UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

/ X /    QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(D) OF THE  SECURITIES
         EXCHANGE ACT OF 1934 (FEE REQUIRED)

                For the quarterly period ended: January 31, 1998
                                                ----------------

/   /    TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934 (NO FEE REQUIRED)


                         Commission file number: 0-20688
                         -------------------------------

                              Datatec Systems, Inc.
                              ---------------------
             (Exact name of Registrant as specified in its charter)

           Delaware                                 94-2914253
-------------------------------                   --------------------
(State or other jurisdiction of                   (I.R.S. Employer
incorporation or organization)                    Identification No.)


20C Commerce Way, Totowa, NJ                           07512
-------------------------------                   --------------------
(Address of principal executive                       (Zip Code)
offices)

                                 (973) 890-4800
                     ---------------------------------------
               Registrant's telephone number, including area code


Check whether the Registrant  (1) has filed all reports  required to be filed by
Section 12 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter period that the Registrant was required to file such
reports) and (2) has been subjected to such filing  requirements for the past 90
days. Yes /X/ No / /.

The number of shares of  Registrant's  Common Stock  outstanding  on January 31,
1998 was 28,630,070.

<PAGE>
                              DATATEC SYSTEMS, INC.
                                    FORM 10-Q
                       NINE MONTHS ENDED JANUARY 31, 1998


                                      INDEX




PART I:     FINANCIAL INFORMATION

                                                                            PAGE
                                                                            ----
            Item 1:  Consolidated Financial Statements

                     Balance Sheets at January 31, 1998 and
                     April 30, 1997                                          3

                     Statements of Operations for the three months ended
                     January 31, 1998 and 1997                               4

                     Statements of Operations for the nine months ended
                     January 31, 1998 and 1997                               5

                     Statements of Cash Flows for the nine months ended
                     January 31, 1998 and 1997                               6

                     Notes to Unaudited Financial Statements                 7

            Item 2:  Management's Discussion and Analysis of Financial
                     Condition and Results of Operations                     9


PART II:    OTHER INFORMATION

            Item 4: Submission of Matters to a Vote of Security Holders     11

            Item 6: Exhibits and Reports of Form 8-K                        13

                                       2

<PAGE>
                              DATATEC SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  APRIL 30,               JANUARY 31,
                                                                    1997                    1998
                                                                  ---------              ------------
                                                                                         (unaudited)
ASSETS
CURRENT ASSETS:
<S>                                                             <C>                   <C>          
   Cash and cash equivalents                                    $   1,135             $         120
   Accounts receivable, net                                        11,289                    14,273
   Inventory                                                        2,134                     3,321
   Prepaid expenses and other current assets                        1,446                     3,215
   Net assets from discontinued operations                          4,816                     3,020
                                                              -----------             --------------
               Total current assets                                20,820                    23,949

PROPERTY AND EQUIPMENT, net                                         3,634                     4,993

GOODWILL                                                            1,680                     1,540

OTHER ASSETS                                                        1,670                     2,295
                                                              -----------             -------------

               Total assets                                    $   27,804             $      32,777
                                                              ===========             =============

LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT)
CURRENT LIABILITIES:
   Short-term borrowings                                       $   11,675                   $ 4,351

   Current portion of long-term
      obligations                                                     850                       890
   Accounts payable                                                 5,415                     7,629
   Accrued liabilities                                              5,331                     2,756
   Other current liabilities                                          506                       555
                                                              -----------             -------------
               Total current liabilities                           23,777                    16,181
                                                              -----------             -------------

DUE TO RELATED PARTIES                                              1,026                       801
                                                              -----------             --------------
LONG-TERM OBLIGATIONS                                               5,001                     2,976
                                                              -----------             --------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY (DEFICIT):
    Preferred Stock                                                    --                        --
    Common Stock                                                       24                        29
   Additional paid-in capital                                      10,341                    25,906
   Accumulated deficit                                            (12,080)                  (12,768)
   Cumulative translation adjustment                                 (285)                     (348)
                                                              -----------              ------------
      Total shareholders' equity (deficit)                         (2,000)                   12,819
                                                              -----------              ------------

      Total liabilities and shareholders' equity (deficit)    $    27,804              $     32,777
                                                              ===========              ============
</TABLE>

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

                                       3

<PAGE>
                              DATATEC SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     FOR THE THREE MONTHS ENDED JANUARY 31,
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>

                                                           1997                  1998
                                                      ------------          -------------
                                                                     (unaudited)

<S>                                                  <C>                   <C>            
Net Sales                                            $    12,973           $        17,954

Cost of Sales                                              8,329                    10,729
                                                     -----------            --------------

Gross Profit                                               4,644                     7,225

Selling, general and administrative expenses               4,613                     7,179
                                                     -----------            --------------


Operating income                                              31                        46

Interest expense, net                                        208                       350
                                                     -----------            --------------

Income (loss) before taxes                                  (177)                     (304)

Provision (benefit) for income taxes                         (14)                       --
                                                     -----------            --------------

Income (loss) from continuing operations                    (163)                     (304)

Discontinued operations                                   (2,106)                     (443)
                                                     -----------            ---------------

Net loss                                             $    (2,269)           $         (747)
                                                     ===========            ===============
Income (loss) per share:

   Continuing operations                             $      (.01)           $          (.01)

   Discontinued operations                                  (.10)                      (.02)
                                                     ------------           ---------------

Net income (loss) per share                          $      (.11)           $          (.03)
                                                     ============           ===============

Weighted average outstanding common shares            21,031,000                 28,431,000
                                                     ============           ===============
</TABLE>

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

                                       4
<PAGE>
                              DATATEC SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      FOR THE NINE MONTHS ENDED JANUARY 31,
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                           1997                     1998
                                                       ------------             ------------
                                                                    (unaudited)

<S>                                                   <C>                          <C>      
Net Sales                                             $    45,162                  $  56,078

Cost of Sales                                              27,528                     34,091
                                                      -----------                  ---------

Gross Profit                                               17,634                     21,987

Selling, general and administrative expenses               13,832                     20,877
                                                      -----------                  ---------

Operating income                                            3,802                      1,110

Interest expense, net                                         802                      1,355
                                                      -----------                  ---------

Income (loss) before taxes                                  3,000                       (245)

Provisions for income taxes                                   111                         --
                                                      -----------                  ---------

Income (loss) from continuing operations                    2,889                       (245)

Discontinued operations                                    (3,733)                      (443)
                                                      -----------                  ---------

Net income (loss)                                     $      (844)                 $    (688)
                                                      ===========                  =========

Income (loss) per share:

   Continuing operations                              $       .14                  $     (.01)


   Discontinued operations                                   (.18)                       (.02)
                                                      ===========                  ==========

Net income (loss)                                     $      (.04)                       (.03)
                                                      ===========                  ==========


Weighted average outstanding common shares             20,738,000                  25,693,000
                                                      ===========                 ===========
</TABLE>

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

                                       5

<PAGE>
                              DATATEC SYSTEMS, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                  FOR THE NINE MONTH PERIODS ENDED JANUARY 31,
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                1997             1998
                                                                                ----             ----
                                                                                      (unaudited)

      CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                           <C>              <C>      
      Net Income (loss)                                                       $  (844)         $   (688)
      Adjustments to reconcile net income to net
           cash used in operating activities:
         Depreciation and amortization                                          1,050             1,451
      Changes in operating assets and liabilities:
         (Increase) decrease in accounts receivable                            (1,451)           (2,984)
         (Increase) decrease in inventory                                         101            (1,187)
         (Increase) decrease in prepaid expenses and other assets                (230)           (2,510)
         (Increase) decrease in  assets held for sale or disposition             (858)              237
          Increase (decrease) in accounts payable,
           accrued and other liabilities                                       (1,346)             (218)
                                                                              --------         --------

      Net cash used in operating activities                                    (3,578)           (5,899)
                                                                              --------         --------

      CASH FLOWS FROM INVESTING ACTIVITIES:

        Purchases of property and equipment                                    (1,419)             (994)
                                                                              -------          --------

        Net cash used in investing activities                                  (1,419)             (994)
                                                                              --------         --------

      CASH FLOWS FROM FINANCING ACTIVITIES:

         Increase (decrease) in short-term borrowings, net                     (2,949)           (7,324)

         Net proceeds (payments) of indebtedness                                  158              (811)

         Proceeds from issuance of stock                                        6,924            14,076

         Distribution to stockholders                                            (587)               --
                                                                              -------          --------


          Net cash provided by financing activities                             3,546             5,941
                                                                              -------          --------

          Net effect of foreign currency translation                              (77)              (63)
                                                                              -------          --------

          Net increase (decrease) in cash                                      (1,528)           (1,015)

      CASH AT BEGINNING OF PERIOD                                               2,219             1,135
                                                                              -------          --------

      CASH AT END OF PERIOD                                                   $   691          $   120
                                                                              =======          ========
</TABLE>

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

                                       6

<PAGE>
                              DATATEC SYSTEMS, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands, except share and per share data)

(1) Business

            Datatec  Systems,  Inc.  (the  "Company"  or  "Datatec"),   and  its
subsidiaries  are in the business of providing  configuration,  integration  and
rapid deployment  services for the implementation of complex computer networking
and connectivity systems.

(2) Basis of Presentation

            The consolidated  financial  statements  include the accounts of the
Company and its  subsidiaries.  All intercompany  accounts and transactions have
been eliminated.

            The accompanying  unaudited  consolidated  financial statements have
been  prepared in  conformity  with  generally  accepted  accounting  principles
consistent  with those applied in, and should be read in  conjunction  with, the
audited  financial  statements  for the year ended April 30,  1997.  The interim
financial   information  is  unaudited,   but  reflects  all  normal   recurring
adjustments  that  are,  in the  opinion  of  management,  necessary  for a fair
statement  of results for the  interim  periods  presented.  The results for the
three and nine months ended January 31, 1998 are not  necessarily  indicative of
results expected for the full fiscal year.

(3)  Earnings Per Share

            In March 1997,  the  Financial  Accounting  Standards  Board  issued
Statement of Financial  Accounting Standards No. 128, "Earnings Per Share" which
makes certain changes to the manner in which earnings per share is reported. The
Company adopted this standard for the quarter ended January 31, 1998.

            The Company has outstanding options,  warrants and convertible notes
that could  potentially  dilute basic  earnings  per share in the future.  These
items were not included in the computation of diluted earnings per share for the
periods presented as they would have been antidilutive.

(4) Debt

            The Company's  credit  facility  requires the Company to comply with
certain  financial and  non-financial  convenants.  As of January 31, 1998,  the
Company was not in  compliance  with certain  covenants and is in the process of
obtaining waivers.

                                       7

<PAGE>
(5)     Supplemental Disclosure of Cash Flows

                                      1997                    1998
                                 ------------             -----------
              Interest Paid          $ 978                  $ 1,097


Supplemental disclosures of non-cash investing and financing activities

            In  August  and  December  of 1997,  holders  of  convertible  notes
converted a total of $1,400 of principal  plus accrued and unpaid  interest into
459,000 shares of common stock.

(6)     Subsequent Events

            In  March  1998,  the  Company  acquired  the  outstanding  minority
interest of its subsidiary Computer-Aided Software Integration, Inc. for $2,414.
As part of the purchase price the Company issued a convertible note due June 15,
1998 for  $1,833.  The note bears  interest  at 10% per annum and if not paid by
June 15, 1998 or if an event of default  occurs prior to June 15, 1998, the note
may be  converted  into common  stock at a discount to the then  current  market
price.

                                       8

<PAGE>
                              DATATEC SYSTEMS, INC.
                         PART I - FINANCIAL INFORMATION
                 (in thousands, except share and per share data)

ITEM 2:     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS - FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 1998

            Net sales for the three and nine months ended  January 31, 1998 were
$17,954 and $56,078, respectively, compared to $12,973 and $45,162, respectively
for the three and nine  months  ended  January  31,  1997.  This  represents  an
increase  of 38.4% and 24.2% for the three and nine  months  ended  January  31,
1998,  respectively.  The  December  holidays  fall within the  Company's  third
quarter and usually have a significant  negative impact on sales.  This negative
impact is the result of the Company's retail customers  reducing their purchases
from the Company  during their peak selling  periods.  Historically,  the retail
industry  has  represented  between  50% and  60% of the  Company's  sales.  The
increase in sales for the three months  ended  January 31, 1998 is the result of
several factors:  more focused efforts on the selling of rapid configuration and
deployment  services,  increased  non-retail  sales  and a  better  matching  of
revenues and expenses on certain long-term  contracts.  In the nine months ended
January 31, 1998, the Company's  backlog of services to be delivered in the next
twelve months increased by $18,700 or 52.3%.

            Gross  profits for the three and nine months ended  January 31, 1998
were  $7,225 and  $21,987,  respectively,  compared to $4,644 and $17,634 in the
three and nine months ended  January 31, 1997.  Gross profits as a percentage of
net sales were 40.2% and 39.2% for the three and nine months  ended  January 31,
1998 compared to 35.8% and 39.0% for the three and nine months ended January 31,
1997. The increase in gross margin is the result of a change in the sales mix in
favor of more complex deployment services.

            Selling,  general and administrative expenses for the three and nine
months  ended  January 31,  1998 were $7,179 and $20,877  compared to $4,613 and
$13,832 for the three and nine months ended  January 31,  1997.  The increase in
selling,  general and  administrative  is partly  attributable to an increase in
infrastructure costs,  including personnel to support the Company's migration to
the more complex service business.

            Net interest expense for the three and nine months ended January 31,
1998 was $350 and $1,355, respectively,  compared to $208 and $802 for the three
and nine months ended  January 31, 1997.  This  increase in interest  expense is
primarily  attributable  to an increase in the average debt  outstanding for the
period and the  amortization  of deferred  financing fees incurred in connection
with securing the Company's senior credit facility.

                                       9
<PAGE>
            The loss from  discontinued  operations  for the three  months ended
January  31,  1998 was $443  representing  additional  expenses  related  to the
disposal and discontinuance of the Company's distribution of data communications
equipment business. This business was discontinued in June 1997.

            The  Company's  net loss for the three and nine months ended January
31,  1998 was $747 and $688  respectively,  compared to a net loss of $2,269 and
$844 for the three and nine months ended January 31, 1997.

FINANCIAL POSITION

            In March 1997,  the Company  entered  into a $17,000  senior  credit
facility to replace two of its existing  credit  facilities.  The senior  credit
facility  consists of a $15,000 revolving line of credit and a $2,000 term loan.
The senior credit facility is supported by accounts  receivable and inventory as
well as other  assets  of the  Company,  has a term of  three  years  and  bears
interest at prime plus three  quarters of one percent  (3/4%) and prime plus one
and one-half percent (1 1/2%) on the line of credit and term loan, respectively.
Availability under the revolving line of credit is calculated using a formula of
85% of eligible accounts receivable and 50% of eligible  inventory.  The $15,000
revolving line of credit represents an increase of approximately $4,000 over the
revolving line of credit it replaced. The Company's credit facility requires the
Company to comply with certain  financial and  non-financial  convenants.  As of
January 31, 1998, the Company was not in compliance  with certain  covenants and
is in the process of obtaining waivers.

            The Company's  shareholders' equity as of January 31, 1998 increased
by approximately $14,819 to $12,819, compared to a deficit of $2,000 as of April
30, 1997. The increase in shareholders' equity (deficit) is primarily the result
of three  different  types of  transactions.  The Company  completed two private
placements  during the nine months  ended  January 31,  1998,  totaling  855,000
shares of common  stock and $3,100.  Convertible  noteholders  converted  $1,400
principal  notes plus accrued  interest into 459,000 shares of common stock.  In
October 1997, holders of redeemable warrants purchased  approximately  2,743,000
shares of common stock at $3.75 per share.

            The Company's  working capital  improved from a deficiency of $2,957
at April 30, 1997 to a working capital of $7,768 at January 31, 1998.


                                       10
<PAGE>
                             DATATEC SYSTEMS, INC.
                                    FORM 10-Q
                           PART II - OTHER INFORMATION


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

      (a) The Company's  Annual Meeting of Stockholders was held on December 22,
1997 (the "Annual Meeting").

      (b)   Ralph Glasgal,  Isaac Gaon,  Christopher Carey, Thomas Berry, Robert
            Friedman,  David Milch and Joseph  Salvani were elected as directors
            of  the  Company  to  serve   until  the  next  annual   meeting  of
            stockholders or until their successors are elected and qualified. No
            other director's term of office continued after the Annual Meeting.

      (c)    (1) Election of Directors

                                              Number of          Number of
                                              Votes For        Votes Withheld
                                              ---------        --------------
                 Ralph Glasgal               23,181,448           44,334
                 Isaac Gaon                  23,181,448           44,334
                 Christopher Carey           23,181,448           44,334
                 Thomas Berry                23,178,448           47,334
                 Robert Friedman             23,178,448           47,334
                 David Milch                 23,179,448           46,334
                 Joseph Salvani              23,179,448           46,334

            (2)  Approval  of an  amendment  to  the  Company's  Certificate  of
   Incorporation to change the name of the Company from "Glasgal Communications,
   Inc." to "Datatec Systems, Inc."

                  Number of          Number of              Number of
                  Votes For        Votes Against        Votes Abstaining
                  ---------        -------------        ----------------
                 23,152,680           52,664                 20,438

            (3)  Approval  of an  amendment  to  the  Company's  Certificate  of
Incorporation  to  increase  the number of  authorized  shares of the  Company's
capital stock from  thirty-eight  million  (38,000,000)  shares to  seventy-nine
million  (79,000,000)  shares  and  the  ratification  of  a  modification  of a
conditional  right of Direct Connect  International,  Inc. to purchase shares of
the Company's Common Stock:

                   Number of         Number of              Number of
                   Votes For       Votes Against        Votes Abstaining
                   ---------       -------------        ----------------
                  13,530,130          318,334                47,434

            (4)  Ratification  and approval of the sale of certain shares of the
   Company's Common Stock to Ralph Glasgal:

                   Number of         Number of              Number of
                   Votes For       Votes Against        Votes Abstaining
                   ---------       -------------        ----------------
                  13,052,810          301,084                47,459

                                       11
<PAGE>
            (5)  Approval of the Company's 1998 Employee Stock Purchase Plan:

                   Number of         Number of              Number of
                   Votes For       Votes Against        Votes Abstaining
                   ---------       -------------        ----------------
                  22,430,872         122,029                 31,238

            (6)  Ratification  of the  appointment  of  Arthur  Andersen  LLP as
   independent  public accountants for the Company for the year ending April 30,
   1998:

                 Number of           Number of               Number of
                 Votes For         Votes Against         Votes Abstaining
                 ---------         -------------         ----------------
                23,187,180            28,964                   9,638



                                       12

<PAGE>
                              DATATEC SYSTEMS, INC.
                                    FORM 10-Q
                     PART II - OTHER INFORMATION - CONTINUED


ITEM 6:     EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibit 11 - Statement of Earnings (Loss) Per Share

      (b)   Exhibit 27 - Financial Data Schedule

      (c)   Reports on Form 8-K

            (1)   The Company filed a Form 8-K dated January 12, 1998  reporting
                  an Item 5 event  in  connection  with its  change  of name and
                  ticker symbols.




                                       13

<PAGE>
                                   SIGNATURES


In accordance with the requirements of the Securities  Exchange Act of 1934, the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                      DATATEC SYSTEMS, INC.
                                          REGISTRANT



Date: March 17, 1998                  By: /s/ James M. Caci
                                          ---------------------------------
                                          James M. Caci
                                          Chief Financial Officer and Duly
                                          Authorized Officer


                                       14