<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
{X} Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act Of 1934 for the quarterly period ended July 26, 1998
-------------
or
{ } Transition Report Pursuant to Section 13 Or 15(d) of the Securities Exchange
Act Of 1934 for the Transition Period from ________to_________
Commission File Number 0-8567
-------
Datametrics Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 95-3545701
- ------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification Number)
25B Hanover Road
Florham Park, New Jersey 07932
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(973) 377-3900
- ------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X NO
------- --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock. $.01 Par Value--15,557,830 shares as of August 28, 1998
1
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DATAMETRICS CORPORATION
INDEX TO FORM 10-Q
PAGE NO.
- --------------------------------------------------------------------------------
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets
as of July 26, 1998 and
October 26, 1997 3
Consolidated Statements of
Operations for the Three Months
and Nine Months Ended
July 26, 1998 and July 27, 1997 4
Consolidated Statements of
Cash flows for the Nine Months
Ended July 26, 1998 and
July 27, 1997 5
Notes to Consolidated
Financial Statements 6
Item 2 Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
Part II - Other Information
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
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DATAMETRICS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
July 26, October 26,
1998 1997
------------- -------------
(In thousands, except for
share data)
ASSETS
------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 620 $ 200
Accounts receivable, net 3,247 2,875
Inventories 7,314 5,996
Prepaid expenses and other current assets 96 173
------------- -------------
Total current assets 11,277 9,244
Property and Equipment, at Cost:
Machinery and equipment 3,728 3,717
Furniture, fixtures & computer equipment 2,160 2,132
Building 1,462 -
Leasehold improvements 55 -
------------- -------------
7,405 5,849
Accumulated depreciation and amortization (5,010) (4,618)
------------- -------------
Net property and equipment 2,395 1,231
Other Assets 800 1,071
------------- -------------
$ 14,472 $11,546
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Revolving line of credit $ 2,795 $ 992
Current maturities of long-term debt 1,880 1,980
Accounts payable 851 1,643
Accrued commissions and payroll 160 639
Accrued warranty 100 100
Other accrued expenses 417 1,018
Other current liabilites - 500
Advance payments and progress payments on contracts - 133
------------- -------------
Total current liabilities 6,203 7,005
Long-Term Debt, less current maturities:
Loan Payable 2,700 696
Other Long-Term Liabilities 59 323
Commitments and Contingencies
Stockholders' Equity
Preferred Stock, $.01 par value; 5,000,000
shares authorized - -
Common stock, $.01 par value; 40,000,000 authorized;
15,557,830 and 13,283,168 shares issued and
outstanding in 1998 and 1997, respectively 155 133
Additional paid-in capital 37,912 34,177
Accumulated deficit (32,557) (30,788)
------------- -------------
Total stockholders' equity 5,510 3,522
------------- -------------
$ 14,472 $11,546
============= =============
</TABLE>
See accompanying notes.
3
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DATAMETRICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three months ended Nine months ended
----------------------------- -----------------------------
July 26, July 27, July 26, July 27,
1998 1997 1998 1997
------------- ------------- ------------- -------------
(In thousands, except for per share data)
<S> <C> <C> <C> <C>
Sales $ 2,667 $ 4,307 $ 6,196 $14,490
Cost of sales 1,513 2,716 4,137 10,073
Research & development 150 32 498 234
Selling, general & administrative 943 1,304 2,935 3,581
------------- ------------- ------------- -------------
Income (loss) from operations 61 255 (1,374) 602
Interest expense, net 156 121 388 346
------------- ------------- ------------- -------------
Income (loss) before provision
for income taxes (95) 134 (1,762) 256
Provision for income taxes 3 9 6 18
------------- ------------- ------------- -------------
Net income (loss) $ (98) $ 125 $(1,768) $ 238
============= ============= ============= =============
Earnings (loss) per share of common stock:
Basic and fully diluted $ (0.01) $ 0.01 $ (0.12) $ 0.02
============= ============= ============= =============
Weighted average number of shares outstanding:
Basic and fully diluted 15,566 13,297 15,102 12,995
============= ============= ============= =============
</TABLE>
See accompanying notes.
4
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DATAMETRICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Nine months ended
-------------------------------
July 26, July 27,
1998 1997
-------------- --------------
(In thousands)
<S> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $(1,768) $ 238
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 392 485
Bad debt expense 25 -
Changes in assets and liabilities
Accounts receivable (362) 1,046
Inventories (1,318) 893
Prepaid expenses and other current assets 77 (23)
Other assets 271 -
Accounts payable (792) (1,908)
Accrued commissions and payroll (479) (612)
Accrued warranty - (80)
Other accrued expenses (1,101) (71)
Advance and progress payments from customers (133) (1,007)
Other long-term liabilites (264) (670)
-------------- --------------
Net cash used in operating activities (5,452) (1,709)
Cash Flows from Investing Activities
Capital expenditures for property and equipment (1,556) (364)
-------------- --------------
Net cash used in investing activities (1,556) (364)
Cash Flows from Financing Activities
Borrowings on revolving line of credit 7,456 8,192
Payments on revolving line of credit (5,638) (9,534)
Redemption of Series B Preferred Stock - (87)
Payments on capitalized lease obligations (6) (53)
Borrowings on short-term debt 400
Borrowings on long-term debt 1,899 1,905
Payments on long-term debt (133) (324)
Proceeds from issuance of common stock and warrants 3,850 1,610
-------------- --------------
Net cash provided by financing activities 7,428 2,109
-------------- --------------
Net increase in cash and cash equivalents 420 36
Cash and cash equivalents at beginning of year 200 386
-------------- --------------
Cash and cash equivalents at end of period $ 620 $ 422
============== ==============
Supplemental disclosure of cash flow information
Interest, net $ 437 $ 318
Income taxes $ 6 $ 9
</TABLE>
See accompanying notes.
5
<PAGE>
DATAMETRICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 26, 1998
(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-
Q. 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 26, 1997 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 25, 1998.
2. INVENTORIES Stockroom inventories are stated at the lower of cost (first-
in, first-out) or market. The Company evaluates at least annually its stockroom
inventories for potential obsolescence or excessive levels based upon backlog
and forecasted usage. Contract inventory costs include purchased materials,
direct labor and manufacturing overhead. General and administrative costs are
expensed
6
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in the period incurred. Inventories as of July 26, 1998 consist of the
following:
Inventories of parts and sub-assemblies $10,644,000
Contracts in process 512,000
-----------
11,156,000
Less reserve for obsolescence 3,842,000
-----------
$ 7,314,000
-----------
3. CONTINGENCIES 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, are seeking 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 seek
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.
The Former Officers have demanded that the Company pay to each of them (i) an
amount equal to one year of their respective annual salaries in effect as of the
date of termination, payable in a lump sum, (ii) twelve monthly installments
payable to the Former Officers, the total of which would also equal their
respective annual salaries, and (iii) attorney's fees. Total payments under the
Severance Agreements excluding attorney's fees would aggregate approximately
$1,200,000 if due in full to the Former Officers. The complaint did not state,
however, any specific amount of damages sought by the plaintiffs.
On February 12, 1997, the Company filed a cross-complaint against the Former
Officers alleging breach of fiduciary duty, constructive fraud, civil conspiracy
and declaratory relief. At present, it is too early to evaluate fully the
Company's exposure, if any, under this action.
7
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Management believes, however, that it has legitimate defenses and intends to
defend vigorously this action.
In a separate matter regarding benefits under the Company's Supplemental
Executive Retirement Plan (the "SERP"), the Company entered into a settlement
agreement (the "Agreement") on February 10, 1998 with the Former Officers in the
total amount of $643,681. The settlement will be made in cash held in a Trust
Account since 1995 totaling $259,681 to be paid in accordance with the
percentages set forth in the Agreement and in common stock totaling 192,000
shares (the "Settlement Shares"). The Settlement Shares are to be sold over a
period of 12 months commencing on or about May 1, 1998. The Company intends to
file a registration statement with respect to the Settlement Shares by October
31, 1998; however, it cannot guarantee when or if the Securities and Exchange
Commission will register the Settlement Shares. As such, the Former Officers
lodged a stipulated judgment in the amount of $384,000. This judgment is in
addition to the cash settlement.
Upon registration of the Settlement Shares, the Former Officers are entitled to
sell 16,000 Settlement Shares per month over a twelve month period. The
proceeds from the sale shall be distributed in accordance with the percentages
set forth in the Agreement. Full completion of these sales shall constitute a
satisfaction of the judgment and shall preclude the Former Officers from
executing on the judgment.
The Company is required to pay $32,000 each month that the Settlement Shares are
not registered beginning on May 1, 1998, but not past the twelfth month. For
each month the Company is required to pay $32,000, 16,000 Settlement Shares will
be returned to the Company. As of May 1, 1998, the Settlement Shares had not
been registered. As a result, the Company paid $64,000 for May and June 1998 to
the escrow agent for the Former Officers, and 32,000 Settlement Shares were
returned to the Company. The Company has not yet paid the escrow agent for
subsequent monthly amounts due, and the Former Officers have taken steps to
collect on the unpaid balance of approximately $320,000 of the stipulated
judgement.
The SERP shall be deemed terminated on the later of the date when the cash
settlement is distributed or the date when the Settlement Shares are delivered.
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
8
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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.
4. SUBSEQUENT EVENT The Company has received $746,500 in net proceeds from the
private sale of an additional $750,000 in aggregate principal amount of 7%
Convertible Debentures due July 24, 2001. The proceeds are to be used only for
operations unless the holders of the debentures otherwise consent.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Nine Month Period Ended July 26, 1998 Compared
----------------------------------------------
To Nine Month Period Ended July 27, 1997
----------------------------------------
Sales for the Nine month period ended July 26, 1998 were $6,196,000, a decrease
of $8,294,000 or 57%, compared with sales of $14,490,000 in the same period in
the prior fiscal year. Sales of defense and defense related products decreased
$7,742,000. The decrease in sales for the nine months ended July 26, 1998 is
attributable to lower production levels resulting from the Company's relocation
of its manufacturing facility to Orlando, Florida, and delays in Department of
Defense funding for various programs. The Company anticipates that funding for
these programs will begin in its fiscal fourth quarter.
On June 3, 1998, the Company announced a global alliance agreement with the
Traffic Control Materials Division of 3M Company. This long-term alliance
encompasses all markets worldwide served by 3M in the transportation safety
industry. The agreement provides for the Company to manufacture, service and
support its CONDOR(TM) and HARRIER(TM) industrial print engines for 3M.
Initially, the CONDOR(TM) and HARRIER(TM) industrial print engines will become
part of 3M's digital imaging system that 3M customers use to produce license
plates. 3M Company is the world's leading supplier of reflective materials for
the transportation safety industry. The global alliance agreement covers
applications in the vehicle license plate market and other potential traffic
safety applications. During the third quarter, the Company began shipment of its
CONDORTM to 3M. The Company believes that this agreement will result in
significant revenues to the Company over the next several years.
Cost of sales for the first nine months of fiscal 1998 was $4,137,000 (67% of
sales), a decrease of $5,936,000 or 59%, compared with $10,073,000 (70% of
sales) for the same period in the prior fiscal
9
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year. Cost of sales is down from the same period in the prior fiscal year due to
efficiencies and cost savings resulting from the opening of the Orlando, Florida
production facility that began to be realized in the third quarter
Research and development expenses were $498,000 for the nine month period ended
July 26, 1998, an increase of $264,000 or 113%, compared with $234,000 for the
same period in the prior year. Almost all of the expenditures were for the
Company's industrial color printer.
Selling, general and administrative ("SG&A") expenses for the nine month period
ended July 26, 1998 were $2,935,000 (47% of sales) a decrease of $646,000, or
18%, compared with $3,581,000 (25% of sales) for the same period in the prior
fiscal year. The decrease is due to decreased professional fees and decreased
selling expenses.
Net interest expense amounted to $388,000 for the nine month period ended July
26, 1998 compared with net interest expense of $346,000 for the same period in
the prior year. This increase is due to the Subordinated debt being outstanding
for the full nine months of fiscal 1998 versus eight months in 1997.
The net loss for the nine month period ended July 26, 1998 amounted to
$1,768,000 a decrease of $2,006,000, compared with net income of $238,000 for
the same period in the prior year.
Three Month Period Ended July 26, 1998 Compared
-----------------------------------------------
To Three Month Period Ended July 27, 1997
-----------------------------------------
Sales for the three-month period ended July 26, 1998 were $2,667,000, a decrease
of $1,640,000 or 38%, compared with sales of $4,307,000 in the same period in
the prior fiscal year. Sales of defense and defense related products decreased
$1,628,000 and other sales decreased $12,000 compared with the same period in
the prior year. The decrease in sales for the third quarter ended July 26, 1998
is attributable to lower production levels during the Company's opening of its
Florida facility and to delays in Department of Defense funding for various
programs.
Cost of sales for the third quarter of fiscal 1998 was $1,513,000 (57% of
sales), a decrease of $1,203,000 or 44%, compared with $2,716,000 (63% of sales)
for the same period in the prior fiscal year. Cost of sales as a percentage of
sales improved due to efficiencies and cost savings resulting from the opening
of the Orlando, Florida production facility.
10
<PAGE>
Research and development expenses were $150,000 for the three-month period ended
July 26, 1998, an increase of $118,000, compared with $32,000 for the same
period in the prior year. Almost all of the expenditures were for the Company's
industrial color printer.
Selling, general and administrative ("SG&A") expenses for the three month period
ended July 26, 1998 were $943,000 (35% of sales) a decrease of $361,000, or 28%,
compared with $1,304,000 (30% of sales) for the same period in the prior fiscal
year. The decrease is due to decreased professional fees and decreased selling
expenses.
Net interest expense amounted to $156,000 for the three month period ended July
26, 1998 compared with net interest expense of $121,000 for the same period in
the prior year. This increase is due to higher bank borrowings.
The net loss for the three-month period ended July 26, 1998 amounted to $98,000
a decrease of $223,000, compared with net income of $125,000 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 26, 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 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 26,
1998 was approximately $3,652,000. Most of the July 26, 1998 backlog is
expected to be delivered during the next twelve months. As of August 27, 1998,
the backlog had increased to approximately $5,491,000.
Approximately 75% of the Company's backlog consists of orders which are subject
to termination at the convenience of the customer at any time. In the event of
such a termination, the Company is entitled to receive reimbursement for its
costs and, as long as the contract would have been profitable, negotiated
profit.
11
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LIQUIDITY AND CAPITAL RESOURCES
The Company has a revolving line of credit agreement (the "Credit Agreement")
with a bank, collateralized by substantially all of the Company's assets, which
allows the Company to borrow up to $3,000,000 at the bank's reference rate plus
2% (8.5% reference rate at July 26, 1998). The advance rate is eighty percent
(80%) of eligible accounts receivable, plus eighty percent (80%) of eligible
progress billings receivable, to a maximum progress billing receivables
sublimit, which could not exceed the lesser of ten percent (10%) of eligible
receivables or $500,000, plus 15% of qualified inventory up to a maximum
sublimit of $300,000. There was $2,795,000 outstanding at July 26, 1998.
The Credit Agreement requires the Company to maintain profitable quarterly
results, to maintain certain financial ratios and restricts or limits the
Company's ability to: (i) create certain liens; (ii) convey, transfer or sell
assets outside of the ordinary course of business; (iii) make capital
expenditures; (iv) incur additional indebtedness; (v) redeem or repurchase any
class of its stock; and (vi) pay dividends on its preferred or common stock.
The Company was not in compliance with certain of its covenants at July 26,
1998, including profitability.
On March 3, 1998, the Company entered into a Forbearance Agreement with the bank
whereby the bank agreed to extend the maturity date and forbear from taking any
action on the revolving line of credit until April 3, 1998. This date was
subsequently extended until June 4, 1998, August 17, 1998, and again extended
until September 15, 1998 on certain terms and conditions, including the
following: (1) interest must be paid currently and (2) the bank will grant an
overadvance not to exceed $1,000,000.
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
August 28, 1998, the Company was in default
12
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of its principal and interest obligations on the Senior Subordinated Debentures.
The Company notified the Senior Subordinated Debenture holders of its intent to
offer to exchange such debentures for a combination of new, higher interest
Subordinated Unsecured Notes and Warrants for the purchase of the Company's
common stock. The Company anticipates that a substantial amount of the Senior
Subordinated Debentures will be exchanged and the balance repaid in full during
the fourth quarter of 1998.
On July 24, 1998, the Company received $982,500 in net proceeds from the private
sale of $1,000,000 in aggregate principal amount of 7% Convertible Debentures
due July 24, 2001. The proceeds are to be used only for operations unless the
holders of the debentures otherwise consent.
On October 27, 1997 the Company effected a private placement of 1,394,094 shares
at $1.75 per share for proceeds of approximately $2,440,000.
The Company has received a commitment, subject to normal terms and conditions,
from the members of the Company's Board of Directors, to arrange to raise up to
$2,500,000 of additional capital for the Company as needed during the 1998
fiscal year through a private placement of equity securities or debt securities
or a combination thereof. Although management believes that it can arrange up
to $2,500,000 of new capital, outside factors may impact the amount of capital
actually raised which may result in an adverse impact on the Company's financial
condition. The Company has raised approximately $879,000 through private
placements of 630,000 shares at prices ranging from $1.25 to $1.75 per share,
and $982,500 from the private sale of 7% Convertible Debentures discussed above.
The Company's working capital and current ratios at July 26, 1998 and at the end
of fiscal years 1997, 1996 and 1995 were $5,074,000, $2,239,000, $3,187,000 and
$19,252,000 and 1.8, 1.3, 1.3 and 5.4, respectively. The deterioration in
financial position in fiscal 1996 resulted from the Company's losses during
fiscal 1996.
Management believes that the Company must make approximately $700,000 of capital
expenditures (including capitalized leases) during the remainder of fiscal 1998.
The Company's other principal commitments for fiscal year 1998 are lease
obligations for the Company's facilities, equipment lease, and principal and
interest payments on loans and subordinated debt.
Management expects to finance the capital expenditure requirements and other
commitments from the bank line of credit, issuance of stock,
13
<PAGE>
subordinated debt, capital leases, capital loans and from other sources of
working capital.
FORWARD LOOKING STATEMENTS-CAUTIONARY FACTORS
Except for the historical information and statements contained in this report,
the matters set forth in this report are "forward looking statements" that
involve uncertainties and risks, some of which are discussed at appropriate
points in this report and the Company's other SEC filings, including the fact
that the Company is engaged in supplying equipment and services to U.S.
government defense programs which are subject to special risks, including
dependence on government appropriations, contract termination without cause,
contract renegotiation and the intense competition for available defense
business.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION
The Company has received $746,500 in net proceeds from the private
sale of an additional $750,000 in aggregate principal amount of 7% Convertible
Debentures due July 24, 2001. The terms of these debentures are the same as
those set forth in the Company's Current Report on Form 8-K, and the exhibits
filed therewith, as described in Item 6.(b) below.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(B) REPORTS ON FORM 8-K.
On July 24, 1998, the Company received $982,500 in net proceeds from
the private sale of $1,000,000 in aggregate principal amount of 7% Convertible
Debentures due July 24, 2001, as reported in its Current Report on Form 8-K
filed with the Securities Exchange Commission on July 24, 1998.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Form 10-Q to be signed on its behalf by its duly
authorized representatives.
DATAMETRICS CORPORATION
-----------------------
(Registrant)
Dated: September 14, 1998 /s/ DANIEL P. GINNS
------------------------------ ----------------------------
Daniel P. Ginns
Chief Executive Officer
Dated: September 14, 1998 /s/ RONALD A. LEFKON
------------------------------ -------------------------------
Ronald A. Lefkon
Principal Financial Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS OF
DATAMETRICS CORPORATION AS OF AND FOR THE NINE MONTH PERIOD ENDED
JULY 26, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-25-1998
<PERIOD-END> JUL-26-1998
<CASH> 620
<SECURITIES> 0
<RECEIVABLES> 3,247
<ALLOWANCES> 0
<INVENTORY> 7,314
<CURRENT-ASSETS> 11,277
<PP&E> 7,405
<DEPRECIATION> 5,010
<TOTAL-ASSETS> 14,472
<CURRENT-LIABILITIES> 6,203
<BONDS> 0
0
0
<COMMON> 155
<OTHER-SE> 37,912
<TOTAL-LIABILITY-AND-EQUITY> 14,472
<SALES> 6,196
<TOTAL-REVENUES> 6,196
<CGS> 4,137
<TOTAL-COSTS> 4,137
<OTHER-EXPENSES> 3,433
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 388
<INCOME-PRETAX> (1,762)
<INCOME-TAX> 6
<INCOME-CONTINUING> (1,768)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,768)
<EPS-PRIMARY> ($.12)
<EPS-DILUTED> ($.12)
</TABLE>
