UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
x QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2007
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File No. 1-8690
DATAMETRICS CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware | 95-3545701 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification number) |
1717 Diplomacy Row, Orlando, FL 32809
(Address of principal executive offices)
407.251.4577
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x
Number of shares outstanding of the issuer's common stock, par value $.01, outstanding as of May 15, 2007: 11,534,736 shares.
Transitional Small Business Disclosure Format (Check one): YES o NO x
DataMetrics Corporation
Table of Contents
Page | ||
Part I. Financial Information | ||
Item 1 - Condensed Consolidated Financial Statements (Unaudited) | ||
Condensed Consolidated Balance Sheet - April 30, 2007 | 3 | |
Condensed Consolidated Statements of Operations -- | 4 | |
Six months ended April 30, 2007 and 2006 | ||
Three months ended April 30, 2007 and 2006 | ||
Condensed Consolidated Statement of Capital Deficit -- | 5 | |
Six months ended April 30, 2007 | ||
Condensed Consolidated Statements of Cash Flows -- | ||
Six months ended April 30, 2007 and 2006 | 6 | |
Notes to Condensed Consolidated Financial Statements (Unaudited) | 7 | |
Item 2 - Management Discussion and Analysis | 8 | |
Item 3 - Controls and Procedures | 12 | |
Part II - Other Information | ||
Item 1 -- Legal Proceedings | 13 | |
Item 2 -- Unregistered Sales of Equity Securities and Use of Proceeds | 13 | |
Item 3 -- Defaults upon Senior Securities | 13 | |
Item 4 -- Submission of Matters to a Vote of Security Holders | 13 | |
Item 5 -- Other Information | 13 | |
Item 6 -- Exhibits | 13 | |
Signatures | 14 | |
Certifications | 15 |
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CONDENSED CONSOLIDATED BALANCE SHEET
APRIL 30, 2007
(Unaudited)
(in thousands, except per share data)
ASSETS | ||||
Current assets | ||||
Cash | $ | 175 | ||
Accounts receivable, net of allowance for doubtful accounts of $1 | 419 | |||
Inventory, net of allowance for obsolete inventory of $6,070 | 870 | |||
Other current assets | 20 | |||
Total current assets | 1,484 | |||
Property and equipment | ||||
Furniture, fixtures and computer equipment | 1,197 | |||
Machinery and equipment | 555 | |||
Total property and equipment | 1,752 | |||
Less accumulated depreciation | 1,752 | |||
Net property and equipment | 0 | |||
Total Assets | $ | 1,484 | ||
LIABILITIES AND CAPITAL DEFICIT | ||||
Current liabilities | ||||
Accounts payable | $ | 317 | ||
Accrued expenses | 462 | |||
Accrued interest | 167 | |||
Warranty reserve | 40 | |||
Notes payable - related parties | 500 | |||
Short term debt | 141 | |||
Total current liabilities | 1,627 | |||
Commitments and contingencies | ||||
Capital deficit | ||||
4% Cumulative preferred stock, $.01 par value ($1,500 aggregate liquidation | ||||
preference); 40,000,000 authorized; 1,000,000 issued and outstanding | 10 | |||
Common stock, $.01 par value; 800,000,000 shares | ||||
authorized; 11,534,736 issued and outstanding | 116 | |||
Additional paid in capital | 64,683 | |||
Accumulated deficit | (64,952 | ) | ||
Total capital deficit | (143 | ) | ||
Total Liabilities and Capital Deficit | $ | 1,484 |
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS AND THREE MONTHS ENDED APRIL 30, 2007 AND 2006
(Unaudited)
(in thousands, except per share data)
Three Months Ended | Six Months Ended | ||||||||||||
April 30 | April 30 | ||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||
Sales | $ | 802 | $ | 1,052 | $ | 1,923 | $ | 2,207 | |||||
Cost of sales | 603 | 773 | 1,280 | 1,544 | |||||||||
Gross profit | 199 | 279 | 643 | 663 | |||||||||
Selling, general and administrative | |||||||||||||
Personnel and related costs | 225 | 205 | 483 | 401 | |||||||||
Other | 285 | 158 | 431 | 457 | |||||||||
Total selling, general and administrative | 510 | 363 | 914 | 858 | |||||||||
Loss from operations | (311 | ) | (84 | ) | (271 | ) | (195 | ) | |||||
Other income (expense) | (6 | ) | 13 | (6 | ) | (1,947 | ) | ||||||
Net loss | $ | (317 | ) | $ | (71 | ) | $ | (277 | ) | $ | (2,142 | ) | |
Loss per share of common stock | |||||||||||||
Basic and diluted | $ | (0.027 | ) | $ | (0.007 | ) | $ | (0.024 | ) | $ | (0.197 | ) | |
Weighted average number of common shares outstanding | |||||||||||||
Basic and diluted | 11,535 | 10,860 | 11,492 | 10,860 |
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
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CONDENSED CONSOLIDATED STATEMENT OF CAPITAL DEFICIT
FOR THE SIX MONTHS ENDED APRIL 30, 2007
(Unaudited)
(in thousands, except per share data)
Common Stock | Ser. B Preferred | Additional | Total | |||||||||||||||||||
Number | Dollar | Number | Dollar | Paid-In | Accumulated | Capital | ||||||||||||||||
of Shares | Amount | of Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
Balance, Oct. 31, 2006 | 11,359,849 | $ | 114 | 700,000 | $ | 7 | $ | 64,367 | $ | (64,654 | ) | $ | (166 | ) | ||||||||
Issuance of series B preferred stock | 300,000 | 3 | 297 | 300 | ||||||||||||||||||
Issuance of common stock for series B preferred stock dividend | 174,887 | 2 | 19 | (21 | ) | - | ||||||||||||||||
Net loss | (277 | ) | (277 | ) | ||||||||||||||||||
Balance, April 30, 2007 | 11,534,736 | $ | 116 | 1,000,000 | $ | 10 | $ | 64,683 | $ | (64,952 | ) | $ | (143 | ) |
The accompanying notes to condensed consolidated financial statements are an integral part of these statements
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 2007 AND 2006
(Unaudited)
(in thousands, except per share data)
2007 | 2006 | ||||||
Cash flows from operating activities | |||||||
Net loss | $ | (277 | ) | $ | (2,142 | ) | |
Adjustments to reconcile net loss used in operating activities: | |||||||
Gain on sale of building | - | (216 | ) | ||||
Depreciation | 7 | 4 | |||||
Expenses paid from debt financing | - | 249 | |||||
Options issued to investors during restructuring | - | 2,186 | |||||
Changes in current assets and liabilities | |||||||
Accounts receivable-net | (339 | ) | 36 | ||||
Inventory-net | (165 | ) | 242 | ||||
Other current assets | 23 | 45 | |||||
Accounts payable | 34 | (262 | ) | ||||
Accrued expenses | 273 | (167 | ) | ||||
Net cash used in operating activities | (444 | ) | (25 | ) | |||
Cash flows from investing activities | |||||||
Proceeds from sale of building | - | 1,445 | |||||
Net cash provided by investing activities | - | 1,445 | |||||
Cash flows from financing activities | |||||||
Proceeds from loan payable | - | 248 | |||||
Proceeds from issuance of series B preferred stock | 300 | - | |||||
Payments on long term debt | - | (1,180 | ) | ||||
Net cash provided by (used in) financing activities | 300 | (932 | ) | ||||
Net (decrease) increase in cash | (144 | ) | 488 | ||||
Cash, beginning of period | 319 | 146 | |||||
Cash, end of period | $ | 175 | $ | 634 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest | - | $ | 72 | ||||
Issuance of common stock options for restructuring incentive expenses | - | $ | 2,186 | ||||
Issuance of common stock in extinguishment of long-term debt and related interest expense | - | $ | 3,081 | ||||
Issuance of series B preferred stock in extinguishment of long-term debt and related interest expense | - | $ | 500 | ||||
Conversion of series A preferred stock into common stock | - | $ | 489 | ||||
Expenses paid with the issuance of notes payable | - | $ | 249 | ||||
Issuance of note payment for extinguishment of short term bridge loan | - | $ | 200 | ||||
Forgiveness of debt as part of the sale of building | - | $ | 30 | ||||
Issuance of common stock for series B preferred stock dividend | $ | 21 | - |
The accompanying notes to condensed consolidated financial statements are an integral part of these statements
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Notes to condensed consolidated financial statements (unaudited)
1. Organization and Summary of Significant Accounting Policies:
(a) Basis of Presentation--The accompanying condensed consolidated financial statements are unaudited and have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures usually found in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Form 10-KSB, as filed with the SEC on February 13, 2007.
The accompanying condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial position and the results of operations for the interim periods presented. The results of operations for an interim period are not necessarily indicative of the results of operations for a full fiscal year.
(b) Use of Estimates--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosed amounts of contingent assets and liabilities at the date of the financial statements, and the amounts of revenues and expenses recognized during the reporting period. Actual results could differ from those estimates.
(c) Research and Development Expenses—The Company expenses research and development costs as incurred. Research and development expense was $61,236 for the six month period ended April 30, 2007.
2. Inventories
Stockroom inventories consist primarily of materials used by the Company for existing and anticipated contracts and materials and finished assemblies which are held to satisfy spare parts requirements of the Company’s customers. Those parts not expected to be sold within one year are classified as a non-current asset and fully reserved. The Company evaluates all inventories for obsolescence on a periodic basis and records estimated reserves accordingly.
Inventories as of April 30, 2007 consist of the following: | (in thousands) | |||
Inventories Parts and sub-assemblies | $ | 732 | ||
Work in Process | 138 | |||
Obsolete Inventory | 6,070 | |||
Total Inventory | 6,940 | |||
Reserve for Obsolete Inventory | 6,070 | |||
Net Inventory | $ | 870 |
3. Short term debt
Short term debt at April 30, 2007 consist of the following: | ||||
In December 1998, the Company closed a private placement of approximately $3.45 million of 10% Subordinated Notes originally due in December 2000. As of April 30, 2007 all but $141 of this debt has been converted. Negotiations for the settlement of the remainder of this debt are ongoing. The debt is unsecured and callable under certain conditions. | $ | 141 |
4. Notes payable-related parties
Notes Payable at April 30, 2007 consist of the following: | ||||
Notes Payable to investors; interest expense at 10% is to be paid monthly commencing January 31, 2007, including accrued and unpaid interest from 2006; principal and unpaid interest is due in full in December 2007. The note is secured by a first priority lien on all Company assets. | $ | 500 |
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5. Common stock
On December 15, 2006 the Company issued 174,887 shares of Common Stock with a par value of $0.01 in the amount of $20,986 ($0.12 per share) to a related party, SG DMTI Capital, LLC in lieu of the 4% annual cumulative dividend on the Series B Preferred Stock that was due on November 30, 2006.
6. Preferred stock
On December 6, 2006 the Company issued 300,000 shares of Series ‘B’ Preferred Stock with a par value of $0.01 to a related party, SG DMTI Capital, LLC. At January 31, 2007 the Company has 1,000,000 shares of Series ‘B’ Preferred Stock with a par value of $0.01 per share outstanding. The stock has a cumulative dividend of 4% per annum.
7. Loss per share of common stock
Basic and diluted loss per share of common stock are computed using the weighted-average number of shares of common stock outstanding during the period. Potentially dilutive securities have been excluded from the computation of diluted earnings per share, as their effect is 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 12,935,000 for outstanding options and warrants for the fiscal years 2007 and 2006.
8. Subsequent events
On May 24, 2007, Mr. Daniel Bertram resigned from his positions as a member of the Board of Directors, Chief Executive Officer and President of the Company. Mr. John Marceca was elected to serve as President and Chief Operating Officer.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of the financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto. The following discussion contains certain forward-looking statements that involve risk and uncertainties. Our actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, risks and uncertainties related to the need for additional funds. We undertake no obligation to publicly release the results of any revisions to those forward-looking statements that may be made to reflect any future events or circumstances.
Business Overview
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 focus upon increasing its presence in the military arena including United States Air Force avionics and ground-based systems as well as United States Army system diagnostics as well as increasing its presence in the mining sector and aviation industry, primarily with its electronic flight bag (EFB) controller. DataMetrics’ equipment is designed and qualified for use as part of commercial airlines cockpit systems.
For the year ended April 30, 2007, the Company has experienced slower than expected receipt of orders. 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. The Company expects to see an increase in order activity in the remaining quarters and attributes the delay in orders due to a focus on budget spending for troops and munitions in the war effort in Afghanistan and Iraq. The following phases in this war and projected increase in overall military and defense spending may entail more sophisticated surveillance techniques and equipment, which will require data processing and peripheral equipment similar to the products we currently supply for the AWACS, P3 Orions aircraft and the armed forces.
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RESULTS of OPERATIONS
For the Six Months Ended April 30, 2007
Sales. We had sales of $1,923,000 in the six months ended April 30, 2007 compared to $2,207,000 in the comparable period in 2006, a decrease of $284,000 or 12.9%. The decrease in sales for the six months ended April 30, 2007 is attributable mainly to a decrease in the receipt of orders from the U.S. Government and major Defense Contractors.
Cost of sales. We had cost of sales of $1,280,000 in the six months ended April 30, 2007, representing approximately 66.6% of sales, compared to cost of sales of $1,544,000 in the comparable period in 2006, which represented 69.9% of sales. The decrease of $264,000 or 17.1% was primarily due to the decrease in sales as previously discussed.
Gross profit. We had gross profit of $643,000 in the six months ended April 30, 2007 representing approximately 33.4% of sales, compared to a gross profit of $663,000 in the comparable period in 2006, which represented 30.0% of sales. The decrease of $20,000 was primarily attributable to the decrease in sales as previously discussed.
Selling, general and administrative expenses. We had selling, general and administrative, “SG&A” , expenses for the six months ended April 30, 2007 of $914,000, approximately 47.5% of sales, compared to $858,000 in the comparable period in 2006, which represented 38.9% of sales. This represents an increase of $56,000 or 6.53% in SG&A and is attributable mainly to increased personnel and related costs associated with an increase in headcount for the fiscal year.
Loss from operations. We had loss from operation for the six months ended April 30, 2007 of $(271,000) compared to loss from operations of $(195,000) in the comparable period in 2006, an increase of $76,000 or 38.9%. The increase in loss from operations is attributable mainly to a reduced sales volume of 12.9% and an increase in SG&A as previously discussed.
Other expense. We had other expense of $6,000 for the six months period ended April 30, 2007 compared to $1,947,000 in the comparable period in 2006, a decrease of $1,941,000 or 99.7%. The decrease was due primarily to warrants totaling 386,315,000 which were issued during 2006. The exercise price for the warrants was less than the market price of the stock resulting in stock based cost being recorded. The decrease is also due to a reduction in interest expense as a result of the debt restructuring that occurred on December 30, 2005 where the majority of long terms loans were either paid in full or converted into equity of the Company.
Net loss. We had net loss for the six months ended April 30, 2007 of $(277,000) compared to a net loss of $(2,142,000) in the comparable period in 2006. The large net loss in 2006 was due primarily to warrants totaling 386,315,000 which were issued during 2006. The exercise price for the warrants was less than the market price of the stock resulting in stock based cost in the amount of $2,186,000 being recorded.
For the Three Months Ended April 30, 2007
Sales. We had sales of $802,000 for the three months ended April 30, 2007 compared to $1,052,000 in the comparable period in 2006, a decrease of $250,000 or 23.7%. The decrease in sales for the three months ended April 30, 2007 is attributable mainly to a decrease in the receipt of orders from the U.S. Government and major Defense Contractors.
Cost of sales. We had cost of sales of $603,000 in the three months ended April 30, 2007, representing approximately 75.2% of sales, compared to cost of sales of $773,000 in the comparable period in 2006, which represented 73.5% of sales. The decrease of $170,000 or 22% was primarily due to the decrease in sales as previously discussed.
Gross profit. We had gross profit of $199,000 in the three months ended April 30, 2007 representing approximately 24.8% of sales, compared to a gross profit of $279,000 in the comparable period in 2006, which represented 26.5% of sales. The decrease of $80,000 or 28.7% was primarily due to the decrease in sales as previously discussed.
Selling, general and administrative expenses. We had selling, general and administrative, “SG&A” , expenses for the three months ended April 30, 2007 of $510,000, approximately 63.6% of sales, compared to $363,000 in the comparable period in 2006, which represented 34.5% of sales. This represents an increase of $147,000 or 40.5% in SG&A and is attributable mainly to increased personnel and related costs associated with an increase in headcount for the fiscal year.
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Loss from operations. We had loss from operation for the three months ended April 30, 2007 of $(311,000) compared to loss from operations of $(84,000) in the comparable period in 2006, an increase of $227,000 or 270.2%. The increase in loss from operations is attributable mainly to a reduced sales volume of 23.7% and an increase in SG&A as previously discussed.
Other (expense)/income. We had other expense of $(6,000) for the three months period ended April 30, 2007 compared to other income of $13,000 in the comparable period in 2006, a decrease in other income of $19,000 or 146.1%. The decrease is primarily attributable to the debt restructuring that occurred on December 30, 2005 where the Company was able to negotiate favorable settlement terms with creditors.
Net loss. We had net loss for the three months ended April 30, 2007 of $(317,000) compared to a net loss of $(71,000) in the comparable period in 2006. The increase in net loss is due to a decrease in net sales, an increase in SG&A and other expenses as discussed in previously.
LIQUIDITY and CAPITAL RESOURCES
The Company's principal capital requirements have been to fund working capital. 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 $444,000 and $25,000 in 2007 and 2006 respectively. The change from 2006 to 2007 was primarily due to an increase in inventory levels to fulfill upcoming sales orders and as a result of the net loss.
Net cash provided by investing activities in 2006 was $1,445,000 derived from the sale of the building. There were no investing activities in 2007.
Net cash provided / (used) by financing activities was $300,000 and $(932,000) in 2007 and 2006, respectively. The change from 2006 to 2007 was primarily related to the refinancing of the property located at 1717 Diplomacy Row, Orlando, FL., and the issuance of Preferred stock as described below.
The Company has generated much of the cash flow to sustain current operations through a combination of sales and from equity transactions.
On December 6, 2006, the Company issued SGD 300,000 shares of Series B Preferred Stock for $300,000, which represent the final shares of Series B Preferred Stock issuable under the Series B Preferred Stock and Warrant Purchase Agreement dated December 30, 2005. The proceeds were used for general working capital.
On December 15, 2006 the Company issued 174,887 shares of Common Stock with a par value of $0.01 in the amount of $20,986 to a related party, SG DMTI Capital, LLC in lieu of the 4% annual cumulative dividend on the Series B Preferred Stock that was due on November 30, 2006.
The liquidity of the Company has been affected by net losses for the second quarter of 2007, and fiscal years 2006 and 2005, which raise doubt about the Company’s ability to continue as a going concern. The Company’s realization of assets and satisfactions of liabilities in the ordinary course of business are dependent upon several factors including the Company’s ability to secure additional funding through investment groups and the generation of sufficient cash flow to satisfy its obligations on a timely basis.
The Company as part of its plan towards resolving these issues has taken the actions described below. Management believes that its current and future plans provide an opportunity to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that may be necessary in the event the Company cannot continue as a going concern.
· | During fiscal year 2007, the operations and process of the Company are being analyzed and restructured to obtain greater efficiencies in production and distribution. Management continues to evaluate operations as well and has made several changes in management and personnel that are designed to improve product distribution, project completion and on-time delivery. Management believes that these efficiencies have positioned the Company to experience increased sales volume. |
· | Effective May 24, 2007, Mr Daniel Bertram resigned his postion as a member of the Board of Directors, Chief Executive Officer and President of the Company. Mr. John Marceca was elected to serve as President and Chief Operating Officer. |
· | On June 1, 2007 the Company successfully completed a reduction in force reducing annual payroll expense approximately $167,000 and reducing the employee headcount from 31 to 27 employees. |
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Off-Balance Sheet Arrangements
We have no off-balance arrangements to report.
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Item 3. CONTROLS AND PROCEDURES
(A) Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s Principal Operating Officer and Principal Financial Officer of the effectiveness of the design and operation of the Company’s disclosure control and procedures. The Company’s disclosure controls and procedures are designed to provide a reasonable level of assurance of achieving the Company’s disclosure objectives. The Company’s Principal Operating Officer and Principal Financial Officer have concluded that the Company’s disclosure controls and procedures are in fact, effective at this reasonable assurance level as of the period covered. In addition, the Company reviewed its internal controls, and there have been no significant changes in its internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation or from the end of the reporting period to the date of this Form 10-QSB.
(B) Changes In Internal Controls Over Financial Reporting
In connection with the evaluation of the Company’s internal controls during the six months ended April 30, 2007 the Company’s Principal Operating Officer and Principal Financial Officer have determined that there are no changes to the Company’s internal controls over financial reporting that has materially affected, or is reasonable likely to materially affect, the Company’s internal controls over financial reporting.
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PART II. Other Information
Item 1. 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, that are material, have been properly accrued.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
The Company is in default on certain unsecured indebtedness of $140,960 in principal and $99,847 in unpaid interest as the monthly payments of $10,000 that were to commence September, 2006 for the unpaid interest have not been paid as scheduled per the agreement.
The Company is in default on certain secured indebtedness of $500,000 in principal and $66,780 in unpaid interest as the monthly payments of $5,000 that were to commence January, 2007 for the unpaid interest have not been paid as scheduled by the agreement.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND OTHER INFORMATION
Signatures
Certifications
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SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated:
DataMetrics Corporation
Registrant
By /s/ John Marceca
John Marceca
President & Chief Operating Officer
By /s/ Edward Kroning
Edward Kroning
Chief Financial Officer
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