SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                           FORM 10-KSB/A AMENDMENT #1

                                   (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 31, 2005

                                       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                                 (IRS 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         None - quoted on the Pink Sheets, Over the
                                           Counter

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 |_| No |X|

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


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<PAGE>

Transitional Small Business Disclosure Format (Check one): Yes |_| ; No |X|

State Issuer's revenues for its most recent fiscal year:
                                           Gross Sales - $3,029,381

State the number of shares outstanding of the Registrant's Common Stock ("Common
Stock"), as of the latest practicable date: 11,377,162 shares of Common Stock as
of June 15, 2006.

The aggregate market value of the common equity of the company held by
non-affiliates as of June 15, 2006 was $1,137,716.

Explanation to Amendment:

      1)    Former Subsidiary paragraph on page 36 of originally filed 10KSB
            removed and replaced by note 2 as described below.

      2)    Acquisition of Subsidiary Note added as note 2 on page 38 of this
            10KSB/A.

      3)    Financial Statement headings amended to read "DataMetrics
            Corporation and Subsidiary" and footnotes amended to read "Notes to
            Consolidated Financial Statements".


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<PAGE>

PART I

ITEM 1. BUSINESS - General

      This report contains certain statements of a forward-looking nature that
relate to the 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 the 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.

      The Company, which commenced operations in 1962, is a manufacturer of
ruggedized information technology equipment, including computers, printers,
workstations, monitors and peripherals, which are designed to work in harsh
environments. The U.S. Military, major defense prime contractors, international
military forces and commercial markets principally use the Company's products.

      The Company has been in a multi-year transformation to refocus on its core
competencies, servicing the military/defense sector. The tragic events of
September 11, 2001 and subsequent military events, including the Global War on
Terrorism, Operation Enduring Freedom and Operation Iraqi Freedom, have had a
significant effect on the Company's business. The war effort caused an immediate
reallocation of military/ defense resources to short term military needs such as
troop support and deployment as well as munitions. Many programs that the
Company relied on were delayed or canceled. Prior to September 11, 2001, this
entire segment had been impacted in recent years by reduced government spending
and defense appropriations. The militarized product area had been especially
subject to defense budget cuts. The long design cycle for these programs creates
an intangible cost in the form of rapid technological obsolescence. Some
military programs that would have sought militarized equipment some years ago
have modified the requirements to reflect a need for rugged or commercial
products. This trend has tended to benefit sales of the Company's rugged product
line. As the Army has pushed for further digitization of the battlefield, the
Company has pressed forward its initiatives in the tactical and tactical support
areas.

      Many of the military programs from which the Company anticipates
generating its revenue have been rescheduled and military priorities have been
reconsidered to account for short, medium, and long-term needs. Although the
defense budget has been significantly increased, and Homeland Security has taken
on a new meaning at the federal, state, and municipal levels, the Company has
concerns about the continued war on terrorism, the conflict in Iraq and a
continuous US military presence in the region. This activity could divert
government funds for troop support and battlefield initiatives.

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

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


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<PAGE>

BUSINESS STRATEGY

      Our goal is to continually improve our position as a leading supplier of
ruggedized systems and equipment. Our strategies to achieve our objectives
include:

      o     Leverage Incumbent Relationships. We intend to leverage our
            relationships with government and industry decision-makers by
            continuing to deliver high levels of performance on our existing
            contracts. Our experience has shown that strong performance on
            existing contracts greatly enhances our ability to obtain additional
            business with our existing customer base. To accomplish this, we
            intend to continue to position ourselves as a "best value" provider
            for our customers. "Best value" is a DoD contracting theme which
            focuses supplier selection on a variety of criteria, including
            supplier's past performance, instead of solely on lowest price.

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

      o     Pursue Strategic Acquisitions. Through selective acquisitions, we
            aim to broaden our existing product base, build on our existing
            customer relationships and enhance our ability to enter new markets.

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

      In 2002, the Company initiated a strategic corporate initiative to offer
integration services such as `populated' chassis and all-in-one workstations in
addition to our traditional products.

      Despite limited resources, the Company makes a modest investment in
research and development (R & D). This investment is not considered material at
this time. The customers absorb most of the Company's R & D and Non-Recurring
Expenses (NRE). However, over the past few years, the Company has invested funds
to develop new products and updates to existing products which include: The
Tuff-Rider - a ruggedized computer, a low-cost ink-jet printer, a new color
thermal printer to replace its 1901/1903 models and a new trunk-mounted rugged
PC for the Public Safety market.

      The Company's Commercial Airline Products have been sought out by airframe
manufacturers to provide a new generation of products. As one of three main
manufacturers of FAA certified printers in the world, the Company seeks to
garner a greater market share. However, the Company will need to invest to
expand its product offering and provide technology updates to its current
product offering.


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<PAGE>

COMPETITION

      The primary business of the Company is the design and manufacture of
application-specific products for military/defense applications and programs. As
such, the company is often a sole-sourced provider of goods and services. The
focus of the company is focused more on collaborating with its customers for
products that meet applications rather than marketing specific products. As
such, the company's success is much more dependant on its collaborative efforts
with its customers than bidding against competitors. Overall, when in
competitive situations, because of the breadth of The Company's product line,
the Company competes with different companies for various products. For its
chassis' the Company competes with ELMA, AP Labs and Carlo Gavazzi. The Company
competes with Barco for monitors and with Miltope for printers.

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

      The extent of competition for any single project generally varies
according to the complexity of the product and the dollar value of the
anticipated award. We believe that we compete on the basis of:

      o     Accumulated technical knowledge and expertise;

      o     The performance, flexibility, and price of our products;

      o     Reputation for prompt and responsive contract performance; and

      o     Breadth of our product lines.

      Our future success will depend in large part upon our ability to leverage
business within our existing customer base, establish new customers, and
identify new program opportunities early enough to be in on the "ground floor".

SOURCES OF SUPPLY

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

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


                                       5
<PAGE>

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.

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

      While management believes that the Company's trademarks, and other
proprietary know-how have significant value, changing technology and COTS
(Commercial off-the-shelf) initiatives within the DoD, makes the Company's
future success dependent principally upon its employees' technical competence
and creative skills for continuing innovation.

      The Company's business is subject to various statutes, regulations and
provisions governing defense contracts including the Truth in Negotiations Act,
which provides for the examination by the U.S. government of cost records to
determine whether accurate pricing information was disclosed in connection with
government contracts.

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

      In Fiscal 2005, the Company's largest customers were the U.S. Government,
Lockheed Martin Corp., Northrop Grumman Corp., and Raytheon Company. The loss of
any one of these customers could have a material adverse impact on the Company's
operations and financial condition. The Company believes that it has a good
reputation with its customers for quality and delivery of its products and
services.

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

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

SERVICE

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


                                       6
<PAGE>

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

BACKLOG

      The Company's backlog of funded orders not yet recognized as revenue at
October 31, 2004 and October 31, 2005 was approximately $1,727,367 and
$1,362,740 respectively. The entire backlog at October 31, 2004 was realized
during the fiscal year ending October 31, 2005.

MARKETING

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

ENVIRONMENTAL EXPOSURE

      DataMetrics is an environmentally responsible member of the community. The
Company uses no hazardous materials in its products or production process. 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.

EMPLOYEES

      The Company employed 34 persons on a full-time basis as of October 31,
2005, compared to 36 persons on a full-time basis as of October 31, 2004. A
union does not represent any of the Company's employees nor is the Company
subject to a collective bargaining agreement. The Company considers relations
with its employees to be good.

OTHER MATTERS

      The business of the Company is not subject to seasonal fluctuations.

      DataMetrics was incorporated in California in October 1962 and was
reincorporated in Delaware in April 1987. The Company's corporate offices and
manufacturing facilities are located at 1717 Diplomacy Row, Orlando, Florida,
32809.

INTERNET ADDRESS

      The Company maintains a website where additional information concerning
its business and various upcoming events can be found. The address of the
Company's website is www.datametrics.com.


                                       7
<PAGE>

RECENT DEVELOPMENTS

      The Company continues to have substantial debt that was due in 2005 and
2004. Although the Company has generated much of the cash flow through equity
transactions to sustain current operations, the debt obligations of previous
periods have not been met. As a result, additional capital and a significant
restructuring were required to meet its prior period debt obligations.

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

      On April 11, 2006, the Company elected to effect a Stock combination
through a reverse stock split. Details of the split are described in the above
referenced Schedule 14C.

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. The Company consolidated all of its operations to this location
in 2001. The Company had a mortgage with SG DMTI, LLC with an outstanding
balance of $751,738 as of October 31, 2005. The property is adequately insured.
For tax purposes, the manufacturing facility is depreciated using the straight
line method over 39 years. The federal tax basis of the facility and
improvements at October 31, 2005 was $830,221. Property taxes are approximately
$29,500 per year.

      SGD acquired the Company's real property in Orlando for $1,500,000
effective November 1, 2005. SGD and the Company entered into a five-year triple
net lease with an annual rent obligation of approximately $150,000.

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.

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

      None


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<PAGE>

PART II

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

      DataMetrics' Common Stock has been listed on the American Stock Exchange
(Symbol "DC") from July 1998 through June 2000, at which time it became listed
on Over The Counter Bulletin Board (Symbol "DMTI"). In March 2003, the Company's
stock became quoted on the Pink Sheets. The Company anticipates re-listing its
stock on the Over-the-Counter Bulletin Board as soon as it files all periodic
reports with the SEC as required by the Securities Exchange Act of 1934.

The closing numbers for each quarter were obtained from the Bloomberg System.
The prices presented are bid prices which represent prices between broker-dealer
and do not include retail markups and markdowns or any commission to the dealer.
The prices may not reflect actual transactions.

The high and low sales for the Common Stock are set forth in the following
table.

Fiscal 2006                                                High             Low
April 30 .......................................          $0.900          $0.020

January 31 .....................................          $0.990          $0.450

Fiscal 2005                                                High             Low
October 31 .....................................          $0.025          $0.021

July 31 ........................................          $0.025          $0.021

April 30 .......................................          $0.045          $0.021

January 31 .....................................          $0.080          $0.030

Fiscal 2004                                                High             Low

October 31 .....................................          $0.060          $0.035

July 31 ........................................          $0.055          $0.030

April 30 .......................................          $0.140          $0.045

January 31 .....................................          $0.090          $0.020

There were approximately 323 stockholders of record as of June 26, 2006. 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.


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<PAGE>

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

      The financial and business analysis below provides information that the
Company believes is relevant to an assessment and understanding of the Company's
consolidated financial condition, changes in financial condition, and results of
operations. This financial and business analysis should be read in conjunction
with the consolidated financial statements and related notes.

      Certain matters and statements made in this Annual Report on Form 10-KSB
constitute forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934. All such statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Wherever possible, the Company has identified these forward-looking statements
by words such as "anticipates," "may," "believes," "estimates," "projects,"
"expects" "intends," and words of similar import. In addition to the statements
included in this Annual Report on Form 10-KSB, the Company and its
representatives may from time to time make other oral or written forward-looking
statements. All forward-looking statements involve certain assumptions, risks
and uncertainties that could cause actual results to differ materially from
those included in or contemplated by the statements. These assumptions, risks,
and uncertainties include, but are not limited to, general business conditions,
including the timing or extent of any recovery of the economy, the highly
competitive nature of the industry in which the Company operates, the continued
involvement of military forces in the war on terrorism, the speed with which
consumers regain confidence in the safety of air transportation and other risks
and uncertainties. All such forward-looking statements may be affected by
inaccurate assumptions or by known or unknown risks and uncertainties, and
therefore, those statements may turn out to be incorrect. Consequently, no
forward-looking statement can be guaranteed. Actual future results may vary
materially.

      All forward-looking statements are made as of the date of filing or
publication. We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
Investors are advised, however, to consult any further disclosures the Company
makes in future filings with the Securities and Exchange Commission or in any of
its press releases. 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.


                                       10
<PAGE>

RESULTS OF OPERATIONS

      Fiscal Year 2005 Compared With Fiscal Year 2004.

      Sales for the year ended October 31, 2005 were $3,029,000 a decrease of
$1,414,000 or 32% compared with sales of $4,443,000 in the prior fiscal year.
The decrease in sales for the year is primarily attributable mainly to slower
than anticipated receipt of orders from major customers.

      Cost of sales for the year ended October 31, 2005 was $2,153,000 (71% of
sales); a decrease of $1,170,000 or 35% compared with $3,323,000 (75% of sales)
for the prior fiscal year. Cost of sales decreased compared to the same period
in the prior fiscal year because of the corresponding decrease in sales.

      Selling, General and Administrative (SG&A) expenses for the year ended
October 31, 2005, were $1,435,000 (47% of sales) an increase of $64,000 or 5%,
compared with $1,371,000 (31% of sales) for the same period in the prior fiscal
year. While SG&A increased modestly, SG&A as a percentage of sales increased due
largely to the relatively fixed nature of the components of selling, general,
and administrative expenses coupled with the substantial reduction of sales for
the period.

      Net interest expense was $447,000 for the year ended October 31, 2005
compared with net interest expense of $470,000 for the prior year. Even though
long-term debt is lower in 2005 than 2004, interest expense decreased slightly.
In both 2005 and 2004 interest expenses reflect the effects of amortization of
refinancing costs incurred late in 2003.

      The net loss for the year ended October 31, 2005 amounted to $583,000 a
decrease of $40,000 or 6% compared with a loss of $623,000 for the prior fiscal
year. Payables write off prevented a worse decline after sales fell.

      Management has determined that, based on the Company's historical losses
from recurring operations, the Company will most likely not recognize its net
deferred tax assets at October 31, 2005. Ultimate recognition of these tax
assets is dependent, to some extent, on the future revenue levels and margins of
the Company. It is the intention of management to assess the appropriate level
for the valuation allowance each quarter.


                                       11
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

      The Company's principal capital requirements have been to fund working
capital and the payment of long-term debt. The Company has relied primarily on
internally generated funds, private placement proceeds, and subordinated debt to
finance its operations. The Company has no material commitments for capital
expenditures which would affect its liquidity.

      Net cash used in operations was $847,000 in 2005 and $816,000 was used in
2004. The change from 2004 to 2005 was due to ongoing losses and lower than
expected sales volume.

      Net cash provided by financing activities were $902,000 and $796,000 in
2005 and 2004, respectively. The change from 2004 to 2005 was primarily related
to the issuance of debt instruments in the form of notes payable in 2005 higher
than the value of preferred stock issued in fiscal year 2004.

      The Company continues to have substantial debt that was due in 2005 and
2004. Although the Company has generated much of the cash flow through equity
transactions to sustain current operations, the debt obligations of previous
periods have not been met. As a result, additional capital and a significant
restructuring were required to meet its prior period debt obligations.

      The details of the restructuring are described with the filing of the
definitive information statement on Schedule 14C as filed with the Securities
and Exchange Commission on March 2, 2006. This includes a description of the
one-for-30 reverse stock split that occurred on April 11, 2006.

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

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

      The Company has incurred operating losses for the last several years which
have adversely affected its liquidity and operations. Management believes that
the reduction in debt obligations and receipt of additional funds in connection
with the restructuring in December 2005 will enable the Company to continue as a
going concern at least through October 31, 2006.


                                       12
<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 are discussed at appropriate points
in this report and the Company's other SEC filings. Others are included in the
fact that the Company has been engaged in supplying equipment and services to
the U.S. government defense programs which are subject to special risks,
including dependence on government appropriations, contract termination without
cause, contract re-negotiations and the intense competition for available
defense business.

ITEM 7. FINANCIAL STATEMENTS

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


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<PAGE>

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

      NONE

ITEM 8A. CONTROLS AND PROCEDURES.

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

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

ITEM 8B - OTHER INFORMATION

      NONE


                                       14
<PAGE>

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS

      Management is vested in DataMetrics' Board of Directors and officers. At
each Annual Meeting, shareholders are to elect Directors. Each newly elected
Director holds office until the succeeding annual meeting and until the election
and qualification of his or her successor. The officers of the Company hold
office at the discretion of the Board of Directors. There was no annual meeting
of shareholders in 2005.

      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              48              Director
Daniel Bertram                 45              Chief Executive Officer, Director
Gary Herman                    41              Chairman, Director
Rafik Moursalien               49              Chief Financial Officer
Thomas Leonardis               60              Director
Edward Kroning                 45              Secretary

BUSINESS EXPERIENCE

      Bruce R. Galloway has been a director of the company since August 2000 and
was Chairman of the Board from August 2000 to May 2005. Mr. Galloway is
currently a managing director of Arcadia Securities Inc., a New York-based
investment firm. From 1993 to 2005 Mr. Galloway was a managing director at
Burnham Securities inc., a New York based investment bank. Prior to joining
Burnham, from 1991 to 1993, Mr. Galloway was a senior vice president at
Oppenheimer & Company, a New York-based investment bank. Mr. Galloway holds a
B.A. degree in Economics from Hobart College and an MBA in Finance from New York
University's Stern Graduate School of Business. He is also the Chairman of
Broadcaster, Inc., and Command Security Corporation, as well as a director of
Forward Industries Inc., GVI Security Solutions, Inc., and Waiter.com.

      Daniel Bertram is the Chief Executive Officer. Mr. Bertram became CEO and
a Director of the Company in June 2001 after serving as Vice President for
Marketing and Sales since March 2001. Mr. Bertram was a principal of Conesys,
Inc. from 1998 through February 2001. From 1997 through 1998 he was a principal
of The Bertram Co., a consulting firm. He served as Vice President for Sales and
Customer Support for Staefa Control System (now a Siemens Company) from 1991 to
1996. Prior to his work at Staefa, he served as Regional Distribution Manager
for Telemecanique/Square D, a U.S. subsidiary of Groupe Schneider, France, a
global leader in Industrial Automation Systems and Components, where he grew its
representative network in 13 western states. He was also Northeast Regional
Marketing Manager for Leroy-Somer, Inc. (now a division of Emerson Electric).
Mr. Bertram holds a Master of Arts in Industrial/Organizational Psychology from
Pepperdine University and a Bachelor of Arts from Marquette University.


                                       15
<PAGE>

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

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

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

      Rafik (Rob) Moursalien, Chief Financial Officer. Mr. Moursalien became
Chief Financial Officer in May 2006 after joining DataMetrics in September 2004
as Controller. He has over 15 years of progressive experience in Accounting and
Finance, Business Management, and Network Administration. Before joining
DataMetrics, he was Controller at IBS Group, a Software Development Company
serving State SBDC's, Federal Government Agencies, and Chambers of Commerce. Mr.
Moursalien holds a Certified Public Accountant's License from the State of
Delaware, the Certified Administrative Manager's Designation from the Canadian
Institute of Certified Administrative Managers, and Novell's Certified Network
Engineer Designation. He also holds a Degree in Accounting from George Brown
College, and a B.S. in Business Management from LaSalle University.

      The audit committee of the Company is comprised of Thomas Leonardis. [The
second member of the audit committee resigned as a director in the Spring of
2003 and has not yet been replaced]. The audit committee has met three times
during FYE 2005. We currently do not have a financial expert as that term is
defined under Reg. S-B, ITEM 401 (e). The Company is diligently searching for
another Independent Director with the requisite financial expertise to become
part of the Audit Committee.

All Directors attended all of the Board of Director meetings in 2005.


                                       16
<PAGE>

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 no one in the
above categories failed to file the required reports.

CODE OF ETHICS

      The Code of Ethics is filed with the SEC as Exhibit 21.2.

ITEM 10. EXECUTIVE COMPENSATION

      The following table shows, for the fiscal year ended October 31, 2004, the
compensation earned by the current Chief Executive Officer of the Company.

                          SUMMARY COMPENSATION SCHEDULE
                               ANNUAL COMPENSATION

<TABLE>
<CAPTION>
                                              Long Term Compensation
                                              ----------------------
                                              Awards                                       Payouts
                                              ------                                       -------
                                                                            Securities
                                                                            Underlying
Name and                                      Other          Restricted     Options and    LTIP **    All
Principal        Fiscal    Base               Annual         Stock Awards   Warrants       Payouts    Other
Position         Year      Salary     Bonus   Compensation   ($)            (#)            ($)        Compensation
--------------   ------   --------    -----   ------------   ------------   -----------    -------    ------------
<S>               <C>     <C>          <C>    <C>            <C>                 <C>          <C>         <C>
Daniel Bertram    2005    $144,000      --    $  7,200(3)          --            --           --          --(4)
    (1)(2)
    (1)(2)

Daniel Bertram    2004    $144,000      --    $ 14,400(3)          --            --           --          --(4)
    (1)(2)
    (1)(2)

Daniel Bertram    2003    $144,000      --    $ 14,400(3)    $  7,244(5)         --           --          --(4)
    (1)(2)                                                   $ 30,926(6)
    (1)(2)
</TABLE>

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

(1)   Hired March 2001.

(2)   Promoted to CEO, June 2001.

(3)   Rent and car allowances.

(4)   Bonus.

(5)   Stock Bonus of 241,455 shares at $.03 per share in May of 2003

(6)   Stock Bonus of 2,061,765 shares at $.015 per share issued May 31, 2003


                                       17
<PAGE>

              AGGREGATED OPTION/SAR* EXERCISES IN LAST FISCAL YEAR
                          AND FY END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                                    Number of Exercisable
                    Shares                                          Securities Underlying         Value of Unexercised
                    Acquired on                Value                Unexercised Options at        In-the-money Options
Name                Exercise                   Realized                     FY-End               At FY-End Exercisable
------------        --------------------       ----------------     ----------------------       ---------------------
<S>                 <C>                        <C>                          <C>                              <C>
Daniel Bertram      None                       Not Applicable               150,000                          0
</TABLE>

DIRECTOR COMPENSATION

      There are no standard arrangements for providing any compensation to
Directors.

EMPLOYMENT AGREEMENTS

      Pursuant to an agreement with the Company dated June 2001 and extended in
2002, 2004, and 2006 the Company agreed to employ Daniel Bertram as the
President/Chief Executive Officer through May 2008. His annual salary is
$148,320. He also receives a monthly automobile allowance, and participation in
the Company's benefit package. He will receive stock options and bonuses as
determined by the Board of Directors.


                                       18
<PAGE>

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

      The following table sets forth, as of June 15, 2006 the number and
percentage of shares of the Company's Common Stock owned beneficially, by class
and on a combined basis, by (i) each current director, (ii) each executive
officer, (iii) all executive officers and directors as a group, and (iv) each
person who is known by us to own beneficially more than 5% of our Common Stock.
The table has been adjusted to reflect the one for 30 reverse split that was
effective April 11, 2006.

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

                                         Number of Shares     Percent of Shares
Name of Beneficial Owner                 Beneficially Owned   Beneficially Owned
------------------------                 ---------------------------------------

SG DMTI Capital, LLC            (1)          12,877,162             50.0%

DMTR, LLC                       (1)           8,181,204             31.8%

Daniel Bertram                  (2)             326,774             1.26%
                                (6)
Bruce Galloway                  (2)(3)           95,397             0.37%
Gary Herman                     (2)(4)          294,000             1.14%
                                (6)
Ed Kroning                      (2)               8,535             0.03%
                                (5)
Rafik Moursalien                (2)                   0                0%

Thomas Leonardis                (2)                   0                0%

All Executive Officers &
Directors as a Group                            724,706             2.81%

Notes:

(1)   Giving effect to the post-split Warrant for 12,877,162 post-split shares,
      the shareholder would own 50% of the common stock of the Company. SG
      Phoenix Ventures LLC is the managing member of SG DMTI Capital LLC. SG
      Phoenix Ventures LLC disclaims beneficial ownership of such securities
      beneficially owned by SG DMTI Capital LLC. Philip S. Sassower and Andrea
      Goren are managing members of SG Phoenix Ventures LLC, and each are
      members of DMTR, owning one-seventh of the membership interests of DMTR
      Messrs. Sassower and Goren disclaim beneficial ownership of such
      securities beneficially owned by SG DMTI Capital LLC and DMTR.

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


                                       19
<PAGE>

(3)   Mr. Galloway is the managing member of DMTR. Mr. Galloway disclaims
      beneficial ownership of the shares owned by DMTR. His ownership includes
      88,026 post-split shares he owns directly and 7,371 post-split shares of
      common stock over which Mr. Galloway has indirect beneficial ownership.

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

(5)   Includes 486 post-split shares of common stock jointly owned with Karen
      Kroning.

(6)   Includes 250,000 post-split shares issued each to Daniel Bertram and Gary
      Herman on June 14, 2006.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS:

                                                            Number of Securities
                    Number of        Weighted-Average       remaining available
Compensation        Securities to    exercise price of      for future issuance
Plan                be issued upon   outstanding Options,   under equity compen-
Category            Exercise of:     Warrants and rights    sation plans.
--------            ------------     -------------------    -------------

Approved by
Shareholders            None                None                    None

Not approved
By Shareholders         None                None                    None

      The Company does not know of any arrangements that may result in a change
in control of the Company, except for the security interest of DMTR LLC in
substantially all of the assets of the Company. See Note 12, Subsequent Events
for more details.

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.

      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 assigned from Branch Banking
and Trust Company, $1,305,000 on certain bridge financing and $798,860 on the
Line of Credit). 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. To the extent such assets and stock are
pledged to secure the Senior Bank Loan and the Bridge Financing, 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 Financing to conform
those terms to the terms of the Line of Credit.


                                       20
<PAGE>

      The Line of Credit matured on January 31, 2003. The Company is in default
of its obligations under the Line of Credit. In April 2001, DMTR agreed to
forgive $700,000 of principal obligations in exchange for the issuance of
14,000,000 shares of common stock or 700,000 shares on a post reverse stock
split. As part of the debt forgiveness, the Company shall continue to pay the
interest for the entire obligation. As additional consideration for the
financing 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 $1.00 per share, exercisable through January 31, 2007.
The exercise price was subsequently lowered to $.24 per share, then $.075 per
share, then $.055 per share in consideration of certain default waivers. Such
issuance gives effect to the company's reverse stock split. DMTR has exchanged
$700,000 in principal amount of the Line of Credit for the issuance of 700,000
shares of common stock (with demand registration rights). The Company and DMTR
entered into a Standstill Agreement that provides for DMTR not to exercise any
of its default rights, so long as the parties negotiate in good faith to
restructure this obligation.

      The Company reached an agreement with 96% of the holders of the 10%
Subordinated Notes dated December 24, 1998 in the aggregate principal amount of
$3,524,000 as of December 31, 2000 (the "10% Notes") to exchange each $1.00 face
amount of the outstanding 10% Notes and accrued interest for shares of common
stock. The Company issued approximately 5,019,434 shares of common stock in 2002
in connection with this exchange. No settlement has been reached to date for the
remaining 4% of holders of these notes.

      Gary Herman is the Chairman and Chief Executive Officer of Digital
Creative Development Corporation ("DCDC"). In March 2000, DCDC purchased 600,000
shares of common stock of MadeMyWay, a subsidiary of the Company, for
$1,200,000. Pursuant to the purchase agreement, such 600,000 shares of common
stock are convertible into 2,000,000 of the Company's common stock. In 2003, the
Company issued DCDC 2,400,000 shares of common stock prior to the stock split.
In addition, in November 2000, DCDC advanced $180,000 of $1,305,000 in bridge
loans to the Company. Such amount has been repaid with interest to DCDC.

      On February 28, 2002, the Company awarded options to purchase shares of
common stock to Messrs. Bertram, Galloway and Herman. While the Company's Board
of Directors initially authorized the issuance of stock, the individuals elected
to accept options. Messrs. Bertram and Galloway each received options for
2,041,365 shares of common stock as management incentive options. Mr. Herman
received options for 765,512 shares in consideration for his work in the
restructuring of the Company's capital structure in 2001 and 2002. The exercise
price was $0.24 per share. Effective June, 2003, the Company canceled the
options and issued Messrs. Galloway, Bertram and Herman the shares otherwise
issuable under the options in consideration for their services to the Company.
Mr. Galloway transferred a portion of his shares to Mr. Herman. As such, Messrs.
Bertram, Galloway and Herman have 2,061,765, 1,634,927 and 1,200,000 shares
respectively.

      Recent developments in 2005 with respect to the loan from DMTR and the
restructuring of the Company's capital structure with other affiliated parties
is described under "Business - Recent Developments"


                                       21
<PAGE>

ITEM 13 EXHIBITS, LISTS AND REPORTS ON FORM 8-K

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

Exhibit
  No.       Description
-------     -----------

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).

4.8         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).

4.17        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
            Exhibit4.3 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.


                                       22
<PAGE>

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 Exhibit 10.1 to the Registrant's 8-K dated September
            13, 1999).

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 (incorporated by reference to the Registrant's Form 10-K filed
            on February 13, 2001).

10.20       Secured Promissory Note dated January 31, 2001 issued by the Company
            to DMTR, LLC (incorporated by reference to the Registrant's Form
            10-K filed on February 13, 2001).


                                       23
<PAGE>

10.21       Modification and Amendment Agreement dated January 31, 2001 between
            the Company and DMTR, LLC (incorporated by reference to the
            Registrant's Form 10-K filed on February 13, 2001).

10.22       Modification and Amendment Agreement dated January 31, 2001 between
            the Company and DMTR, LLC (incorporated by reference to the
            Registrant's Form 10-K filed on February 13, 2001).

10.23       Exchange Agreement dated as of January 31, 2001 between the Company
            and DMTR, LLC (incorporated by reference to the Registrant's Form
            10-K filed on February 13, 2001).

10.24       Registration Rights Agreement dated as of January 31, 2001 between
            the Company and DMTR, LLC (incorporated by reference to the
            Registrant's Form 10-K filed on February 13, 2001).

10.25       Security Agreement dated January 31, 2001 between the Company and
            DMTR, LLC (incorporated by reference to the Registrant's Form 10-K
            filed on February 13, 2001).

10.26       Security Agreement dated January 31, 2001 between the MadeMyWay.Com,
            Inc. and DMTR, LLC (incorporated by reference to the Registrant's
            Form 10-K filed on February 13, 2001).

10.27       Pledge Agreement dated January 31, 2001 between the Company and
            DMTR, LLC (incorporated by reference to the Registrant's Form 10-K
            filed on February 13, 2001).

10.24       Form of Letter of Acceptance relating to Exchange Offer to holders
            of the Company's 10% Subordinated Notes (incorporated by reference
            to the Registrant's Form 10-K filed on February 13, 2001).

10.25       Agreement and Plan of Merger between the Company, PEC and Merger
            subdued November 19, 2001 (incorporated by reference from the Form
            8-K filed on December 5, 2001), (incorporated by reference to the
            Registrant's Form 10-K filed on February 13, 2001).

10.26       Standstill Agreement with DMTR, LLC effective as of January 31,
            2003.

10.27       Contract of sale between DataMetrics Corporation and SG DMTI, LLC
            dated November 4, 2005. (incorporated by reference to the
            Registrant's Form 8-K filed on November 24, 2005)

10.28       Lease Agreement between DataMetrics Corporation and SG DMTI, LLC.
            (incorporated by reference to the Registrant's Form 8-K filed on
            January 17, 2006)

10.29       Secured Promissory Note dated November 7, 2005. (incorporated by
            reference to the Registrant's Form 8-K filed on January 17, 2006)

10.30       Loan Termination and Conversion Agreement between the Company and
            DMTR dated as of December 30, 2005. (incorporated by reference to
            the Registrant's Form 8-K filed on January 17, 2006)


                                       24
<PAGE>

10.31       Series B Preferred Stock and Warrant Purchase Agreement between the
            Company and SG dated as of December 30, 2005. (incorporated by
            reference to the Registrant's Form 8-K filed on January 17, 2006)

10.32       Certificate of Designations, Preferences and Rights of Series B
            Preferred Stock. (incorporated by reference to the Registrant's Form
            8-K filed on January 17, 2006)

10.33       Common Stock Purchase Warrant dated as of December 30, 2005.
            (incorporated by reference to the Registrant's Form 8-K filed on
            January 17, 2006)

10.34       Registration Rights Agreement dated as of December 30, 2005 between
            the Company and SG. (incorporated by reference to the Registrant's
            Form 8-K filed on January 17, 2006)

10.35       Secured Promissory Note dated as of December 30, 2005. (incorporated
            by reference to the Registrant's Form 8-K filed on January 17, 2006)

10.36       Consent Agreement between DMTR LLC and Commerce Bank, N.A. dated as
            of December 30, 2005. (incorporated by reference to the Registrant's
            Form 8-K filed on January 17, 2006)

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.

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.

21.2        DataMetrics Corporation Code of Ethics (incorporated by reference to
            Exhibit 21.2 on the Registrant's Form 10-K filed on September 30,
            2005).

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).


                                       25
<PAGE>

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 Form 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).

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 Form 8-K filed on August 18, 2000).

99.11       Certification of Daniel Bertram, Chief Executive Officer, under the
            Sarbanes-Oxley Act of 2002 dated July 18, 2005.

99.12       Certification of Rafik Moursalien, Controller, under the
            Sarbanes-Oxley Act of 2002 dated July 18, 2005.

(b) Reports on Form 8-K - None

EXHIBIT 21.1

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

1.    MadeMyWay.Com (Became Inactive During The 2001 Fiscal Year And The
      Investment Was Written Off).

2.    Peripheral Equipment Corporation.


                                       26
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

      The following table represents the aggregate fees billed for professional
audit services rendered to the Company by Davis Monk & Co. for the audit of the
Company's annual financial statements for the 2 years ended October 31, 2005 and
2004, and all fees billed for other services by Davis Monk & Co. during those
periods:

--------------------------------------------------------------------------------
Year Ended October 31,                                   2005             2004

Audit fees (1)                                          $55,465          $14,531

Audit Related Fees (2)                                  $None            $ 4,477

Tax fees (3)                                            $ 4,280          $14,088

All other fees (3)                                      None             None

Total Accounting Fees and Services                      $59,745          $33,096

(1)   AUDIT FEES. These are fees for professional services for the audit of the
      Company's annual financial statements, and for the review of the financial
      statements included in the Company's filings on Form 10Q and for services
      that are normally provided in connection with statutory and regulatory
      filings or engagements.

(2)   TAX FEES. These are fees for professional services with respect to tax
      compliance, tax advice, and tax planning.

(3)   ALL OTHER FEES. These are fees for permissible work that does not fall
      within any of the other fee categories, i.e., Audit Fees or Tax Fees.

PRE-APPROVAL POLICY FOR AUDIT SERVICES

      The Company's Audit Committee has responsibility for the approval of all
audit and non-audit services before the Company engages an accountant. All of
the services rendered to the Company by Davis Monk & Co. for the fiscal years
ended October 31, 2005 and 2004 were pre-approved by the Audit Committee before
the engagement of the auditors for such services. The Company and the Audit
Committee are working with the Company's legal counsel to establish formal
pre-approval policies and procedures for all future engagements of the Company's
accountants. The Company's pre-approval policy will expressly provide for the
annual pre-approval of all audit, audit-related and all non-audit services
proposed to be rendered by the independent auditor for the fiscal year, as
specifically described in the auditor's engagement letter, such annual
pre-approval to be performed by the Audit Committee.


                                       27
<PAGE>

SIGNATURES

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

                                        DATAMETRICS CORPORATION
                                        -----------------------


                                        /s/ Daniel Bertram
                                        Chief Executive Officer

                                        /s/ Rafik Moursalien
                                        Chief Financial Officer

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

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

/s/ Daniel Bertram                  Director                   July 6, 2006
-------------------
    Daniel Bertram

/s/ Bruce Galloway                  Director                   July 6, 2006
-------------------
    Bruce Galloway

/s/ Gary Herman                     Director                   July 6, 2006
-------------------
    Gary Herman

/s/ Thomas Leonardis                Director                   July 6, 2006
-------------------
    Thomas Leonardis


                                       28
<PAGE>

              FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS REPORT
                     DATAMETRICS CORPORATION AND SUBSIDIARY
                            OCTOBER 31, 2005 AND 2004

                                TABLE OF CONTENTS
                                                                           Page
                                                                           ----

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                    30

CONSOLICATED BALANCE SHEET                                                 31

CONSOLIDATED STATEMENTS OF OPERATIONS                                      32

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT                           33

CONSOLIDATED STATEMENTS OF CASH FLOWS                                      34-35

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                             36-44

CERTIFICATIONS                                                             45-50


                                       29
<PAGE>

             Report of Independent Registered Public Accounting Firm

To the Audit Committee, Board of Directors and Stockholders
DataMetrics Corporation and Subsidiary
Orlando, Florida

We have audited the  accompanying  balance sheet of DataMetrics  Corporation and
Subsidiary as of October 31, 2005,  and the related  consolidated  statements of
operations,  stockholders'  deficit,  and cash flows for the years ended October
31, 2005 and October 31, 2004. These financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of  DataMetrics
Corporation  and  Subsidiary  as of October  31,  2005,  and the  results of its
operations  and its cash flows for the years ended October 31, 2005, and October
31, 2004 in conformity  with  accounting  principles  generally  accepted in the
United States of America.


/s/ Davis, Monk & Company
---------------------------
DAVIS, MONK & COMPANY

June 12, 2006
Gainesville, Florida


                                       30
<PAGE>

                           Consolidated Balance Sheets
                      October 31, 2005 and October 31, 2004
                     DataMetrics Corporation and Subsidiary
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                               2005           2004
                                                                                             --------       --------
<S>                                                                                          <C>            <C>
ASSETS
Current Assets
           Cash                                                                              $    146       $     91
           Accounts Receivable (net of allowance for doubtful accounts
                  of $0 for 2005 and 2004)                                                        270            667
           Inventory (net of allowance for obsolete inventory of $6,070 for 2005
                 and $6,006 for 2004)                                                             907            497
           Other Current Assets                                                                    94             40
                                                                                             -----------------------
                                             Total current assets                               1,417          1,295

Property and Equipment
           Building and improvements                                                            1,112          1,112
           Furniture, Fixtures and computer equipment                                           1,195          1,195
           Machinery and equipment                                                                547            547
           Land                                                                                   420            420
                                                                                             -----------------------
                      Total Property and Equipment                                              3,274          3,274
                      Less Accumulated Depreciation                                            (2,011)        (1,956)
                                                                                             -----------------------
                                             Net Property and Equipment                         1,263          1,318

                                             Total Assets                                    $  2,680       $  2,613
                                                                                             =======================

LIABILITIES AND STOCKHOLDERS DEFICIT
Current Liabilities
           Accounts Payable                                                                       492            774
           Accrued Expenses                                                                       677            667
           Deferred Revenue                                                                        --            145
           Warranty Reserve                                                                        40             40
           Other Current Liabilities                                                               --             20
           Notes and Advances Payable - Related Parties                                         1,712             --
           Current maturities of LT Debt                                                        3,041          3,102
                                                                                             -----------------------
                                             Total Current Liabilities                          5,962          4,748

Long-Term Liabilities
           Long-Term Debt                                                                          --            719
           Refinance Cost                                                                          --           (155)
                                                                                             -----------------------
                                             Total Long Term Liabilities                           --            564

                                                                                             -----------------------
                                             Total Liabilities                               $  5,962       $  5,312

Stockholders deficit:
           Preferred Stock - $1,339 aggregate liquidation preference                         $      9       $      9
           Common Stock                                                                           321            321
           Additional Paid In Capital                                                          58,142         58,142
           Accumulated Deficit                                                                (61,754)       (61,171)

                                                                                             -----------------------
                                             Total Stockholders Deficit                      $ (3,282)      $ (2,699)
                                                                                             -----------------------

                                             Total Liabilities and Stockholders Deficit      $  2,680       $  2,613
                                                                                             =======================
</TABLE>

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


                                       31
<PAGE>

                      Consolidated Statements of Operations
                  For the years ended October 31, 2005 and 2004
                     DataMetrics Corporation and Subsidiary
                 (in thousands, except per share and share data)

                                                              2,005       2,004
                                                            -------     -------
SALES                                                         3,029       4,443

COST OF SALES
           Purchases, Manufacturing and Overhead              2,153       3,323
                                                            -------     -------

GROSS PROFIT                                                    876       1,120

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                  1,435       1,371
                                                            -------     -------

OPERATING LOSS                                                 (559)       (251)

OTHER INCOME (EXPENSE)
           Interest expense                                    (447)       (470)
           Inventory Adjustment to Market                       (64)         --
           Bad Debt Allowance Recovery                           --          25
           Forgiveness of Payables                              487          --
           Other Income                                          --          73

                                                            -------     -------
TOTAL OTHER (EXPENSE)                                           (24)       (372)
                                                            -------     -------

LOSS BEFORE PROVISION FOR INCOME TAXES                         (583)       (623)

PROVISION FOR INCOME TAXES                                       --          --

                                                            -------     -------
NET LOSS                                                       (583)       (623)
                                                            =======     =======

LOSS PER SHARE ON COMMON STOCK, BASIC
           AND DILUTED:
           Net Loss                                           (0.02)      (0.02)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING,
           BASIC AND DILUTED                                 32,113      32,113
                                                            =======     =======

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


                                       32
<PAGE>

                Consolidated Statements of Stockholders' Deficit
                  For the years ended October 31, 2005 and 2004
                     DataMetrics Corporation and Subsidiary
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                       Common Stock              Preferred Stock
                                ------------------------     -----------------------
                                   Number                      Number
                                 of Shares        Amount     of Shares       Amount
                                ----------------------------------------------------
<S>                              <C>              <C>          <C>          <C>
Balances at October 31,
2003                             33,056,590       $ 330                     $     --

Reclassification of Stock
  Surrendered To Properly
  Reflect their Status as
  Cancelled                        (943,847)      $  (9)

Issuance of Preferred
Stock                                                          892,652             9

Fractional Difference from
  Transfer Agent                       (640)

Net Loss
                                ----------------------------------------------------

Balances at October 31,
2004                             32,112,103       $ 321        892,652      $      9

Net Loss

Balances at October 31,
2005                             32,112,103       $ 321        892,652      $      9

<CAPTION>
                                    Treasury Stock                                          Total
                                -----------------------       Add'l                         Stock
                                 Number                      Paid-In      Accumulated      holders
                                of Shares       Amount       Capital        Deficit        Deficit
                                ------------------------------------------------------------------
<S>                              <C>           <C>           <C>            <C>            <C>
Balances at October 31,
2003                              943,847      $   (120)     $ 57,368       $(60,548)      $(2,970)

Reclassification of Stock
  Surrendered To Properly
  Reflect their Status as
  Cancelled                      (943,847)     $    120      $   (111)                          --

Issuance of Preferred
Stock                                                             885                          894

Fractional Difference from
  Transfer Agent

Net Loss                                                                        (623)         (623)
                                ------------------------------------------------------------------

Balances at October 31,
2004                                   --      $     --      $ 58,142       $(61,171)      $(2,699)

Net Loss                                                                        (583)         (583)

Balances at October 31,
2005                                   --      $     --      $ 58,142       $(61,754)      $(3,282)
</TABLE>

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


                                       33
<PAGE>

                      Consolidated Statements of Cash Flows
                  For the years ended October 31, 2005 and 2004
                     DataMetrics Corporation and Subsidiary
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                    2005     2004
                                                                                    -------------
<S>                                                                                 <C>      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
         Net Loss                                                                   (583)    (623)
         Adjustments to Reconcile Net Loss to Net Cash Used
                in Operating Activities:
                Depreciation                                                          55       53
                Write Down of Inventory                                               64       --
                Expenses with Equity Instruments or Financing                         30       50
                Bad Debts                                                             --      (25)
                Warranty Recovery                                                     --      (16)
                Amortization of Refinancing Costs                                    155      205
                Forgiveness of Payables                                             (487)      --

         Changes in assets and liabilities:
                Accounts Receivable                                                  397     (470)
                Inventories                                                         (474)     290
                Prepaid Expenses and Other Current Assets                            (54)     (30)
                Accounts Payable                                                     (65)     (32)
                Accrued Expenses                                                     280       (6)
                Other Current Liabilities                                            (20)      15
                Deferred Revenue                                                    (145)    (227)

                                                                                    -------------
NET CASH USED IN OPERATING ACTIVITIES                                               (847)    (816)
                                                                                    -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
         Issuance of Stock and Warrants                                               --      844
         Proceeds from Notes Payable - Related Party                                 931       --
         Payments on long-term debt                                                  (29)     (47)

                                                                                    -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                            902      797
                                                                                    -------------

NET INCREASE (DECREASE) IN CASH                                                       55      (19)

CASH, BEGINNING OF YEAR                                                               91      110

                                                                                    -------------
CASH, END OF YEAR                                                                    146       91
                                                                                    =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
         Cash Paid During the Year for:
           Interest                                                                  100      220
           Income Taxes                                                               --       --

         Noncash Investing and Financing Activities:
           Expenses Paid by Issuance of Preferred Stock                               --       50
           Mortgage Payable Paid by Loan from Related Party                          751       --
           Expense Paid by Advance from Related Party                                 30       --
</TABLE>

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


                                       34
<PAGE>

                   Notes to Consolidated Financial Statements
                            October 31, 2005 and 2004
                     DataMetrics Corporation and Subsidiary

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.

Revenue Recognition and Related Warranty Reserves

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 prior years  experience with actual warranty costs.  The
warranty for the Company's  products  generally  covers  defects in material and
workmanship for a period of one year.

Accounts Receivable and Allowance for Doubtful Accounts

As is customary in the industry, the Company grants non-collateralized credit to
its clients, which include primarily the U.S. government and large multinational
corporations  operating in a broad range of industries.  Accounts receivable are
recorded at contract  value.  In order to mitigate its credit risk,  the Company
continually evaluates the credit worthiness of its major commercial clients, and
maintains an allowance for potential losses within management expectations based
on past experience. Based on past experience and the client base, bad debts have
been extremely rare.  Consequently,  no allowance for doubtful accounts has been
provided.  An account is written off only after  deemed  worthless by a specific
review of management.  Since  collection  problem with receivables are rare, the
Company does not have a policy of charging interest on overdue receivables.

Inventories

Inventories are stated at the lower of cost (first in, first-out) or market.

Property and Equipment

Property and equipment are recorded at cost.  Depreciation is provided using the
straight-line method over the following estimated useful lives:

                 Building and improvements                          39 years
                 Furniture, fixtures and computer equipment         3 to 8 years
                 Machinery and equipment                            3 to 8 years


                                       35
<PAGE>

                   Notes to Consolidated Financial Statements
                            October 31, 2005 and 2004
                     DataMetrics Corporation and Subsidiary

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basic and Diluted Net Loss per Common Share

Basic and diluted  net loss per share are  computed  using the  weighted-average
number of shares of common  stock  outstanding  during the  period.  Potentially
dilutive  securities have been excluded from the computation of diluted earnings
per share,  as their  effect is  antidilutive.  If the Company had  reported net
income,  diluted  earnings per share would have  included the shares used in the
computation  of net loss per share  plus  common  equivalent  shares  related to
1,724,925  outstanding  options and  warrants for the fiscal years 2005 and 2004
respectively.

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  (non-discounted  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 Statement of
Financial  Accounting  Standards (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.  Because  of the  uncertainty  that tax
benefits  from net operating  losses will be utilized,  no deferred tax benefits
are included in income.

Statement of Cash Flows

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

Use of Estimates

The preparation of financial  statements in accordance  with generally  accepted
accounting  principles  requires the Company's  management to make estimates and
assumptions.  These  estimates and  assumptions  affect the reported  amounts of
assets, liabilities, and disclosure of contingent assets and liabilities, at the
date of the  financial  statements  and the  reported  amounts of  revenues  and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.


                                       36
<PAGE>

                   Notes to Consolidated Financial Statements
                            October 31, 2005 and 2004
                     DataMetrics Corporation and Subsidiary

NOTE 2 - ACQUISITION OF SUBSIDIARY

In  2001,  DataMetrics   Corporation  formed  Peripheral  Equipment  Acquisition
Corporation  (PEAC)  to  acquire  100%  of the  stock  of  Peripheral  Equipment
Corporation. PEAC changed its name to Peripheral Equipment Corporation following
the merger of Peripheral Equipment  Corporation into PEAC.  Peripheral Equipment
Corporation  has been inactive  since 2002.  Consequently,  no income or expense
from this subsidiary is reported for the years ended October 31, 2005 and 2004.

NOTE 3 - INVENTORIES

Inventories consist of the following:

                                                                 000's

                                                          2005            2004
Inventory Parts and sub-assemblies                      $   588         $   393
Work in Process                                             383             104
Finished Goods                                               --              --
Obsolete Inventory                                        6,006           6,006

                                                        -----------------------
Total Inventory                                           6,977           6,503
Adjustment for Market Value                              (6,070)         (6,006)

                                                        -----------------------
Net Inventory                                           $   907         $   497
                                                        =======================

Inventory parts and  sub-assemblies  consist  primarily of materials used by the
Company for  existing  and  anticipated  contracts  and  materials  and finished
assemblies,  which are held to satisfy spare parts requirements of the Company's
customers.


                                       37
<PAGE>

                   Notes to Consolidated Financial Statements
                            October 31, 2005 and 2004
                     DataMetrics Corporation and Subsidiary

NOTE 4 - LONG-TERM DEBT

Long-term debt at October 31, 2005 and 2004 consists of the following:

<TABLE>
<CAPTION>
                                                                                                                 000s
                                                                                                          -------------------
                                                                                                           2005        2004
                                                                                                           ----        ----
<S>                                                                                                       <C>         <C>
      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 was  originally  scheduled  to
      mature on March 9, 2008 and was  collateralized by the Orlando  Facility.  Interest was 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.  In June 2005,  investors
      paid off this loan.  The  investors  were paid back during the  restructuring  of the Company as
      described in note 12                                                                                $    --     $   780

      In December 1998, the Company closed a private  placement of approximately  $3.45 million of 10%
      Subordinated  Notes  originally due in December 2000. The Notes are unsecured and callable under
      certain conditions                                                                                      141         141

      In January 2001,  the Company  executed  loan  documents  with DMTR,  LLC, a related party whose
      partners are major stockholders and members of the Board of Directors of the Company.  The loan,
      secured by all assets of the Company,  accrues  interest  (payable  monthly) at the base rate of
      Citibank N.A. plus 100 basis  points.  The principal and remaining  interest were due in January
      2003
                                                                                                            2,900       2,900
                                                                                                          -------------------
      Total Long-Term Debt                                                                                  3,041       3,821
      Less: Current Maturities                                                                             (3,041)     (3,102)
                                                                                                          -------------------
      Net Long-Term Debt                                                                                  $    --     $   719
                                                                                                          ===================
</TABLE>

The holders of the DMTR, LLC loan reached  agreements with the Company to extend
the due dates of the loans pending completion of the restructuring  described in
note 12. The debts were repaid once the restructuring was complete. Negotiations
with the  holders  of the 10%  Subordinated  Notes  are  ongoing.  To  date,  no
resolution on a settlement date or amount has been reached.


                                       38
<PAGE>

                   Notes to Consolidated Financial Statements
                            October 31, 2005 and 2004
                     DataMetrics Corporation and Subsidiary

Future payments required on long-term debt are as follows:

                                                              000's
                                                             ------
            2006                                              3,295
            Less Interest                                      (254)
                                                             ------
            Principal Balance                                 3,041
                                                             ======

NOTE 5 - REFINANCING COST

During 2003, the Company reached agreement with holders of its long term debt to
extend  the due dates of the debt.  As part of the  negotiations  to extend  the
dates,  the Company issued 7,000,000 shares of Company stock options to the debt
holders.  The options,  with an original  exercise price of $0.07 per share were
valued, using the Black Scholes method, at $515,474.  The value of these options
were  capitalized as a component of long term debt and are being  amortized over
the new expected  lives of the related  debt of 2 1/2 years.  The balance of the
cost and related  amortization to date of these costs as of 2005 and 2004 are as
follows:

                                                             $000s
                                                      2005           2004
                                                      ----           ----
      Original Cost                                  $ 515          $ 515
      Accumulated Amortization                        (515)          (360)
                                                     --------------------
      Unamortized Balance                            $  --          $ 155
                                                     ====================

NOTE 6 - NOTES AND ADVANCES PAYABLE - RELATED PARTIES

In anticipation of the Company restructuring described in Note 12, the investors
involved  in the  restructuring  loaned  the  Company  cash in 2005 for  working
capital.  Advances were also  incurred when the investors  paid off the mortgage
payable on the Company headquarters. Those notes and advances were structured to
mature 30 days after issuance with interest rates ranging from 10-12%. They were
collateralized  by all assets of the Company,  but those rights were subordinate
to the rights of the other  holders of long term debt.  Most of these  notes and
advances were in default at October 31, 2005. The investors agreed to extend the
due date until the  restructuring was complete and these notes and advances were
paid in full with the restructuring.

NOTE 7 - COMMON STOCK

Relevant  information for the Company's  common stock as of October 31, 2005 and
2004 is as follows:

                                                                $000's
                                                        2005               2004
                                                      -------            -------
Par Value per share                                       .01                .01
Authorized                                            800,000            800,000
Issued                                                 32,113             32,113
Outstanding                                            32,113             32,113


                                       39
<PAGE>

                   Notes to Consolidated Financial Statements
                            October 31, 2005 and 2004
                     DataMetrics Corporation and Subsidiary

NOTE 8 - PREFERRED STOCK

The Company had 892,652 shares of Series 'A' Preferred Stock with a par value of
$0.01  per share  outstanding  at  October  31,  2005 and 2004.  The stock has a
cumulative  dividend of four percent per annum and is convertible into shares of
the Company's common stock at $.06 per share.

NOTE 9 - STOCK OPTIONS

      The  Company  periodically   provides  for  the  granting  of  options  to
employees,  directors,  and others as compensation  for services  rendered.  The
options,  including their exercise prices and terms, are initiated solely at the
discretion  of the Board of Directors.  These options  generally are 100% vested
upon issuance.

No options were granted in either of Fiscal years 2005 or 2004.

A summary of the status of the  Company's  stock  options as of October 31, 2005
and 2004, and changes during those years are presented below:

                                                  2005               2004
                                            ----------------    ---------------
                                                     Weighted           Weighted
                                                      Average            Average
                                            Shares   Exercise  Shares   Exercise
                                            (000s)     Price   (000s)     Price
                                            ------    ------    -----    ------
    Outstanding at Beginning of Year         1,725    $ 1.31    2,112    $ 5.27
    Granted                                      0                  0
    Exercised                                    0                  0
    Expired / Canceled                           0                387     22.95
                                            ------    ------    -----    ------
    Outstanding and Fully Exercisable at
         the End of the Year                 1,725    $ 1.31    1,725    $ 1.31
                                            ======    ======    =====    ======

Significant  option groups  outstanding at October 31, 2005 and 2004 and related
weighted average life information are as follows:

<TABLE>
<CAPTION>
                            2005                                    2004
                           Number       Weighted                   Number     Weighted
                         Outstanding     Average                 Outstanding   Average
                             and        Remaining                   and        Remaining
                            Fully      Contractual                 Fully      Contractual
             Exercise    Exercisable      Life      Exercise     Exercisable     Life
               Price        (000s)       (YEARS)      Price        (000s)       (YEARS)
               -----        ------       -------      -----        ------       -------
<S>           <C>           <C>           <C>        <C>           <C>           <C>
              $ 1.40        1,500         6.05       $ 1.40        1,500         7.05
                1.00          150         1.61         1.00          150         2.61
               0.055           75         2.00        0.055           75         3.00

                            -----                                  -----
     Total                  1,725                Total             1,725
                            =====                                  =====
</TABLE>


                                       40
<PAGE>

                   Notes to Consolidated Financial Statements
                            October 31, 2005 and 2004
                     DataMetrics Corporation and Subsidiary

NOTE 10 - WARRANTY RESERVES

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

The table below  outlines  warranty  accruals  and related  costs for the fiscal
years ending October 31, 2005 and 2004 respectively.

                                                                   $000's
                                                             2005          2004
                                                             ------------------
Warranty Reserves, Beginning of Year                           40            61
Warranty Accrual / Recovery                                    10           (16)
                                                             ------------------
                                                               50            45
Warranty Expense                                               10             5
                                                             ------------------

Warranty Reserves, End of Year                                 40            40
                                                             ==================

NOTE 11 - INCOME TAXES

The primary  components of the Company's deferred tax assets and liabilities are
as follows:

                                                                 000's

                                                          2005           2004
                                                       ---------      ---------

Deferred tax assets:
Operating loss carryforwards                           $22,196.9      $21,933.3
 Non-deductible accruals and allowances , and
 other
                                                         3,341.9        3,376.1

                                                       ---------      ---------

Total Deferred Income Tax Asset                         25,538.8       25,309.4
Valuation Allowance for Deferred Income Tax Assets
                                                       (25,538.8)     (25,309.4)
                                                       ---------      ---------

Net Deferred Income Tax Assets                         $      --      $      --
                                                       =========      =========

Net operating loss carryforwards of approximately $56 million for federal income
tax purposes  will expire at various times and in varying  amounts  between 2010
and 2024.


                                       41
<PAGE>

                   Notes to Consolidated Financial Statements
                            October 31, 2005 and 2004
                     DataMetrics Corporation and Subsidiary

The provision for income taxes is comprised of the following

                                                            2005          2004
                                                        (dollars in thousands)
Current:
     Federal                                             $    -0-      $    -0-
     State                                               $    -0-      $    -0-
Deferred
     Federal                                             $(196.0)      $(211.9)
     State                                               $ (33.4)      $ (36.1)
Increase in Valuation  Allowance
                                                         $ 229.4       $ 248.0
Net                                                      $    -0-      $    -0-

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

NOTE 12 - CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

Approximately  85% and 80% of the  Company's  sales during fiscal years 2005 and
2004,  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  $356,848  or 12% of total sales in fiscal year
2005. Export sales to foreign  customers  amounted to $240,241 or 5% of sales in
fiscal year 2004. The Company's three largest  customers  accounted for 39%, 10%
and 8% of the Company's  sales for the fiscal year ended  October 31, 2005.  Its
three largest  customers  accounted for 25%, 19% and 19% of the Company's  sales
for the fiscal  year  ended  October  31,  2004.  The  Company's  three  largest
customers  accounted for 81%, 0% and 1% of account receivable in the fiscal year
ended October 31, 2005. The Company's three largest customers accounted for 33%,
10% and 27% of account receivable at October 31, 2004.

The Company  maintains  its cash  balances  in one  financial  institution.  The
balances  are  insured  by  the  Federal  Deposit  Insurance  Corporation  up to
$100,000.  The Company had  $159,000  and $0 in  uninsured  cash balance for the
fiscal years ended 2005 and 2004, respectively.


                                       42
<PAGE>

                   Notes to Consolidated Financial Statements
                            October 31, 2005 and 2004
                     DataMetrics Corporation and Subsidiary

NOTE 13 - SUBSEQUENT EVENTS

In 2005, the Company's Board of Directors  approved a proposal from SG DMTI, LLC
("SGD"),  an  affiliated  entity  of two  members  of  DMTR,  LLC,  who are also
principal shareholders of the Company.

Pursuant to the proposal,  SGD acquired the  Company's  real property in Orlando
for $1,500,000  effective  November 1, 2005. SGD and the Company  entered into a
five-year  triple  net lease with an annual  rent  obligation  of  approximately
$150,000.

In addition,  the Company  consummated a series of other transactions  including
reaching an agreement with the holders of certain long term debt and the holders
of the Series A Preferred Stock to convert those debt and equity securities plus
related accrued  interest  expense into shares of common stock. The Company also
issued  Series B Preferred  Stock to other holders of long term debt in exchange
for  canceling  that  debt.  The  net  effect  of  this  restructuring  was  the
elimination of  approximately  $4.8 million of long term debt, notes payable and
accrued  interest and $250,000 of accounts  payable and other  accrued  expenses
reported in the financial statements for the year ended October 31, 2005.

The Company also effected a one for 30 reverse stock split on April 11, 2006.

NOTE 14 - GOING CONCERN

At October 31, 2005, the Company had a working capital deficit of $4,545,000 and
an  accumulated  deficit of $3,282,000.  Additionally,  the Company has incurred
losses over the past several  years.  Management has taken action to ensure that
the Company will  continue as a going  concern  through  October 31,  2006.  The
actions involve a major restructuring of the Company,  including the addition of
more equity financing which is fully described in Note 12.  Management  believes
that these  actions  will  enable the  Company to  continue  as a going  concern
through October 31, 2006.


                                       43