As filed with the Securities and Exchange Commission on September 17, 1999.
================================================================================
Registration No. 0-8567

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Amendment No. 1
to ---
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

DATAMETRICS CORPORATION
(Name of Small Business Issuer in its Charter)

DELAWARE 0357 95-3545701
(State or jurisdiction of incorporation (Primary Standard Industrial (I.R.S. Employer Identification
or organization) Classification Code Number) Number)

25B Hanover Road, Suite 3305
Florham Park, New Jersey 07932
(973) 377-3900
------------------------------
(Address and Telephone Number of Principal Executive Offices and Principal Place
of Business)

Daniel P. Ginns with a copy to:
Chief Executive Officer Joseph F. Mazzella, Esquire
Datametrics Corporation Lane Altman & Owens LLP
25B Hanover Road, Suite 3305 101 Federal Street
Florham Park, New Jersey 07932 Boston, MA 02110
(973) 377-3900 (617)345-9800
- -------------------------------- ----------------------------
(Name, Address and Telephone (Name, Address and Telephone
Number of Agent for Service) Number of Agent for Service)

Approximate Date of Proposed Sale to the Public: from time to time
after the effective date of this Registration Statement.

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]

If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|

================================================================================

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Amount to be Proposed Proposed Maximum Amount of
Registered Registered(1) Maximum Offering Aggregate Offering Registration Fee
Price Per Unit (2) Price
- --------------------------------------- ------------- ------------------ ------------------ ----------------

Common Stock, $.01 par value 3,874,479 $1.1875(3) $4,600,943.80 $1,279.06
Common Stock Underlying Warrants 2,428,901 $1.50(4) $3,643,352 $1,012.85
Common Stock Underlying 2,300,000 $1.00(4) $2,300,000 $639.40
Convertible Notes
Common Stock Underlying Warrants 1,150,000 $1.10(4) $1,265,000 $351.67
Common Stock Underlying Warrants 1,500,000 $1.00(4) $1,500,000 $417.00
Common Stock Underlying Warrants 1,500,000 $1.1875(5) $1,781,250 $495.19
Total Shares Being Registered 12,753,380 $15,090,545 $4,195.17

(1) All of the shares of Common Stock being registered hereby are being
offered for the accounts of selling shareholders who acquired such
shares or Warrants to acquire shares in private transactions. No other
shares of the registrant's Common Stock are being registered pursuant
to this offering.

(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.

(3) In accordance with Rule 457(c) the registration fee is calculated based
upon a price of $1.1875 per share, the average of the high and low sale
prices of the Common Stock as reported by the American Stock Exchange
on September 14, 1999.

(4) Pursuant to Rule 457(g), the registration fee for shares of Common
Stock issuable upon the exercise of the Warrants and Convertible Notes
is calculated based upon the price at which these Warrants may be
exercised and the Convertible Notes may be converted by the holders.

(5) The price at which these Warrants may be exercised is variable and
undetermined at the time of calculating the registration fee. In
accordance with Rule 457(g) the registration fee is calculated based
upon a price of $1.1875 per share, the average of the high and low sale
prices of the Common Stock as reported by the American Stock Exchange
on September 14, 1999.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.

DATAMETRICS CORPORATION

12,753,380 Shares of Common Stock

This prospectus covers 12,753,380 shares of Common Stock
("Securities"), $0.01 par value per share of Datametrics Corporation (referred
to as "We" and the "Company"), which may be offered and sold from time to time
by one or all of the selling shareholders named in this prospectus ("Selling
Shareholders"). The Common Stock offered by this prospectus consists of the
following:

o 3,874,479 shares of Common Stock presently issued and outstanding
which were issued to the Selling Shareholders in private
transactions; and

o 6,578,901 shares of Common Stock issuable upon the exercise of
warrants ("Warrants") which were issued to the Selling
Shareholders in private transactions.

o 2,300,000 shares of Common Stock issuable upon the conversion of
convertible notes ("Convertible Notes") which were issued to the
Selling Shareholders in private transactions.

We will not receive any of the proceeds from the sale of the Common
Stock by the Selling Shareholders. We will receive approximately $8,433,352 if
all of the Warrants are exercised, and $2,300,000 of indebtedness will be
converted to equity if all of the Convertible Notes are converted into shares of
Common Stock. See "Use of Proceeds."

Our Common Stock trades on the American Stock Exchange under the symbol
"DC." On September 14, 1999, the reported last sale price of the Common Stock on
the American Stock Exchange was $ 1.1875 per share.

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

INVESTING IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 4.

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

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is September 15, 1999

SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS

Certain statements in this prospectus or in the documents incorporated
by reference herein constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve certain known and unknown risks, uncertainties and other
factors which may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the factors set forth below under "Risk Factors." The words
"believe," "expect," "anticipate," "intend" and "plan" and similar expressions
identify forward-looking statements. We caution you not to place undue reliance
on these forward-looking statements, which speak only as of the date the
statement was made. See "Risk Factors."

THE COMPANY

Datametrics Corporation was incorporated in California in October 1962
and was reincorporated in Delaware in April 1987. Our executive offices are
located at 25B Hanover Road, Suite 3305, Florham Park, New Jersey 07932, and our
telephone number is (973) 377-3900. We design, develop and sell high-speed color
printers, high-resolution non-impact printer/plotters and ruggedized computers,
printers and workstations for government/defense and industrial markets. We
pioneered the development of high-speed, non-impact printers for tactical
military applications. Our current product line includes printers,
printer/plotters and ruggedized computers and workstations with diverse
capabilities ranging from stringent military specifications to varying
commercial standards.

Our manufacturing operations are conducted from a 43,000 square foot
manufacturing facility in Orlando, Florida, which we purchased in December 1997.
A 6,600 square foot facility located in Calabasas, California, which houses our
technology center, was opened in November 1997. In April 1998, we leased a 5,400
square foot office in Florham Park, New Jersey in which our corporate offices
are located.

THE OFFERING

COMMON STOCK Up to 12,753,380 shares of Common Stock,
which may be offered and sold from time to
time by one or all of the Selling
Shareholders, who were issued shares of
Common Stock, Warrants to purchase shares of
Common Stock and Notes convertible into
shares of Common Stock in private
transactions.

USE OF PROCEEDS We will not receive any proceeds from the
sale by the Selling Shareholders of the
Common Stock being sold pursuant to this
Prospectus. We will receive approximately
$8,433,352 upon the exercise of all the
Warrants. We expect to use these proceeds,
if any, for working capital. In addition,
$2,300,000 of indebtedness will be converted
to equity if all the Convertible Notes are
converted. See "Use of Proceeds" and "Plan
of Distribution."

RISK FACTORS Investment in the Common Stock offered
hereby is highly speculative and involves a
high degree of risk. You could lose your
entire investment. See "Risk Factors" on
page 4.

ABOUT OUR FINANCIAL CONDITION

Although we recently obtained a $1,500,000 revolving line of credit
from Branch Banking and Trust Company, a North Carolina banking corporation
("Branch Bank"), we still rely on income from operations and the proceeds of
private placements of our Common Stock and other securities in order to fund
operations. In May 1999, we sold 1,500,000 shares of our Common Stock for
$1,500,000 in a private placement. In August 1999, we raised an additional
$2,300,000 in a private placement of Convertible Subordinated Secured Notes Due
July 2000. Most of the proceeds from the private placements, as well as a
portion of the line of credit, was applied to the reduction of outstanding debt.
See "Risk Factors" and "Liquidity and Capital Resources."

The following table sets forth historical summary financial information
of the Company. The statements of operations and balance sheet data contained in
the table for the fiscal years ended October 25, 1998 and October 26, 1997 have
been derived from audited financial statements, and are qualified in their
entirety by, and should be read in connection with, "Management's Discussion And
Analysis," the audited financial statements (and notes thereto) and other
financial and statistical information of the Company appearing elsewhere in this
prospectus. The statements of operations and balance sheet data for the nine
months ended July 25, 1999 and July 26, 1998 have been derived from unaudited
condensed financial statements. The results of interim periods are not
necessarily indicative of the results to be obtained in a full fiscal year.

NINE MONTHS ENDED FISCAL YEAR ENDED
July 25, 1999 July 26, 1998 October 25, 1998 October 26, 1997
------------- ------------- ---------------- ----------------

STATEMENT OF
OPERATIONS DATA

Sales $6,273,000 $6,196,000 $7,742,000 $16,797,000
Net loss $(1,646,000) $(1,768,000) $(3,270,000) $(3,101,000)
Net loss per share:
Basic and Diluted $(0.09) $(0.12) $(0.22) $(0.24)

Weighted average number of
shares outstanding:
Basic and Diluted 17,386,000 15,102,000 15,202,000 12,995,000

BALANCE SHEET DATA

Total assets $14,347,000 $14,472,000 $12,719,000 $11,546,000
Long-term Debt, including
Current Portion $7,112,000 $4,639,000 $5,313,000 $2,993,000
Stockholders' equity $5,572,000 $5,510,000 $4,008,000 $3,522,000

RISK FACTORS

An investment in our Common Stock is highly speculative and involves a
high degree of a number of risks, including those described below. You could
lose your entire investment. Prospective investors should carefully consider the
following factors, along with the other information set forth in this
prospectus, in evaluating us, our business and prospects before purchasing the
Common Stock.

NO ASSURANCE CAN BE GIVEN THAT WE WILL BE ABLE TO CONTINUE TO SELL
COMMON STOCK OR OTHER SECURITIES OR WILL BE SUCCESSFUL IN RAISING WORKING
CAPITAL THROUGH PRIVATE PLACEMENTS TO ADEQUATELY FINANCE OUR OPERATIONS.
Although we recently obtained a $1,500,000 revolving line of credit from Branch
Bank, there can be no assurance that such amount will be sufficient to provide
the working capital required by the Company, and we may have to rely on income
from operations and the proceeds of private placements of our Common Stock and
other securities in order to fund operations. The issue and sale of Common Stock
will be dilutive to existing holders of Common Stock, and the issue and sale of
debt securities may create obligations we are ultimately unable to discharge.

FUTURE SALES OF ADDITIONAL SHARES OF OUR COMMON STOCK MAY CAUSE THE
MARKET PRICE OF OUR COMMON STOCK TO DECLINE. As of the date of this Prospectus
we have 19,007,227 shares of Common Stock issued and outstanding, and an
additional 8,209,901 shares of Common Stock reserved for issuance upon the
exercise of Warrants and conversion of the Convertible Notes. Of the shares of
Common Stock being registered hereunder, 3,874,479 shares are currently issued
and outstanding, and represent approximately 20.4% of our outstanding Common
Stock. Assuming exercise of all the Warrants for 6,578,901 shares of Common
Stock and conversion of all the Convertible Notes for 2,300,000 shares of Common
Stock, the Selling Shareholders may sell up to 12,573,380 shares, which would
then represent approximately 45.7% of our then issued and outstanding shares of
Common Stock. There are no contractual restrictions on the resale of the
outstanding Common Stock. The sale on the open market of the Common Stock
offered hereby, or the perception that these sales may occur, may depress
prevailing market prices of the Common Stock. These factors may also make it
more difficult for us to raise funds through future offerings of Common Stock.

In addition to the warrants and convertible notes held by the Selling
Stockholders, we have also issued other rights to buy Common Stock to certain
key officers in connection with their employment and to certain officers and
Directors as compensation for arranging financings. All Warrants provide for an
increase in the number of Warrants under certain circumstances to protect
against antidilution. Exercise of these Warrants and/or subsequent increase in
the number of Warrants pursuant to the antidilution provisions would be dilutive
to our Shareholders.

THE TRADING PRICE OF OUR COMMON STOCK FLUCTUATE WIDELY IRRESPECTIVE OF
OUR PERFORMANCE. The trading price of our Common Stock has from time to time
fluctuated widely because of our small trading volume as compared to those of
our competitors. In the future the price of our stock may be subject to similar
fluctuations in response to announcements by us or our competitors of
technological innovations or new products, announcements by us of marketing and
distribution arrangements, general conditions in the industries in which we
compete, and other events or factors. In addition, in recent years broad stock
market indices, in general, and the securities of technology companies, in
particular, have experienced substantial price fluctuations. Such broad market
fluctuations also may adversely affect the future trading price of our Common
Stock.

WE ARE, FROM TIME TO TIME, SUED. We recently lost one suit by 4 former
employees for $1,200,000, and we have appealed. If we lose the appeal currently
underway, we may have to issue a $1,200,000 7% convertible debenture with a two
year maturity. The debenture will be convertible into shares of Common Stock at
the lower of $2.00 per share or 75% of the closing sale price of the Company's
Common Stock on the date of payment. There is no guaranty that we will prevail
on the appeal.

In May 1999, Warrants to purchase 200,000 shares of Common Stock were
issued to Continental Capital and Equity Corp. ("CCEC") pursuant to a Marketing
Access Program Marketing Agreement (the "Marketing Agreement"). The Warrants
provide that CCEC has the right to exercise these warrants at any time until May
2004, at a price of $2.00 per share with respect to 100,000 of such Warrants,
and $4.00 per share with respect to 100,000 of such Warrants, subject to
adjustment. Subsequent to such issuance, however, an issue arose between CCEC
and the Company, as a result of which the Company terminated the Marketing
Agreement and are seeking the immediate return of the Common Stock and Warrants.
If not sooner resolved, CCEC may commence an action seeking to require us to
honor the Common Stock and Warrants and to pay amounts that would have come due
under the Marketing Agreement.

OUR ENTRANCE INTO THE SB FILING SYSTEM MAY HAVE AN ADVERSE EFFECT ON
OUR PERCEPTION AMONG INVESTORS AND OUR POSITION IN THE MARKETPLACE. In order to
take advantage of certain relaxed reporting requirements of the small-business
"SB" filing system of the Securities and Exchange Commission ("SEC"), we have
entered the SB filing system commencing with the fiscal year ending October 31,
1999. Accordingly, we must file all reports required to be filed by the
Securities and Exchange Act of 1934, as amended, on SB forms promulgated by the
SEC, until we have exited the SB filing system

THERE CAN BE NO ASSURANCES THAT THE LISTING OF OUR COMMON STOCK BY THE
AMERICAN STOCK EXCHANGE ("AMEX") WILL BE CONTINUED. IF OUR COMMON STOCK IS NO
LONGER LISTED ON THE AMEX, THE MARKETABILITY OF OUR SHARES OF COMMON STOCK COULD
BE ADVERSELY AFFECTED. Our Common Stock currently trades on the American Stock
Exchange ("AMEX") under the trading symbol "DC." Based on our financial
performance during early 1999, certain listing guidelines of the AMEX were not
being met. The AMEX has reviewed the situation and has taken no action to date.
We believe that our performance for the most recent quarters, and our sales of
equity during 1999, will favorably influence the AMEX's evaluation of continued
listing. If our Common Stock is no longer listed on the AMEX, it will be more
difficult to buy and sell our Common Stock, and the price of our Common Stock
could be adversely affected

OUR COMPUTER SYSTEMS MAY NOT RECOGNIZE THE YEAR 2000 WHICH MAY DISRUPT
OUR BUSINESS AND ADVERSELY AFFECT OUR OPERATIONS, LIQUIDITY AND FINANCIAL
POSITION. We are engaged in a continuous process of communicating with our major
customers and suppliers. to determine Year 2000 systems compatibility and
compliance. We have been assured by our major suppliers that there will be no
disruption in the delivery of goods and services. We believe that adequate
resources are available for the supply of our raw materials and that our
facility related equipment will be operational. We continue to assess the risks
associated with program failures and plan to develop a formal contingency plan
with our business partners to address specific risks. The failure to correct a
material Year 2000 problem could result in an interruption in normal business
activity. Our plan is expected to significantly reduce the risk associated with
the Year 2000 issue. However, due to the inherent uncertainty of the Year 2000
issue and dependence on third-party compliance, no assurance can be given that
potential Y2K failures will not adversely affect our operations, liquidity and
financial position.

WE MAY NOT BE ABLE TO ACHIEVE PROFITABILITY IN THE FUTURE. We reported
net losses of $3,270,000 and $3,101,000 for the fiscal years ended October 25,
1998 and October 26, 1997, respectively; a net loss of $1,776,000 in the first
quarter of fiscal year 1999, and net income of $87,000 and $43,000 in the second
and

third quarters, respectively, of fiscal year 1999. No assurance can be given
that we will not incur substantial losses in the future.

THERE CAN BE NO ASSURANCE THAT WE WILL BE PROFITABLE IN ANY PARTICULAR
QUARTER. Our results of operations are subject to considerable fluctuations from
quarter to quarter due to changes in demand for our products and other factors.
Demand for our products in each of the markets we serve can vary significantly
from quarter to quarter due to revisions in budgets or schedules for customer
projects requiring our products, changes in demand for the customers' products
which incorporate or utilize our products and other factors beyond our control.

WE COMPETE IN EACH OF OUR TARGET MARKETS AGAINST OTHER COMPANIES, MANY
OF WHICH HAVE SUBSTANTIALLY GREATER FINANCIAL, TECHNICAL, MARKETING,
DISTRIBUTION AND OTHER RESOURCES THAN WE HAVE. The principal competitive factors
in the markets in which we participate are image quality, product performance
and price. In domestic and international defense markets, our principal
competitors are DRS Technologies Inc., and Miltope Group Inc. In addition, many
airborne electronic data processing and communications prime contractors have
the capability of manufacturing military and airborne products, and several such
companies do presently manufacture products performing functions similar to our
products. In almost all cases, these companies have substantially greater
financial and technological resources than we have. In certain applications, our
printers are higher in price than those of our competitors, and many of our
competitors have more experience in the markets for lower-cost military printers
than we have.

THE LOSS OF ANY ONE OF OUR CUSTOMERS COULD HAVE A MATERIAL AND ADVERSE
EFFECT ON OUR BUSINESS. In the fiscal year ended October 25, 1998, our three
largest customers in sales, the U.S. government (23.7%), Raytheon (22.3%) and
Lockheed Martin (18.9%), accounted for an aggregate of 64.9% of our total sales.
In the fiscal year ended October 26, 1997, our five largest customers in sales,
Lockheed Martin (15.7%), the U.S. government (13.7%), GTE (12.5%), Computing
Devices Canada (10.9%) and Digital Equipment Corporation (10.8%), accounted for
an aggregate of 64% of our total sales. The loss of any one of these customers
could have a material adverse impact on the results of our operations and on our
financial condition.

For the fiscal years ended October 25, 1998 and October 26, 1997, the
DoD and prime contractors under programs funded by the DoD represented
approximately 71% and 67% of our revenues, respectively. Companies which are
engaged primarily in supplying equipment and services, directly or indirectly,
to the U.S. government are subject to special risks including dependence on
government appropriations, termination without cause, contract renegotiation and
competition for the available DoD business. Over the past several years, we have
been significantly impacted by market changes in the DoD. DoD budget forecasts
indicate that overall funding will continue to decrease for the foreseeable
future.

WE ARE DEPENDENT ON CERTAIN SUPPLIERS, AND IF THEY STOPPED DOING
BUSINESS WITH US, OUR BUSINESS WOULD BE HARMED SIGNIFICANTLY. We are generally
not dependent upon any one supplier for any raw material or component which we
purchase, and there are available alternative sources for such raw materials and
components. We are currently dependent, however, on certain OEM suppliers for
components used in our ruggedized computer devices and peripherals. We have
year-to-year renewable supply agreements with suppliers which have been renewed
in prior years. In the event any of these contracts are not renewed, however,
our business would be materially and adversely impacted because we would have to
purchase similar components upon substantially less favorable terms and
conditions.

WE MAY NOT HAVE ADEQUATE PROTECTION OF OUR INTELLECTUAL PROPERTY. We
regard portions of the hardware designs and operating software incorporated into
our products as proprietary and we attempt to protect them with a combination of
patent, copyright, trademark and trade secret laws, employee and third-party
nondisclosure agreements and similar means. Despite these precautions, it may be
possible for unauthorized third parties to copy certain portions of our products
or to "reverse engineer" or otherwise obtain and use to our detriment
information that we regard as proprietary. Although we own a number of patents,
not every process or product we manufacture or develop which management deems
significant to our business or prospects is protected by patents or pending
patent applications. Moreover, the laws of some foreign countries do not afford
the same protection to our proprietary rights as do U.S. laws. We are presently
reviewing our patent situation to determine what action needs to be taken to
preserve and/or initiate additional patent rights. There can be no assurance,
that any of these protections will be adequate or that our competitors will not
independently develop technologies that are substantially equivalent or superior
to our technologies.

USE OF PROCEEDS

We will not receive any proceeds from the sale by the Selling
Shareholders of the Common Stock offered by this prospectus. We will receive
approximately $8,433,352 if all of the Warrants for the underlying the shares of
Common Stock being registered are exercised. We expect to use these proceeds, if
any, for working capital. If all of the convertible notes for the underlying
shares of Common Stock being registered are converted, $2,300,000 of
indebtedness will be converted to equity. See "Plan of Distribution."

Number of Shares to be Issued Pursuant to Exercise or Conversion Proceeds to Company(2)
Warrants and Convertible Notes Price
- ----------------------------------------- ---------------------- ----------------------

353,341 (Warrants issued November 1996) $1.50 per share $530,012
2,075,560 (Warrants issued December 1998) $1.50 per share $3,113,340
1,500,000 (Warrants issued May 1999) Variable (1) $2,025,000 (1)
1,150,000 (Warrants issued August 1999) $1.10 per share $1,265,000
1,500,000 (Warrants issued August 1999) $1.00 per share $1,500,000
6,578,901 Total Warrants $8,433,352
2,300,000 (Convertible Notes issued August 1999) $1.00 per share $2,300,000 (3)

(1) These Warrants have a variable exercise price calculated as the lesser of
(i) $1.35 or (ii) the volume-weighted average price of the Common Stock for
the 20 trading days immediately preceding the notice of exercise. Proceeds
to the Company are based upon an assumed exercise price of $1.35 per share,
but could vary in accordance with the foregoing.

(2) Assumes exercise of all the Warrants and conversion of all the Convertible
Notes.

(3) If all the Convertible Notes are converted, $2,300,000 of the Company's
indebtedness to security-holders will be converted into equity. The Company
will not receive any cash proceeds upon conversion of the Convertible
Notes.

MARKET FOR COMMON STOCK

Our Common Stock has been listed on the American Stock Exchange (Symbol
"DC") since July 26, 1988. The following table sets forth the closing high and
low sales prices of our Common Stock for each of the periods indicated below.

Fiscal 1999 Quarter Ended High Low
------------------------- ---- ---
January 24 $1 5/8 $ 3/4
April 25 $1 13/16 $1 1/8
July 25 $1 1/2 $13/16

Fiscal 1998 Quarter Ended High Low
------------------------- ---- ---
January 25 $2 3/16 $2 1/16
April 26 $1 7/8 $1 7/8
July 26 $1 11/16 $1 5/8
October 25 $1 15/16 $ 3/4

Fiscal 1997 Quarter Ended High Low
------------------------- ---- ---
January 26 $1 9/16 $ 7/8
April 27 $2 7/16 $1 1/4
July 27 $1 11/16 $1 1/8
October 26 $2 1/4 $1 3/16

There were 774 stockholders of record as of September 14, 1999.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This prospectus 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 that
actual events or results may differ materially.

RESULTS OF OPERATIONS

NINE MONTH PERIOD ENDED JULY 25, 1999 COMPARED
TO NINE MONTH PERIOD ENDED JULY 26, 1998

Sales for the nine month period ended July 25, 1999 were $6,273,000, an
increase of $77,000 or 1%, compared with sales of $6,196,000 in the same period
in the prior fiscal year. The increase in sales for the nine months ended July
25, 1999 is attributable to higher production and order levels. During the same
period in

the prior fiscal year, the Company was completing the start up of its new
manufacturing facility in Orlando, Florida and during this transition period
experienced material shortages and labor inefficiencies.

Cost of sales for the first nine months of fiscal 1999 was $3,543,000
(57% of sales), a decrease of $594,000 or 14%, compared with $4,137,000 (67% of
sales) for the same period in the prior fiscal year. Cost of sales decreased
compared to the same period in the prior fiscal year because the Company has
completed its transition to its new Florida manufacturing facility and is now
starting to experience labor and material efficiencies.

Research and development expenses were $284,000 for the nine-month
period ended July 25, 1999, a decrease of $214,000 or 43%, compared with
$498,000 for the same period in the prior year. The decrease in expenditures is
due to less research and development required for the Company's new family of
industrial color printers.

Selling, general and administrative expenses for the nine month period
ended July 25, 1999 were $2,511,000 (40% of sales) a decrease of $424,000, or
14%, compared with $2,935,000 (47% of sales) for the same period in the prior
fiscal year. The decrease is due to fewer administrative and support staff
required by the Company.

Net interest expense amounted to $356,000 for the nine month period
ended July 25, 1999, a decrease of $32,000, or 9%, compared with net interest
expense of $388,000 for the same period in the prior year. This decrease is due
to lower outstanding borrowings.

The net loss for the nine-month period ended July 25, 1999 amounted to
$1,646,000 a reduction in losses of $122,000 compared with a net loss of
$1,768,000 for the same period in the prior year. The loss for the current
nine-month period is primarily attributable to the non-recurring settlement with
the Company's former California landlord in which the Company agreed to pay to
the landlord $1,225,000 in cash and stock.

THREE MONTH PERIOD ENDED JULY 25, 1999 COMPARED
TO THREE MONTH PERIOD ENDED JULY 26, 1998

Sales for the three-month period ended July 25, 1999 were $2,385,000, a
decrease of $282,000 or 11%, compared with sales of $2,667,000 in the same
period in the prior fiscal year. The decrease in sales for the third quarter
ended July 25, 1999 is attributable to lower than anticipated orders from the
Department of Defense and prime contractors for the Department of Defense.

Cost of Sales for the third quarter of fiscal 1999 was $1,227,000 (51%
of sales), a decrease of $236,000 or 15%, compared with $1,513,000 (57% of
sales) for the same period in the prior fiscal year. Cost of sales improved as
the Company continues to be more efficient in the use of direct labor.

Research and development expenses were $59,000 for the three-month
period ended July 25, 1999, a decrease of $91,000, compared with $150,000 for
the same period in the prior year. All of the expenditures were for the
Company's DmC Model 1200 dot matrix printer and DmC Model 4080 thermal printer
as well as the Company's new family of industrial color printer. The decrease is
due to less resources required for the Company's family of industrial color
printer.

Selling, general and administrative expenses for the three month period
ended July 25, 1999 were $893,000 (37% of sales) a decrease of $50,000, or 5%,
compared with $943,000 (35% of sales) for the same

period in the prior fiscal year. The decrease is due to lower administrative and
support staff expenses throughout the Company.

Net interest expense amounted to $113,000 for the three month period
ended July 25, 1999 compared with net interest expense of $156,000 for the same
period in the prior year. The decrease is due to lower outstanding borrowings.

The net income for the three-month period ended July 25, 1999 amounted
to $43,000, an increase of $141,000, compared with net loss of $98,000 for the
same period in the prior year.

Management has determined that, based on the Company's historical
losses from recurring operations, the Company will not recognize its net
deferred tax assets at July 25, 1999. Ultimate recognition of these tax assets
is dependent, to some extent, on future revenue levels and margins. It is the
intention of management to assess the appropriate level for the valuation
allowance each quarter.

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

The Company's backlog of funded orders not yet recognized as revenue at
July 25, 1999 was approximately $4,245,022. At September 2, 1999, the backlog
was approximately $4,047,761. Approximately 75% of the September 2, 1999 backlog
is expected to be delivered during the next twelve months.

FISCAL YEAR 1998 COMPARED WITH FISCAL YEAR 1997

Sales for the year ended October 25, 1998 were $7,742,000, a decrease
of $9,055,000 or 54%, compared with sales of $16,797,000 in the prior fiscal
year. Sales of defense and defense related products decreased $8,594,000, while
other sales decreased by $461,000. Sales for fiscal 1998 were adversely impacted
by lower than anticipated orders from the Department of Defense and prime
contractors, the Company's decision not to accept orders for single or low
quantity orders with substantial development costs, the Company's decision to
relocate its manufacturing operations to Florida, and the time required for new
manufacturing and supervisory personnel to learn to produce efficiently the
Company's products.

Cost of sales for fiscal 1998 was $5,570,000 (72% of sales), a decrease
of $7,831,000 or 58%, compared with $13,401,000 (80% of sales) for the prior
fiscal year. In the current year, cost of sales was favorably impacted by lower
direct labor costs in the Company's Florida manufacturing operation compared to
the Company's former manufacturing operation in California. In the prior year,
cost of sales as a percentage of sales was unfavorably impacted by four
contracts that were begun prior to October 1996 that lost $1,060,000, the
$524,000 reserve taken for excess and obsolete inventory, and $275,000 in
severance benefits in connection with the Company's relocation of its
manufacturing operations to Florida.

Research and development expenses were $544,000 for fiscal 1998, an
increase of $201,000 or 59%, compared with $343,000 for fiscal 1997. The
increase is primarily due to the continuing development costs of the Company's
new family of industrial printers.

Selling, general and administrative expenses for fiscal 1998 were
$4,373,000 (56% of sales), a decrease of $1,297,000, or 23%, compared with
$5,670,000 (34% of sales) for the prior fiscal year. The decrease was the result
of lower defense-related marketing expenses, lower plant and facility expenses
and lower

administrative and support staff expenses throughout the Company. This reduction
was partially offset by an increase in audit and legal fees for 1998.

Net interest expense amounted to $518,000 for the year ended October
25, 1998 compared with net interest expense of $474,000 for fiscal 1997. This
increase is due to higher outstanding borrowings.

The net loss for the year ended October 25, 1998 amounted to
$3,270,000, an increase of $169,000 or 5%, compared with net loss of $3,101,000
for the prior fiscal year.

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 25, 1998. Ultimate recognition of these tax
assets is dependent, to some extent, on future revenue levels and margins. It is
the intention of management to assess the appropriate level for the valuation
allowance each quarter.

The Company utilizes various computer software packages as tools in
running its accounting operations. Management plans to replace the current
software with a software package better suited to support its current and future
business needs. Management has selected the appropriate software package and
anticipates completing implementation by November 1, 1999. The Company believes
that it has a prudent approach in place to address these issues. The approach
includes: an assessment of internal programs and equipment; communication with
major customers and vendors with respect to the state of readiness of their
systems; an evaluation of facility related issues and the development of a
contingency plan. This approach is designed to maintain an uninterrupted supply
of goods and services to/from the Company. The Company is incorporating the Y2K
computer programming language into its choice of an appropriate software
package. The Company does not believe the investment required for its mainframe
and critical hardware equipment to be Y2K compliant will be significant.

The Company is in a continuous process of communicating with its major
customers and suppliers. This contact is designed to determine systems
compatibility and compliance. The Company has been assured by its major
suppliers that there will be no disruption in the delivery of goods and
services. The Company believes that adequate resources are available for the
supply of its raw materials and facility related equipment will be operational.

The Company continues to assess the risks associated with program
failures and will develop a formal contingency plan with its business partners
to address specific risks. The failure to correct a material Y2K problem could
result in an interruption in normal business activity. The Company's plan is
expected to significantly reduce the risk associated with the Y2K issue.
However, due to the inherent uncertainty of the Y2K issue and dependence on
third-party compliance, no assurance can be given that potential Y2K failures
will not adversely effect the Company's operations, liquidity and financial
position.

LIQUIDITY AND CAPITAL RESOURCES

In August, the Company completed a private financing of $2,300,000
through the sale of 12% Subordinated Convertible Secured Notes Due August 2000.
A portion of the purchase price for the Notes included the tender back to the
Company and retirement of $600,000 of the Company's 10% Senior Subordinated
Secured Debentures, and $150,000 of the Company's 10% Bridge Notes. The
remaining

$1,550,000 was received in cash. The Company is using the cash proceeds from the
sale of the Notes to fund working capital.

Subsequent to the end of the quarter, the Company established a
$1,500,000 revolving line of credit with Branch Bank, which accrues interest at
a variable rate equal to the Branch Bank's Prime Rate plus 0.5%. The Line of
Credit is secured by the assets of the Company and guarantees by two guarantors
in the aggregate amount of $1,500,000 that are secured by letters of credit
issued on the account of each of the guarantors. The Company recently applied a
portion of the proceeds of its line of credit to fund the payment of the
remaining $750,000 in principal amount outstanding of its 10% Senior
Subordinated Secured Debentures in default, plus accrued interest thereon, and
expects to continue to use the proceeds of the line of credit hereinafter to
fund working capital.

The Company's working capital and current ratios at July 25, 1999, and
at the end of fiscal year 1998, were $4,523,000 and $3,570,000, and 2.2 and 1.6
respectively.

Management believes that the Company must make approximately $100,000
of capital expenditures (including capitalized leases) during the remainder of
fiscal 1999. The Company's other principal commitments for fiscal year 1999
include principal and interest payments on loans and subordinated debt.
Management expects to finance the capital expenditure requirements and other
commitments using a portion of the proceeds of its revolving line of credit.

The Company utilizes various computer software packages as tools in
running its accounting operations. Management plans to replace the current
software with a new version which is better suited to support its current and
future business needs. The approach includes: an assessment of internal programs
and equipment; communication with major customers and vendors with respect to
the state of readiness of their systems; an evaluation of facility related
issues and the development of a contingency plan. This approach is designed to
maintain an uninterrupted supply of goods and services to/from the Company. The
Company is incorporating Year 2000 ("Y2K") compliant computer programming
language into its software package. The Company does not believe the investment
required for its mainframe and critical hardware equipment to be Y2K compliant
will be significant.

The Company is in a continuous process of communicating with its major
customers and suppliers to determine Y2K systems compatibility and compliance.
The Company has been assured by its major suppliers that there will be no
disruption in the delivery of goods and services. The Company believes that
adequate resources are available for the supply of its raw materials and
facility related equipment will be operational.

The Company continues to assess the risks of Y2K associated program
failures and will develop a formal contingency plan with its business partners
to address the specific risks. The failure to correct a material Y2K problem
could result in an interruption in normal business activity. The Company's plan
is expected to significantly reduce the risk associated with the Y2K issue.
However, due to the inherent uncertainty of the Y2K issue and dependence on
third-party compliance, no assurance can be given that potential Y2K failures
will not adversely effect the Company's operations, liquidity and financial
position.

BUSINESS

Datametrics Corporation was incorporated in California in October 1962
and was reincorporated in Delaware in April 1987. We design, develop and sell
high-speed color printers, high-resolution non-impact printer/plotters and
ruggedized computers, printers and workstations for government/defense and
industrial

markets. We pioneered the development of high-speed, non-impact printers for
tactical military applications. Our current product line includes printers,
printer/plotters and ruggedized computers and workstations with diverse
capabilities ranging from stringent military specifications to varying
commercial standards.

COMPANY BACKGROUND

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

Over the past several fiscal years, we have been significantly impacted
by market changes in the DoD. DoD budget forecasts indicate that overall funding
will continue to decrease for the foreseeable future. Our primary response to
these adverse defense market conditions has been to develop and aggressively
pursue industrial and international opportunities for our ruggedized printers
and electronic communications equipment, expand our core ruggedized product line
and explore opportunities and strategic alliances for our high-speed digital
color printer products.

DEFENSE PRODUCTS

We design, develop, manufacture and sell military specification
("mil-spec") and ruggedized computers, workstations and printers for use in DoD
applications. Our products sold into the DoD markets can be categorized into
three basic groups: mil-spec printers, ruggedized computers, and ruggedized
printers. For the fiscal year ended October 25, 1998, approximately 71% of our
revenues were derived from DoD business, including contracts with U.S.
government contractors as well as the DoD itself.

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

Military Printers. We manufacture a wide range of printers which are
categorized as either mil-spec or ruggedized. These printers utilize thermal
printing, impact printing and laser printing technologies. These printers are
purchased and utilized by the DoD as well as by companies and organizations
which manufacture, sell or use data processing or data communications systems
that require "hard copy" printouts. Our products are incorporated into these
systems. The military printers are more reliable than conventional commercial
printers and are designed to work in severe environmental applications. The
design and component selection allow the Company's printers to withstand certain
adverse effects of dirt and grime, corrosion, droppage, bullets, moisture,
extremes in hot and cold temperature, and in some cases, nuclear radiation. In
connection with the U.S. government military peripheral standardization
programs, the DoD has approved and assigned nomenclature (military
identification) to standard computer peripherals for its defense systems.
Several of our

printers have been included in this standardization program, enabling the armed
services to select our printers for new systems without incurring the expense of
developing new printer documentation for each system. We believe that the
inclusion of our printers in this standardization program influenced the
purchase of our printers on several defense programs.

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

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

Our DmC 1901 Model, a high resolution color printer/plotter, is also
used by the U.S. Navy. This product line utilizes the thermal transfer process
to produce high-resolution, full color images on plain paper. The thermal
transfer technology used in the DmC Series 1901 differs from the direct imaging
thermal process in that it uses plain paper and a multi-colored ribbon instead
of direct imaging paper. These products provide between 40,000 and 90,000 pixels
(picture elements) per square inch and up to 16,000,000 colors, shades or tones.
This printer is used by the U.S. Navy for utilization within a number of Aegis
subsystems. The military color printer market has been slow to develop due to
cost considerations; however, we have developed a new lower cost ruggedized
printer which we believe should enjoy higher sales.

Ruggedized Computers. Our ruggedized products combine environmental and
mechanical engineering technology with computer technology to produce products
that perform identically to commercial counterparts, but are able to operate in
adverse environments. We offer ruggedized versions of computer devices and
peripherals encased in shock, vibration and temperature resistant housing for
products of equipment manufacturers such as Hewlett-Packard Company, Silicon
Graphics Inc., and Sun Microsystems Inc. This process often requires us to
design and manufacture cases, controls, backplanes and power supplies. These
products require much shorter development and testing periods than mil-spec
products. As such, these products allow the military to deploy state-of-the-art
computer technology rapidly, at a price greatly reduced from full mil-spec
systems. These timing and price factors are responsive to current U.S.
government trends.

A substantial portion of our ruggedized products revenue is derived
from the sale of workstations into the international marketplace. Workstations
have been sold into the Japanese P-3 maritime patrol aircraft program. Other
sales have been to France, Italy and Israel. This marketplace continues to be
active for these products.

International Military. We believe that international markets offer
promising growth opportunities for our high-end monochrome and color printers
and ruggedized printer, computers and workstations. As the U.S. government
funding continues to decrease, other countries are increasing their military
budgets, specifically in the Pacific Rim. These countries are assuming more of
the burden of their defense roles as the U.S. military reduces its presence. We
continue to be aggressive in the international marketplace, although there is
greater inherent risk.

SIGNIFICANT CUSTOMERS AND MATTERS CONCERNING DOD BUSINESS

Most of our customers are the DoD and prime contractors under programs
funded by the DoD. For the fiscal years ended October 25, 1998 and October 26,
1997, direct and indirect DoD business represented approximately 71% and 67%,
respectively, of our revenues. Because our products are intended to function as
subsystems, they are sold to customers which manufacture, sell or use data
processing or data communication systems which involve a processing, printing,
recording or data entry function for which our products are suited. While we may
be a subcontractor on a government program with an aggregate budget of billions
of dollars extending over as much as a ten-year period, our share of the budget
for any major program is relatively small.

In the fiscal year ended October 25, 1998, our three largest customers
in sales, the U.S. government 23.7%, Raytheon 22.3% and Lockheed Martin 18.9%
accounted for an aggregate of 64.9% of total sales. The loss of any one of these
customers could have a material adverse impact on our results of operations and
financial condition.

In the fiscal year ended October 26, 1997, our five largest customers
in sales, Lockheed Martin (15.7%), U.S. government (13.7%), GTE (12.5%),
Computing Devices Canada (10.9%) and Digital Equipment Corporation (10.8%),
accounted for an aggregate of 64% of total sales.

Companies which are engaged primarily in supplying equipment and
services, directly or indirectly, to the U.S. government are subject to special
risks including dependence on government appropriations, termination without
cause, contract renegotiation and competition for the available DoD business.
Over the past several years, we have been significantly impacted by market
changes in the DoD. DoD budget forecasts indicate that overall funding will
continue to decrease for the foreseeable future.

Our DoD related contracts provide for the right to audit our cost
records and are subject to defective pricing regulation. We do not believe that
we have any material exposure of this sort on any such contracts. Accordingly,
no provisions have been made in our accounts in connection with defective
pricing regulation.

HIGH-SPEED COLOR DIGITAL PRINTER

In fiscal 1994, we began an intensive program to develop a high-speed
color digital printer for the short- run production printer market. After
significant development and marketing costs, coupled with limited market
success, in October 1996 we idled and subsequently ceased all manufacture and
marketing of our CYMax product line to permit a comprehensive strategic and
operational feasibility study of our overall concurrent transfer imaging ("CTI")
technology and potential applications. Following the completion of the strategic
and operational feasibility study, we introduced a new family of five industrial
and government/defense high-speed concurrent thermal transfer printers on July
21, 1997. Our new family of medium and wide format printers includes the Harrier
(TM), the Condor (TM) I and the Condor (TM) II for industrial customers, and the
Cobra (TM) I and Cobra (TM) II for government/defense customers.

The Harrier (TM), Condor (TM) series and Cobra (TM) series of print
engines are robust, rugged, high-performance printers which incorporate a wide
range of our newly-developed technological capabilities in the area of thermal
transfer printing.

CERTAIN MARKET CONSIDERATIONS

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

SERVICE

Pursuant to maintenance agreements, repair orders or warranty
provisions, we generally service our printers at our facility. In-house,
non-warranty repairs and maintenance service provided 3.3% and 4.9% of our sales
in fiscal 1998 and 1997, respectively. For both military and commercial
products, our standard warranty period is ninety days, although longer warranty
periods are available at customer request for an additional charge.

Sales of spare parts for our products amounted to 18.1% and 17.8% of
fiscal 1998 and 1997 revenue, respectively. We also sell documentation, such as
handbooks, operational manuals, schematics and other technical data to assist
its customers in maintaining their own equipment.

COMPETITION

We compete in each of our target markets against other companies, many
of which have substantially greater financial, technical, marketing,
distribution and other resources than we have. The principal competitive factors
in the markets in which we participate are image quality, product performance
and price.

In domestic and international defense markets, our principal
competitors are D.S. Technologies Inc., and Miltope Group Inc. In addition, many
airborne electronic data processing and communications prime contractors have
the capability of manufacturing military and airborne products, and several such
companies do presently manufacture products performing functions similar to our
products. In almost all cases, these companies have substantially greater
financial and technological resources than we have. In certain applications, our
printers are higher in price than those of our competitors, and many of our
competitors have more experience in the markets for lower-cost military printers
than we do. We believe, however, that our printers usually perform at higher
speed and with greater reliability in extreme environments.

INTELLECTUAL PROPERTY RIGHTS

It is our policy to obtain appropriate proprietary rights protection
for any potentially significant new technology we have acquired or developed. We
have a trademark registration covering our "DmC" (R) logo and for the Harrier
(TM) products, and have applied for registration for the Condor (TM) mark. We
have been granted two U.S. patents relating to our high-speed color digital
printer technology. We also have several U.S. patent

applications pending relating to our high-speed color digital printer. There can
be no assurance, however, that any patents will be granted pursuant to these
various applications in the U.S. and abroad.

In addition, we rely on copyright and trade secret laws to protect
proprietary rights. We attempt to protect our trade secrets and other
proprietary information through agreements with customers and suppliers,
proprietary information agreements with our employees and consultants and other
similar measures. There can be no assurance, however, that we will be successful
in protecting trade secrets and other proprietary information.

While we believe that our trademarks, patents, patent applications, and
other proprietary know-how have significant value, changing technology makes our
future success dependent principally upon our employees' technical competence
and creative skills for continuing innovation.

RESEARCH AND DEVELOPMENT ACTIVITIES

We are involved in both Company-sponsored and customer-sponsored
research and development. In the latter case, customers contract directly for
such activities. The customer-sponsored research and development primarily
consist of non-recurring engineering costs relating to production contracts. In
addition to design technology, this non-recurring engineering includes
development of maintenance and operator manuals, drawings, reliability and
maintainability analysis, technical design audits and data required to support
field repairs. Such costs do not qualify as research and development costs as
defined by Financial Accounting Standards Board Statement No. 2, and
accordingly, have not been disclosed as such in our financial statements. We
spent approximately $284,000 and $498,000 on research and development during the
nine months ended July 25, 1999 and July 26, 1998, respectively. The decrease in
expenditures is due to the completion of substantially all of the research and
development required for the Company's new line of industrial color printers.

EMPLOYEES

As of September 14, 1999 we employed 95 persons on a full-time basis,
compared to 85 persons on a full-time basis as of September 14, 1998. None of
our employees are represented by a union or are subject to a collective
bargaining agreement.

OTHER MATTERS

Our business is not seasonal.

Our 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. We are not involved in any pending or threatened proceedings which
would require curtailment of, or otherwise restrict, our operations because of
such regulations. Compliance with applicable environmental laws has not had a
material adverse effect on our business, financial condition or results of
operations.

PROPERTIES

Our operations are conducted from a 43,000 square foot manufacturing
facility in Orlando, Florida, purchased in December 1997 for $899,000. In
connection with the acquisition of this property, we obtained

a mortgage loan in the amount of $975,000, which included approximately $76,000
to be used for building improvements. We completed our move to Florida during
February 1998. A 6,600 square foot facility located in Calabasas, California was
leased and opened in November 1997. This facility houses our technology center.
The lease is for a three year term through October 2000. In April 1998, we
leased a 5,400 square foot office in Florham Park, New Jersey in which our
corporate offices are located. The lease provides for a five year term through
March 2003. We believe that the rents for the leased properties are reasonable
and that these facilities are suitable and adequate for our current needs.

LEGAL PROCEEDINGS

For a description of legal proceedings, refer to the section of this
Prospectus entitled "Litigation" under the heading "Risk Factors" on page 4.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Management is vested in our Board of Directors and officers. The Board
of Directors is divided into three classes with two members in Class I, two
members in Class II and two members in Class III. Each class is elected for a
term of three years. At each annual meeting, shareholders elect Directors to
succeed those Directors in the class whose term expires at that annual meeting.
Each newly elected Director holds office until the third succeeding annual
meeting and until the election and qualification of his or her successor. The
officers of the Company hold office at the discretion of the Board of Directors.

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

NAME AGE POSITION(S) HELD

Daniel P. Ginns 49 Chairman of the Board of Directors, Chief
Executive Officer and Secretary
Adrien A. Maught, Jr. 49 Director, Chief Operating Officer and President
Douglas S. Friedenberg 46 Director
John W. O'Leary 63 Director
Richard J. Love 66 Director
William B. Pandos 39 Chief Financial Officer and Treasurer
James D. Sturgeon, Jr. 65 Vice President, Marketing
Vincent J. Cahill 52 Director

BUSINESS EXPERIENCE

DANIEL P. GINNS has been the Chairman of the board of directors and
Chief Executive Officer of the Company since October 1996, and Secretary of the
Company since February 1997. Mr. Ginns is also a Director of StarBase
Corporation, a company whose shares are quoted on The Nasdaq SmallCap(sm)
Market. From 1989 to 1996, Mr. Ginns was President of Belmont Capital, Inc., a
management and financial advisory firm.

ADRIEN A. MAUGHT, Jr. has served as Chief Operating Officer of the
Company since February 1998, as President since January 1997 and as a director
since October 1996. As of the date of this prospectus, Mr. Maught is on medical
leave. Mr. Maught was the Interim Chief Financial Officer of the Company from
October 1996 until April 1997. From 1992 to 1997, Mr. Maught was the President
of the Adrien A. Maught Company, an industrial real-estate and management
consultant firm.

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

JOHN W. O'LEARY has been a director of the Company since January 1999.
Mr. O'Leary was the President and Chief Executive Officer of International
Imaging Materials, Inc., a subsidiary of Paxar Corporation from 1984 to 1998. He
is Chairman of the Board of AIM(R) USA and also serves on the board of directors
of Marine Midland Bank, Rochester Region and the United Way of Rochester.

RICHARD J. LOVE has been a director of the Company since December 1998.
Mr. Love is currently a principal of RJL Capital Management of Santa Barbara,
California, an investment management firm. From 1973 to 1998, Mr. Love served as
an investment counselor, then senior partner, of Loomis, Sayles & Co.

WILLIAM B. PANDOS has served as Chief Financial Officer and Treasurer
of the Company since December, 1998. From 1988 to 1998, Mr. Pandos served as
Vice President and Treasurer of Standard Uniform, Inc., headquartered in
Irvington, New Jersey.

JAMES D. STURGEON, Jr. has served as Vice President, Marketing of the
Company since February, 1998. Mr. Sturgeon served as Chief Operating Officer of
the Company from April 1997 to February 1998, Vice President, Manufacturing
Operations of the Company from April 1992 until April 1997 and Vice President,
Operations of the Company from February 1989 until April 1992.

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

EXECUTIVE COMPENSATION

The following table shows, for the fiscal years ended October 25, 1998,
October 26, 1997 and October 27, 1996, the compensation earned by (i) the
current Chief Executive Officer of the Company and (ii) the two executive
officers of the Company who were serving as executive officers at the end of
fiscal year 1998 and who received total annual salary, bonus and other
compensation in excess of $100,000 during fiscal year 1998 (the "Named Executive
Officers").

SUMMARY COMPENSATION TABLE

LONG-TERM COMPENSATION

ANNUAL COMPENSATION AWARDS PAYOUTS

OTHER RE-
ANNUAL STRICTED SECURITIES ALL OTHER
NAME AND COMPEN- STOCK UNDERLYING LTIP COMPEN-
PRINCIPAL SATION AWARD(S) OPTIONS AND PAYOUTS SATION
POSITIONS YEAR SALARY BONUS(S) ($)(3) ($) WARRANTS (#) ($) ($)
- -------------- ---- ------ -------- ------ -------- ------------ ------- --------

Daniel P. Ginns, 1998 252,681 --- 32,000(4) 10,000(5) 50,000 --- ---
Chief Executive 1997 261,035(1) 24,000 27,000(4) 10,000(5) 50,000 --- ---
Officer, 1996 17,500 --- --- --- 715,000 --- ---
Secretary and
Chairman of the
Board of
Directors
Adrien A. 1998 200,891 --- 12,500(4) 10,000(5) --- --- ---
Maught, Jr. 1997 210,901(2) 21,500 7,500(4) 10,000(5) 50,000 --- ---
President and 1996 13,500 --- --- --- 515,000 --- ---
Director
James D. 1998 124,905 --- --- --- --- --- ---
Sturgeon, Jr., 1997 123,882 --- --- --- 1,750 --- ---
Vice President, 1996 118,646 --- --- --- 10,000 --- ---
Marketing

(1) Includes related party payments of $72,250 for fees paid to Belmont
Capital Inc. for consulting services prior to becoming an employee of
the Company.
(2) Includes related party payments of $45,750 for fees paid to Belmont
Capital Inc. for consulting services prior to becoming an employee of
the Company.
(3) Does not include perquisites to each of the Named Executive Officers
that did not exceed the lesser of $50,000 or 10% of the total salary
and bonus for such officer.
(4) Directors fees.

(5) Restricted stock awarded in lieu of fees for attendance of certain
meetings of Directors.

OPTION/WARRANT GRANTS IN LAST FISCAL YEAR

The following table provides information concerning individual grants
of Warrants made during the fiscal year ending October 25, 1998 to each of the
Named Executive Officers. None of the shares of the Common Stock underlying
these Warrants are being registered hereby. No stock options or stock
appreciation rights were granted during fiscal 1998.

% of Total
Number of Securities Warrants Granted
Named Executive Underlying Warrants to Employees in Exercise or Base
Officer Granted (#) Fiscal Year Price ($/Sh) Expiration Date
--------------- -------------------- ----------------- ---------------- ---------------

Daniel P. Ginns 50,000 (1) 20% $1.81 10/27/02
Adrien A. Maught, Jr. 50,000 (1) 20% $1.81 10/27/02
James D. Sturgeon, Jr. ---- ---- ---- ----

(1) Represents warrants to purchase 50,000 shares of Common Stock of the
Company granted on October 27, 1997, which are part of an aggregate
150,000 warrants issued to executive officers and Directors of the
Company during fiscal 1998 as compensation for arranging financings.

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

The following table provides information with respect to the Named
Executive Officers regarding the exercise of options/Warrants during the fiscal
year ended October 25, 1998 and unexercised options/Warrants held as of the end
of the fiscal year ended October 25, 1998. No stock appreciation rights were
exercised during fiscal year 1998 or were outstanding at the end of fiscal year
1998.

NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
ACQUIRED VALUE OPTION/WARRANTS AT OCTOBER MONEY OPTIONS/WARRANTS AT
ON REALIZED 25, 1998 (#) OCTOBER 25, 1998($)
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ -------- ----------- ------------- ----------- -------------

Daniel P. Ginns 0 0 757,500 (1) 7,500 0 0
Adrien A. 0 0 557,500 (2) 7,500 0 0
Maught, Jr.
James D. 0 0 64,000 (3) 0 0 0
Sturgeon, Jr.

Notes:
(1) Includes warrants to purchase 700,000 shares of common stock issued in
connection with Mr. Ginns' employment agreement, warrants to purchase
50,000 shares of common stock issued on October 27, 1997 as
compensation for arranging financings, and 7,500 non-qualified stock
options that are presently exercisable as of October 25, 1998 pursuant
to a grant of 15,000 non-qualified stock options in October 1996, which
options vest over a period of 16 fiscal quarters.

(2) Includes warrants to purchase 500,000 shares of common stock issued in
connection with Mr. Maught's employee agreement, and warrants to
purchase 50,000 shares of common stock issued on October 27, 1997 as
compensation for arranging financings, and 7,500 non-qualified stock
options that are presently exercisable as of October 25, 1998 pursuant
to a grant of 15,000 non-qualified stock options in October 1996, which
options vest over a period of 16 fiscal quarters.

(3) Includes (i) 4,000 shares of Common Stock subject to Incentive Stock
Options that are presently exercisable and expire in February 2000,
(ii) 10,000 shares of Common Stock subject to Incentive

Stock Options that are presently exercisable as of October 25, 1998 and
expire in December 2000, (iii) 10,000 shares of Common Stock subject to
Incentive Stock Options that expired in December 1998, and (iv) 40,000
shares of Common Stock subject to Incentive Stock Options that expired
in March 1999.

EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS

In January 1997, we entered into employment agreements with Mr. Ginns
to be our Chief Executive Officer of the Company, and with Mr. Maught to be our
President. Each of these agreements currently terminates on December 31, 2002,
but automatically renews for five years on January 1 and July 1 of each year so
that the remaining term of each agreement will not be less than four and
one-half years from the time of renewal. Under these agreements, Mr. Ginns and
Mr. Maught are paid an initial annual base salary of $240,000 and $215,000,
respectively. For each calendar year commencing with the calendar year beginning
January 1, 1998, the base salary under these agreements is adjusted by the
greater of 3% or a percentage equal to the percentage change in the Consumer
Price Index for the year then ended from the prior calendar year. In addition to
the base salary, the Compensation Committee of the Board of Directors may, in
its sole discretion, pay a performance-based bonus to Mr. Ginns or Mr. Maught in
any year during the term of their respective agreements.

We have the right to terminate Mr. Ginns' or Mr. Maught's employment
without cause at any time, provided, however, that Mr. Ginns and Mr. Maught each
shall be entitled to payment of his base salary for a period equal to the
greater of one year from the date of termination or the remainder of the
employment agreement; and we shall continue to provide to each such executive
(and each member of his immediate family) all benefits provided by the
employment agreement. In addition, upon termination in connection with a certain
change in control of the Company, Mr. Ginns and Mr. Maught each shall be
entitled to a cash payment equal to the lesser of three years' base salary or
the maximum amount which would not result in any portion of such payment being
subject to the excise tax under Section 4999 of the Internal Revenue Code.

In connection with these employment agreements, we granted Mr. Ginns
and Mr. Maught Warrants to purchase up to 700,000 and 500,000 shares,
respectively, of the Company's Common Stock at a purchase price of $2.00 per
share. The Warrants provide for increase in the amount of Warrants issued under
certain circumstances to protect against antidilution. All of these Warrants are
immediately exercisable and have a term of five years. Upon renewal of the
employment agreement, the five-year term of the Warrants is automatically
renewed, commencing with the date of the employment agreement.

We know of no arrangement among Stockholders which may result in a
change of control of the Company.

DIRECTOR COMPENSATION

As Chairman of the Board of Directors, Daniel P. Ginns is entitled to
an annual retainer fee of $32,000. All other Directors are entitled to receive
an annual retainer fee of $12,500. In addition, each Director serving as
Chairman on any committee of the Board of Directors is entitled to receive
$1,600 for each committee meeting attendance, and all other Directors who are
committee members are entitled to receive $800 for each committee meeting
attendance. Pursuant to a written resolution of the Board of Directors, the
Company has agreed to issue 10,000 shares of Common Stock to each Director in
lieu of fees for committee participation. Accordingly, the Company has issued
10,000 shares to each Director during fiscal years 1997, 1998 and 1999 in lieu
of fees for committee participation during each of those fiscal years, and the
Company expects to

continue issuing such shares of Common Stock in the future. These shares of
Common Stock are restricted shares and may not be offered or sold unless
registered under the Securities Exchange Act of 1933, as amended, or pursuant to
an exemption therefrom.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Since the fiscal year ended October 25, 1998, certain of our executive
officers and Directors have engaged in transactions with us from time to time.
Except as set forth below, these transactions involved (i) the purchase of our
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.

o On April 14, 1999, we borrowed $50,000 from Daniel P. Ginns,
our Chief Executive Officer, which principal amount was repaid
in full on April 15, 1999.
o On April 27, 1999, we borrowed $30,000, from a member of the
immediate family of Daniel P. Ginns, which principal amount
was repaid in full on April 28, 1999.
o On April 20, 1999, we borrowed $50,000 from Daniel P. Ginns,
which principal amount was repaid in full on May 24, 1999.
o On June 15, 1999, we borrowed $50,000 from Daniel P. Ginns,
which principal amount was repaid in full on August 2, 1999.

During the fiscal year ending October 25, 1998, we paid $371,225 and
$450,000 for liability and medical insurance, respectively, to Arthur A. Watson
& Co., Inc., an entity of which Stephen Gass, a Director of the Company during
fiscal 1998, is an Executive Vice President and stockholder. Management believes
that these payments did not exceed amounts that a similarly situated computer
and office equipment manufacturing company would reasonably expend for liability
and medical insurance in an arms-length transaction. Mr. Gass resigned from the
Board of Directors of the Company in July 1998.

DESCRIPTION OF SECURITIES

The Certificate of Incorporation of Datametrics Corporation, as
amended, authorize the issuance of up to 40,000,000 shares of Common Stock
having a par value of $.01 per share and 5,000,000 shares of Preferred Stock
having a par value of $.01 per share. As of the date of this prospectus, we have
19,007,227 shares of Common Stock outstanding and no shares of Preferred Stock
outstanding.

COMMON STOCK

Of the 12,753,380 shares of Common Stock being registered hereunder,
3,874,479 shares of Common Stock were issued to the Selling Shareholders in
private transactions; 6,578,901 shares of Common Stock are issuable upon the
exercise of the Warrants; and 2,300,000 shares are issuable upon the conversion
of the Convertible Notes.

Each share of Common Stock entitles the holder thereof to vote on all
matters submitted to a vote of the stockholders. Since the holders of Common
Stock do not have cumulative voting rights, holders of more than 50% of the
outstanding shares can elect on an annual basis the entire class of Directors
then standing for election and holders of the remaining shares by themselves
cannot elect any Directors. The holders of Common Stock have no preemptive
rights or rights to convert their Common Stock into other securities. Holders of
Common Stock are entitled to receive ratably such dividends as may be declared
in respect of the Common

Stock by the Board of Directors out of funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, holders of the
Common Stock have the right to a ratable portion of the assets remaining after
payment of liabilities. All shares of Common Stock outstanding are and the
shares of Common Stock to be sold in this Offering will be, when issued, fully
paid and non-assessable.

DIVIDENDS POLICY

We have never declared or paid a dividend on our Common Stock, and
management expects that future earnings will be retained for operations and for
expansion or development of business. Whether we will pay dividends in the
future will be at the discretion of the Board of Directors and will depend upon,
among other things, future earnings, operations, capital requirements and
surplus, our general financial condition, restrictive covenants in loan or other
agreements to which we may be subject, and such other factors as the Board of
Directors may deem to be relevant, including the desirability of cash dividends
to stockholders.

TRANSFER AGENT

Chase Mellon Shareholder Services, LLC, 85 Challenger Road, Ridgefield
Park, New Jersey 07660 serves as transfer agent for our Common Stock.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of July 31,1999 by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, (iii) each
executive officer of the Company, and (iv) all executive officers and directors
of the Company as a group.

AMOUNT OF PERCENT OF SHARES
BENEFICIAL OWNER SHARES BENEFICIALLY OWNED
BENEFICIALLY
OWNED
Daniel P. Ginns (1) 840,312 (2) 4.4%
Douglas Friedenberg (1) 1,093,142 (3) 5.8%
Adrien A. Maught (1) 590,312 (4) 3.1%
John W. O'Leary (1) 27,812 (5) *
William B. Pandos (1) 0 *
James D. Sturgeon, Jr. (1) 14,000 (6) *
Richard Love (1) 352,097 (7) 1.9%
Vincent J. Cahill(1) 11,874 (8) *
- --------------------------------- ---------------- ----------------
All Executive Officers and Directors
as a Group (8 People) 2,929,549 15.4%

Headwaters Capital (9) 2,000,000 (10) 10.5%
Robert London (11) 1,460,000 7.7%
Parker Quillen (12) 1,198,966 (13) 6.30%
*less than 1%

Notes:

(1) The addresses of each of these persons is c/o Datametrics Corporation,
25B Hanover Road, Suite 3305, Florham Park, New Jersey 07932. The
affiliation of each of these persons with the Company within the past three
years is set forth in the section of this Prospectus entitled "Management."

(2) Includes 700,000 shares of Common Stock underlying warrants presently
exercisable at $2.00 per share; 50,000 shares of Common Stock underlying
warrants exercisable at $1.00 per share; and 50,000 shares of Common Stock
underlying warrants exercisable at $1.81 per share. Also includes 10,312
shares of Common Stock subject to non-qualified stock options presently
exercisable at $1.25 per share. Excludes 4,688 shares of Common Stock
subject to non-qualified stock options not exercisable during the next 60
days.

(3) Includes 100,000 shares of Common Stock underlying warrants presently
exercisable at $2.00 per share and 50,000 shares of Common Stock underlying
warrants presently exercisable at $1.81 per share. Also includes 10,312
shares of Common Stock subject to non-qualified stock options presently
exercisable at $1.25 per share. Excludes 4,688 shares of Common Stock
subject to non-qualified stock options not exercisable during the next
sixty (60) days. Also includes the holdings of each of the following, as to
each of which Mr. Friedenberg exercises investment control: (a) Peter
Sosnkowski IRA - 16,667 shares of Common Stock; (b) Firebird Overseas, Ltd.
- 476,911 shares of Common Stock (including 80,002 shares of Common Stock
underlying warrants presently exercisable at $1.50 per share); (c) Firebird
Partners LP - 193,347 shares of Common stock; and (d) Euro-Dutch Company -
185,905 shares of Common Stock (including 23,334 shares of Common Stock
underlying warrants presently exercisable at $1.50 per share).

(4) Includes 500,000 shares of Common Stock underlying warrants presently
exercisable at $2.00 per share and 50,000 shares of Common Stock underlying
warrants presently exercisable at $1.81 per share. Also includes 10,312
shares of Common Stock subject to non-qualified stock options that are
presently exercisable at $1.25 per share. Excludes 4,688 shares of Common
Stock subject to non-qualified stock options not exercisable during the
next 60 days.

(5) Includes 2,812 shares of Common Stock subject to non-qualified stock
options that are presently exercisable at $1.88 per share. Excludes 12,188
shares of Common Stock subject to non-qualified stock options not
exercisable during the next 60 days.

(6) Includes 10,000 shares of Common Stock subject to incentive stock
options that are presently exercisable at $7.875 per share, and 4,000
shares of Common Stock subject to incentive stock options that are
presently exercisable at $5.75 per share.

(7) Includes 25,000 shares of Common Stock underlying Warrants presently
exercisable at $1.00 per share, and 2,812 shares of Common Stock subject to
non-qualified stock options that are presently exercisable at $1.94 per
share. Excludes 12,188 shares of Common Stock subject to non-qualified
stock options not exercisable during the next 60 days

(8) Includes 1,875 shares of Common Stock subject to non-qualified stock
options that are presently exercisable at $1.31 per share. Excludes 13,125
shares of Common Stock subject to non-qualified stock options not
exercisable during the next 60 days.

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

(10) Includes 1,000,000 shares of Common Stock underlying warrants
exercisable at the lesser of $1.35 per share or the "volume-weighted
average price" (See the discussion under the heading "Description of
Securities" in this prospectus).

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

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

(13) Includes the holdings of each of the following, as to each of which
Mr. Quillen exercises investment control: Little Wing LP - 637,392 shares
of Common Stock underlying warrants presently exercisable at $1.50 per
share; Little Wing Too LP - 68,856 shares of Common Stock underlying
warrants presently exercisable at $1.50 per share; and Tradewinds Fund
Limited - 492,718 shares of Common Stock underlying warrants presently
exercisable at $1.50 per share.

We know of no arrangement which may result in a change in control of the
Company.

SECURITY OWNERSHIP OF SELLING SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of July 31, 1999 by each Selling
Shareholder.

SHARES ISSUED SHARES SHARES SHARES
BENEFICIALLY SHARES TO SUBJECT TO SUBJECT TO BENEFICIALLY
OWNED PRIOR BE SOLD IN WARRANTS CONVERTIBLE OWNED AFTER
SELLING SHAREHOLDERS TO THE THE TO BE SOLD NOTES TO BE OFFERING
OFFERING OFFERING IN THE SOLD IN THE (AND
(1) OFFERING OFFERING (6) PERCENT)
--------------------- ----------- ----------- ------------ ------------ ----------

Robert S. London 1,269,930 1,269,930 0 (*)
SMG Overseas, Limited 12,000 (2) 44,000 (3) 0 (*)
Michael Rich 30,000 30,000 0 (*)
Rich Family Partnership, LLC 132,625 (2) 100,625 44,000 (3) 0 (*)
Minette Rich 64,687 64,687 0 (*)
Michael Rich IRA 122,187 122,187 0 (*)
Minette Rich IRA 71,875 71,875 0 (*)
Fenwood Equities 16,667 16,667 (3) 0 (*)
Peter Wymann 106,667 41,667 (5) 50,000 15,000 (*)
Peter Sosnkowski IRA (4) 166,667 66,667 (7) 100,000 0 (*)
Firebird Overseas, Ltd. (4) 814,411 282,857 192,502 (8) 225,000 114,052 (*)
Firebird Partners, LP (4) 131,347 119,747 11,600 (*)
Euro-Dutch Company (4) 185,905 162,571 23,334 (3) 0 (*)
Gertrude Cohen (4) 75,000 25,000 (9) 50,000
George B. Clairmont 322,500 87,500 (9) 175,000 30,000 (*)
Evergreen Worldwide Investment Fund 83,335 83,335 (3) 0 (*)
Neal & Company 83,335 83,335 (3) 0 (*)
Allen Ozdemir 33,334 33,334 (3) 0 (*)
Quilcap Corporation: (10)
Little Wing LP 674,472 (11) 822,786 (3) 0 (*)
Little Wing Too LP 72,837 (12) 88,758 (3) 0 (*)
Quilcap International Corp.:
Tradewinds Fund Ltd. (13) 521,379 (14) 636,016 (3) 0 (*)
Cannell Capital Management: (15)
Cuttyhunk Fund Limited 112,000 (16) 154,000 (3) 0 (*)
Tonga Partners LP 208,000 (17) 286,000 (3) 0 (*)
The Manufacturer's Life Insurance
Company (U.S.A.) 150,000 150,000 0 (*)
Settondown Capital International, Ltd. 500,000 250,000 250,000 (18) 0 (*)
Headwaters Capital 2,000,000 1,000,000 1,000,000(18) 0 (*)
Manchester Asset Management, Ltd. 500,000 250,000 250,000 (18) 0 (*)
Emily T. Fairbairn 75,000 25,000 (9) 50,000 0 (*)
Malcolm G. and Emily T. 0 (*)
Fairbairn, JT w/ROS 75,000 25,000 (9) 50,000 0 (*)
Morrison 1997 Char. Remainder Trust (19) 150,000 50,000 (9) 100,000 0 (*)
The Achieve Fund (19) 300,000 100,000 (9) 200,000 0 (*)
The Ascend Fund (19) 75,000 25,000 (9) 50,000 0 (*)
Richard H. and Laurie C. Morrison 0 (*)
Living Trust (19) 150,000 50,000 (9) 100,000 0 (*)
John P. Rosenthal 150,000 50,000 (9) 100,000 0 (*)
Fortune Fund Ltd. 150,000 50,000 (9) 100,000 0 (*)
Tim Hassler 150,000 50,000 (9) 100,000 0 (*)
Bruce Galloway: 45,000 15,000 (9) 30,000 0 (*)
Bruce Galloway Rollover IRA (20) 255,000 85,000 (9) 170,000 0 (*)
NTS Financial Services Ltd. (20) 450,000 150,000 (9) 300,000 0 (*)
Theron T. Chapman, Jr. 300,000 100,000 (9) 200,000 0 (*)
Roy Doumani 433,332 (21) 1,000,000 (23) 0 (*)
Carl K. Doumani 216,668 (22) 500,000 (23) 0 (*)
Inder M. Singh and Raman R. Singh, Ttees,
Singh Family Trust - 1999 u/i dtd 7/27/99 60,000 20,000 (9) 40,000 0 (*)
Tafy Enterprises, Inc. 20,000 5,000 (9) 10,000 5,000 (*)
MAR-JAC Investments, Inc. 314,285 50,000 (9) 100,000 164,285 (*)

TOTAL 11,830,445 3,874,479 6,578,901 2,300,000 339,937
*less than 1%

Notes:

(1) This column represents currently outstanding shares of
Common Stock which are being registered for sale.

(2) Represents the number of shares of Common Stock beneficially
owned by this Stockholder. The remainder of the shares
subject to warrants listed as to be sold vest at the rate of
3,000 per calendar quarter through September 30, 2000.

(3) Represents shares of Common Stock underlying warrants
exercisable at $1.50 per share.

(4) These entities and individuals are affiliates of Douglas
Friedenberg, one of our directors.

(5) Represents 16,667 shares of Common Stock underlying warrants
exercisable at $1.50 per share.

(6) All of the shares listed in this column are shares of Common
Stock issuable upon the conversion of the Convertible Notes,
at a rate of $1.00 per share.

(7) Represents 16,667 shares of Common Stock underlying warrants
exercisable at $1.50 per share, and 50,000 shares of Common
Stock underlying warrants exercisable at $1.10 per share.

(8) Represents 80,002 shares of Common Stock underlying warrants
exercisable at $1.50 per share, and 112,500 shares of Common
Stock underlying warrants exercisable at $1.10 per share.

(9) Represents shares of Common Stock underlying warrants
exercisable at $1.10 per share.

(10) Quilcap Corporation, and its two funds, Little Wing LP and
Little Wing Too LP, are affiliates of Parker Quillen, a
beneficial owner of in excess of 5% of the Company's
outstanding Common Stock.

(11) Represents the number of shares of Common Stock beneficially
owned by this Stockholder. The remainder of the shares
subject to warrants listed as to be sold vest at the rate of
37,080 per calendar quarter through September 30, 2000.

(12) Represents the number of shares of Common Stock beneficially
owned by this Stockholder. The remainder of the shares
subject to warrants listed as to be sold vest at the rate of
3,981 per calendar quarter through September 30, 2000.

(13) Quilcap International Corporation, and its fund, Tradewinds
Fund Limited, are affiliates of Parker Quillen, a beneficial
owner of in excess of 5% of the Company's outstanding Common
Stock.

(14) Represents the number of shares of Common Stock beneficially
owned by this Stockholder. The remainder of the shares
subject to warrants listed as to be sold vest at the rate of
28,661 per calendar quarter through September 30, 2000.

(15) Cannell Capital Management is the investment advisor for
each of Cuttyhunk Fund Limited and Tonga Partners LP.

(16) Represents the number of shares of Common Stock beneficially
owned by this Stockholder. The remainder of the shares
subject to warrants listed as to be sold vest at the rate of
10,500 per calendar quarter through September 30, 2000.

(17) Represents the number of shares of Common Stock beneficially
owned by this Stockholder. The remainder of the shares
subject to warrants listed as to be sold vest at the rate of
19,500 per calendar quarter through September 30, 2000.

(18) Represents shares of Common Stock underlying warrants
exercisable at the lesser of $1.35 per share or the
"volume-weighted average price" (See the discussion under
the heading "Description of Securities" in this prospectus).

(19) Shares held by these entities may be deemed to be
beneficially owned by Richard H. Morrison.

(20) Shares held by these entities may be deemed to be
beneficially owned by Bruce Galloway.

(21) Represents the number of shares of Common Stock beneficially
owned by this Stockholder. The remainder of the shares
subject to warrants listed as to be sold vest at the rate of
33,333 shares per month through August 1, 2000, with an
additional 266,667 shares vesting on March 1, 2000, to the
extent certain obligations of the Stockholder remain
outstanding.

(22) Represents the number of shares of Common Stock beneficially
owned by this Stockholder. The remainder of the shares
subject to warrants listed as to be sold vest at the rate of
16,667 shares per month through August 1, 2000, with an
additional 133,333 shares vesting on March 1, 2000, to the
extent certain obligations of the Stockholder remain
outstanding.

(23) Represents shares of Common Stock underlying warrants
exercisable at $1.00 per share.

PLAN OF DISTRIBUTION

We have been advised that the Selling Shareholders may sell Securities
from time to time in transactions on the American Stock Exchange or on other
exchanges on which the Securities may be traded, in the over-the-counter market,
in negotiated transactions, through the writing of options on the Securities or
a combination of such methods of sale, or through other means. Sales may be
effected at fixed prices which may be changed, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Selling Shareholders are not restricted as to the price
or prices at which they may sell their Securities. Sales of Securities by the
Selling Shareholders may depress the market price of our securities since the
number of Securities which may be sold by the Selling Shareholders is relatively
large compared to the historical average weekly trading of our securities, and
therefore, if the Selling Shareholders were to sell, or attempt to sell, all of
such Securities at once, we believe such a transaction could adversely impact
the market price for our securities. As used herein, "Selling Shareholders"
includes donees and pledgees selling Securities received from a named Selling
Shareholder after the date of this prospectus.

The Selling Shareholders may effect such transactions by selling the
Securities to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholders or the purchasers of the Securities for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). The Selling Shareholders and any broker-dealers or
agents who participate in the distribution of Securities hereunder may be deemed
to be "underwriters" as that term is defined in the Securities Act of 1933, as
amended (the "Act"), and any commissions received by them and profit on any
resale of the Securities as principal might be deemed to be underwriting
discounts and commissions under the Act.

The Selling Shareholders are subject to applicable provisions of the
Securities Exchange Act of 1934, as amended and the rules and regulations
thereunder, including without limitation, Regulation M, which provisions may
limit the timing of purchases and sales of the Securities by the Selling
Shareholders.

In order to comply with certain states' securities laws, if applicable,
the Securities may be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the Securities may not be sold
unless the Securities have been registered or qualified for sale in such state,
or unless an exemption from registration or qualification is available and is
obtained.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

Effective November 3, 1997, our Board of Directors dismissed Ernst &
Young LLP as our certifying accountants and engaged Deloite & Touche LLP as our
certifying accountants, as reported in a Current Report on Form 8-K, filed with
the Securities and Exchange Commission on November 7, 1997. This dismissal did
not involve any substantive disagreement.

On February 18, 1998, our certifying accountants, Deloite & Touche LLP,
resigned as reported in a Current Report on Form 8-K filed with the Securities
and Exchange Commission on February 25, 1998. We had disagreements with our
certifying accountants arising in connection with the fiscal 1997 audit report
concerning the Company's desire to continue to follow the industry-practice of
classifying certain inventoried parts as current assets, Deloite & Touche LLP's
position that the Company should amortize its inventory on a straight-line basis
over a 5-year period, and their raising a resulting question of our ability to
continue as a going concern.

Effective April 23, 1998, we engaged BDO Seidman, LLP as our certifying
accountants, as reported in a Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 29, 1998. BDO Seidman, LLP
subsequently re-audited the Company for 1997.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our Certificate of Incorporation limits the liability of Directors to
the maximum extent permitted by the General Corporation Law of Delaware (the
"Delaware Code"). The Delaware Code provides that the directors of a corporation
will not be personally liable to such corporation or its stockholders for
monetary damages for breach of their fiduciary duties as directors, except for
liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for unlawful
payments of dividends or unlawful

stock repurchases or redemption's as provided in Section 174 of the Delaware
Code; or (iv) for any transaction from which the Director derives an improper
personal benefit. The Certificate of Incorporation also provides that the
Company shall indemnify its directors and officers to the fullest extent
permitted by Delaware law, except against actions by the Company approved by the
Board of Directors, and requires the Company to advance expenses to such
directors and officers to defend any action for which rights of indemnification
are provided in the Certificate of Incorporation, and also permits the Board of
Directors to grant such rights to its employees and agents.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby have been
passed upon for the Company by Lane, Altman & Owens LLP, 101 Federal Street,
Boston, Massachusetts 02110.

EXPERTS

The consolidated financial statements included in this prospectus and
in the Registration Statement have been audited by BDO Seidman LLP, independent
certified public accountants, to the extent and for the periods set forth in
their report appearing elsewhere herein and in the Registration Statement, and
are included in reliance upon such report given upon the authority of said firm
as experts in auditing and accounting.

ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission, a
Registration Statement with respect to the securities offered by this
prospectus. This prospectus, filed as part of such Registration Statement, does
not contain all of the information set forth in, or annexed as exhibits to, the
Registration Statement, certain portions of which have been omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission. For further information with respect to our company and this
offering, reference is made to the Registration Statement, including exhibits
filed therewith, which may be read and copied at the public reference facilities
maintained by the Securities and Exchange Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional
office at 7 World Trade Center, 13th Floor, New York, New York 10048. You can
obtain copies of such materials at prescribed rates from the Public Reference
Room of the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the Securities and Exchange Commission at
1-800- SEC-0330. Our Electronic filings made through the Securities and Exchange
Commission's Electronic Data Gathering, Analysis and Retrieval System are
publicly available through the Securities and Exchange Commission's worldwide
web site (http://www.sec.gov). In addition, such material may be inspected at
the offices of the American Stock Exchange, 86 Trinity Place, New York, New York
10006.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Item Page No.
--------

Unaudited Interim Financial Statements for Six Months Ended April 25, 1999

Consolidated Balance Sheet as of July 25, 1999............................................................ F-2
Consolidated Statements of Operations for the nine months ended July 25, 1999 and July 26, 1998........... F-3
Consolidated Statements of Cash Flows for the nine months ended July 25, 1999 and July 26, 1998........... F-4
Notes to Consolidated Financial Statements................................................................ F-5

Consolidated Financial Statements for the Fiscal Years Ending October 26, 1997 and October 25, 1998

(Reserved)................................................................................................ F-7
Report of BDO Seidman LLP, Independent Auditors........................................................... F-8
Consolidated Balance Sheet as of October 25, 1998......................................................... F-9
Consolidated Statements of Operations for the fiscal years ended October 25, 1998 and October 26, 1997... F-10
Consolidated Statements of Stockholders' Equity for the fiscal years ended October 25, 1998 and
October 26, 1997..................................................................................... F-11
Consolidated Statements of Cash Flows for the fiscal years ended October 25, 1998 and October 26, 1997.... F-12
Notes to Consolidated Financial Statements................................................................ F-13

F-1

DATAMETRICS CORPORATION
CONSOLIDATED BALANCE SHEET
(unaudited)

(in thousands, except for share date) July 25, 1999
- ------------------------------------- -------------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents $776
Accounts receivable, net 2,780
Inventory, net 4,579
Prepaid expenses and other current assets 3
-------------

Total Current Assets 8,138

Property and Equipment, at Cost:
Land 420
Building 1,042
Machinery and equipment 3,312
Furniture, fixtures & computer equipment 2,773
Leasehold improvements 96
-------------

7,643
Accumulated depreciation and amortization (5,441)

Net property and equipment 2,202
Inventoried Parts 3,200
Other Assets 807
-------------

$14,347

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt 1,950
Accounts Payable 712
Accrued commissions and payroll 90
Accrued warranty 30
Other accrued expenses 356
Other accrued liabilities 225
Bridge Notes 250

Total Current Liabilities 3,613

Long-Term Debt, less current maturities
Loan Payable 4,396
Other Long-Term Liabilities 766

Total Liabilities 8,775

Commitments and Contingencies
Stockholders' Equity
Common stock, $.01 par value - 40,000,000 shares
authorized; 19,007,227 shares issued and
outstanding in 1999 (15,557,630 in 1998) 190
Additional paid-in capital 41,091
Accumulated deficit (35,709)
-------------

Total Stockholders' Equity 5,572

$14,347
See accompanying notes.

F-2

DATAMETRICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended Nine Months Ended
July 25, July 26, July 25, July 26,
1999 1998 1999 1998
--------------------- ---------------------
(In thousands, except for per share data)

Sales $2,385 $2,667 $6,273 $6,196

Cost of sales 1,277 1,513 3,543 4,137
Research & development 59 150 284 498
Selling, general & administrative 893 943 2,511 2,935
-----------------------------------------------

Income (loss) from operations 156 61 (65) (1,374)
Interest expense, net 113 156 356 388
Lease settlement expense --- --- 1,225 ---
-----------------------------------------------

Income (loss) before provision 43 (95) (1,646) (1,762)
for income taxes
Provision for income taxes --- 3 --- 6
-----------------------------------------------

Net income (loss) $43 ($98) ($1,646) ($1,768)
===============================================

Earnings (loss) per share of common stock
Basic and Diluted $0.00 ($0.01) ($0.09) ($0.12)
===============================================

Weighted average number of shares outstanding
Basic and Diluted $18,447 15,566 17,386 15,102
=================================================

F-3

DATAMETRICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)

For the Nine Months Ended
July 25, 1999 July 26, 1998
---------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss (1,646) (1,768)
Adjustments:
Depreciation and amortization 341 392
Bad debt expense --- 25

Changes in assets and liabilities
Accounts receivable (801) (362)
Inventory (439) (1,318)
Prepaid expenses and other current assets 52 77
Other assets 3 271
Accounts payable (322) (792)
Accrued commission and payroll (135) (479)
Other accrued expenses 141 (1,101)
Advance and progress payments from customers --- (133)
Other long-term liabilities --- (264)
---------------------------------------

Net cash used in operating activities (2,806) (5,452)
---------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment (236) (1,556)
---------------------------------------

Net cash used in investing activities (236) (1,556)
---------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolving line of credit 426 7,456
Payments on revolving line of credit (2,095) (5,638)
Payment on capitalized lease obligations --- (6)
Borrowings on long-term debt 1,800 1,899
Payments on long-terms debt --- (133)
Proceeds from the issuance of common stock and warrants 3,209 3,850
Proceeds from bridge notes 250 ---

Net cash provided by financing activities 3,590 7,428
---------------------------------------

Net increase in cash and cash equivalents 548 420
Cash and cash equivalents at the beginning of the period 228 200
---------------------------------------

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $776 $620
=======================================

Cash paid during the period for:
Interest $172 $437
Income taxes --- 6
Non-cash transactions
Exchange of 7% Convertible Debentures for 10%
Senior Subordinated Notes Due 2000 (1,750) ---
Exchange of Senior Subordinated Debentures for
10% Senior Subordinated Notes Due 2000 (500) ---

See accompanying notes.

F-4

DATAMETRICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

July 25, 1999
(Unaudited)

1. The consolidated financial statements include the accounts of Datametrics
Corporation and its wholly-owned subsidiaries (collectively, the "Company").

The consolidated financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission for the requirements of the Quarterly Report on Form
10-QSB. Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
consolidated financial statements be read in conjunction with the statements and
notes thereto included in the Company's latest Annual Report on Form 10-K for
the fiscal year ended October 25, 1998 as filed with the Securities and Exchange
Commission.

The information reflects all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary to present a
fair statement of the results of operations for the interim periods. Much of the
Company's business is longer term and involves varying development, production,
and delivery schedules. Accordingly, results of a particular quarter or
quarter-to-quarter comparisons of recorded sales and profits may not be
indicative of future operating results, including results for the fiscal year
ending October 31, 1999.

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. The Company does not amortize its non-current inventory,
but the Company evaluates all inventory for obsolescence on a periodic basis and
records estimated reserves. Inventories as of July 25, 1999 consist of the
following:

Inventories of parts and sub-assemblies $ 11,662,929
Contracts in progress 741,552
Finished goods 202,500
-----------------
12,606,981

Less non current inventories 3,200,000
Less reserve for obsolescence 4,828,000
$ 4,578,981

3. SUBSEQUENT EVENTS. In August 1999 the Company completed the sale of
$2,300,000 of Subordinated Convertible Secured Notes Due August 2000 ("Notes").
A portion of the purchase price for the Notes included the tender back to the
Company and retirement of $600,000 of the Company's 10% Senior Subordinated
Secured Debentures then in default, and $150,000 of the Company's 10% Bridge
Notes which were required by their terms to be repaid in May 1999 and extended
by agreement of the holders. The remaining $1,550,000 was received in cash. In
connection with the sale of the Notes, the Company issued warrants to purchase
up to 1,150,000 shares of its Common Stock, $.01 par value, for a purchase price
of $1.10 per share. The Company also issued Warrants to purchase up to an
aggregate 250,000 shares of its Common stock for a purchase price of $1.00 per
share to the holders of the Company's 10% Bridge Notes then outstanding in
consideration of interest due on the Bridge Notes and the extension of the date
of maturity of the Bridge Notes. See the Company's Current Report on Form 8-K
filed with the Securities and Exchange Commission on August 24, 1999.

On August 20, 1999, the Company made a payment of $100,000 in satisfaction of
the remaining $100,000 of the Company's 10% Bridge Notes which were required by
their terms to be repaid in May 1999 and extended by agreement with the holder.

F-5

In September, the Company completed negotiations and closed on a $1,500,000
revolving line of credit with Branch Banking and Trust Company ("Branch Bank").
The Line of Credit accrues interest at a variable rate equal to Branch Bank's
Prime Rate plus 0.5%. The Line of Credit is secured by the assets of the Company
and guarantees by two guarantors in the aggregate amount of $1,500,000
("Guarantees") that are secured by letters of credit issued on the accounts of
each of the guarantors. In consideration of the Guarantees, the guarantors
received Warrants to purchase up to an aggregate 1,500,000 shares of the Common
Stock of the Company, $.01 par value, for a purchase price of $1.00 per share,
pursuant to an arrangement made in July 1999. The Company also issued Warrants
to purchase up to 75,000 shares of the Common Stock of the Company for a
purchase price of $1.10 per share to a third party as compensation for arranging
the Guarantees. The Line of Credit expires on August 25, 2000.

On September 6, 1999, the Company applied a portion of the proceeds of its line
of credit to fund the payment of the remaining $750,000 of its 10% Senior
Subordinated Secured Debentures then in default, plus accrued interest thereon.

4. COMPREHENSIVE INCOME. The Company does not have, other than net income (loss)
any items of comprehensive income.

F-6

(This Page Intentionally Left Blank)

F-7

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
Datametrics Corporation

We have audited the accompanying consolidated balance sheets of Datametrics
Corporation and Subsidiaries as of October 25, 1998 and October 26, 1997, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the fiscal years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In the report of a previous auditor on the 1997 financial statements, dated
January 30, 1998, that previous auditor expressed a qualified opinion stating
that certain parts inventory that would not be used within one year should have
been classified as a non-current asset. As described in Note 4, parts inventory
not expected to be sold within one year have been classified as a non-current
asset for all periods presented in the accompanying consolidated balance sheets.

In our opinion, the consolidated financial statements present fairly, in
all material respects, the consolidated financial position of Datametrics
Corporation and Subsidiaries at October 25, 1998 and October 26, 1997, and the
results of their operations and their cash flows for the fiscal years then ended
in conformity with generally accepted accounting principles.

/s/ BDO SEIDMAN, LLP
-------------------------
New York, New York
January 7, 1999

F-8

DATAMETRICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

Fiscal Year Ended
October 25,
1998
ASSETS (Note 6) (In thousands, except for share data)
- ---------------

Current assets:
Cash and cash equivalents........................................... $ 228
Accounts receivable, net (Notes 1 and 3)............................ 1,979
Inventories, net (Note 4)........................................... 4,140
Prepaid expenses and other current assets........................... 55
----------

Total current assets......................................... 6,402
----------
Property and equipment, at cost:
Land (Note 7)....................................................... 420
Building and improvements(Note 7)................................... 1,042
Machinery and equipment............................................. 3,312
Furniture, fixtures and computer equipment.......................... 2,562
Leasehold improvements.............................................. 71
----------
7,407

Less: Accumulated depreciation and amortization..................... (5,100)
----------

Net property and equipment.................................. 2,307
Inventoried parts (Note 4).......................................... 3,200
Other assets (Note 8)............................................... 810
----------

$12,719

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Revolving line of credit (Note 6)................................... $1,669
Current maturities of long-term debt (Note 7)....................... 1,871
Accounts payable.................................................... 1,034
Accrued commissions and payroll..................................... 225
Accrued warranty.................................................... 30
Other accrued expenses.............................................. 440
----------
Total current liabilities..................................... 5,269
Long-term debt, less current maturities (Note 7).................... 2,696
Loan payable (Note 8)............................................... 746
----------

Total liabilities............................................. 8,711
----------
Commitments and contingencies (Notes 9 and 11)
Stockholders' equity (Note 10):
Preferred stock, $.01 par value; 5,000,000 shares authorized, none issued.
Common stock, $.01 par value; 40,000,000 shares authorized;
15,563,505 shares issued and outstanding .......................... 156
Additional paid-in capital.......................................... 37,910
Accumulated deficit................................................. (34,058)
----------
Total stockholders' equity.................................... 4,008
----------
$12,719

See accompanying notes.

F-9

DATAMETRICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Years Ended

October 25, October 26,
1998 1997
(In thousands, except per share data)

Sales (Note 1)............................................................ $7,742 $16,797
------- -------
Cost of sales (Note 2)................................................. 5,570 13,401
Research and development............................................... 544 343
Selling, general and administrative (Note 2)........................... 4,373 5,670
-------- -------

Loss from operations................................................... (2,745) (2,617)
Interest expense, net.................................................... (518) (474)
-------- --------

Loss before provision for income taxes................................. (3,263) (3,091)
Provision for income taxes (Note 5)....................................... 7 10
-------- --------

Net loss $(3,270) $(3,101)
-------- --------

Loss per share of common stock:
Basic and diluted...................................................... $ (0.22) $(0.24)
========= =========

Weighted Average Number of Shares Outstanding
Basic and diluted...................................................... 15,202 12,995
======== ==========

See accompanying notes.

F-10

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

Common Stock
Number of Amount Additional Accumulated Total
Shares Paid-in Deficit Stockholders'
Capital Equity
---------- ------- ----------- ----------- -------------

Balances at October 29, 1995................ 12,031,582 $120 $32,120 $(10,301) $21,939
Issuance of Common Stock.................... 232,826 3 457 ___ 460
Net Loss.................................... ___ ___ ___ (17,386) (17,386)

Balances at October 27, 1996................ 12,264,408 123 32,577 (27,687) 5,013
Issuance of Common Stock and Warrants....... 1,018,760 10 1,600 ___ 1,610
Net Loss.................................... ___ ___ ___ (3,101) (3,101)

Balances at October 26, 1997................ 13,283,168 133 34,177 (30,788) 3,522
Issuance of Common Stock and Warrants....... 2,280,337 23 3,733 ___ 3,756
Net Loss.................................... ___ ___ ___ (3,270) (3,270)

Balances at October 25, 1998................ 15,563,505 156 37,910 (34,058) 4,008

See accompanying notes.

F-11

DATAMETRICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Fiscal Years Ended
October 25 October 26,
1998 1997
---- ----

Cash Flows from Operating Activities:
Net loss..................................................................... $(3,270) $(3,101)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization.............................................. 490 1,192
(Gain) loss on disposal of assets.......................................... (3) 284
Changes in assets and liabilities:
Accounts receivable.......................................................... 896 2,860
Inventories and parts........................................................ (1,344) 949
Prepaid expenses and other current assets.................................... 118 (20)
Other assets................................................................. 261 (607)
Accounts payable............................................................. (609) (1,885)
Accrued commissions and payroll.............................................. (414) (356)
Accrued warranty............................................................. (70) (80)
Other accrued expenses....................................................... (578) 43
Advance and progress payments from customers................................. (133) (904)
Other long-term liabilitieS.................................................. ( 323) (5)
------ ------------

Net cash used in operating activities.................................. (4,979) (1,630)
------- ---------

Cash Flows from Investing Activities:
Capital expenditures for property and equipment.............................. (1,574) (356)
Proceeds from sale of fixed assets........................................... 11 43
------- ----------
Net cash used in investing activities.................................. (1,563) (313)
------- --------

Cash Flows from Financing Activities:
Borrowings on revolving line of credit....................................... 8,310 11,258
Payments on revolving line of credit......................................... (7,633) (12,816)
Increase (decrease) in other current liabilities............................. (500) 500
Redemption of Series B Preferred Stock....................................... - (87)
Payments on capitalized lease obligations.................................... (6) (72)
Borrowings on long-term debt................................................. 2,717 1,713
Payments on long-term debt................................................... (124) (480)
Borrowings on loan payable................................................... 50 131
Proceeds from the issuance of common stock and warrants...................... 3,756 1,610
----- -----
Net cash provided by financing activities............................... 6,750 1,757
----- -----

Net increase (decrease) in cash and cash equivalents............................ 28 (186)
Cash and cash equivalents at beginning of the year.............................. 200 386
------- --------

Cash and cash equivalents at end of the year.................................... $ 228 $ 200
======= ========

Supplemental Disclosures of Cash Flow Information:
Interest, net................................................................$ 512 $ 282
Income taxes................................................................. 7 10

See accompanying notes.

F-12

DATAMETRICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Datametrics Corporation, a Delaware corporation, is engaged primarily in
the design, development, manufacture and sale of high-speed, non-impact
printers; high-resolution, non-impact printer/plotters; and ruggedized computers
and computer workstations.

BASIS OF PRESENTATION AND CONSOLIDATION

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

REVENUE RECOGNITION

Revenues include both product sales and revenues applicable to long-term
design and production contracts. The majority of the Company's revenues from
product sales and long-term contracts are measured using the "units-of-delivery"
method. Revenues applicable to certain fixed-price, long-term contracts
(principally design and development contracts) are measured using the
"cost-to-cost" method, whereby revenue is measured by relating costs incurred to
total estimated costs. Sales under cost-reimbursement-type contracts are
recorded as costs are incurred. Applicable estimated profits under cost
reimbursement type contracts are included in sales in the proportion that
incurred costs bear to total estimated costs.
Any anticipated losses on contracts are charged to income when identified.

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

CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

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

Approximately 71% and 67% of the Company's sales during fiscal years 1998
and 1997, 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 $ 4,533,000 ($1,922,000 to Canada, $2,354,000 to
Europe and the Middle East, and $257,000 to the Pacific Rim) or 27.0% of total
sales in fiscal year 1997. Export sales in 1998 were immaterial. The Company's
three largest customers accounted for 23.7%, 22.3%, and 18.9% of the Company's
sales for the fiscal year ended October 25, 1998. Its five largest customers
accounted for 15.7%, 13.7%, 12.5%, 10.9% and 10.8% of the Company's sales for
the fiscal year ended October 26, 1997. Accounts receivable from these customers
totalled $422,000 at October 25, 1998. No other customer accounted for more than
10 percent of total revenues for fiscal 1998 and 1997.

CASH AND CASH EQUIVALENTS

The Company considers securities purchased within three months of their
date of maturity to be cash equivalents.

F-13

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

INVENTORIES

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

PROPERTY AND EQUIPMENT

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

Building and improvements........................ 39 years
Machinery and equipment.......................... 2 to 5 years
Furniture, fixtures and computer equipment....... 2 to 8 years
Leasehold improvements........................... Shorter of the remaining
term of the lease or
the life of the asset

USE OF ESTIMATES

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

EARNINGS PER SHARE

During 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share," which provides for the calculation of "basic" and "diluted" earnings per
share. This Statement, effective for financial statements issued for periods
ending after December 15, 1997, requires restatement of all prior-period EPS
data presented. Basic earnings per share includes no dilution and is computed by
dividing income available to common shareholders by the weighted average number
of common shares outstanding for the period. Diluted earnings per share reflect,
in periods in which they have a dilutive effect, the effect of common shares
issuable upon exercise of stock options. All periods presented have been
restated to comply with the provisions of SFAS No. 128. The effect of common
stock equivalents has been excluded from the diluted calculation since the
effect would be antidilutive. The adoption of SFAS No. 128 did not effect the
financial statements.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values of financial instruments including cash and cash
equivalents, accounts receivable and accounts payable approximate fair value due
to the relatively short maturities of these instruments. The carrying value of
long-term debt approximates the fair value for similar debt issues based on
quoted market prices or current rates offered to the Company for debt of the
same maturities.

F-14

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

IMPAIRMENT OF LONG-LIVED ASSETS

In accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," the Company
evaluates long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. If the estimated future cash flows (undiscounted and without
interest charges) from the use of an asset are less than the carrying value, a
write-down would be recorded to reduce the related asset to its estimated fair
value.

INCOME TAXES

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

RECLASSIFICATIONS

Certain reclassifications were made to 1997 balances to conform with 1998
presentation.

RECENT ACCOUNTING STANDARDS

In June 1997, the FASB issued two new disclosure standards. Results of
operations and financial position will be unaffected by implementation of these
new standards.

SFAS No. 130, "Reporting Comprehensive Income," establishes standards for
reporting and display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes in equity
except those resulting from investments by owners and distributions to owners.
Among other disclosures, SFAS No. 130 requires that all items that are required
to be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements.

SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information," which supersedes SFAS No. 14, "Financial Reporting for Segments of
a Business Enterprise," establishes standards for the way that public
enterprises report information about operating segments in annual financial
statements and requires reporting of selected information about operating
segments in interim financial statements issued to the public. It also
establishes standards for disclosure regarding products and services, geographic
areas and major customers. SFAS No. 131 defines operating segments as components
of and enterprises about which separate financial information is available that
is evaluated regularly by management in deciding how to allocate resources and
in assessing performance.

Both SFAS Nos. 130 and 131 are effective for financial statements for
periods beginning after December 15, 1997 and require comparative information
for earlier years to be restated. Both SFAS Nos. 130 and 131 should not have a
material impact on the Company's financial statements and disclosures.

F-15

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

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 requires companies to
recognize all derivative contracts at their fair values, as either assets or
liabilities on the balance sheet. If certain conditions are met, a derivative
may be specifically designated as a hedge, the objective of which is to match
the timing of gain or loss recognition on the hedged derivative with the
recognition of (1) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk, or (2) the earnings effect
of the hedged forecasted transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the period of
change. SFAS No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999.

Historically, the Company has not entered into derivative contracts either
to hedge existing risks or for speculative purposes. Accordingly, the Company
does not expect adoption of the new standard to affect its financial statements.

NOTE 2. NON-RECURRING CHARGES

In connection with its relocation to Florida, the Company incurred certain
non-recurring charges totaling approximately $745,000 during the quarter ended
October 26, 1997. The components of the non-recurring charges were $275,000 in
severance payments and accruals related to employee terminations, $320,000 from
the abandonment of leasehold improvements at the Woodland Hills, California
facility and $150,000 for moving expenses.

NOTE 3. ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:
1998
(In thousands)

U.S. government or its prime contractors amounts billed................ $1,009
Foreign, commercial and other.......................................... 1,165
-----
2,174
Less allowance for possible losses..................................... (195)
-------
$1,979
NOTE 4. INVENTORIES

Inventories consist of the following:
1998
(In thousands)

Stockroom inventories.................................................. $10,630
Contracts in process................................................... 1,117

Finished goods......................................................... 421
12,168
Less inventories classified as non-current asset....................... (3,200)
Less reserve for obsolescence.......................................... (4,828)
-------
$4,140

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

F-16

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

Note 5. Income Taxes

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

1998
(In thousands)

Net operating loss carryforwards........................ $12,336
General business credit carryforwards................... 372
Inventory accounting methods............................ 1,991
Book over tax depreciation.............................. 40
Other non-deductible accruals and allowances............ 127
--------
Total deferred income tax assets................... 14,866
Valuation allowance for deferred income tax assets...... (14,866)
--------
Net deferred income tax assets.......................... $ - --
=========

Net operating loss and tax credit carryforwards of $30,840,000 and $372,000
respectively, for federal income tax purposes will expire at various times
between 1999 and 2013.

The provision for income taxes is composed of the following:

1998 1997
(In thousands)
Current:
Federal.......................................... $----- $----
State............................................ 7 10
Deferred:
Federal.......................................... (1,105) (1,186)
State............................................. (188) (199)
Increase in valuation allowance....................... 1,293 1,385
----- -----
$ 7 $ 10
====== ======

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

1998 1997
---- ----
(In thousands)

Federal income tax benefit computed at statutory rate....... $(1,109) $(1,051)
State income tax expense (benefit), net of federal benefits. (195) (185)
Goodwill amortization....................................... --- ---
Change in valuation allowance............................... 1,293 1,385
Other, net.................................................. 18 (139)
------- ---------

$ 7 $ 10
======= =======

F-17

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

NOTE 6. REVOLVING LINE OF CREDIT

The Company had, with a bank, a revolving line of credit agreement, which
at October 25, 1998 the Company was in default of. The balance outstanding was
approximately $ 1.7 million at October 25, 1998. This amount was paid in full on
December 30, 1998 (see Note 13). The Company no longer has a line of credit
agreement with the bank.

NOTE 7. LONG-TERM DEBT

Long-term debt consists of the following:

1998
(In thousands)

Loans payable(a).................................. $ -
Senior Subordinated Secured Debentures(b)......... 1,850

Convertible Debentures(c) ........................ 1,750
Mortgage - South Trust Bank(d)................... 967
------
Subtotal......................................... 4,567
Less current maturities of long-term debt........ 1,871
------
$2,696

(a) The Company had borrowed approximately $1,311,000 at interest rates ranging
from 10.03% to 10.80%, payable in monthly installments of approximately
$42,000, including interest, over a three-year period. The final payment on
these loans was made in April 1998.

(b) During November 1996, the Company issued $1,850,000 of Senior Subordinated
Secured Debentures with a maturity date of May 25, 1998 and an annual
interest rate of 10% (effective interest is 10.8% based upon original issue
discount). The proceeds from the sale of the Senior Subordinated Secured
Debentures were used to reduce the line of credit and fund working capital
requirements. The Senior Subordinated Secured Debenture holders received
warrants to purchase a total of 616,679 shares of common stock at a price
of $1.50 for each share in connection with the financing. The warrants are
subject to call by the Company if the closing market price of the Company's
common stock is $3.00 or greater for twenty consecutive days. The warrants
expire November 25, 2001. As of October 25, 1998, the Company was in
default of its principal and interest obligations on the Senior
Subordinated Secured Debentures.

In December 1998, the Company placed approximately $5.0 million of common
stock and debt (see Note 13), $ 500,000 of which was used to reduce the
amount owed under the Senior Subordinated Secured Debentures. The Company
is currently negotiating a settlement on the remaining amount outstanding
and expects to either issue new notes or repay the amounts owed with a
combination of stock and cash during fiscal 1999.

(c) On July 24, 1998, the Company received $982,500 in net proceeds from the
private sale of $1,000,000 in the aggregate principal amount of 7%
Convertible Debentures due July 24, 2001. Additionally, on September 4,
1998, the Company received $746,500 in net proceeds from the private sale
of $750,000 in the aggregate principal amount of 7% Convertible Debentures
due July 24, 2001. The debentures are convertible to common shares in an
amount equal to the face value of the debenture. The conversion price shall
be equal to the lesser of $ 2.125 (2 1/8) per share or 80% of the average
closing bid prices of the common stock for the ten day trading period
immediately preceding the conversion date.

In December 1998, the 7% Convertible Debentures were exchanged for new debt
(see Note 13).

F-18

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

(d) 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 South Trust Bank. The loan matures on March 9, 2008. Interest is based
on 8.02% per annum through March 9, 2003 and is then adjusted to equal
2.25% in excess of the weekly average yield on United States Treasury Notes
adjusted to a constant maturity of five years as made available by the
Federal Reserve Board.

Maturities of the mortgage loan debt at October 25, 1998 are as follows:
(In thousands)

1999................................... $ 21
2000................................... 23
2001................................... 24
2002................................... 26
2003................................... 29
Thereafter............................. 844
-------

Total Maturities ...................... 967
Less: Current maturities of........... 21
long-term debt -------
946

NOTE 8. LOAN PAYABLE

During 1998, the Company borrowed $50,000 against the cash surrender value
of its key-man life insurance policy. At October 25, 1998, the balance owed,
which approximates the cash surrender value included in other assets, was
$746,000 at 7.8% per annum.

NOTE 9. LEASES

The Company currently leases its facilities and various equipment under
operating leases. The building leases expire through 2004 and the equipment
leases expire through 2002. Minimum future rental commitments under
noncancelable operating leases are as follows:

(In thousands)

1999................................. $ 917
2000................................. 943
2001................................. 830
2002................................. 794
2003................................. 688
Thereafter........................... 478
--------
$4,650

Property and equipment under capital leases have a cost of $251,000 and
accumulated depreciation of $74,000 at October 25, 1998. Rental expenses charged
to operations were $321,000 and $652,000 for the fiscal years 1998 and 1997,
respectively.

F-19

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

Note 10. Stock Option Plans and Warrants

Stock Options

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

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

Number of Exercise
Shares Price Range
------------- -----------
(In thousands)

Options outstanding for shares of common stock at
October 27, 1996............................................ 635 $1.2500-7.8750
Granted................................................... 173 $1.4375-1.6250
Canceled or expired....................................... (614) $1.2500-7.8750
Exercised................................................. --- ---
------- --------------

Options outstanding for shares of common stock at
October 26, 1997............................................ 194 $1.2500-7.8750
Granted.................................................. 85 $1.8150
Canceled or expired...................................... (38) $1.2500-7.8750
Exercised................................................ --- ----
------- --------------
Options outstanding for shares of common stock at
October 25, 1998............................................ 241 $1.2500-7.8750
======= ==============

Shares reserved for issuance at October 25, 1998...... 1,534
=====

Weighted average option exercise price information was as follows:

1998 1997
---- ----
Outstanding at beginning of year......................... $ 2.47 $3.53
Granted during the year.................................. $1.82 $1.50
Exercised during the year................................ - -
Canceled, terminated and expired......................... $ 2.23 $3.78
Exercisable at year end.................................. $ 2.02 $2.47

F-20

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

Significant option groups outstanding at October 25, 1998 and related
weighted average price and life information were as follows:

Weighted Average Weighted
Number Remaining Weighted Average Number Average
Exercise Price Range Outstanding Contractual Life Exercise Price Exercisable Exercise Price
- -------------------- ----------- ---------------- -------------- ----------- --------------
(In thousands) (In thousands)

$1.200.................... 40 0.36 $1.2500 40 $1.2500
$1.500-5.7500............. 46 2.82 $2.1758 25 $2.6327
$7.8750................... 10 2.13 $7.8750 7 $7.8750
$1.2500................... 60 2.95 $1.2500 30 $1.2500
$1.8150 .................. 85 3.52 $1.8150 11 $1.8150
---- ---- ------- ---- -------
241 2.66 $1.9003 113 $2.0028
==== ==== ======= === =======

The Company applies Accounting Principles Board Opinion No. 25,
"Accounting For Stock Issued To Employees," and selected interpretations in
accounting for its stock-based compensation plans. Accordingly, as all options
and warrants have been granted at exercise prices equal to fair market value on
the date of grant, no compensation expense has been recognized by the Company in
connection with its stock-based compensation plans. Had compensation cost for
the stock options and warrants been determined based upon the fair value at the
grant date for awards under these plans consistent with the methodology
prescribed under SFAS No. 123, "Accounting For Stock-Based Compensation," the
Company's net loss and loss per share would have been increased by approximately
$199,000 and $387,000 or $.01 and $.12 per share in 1998 and 1997, respectively.
The weighted average fair value of the options and warrants granted during 1998
and 1997 is estimated at $.65 and $.87 on the date of grant (using Black-Scholes
option pricing model) with the following weighted average assumptions both for
1998 and 1997: volatility of 46.5% and 46.5%, risk-free interest rate of 6.20%
and 6.20%, and an expected life of two to five years in 1998 and 1997.

WARRANTS

There are 200,000 shares of common stock reserved for issuance upon
exercise of warrants sold for $0.001 per warrant to the underwriters of the
Company's June 21, 1995 offering of common stock. The warrants are exercisable
for a period of five years beginning June 21, 1996 and have a per-share exercise
price equal to $9.60 (120% of the initial public offering price of $8.00). There
were 616,679 shares of common stock reserved for issuance upon exercise of
warrants issued in conjunction with the Company's November 25, 1996 Senior
Subordinated Debt Offering. The warrants are exercisable for a period of five
years beginning November 25, 1996 and have a per-share exercise price of $1.50.
There were 337,000 warrants outstanding at October 25, 1998. There are 200,000
shares of common stock reserved for issuance upon exercise of warrants issued in
conjunction with a commitment to raise up to $3,000,000 in capital for the
Company. The warrants are exercisable for a period of five years beginning
February 5, 1997 and have a per-share exercise price of $2.00. There are
1,200,000 shares of common stock reserved for issuance upon exercise of warrants
issued to two executive officers issued in conjunction wth their employment
agreements (see Note 11). The warrants are exercisable for a period of five
years beginning November 13, 1996 and have a per-share exercise price of $ 2.00.

F-21

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

NOTE 11. COMMITMENTS AND CONTINGENCIES

EMPLOYMENT AGREEMENTS

The Company has employment agreements with two of its executive
officers/directors which expire December 31, 2002. The agreements automatically
renew on an annual basis unless notified by July 1. Such agreements provide for
minimum salary levels, adjusted annually for cost-of-living changes, as well as
for incentive bonuses which are payable if specified management goals are
attained. The aggregate commitment for future salaries at October 25, 1998,
excluding bonuses, was approximately $2,641,000. These agreements also provide
severance pay benefits upon termination of the executive's employment with the
Company as follows:

(a) Company-Initiated Termination Without Cause--the executive shall
be entitled to one payment of the Base Salary for a period equal to the greater
of (i) one year from the date of termination, or the remainder of the employment
term; and (ii) the Company shall continue to provide the executive and the
members of the executive's immediate family all benefits provided by the
employment agreement. If any of these benefits terminate by operation of law,
the Company will reimburse the executive for the costs of replacing those
benefits for the remainder of such period. As security for all of the Company's
obligations to make any payments to the executives, the Company granted to the
executives a subordinated security interest in all assets of the Company now
owned or hereafter acquired.

(b) Company-Initiated Termination in Connection with a Change in
Control--the executives shall be entitled to a cash payment equal to the lesser
of three years' base salary or the maximum amount which would not result in any
portion of the payment being subject to the excise tax under Section 4999 of the
Internal Revenue Code. "Change in Control" shall mean: (i) a merger or
consolidation in which the Company is not the surviving corporation; (ii) a
reverse merger; or (iii) the acquisition by any person, entity or group within
the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended, of the beneficial ownership of securities of the Company representing
at least fifty percent of the combined voting power entitled to vote in the
election of directors.

LEGAL PROCEEDINGS

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

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

On September 28, 1998, a California trial court upheld the enforcability of
the former officers' severence agreements and the officers requested entry of a
judgment in the approximate amount of $1,200,000 plus interest and costs. The
Company has appealed the judgment, which has been bonded, and the repayment of
the bond has been guaranteed by the holder of a significant amount of the
Company's debt securities ("Guarantor"). The Guarantor received Warrants to
purchase Common Stock in connection with the guarantee. If the guaranty is
called on, the Company has agreed to issue such Guarantor 7% convertible
debentures with a two year maturity in an amount equal to the amount paid by the
Guarantor, which debentures will be convertible into shares of Common Stock at
the lower of $2.00 per share or 75% of the closing sale price on the date
of payment.

F-22

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

In April 1998, the owner of the Woodland Hills, CA premises formerly
occupied by the Company sued for the balance of all rent due through the end of
the extant lease agreement plus damages of approximately $1,000,000. The Company
relocated from such premises after the owner had ignored repeated notifications
of unsafe structural conditions as cited by Los Angeles County building
inspectors. Although it is presently too early to determine the outcome of this
litigation, the Company believes it has valid defenses in this case and has made
no accrual relating to this litigation.

NOTE 12. EMPLOYEE BENEFIT PLANS

The Company sponsors a defined contribution 401(k) plan, as amended,
covering a majority of its employees. The plan allows eligible employees to
contribute up to 14% of their gross salary. Company contributions are voluntary
and at the discretion of the Board of Directors. There were no Company
contributions in fiscal years 1998 and 1997. Employees vest in Company
contributions based upon their years of vesting service, as defined.

During November 1994, the Company established a SERP, a defined benefit
pension plan covering certain officers to whom the plan is offered. Normal
retirement age is 65, but provision is made for earlier retirement. Benefits
under the plan are generally payable for up to fifteen years after a
participant's retirement. However, the participant may elect a lump-sum payment
equal to 90% of the net present value of the benefit amount at the participant's
retirement date. As discussed in Note 11, the SERP was terminated in October
1998.

NOTE 13. SUBSEQUENT EVENTS

On December 29, 1998, the Company closed a private placement of
approximately $3.45 million of 10% Subordinated Notes due in 2000 (the
"Subordinated Notes") and $1.55 million in shares of the Company's common stock.
The Subordinated Notes, which are unsecured and callable under certain
conditions, provide for the Company to issue 5-year warrants exercisable into
the Company's common stock at a price of $1.50 per share. As part of the
offering, investors holding $1.75 million of the Company's Convertible
Debentures issued earlier in the year exchanged their holdings for new 10%
Subordinated Notes. In addition, holders of $500,000 of the Company's Senior
Subordinated Debentures also exchanged their Debentures for the new 10%
Subordinated Notes. The net proceeds of approximately $2.75 million from the
sale of Subordinated Notes and common stock will be used for debt retirement and
working capital purpose.

F-23

WE HAVE NOT AUTHORIZED ANY DEALER, SALES PERSON OR ANY OTHER PERSON TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL
OR BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL.

TABLE OF CONTENTS

Special Information Regarding Forward Looking Statements............................................2
Risk Factors........................................................................................4
Use of Proceeds.....................................................................................7
Market for Common Stock.............................................................................8
Management's Discussion and Analysis of Financial Condition and Results of Operations...............8
Business...........................................................................................12
Management.........................................................................................18
Certain Relationships and Related Transactions.....................................................23
Description of Securities..........................................................................23
Security Ownership of Management and Certain Beneficial Owners.....................................24
Security Ownership of Selling Shareholders.........................................................26
Plan of Distribution...............................................................................29
Changes in and Disagreements with Accountants......................................................30
Indemnification of Directors and Officers..........................................................30
Legal Matters......................................................................................31
Experts............................................................................................31
Additional Information.............................................................................31
Financial Statements..............................................................................F-1

================================================================================

12,753,380 Shares

Common Stock

DATAMETRICS CORPORATION

------------------------
PROSPECTUS
------------------------

September 15, 1999

================================================================================

F-24

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Certificate of Incorporation of Datametrics Corporation limits the
liability of Directors to the maximum extent permitted by the General
Corporation Law of Delaware (the "Delaware Code"). The Delaware Code provides
that the directors of a corporation will not be personally liable to such
corporation or its stockholders for monetary damages for breach of their
fiduciary duties as directors, except for liability (i) for any breach of their
duty of loyalty to the corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) for unlawful payments of dividends or unlawful stock
repurchases or redemption's as provided in Section 174 of the Delaware Code; or
(iv) for any transaction from which the Director derives an improper personal
benefit. The Certificate of Incorporation also provides that the Company shall
indemnify its directors and officers to the fullest extent permitted by Delaware
law, except against actions by the Company approved by the Board of Directors,
and requires the Company to advance expenses to such directors and officers to
defend any action for which rights of indemnification are provided in the
Certificate of Incorporation, and also permits the Board of Directors to grant
such rights to its employees and agents.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The estimated expenses in connection with the distribution of the
Common Stock registered hereby, are set forth in the following table:

SEC registration fee........................$5,000
Legal fees and expenses....................$35,000
Accounting fees and expenses...............$15,000
Printing expenses...........................$3,000
Total......................................$58,000

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

During the past three fiscal years, we have sold the following
securities without registration and pursuant to the exemption set forth in
Section 4(2) under the Securities Act of 1933, as amended:

During November 1996 we completed the sale to approximately 12
investors of an aggregate of 37 Units, each Unit consisting of $50,000 of Senior
Subordinated Secured Debentures and 5-year Warrants to purchase up to 16,667
shares of Common Stock, for an aggregate purchase price of $1,850,000.

During February 1997 we sold an aggregate of 667,334 shares of
Common Stock at $1.50 per share, to approximately 6 investors for an aggregate
purchase price of $1,001,001.

During October 1997 we completed the sale of an aggregate 1,394,094
shares of Common Stock at $1.75 per share to approximately 29 investors for an
aggregate purchase price of $2,439,664.

During March 1998 we sold an aggregate 340,000 shares of Common
Stock at $1.25 per share to approximately 4 shareholders for an aggregate
purchase price of $425,000

II-1

During April 1998 we sold an aggregate 275,000 shares of Common
Stock at $1.378 per share to approximately 4 shareholders for an aggregate
purchase price of $378,950.

During July 1998 we completed the sale of an aggregate $1,750,000 of
7% Convertible Debentures to approximately 3 investors for an aggregate purchase
price of $1,750,000.

During December 1998 we completed the sale of an aggregate
$3,450,000 of 10% Subordinated Notes Due 2000 to approximately 7 investors, in
exchange for $500,000 of our Senior Secured Subordinated Debentures and
retirement of all $1,750,000 of our 7% Convertible Debentures. The remaining
$1,200,000 purchase price was paid in cash. The 10% Subordinated Notes provide
for issuance of 5-year Warrants to purchase up to 845,760 Common Stock of the
Company at $1.50 per share, and 5-year Closing Fee Warrants to purchase up to
1,229,800 of the Company's Common Stock at $1.50 per share.

During December 1998 we also sold an aggregate 1,559,374 shares of
Common Stock at $1.00 per share to approximately 6 shareholders for an aggregate
purchase price of $1,559,374.

During March 1999 we sold an aggregate $400,000 of 10% Bridge Notes
Due May 1999 to approximately 5 investors for an aggregate purchase price of
$400,000. In connection with such sale, we also issued 5-year Warrants to
purchase up to an aggregate of 200,000 shares of the Company's Common Stock at a
purchase price of $1.00 per share.

During April 1999 we issued 150,000 shares of Common Stock to The
Manufacturer's Life Insurance Company (U.S.A.) pursuant to a Mutual Release and
Settlement Agreement.

During May 1999 we sold an aggregate 1,500,000 shares of Common
Stock at $1.00 per share to approximately 3 investors for an aggregate purchase
price of $1,500,000. The investors were also issued 5-year Warrants to purchase
up to an aggregate 1,500,000 shares of the Company's Common Stock. We also
issued 75,000 shares to a broker in connection with such sale.

During May 1999 we issued 103,348 shares of Common Stock to a
service providor as compensation for marketing services to be performed pursuant
to a Market Access Program Marketing Agreement. We also issued Warrants to
purchase up to 200,000 shares of our Common Stock to the service provider
pursuant to such Marketing Agreement.

During August 1999, we sold an aggregate $2,300,000 of Convertible
Subordinated Secured Notes due July 2000. A portion of the purchase price
included the exchange of $600,000 of our 10% Senior Subordinated Secured
Debentures then in default and $150,000 of our outstanding 10% Bridge Notes. The
remaining $1,550,000 was paid in cash. We also issued Warrants to purchase up to
1,150,000 shares of Common Stock, for a purchase price of $1.10 per share.

In September 1999, we issued Warrants to purchase up to an aggregate
1,500,000 shares of our Common Stock for a purchase price of $1.00 per share to
the guarantors of our line of credit with Branch Banking and Trust Company. We
also issued Warrants to purchase up to 75,000 shares of Common Stock for a
purchase price of $1.10 per share to a third party in consideration of arranging
the guarantees.

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ITEM 27. EXHIBITS.

(a) 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).

4.1* Warrant issued to Daniel P. Ginns, dated November 13,
1996.

4.2* Warrant issued to Adrien A. Maught, Jr., dated November
13, 1996.

4.3 7% Convertible Debenture Subscription Agreement dated as
of July 24, 1998 between the Registrant and the Investors
named therein (incorporated by reference to Exhibit 4.1 to
the Registrant's Form 8-K dated July 24, 1998).

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

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

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

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

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

4.9 Form of Common Stock Subscription Agreement (ncorporated
by reference to Exhibit 4.7 to the Registrant's Form 8-K
dated December 24, 1998).

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4.10 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).

4.11 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).

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

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

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

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

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

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

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

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

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

5.1* Opinion of Counsel as to the legality of the securities
being registered.

10.3* Employment Agreement of Daniel P. Ginns dated as of August
12, 1997.

10.4* Security Agreement between the Registrant and Daniel P.
Ginns, dated as of August 12, 1997.

10.5* Employment Agreement of Adrien A. Maught, Jr. dated as of
August 12, 1997.

10.6* Security Agreement between the Registrant and Adrien A.
Maught, Jr. dated as of August 12, 1997.

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

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).

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

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

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

21.1 List of Subsidiaries (incorporated by reference to Exhibit
21 to the Registrant's Form 10-K for the year ended
October 27, 1996).

23.1* Consent of Counsel (included in opinion filed as Exhibit
5.1).

23.2* Consent of Independent Certified Public Accountants

24.1* Power of Attorney (included in the signature page of this
Registration Statement).

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 The 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).

II-5

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

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

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

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

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

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).
-------------------------
* Filed with this Registration Statement.

ITEM 28. UNDERTAKINGS

A. The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii)Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information set forth in the
registration statement; and

(iii)Include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-6

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

B. Undertaking required by Regulation S-B, Item 512(e).

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or controlling persons pursuant to
the foregoing provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

C. Undertaking Required by Regulation S-B, Item 512(f).

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
initial bona fide offering thereof.

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SIGNATURES

In accordance with the requirements of the Securities Act of 1933the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the city of Florham
Park, State of New Jersey on September 15, 1999.

DATAMETRICS CORPORATION
(Registrant)

/s/ Daniel P. Ginns
------------------------------
Daniel P. Ginns,
Chairman of Board of Directors
and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Daniel P. Ginns, as his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
foregoing, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.

Signature* Title Date
- --------- ----- ----

/*/ ADRIEN A. MAUGHT Chief Operating Officer, September 15, 1999
- ---------------------------------------------- President and Director
Adrien A. Maught

/*/ WILLIAM B. PANDOS Chief Financial Officer and September 15, 1999
- ---------------------------------------------- Treasurer
William B. Pandos

/*/ DOUGLAS S. FRIEDENBERG Director September 15, 1999
- ----------------------------------------------
Douglas S. Friedenberg

/*/ JOHN W. O'LEARY Director September 15, 1999
- ----------------------------------------------
John W. O'Leary

/*/ RICHARD J. LOVE Director September 15, 1999
- --------------------------------------------
Richard J. Love

/*/ VINCENT J. CAHILL Director September 15, 1999
- --------------------------------------------
Vincent J. Cahill

* By Daniel P. Ginns, Attorney-In-Fact

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