date: 20,512,227 shares of Common Stock as
of February 7, 2001.

PART I

ITEM 1.  BUSINESS.

     This report contains certain statements of a forward-looking nature
relating to future events or the future performance of Datametrics Corporation
("Datametrics" or the "Company"). Prospective investors are cautioned that such
statements are only predictions and that actual events or results may differ
materially. In evaluating such statements, prospective investors should
specifically consider various factors identified in this report, including,
without limitation, that Department of Defense ("DoD") contracts are subject to
termination without cause, competitive factors and pricing pressures.

     Fiscal 2000 marked a change in the management and corporate direction of
Datametrics. Company revenues declined over the past six years from about $25.2
million in 1994 to $2.8 million in 2000. Stock value also declined from a high
of $11.75 per share in 1995 to $0.06 per share on August 18, 2000 when the
Company accepted the resignation of its Chairman and Chief Executive Officer.
The Company ended its fiscal year 2000 with a stock price of $0.11 per share on
October 27, 2000.

     On-going losses and revenue reductions continued to impair the Company's
liquidity and cash resources during fiscal 2000. In January 2000, the Company
announced the discontinuance of the manufacture of printers and computer
controllers for military defense clients while continuing its military spare
parts and repair services. With this announcement, the Company terminated
approximately 30 employees.

     Based upon the expectation of new funding and the prospect of income from
the sale of its military business, customer purchases of Condor(TM) Thermal
Transfer Printers (the "Condor Printer") and supplies, and revenue from it
subsidiary, MadeMyWay.com, Inc.(TM) ("MadeMyWay"), the Company redirected its
efforts toward developing and promoting its four-color Condor Printers and
MadeMyWay website business. However, the Company was unable to sell its military
business or raise sufficient funding to implement its new business plan.

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     In March 2000, the Company sold 600,000 shares, or 12%, of common stock in
MadeMyWay to an outside investor, affiliated with the Company's current
Chairman, Bruce Galloway, for $1.2 million. Two years after closing, the
investor has the right to convert its common shares of MadeMyWay into preferred
shares of the Company under certain circumstances as defined in the Stock
Purchase Agreement. Subsequently, the Company sought additional funding from Mr.
Bruce Galloway and certain of his co-investors.


     The Company's revenues decreased with the loss of military sales. The
Company received some revenue from its repair business and printer consumables,
but revenue from spare parts declined.

     In April 2000, the Company delivered ten Condor Printers to 3M in
accordance with its Global Alliance Agreement (the "Global Agreement"). In
fiscal 2000, 3M's purchase and contractual payments generated about $700,000 in
revenue for the Company; in addition, the state of Iowa adopted the Condor(TM)
printing technology, as part of the 3M license plate processing system, to print
its regulated plates. However, the Company was unable to realize any further
commercial and industrial sales for its Condor Printer and its one-color
Harrier(TM) printers (the "Harrier Printer") other than its sale to 3M for
regulated license plate printing.

     The Company did place a Condor Printer at a commercial sign printing beta
site during this period; however, the Company uncovered a number of technical
difficulties during beta testing. In addition, Datametrics encountered
resistance from prospective Condor Printer buyers due to its price and lack of
graphic user interface ("GUI") functionality because neither of the DmC
Industrial Imaging Systems thermal transfer printers were CE certifiable, the
Company was precluded from selling or shipping them to customers in the European
Union.

     By the last fiscal quarter of 2000, the Company resolved the commercial
Condor Printer's technical difficulties and subsequently sold two Condor
Printers during the first quarter of fiscal 2001.

     In addition, despite significant investments of both capital and human
resources, the Company was not able to launch MadeMyWay in fiscal 2000. This,
combined with the inability of internet companies to attract capital during the
latter three-quarters of 2000 adversely affected the Company's prospects of
raising outside capital. However, during July to November 2000, the Company was
able to secure short term bridge loans. In January 2001, this same group of
investors secured financing for the Company to restructure its debt. (See
discussion under Liquidity and Capital Resources page 15.)

     In early September 2000, Mr. Vincent J. Cahill, the newly appointed Chief
Executive Officer, and the new Datametrics management team, after a
re-examination of the Company's operations, concluded that the military market
was potentially profitable, and therefore, recommended, and the Board
authorized, the Company's re-entry into the military and airline markets. The
Company restructured and expanded its military marketing and sales efforts, and
staff and management communicated its re-entry into this market. In
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addition, the Company revived efforts to develop new products for these markets.

     Datametrics separates its activities into three business units: DmC Rugged
Systems (Military/Airlines), DmC Industrial Imaging Systems
(Industrial/Commercial), and its internet subsidiary, MadeMyWay.


     As a result, during the last quarter of fiscal 2000, Datametrics secured a
number of significant military contracts for its printers and computer
controllers. Since August 2000, DmC Rugged Systems (Military/ Airlines) division
has steadily increased its order backlog to $1.3 million as of October 29, 2000
of $1.8 million. The Company has also reduced its turnaround production time
while reducing product defects. The Company continues to fulfill its contracts
on or ahead of schedule.

     To meet growing demand, during the first quarter of fiscal 2001,
Datametrics expanded its repair and customer service staff. The Company also
adjusted its repair pricing structure to insure profitable operation. The
Company estimates that over 15,000 Datametrics printers and computer products
are currently in use around the world. Management projects that the Company's
repair business for fiscal 2001 will significantly exceed that of fiscal 2000.

     To increase sales, management has reduced the price of a fully equipped
Condor Printer. Moreover, it has developed a preliminary version of its new
graphic user interface software (the "GUI software") that enables efficient
operator training and increases ease of use. The Company is about to enter beta
testing of this printer. In addition, DmC Industrial Imaging Systems has
developed the 3300(TM) Printer( the "3300 Printer") -- a CE certifiable,
ruggedized industrial printer. The 3300 Printer can rapidly print (900 square
feet per hour) outdoor, durable images with variable information on both
flexible plastic or paper media. The Company has scheduled shipment of both the
GUI software and 3300 Printer for April 2001. Management projects that it will
sell 40 to 50 Condor Printers and 3300 printers in fiscal 2001 will show
significant increase compared to fiscal 2000.

     DmC Industrial Imaging Systems is also developing and collaborating with
other companies to develop handling and finishing equipment for use with Condor
and 3300 Printers, including unwinders, rewinders, die cutters and laminators.
DmC Industrial Imaging Systems sells its printers, software and supplies
directly and through distributors.

     In November 2000, Datametrics hired Mr. Donald Newman as its Chief
Technical Officer to oversee and direct the construction and implementation of
the Datametrics and MadeMyWay websites. In January 2001, it hired Ms. Heidi
James as Vice President of Marketing. Ms. James will focus on the commercial
development of MadeMyWay. Management is currently arranging for order
fulfillment operations at a number of locations in North America.

     The Company will require additional equity or subordinated debt financing
to meet its obligations and fund operations during 2001. Management anticipates
that the Company will begin to operate with a positive cash flow from operations
by the end of fiscal year 2001. The Company's business units will likely attain
profitability at different times during 2001. Inasmuch as MadeMyWay requires
greater business development than either DmC Rugged Systems or DmC Industrial
Imaging Systems, it may not attain profitablity until early in fiscal 2002.

     The Company is continuing ongoing discussions with investors about equity
and/or subordinated debt financing. The Company is continuing to seek capital to
meet the short-term funding requirements necessary for day-to-day operations
during the organization's restructuring as well as long-term funding

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necessary for continued research and product development. There can be no
assurance that the Company will be successful in obtaining additional equity
or subordinated debt financing or, if agreed to, that the financing will be
completed.

General

     Datametrics has two divisions -- DmC Rugged Systems and DmC Industrial
Imaging Systems -- and one majority-owned subsidiary -- MadeMyWay.com, Inc. DmC
Rugged Systems designs, develops, manufactures and sells rugged printers,
computers, computer peripherals, workstations and supplies for military,
airline, transportation and other demanding environment applications. DmC
Industrial Imaging Systems designs, develops, manufactures, licenses and sells
high-speed multi- and single-color printers, peripherals, software and computer
controllers. MadeMyWay is a start-up internet-facilitating company. It provides
a marketing mechanism for internet companies and product customization,
personalization and order fulfillment.

     The Company's product line includes printers, printer/plotters and
ruggedized computers and workstations with diverse capabilities ranging from
stringent military specifications to varying commercial standards. The Company
pioneered the development of high-speed, non-impact printers for tactical
military applications. At present, ruggedized printers remain the Company's core
product line, and the U.S. government (or the prime contractors to the U.S.
government) remains its largest source of revenue. Building from this base, the
Company has developed and manufactured other high-performance, high-reliability
electronics communications equipment for aerospace, defense, industrial and
commercial markets.

     On June 3, 1998, the Company announced the Global Agreement with the
traffic control materials division of the 3M. This long-term alliance
encompasses worldwide markets served by the 3M Company ("3M"or the "3M Company")
in the transportation safety industry. The agreement provides for the Company to
manufacture, service and support its Condor Printers and Harrier Printers for
the 3M Company. The Condor industrial print engine is currently the only printer
that is part of 3M's digital imaging system that 3M customers use to produce
license plates. The 3M Company is the world's leading supplier of reflective
materials for the transportation safety industry. The Global Agreement covers
applications in regulated vehicle license plate markets and other potential
traffic safety applications. The Condor Printer currently prints all of Iowa's
vanity and standard state license plates. 3M is negotiating the placement of
Condor license plate printing systems at other license plate manufacturing sites
in the future. 3M has indicated that it plans to install four to six systems at
four locations each year for the next three years.

     3M and the Company amended their original agreement in June 2000 and
January 2001. The June 2000 amendment limited 3M's exclusivity to regulated
license plates; it also relieved 3M of its obligation to purchase ten Condor
printers by May 2001 in exchange for a payment of $180,000. The January 2001
amendment increased 3M's maintenance payment per installation location from
$10,000 to $60,000. The Global Agreement, as amended, permits 3M to sell its
printers for regulated license plate applications. The Company believes that the
Global Agreement could result in significant revenues to Datametrics over the
next several years, but has anticipated greater revenue from this agreement than
it has yet realized.

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     In January 2000, previous management discontinued the manufacture of
products for military clients, while continuing its military spare parts and
repair business. It focused on producing and promoting its Condor and Harrier
Printers and developing MadeMyWay as an internet-based subsidiary of the Company
engaged in the fulfillment of customized and personalized apparel, textiles and
specialty imprinted products aimed at the business-to-business e-commerce
market. Datametrics hired outside consultants to assist in the sale of the
military business and to identify prospective buyers for the military business.
After new management assumed control of the Company, it reviewed the military
business's potential, pricing and prospects and determined that re-entry into
the military market was advisable.

     The Company closed Datametrics' research and development facility in
Calabasas, California in July 2000 and consolidated research and development
activity in the Company's Orlando, Florida plant. The Company plans to open a
marketing and service center in California during 2001 to address the needs of
customers in the US, Canadian West, Mexico and Central America.

DEFENSE PRODUCTS

     The Company has designed, developed, manufactured and sold military
specification ("mil-spec") and ruggedized computers, workstations and printers
for use in DoD applications. Products sold by the Company into the DoD markets
can be categorized into three basic groups: mil-spec printers, ruggedized
computers, and ruggedized printers. For the fiscal years ended October 29, 2000
and October 31, 1999, approximately 47% and 54%, respectively, of the Company's
revenues were derived from DoD business, which includes contractors with U.S.
government contracts as well as the DoD itself.

     Mil-spec products are designed specifically to meet military requirements
and must meet the stringent requirements for operation in adverse environments,
including shock, vibration, extreme temperatures and, in some cases, nuclear
radiation. Being so designed, these products are more reliable and significantly
more expensive than ruggedized or industrial products (products designed for
benign environments as are experienced in commercial applications). Industrial
products can be used in selected military environments and are significantly
less expensive than the mil-spec products. The broader intermediary category
includes the ruggedized products which are generally configured to operate in
some adverse environments, but do not meet full mil-spec requirements.

MILITARY PRINTERS

     The Company manufactures a wide range of printers, which are categorized as
either mil-spec or ruggedized. These printers utilize thermal printing, impact
printing and laser printing technologies. These printers are purchased and
utilized by the DoD as well as by companies and organizations, which
manufacture, sell or use data processing or data communications systems that
require "hard copy" printouts. The Company's products are incorporated into
these systems. The military printers are more reliable than conventional
commercial printers and are designed to work in severe environmental
applications. The design and component selection allow the Company's printers to
withstand certain adverse effects of dirt and grime, corrosion, droppage,
bullets, moisture, extremes in hot and cold temperature, and in some cases,


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nuclear radiation. In connection with the U.S. government military peripheral
standardization programs, the DoD has approved and assigned nomenclature
(military identification) to standard computer peripherals for its defense
systems. Several of the Company's printers have been included in this
standardization program, enabling the armed services to select the Company's
printers for new systems without incurring the expense of developing new printer
documentation for each system. The Company believes that the inclusion of the
Company's printers in this standardization program influenced the purchase of
its printers on several defense programs.

     The Company's high-resolution thermal printers utilize a thermal direct
imaging method of printing. In the past, printers utilizing the thermal printing
process generally could not meet the specifications required in certain rigorous
environments. Embracing technological improvements, thermal printers can now be
built to operate in adverse environments while providing quiet and reliable
printing operations. The Company has developed a low cost impact printer as well
as a ruggedized laser printer, which are targeted at the low end of the severe
environment market. These ruggedized products utilize commercial components,
some industrial (high-reliability, military rated) components, and are encased
in a rugged case to withstand moderately severe environments.

     The Company has experienced the highest sales volume of full mil-spec
printers with its DmC 1600 printer/plotter. These printers are used for the U.S.
Navy's Tactical Flag Command Center ("TFCC"). The TFCC system provides the hard
copy data utilized by the Fleet Commander when tactical decisions are required
during crisis situations. The TFCC system is proposed for most of the Navy's
nuclear super aircraft carriers and cruisers. In addition, the DmC 1600's are
used for the U.S. Navy standard display consoles that are utilized on virtually
every fighting ship in the fleet. This printer is qualified for the Navy's
rigorous environmental standards. A special version of the DmC 1600 printer is
being used for the U.S. Army REGENCY NET secure communications systems, the U.S.
Navy's on-board anti-submarine warfare training program, and the MILSTAR
Communications Satellite Program, the DoD's global communications system.

     The Company's DmC 1900 Model, a high resolution color printer/plotter, also
is used by the U.S. Navy. This product line utilizes the thermal transfer
process to produce high-resolution, full color images on plain paper. The
thermal transfer technology used in the DmC Series 1900 differs from the direct
imaging thermal process in that it uses plain paper and a multi-colored ribbon
instead of direct imaging paper. These products provide between 40,000 and
90,000 pixels (picture elements) per square inch and up to 16,000,000 colors,
shades or tones. This printer is used by the U.S. Navy for utilization within a
number of Aegis subsystems. The military color printer market has been slow to
develop due to cost considerations; however, the Company has developed a new
lower cost ruggedized printer which it believes should enjoy higher sales.

RUGGEDIZED COMPUTERS

     The Company's ruggedized products combine environmental and mechanical
engineering technology with computer technology to produce products that perform
identically to commercial counterparts, but are able to operate in adverse
environments. The Company offers ruggedized versions of computer devices and
peripherals encased in shock, vibration and temperature resistant

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housing for products of equipment manufacturers such as Digital Equipment
Corporation, Hewlett-Packard Company, Silicon Graphics Inc., and Sun
Microsystems Inc. This process often requires the Company to design and
manufacture cases, controls, backplanes and power supplies. These products
require much shorter development and testing periods than mil-spec products. As
such, these products allow the military to deploy state-of-the-art computer
technology rapidly, at a price greatly reduced from full mil-spec systems. These
timing and price factors are responsive to current U.S. government trends.

SIGNIFICANT CUSTOMERS AND MATTERS CONCERNING DOD BUSINESS

     Most of the customers for the Company's products are the DoD and prime
contractors under programs funded by the DoD. For the fiscal years ended October
29, 2000 and October 31, 1999, direct and indirect DoD business represented
approximately 47% and 54%, respectively, of the Company's revenues. 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 involve 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 much as a ten-year period, the Company's share of the
budget for any major program is relatively small.

     In the fiscal year ended October 29, 2000, the Company's three largest
customers in sales, 3M - 25%, U.S. Government - 23%, and Computing Devices
Canada - 18%, accounted for an aggregate of 66% of total Company sales. The loss
of any one of these customers could have a material adverse impact on the
results of operations and financial condition of the Company.

     In the fiscal year ended October 31, 1999, the Company's three largest
customers in sales, Computing Devices Canada - 36%, Lockheed Martin - 22% and
U.S. government - 11%, accounted for an aggregate of 69% of total Company sales.
The loss of any one of these customers could have a material adverse impact on
the results of operations and financial condition of the Company.

     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 renegotiation and competition for the available DoD business.

     However, despite past forecasts to the contrary, the Company sees a
reversal in the trend of diminishing DoD budget forecasts. The Company's DoD
related contracts provide for 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.

HIGH-SPEED COLOR DIGITAL PRINTER

     In fiscal 1994, the Company began an intensive program to develop a
high-speed color digital printer for the short-run production printer market.
After significant development and marketing costs, coupled with limited

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market success, the Company in October 1996 idled and subsequently ceased all
manufacture and marketing of its CYMax product line to permit a comprehensive
strategic and operational feasibility study of its overall concurrent transfer
imaging ("CTI") technology and its potential applications. Following the
completion of the strategic and operational feasibility study, the Company
planned to introduce a family of five industrial and government/ defense
high-speed concurrent thermal transfer printers in July 1997. The Company's
projected family of medium and wide format printers included the Harrier
Printer, the Condor I(TM) and the Condor Printer II(M) for industrial customers,
and the Cobra I(M) and Cobra II(M) (the "Cobra Printer") for government/defense
customers. Datametrics built Harrier and Condor Printers for 3M and Condor
Printers for commercial/industrial customers. It has not built any Cobra
Printers. Datametrics is currently developing a 3300 series f printers. The 3300
series printers have been designed as a CE certifiable four-color concurrent
thermal transfer printer for the European commercial/industrial market. The
Harrier and Condor series of print engines are robust, rugged, high-performance
printers which incorporate a wide range of Datametrics' newly-developed
technological capabilities in the area of thermal transfer printing.

     The Company's Global Agreement with 3M represents a long-term alliance
which encompasses all markets worldwide served by 3M in the transportation
safety industry. This agreement provides for the Company to manufacture, service
and support its Condor and Harrier industrial print engines for 3M. Initially,
the Condor and Harrier industrial print engines will become part of 3M's digital
imaging system that 3M customers use to produce license plates. 3M Company is
the world's leading supplier of reflective materials for the transportation
safety industry. The Global Agreement covers applications in the vehicle license
plate market and other potential traffic safety applications.

CERTAIN MARKET CONSIDERATIONS

     The markets served by the Company are characterized by rapid technological
advances, downward price pressure in the marketplace as technologies mature,
changes in customer requirements and frequent new product introductions and
enhancements. The Company's business requires ongoing research and development
efforts and expenditures, and its future success will depend on its ability to
enhance its current products, reduce product costs and develop and introduce new
products that keep pace with technological developments in response to evolving
customer requirements. The Company's failure to anticipate or respond adequately
to technological developments could result in a loss of anticipated future
revenues and impair the Company's competitiveness.

SERVICE

     Pursuant to maintenance agreements, repair orders or warranty provisions,
the Company generally services its printers with its own employees at its
facility. In-house, non-warranty repairs and maintenance service provided 9% and
3% of the Company's sales in fiscal 2000 and 1999, respectively. For both
military and commercial products, the Company's standard warranty period is
ninety days, although longer warranty periods are available at customer request
for an additional charge.

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     Sales of spare parts for the Company's products accounted for 29% and 24%
of fiscal 2000 and 1999 revenue, respectively. The Company also sells
documentation, such as handbooks, operational manuals, schematics and other
technical data to assist its customers in maintaining their own equipment.

BACKLOG

     The Company's backlog of funded orders not yet recognized as revenue at
October 29, 2000 and October 31, 1999 was approximately $1,303,000 and
$2,559,000, respectively. The entire backlog as of October 29, 2000 is expected
to be delivered during the fiscal year ending October 28, 2001.

SOURCES OF SUPPLY

     The Company is generally not dependent upon any one supplier for any raw
material or component which it purchases, and there are available alternative
sources for such raw materials and components. The Company is currently
dependent, however, on certain OEM suppliers for components used in its
ruggedized computer devices and peripherals. The Company has year-to-year
renewable supply agreements with these suppliers, which have been renewed in
prior years. In the event any of these contracts are not renewed, however, the
Company's business would be materially and adversely impacted because the
Company would have to purchase similar components upon substantially less
favorable terms and conditions.

COMPETITION

     The Company competes in each of its target markets with other companies,
many of which have substantially greater financial, technical, marketing,
distribution and other resources than the Company. The principal competitive
factors in the markets in which the Company participates are image quality,
product performance and price.

INTELLECTUAL PROPERTY RIGHTS

     It is the Company's policy 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 products. The Company has been granted two
U.S. patents relating to its high-speed color digital printer technology. The
Company also has several U.S. patent applications pending relating to its
high-speed color digital printer. There can be no assurance, however, that any
patents will be granted pursuant to these various applications in the U.S. and
abroad.

     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, patents, patent
applications, and other proprietary know-how have significant value, changing
technology makes the Company's future success dependent principally

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upon its employees' technical competence and creative skills for continuing
innovation.

RESEARCH AND DEVELOPMENT ACTIVITIES

     The Company is involved in both Company-sponsored and customer-sponsored
research and development. In the latter case, customers contract directly for
such activities. The customer-sponsored research and development primarily
consist of non-recurring engineering costs relating to production contracts. In
addition to design technology, this non-recurring engineering includes
development of maintenance and operator manuals, drawings, reliability and
maintenance analysis, technical design audits and data required to support field
repairs. Such costs do not qualify as research and development costs as defined
by Financial Accounting Standards Board Statement No. 2, and accordingly, have
not been disclosed as such in the Company's financial statements.

EMPLOYEES

     The Company employed 49 persons on a full-time basis as of October 29, 2000
and 59 persons on February 4, 2001, compared to 93 persons on a full-time basis
as of October 31, 1999. A union does not represent any of the Company's
employees nor is the Company subject to a collective bargaining agreement. The
Company's considers relations with its employees to be good.

OTHER MATTERS

     The business of the Company is not seasonal.

     The Company's manufacturing operations are subject to various federal,
state and local laws, including those restricting or regulating the discharge of
materials into the environment, or otherwise relating to the protection of the
environment. The Company is not involved in any pending or threatened
proceedings which would require curtailment of, or otherwise restrict, its
operations because of such regulations, and compliance with applicable
environmental laws has not had a material adverse effect on the business,
financial condition or results of operations of the Company.

     In December 1997, the Company purchased a 43,000 square foot facility in
Orlando, Florida for $899,000. In connection with the acquisition of this
property, the Company obtained a mortgage loan in the amount of $975,000, which
included approximately $76,000 to be used for building improvements. The Company
completed its move to Florida during February 1998.

     Datametrics was incorporated in California in October 1962 and was
reincorporated in Delaware in April 1987. The Company's corporate offices are
located at 1717 Diplomacy Row, Orlando, Florida 32809 with its accounting
offices located at 25B Hanover Road, Florham Park, New Jersey 07932.

ITEM 2. PROPERTIES.

     The Company's operations are conducted from a 43,000 square foot
manufacturing facility in Orlando Florida, which the Company purchased in
December 1997 (See Item 1. Other Matters).

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     The Company closed its 6,600 square foot facility located in Calabasas,
California in July 2000.

     The Company leased a 1,000 square foot office at 345 Seventh Avenue, New
York, New York in January 2001 for its MadeMyWay marketing and development
operations. The lease is for a six-month term through July 2001.

     The Company leased a 150 square foot office in Waynesboro, Pennsylvania in
November 2000 to serve its CEO, marketing and public relation efforts. The
Company leases this space on a month to month basis.

     The Company leases a 5,400 square foot office in Florham Park, New Jersey,
which currently houses the Company's accounting department. Its five year lease
expires in March 2003. The Company has notified the landlord of its intention to
vacate this property in the near future.

     Management believes that its facilities are suitable and adequate for the
Company's current needs.

ITEM 3. LEGAL PROCEEDINGS.

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

     In April 1998, the owner of the Woodland Hills, CA, premises formerly
occupied by the Company sued for the balance of all rent due through the end of
the then existing lease agreement plus damages. In March 1999, the Company
entered into a Mutual Release and Settlement Agreement wherein the Company paid
a total of $850,000 in cash and issued 150,000 shares of Common Stock to the
owner. The Company has agreed to register the shares of Common Stock, and under
certain circumstances, the Company will issue additional shares of Common Stock
to the extent that the market price of the Common Stock falls below certain
levels. Since the minimum amount guaranteed of $375,000 in Common Stock by the
Company exceeded the Market Value of the Common Stock issued by the Company, the
Common Stock has been valued at $2.50 per share. Under the terms of the
Agreement, the additional shares required to be issued is approximately 2.7
million shares, which shares have not been issued as of October 29, 2000.

     Four former officers of the Company (the "Former Officers"), whose
employment relationships with the Company terminated in part as a result of the
Company's restructuring in October 1996, sought severance benefits from the
Company. On January 13, 1997, three of the Former Officers sued the Company in
the Superior Court of the State of California for Los Angeles County, in order
to enforce payment of severance benefits under certain agreements, each dated as
of October 7, 1996, between each Former Officer and the Company (collectively,
the "Severance Agreements"). The fourth Former Officer sued the Company in
response to the Company's cross-complaint. The Former Officers sought damages
from the Company based upon the Severance Agreements and an alleged implied
promise not to terminate the employment of the Former Officers with the Company
without good cause. On September 28, 1998, a California trial court upheld the
enforceability of the Former

                                                                              12
<PAGE>

Officers' severance agreements and the Former Officers requested entry of a
judgment in the approximate amount of $1,200,000 plus interest and costs. The
Company appealed the judgment and in September 1999, the California Court of
Appeal reversed the judgment in favor of the Former Officers and awarded the
Company its costs on appeal. Later, the California Supreme Court denied the
Former Officers' petition for review of the appellate decision. In July 2000,
pursuant to a Mutual Release and Settlement Agreement, the Former Officers
agreed to pay $150,000 to the Company in settlement of all claims.

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

         None.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.

     Datametrics's Common Stock had been listed on the American Stock Exchange
(Symbol "DC") from July 1988 through June 2000, at which time it became listed
on Over The Counter Bulletin Board (Symbol "DMTR"). The high and low sales
prices for the Common Stock are set forth in the following table.

Fiscal 2001 Quarter Ended                 High              Low
-------------------------                 ----              ---
January 28..........................    $0.2969           $0.0781


Fiscal 2000 Quarter Ended                 High              Low
-------------------------                 ----              ---
January 30..........................    $1.7500           $0.9375
April 30............................    $1.1250           $0.5000
July 30.............................    $0.6875           $0.7000
October 29..........................    $0.3300           $0.0550


Fiscal 1999 Quarter Ended                 High              Low
-------------------------                 ----              ---
January 24.........................     $2.1250           $0.9375
April 25...........................     $1.8125           $1.1250
July 25............................     $1.5000           $0.8125
October 31.........................     $1.9375           $0.9375


     There were approximately 746 stockholders of record as of October 29, 2000.

     No cash dividends have been paid to Common Stockholders since the Company
was founded, and the Company does not intend to do so in the foreseeable future.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

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

                                                                              13
<PAGE>

RESULTS OF OPERATIONS

     Fiscal Year 2000 Compared With Fiscal Year 1999:

     Sales for the year ended October 29, 2000 were $2,844,000, a decrease of
$5,716,000 or 69% compared with sales of $8,560,000 in the prior fiscal year.
The decrease in sales is attributable to the Company's decision to withdraw from
the military defense business, although that decision has now been reversed.

     Cost of sales for fiscal 2000 was $4,863,000 (171% of sales); a decrease of
$229,000 or 5% compared with $5,092,000 (60% of sales) for the prior fiscal
year. Cost of sales decreased slightly despite a significant decrease in sales
compared to the prior fiscal year because of lower gross margin product mix as
well as the Company functioning at a lower capacity than the previous year.

     During fiscal 2000, the Company recorded a write down of its inventory of
$1,450,000 due to changes in business direction. During fiscal year 1999, the
Company recorded a $2,000,000 write down of its military inventory related to
its decision to withdraw from the military defense business.

     Selling, general and administrative expenses for the year ended October 29,
2000 were $2,699,000 (95% of sales) a decrease of $1,990,000 or 42%, compared
with $4,689,000 (55% of sales) for the same period in the prior fiscal year. The
decrease is due to lower administrative and support staff expenses throughout
the Company

     In the prior year the Company incurred lease settlement expenses of
$1,225,000. There was no such expense in the current period.

     Net interest expense amounted to $1,747,000 for the year ended October 29,
2000 compared with net interest expense of $1,259,000 for the prior year. This
increase is due to higher outstanding borrowings and higher amortization of
original issue discount from warrants issued in connection with certain
borrowings.

     The net loss for the year ended October 29, 2000 amounted to $7,897,000, an
increased loss of $1,179,000 compared with a net loss of $6,718,000 for the
prior fiscal year. The loss for the current period is attributable to the
Company's decision to withdraw from the military/defense business (which
decision has been reversed), write down of inventory and the start-up expenses
for MadeMyWay.

     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 29, 2000. Ultimate recognition of these tax
assets is dependent, to some extent, on the future revenue levels and margins.
It is the intention of management to assess the appropriate level for the
valuation allowance each quarter.

     The Company utilizes various computer software packages as tools in running
its operations. Management replaced in fiscal 2000 the existing Western Data
Systems software with a software package better suited to support its current
and future business needs. The new software is fully Y2K compliant.

                                                                              14
<PAGE>

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

Fiscal Year 1999 Compared With Fiscal Year 1998:

     Sales for the year ended October 31, 1999 were $8,560,000, an increase of
$818,000 or 11% compared with sales of $7,742,000 in the prior fiscal year.
Sales for fiscal 1999 were favorably impacted by increased sales of spare parts.

     Cost of sales for fiscal 1999 was $5,092,000 (60% of sales), a decrease of
$478,000 or 9% compared with $5,570,000 (72% of sales) for the prior fiscal
year. In fiscal 1999, cost of sales was favorably impacted by lower direct labor
costs in the Company's Florida manufacturing operation compared to the Company's
former manufacturing operation in California which was offset by higher general
overhead costs. Fiscal 1999 included a $2,000,000 writedown of inventory to
reflect the Company's plans to discontinue and sell its military defense
business. Additionally, fiscal 1999 inventory levels based on sales and usage
were substantially below the closing fiscal 1999 inventory balances. Such
unanticipated differential has been attributed to shrinkage, in the approximate
amount of $1,013,000 which may have been the result of theft, deterioration,
loss, disposal, clerical error and other factors in one or more periods. The
Company has not determined which of such factors, or to which extent each of
such factors, contributed to the total amount of shrinkage.

     Selling, general and administrative expenses as well as research and
development expenses for fiscal 1999 were $4,689,000 (55% of sales) a decrease
of $235,000 or 5%, compared with $4,924,000 (64% of sales) for the prior fiscal
year. The reduction in SG&A was the result of lower defense-related marketing
expenses and lower administrative and support staff expenses throughout the
Company. This reduction was partially offset by an increase in professional fees
for 1999.

     Net interest expense amounted to $1,259,000 for the year ended October 31,
1999 compared with net interest expense of $518,000 for the year ended October
25, 1998. This increase is due to higher outstanding borrowings.

     The net loss for the year ended October 31, 1999 amounted to $6,718,000, an
increase of $3,448,000 compared with net loss of $3,270,000 for the prior fiscal
year.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's principal capital requirements have been to fund working
capital needs, capital expenditures and the payment of long term debt. The
Company has formerly relied primarily on internally generated funds, private
placement proceeds, subordinated debt and other bank debt to finance its
operation. The Company's liquidity and cash resources are significantly impaired
by ongoing losses and significant reductions in revenues. The opinion of the
Company's auditors contains an explanatory paragraph regarding the Company's
ability to continue as a going concern.

     Net cash used in operations was $2.2 million and $5.2 million in 2000 and
1999, respectively. The change from 1999 to 2000 was due to ongoing

                                                                              15
<PAGE>

losses and revenue reductions primarily associated with the discontinuation of
the military business.

     Net cash provided by (used in) investing activities was $.8 million and
$(0.1) million in 2000 and 1999, respectively. The change from 1999 to 2000 was
the result of proceeds from sale of equity in a subsidiary and reduced
expenditures for property and equipment.

     Net cash provided by financing activities was $l.3 million and $5.2 million
in 2000 and 1999, respectively. The change from 1999 to 2000 was primarily due
to decreased net proceeds from the issuance of Common Stock and warrants and
long term debt offset by proceeds from bridge loans.

     The Company had substantial debt due for repayment during fiscal 2000 and
2001, which debt cannot be repaid from cash or other proceeds from operations.
As a result, significant additional equity or other capital are required to meet
its debt obligations and satisfy operating expenses in the short and long term.

     In March 2000, the Company sold 600,000 shares, or 12%, of Common Stock in
MadeMyWay to an outside investor, affiliated with the Company's current
Chairman, for $1.2 million.

     In July 2000, the Company was in need of immediate financing. Mr. Bruce
Galloway, the current Chairman of the Company, and several co-investors supplied
additional funding on a short-term bridge loan basis of approximately $480,000
(the "Initial Bridge"). In connection with such financing on August 18, 2000,
the Board elected Mr. Galloway as Chairman of the Board and accepted the
resignation of Daniel P. Ginns as Chairman and Chief Executive Officer of the
Company. The new Board appointed Mr. Cahill as Chief Executive Officer on that
date. Subsequent to that initial round of financing, Mr. Galloway and his
co-investors have provided additional bridge loan financing which, together with
the Initial Bridge, amounted to $1,305,000 (the "Bridge Financings").

     In August 2000, the Company was in default under its senior bank facility
in the principal amount of $1,496,140, under certain 10% Subordinated Notes in
the aggregate principal amount of $3,524,000 and in December 2000 under certain
12% Subordinated Convertible Secured Notes in the aggregate principal amount of
$2,835,607 (such amounts as of December 31, 2000). Although (as described below)
the terms of such aggregate debt have been modified and the defaults waived, the
Company expects that such aggregate debt can be repaid in whole or in part only
from the proceeds of additional financings of its business or that of its
subsidiaries, the sale of some or all of its interests in MadeMyWay or other
subsidiaries, or from the proceeds of sale of its common stock, directly or
through the conversion of outstanding warrants or other rights to purchase
common stock.

     Mr. Galloway leads an investment group, DMTR LLC ("DMTR"), which has
provided Datametrics with operating capital and funding to rebuild operations,
to repay outstanding obligations and strategic expertise for reorganizing and
restructuring its indebtedness. DMTR, a New York limited liability company,
consists of seven investors, including Mr. Galloway, who had previously provided
$1,125,000 of the $1,305,000 bridge loan financings.

                                                                              16
<PAGE>

     The Company's senior secured bank facility with Branch Banking & Trust
Corporation (the "Bank") in the amount of $1,496,140 (the "Senior Bank Loan")
was in default in August 2000. The Bank drew on a standby letter of credit
posted by Roy and Carl Doumani, as guarantors, in full satisfaction of the
Company's obligations to the Bank and assigned the loan documents and collateral
to the Doumanis. DMTR has satisfied all obligations under those loan documents
owing to the Doumanis, and DMTR has taken an assignment of the loan documents
and the collateral securing that loan. In addition, DMTR has repaid all of the
Bridge Financings in the aggregate amount of $1,305,000 plus interest thereon
and taken an assignment of the loan documents evidencing the Bridge Financings
and an assignment of the collateral securing the Bridge Financings.

     Effective January 31, 2001, DMTR and the Company executed loan documents to
provide the Company with a line of credit in the maximum amount of $798,860 (the
"Line of Credit"). Accordingly, the Company (assuming a draw of the entire Line
of Credit) is obligated to DMTR in the aggregate amount of $3,600,000 (comprised
of $1,496,140 on the Senior Bank Loan, $1,305,000 on the Bridge Financings and
$798,860 on the Line of Credit) (subject to the agreement, described below, to
exchange a portion of the Bridge Financings for Common Stock of the Company).
The Line of Credit has a term of two years with interest (payable monthly) at
the Base Rate of Citibank, N.A. plus 100 basis points and is secured by all
assets of the Company, a pledge of the Company's stock in MadeMyWay and the
assets of MadeMyWay. To the extent such assets and stock are pledged to secure
the Senior Bank Loan and the Bridge Financings, the security for the Line of
Credit is subject to such prior security interests. The Company is also
obligated to make mandatory prepayments of the principal of the Line of Credit
on a monthly basis to the extent the Company has available cash in excess of
$200,000. Simultaneously with the closing of the Line of Credit, DMTR agreed to
modify the terms of the Senior Bank Loan and the Bridge Financings to conform
those terms to the terms of the Line of Credit. Therefore, the Senior Bank Loan
and the Bridge Financings mature on January 31, 2003, accrue interest (payable
monthly) at the Base Rate of Citibank N.A. plus 100 basis points and are subject
to the mandatory prepayment provision set forth in the Line of Credit. As
additional consideration for the financings provided by DMTR, the Company issued
a Warrant to DMTR to acquire up to 7,000,000 shares of the Common Stock of the
Company with an exercise price of $.125 per share, exercisable through January
31, 2007. The value of such warrants will be recorded as debt costs in fiscal
2001. DMTR has agreed to exchange $700,000 in principal amount of the Bridge
Financings for the issuance of 700,000 shares of the Company's Common Stock
(with demand registration rights), such number of shares determined on a
proposed post reverse stock split basis described below.

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

                                                                              17
<PAGE>

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

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

     The Company is also negotiating with the holders of the 12% Notes and the
Company has reached an agreement in principal, subject to the execution and
delivery of definitive documents, with such holders to exchange 1.1 shares of
the Company's Common Stock for each $1.00 in principal of the outstanding 12%
Notes. If the exchange is consummated, the holders of the 12% Notes will waive
all amounts owing in respect of the 12% Notes, whether of principal, interest,
premium or penalty.

      The Company seeks to effect the exchanges during the first quarter of
calendar 2001 on substantially the terms described above. Although the Company
has received commitments from a majority of the holders of the 10% Notes (87%
received as of February 13, 2001) and a majority of the holders of the 12% Notes
(74% received as of February 13, 2001), the closing of the exchanges is subject
to the execution and delivery of definitive documents and the amendment of the
Company's Certificate of Incorporation to increase the Company's authorized
capital and to effect a 1 for 20 reverse stock split. Further any holder may
accept or reject the proposed exchange as to his 10% Note or 12% note, as the
case may be, and preserve his claims under his Notes regardless of acceptance of
the exchange by any number of other holders. The Company is actively soliciting,
and anticipates successfully obtaining, the consents of stockholders for the
amendment and reverse stock split described above. In the unlikely event that
stockholder approval is not obtained for the amendment and stock split noted
above, the 10% and 12% Noteholders would retain their rights under the original
Notes, whether of principal, interest, premium or significant penalty. This
would have a material adverse effect on the financial position of the Company.

RECENT ACCOUNTING STANDARDS

                                                                              18
<PAGE>

     In November 1999, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 requires companies
to recognize all derivative contracts at their fair values, as either assets or
liabilities on the balance sheet. If certain conditions are met, a derivative
may be specifically designated as a hedge, the objective of which is to match
the timing of gain or loss recognition on the hedged derivative with the
recognition of (1) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk, or (2) the earnings effect
of the hedged forecasted transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the period of
change. SFAS No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999.

     Historically, the Company has not entered into derivative contracts either
to hedge existing risks or for speculative purposes. The adoption of this new
standard did not have an effect on the Financial Statements.

     In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin #101, "Revenue Recognition in Financial Statements." The
company's management has determined that the application of Staff Accounting
Bulletin #101 will not have a material impact on the Company's consolidated
financial statements.

     In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44 of Accounting Principles Board Opinion No. 25, "Accounting
for Certain Transactions Involving Stock Compensation," which, reduces the
exercise price of a fixed stock option award (otherwise known as repricing). The
adoption of this Interpretation did not impact the Company's consolidated
financial statements.


                                                                              19
<PAGE>

FORWARD LOOKING STATEMENTS--CAUTIONARY FACTORS

     Except for the historical information and statements contained in this
report, the matters set forth in this report are "forward looking statements"
that involve uncertainties and risks, some of which are discussed at appropriate
points in this report and the Company's other SEC filings, including the fact
that the Company has been engaged in supplying equipment and services to U.S.
government defense programs which are subject to special risks, including
dependence on government appropriations, contract termination without cause,
contract renegotiations and the intense competition for available defense
business.

ITEM 7. SELECTED FINANCIAL DATA.

     The financial statements are included as a separate section following the
signature page to this Form 10-KSB.

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

     There have been no changes in or disagreements with accountants on
accounting and financial disclosure in fiscal 1999 and fiscal 2000.

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS

     Management is vested in Datametrics' Board of Directors and officers. The
Board of Directors is divided into three classes with two members in Class I,
two members in Class II and two members in Class III. Each class is elected for
a term of three years. At each annual meeting, shareholders elect Directors to
succeed those Directors in the class whose term expires at that annual meeting.
Each newly elected Director holds office until the third 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 has been no annual meeting of shareholders in 2000.

     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       Title

Bruce R. Galloway          43       Chairman, Director
Vincent J. Cahill          53       Chief Executive Officer, Director
Cal Leone                  40       Chief Operating Officer, Director
Larry B. Silverman         57       Controller
Donald Newman              44       Chief Technology Officer
Gary L. Herman             36       Secretary, Director
Heidi James                36       Vice President of Marketing
Douglas S. Friedenberg     49       Director
Michael R. Planit          37       Director


                                       20
<PAGE>

BUSINESS EXPERIENCE

     BRUCE R. GALLOWAY has been Chairman of the Company since August 2000. Mr.
Galloway is currently a managing director in The Galloway Division at Burnham
Securities Inc., an investment bank based in New York. Prior to joining Burnham
in 1993, Mr. Galloway was a senior vice president at Oppenheimer & Company, an
investment bank and NASD Broker/Dealer based in New York, from 1991 through
1993. Mr. Galloway holds a B.A. degree in Economics from Hobart College and an
M.B.A. in Finance from New York University's Stern Graduate School of Business.
Mr. Galloway is Chairman of Digital Creative Development Corporation, Arthur
Treacher's Inc, and Digital Systems Group Inc. and a director of Waiter.com and
Comstar Interactive.

     VINCENT J. CAHILL has been Chief Executive Officer since August 2000; prior
to being appointed CEO, Mr. Cahill has been a Director of the Company since
April 1999. Since 1978 he has been a consultant to The Colorworks, a
screen-printing and graphic imaging firm. Since 1996 he has served as a
consultant to IT Strategies, a consulting company servicing the digital printing
industry. Mr. Cahill is also a member of Newhill Technologies, LLC, which has
pioneered development of digital technology for printing on ceramics and glass,
and since 1998 has worked with Specialty Materials and Graphic Solutions, a firm
which imports "thermo-weldable" printing materials. Mr. Cahill has written
extensively on digital printing and graphic imaging as a contributing editor to
Impressions Magazines and a writer for Screen Printing Magazine.

     CAL LEONE, Chief Operating Officer, has been a director since August 2000
and is a business development manager, engineer, consultant, and author with
more than 17 years of experience in various high-tech business sectors. He has
served as CEO of Graseby Optronics, a division of Graseby PLC, UK, an
international manufacturer of precision electro-optical instrumentation
specializing in color measurement systems and fiber-optic test equipment. He
joined Datametrics as the Engineering Manager in 1999.

     LARRY B. SILVERMAN is the Company's Controller. From 1991 to 1999, Mr.
Silverman was Controller of Shima Seiki U.S.A. Inc., headquartered in Cranbury,
New Jersey and from 1974 to 1991 was Treasurer of Teknika Electronics
Corporation in Fairfield, New Jersey.

     DONALD NEWMAN, Chief Technology Officer, is chartered with guiding the
Company's expansion into the e-business arena through its MadeMyWay subsidiary
as well as the initial growth of Internet accessibility of Datametrics customer
service and sales and marketing functions. An industry veteran with over 18
years of experience in software product development and product line management,
Mr. Newman will direct and manage the Datametrics IT team. Previously, he was a
co-founder of sonicnet.com in 1994, a leading music service on the Internet now
owned by MTV. Mr. Newman was also Product Manager for brandwizard.com and
developed applications for automated packaging graphics worldwide.

     GARY L. HERMAN has been a director of the Company since August 2000. Mr.
Herman is an Associate Managing Director in the Galloway Division at Burnham
Securities, Inc., an investment bank based in New York. 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. He is

                                                                              21
<PAGE>

currently on the Board of Directors of Arthur Treacher's, Inc., Comstar
Interactive, Inc. and the NYC Industrial Development Agency. He is also an
advisor to Digital Creative Development Corp.

     HEIDI JAMES, Vice President of Marketing, will spearhead marketing for the
Company's Industrial and MadeMyWay business units. In addition, she will
continue to expand marketing, product development and customer service for the
Company's revitalized Military business. Ms. James has over ten years experience
in selling and marketing product. Ms. James was previously Vice President for
Sales and Marketing with Circline, and Chief Operating Officer of
OurYearbook.com. Prior to these positions she was with several prestigious New
York based design firms.

     DOUGLAS S. FRIEDENBERG has been a director of the Company from October 1996
through June 2000 and from August 2000 to the present. Mr. Friedenberg has also
been President of Firebird Capital Management, a manager of hedge funds, since
1993. From July 1991 through March 1993, Mr. Friedenberg was the President of
Unicorn Capital Management, a hedge fund manager. Mr. Friedenberg is a Director
of Stratford Acquisition Corp., a company whose shares are listed on the OTC
Bulletin Board.

     MICHAEL R. PLANIT has been a director since August 2000. Mr. Planit has
been a consultant responsible for creating strategic solutions for marketing,
sales, and licensing aspects of companies across a variety of industries. From
1995-1999. Mr. Planit founded and was president of Creative Zone, Inc., a
novelty toy manufacturing company, and was instrumental in developing the
Company's products, implementing marketing and sales strategies, and
coordinating manufacturing operations. Mr. Planit is a graduate of Northeastern
University with degrees in finance and Marketing. Mr. Planit is a senior
committee member of the Pediatric Aids Foundation.

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 during fiscal 2000 all
filing requirements were met except as set forth below:





                                                                              22
<PAGE>

<TABLE>
<CAPTION>
                                                                                  Number of
                                                            Number of             Failures to
                                Number of Reports Filed     Transactions Not      File Required
Name and Principal Position     Late                        Timely Reported       Reports
---------------------------     --------------              -----------           ------------
<S>                            <C>                         <C>                   <C>
Bruce R. Galloway               0                           0                     0
Vincent J. Cahill               1(1)                        2                     1(2)
Cal Leone                       0                           1(2)(3)               1(2)(3)
Douglas S. Friedenberg          2                           2                     4(2)(3)
Gary L. Herman                  0                           0                     0
Michael R. Planit               0                           0                     0
Donald Newman                   0                           0                     0
Heidi James                     0                           0                     0
Headwaters Capital              0                           0                     0
</TABLE>

Notes:

(1)  Includes late filing of Form 3.
(2)  Includes failure to file Form 4 for fiscal 2000.
(3)  Includes failure for file Form 5 for fiscal 1999 and 2000.

ITEM 10. EXECUTIVE COMPENSATION

     The following table shows, for the fiscal year ended October 29, 2000, the
compensation earned by the current Chief Executive Officer of the Company,
three named executive officers, the former Chief Executive Officer and the
former Chief Operating Officer.



                                                                              23
<PAGE>


                           SUMMARY COMPENSATION TABLE
                               ANNUAL COMPENSATION

<TABLE>
<CAPTION>
                                                                         Long Term Compensation
                                                                         -----------------------
                                                                         Awards                        Payouts
                                                                         --------                      ---------
                                                                                         Securities
                                                                                         Underlying
                                                         Other           Restricted      Options and                   All Other
Name and                   Fiscal    Base                Annual          Stock Award(s)  Warrants      LTIP** Payouts  Compensation
Principal Position         Year      Salary      Bonus   Compensation    ($)             (#)           ($)             ($)
------------------         ----      --------    -----   ------------    -----------     ---------     -------         ------------
<S>                       <C>        <C>       <C>       <C>             <C>             <C>          <C>            <C>
Daniel P. Ginns (1)        2000      $ 251,197   -       $   15,000(a)   -               -             -               -
A.A. Maught (2)            2000      $  18,246   -       -               -               -             -               -
                                                         $66,000(b)

Vincent J. Cahill(3)       2000      $ 160,000   -       $ 3,125(a)      $12,400(5)      500,000       $86,800(7)      -
Cal Leone(4)               2000      $ 130,000   -       -               $ 5,500(6)      250,000       $10,000(8)      -
Larry B. Silverman         2000      $  85,000   -       -               -               -                             -

</TABLE>


<PAGE>


                     Option/SAR* Grants in Last Fiscal Year
                               (Individual Grants)

<TABLE>
<CAPTION>

                     Number of Securities       Percent of Total Options/SARs
                     Underlying Options/SARs    Granted to Employees in
Name                 Granted (#)                Fiscal Year                    Exercise or Base Price       Expiration Date
-----------------    -----------------          -----------------              -----------------------      ------------------
<S>                  <C>                        <C>                            <C>                           <C>
Vincent J. Cahill    500,000                    66%                            .062                         -
Cal Leone            250,000                    33%                             .10                         -
</TABLE>


*Stock Appreciation Rights (SARs) refers to SARS payable in cash or stock
including SARs payable in cash or stock at the election of the Company.

**LTIP means any plan providing compensation intended to serve as incentive for
performance to occur over a period longer than one fiscal year.






<PAGE>

(1)  Resigned August 2000.
(2)  Resigned November 1999.
(3)  Became employee, Chief Executive Officer, as of August 2000; consultant
     fees paid November 1999 through July 2000.
(4)  Became Chief Operating Officer as of August 2000; prior to that was
     Engineering Manager.
(5)  Award as part of employment compensation; valuation of $.62 per share.
(6)  Award as part of employment compensation; valuation of $.10 per share
(7)  Stock grants of 400,000 shares and stock options of 1,000,000 to be paid
     out over employment contract, valuation $.62 per share.
(8)  Stock grants of 100,000 shares and stock options of 500,000 to be paid out
     over employment contract, valuation $1.00 per share.
(a)  Directors' Fees.
(b)  Consultant Fees.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

     Options/SARs were granted to the following persons in the following amounts
in fiscal 2000:

        Vincent J. Cahill                  500,000
        Cal Leone                          250,000

AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/WARRANT VALUES

     The following table provides information with respect to the Named
Executive Officer regarding the exercise of options/SARs during the fiscal year
ended October 29, 2000 and unexercised options/Warrants held as of the end of
the fiscal year ended October 29, 2000.










<PAGE>


             Aggregated Option/SAR Exercises in Last Fiscal Year and
                            FY-End Option/SAR Values

<TABLE>
<CAPTION>
                                                      Number of Securities            Value of Unexercised In-the-
                     Shares Acquired   Value          Underlying Unexercised          Money Options/Warrants at
Name                 On Exercise (#)   Realized ($)   Options at October 29, 2000     October 29, 2000 ($)
---------------      -----------       ------------   ----------------------------    -------------------------------
                                                      Exercisable    Unexercisable    Exercisable        Unexercisable
                                                      -----------    -------------    -----------        -------------
<S>                  <C>               <C>            <C>            <C>              <C>                <C>
Vincent J. Cahill    -                 -              500,000
Cal Leone            -                 -              250,000

</TABLE>


           Long-Term Incentive Plans - Awards in the Last Fiscal Year

<TABLE>
<CAPTION>

                                                                            Estimated Future Payouts Under
                                                                            Non-Stock Price-Based Plans

                     Number of Shares,       Performance or Other Period    Threshold             Target             Maximum
Name                 Units or Other Rights   Until Maturation or Payout     ($ or #)              ($ or #)           ($ or #)
---------------      -----------             ------------                   -----------           -------------      -----------
<S>                  <C>                     <C>                            <C>                   <C>                <C>
Vincent J. Cahill    1,000,000(1)            2 years
Cal Leone              500,000(2)            2 years
</TABLE>





<PAGE>

Notes:
(1)  Stock grants of 400,000 shares and stock options of 1,000,000 to be paid
     out over employment contract, valuation $.62 per share.
(2)  Stock grants of 100,000 shares and stock options of 500,000 to be paid out
     over employment contract, valuation $1.00 per share.

DIRECTOR COMPENSATION

     All other Directors are entitled to receive a retainer fee of $3,125.00 per
quarter.

     In addition, each Director serving as chairman on any committee of the
Board of Directors is entitled to receive $1,600.00 for each committee meeting
attendance, and all other Directors who are committee members are entitled to
receive $800.00 for each committee meeting attendance.

     Pursuant to a written resolution of the Board of Directors, the Company has
agreed to issue 10,000 shares of Common Stock to each Director in lieu of fees
for committee participation. However, the Company has not issued any shares to
any Director during fiscal year 2000 in lieu of fees for committee participation
during each of the fiscal year, and the Company expects to continue issuing such
shares of Common Stock in the future. These shares of Common Stock are
restricted shares and may not be offered or sold unless registered under the
Securities Exchange Act of 1933, as amended, or pursuant to an exemption
therefrom.

EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS

     In August 2000, the Company entered into an employment agreement with Mr.
Cahill as Chief Executive Officer. This agreement terminates on August 18, 2003,
but automatically renews for additional one-year periods unless either party
gives thirty days notice prior to the expiration of the three-year-term. Under
this agreement, Mr. Cahill is paid an initial annual base salary of $160,000,
for each calendar year commencing with the calendar year beginning August 18,
2000, and the base salary under these agreements is adjusted by the greater of
3% or the percentage change in the Consumer Price Index for the year then ended.
The Company also will pay Mr. Cahill a base salary that is at least ten percent
more than any other employee to be adjusted as necessary. In addition to the
base salary, the Compensation Committee of the Board of Directors may pay a
performance-based bonus to Mr. Cahill of one percent of profit over $8 million.
Company sales over $8 million. The Company has the right to terminate
Mr. Cahill's employment without cause at any time, provided, however, that
Mr. Cahill shall be entitled to payment of his base salary for a period equal to
the greater of one year from the date of termination or the remainder of the
employment agreement and the Company shall continue to provide to such executive
(and each member of his immediate family) all benefits provided by the
employment agreement.

     In connection with his employment agreement, the Company granted Mr. Cahill
200,000 shares of Common Stock and options for 500,000 unrestricted, undiluted
shares at the closing share price listed on August 18, 2000 for Datametrics and
MadeMyWay. On each subsequent anniversary of his employment date, the Company
shall grant Mr. Cahill 200,000 shares and 500,000 options in the Company,
MadeMyWay and each subsidiary he is currently supervising.

     In September 2000, the Company entered into an employment agreement with
Mr. Leone as Chief Operating Officer. This agreement terminates on September 3,
2003, but automatically renews for additional one-year periods unless either
party gives thirty days notice prior to the expiration of the three-year term.
Under this agreement, Mr. Leone is paid an initial annual base salary of
$130,000, for each calendar year commencing with the calendar year beginning
September 3, 2000, and the base salary under these agreements is adjusted by the
greater of 3% or the percentage change in the Consumer Price Index for the year
then ended. The Company has the right to terminate


<PAGE>

Mr. Leone's employment without cause at any time, provided, however, that Mr.
Leone shall be entitled to payment of his base salary for a period equal to the
greater of one year from the date of termination or the remainder of the
employment agreement; and the Company shall continue to provide to such
executive (and each member of his immediate family) all benefits provided by the
employment agreement. In the event of a change of control, the Company shall pay
Mr. Leone 299% of the Chief Operating Officer's base salary, and the Company
shall continue to provide to such executive (and each member of his immediate
family) all benefits provided by the employment agreement.

     In connection with his employment agreement, the Company granted Mr. Leone
50,000 shares of Common Stock and options for 250,000 shares at the closing
share price listed on September 3, 2000 for Datametrics; on each subsequent
anniversary of his employment date, the Company shall grant Mr. Leone 50,000
shares and 250,000 options in the Company.

     On August 18, 2000, Daniel P. Ginns resigned as a Director, Chairman and
Chief Executive Officer of the Company and as a Director and Officer of
MadeMyWay, a subsidiary of the Company. Except for certain non-compete,
confidentiality and indemnification provisions that survive, Mr. Ginns' Amended
Employment Agreement with the Company was terminated. In exchange for the
cancellation of Warrants held by Mr. Ginns, the Company agreed to pay Mr. Ginns
$100,000 and issued to Mr. Ginns 500,000 shares of the Company's Common Stock.
Subject in all events to disposition restrictions under applicable securities
laws, Mr. Ginns may dispose of up to 125,000 of such shares of Common Stock in
any quarterly period. If Mr. Ginns disposes of fewer than 125,000 shares in any
quarter, he may in addition dispose of such shortfall in any subsequent quarter.

     The Company knows of no arrangement among Stockholders which may result in
a change of control of the Company.

ITEM 11. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

     The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of February __, 2000 by (I) each
person known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, (iii) each
executive officer of the Company, and (iv) all executive officers and directors
of the Company as a group.

<TABLE>
<CAPTION>
Beneficial Owner                         Number of Shares Beneficially Owned    Percent of Shares Beneficially Owned
--------------------                     -----------------------------------    ------------------------------------
<S>                                      <C>                                    <C>
Bruce R. Galloway                        389,700(11)                            1.9%
Vincent J. Cahill (1)                    711,874(9)                             3.5%
Douglas Friedenberg (1)                  825,756(3)                             3.7%
Cal Leone                                305,000(10)                            1.5*
                                         --------------                         -----

All Executive Officers
and Directors as a Group                 2,232,330                             10.6%

Headwaters Capital(4)                    2,000,000  (5)                         9.75%
Robert London (6)                        1,269,000                              6%
Parker Quillen (7)                       1,338,410 (8)                          6.5%
Daniel P. Ginns(1)                       530,000(2)                             2.5%
</TABLE>

Notes:

(1)  The addresses of each of these persons is c/o Datametrics Corporation, 25B
     Hanover Road, Suite 3305, Florham Park, New Jersey 07932.

(2)  Includes 500,000 shares of Common Stock issued in exchange for Warrants
     held by Mr. Ginns.

(3)  600,856 shares of Common Stock and 225,000 shares of Common Stock
     underlying warrants which includes (i) Firebird Overseas, Ltd. - 413,450
     shares of Common Stock (including 40,001 shares of Common Stock underlying
     warrants presently exercisable at $1.50 per share 62,250 shares of Common
     Stock underlying warrants presently exercisable at $1.10 per share, and
     112,500 shares of Common Stock


<PAGE>

     underlying convertible debentures presently convertible at $1.00 per share
     and (ii) Firebird Partners LP - 193,347 shares of Common Stock.

(4)  The address of Headwaters Capital is 220 Montgomery Street, Suite 500, San
     Francisco, California 94965.

(5)  Includes 1,000,000 shares of Common Stock underlying warrants exercisable
     at the lesser of $1.35 per share or a price based upon the average market
     price of the shares during the 20 days preceding the purchase.

(6)  The address of Robert London is 212 Aurora Drive, Montecito, CA 93108.

(7)  The address of Mr. Quillen is c/o Quilcap Corporation, 375 Park Avenue,
     Suite 1404, New York, New York.

(8)  Includes the holdings of each of the following, as to each of which Mr.
     Quillen exercises investment control: Little Wing LP - 711,552 shares of
     Common Stock underlying warrants presently exercisable at $1.50 per share;
     Little Wing Too LP - 76,818 shares of Common Stock underlying warrants
     presently exercisable at $1.50 per share; and Tradewinds Fund Limited -
     550,040 shares of Common Stock underlying warrants presently exercisable at
     $1.50 per share.

(9)  Includes 500,000 shares of Common Stock underlying options presently
     exercisable at $.06 per share.

(10) Includes 250,000 shares of Common Stock underlying options presently
     exercisable at $.10 per share.

(11) Includes 85,600 shares of Common Stock, 44,100 shares of Common Stock over
     accounts which Mr. Galloway has indirect beneficial ownership, and 10,000
     shares owned by Mr. Galloway's wife, Sara Herbert Galloway.

     The Company knows of no arrangement which may result in a change in control
of the Company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During the last two fiscal years, certain of Datametrics' executive
officers and Directors have engaged in transactions with Datametrics from time
to time. Except as set forth below, these transactions involved (i) the purchase
of Common Stock and Warrants to purchase Common Stock in connection with various
private placements on terms and conditions no different than those afforded to
other investors, or (ii) amounts not exceeding $60,000.

     On April 14, 1999, the Company borrowed $50,000 from Daniel P. Ginns, which
principal amount was repaid in full on April 15, 1999.

     On April 27, 1999, the Company borrowed $30,000, from a member of the
immediate family of Daniel P. Ginns, which principal amount was repaid in full
on April 28, 1999.

     On April 20, 1999, the Company borrowed $50,000 from Daniel P. Ginns, which
principal amount was repaid in full on May 24, 1999.

     On June 15, 1999, the Company borrowed $50,000 from Daniel P. Ginns, which
principal amount was repaid in full on August 2, 1999.

     In May 1999 the Company sold an aggregate 1,500,000 shares of Common Stock
at $1.00 per share to 3 investors for an aggregate purchase price of $1,500,000.
The investors were also issued 5-year Warrants to purchase up to an aggregate
1,500,000 shares of the Company's Common Stock. Headwater Capital purchased
1,000,000 of such shares, and received 1,000,000 of such warrants, which gave it
beneficial ownership of in excess of 5% of the Company's outstanding Common
Stock.

     Headwaters Capital exercised their warrants for 500,000 shares in September
2000, at an exercise price of $.1324 per shares for a total of

<PAGE>

$66,200. In November 2000, Headwaters Capital exercised their remaining warrants
for 500,000 shares at an exercise price of $.1323 for a total of $66,150.

     In March 2000, the Company sold 600,000 shares, or 12%, of Common Stock in
MadeMyWay to an outside investor, affiliated with the Company's current
Chairman, for $1.2 million. Two years after closing, the investor has the right
to convert its common shares of MadeMyWay into preferred shares of the Company
under certain circumstances as defined in the Stock Purchase Agreement.

     On August 18, 2000, Daniel P. Ginns resigned as a Director, Chairman and
Chief Executive Officer of the Company and as a Director and Officer of
MadeMyWay, a subsidiary of the Company. Except for certain non-compete,
confidentiality and indemnification provisions that survive, Mr. Ginns' Amended
Employment Agreement with the Company is terminated. In exchange for the
cancellation of Warrants held by Mr. Ginns, the Company agreed to pay Mr. Ginns
$100,000 and issue to Mr. Ginns 500,000 shares of the Company's Common Stock.
Subject in all events to disposition restrictions under applicable securities
laws, Mr. Ginns may dispose of up to 125,000 of such shares of Common Stock in
any quarterly period. If Mr. Ginns disposes of fewer that 125,000 shares in any
quarter, he may in addition dispose of such shortfall in any subsequent quarter.

     As described in Liquidity and Capital Resources under Management's
Discussion and Analysis, the Company's senior secured bank facility with Branch
Banking & Trust Corporation (the "Bank") in the amount of $1,496,140 (the
"Senior Bank Loan") was in default. The Bank drew on a standby letter of credit
posted by Roy and Carl Doumani, as guarantors, in full satisfaction of the
Company's obligations to the Bank and assigned the loan documents and collateral
to the Doumanis. An investment group headed by Bruce Galloway, DMTR, LLC, a New
York limited liability company ("DMTR"), has satisfied all obligations under
those loan documents owing to the Doumanis, and DMTR has taken an assignment of
the loan documents and the collateral securing that loan. In addition, DMTR has
repaid in December all of the Company's Bridge Financings in the aggregate
amount of $1,305,000 plus interest thereon and taken an assignment of the loan
documents evidencing the Bridge Financings and an assignment of the collateral
securing the Bridge Financings.

     Effective January 31, 2001, DMTR and the Company executed loan documents to
provide the Company with a line of credit in the maximum amount of $798,860 (the
"Line of Credit"). Accordingly, the Company (assuming a draw of the entire Line
of Credit) is obligated to DMTR in the aggregate amount of $3,600,000 (comprised
of $1,496,140 on the Senior Bank Loan, $1,305,000 on the Bridge Financings and
$798,860 on the Line of Credit) (subject to the agreement, described below, to
exchange a portion of the Bridge Financings for Common Stock of the Company).
The Line of Credit has a term of two years with interest (payable monthly) at
the Base Rate of Citibank, N.A. plus 100 basis points and is secured by all
assets of the Company, a pledge of the Company's stock in MadeMyWay and the
assets of MadeMyWay. To the extent such assets and stock are pledged to secure
the Senior Bank Loan and the Bridge Financings, the security for the Line of
Credit is subject to such prior security interests. The Company is also
obligated to make mandatory prepayments of the principal of the Line of Credit
on a monthly basis to the extent the Company has available cash in excess of
$200,000. Simultaneously with the closing of the Line of Credit, DMTR agreed to
modify the terms of the Senior Bank Loan and the Bridge Financings to conform
those terms to the terms of the Line of Credit. Therefore, the Senior Bank Loan
and the Bridge Financings mature on January 31, 2003, accrue interest (payable
monthly) at the Base Rate of Citibank N.A. plus 100 basis points and are subject
to the mandatory prepayment provision set forth in the Line of Credit. As
additional consideration for the financings provided by DMTR, the Company issued
a Warrant to DMTR to acquire up to 7,000,000 shares of the Common Stock of the
Company on a fully diluted basis with an exercise price of $.125 per share,
exercisable through January

<PAGE>

31, 2007. DMTR has agreed to exchange $700,000 in principal amount of the Bridge
Financings for the issuance of 700,000 shares of the Company's Common Stock
(with demand registration rights), such number of shares determined on a
proposed post reverse stock split basis described below.

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

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

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

     The Company is also negotiating with the holders of the 12% Notes and the
Company has reached an agreement in principal, subject to the execution and
delivery of definitive documents, with such holders to exchange 1.1 shares of
the Company's Common Stock for each $1.00 in principal of the outstanding 12%
Notes. If the exchange is consummated, the holders of the 12% Notes will waive
all amounts owing in respect of the 12% Notes, whether of principal, interest,
premium or penalty.

     The Company seeks to effect the exchanges during the first quarter of
calendar 2001 on substantially the terms described above. Although the Company
has received commitments from a majority of the holders of the 10% Notes and
from the holders of the 12% Notes, the closing of the exchanges is subject to
the execution and delivery of definitive documents and the amendment of the
Company's Certificate of Incorporation to increase the Company's authorized
capital and to effect 1 for 20 reverse stock split.

<PAGE>

Further any holder may accept or reject the proposed exchange as to his 10% Note
or 12% note, as the case may be, and preserve his claims under his Notes
regardless of acceptance of the exchange by any number of other holders.

     In September 2000, the Company advanced a total of $26,000 to and on behalf
of a related entity, which company is in involuntary bankruptcy proceedings. In
November 2000, the Company committed to advance an additional $51,000. The
Company intends to acquire certain assets of a related entity upon resolution of
the bankruptcy proceedings. A related party whose chairman is also the Company's
Chairman is both an investor in and creditor of this related entity.

     Bruce Galloway is the Chairman and Chief Executive Officer of Digital
Creative Development Corporation ("DCDC"). In March 2000, DCDC purchased 12% of
MadeMyWay for $1,200,000. DCDC invested $450,000 in and loaned $160,000 to a
related entity, which company is in involuntary bankruptcy. The total investment
and loan was fully reserved by DCDC as of their year-end June 30, 2000 as
disclosed in DCDC's 10-K. In November 2000, DCDC advanced $180,000 of $1,305,000
in bridge loans to the Company. Such amount has been repaid to DCDC.



<PAGE>


                                     PART IV

                             DATAMETRICS COPORATION
                  10-KSB for fiscal year ended October 29, 2000

(a)                 EXHIBIT LIST and DESCRIPTION OF EXHIBITS
-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Exhibit No.    Description
-----------    -----------
<S>             <C>

3.1            Restated Certificate of Incorporation, as
               currently in effect (incorporated by
               reference to Exhibit 3.1 to the Registrant's
               Form 8-K dated April 15, 1987).

3.2            Certificate of Designations, Preferences and
               Relative, Participating, Optional and Other
               Special Rights of Series B Preferred Stock
               and Qualifications, Limitations and
               Restrictions Thereof dated August 10, 1993
               (incorporated by reference to Exhibit 4.1 to
               Registrant's Form 8-K dated August 10,
               1993).

3.3            Bylaws as currently in effect (incorporated by reference to Exhibit 3.2 to
               Registrant's Form 10-K for the year ended October 28, 1990).

3.4            First Amendment to the Restated Bylaws,
               dated August 6, 1996 (incorporated by
               reference to Exhibit 3.0 to the Registrant's
               Form 8-K dated August 6, 1996).

4.1            Warrant issued to Daniel P. Ginns, dated November 13, 1996 (incorporated  by
               reference  to Exhibit 4.1 to the Registrant's Form SB-2/A dated September 17,
               1999).

4.2            7% Convertible Debenture Subscription Agreement dated as of July 24, 1998
               between the Registrant and the Investors named therein (incorporated by
               reference to Exhibit 4.1 to the Registrant's Form 8-K dated July 24, 1998).

4.3            Form of 7% Convertible Debenture (incorporated by reference to Exhibit 4.2 to
               the Registrant's Form 8-K dated July 24, 1998).

4.4            Registration Rights Agreement dated as of
               July 24, 1998 between the Registrant and the
               Investors named therein (incorporated by
               reference to Exhibit 4.3 to the Registrant's
               Form 8-K dated July 24, 1998).

4.5            Form of 10% Subordinated Note Subscription
               Agreement (incorporated by reference to
               Exhibit 4.4 to the Registrant's Form 8-K
               dated December 24, 1998.)

4.6            Form of 10% Subordinated Note (incorporated by reference to Exhibit 4.5 to the
               Registrant's Form 8-K dated December 24, 1998).

4.7            Form of Registration Rights Agreement
               (incorporated by reference to Exhibit 4.6 to
               the Registrant's Form 8-K dated December 24,
               1998).
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S>             <C>
4.8            Form of Common Stock Subscription Agreement
               (incorporated by reference to Exhibit 4.7 to
               the Registrant's Form 8-K dated December 24,
               1998).

4.9            Common Stock Purchase Agreement, dated May 7, 1999, by and among the
               Registrant and the Purchasers listed therein(incorporated by reference to
               Exhibit 4.1 to the Registrant's Form 8-K dated May 7, 1999).

4.10           Registration Rights Agreement, dated May 7,
               1999, by and among the Registrant and the
               Purchasers listed therein (incorporated by
               reference to Exhibit 4.2 to the Registrant's
               8-K dated May 7, 1999).

4.11           Form of Warrant (incorporated by Reference to Exhibit 4.3 to the Registrant's
               8-K dated May 7, 1999).

4.12           Form of Subscription Agreement between the Company and the subscribers
               listed  therein  for  12%  Convertible Subordinated Secured Notes Due July
               2000 (incorporated by reference to Exhibit 4.1 to the Registrant's 8-K dated
               August 2, 1999).

4.13           Form of Security  Agreement in connection  with 12% Convertible  Subordinated
               Secured  Notes  Due  2000 (incorporated  by  reference  to Exhibit 4.5 to the
               Registrant's 8-K dated August 2, 1999).

4.14           Form of Registration Rights Agreement in connection with 12% Convertible
               Subordinated Secured Notes Due July 2000 (incorporated  by  reference  to
               Exhibit 4.4 to the Registrant's 8-K dated August 2, 1999).

4.15           Form of 12% Convertible Subordinated Secured
               Note Due July 2000 (incorporated by
               reference to Exhibit 4.2 to the Registrant's
               8-K dated August 2, 1999).

4.16           Form of Warrant issued in connection with 12% Convertible Subordinated Secured
               Notes Due July 2000 (incorporated by reference to Exhibit 4.3 to the
               Registrant's 8-K dated August 2, 1999).

4.17           Warrant issued to Carl K. Doumani  (incorporated by reference to Exhibit 4.1
               to the Registrant's 8-K dated September 13, 1999).

4.18           Warrant issued to Roy Doumani (incorporated by reference to Exhibit 4.2 to the
               Registrant's 8-K dated September 13, 1999).

4.19           Form of Warrant issued to finder  (incorporated by reference to Exhibit 4.3 to
               the Registrant's 8-K dated September 13, 1999).

4.20           Warrant to purchase 7,000,000 shares of common stock issued to DMTR, LLC

4.21           Exchange Offering Statement dated February 8, 2001 in respect of the Company's 12% Subordinated
               Convertible Secured Notes.

4.22           Form of Letter of Acceptance relating to Exchange Offer to holders of the Company's 12% Subordinated
               Convertible Secured Notes.

4.23           Exchange Offering Statement dated February 8, 2001 in respect of the Company's 10% Subordinated Notes.

10.6           Security Agreement between the Registrant and Adrien A. Maught, Jr. dated as
               of August 12, 1997. (incorporated by reference to Exhibit 10.6 to the
               Registrant's Form SB-2/A dated September 17, 1999).

10.7           Loan Agreement with Branch Bank, dated as of
               August 20, 1999 (incorporated by reference
               to Exhibit 10.1 to the Registrant's 8-K
               dated September 13, 1999).

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>     <C>

10.8     Promissory Note payable to Branch Bank, dated as of August 20, 1999
         (incorporated by reference to Exhibit 10.2 to the Registrant's 8-K dated
         September 13, 1999).

10.9     Security Agreement and Addendum with Branch Bank, dated as of August 20, 1999
         (incorporated by reference to Exhibit 10.3 to the Registrant's 8-K dated
         September 13, 1999).

10.10    Form of Guarantee and Addendum of each of the guarantors of the Registrant's line of
         credit with Branch Banking and Trust Company (incorporated by reference to Exhibit 10.4
         to the Registrant's 8-K dated September 13, 1999).

10.11    Form of Secured Promissory Note for loan of $480,000.00 (incorporated by reference to
         Exhibit to 10.5 to the Registrant's Form 8-K filed on August 22, 2000).

10.12    Stock Pledge Agreement dated July 31, 2000 between the Company and Bruce Galloway (incorporated
         by reference to Exhibit to 10.6 to the Registrant's Form 8-K filed on August 22, 2000).

10.13    Irrevocable Proxy dated July 31, 2000 (incorporated by reference to Exhibit to 10.7 to the
         Registrant's Form 8-K filed on August 22, 2000).

10.14    Form of Secured Promissory Note for the Second Loan of $210,000.00 (incorporated by reference to
         Exhibit to 10.8 to the Registrant's Form 8-K filed on August 22, 2000).

10.15    Security Agreement dated August 18, 2000 between MadeMyWay and Bruce Galloway, as Collateral
         Agent (incorporated by reference to Exhibit to 10.9 to the Registrant's Form 8-K filed on
         August 22, 2000).

10.16    Pledge Agreement dated August 18, 2000 between the Company and Bruce Galloway, as Collateral
         Agent (incorporated by reference to Exhibit to 10.10 to the Registrant's Form 8-K filed on
         August 22, 2000).

10.17    Irrevocable Proxy dated August 18, 2000 (incorporated by reference to Exhibit to 10.11 to the
         Registrant's Form 8-K filed on August 22, 2000).

10.18    Assignment of Life Insurance as Collateral (incorporated by reference to Exhibit to 10.12 to
         the Registrant's Form 8-K filed on August 22, 2000).

10.19    Loan Agreement dated January 31, 2001 between the Company and DMTR, LLC.

10.20    Secured Promissory Note dated January 31, 2001 issued by the Company to DMTR, LLC.

10.21    Modification and Amendment Agreement dated January 31, 2001 between the Company and DMTR, LLC.

10.22    Modification and Amendment Agreement dated January 31, 2001 between the Company and DMTR, LLC

10.23    Exchange Agreement dated as of January 31, 2001 between the Company and DMTR, LLC.

10.24    Registration Rights Agreement dated as of January 31, 2001 between the Company and DMTR, LLC

10.25    Security Agreement dated January 31, 2001 between the Company and DMTR, LLC.

10.26    Security Agreement dated January 31, 2001 between the MadeMyWay.Com, Inc. and DMTR, LLC.

10.27    Pledge Agreement dated January 31, 2001 between the Company and DMTR, LLC.

10.24    Form of Letter of Acceptance relating to Exchange Offer to holders of the Company's 10% Subordinated
         Notes.

16.1     Letter of Ernst & Young LLP dated November 7, 1997 regarding its
         comments to the statements made by Registrant in Item 4 of Registrant's
         Form 8-K filed with the Securities and Exchange Commission on

(b) Reports on Form 8-K

1.       Form 8-K filed on August 10, 2000. Item 5. Other Events. Douglas S.
         Friedenberg resigned as director.

2.       Form 8-K filed on August 22, 2000. Item 5. Other Events. Daniel P.
         Ginns resigned as Chairman and Chief Executive Officer of Datametrics
         and as Director and Officer of MadeMyWay. Mr. Vincent Cahill appointed
         by Datametrics as Chief Executive Officer. John O'Leary resigned as
         Director. Mr. Galloway and affiliates provide a loan of $480,000
         secured by shares of MadeMyWay. Bruce Galloway, Gary Herman, Douglas
         Friedenberg and Michael Planit appointed to Board.

3.       Form 8-K filed on September 7, 2000. Item 5. Other Events. Cal Leone
         has been elected to the Board of Directors which is now comprised of
         six directors.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S>             <C>
         November 7, 1997 (incorporated by reference to Exhibit 16.1 to the
         Registrant's Form 8-K filed on November 7, 1997).

16.2     Letter of Deloitte & Touche LLP dated March 3, 1998 regarding its
         comments to the statements made by Registrant in Item 4 of Registrant's
         Form 8-K filed with the Securities and Exchange Commission on February
         25, 1998 (incorporated by reference to Exhibit 16.1 to the Registrant's
         Form 8-K/A filed on March 5, 1998).

16.3     Letter of Deloitte & Touche LLP dated May 8, 1998 regarding its
         comments to the statements made by Registrant in Item 4 of Registrant's
         Form 8-K filed with the Securities and Exchange Commission on April 30,
         1998 (incorporated by reference to Exhibit 16.1 to the Registrant's
         Form 8-K/A filed on May 21, 1998).

21.1     List of Subsidiaries.

99.1     The Datametrics Employee Savings Plan And The Trust Agreement Pursuant
         To The Datametrics Employee Savings Plan (incorporated by reference to
         Exhibit 28 to Registrant's Statement on Form S-8 filed on November 12,
         1985 SEC File No. 33-01469.

99.2     Amended and Restated 1993 Stock Option Plan of Datametrics Corporation
         (incorporated by reference to Exhibit 28.2 to Registrant's Form 10-K
         for the year ended October 31, 1993).

99.3     The 1986 Stock Option Plan of Datametrics Corporation, as amended
         (incorporated by reference to Exhibit 28.1 to Registrant's Registration
         Statement on Form S-8 filed on June 10, 1987, SEC File No. 33-14969 and
         Exhibit 28.5 to Registrant's Form 10-K for the year ended October 29,
         1988).

99.4     The 1982 Stock Option Plan of Datametrics Corporation, as amended
         (incorporated by reference to Exhibit 28.2 to Registrant's Registration
         Statement on Form S-8 filed on June 10, 1987, SEC File No. 33-14969).

99.5     The 1993 Directors' Option Plan of Datametrics Corporation
         (incorporated by reference to Exhibit 28.5 to Registrant's Form 10-K
         for the year ended October 31, 1993).

99.6     Datametrics Corporation Supplemental Executive Retirement Plan and
         Master Trust Agreement (incorporated by reference to Exhibit 28.6 to
         Registrant's From 10-K for the year ended October 30, 1994).

99.7     The 1995 Stock Option Plan of Datametrics Corporation (incorporated by
         reference to Exhibit 28.7 to Registrant's Form S-8 Filed May 30, 1996,
         SEC File No. 333-04815).
</TABLE>
<PAGE>

99.8     The Datametrics Corporation Employee Qualified Stock Purchase Plan
         (incorporated by reference to Exhibit 28.8 to Registrant's Form S-8
         filed on May 30, 1996, SEC File No. 333-04815).

99.9     Press Release (incorporated by reference to Exhibit 99.1 to
         Registrant's Form 8-K filed on August 18, 2000).

99.10    Press Release (incorporated by reference to Exhibit 99.2 to
         Registrant's From 8-K filed on August 18, 2000).

EXHIBIT 21.1

Subsidiaries of Small Business Issuer
-------------------------------------

MadeMyWay.Com, Inc, was organized as a Delaware corporation on January 21, 2000.
It is majority-owned by the Small Business Issuer and does business under the
name "MadeMyWay.Com"(TM)




<PAGE>

     SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Orlando,
State of Florida, on the 13th day of February, 2001.

                                                 DATAMETRICS CORPORATION

                                                 /s/ Vincent J. Cahill
                                                 -----------------------
                                                 Vincent J. Cahill
                                                 Chief Executive Officer

     Pursuant to the requirements of the Securities 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:



Name                           Title                         Date
------------                   -----------                   -----------



/s/ Vincent J. Cahill          Chief Executive Officer       February 13, 2001
----------------------
    Vincent J. Cahill

/s/ Larry B. Silverman         Controller                    February 13, 2001
----------------------
    Larry B. Silverman

/s/ Bruce R. Galloway          Chairman of the Board         February 13, 2001
----------------------
    Bruce R. Galloway

/s/ Gary L. Herman             Secretary, Director           February 13, 2001
----------------------
    Gary L. Herman

/s/ Douglas S. Friedenberg     Director                      February 13, 2001
----------------------
    Douglas S. Friedenberg

/s/ Cal Leone                  Director                      February 13, 2001
----------------------
    Cal Leone

/s/ Michael R. Planit          Director                      February 13, 2001
----------------------
    Michael R. Planit


<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                   Form 10-KSB

                                                                        Page

Consolidated Financial Statements

Report of Independent Certified Public Accountants...................... F-2

Consolidated Balance Sheet as of October 29, 2000....................... F-3

Consolidated Statements of Operations for the

fiscal years ended October 29, 2000 and October 31, 1999................ F-4

Consolidated Statements of Stockholders' Equity for the

fiscal years ended October 29, 2000 and October 31, 1999................ F-5

Consolidated Statements of Cash Flows for the

fiscal years ended October 29, 2000 and October 31, 1999................ F-6-7

Notes to the Consolidated Financial Statements.......................... F-8-24

                                       F-1


<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
Datametrics Corporation

     We have audited the accompanying consolidated balance sheet of Datametrics
Corporation and Subsidiaries as of October 29, 2000, and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
the years ended October 29, 2000 and October 31, 1999. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 present fairly, in
all material respects, the financial position of Datametrics Corporation and
Subsidiaries at October 29, 2000, and the results of their operations and their
cash flows for the years ended October 29, 2000 and October 31, 1999 in
conformity with generally accepted accounting principles.

     The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
2 to the financial statements, the Company continues to experience significant
losses from operations and, at October 29, 2000, has a working capital
deficiency and a stockholders' deficit. These matters raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regards to these matters are described in Notes 2 and 10. The accompanying
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.


                                                     /s/ BDO SEIDMAN, LLP



New York, New York
January 16, 2001

(except as to Notes 8 and 10
which are as of February 13, 2001)

                                       F-2
<PAGE>

                    DATAMETRICS CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                October 29, 2000
                      (In thousands, except for share data)

<TABLE>
<CAPTION>
<S>                                                                                <C>
ASSETS
Current assets:
    Cash                                                                                 $28
    Accounts receivable, net of allowance for doubtful accounts of $50 (Note 1)           73
    Inventories, net  (Notes 1 and 4)                                                  2,199
    Prepaid expenses and other current assets                                            327
                                                                                      ------
      Total current assets                                                             2,627
Property and equipment, at cost: (Note 1)
    Land (Note 8)                                                                        420
    Building and improvements (Note 8)                                                 1,042
    Machinery and equipment                                                            2,780
    Furniture, fixtures and computer equipment                                         2,715
                                                                                      ------
                                                                                       6,957
    Less: Accumulated depreciation                                                    (4,947)
                                                                                      ------
      Net property and equipment                                                       2,010
    Inventories, net (Notes 1 and 4)                                                   2,272
    Other assets (Note 9)                                                                931
                                                                                      ------
                                                                                      $7,840
                                                                                      ======
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
    Current maturities of long-term debt (Notes 8 and 10)
    Note payable (Notes 7 and 10)                                                     $7,407
    Accounts payable                                                                   1,496
                                                                                         663
    Accrued expenses                                                                     999
                                                                                      ------
      Total current liabilities                                                       10,565
    Long-term debt, less current maturities (Notes 8 and 10)                             899
    Loan payable (Notes 9 and 10)                                                        877
                                                                                      ------
    Total liabilities                                                                 12,341
                                                                                      ------
Commitments and contingencies (Notes 11 and 13)
Stockholders' deficit: (Notes 8 and 12)
      Preferred stock, $.01 par value; 5,000,000 shares
         authorized, none issued                                                           -
      Common stock, $.01 par value; 40,000,000 shares
         authorized; 20,012,227 shares issued and outstanding                            200
      Additional paid-in capital                                                      43,972
      Accumulated deficit                                                            (48,673)
                                                                                     -------
         Total stockholders' deficit                                                  (4,501)
                                                                                     -------
                                                                                     $ 7,840
                                                                                     =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-3
<PAGE>



                    DATAMETRICS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                   Fiscal Years Ended
                                                                   -----------------------------------
                                                                   October 29,             October 31,
                                                                   2000                    1999
                                                                   ----------------        -----------
                                                                   (in thousands, except per share data)

<S>                                                                <C>                   <C>
Sales (Note 1)                                                        $2,844                 $ 8,560
                                                                  ----------             -----------
Cost of sales:
   Purchases, manufacturing and overhead                               4,863                   5,092
   Write-down of inventory (Note 4)                                    1,450                   2,000
   Inventory shrinkage (Note 4)                                            -                   1,013
                                                                       6,313                   8,105
                                                                  ----------              ----------
Gross (loss) profit                                                   (3,469)                    455
Selling, general and administrative expenses                          (2,699)                 (4,689)
Lease settlement expense (Note 13(b))                                      -                   1,225)
                                                                  ----------              ----------

Loss from operations                                                  (6,168)                 (5,459)
Interest expense (Note 12(b))                                         (1,747)                 (1,259)
                                                                  ----------              ----------

Loss before minority interest                                         (7,915)                 (6,718)
Minority interest                                                         18                       -
                                                                  ----------              ----------

         Net loss                                                   $(7,897)                $ (6,718)
                                                                  ==========              ==========

Loss per share of common stock:
         Basic and diluted                                          $ (0.41)                $ (0.38)
                                                                  ==========              ==========

Weighted average number of common shares outstanding:
         Basic and diluted                                           19,157                  17,773
                                                                  ==========              ==========
</TABLE>


See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                      (in thousands, except for share data)

<TABLE>
<CAPTION>

                                            Common Stock
                                            ------------              Additional                   Total
                                            Number of                 Paid-in      Accumulated     Stockholders'
                                            Shares         Amount     Capital      Deficit         Deficit
                                            -----------    --------   -----------  ------------    -------------
<S>                                          <C>              <C>       <C>            <C>                <C>
Balances at October 25, 1998                 15,563,505       $156      $37,910        $(34,058)          $4,008
Issuance of common stock and
    warrants, net of issuance costs           3,283,722         32        3,172               -            3,204
Issuance of common stock relating to
    legal settlement                            150,000          2          373               -              375
Warrants issued in connection with 10%
    Subordinated Notes                                -          -          599               -              599
Warrants issued in connection with 10%
    bridge notes                                      -          -           35               -               35
Warrants issued in connection with 12%
    Convertible Notes                                 -          -          294               -              294
Warrants issued in connection with
    financing from  Branch Banking &
    Trust Company line of credit                      -          -          320               -              320
Net loss                                              -          -            -          (6,718)          (6,718)
                                             -----------   --------  ------------  ------------    -------------
Balances at October 31, 1999                 18,997,227        190       42,703         (40,776)           2,117
Sale of equity interest in subsidiary
    (Note 5)                                          -          -        1,182               -            1,182
Issuance of common stock and warrants,
    net of issuance costs (Note 12)           1,015,000         10           87               -               97
                                                      -          -            -          (7,897)          (7,897)
Net loss                                    ----------- ----------   ----------      ----------     ------------
                                             20,012,227       $200      $43,972        $(48,673)         $(4,501)
Balances at October 29, 2000                =========== ==========   ==========      ==========     ============

</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                  Fiscal Years Ended
                                                                              ---------------------------
                                                                          October 29,                October 31,
                                                                             2000                    1999
                                                                         -------------               -----------
                                                                                    (in thousands)
<S>                                                                               <C>                 <C>
Cash Flows from Operating Activities:
      Net loss                                                                  $(7,897)                $(6,718)
      Adjustments to reconcile net loss to net cash used in operating
      activities:
           Depreciation                                                              328                     419
           Write down and shrinkage of inventory                                   1,450                   3,013
           Non-cash interest and financing costs                                   1,087                     416
           Non-cash charges related to settlement of litigation                        -                     375
           Other non-cash charges                                                     31                       -
           Minority interest in net loss of subsidiary                              (18)                       -

Changes in assets and liabilities:
      Accounts receivable                                                          2,318                   (412)
      Inventories                                                                     21                 (1,615)
      Prepaid expenses and other current assets                                      634                   (423)
      Other assets                                                                 (493)                    (61)
      Accounts payable                                                             (276)                    (94)
                                                                                     596                    (70)
      Accrued expenses                                                       -----------             -----------
                                                                                 (2,219)                 (5,170)
           Net cash used in operating activities                              ----------             -----------

Cash Flows from Investing Activities:
      Capital expenditures for property and equipment                              (362)                    (88)
                                                                                   1,200                       -
      Proceeds from sale of equity in subsidiary                              ----------              ----------
                                                                                     838                    (88)
           Net cash provided by (used in) investing activities               -----------              ----------



                                                        (CONTINUED ON NEXT PAGE)

</TABLE>



                                      F-6
<PAGE>



                    DATAMETRICS CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

<TABLE>
<CAPTION>
                                                                                 Fiscal Years Ended
                                                                             ---------------------------
                                                                           October 29,       October 31,
                                                                               2000             1999
                                                                          -------------      -----------
                                                                                   (in thousands)
<S>                                                                       <C>                          <C>
Cash Flows from Financing Activities:
      Borrowings on revolving line of credit                                           46                 1,877
      Payments on revolving line of credit                                              -                (2,095)
      Borrowings on long-term debt                                                      -                 3,150
      Payments on long-term debt                                                      (22)               (1,022)
      Borrowings on loan payable                                                       77                    54
      Proceeds from bridge notes                                                    1,105                     -
      Proceeds from the issuance of common stock                                       66                 3,203
          and warrants                                                         ----------            ----------
                                                                                    1,272                 5,167
              Net cash provided by financing activities                        ----------            ----------

Net (decrease) increase in cash
Cash at the beginning of the period                                                  (109)                  (91)
Cash at the end of the period                                                         137                   228
                                                                               ----------            ----------
                                                                                    $  28                 $ 137
                                                                               ==========            ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
      Interest paid, net                                                            $ 539                 $ 776
      Income taxes paid                                                                 -                     3
      Non-cash transactions:
      Conversion of accrued interest to 12% Subordinated
        Convertible Secured Notes Due 2000                                            305                     -

</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-7
<PAGE>

                    DATAMETRICS CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

     Datametrics Corporation, a Delaware corporation, 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.

BASIS OF PRESENTATION AND CONSOLIDATION

     The accompanying consolidated financial statements include the accounts of
Datametrics Corporation and its wholly- and majority-owned subsidiaries
(collectively, the "Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation. The Company's fiscal year
end is the last Sunday of each October.

REVENUE RECOGNITION

     The Company recognizes revenue on the sale of product and parts when
shipped.

     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 current accrual represents the average
outstanding warranty of approximately ninety days.

CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

     As is customary in the industry, the Company grants uncollateralized credit
to its clients, which include the U.S. government and large multi-national
corporations operating in a broad range of industries. In order to mitigate its
credit risk, the Company continually evaluates the credit worthiness of its
major commercial clients, and maintains allowances for potential losses within
management expectations.

     Approximately 47% and 54% of the Company's sales during fiscal years 2000
and 1999, respectively, were 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 $664,000 or 23% of total sales in fiscal year
2000. Export sales to foreign customers amounted to $3,151,000 ($3,069,000 to
Canada) or 37% of total sales in fiscal year 1999. The Company's three largest
customers accounted for 25%, 23% and 18% of the Company's sales for the fiscal
year ended October 29, 2000. Its three largest customers accounted for 36%, 22%
and 11% of the Company's sales for the fiscal year ended October 31, 1999.
Accounts receivable from these customers represented 58% of accounts receivables
at October 29, 2000.



                                      F-8
<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

INVENTORIES

     Inventories, which primarily include purchased parts and subassemblies, are
stated at the lower of cost (first-in, first-out) or market. Contract inventory
costs include purchased materials, direct labor and manufacturing overhead. The
portion of inventories not expected to be sold within one year are classified as
noncurrent assets.

PROPERTY AND EQUIPMENT

     Depreciation of property and equipment are provided using the straight-line
method over the following estimated useful lives:

Building and improvements.................. 39 years
Machinery and equipment.................... 2 to 5 years
Furniture, fixtures and computer equipment. 2 to 8 years

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The more significant estimates affecting amounts reported in
the financial statements relate to revenues and costs under long-term contracts
and inventory reserve accruals. Actual results could differ from those
estimates.

LOSS PER SHARE

     Basic loss per share includes no dilution and is computed by dividing loss
available to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted loss per share reflect, in periods in which
they have a dilutive effect, the effect of common shares issuable upon exercise
of stock options and warrants. The effect of common stock equivalents has been
excluded from the diluted calculation since the effect would be antidilutive.



                                      F-9
<PAGE>



                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

IMPAIRMENT OF LONG-LIVED ASSETS

     The Company evaluates long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying value of an asset may not be
recoverable. If the estimated future cash flows (undiscounted and without
interest charges) from the use of an asset are less than the carrying value, a
write-down would be recorded to reduce the related asset to its estimated fair
value.

INCOME TAXES

     Income taxes are calculated using the liability method specified by SFAS
No. 109, "Accounting for Income Taxes". SFAS No.109 requires a company to
recognize deferred tax liabilities and assets for the expected future tax
consequences of events that have been recognized in a company's financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statement
carrying amounts and tax basis of assets and liabilities using enacted tax rates
in effect in the years in which the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance to the extent
realization is uncertain.

RECLASSIFICATIONS

     Certain reclassifications were made to 1999 balances to conform with 2000
presentation.

RECENT ACCOUNTING STANDARDS

     In November 1999, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 requires companies
to recognize all derivative contracts at their fair values, as either assets or
liabilities on the balance sheet. If certain conditions are met, a derivative
may be specifically designated as a hedge, the objective of which is to match
the timing of gain or loss recognition on the hedged derivative with the
recognition of (1) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk, or (2) the earnings effect
of the hedged forecasted transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the period of
change. SFAS No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999.

     Historically, the Company has not entered into derivative contracts either
to hedge existing risks or for speculative purposes. The adoption of this new
standard is not expected to have an effect on the Financial Statements.

                                      F-10


<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin #101, "Revenue Recognition in Financial Statements." The
Company's management has determined that the application of Staff Accounting
Bulletin #101 will not have a material impact on the Company's consolidated
financial statements.

         In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44 of Accounting Principles Board Opinion No. 25, "Accounting
for Certain Transactions Involving Stock Compensation," which, among other
things, addressed accounting consequences of a modification that reduces the
exercise price of a fixed stock option award (otherwise known as repricing). The
adoption of this interpretation in fiscal 2000 did not impact the Company's
consolidated financial statements.

NOTE 2.  GOING CONCERN

         The accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has
continued to incur significant losses from operations resulting primarily from a
decline in the Company's military business and has a working capital deficiency
and stockholders' deficit as of October 29, 2000. These matters raise
substantial doubt about its ability to continue as a going concern.

         The Company is planning to take steps necessary to enable the Company
to continue as a going concern. As discussed in Note 3, the Company has
implemented cost cutting measures including significant employee reductions and
has decided to continue in the military business.

         The Company has also separately incorporated MadeMyWay.com, Inc.(TM)
("MadeMyWay"), an Internet-based company which uses the Company's printer
technology to manufacture apparel, textile and specialty items. Although the
Company believes that MadeMyWay will be successful given the Company's superior
printer technology, variety of offerings and quick fulfillment time, there can
be no assurances that this company will be successful or profitable. The Company
is also seeking additional financing to assist the Company with its launch of
MadeMyWay and for general working capital purposes. There can be no assurance
that the Company will be successful in these efforts.

         The Company's continuation as a going concern is dependent on its
ability to successfully implement its cost cutting measures, increase revenues
from its military and industrial printer businesses and the newly formed
MadeMyWay and raise additional financing (See Note 10). The accompanying
financial statements do not include any adjustments that may result from the
Company's inability to continue as a going concern.

                                       F-11


<PAGE>


                     DATAMETRICS ORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 3.   CONTINUATION OF THE MILITARY BUSINESS

         In January 2000, the Company's Board of Directors approved the sale of
the Company's military business. The Company was seeking to sell the entire
inventory, customer lists and manufacturing drawings and specifications related
to this line of business. The Company's intention was to redirect its efforts
exclusively to the manufacturing and marketing of the Condor and Harrier high
speed thermal transfer printers and the management and operation of its
internet-based MadeMyWay. In connection with this pending sale, the Company
incurred a write down of its military inventory of approximately $2 million.
Since the sale of the military business was anticipated to occur within the next
year, all military inventories were classified as a current asset. In January
2000, the Company also terminated approximately 30 employees. Severance was
insignificant and there were no other exit costs related to the planned
disposition of the military business.

         In August 2000, the Company underwent significant management changes
including the resignation of its Chief Executive Officer (and termination of his
employment agreement) and the formation of a new Board of Directors. The new
management team, in assessing the Company's business and future prospects, has
decided that it will not sell the military business and will continue to service
those customers. The Company will also continue to focus on the Condor(TM) and
Harrier(TM) printers and MadeMyWay. As a result of this decision, management
assessed the impact of the attempted sale of the military business for the past
several months. Management also determined that the previous method used to
account for military inventory (i.e., recognizing inventory to be sold over five
years as a long-term asset) would no longer be appropriate given the events of
the past several months and current state of the military business. Military
inventory projected to be sold within three years has been recognized as an
asset, and all other military inventory has been reserved for and in many cases
disposed of. At October 29, 2000, military inventory was approximately $1.7
million after provision for reserves for obsolescence.

NOTE 4.  INVENTORIES

         Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                 2000
                                                                 ----
<S>                                                             <C>
(In thousands)
Inventories of parts and sub-assemblies....................... $10,314
Work in process...............................................     258
Finished goods................................................     849
                                                               ---------
                                                                11,421

 Less inventories classified as non-current asset.............. (2,272)
 Less reserve for obsolescence................................. (6,950)

                                                               ---------
                                                                $2,199
                                                               =========
</TABLE>


                                       F-12


<PAGE>


                     DATAMETRICS ORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         Inventories consist primarily of materials used by the Company for
existing and anticipated contracts and materials and finished assemblies which
are held to satisfy spare parts requirements of the Company's customers. Those
parts not expected to be sold within one year are classified as a non-current
asset. The Company does not amortize its non-current inventory, rather the
Company evaluates all inventory for obsolescence on a periodic basis and records
estimated reserves.

         Fiscal 1999 inventory levels based on sales and usage were
substantially below the closing fiscal 1999 inventory balances. Such
unanticipated differential was attributed to shrinkage in the approximate amount
of $1,013,000 which may have been the result of theft, deterioration, loss,
disposal, clerical error and other factors in one or more periods. This amount
was written off in the fourth quarter of fiscal 1999. The Company has not
determined which of such factors, or to which extent each of such factors,
contributed to the total amount of shrinkage.

NOTE 5.  SALE AND PLEDGE OF COMMON STOCK

         In the current fiscal year, the Company formed an internet subsidiary,
MadeMyWay (see Note 14). In March 2000, the Company sold 600,000 shares of
Common Stock in MadeMyWay to an outside investor, whose chairman is also the
Company's Chairman, for approximately $1.2 million. The sale reduced the
Company's ownership interest in MadeMyWay from 100% to 88%. Two years after
closing the investor has the right to convert its common shares of MadeMyWay
into preferred shares of Datametrics Corporation under certain circumstances as
defined in the Stock Purchase Agreement. The proceeds from the sale have been
used for working capital purposes and marketing MadeMyWay. In July and August
2000, the Company pledged its remaining shares of Common Stock in MadeMyWay to
an outside investor group to secure certain bridge loans to the Company in the
aggregate amount as of October 29, 2000 of $1,105,000 (see Note 8).

NOTE 6.  INCOME TAXES

The primary components of the Company's net deferred income tax assets are as
follows:

                                                                  2000
                                                                  ----
                                                             (In thousands)
Net operating loss carryforwards............................. $  17,013
General business credit carryforwards........................       372
Other non-deductible accruals and allowances.................     2,312
                                                               ---------
  Total deferred income tax assets  ........................     19,967
Valuation allowance for deferred income tax assets...........   (19,697)
                                                               ---------
Net deferred income tax assets............................... $       -
                                                               =========



                                       F-13


<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         Net operating loss carryforwards of approximately $43 million for
federal income tax purposes will expire at various times between 2010 and 2019.

The provision for income taxes is composed of the following:

                                                          2000     1999
                                                          ----     ----
                                                          (In thousands)

Current:
  Federal                                               $    -    $    -
  State                                                      -         -
Deferred:
  Federal                                               (2,081)   (2,026)
  State                                                   (367)     (357)
Increase in valuation allowance                          2,448     2,383
                                                         ------   ------

                                                        $     -  $     -
                                                         ======   ======



         Based upon management's judgment and the continued losses incurred by
the Company, the valuation allowance represents 100% of the Company's net
deferred income tax assets. The following is a reconciliation of the difference
between the actual provision for income taxes and the provision computed by
applying the federal statutory tax rate on loss before income taxes:

                                                           2000            1999
                                                           ----            ----
                                                               (In thousands)

Federal income tax benefit computed
  at statutory rate.....                                $(2,148)        $(2,284)
State income tax benefit,
  net of federal benefits...............                   (379)           (335)
Change in valuation allowance.................            2,448           2,383
Other, net.....................................              79             236
                                                        -------         -------
                                                        $     -         $     -
                                                        =======         =======

NOTE 7.  NOTE PAYABLE

         In September 1999, the Company entered into a $1,500,000 revolving line
of credit ("Senior Bank Loan") with Branch Banking and Trust Company ("Branch
Bank"). The line of credit expired in August 2000 and was called by Branch Bank
at which time guarantors of the Senior Bank Loan were required to pay the
outstanding principal balance of $1,496,140, which amount remained unpaid and in
default as of October 29, 2000. As discussed in Note 10, all obligations
pursuant to this note were satisfied by a related party.

                                       F-14


<PAGE>



                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8.  LONG-TERM DEBT

Long-term debt consists of the following:                              2000
                                                                       ----
                                                                  (In thousands)

Mortgage SouthTrust Bank(a) .................................        $  924
Subordinated Notes (b).......................................         3,524
Subordinated Convertible Notes(c)............................         2,753
Bridge Notes (d).............................................         1,305
Less current maturities of long-term debt....................        (7,407)
                                                                     -------
                                                                     $  899
                                                                     =======

(a)      In December 1997, the Company purchased a 43,000 square foot facility
         in Orlando, Florida for $899,000. In connection with the acquisition of
         this property, the Company obtained a mortgage loan in the amount of
         $975,000 from SouthTrust Bank. The loan matures on March 9, 2008.
         Interest is based on 8.02% per annum through March 9, 2003 and is then
         adjusted to equal 2.25% in excess of the weekly average yield on United
         States Treasury Notes adjusted to a constant maturity of five years as
         made available by the Federal Reserve Board.

                  Maturities of the mortgage loan debt at October 29, 2000 are
as follows:

<TABLE>
<CAPTION>
<S>                                                                                     <C>
         2001...........................................................................$ 25
         2002...........................................................................  26
         2003...........................................................................  29
         2004...........................................................................  32
         2005...........................................................................  35
         Thereafter..................................................................... 777
                                                                                        -----
                  Total Maturities...................................................... 924

                  Less: Current maturities of long term debt                              25
                                                                                       -----
                                                                                        $899
                                                                                       =====
</TABLE>




                                       F-15


<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(b)  In December 1998, the Company closed a private placement of approximately
     $3.45 million of 10% Subordinated Notes due in December 2000 (the "10%
     Notes") and $1.55 million in shares of the Company's common stock. The 10%
     Notes, which are unsecured and callable under certain conditions, provide
     for the Company to issue 5-year warrants exercisable into the Company's
     common stock at a price of $1.50 per share. As part of the offering,
     investors holding $1.75 million of the Company's Convertible Debentures
     issued earlier in the year exchanged their holdings for the new 10% Notes.
     In addition, holders of $500,000 of the Company's Senior Subordinated
     Debentures also exchanged their Debentures for the new 10% Notes. The net
     proceeds of approximately $2.75 million from the sale of 10% Notes and
     common stock were used for debt retirement and working capital purposes.

     As discussed in Note 10, the Company is presently negotiating with the
     Noteholders to exchange the 10% Notes for other debt securities in full
     settlement of all defaults associated with the 10% Notes.

(c)  In August 1999, the Company closed a private placement of approximately
     $2.3 million of 12% Notes due in August 2000 (the "12% Notes"). The 12%
     Notes, which are callable under certain conditions, provide for the Company
     to issue 5-year warrants exercisable into the Company's common stock at a
     price of $1.10 per share. As part of the offering, investors holding
     $150,000 of the Company's Bridge Notes issued earlier in the year and
     holder of $600,000 of the Company's Senior Subordinated Debentures
     exchanged their holdings for the new 12% Notes. The net proceeds of
     approximately $1.55 million from the sale of 12% Notes were used for
     working capital purposes.

     Quarterly interest (aggregating approximately $453,000) on the 12% Notes
     has been paid in-kind by the issuance of additional 12% Notes. As discussed
     in Note 10, the Company is presently negotiating with the Noteholders to
     exchange the 12% Notes for other securities in full settlement of all
     defaults associated with the 12% Notes.

                                       F-16


<PAGE>



                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(d)  During August to October 2000, the Company's Chairman and six associated
     investors provided bridge loan financing (the "Bridge Financing") to the
     Company in the aggregate amount of $1,105,000 as of October 29, 2000. The
     series of bridge loans were generally secured by shares of MadeMyWay common
     stock and by the assets of MadeMyWay, the pledge of such shares and an
     assignment of the Company's life insurance policy on a former Chief
     Executive Officer. The entire loan amount of $1,105,000 remains outstanding
     as of October 29, 2000. As discussed in Note 10, the Bridge Financing was
     satisfied by a related party.

NOTE 9.  LOAN PAYABLE

         During 2000, the Company borrowed $77,000 against the cash surrender
value of its key-man life insurance policy. At October 29, 2000, the balance
owed, which approximates the cash surrender value included in other assets, was
$877,000 at 7.6% per annum.

NOTE 10. RELATED PARTY TRANSACTIONS AND SUBSEQUENT EVENTS

         In September 2000, the Company advanced a total of $26,000 to and on
behalf of a related entity, which company is in involuntary bankruptcy
proceedings. In November 2000, the Company committed to advance an additional
$51,000. The Company intends to acquire certain assets of this related entity
upon resolution of the bankruptcy proceedings. A related party whose chairman is
also the Company's Chairman is both an investor in and creditor of this related
entity.

         In November 2000, the Company received additional Bridge Financing of
$200,000.

         In December 2000, an investment group headed by the Company's chairman,
and including the six associated investors who advanced bridge loans to the
Company, formed DMTR, LLC, a New York limited liability company, ("DMTR"). DMTR
has satisfied the $1,496,140 due to the guarantors of the Senior Bank Loan (see
note 7) and has taken an assignment of the loan documents and the collateral
securing that loan. In addition, DMTR has repaid in December all of the
Company's Bridge Financings in the aggregate amount of $1,305,000 plus interest
thereon and taken an assignment of the loan documents evidencing the Bridge
Financings and an assignment of the collateral securing the Bridge Financings.

                                       F-17


<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                  Effective January 31, 2001, DMTR and the Company executed loan
documents to provide the Company with a line of credit in the maximum amount of
$798,860 (the "Line of Credit"). Accordingly, the Company (assuming a draw of
the entire Line of Credit) is obligated to DMTR in the aggregate amount of
$3,600,000 (comprised of $1,496,140 on the Senior Bank Loan, $1,305,000 on the
Bridge Financings and $798,860 on the Line of Credit) (subject to the agreement,
described below, to exchange a portion of the Bridge Financings for Common Stock
of the Company). The Line of Credit has a term of two years with interest
(payable monthly) at the Base Rate of Citibank, N.A. plus 100 basis points and
is secured by all assets of the Company, a pledge of the Company's stock in
MadeMyWay and the assets of MadeMyWay. To the extent such assets and stock are
pledged to secure the Senior Bank Loan and the Bridge Financings, the security
for the Line of Credit is subject to such prior security interests. The Company
is also obligated to make mandatory prepayments of the principal of the Line of
Credit on a monthly basis to the extent the Company has available cash in excess
of $200,000. Simultaneously with the closing of the Line of Credit, DMTR agreed
to modify the terms of the Senior Bank Loan and the Bridge Financings to conform
those terms to the terms of the Line of Credit. Therefore, the Senior Bank Loan
and the Bridge Financings mature on January 31, 2003, accrue interest (payable
monthly) at the Base Rate of Citibank N.A. plus 100 basis points and are subject
to the mandatory prepayment provision set forth in the Line of Credit. As
additional consideration for the financings provided by DMTR, the Company issued
a Warrant to DMTR to acquire up to 7,000,000 shares of the Common Stock of the
Company on a fully diluted basis with an exercise price of $.125 per share,
exercisable through January 31, 2007. DMTR has exchanged $700,000 in principal
amount of the Bridge Financings for the issuance of 700,000 shares of the
Company's Common Stock (with demand registration rights), such number of shares
determined on a proposed post reverse stock split basis described below.

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




                                       F-18


<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

         The Company is also negotiating with the holders of the 12% Notes and
the Company has reached an agreement in principal, subject to the execution and
delivery of definitive documents, with such holders to exchange 1.1 shares of
the Company's Common Stock for each $1.00 in principal of the outstanding 12%
Notes. If the exchange is consummated, the holders of the 12% Notes will waive
all amounts owing in respect of the 12% Notes, whether of principal, interest,
premium or penalty.


         The Company seeks to effect the exchanges during the first quarter of
calendar 2001 on substantially the terms described above. Although the Company
has received commitments from a majority of the holders of the 10% Notes (87%
received as of February 13, 2001) and a majority of the holders of the 12% Notes
(74% received as of February 13, 2001), the closing of the exchanges is subject
to the execution and delivery of definitive documents and the amendment of the
Company's Certificate of Incorporation to increase the Company's authorized
capital and to effect a 1 for 20 reverse stock split. Further any holder may
accept or reject the proposed exchange as to his 10% Note or 12% note, as the
case may be, and preserve his claims under his Notes regardless of acceptance of
the exchange by any number of other holders. The Company is actively soliciting,
and anticipates successfully obtaining, the consents of stockholders for the
amendment and reverse stock split described above. In the unlikely event that
stockholder approval is not obtained for the amendment and stock split noted
above, the 10% and 12% Noteholders would retain their rights under the original
Notes, whether of principal, interest, premium or significant penalty. This
would have a material adverse effect on the financial position of the Company.



                                       F-19


<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         In January 2001, the Company received net cash proceeds of
approximately $1,043,000 after deducting $877,000 loan payable (see Note 9) from
its key-man life insurance policy on a former Chief Executive Officer.

NOTE 11.    LEASES

         The Company currently leases its facilities and various equipment under
operating leases that expire through 2003. Minimum future rental commitments
under noncancelable operating leases are as follows:

2001............................................................. $211
2002.............................................................  162
2003.............................................................   52

                                                                  -----
                                                                  $425

     Rental expenses charged to operations were $315,000, and $320,000 for the
fiscal years 2000 and 1999, respectively.

NOTE 12.   STOCK OPTION PLANS AND WARRANTS

(a)   STOCK OPTIONS

         The Company has several stock option plans which provide for the
granting of options to employees or directors at prices and terms as determined
by the Board of Directors. Such options vest over a period of one to four years.
All options issued by the Company to date have exercise prices which were equal
to the market value of the Company's common stock at the date of grant.

                                       F-20


<PAGE>



                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         The following table sets forth summarized information concerning the
Company's stock options:

<TABLE>
<CAPTION>
                                                             Number of         Exercise Price
                                                              Shares               Range
                                                            ----------           ----------
                                                                   (In thousands)
<S>                                                         <C>                <C>
Options outstanding for
   Shares of common stock at
   October 25, 1998..........................                     241         $1.2500-7.8750
   Granted...................................                       -                      -
   Canceled or expired.......................                    (50)         $1.2500-2.8750
   Exercised..................................                      -                      -
                                                             --------         --------------
Options outstanding for
   Shares of common stock at
   October 31, 1999..........................                     191         $1.2500-7.8750
   Granted...................................                     750         $0.6200-1.0000
   Canceled or expired.......................                    (155)        $1.2500-7.8750
   Exercised.................................                       -                      -
                                                             --------         --------------
Options outstanding for shares of                                786          $0.6200-1.8150
    common stock at October 29, 2000                         ========         ==============
Shares reserved for issuance at
   October 29, 2000.........................                784
                                                        -------



Weighted average option exercise price information was as follows:

                                                           2000                     1999
                                                          ------                   ------
Outstanding at beginning of year.............                  $1.990                  $1.90
  Granted during the year....................                    $.75                      -
  Exercised during the year..................                       -                      -
  Canceled, terminated and expired...........                  $2.255                  $1.58
  Exercisable at year end.....................                  $1.26                  $2.19

</TABLE>



                                       F-21


<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         Significant option groups outstanding at October 29, 2000 and related
weighted average price and life information were as follows:

<TABLE>
<CAPTION>
                                           Weighted
                                           Average              Weighted                                 Weighted
                                           Remaining            Average         Number                   Average
Exercise Price     Number Outstanding      Contractual          Exercise        Exercisable              Exercise
Range              (In thousands)          Life                 Price           (In thousands)           Price
---------          ----------              ----------           ---------       ----------               --------
<S>                <C>                     <C>                  <C>             <C>                      <C>
$1.5000            5                       .42                  $1.5000         5                        $1.5000
$1.8150            31                      1.51                 $1.8150         19                       $1.8150
$0.0062            500                     4.00                 $0.6200         125                      $0.0062
$0.1000            250                     4.00                 $0.1000         63                       $0.1000
                   ----------                                                   ---------
-                  786                     3.88                 $1.2600         212                      $1.7743
                   ==========                                                   =========
</TABLE>

         The Company applies Accounting Principles Board Opinion No. 25,
"Accounting For Stock Issued To Employees," and selected interpretations in
accounting for its stock-based compensation plans. Accordingly, as all options
and warrants have been granted at exercise prices equal to fair market value on
the date of grant, no compensation expense has been recognized by the Company in
connection with its stock-based compensation plans.

         FASB Statement 123, "Accounting for Stock-Based Compensation," requires
that the company provide pro forma information regarding net loss and loss per
share as if the compensation cost for the Company's stock option plan had been
determined in accordance with the fair value method prescribed in such
statement. The Company estimates the fair value of each stock option at the
grant date by using the Black-Scholes option-pricing model with the following
weighted average assumptions used for grants in fiscal 2000: dividend yield of
0%; expected volatility of 45.8%; average risk-free interest rate of 5.95%;
expected life of 5 years; and a discount due to marketability and dilution of
0%.

         Under the accounting provisions of FASB Statement 123, the Company's
net loss and loss per share would have been adjusted to the pro forma amounts
indicated below:

                      (in thousands, except per share data)
                                         2000                      1999
                                      ---------                 ----------
Net loss
  As reported                           $7,897                    $6,718
  Pro forma                             $7,912                    $6,718
Net loss
(basic and diluted)
  As reported                          $(0.41)                   $(0.38)
  Pro forma                            $(0.41)                   $(0.38)


(b)  WARRANTS

         There are 200,000 shares of common stock reserved for issuance upon
exercise of warrants sold for $0.001 per warrant to the underwriters of the
Company's June 21, 1995 offering of common stock. The warrants are exercisable
for a period of five years beginning June 21, 1996 and have a per-share exercise
price equal to $9.60 (120% of the initial public offering price of $8.00). There
were 616,679 shares of common stock reserved for issuance upon exercise of
warrants issued in conjunction with the Company's November 25, 1996 Senior
Subordinated Debt Offering. The warrants are exercisable for a period of five
years beginning November 25, 1996 and have a


                                       F-22
<PAGE>

per-share exercise price of $1.50. There were 337,000 warrants outstanding at
October 29, 2000. There are 200,000 shares of common stock reserved for issuance
upon exercise of warrants issued in conjunction with a commitment to raise up to
$3,000,000 in capital for the Company. The warrants are exercisable for a period
of five years beginning February 5, 1997 and have a per-share exercise price of
$2.00. There are 500,000 shares of common stock reserved for issuance upon
exercise of warrants issued to a former officer of the Company. The warrants are
exercisable for a period of five years beginning November 13, 1996 and have a
per-share exercise price of $ 2.00.

                                      F-23


<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         During fiscal 1999, the Company issued approximately 7.2 million
warrants, of which 6.7 million were still outstanding at October 29, 2000, in
connection with various debt and stock placements. The weighted average exercise
price was $1.10 and the weighted average warrant life was five years. The fair
value of the warrants were determined using the Black-Scholes option pricing
model. The weighted average assumptions were as follows: volatility of 45.8%,
risk free rate of 5.63% and an expected life of one year. The fair value of the
warrants issued in connection with debt was treated as original issue discount
("OID"), are included in prepaid expenses and other assets and are being
amortized over the life of the related debt. For the years ended October 29,
2000 and October 31, 1999, approximately $782,000 and $416,000 was charged to
interest expense relating to the amortization of OID.

         In August 2000, the Company agreed to pay $100,000 and issue 500,000
shares of the Company's Common Stock to its former chief executive officer
(valued at $31,000 and accounted for as severance pay in fiscal 2000) in
exchange for 1.6 million warrants held by him in connection with the termination
of his employment agreement.

         In September 2000, an investor of the Company's Common Stock exercised
500,000 warrants at an exercise price of $.1324. In November 2000, that investor
exercised their remaining 500,000 warrants at an exercise price of $.1323.

         As of October 29, 2000, the Company had an aggregate of approximately
8.6 million warrants outstanding.

NOTE 13.    COMMITMENTS AND CONTINGENCIES

(a)  EMPLOYMENT AGREEMENTS

         The Company has employment agreements with its Chief Executive Officer
and Chief Operations Officer which expire in August and September of 2003
respectively. Such agreements provide for annual base salaries which may be
increased at any time at the discretion of the Company. The aggregate commitment
for future salaries at October 29, 2000, excluding bonuses, was approximately
$833,000. These agreements also provide for severance pay benefits upon
termination of the employee's employment with the Company.

(b)  LEGAL PROCEEDINGS

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

                                       F-24


<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Four former officers of the Company (the "Former Officers"), whose employment
relationships with the Company terminated in part as a result of the Company's
restructuring in October 1996, sought severance benefits from the Company. On
January 13, 1997, three of the Former Officers sued the Company in the Superior
Court of the State of California for Los Angeles County, in order to enforce
payment of severance benefits under certain agreements, each dated as of October
7, 1996, between each Former Officer and the Company (collectively, the
"Severance Agreements"). The fourth Former Officer sued the Company in response
to the Company's cross-complaint described below. The Former Officers sought
damages from the Company based upon the Severance Agreements and an alleged
implied promise not to terminate the employment of the Former Officers with the
Company without good cause.

On September 28, 1998, a California trial court upheld the enforceability of the
Former Officers' Severance Agreements and the Former Officers' requested entry
of a judgment in the approximate amount of $1,200,000 plus interest and costs.
The Company has appealed the judgment and in September 1999, the California
Court of Appeal reversed the judgment in favor of the Former Officers and
awarded the Company its costs on appeal. In addition, the California Supreme
Court denied the Former Officers' petition for review of the appellate decision.
In July 2000, pursuant to a Mutual Release and Settlement Agreement, the Former
Officers agreed to pay $150,000 to the Company in settlement of all claims.

In April 1998, the owner of the premises the Company formerly leased in Woodland
Hills, California, sued the Company for the balance of all rent due through the
end of the then existing lease agreement plus damages. In March 1999, the
Company entered into a Mutual Release and Settlement Agreement wherein the
Company paid a total of $850,000 in cash and issued 150,000 shares of Common
Stock to the owner. The Company has agreed to register the shares of Common
Stock, and under certain circumstances, the Company will issue additional shares
of Common Stock to the extent that the market price of its Common Stock falls
below certain levels. Since the minimum amount guaranteed of $375,000 in common
stock by the Company exceeded the market value of the common stock issued by the
Company, the Common Stock has been valued at $2.50 per share. Under the terms of
the Agreement, the additional shares required to be issued is approximately 2.7
million shares, which shares have not been issued as of October 29, 2000.

                                       F-25


<PAGE>


                    DATAMETRICS CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 14. SEGMENT DATA

         The Company has two reportable segments: printer and internet. The
printer segment designs, develops and sells both military and industrial
printers. The internet segment consists of a subsidiary incorporated in the
current fiscal year, MadeMyWay, engaged in the fulfillment of customized and
personalized products primarily for the business-to-businss e-commerce market.
The reportable segments are strategic business units that offer different
products and services. Results for the two reportable segments are as follows:

<TABLE>
<CAPTION>
For the twelve months ended
October 29, 2000                                                    PRINTER            INTERNET            TOTAL
-----------------                                                   --------           --------            ------
<S>                                                                     <C>                   <C>           <C>
Sales                                                                   $2,844                $-            $2,844
                                                                       -------            ------           -------
Purchases, manufacturing and overhead                                    4,652               211             4,863
Write down of inventory                                                  1,450                 -             1,450
                                                                      --------           -------           -------
Cost of Sales                                                            6,102               211             6,313
                                                                      --------           -------           -------
Gross loss                                                             (3,258)             (211)           (3,469)
Selling, general and administrative                                    (2,444)             (255)           (2,699)
                                                                      --------           -------           -------
Loss from operations                                                   (5,702)             (466)           (6,168)
Interest expense                                                       (1,747)                 -           (1,747)
                                                                      --------           -------           -------
Loss before minority interest                                         ($7,449)            ($466)          ($7,915)
                                                                      ========           =======           =======

MadeMyWay has no recorded assets at October 29, 2000.
</TABLE>

                                       F-26


<PAGE>


                                  EXHIBIT LIST
                                  ------------


<TABLE>
<CAPTION>
Exhibits
--------
<S>       <C>
10.11      Loan Agreement dated January 31, 2001 between the Company and DMTR, LLC.

10.12      Secured Promissory Note dated January 31, 2001 issued by the Company to DMTR, LLC.

10.13      Modification and Amendment Agreement dated January 31, 2001 between the Company and
           DMTR, LLC.

10.14      Modification and Amendment Agreement dated January 31, 2001 between the Company and DMTR, LLC

10.15      Exchange Agreement dated as of January 31, 2001 between the Company and DMTR, LLC.

10.16      Registration Rights Agreement dated as of January 31, 2001 between the Company and DMTR, LLC

10.17      Security Agreement dated January 31, 2001 between the Company and DMTR, LLC.

10.18      Security Agreement dated January 31, 2001 between the MadeMyWay.Com, Inc. and DMTR, LLC.

10.19      Pledge Agreement dated January 31, 2001 between the Company and DMTR, LLC.

10.20      Warrant to purchase 7,000,000 shares of common stock issued to DMTR, LLC

10.21      Exchange Offering Statement dated February 8, 2001 in respect of the Company's 12%
           Subordinated Convertible Secured Notes.

10.22      Form of Letter of Acceptance relating to Exchange Offer to holders of the Company's 12%
           Subordinated Notes.

10.23      Exchange Offering Statement dated February 8, 2001 in respect of the Company's 10%
           Subordinated Notes.

10.24      Form of Letter of Acceptance relating to Exchange Offer to holders of the Company's 10%
           Subordinated Notes.
</TABLE>