DATAMETRICS CORP, SB-2, 1999-05-28

DATAMETRICS CORP
SB-2, 1999-05-28
COMPUTER PERIPHERAL EQUIPMENT, NEC

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As filed with the Securities and Exchange Commission on May 28, 1999.

Registration No. 0-8567

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

DATAMETRICS CORPORATION
(Name of Small Business Issuer in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 0357 95-3545701
(State or jurisdiction of incorporation (Primary Standard Industrial (I.R.S. Employer Identification
or organization) Classification Code Number) Number)
</TABLE>
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
Chief Executive Officer
Datametrics Corporation
25B Hanover Road, Suite 3305
Florham Park, New Jersey 07932
(973) 377-3900
(Name, Address and Telephone
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|

<PAGE>

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
- --------------------------------------- ------------- ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 4,211,769 $1.125 (3) $4,738,240 $1,317.23
Common Stock Underlying Warrants 2,384,901 $1.50 (4) $3,577,352 $994.50
Common Stock Underlying Warrants 100,000 $2.00 (4) $200,000 $55.60
Common Stock Underlying Warrants 100,000 $4.00 (4) $400,000 $111.20
Common Stock Underlying Warrants 1,500,000 $1.125 (5) $1,687,500 $469.13
Total Shares Being Registered 8,296,670 $10,603,092 $2,947.66

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(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 $1.125 per share, the average of the high and low sale
prices of the Common Stock as reported by the American Stock Exchange
on May 25, 1999.

(4) Pursuant to Rule 457(g), the registration fee for shares of Common
Stock issuable upon the exercise of theses warrants is calculated based
upon the price at which these Warrants may be exercised 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 $1.125 per share, the average of the high and low sale
prices of the Common Stock as reported by the American Stock Exchange
on May 25, 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.

<PAGE>

DATAMETRICS CORPORATION

8,296,670 Shares of Common Stock

This prospectus covers 8,296,670 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"). All
of the Common Stock offered by this prospectus consists of the following:

o 4,211,769 shares of Common Stock presently issued and outstanding
which were issued to the Selling Shareholders in private
transactions; and

o 4,084,901 shares of Common Stock issuable upon the exercise of
Warrants 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, although we will receive approximately
$6,202,351 if all of the Warrants are exercised.
See "Use of Proceeds."

Our Common Stock trades on the American Stock Exchange under the symbol
"DC." On May 25, 1999, the reported last sale price of the Common Stock on the
American Stock Exchange was $1.125 per share.

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

INVESTING IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.

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

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 May 28, 1999

<PAGE>

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."

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this
prospectus and is qualified in its entirety by reference to the more detailed
information and financial statements appearing elsewhere in this prospectus. The
summary is not complete and may not contain all of the information you may need
to consider before investing in the Common Stock. You should read this entire
prospectus carefully, including the "Risk Factors" section and the financial
statements and notes to those statements.

THE COMPANY

IN GENERAL

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.

DEFENSE PRODUCTS

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 U.S. Department of Defense ("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 our 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

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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 its printers on several defense programs.

RUGGEDIZED PRINTERS

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.

HIGH-SPEED COLOR DIGITAL PRINTER

Following the completion of a 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.

On June 3, 1998, we announced a global alliance agreement with the
Traffic Control Materials Division of 3M Company ("3M"). This long-term alliance
encompasses all markets worldwide served by 3M in the transportation safety
industry. The agreement provides for us to manufacture, service and support our
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. We believe that this agreement will result in significant
revenues over the next several years.

RECENT DEVELOPMENTS

On January 20, 1999, we announced a North American Strategic Alliance
with International Imaging Materials, Inc. ("IIMAK"), a subsidiary of Paxar
Corporation. IIMAK is North America's leading manufacturer of thermal transfer
ribbons. The goal of the long-term alliance is to develop new markets and
distribution channels for our Harrier (TM) and Condor (TM) thermal transfer
printers and for IIMAK's wax and resin color thermal transfer ribbons. Under the
terms of the 5-year agreement, we will continue to develop and manufacture our
Harrier (TM) and Condor (TM) thermal transfer printers, which will be marketed
jointly with IIMAK's broad range of spot and processed color thermal transfer
ribbons. We will work together with IIMAK to structure and utilize a North
American distribution network for the sign making and silk screening industries.
The primary market focus of our combined efforts with IIMAK will be active
customers in the sign making and silk screen industries who can benefit most
from the compelling speed, cost advantages and quality output of the DmC Harrier
(TM) and Condor (TM) thermal transfer printers and IIMAK's color thermal
transfer ribbons. Using IIMAK-supplied DuraCoat ribbons, we will offer a
bailment program to key customers in these industries, whereby the user can
enjoy the speed, quality and cost savings without any capital expenditure.

<PAGE>

THE OFFERING

COMMON STOCK Up to 8,296,670 shares of Common Stock, which may be
offered and sold from time to time by one or all of the
Selling Shareholders. Included are (i) 4,211,769 shares
of Common Stock presently issued and outstanding which
were issued to the Selling Shareholders in private
transactions; and (ii) 4,084,901 shares of Common Stock
issuable upon the exercise of Warrants which were issued
to the Selling Shareholders 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 $6,202,351 upon the exercise of all the
Warrants. We expect to use these proceeds, if any, for
working capital. 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 5.

SUMMARY FINANCIAL DATA

We do not currently have a bank credit facility and must rely solely 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 an
aggregate 1,500,000 shares of our Common Stock to approximately 3 investors for
an aggregate purchase price of $1,500,000, the proceeds of which were used to
satisfy certain of our debt obligations. However, we are currently in default of
approximately $1,350,000 in principal amount of our 10% Senior Subordinated
Secured Debentures which were required to be repaid by their terms on May 25,
1998. We are currently negotiating a settlement with the holders and expect to
either issue new notes or repay the amounts owing with a combination of stock
and cash during fiscal 1999. 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 has
been derived from audited financial statements, and is qualified in its 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 three
months ended January 24, 1999 and January 25, 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.

<PAGE>

STATEMENT OF FISCAL QUARTER ENDED FISCAL YEAR ENDED
OPERATIONS DATA January 24, 1999 January 25, 1998 October 25, 1998 October 26, 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Sales $1,586,000 $1,525,000 $7,742,000 $16,797,000
Net loss $(1,776,000) $(1,312,000) $(3,270,000) $(3,101,000)
Net loss per share:
Basic and Diluted $(0.11) $(0.08) $(0.22) $(0.24)

Weighted average number of
shares outstanding:
Basic and Diluted 16,578,000 15,031,000 15,202,000 12,995,000

BALANCE SHEET DATA

Total assets $13,141,000 $12,548,000 $12,719,000 $11,546,000
Long-term Debt, including
Current Portion $6,494,000 $3,819,000 $5,313,000 $2,993,000
Stockholders' equity $3,793,000 $4,712,000 $4,008,000 $3,522,000

</TABLE>

RISK FACTORS

An investment in the Common Stock of the Company offered hereby is
highly speculative and involves a high degree of risk. Investors could lose
their 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.

LIQUIDITY AND WORKING CAPITAL

We do not currently have a bank credit facility and must rely solely on
income from operations and the proceeds of private placements of our Common
Stock and other securities in order to fund operations. No assurance can be
given that we will be able to continue to sell such securities or will be
successful in raising working capital through such private placements. 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.

DEFAULT ON SENIOR SECURED DEBENTURES

We are currently in default of approximately $1,350,000 in principal
amount of our 10% Senior Subordinated Secured Debentures which remain
outstanding. The Debentures are secured by a lien on the assets of the Company.
The Debentures were required to be repaid by their terms on May 25, 1998. We are
currently negotiating a settlement with the holders and expect to either issue
new notes or repay the amounts owing with a combination of stock and cash during
fiscal 1999. The holders of the Debentures have so far not exercised their
remedies as creditors, but there is no guarantee that they will not pursue such
remedies in the future or that the Company will succeed in refinancing or
restructuring the Debentures.

LITIGATION

We are, from time to time, the subject of litigation, claims and
assessments arising out of matters occurring during the normal operation of our
business. Except as discussed below, in the opinion of

<PAGE>

management, the liability, if any, under such current litigation, claims and
assessments would not materially affect the financial position or the results of
our operations.

Four former officers of the Company (the "Former Officers"), whose
employment relationships with the Company terminated in part as a result of our
restructuring in October 1996, sought severance benefits from us. On January 13,
1997, three of the Former Officers sued us 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 us in response to our cross-complaint. The Former
Officers sought damages from us based upon the Severance Agreements and an
alleged implied promise not to terminate the Former Officers' employment 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. We have appealed the judgment, which has been bonded, and
the repayment of the bond has been guaranteed by the holder of a significant
amount of our debt securities ("Guarantor"). The Guarantor received Warrants to
purchase Common Stock in connection with the guarantee. If the guarantee is
called on, we have 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.

We are engaged in a dispute with Manchester Movers of Manchester,
Connecticut regarding approximately $195,000 of damage to our furniture incurred
during a move from our California office to our New Jersey and Orlando offices
in 1998. We have agreed to mediate the dispute with Manchester Movers.

DIVIDEND 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 our 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.

ENTRANCE INTO THE SMALL-BUSINESS FILING SYSTEM

In order to take advantage of certain relaxed reporting requirements of
the small-business "SB" filing system of the Securities and Exchange Commisison
("SEC"), we have entered the SB filing system commencing with the fical 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 assurance that our entrance into the SB filing system will not have an
adverse effect on our perception among investors and our position in the
marketplace.

AMERICAN STOCK EXCHANGE LISTING

Our Common Stock currently trades on the American Stock Exchange
("AMEX") under the trading symbol "DC." Based on our recent financial
performance, certain continued listing guidelines of the AMEX were not currently
met. Accordingly, there can be no assurances that the listing of our Common

<PAGE>

Stock will be continued. However, on May 21, 1999, AMEX agreed that the listing
of the Company would be continued pending review of the Company's Form 10-QSB
for the quarter ending April 1999. We believe that our performance for that
quarter, and our recent sale of 1,500,000 shares of additional equity on May 7,
1999 will favorably influence the AMEX's evaluation of continued listing. If our
Common Stock is no longer listed on the AMEX, the marketability of our shares of
Common Stock could be adversely affected.

ANTIDILUTION

In connection with our employment of certain key officers, we have
issued a significant number of Warrants to purchase Common Stock at a purchase
price of $2.00 per share. During fiscal 1997 and 1998, we also issued an
aggregate 350,000 Warrants to purchase Common Stock to certain officers and
Directors as compensation for arranging financings. These Warrants provide for
an increase in the number of Warrants under certain circumstances to protect
against antidilution. Certain Warrants issued to investors in private placements
from time to time also contain antidilution provisions. Exercise of these
Warrants and/or subsequent increase in the number of Warrants pursuant to the
antidilution provisions would be dilutive to existing holders of our Common
Stock.

YEAR 2000 COMPLIANCE

We are engaged in a continuous process of communicating with our major
customers and suppliers. to determine Year 2000 ("Y2K") 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 Y2K problem could result in an interruption in normal business
activity. Our plan is expected significantly to 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 affect our operations, liquidity and financial
position.

HISTORICAL LOSSES

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, and a loss of
$1,776,000 in the first quarter of fiscal year 1999. No assurance can be given
that we will not incur substantial losses in the future.

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 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. We believe, however, that our printers usually perform at higher
speed and with greater reliability in extreme environments.

<PAGE>

DEPENDENCE ON MAJOR CUSTOMERS

Most of the customers for our products 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% of our revenuses, respectively. 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 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.

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.

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.

FLUCTUATIONS IN QUARTERLY RESULTS

Our results of operations are subject to considerable fluctuations from
quarter to quarter due to changes in demand for our products and other factors,
and there can be no assurance that we will be profitable in any particular
quarter. 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.

DEPENDENCE ON KEY PERSONNEL

We believe that our success depends in part upon our ability to attract
and retain highly skilled management, technical and marketing personnel.
Competition for highly skilled personnel exists in all of these areas, and there
can be no assurance that we will be successful in attracting and retaining such
personnel.

LIMITED PROTECTION OF INTELLECTUAL PROPERTY

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. We are presently reviewing
our patent situation to determine what action needs to be taken to preserve
and/or initiate patent rights.

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

<PAGE>

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. Moreover, the laws of
some foreign countries do not afford the same protection to our proprietary
rights as do U.S. laws. There can be no assurance, therefore, 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.

VOLATILITY OF STOCK PRICE

The trading price of our Common Stock has from time to time fluctuated
widely and in the future may be subject to similar fluctuations in response to
announcements by us or our competitor 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.

CERTAIN CHARTER AND BY-LAW PROVISIONS AFFECTING COMMON STOCK

Our Board of Directors has the authority to issue up to 5,000,000
shares of Preferred Stock and to determine the price, rights, preferences and
privileges, including voting rights, of such shares without any further vote on
action by our stockholders. The rights of the holders of Common Stock will be
subject to, and could be adversely affected by, the rights of the holders of any
Preferred Stock that may be issued in the future. The issuance of shares of
Preferred Stock under certain circumstances could have the effect of delaying,
deferring or preventing a change of control of the Company. Certain provisions
of Delaware law could delay or inhibit a merger, tender offer or proxy contest
involving Datametrics Corporation.

VOLUME OF SHARES TO BE SOLD

As of the date of this Prospectus we have 19,007,227 shares of Common
Stock issued and outstanding. Of the shares of Common Stock being registered
hereunder, 4,211,769 shares are currently issued and outstanding, and represent
approximately 22.2% of our outstanding Common Stock. Assuming exercise of all
the Warrants for 4,084,901 shares, the Selling Shareholders may sell up to
8,296,670 shares, which would then represent approximately 36% of our 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.

<PAGE>

USE OF PROCEEDS

We will not receive any proceeds from the sale by the Selling
Shareholders of the Common Stock offered by this prospectus. The shares of
Common Stock will be sold from time to time by the Selling Shareholders at
prevailing market prices. We will receive approximately $6,202,351 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. See
"Plan of Distribution."

Number of Shares to be Issued Pursuant to Warrant Exercise Price Proceeds to Company(2)
Warrants
- ----------------------------------------- ---------------------- ----------------------
<S> <C> <C>
309,341 (Warrants issued November 1996) $1.50 per share $464,011
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)
200,000 (Warrants issued May 1999) 100,000 @ $2.00 per share $600,000
100,000 @ $4.00 per share
4,084,901 Total $6,202,351

</TABLE>

(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
underlying the Common Stock being offered hereby.

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

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

<PAGE>

There were approximately 777 stockholders of record as of May 11, 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

Three Month Period Ended January 24, 1999 Compared To Three Month
Period Ended January 25, 1998

Sales for the three month period ended January 24, 1999 were $1,586,000
which was an increase of $61,000 or 4%, compared with sales of $1,525,410 in the
same period in the prior fiscal year. Sales of defense and defense related
products decreased $598,000, while other sales increased $659,000. The decrease
in defense and defense related sales for the three months ended January 24, 1999
is attributable to lower than anticipated orders from the Department of Defense
and prime contractors.

Cost of sales for the first three months of fiscal 1999 was $1,084,000
(68% of sales), a decrease of $479,720 or 30%, compared with $1,584,000 (104% of
sales) for the same period in the prior fiscal year. Cost of sales is down from
the same period in the prior fiscal year due to lower direct labor costs in the
Company's Florida manufacturing operation compared to the Company's former
manufacturing operation in California.

Research and development expenses were $62,000 for the three month
period ended January 24, 1999, a decrease of $74,000 or 54%, compared with
$136,000 for the same period in the prior year. The decrease is due to lower
development costs associated with the Company's new family of industrial
printers.

Selling, general and administrative ("SG&A") expenses for the three
month period ended January 24, 1999 were $867,000 (55% of sales) a decrease of
$159,000, or 15%, compared with $1,026,000 (67% 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 $124,000 for the three month period
ended January 24, 1999 compared with net interest expense of $87,000 for the
same period in the prior year. This increase is due to higher outstanding
borrowings.

Lease Settlement expense of $1,225,000 for the three month period ended
January 24, 1999 related to the Company's settlement of a dispute concerning
rents due on formerly leased property in Woodland Hills, California

The net loss for the three month period ended January 24, 1999 amounted
to $(1,776,000) an increased loss of $464,000, compared with a net loss of
$(1,312,000) for the same period in the prior year.

<PAGE>

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 January 24, 1999. Ultimate recognition of these tax
assets is dependent, to some extent, on future revenue levels and margins.
Management intends 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
January 24, 1999 was approximately $4,604,000. Most of the January 24, 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 ("R&D") 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 ("SG&A") 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 reduction in SG&A 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.

<PAGE>

The Company utilizes various computer software packages as tools in
running its accounting operations. Management plans to replace the current
Western Data Systems software with a software package better suited to support
its current and future business needs. Management believes it will select and
implement the appropriate software package by June 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

Our principal capital requirements have been to fund working capital
needs, capital expenditures and the payment of long term debt. We have recently
relied primarily on internally generated funds, private placement proceeds and
subordinated debt to finance operations. See "Liquidity and Working Capital" and
"Default on Senior Secured Debentures" under the heading "Risk Factors."

Net cash used in operations was $5 million and $1.6 million in 1998 and
1997, respectively. The change from 1997 to 1998 was primarily due to an
increase in inventory in 1998 versus a decrease in inventory in 1997 and a
greater reduction in accounts receivable in 1997 versus 1998.

Net cash used in investing activities was $1.6 million and $0.3 million
in 1998 and 1997, respectively. The change from 1997 to 1998 was primarily the
result of the move of our manufacturing and distribution facility from
California to Florida and our finance and administrative offices from California
to New Jersey.

Net cash provided by financing activities was $6.6 million and $1.8
million in 1998 and 1997, respectively. The change from 1997 to 1998 was
primarily due to the issuance of Common Stock and warrants and an increase in
long-term borrowings in 1998.

On December 30, 1998, we sold approximately $3.45 million of 10%
Subordinated Notes due 2000 (the "Subordinated Notes") which are unsecured and
callable under certain conditions, and $1.55

<PAGE>

million in shares of our Common Stock. In connection with the transaction we
issued 5-year warrants exercisable into our Common Stock at a price of $1.50 per
share.

As part of the December 30, 1998 offering, investors holding $1.75
million of our Convertible Debentures issued earlier in the year exchanged their
holdings for the new Subordinated Notes. In addition, holders of $500,000 of our
Senior Subordinated Debentures also exchanged their debentures for the new
Subordinated Notes. The net proceeds of approximately $2.75 million were used
for debt retirement and working capital purposes.

We are currently in default of approximately $1,350,000 in principal
amount of our 10% Senior Subordinated Secured Debentures which remain
outstanding. The Debentures were required to be repaid by their terms on May 25,
1998. We are currently negotiating a settlement with the holders, and expect to
either issue new notes or repay the amounts owing with a combination of stock
and cash during fiscal 1999. The holders of the Debentures have so far not
exercised their remedies as creditors, but there is no guarantee that they will
not pursue such remedies in the future.

We currently have no revolving line of credit with a bank or financial
institution.. In order to satisfy short-term working capital requirements, we
are actively seeking a new revolving line of credit agreement from several
banks. Our failure to obtain such credit could have a material adverse effect on
our continued operations, or require that we obtain substitute financing at
higher cost, or raise additonal capital through the sale of other debt or equity
securities.

From October 1996 through May 1999, through various private placements
of debt and equity, we raised approximately $12.5 million.

We hope to finance our capital expenditure requirements and other
commitments with the proceeds from the various private placements, subordinated
notes and other sources of working capital.

Four former officers of the Company sued us in the Superior Court of
the State of California in January 1997, seeking severance benefits under
certain severence agreements. On September 28, 1998, a California trial court
upheld the enforcability of the former officers' severance agreements and the
officers requested entry of a judgment in the approximate amount of $1,200,000
plus interest and costs. We have appealed the judgment, which has been bonded,
and the repayment of the bond has been guaranteed by the holder of a significant
amount of our debt securities ("Guarantor"). The Guarantor received Warrants to
purchase Common Stock in connection with the guarantee. If the guarantee is
called on, we have 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.

RECENT ACCOUNTING STANDARDS

In June 1997, the Financial Accounting Standards Board issued two new
disclosure standards. Results of operations and financial position are
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.

<PAGE>

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 have no material
impact on the Company's financial statements and disclosures.

In June 1998, the Financial Accounting Standards Board 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
hedging 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 effect its financial
statements.

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

<PAGE>
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 milspec 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

16
<PAGE>

training program, and the MILSTAR Communications Satellite Program, the DoD's
global communications system.

Our DmC 1901 Model, a high resolution color printer/plotter, also is
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.

<PAGE>

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.

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.

<PAGE>

BACKLOG

Our backlog of funded orders not yet recognized as revenue at January
24, 1999 and January 25, 1998, was approximately $4,604,000 and $3,142,000,
respectively. More than 90% of the January 24, 1999 backlog is expected to be
delivered during the fiscal year ending October 31, 1999.

SOURCES OF SUPPLY

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.

COMPETITION

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. See "Risk Factors" for further information about our
intellectual property.

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.

<PAGE>

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
expended approximately $62,000 and $136,000 on research and development during
the fiscal quarter ended January 24, 1999 and January 25, 1998, respectively.

EMPLOYEES

As of January 24, 1999 we employed 94 persons on a full-time basis,
compared to 73 persons on a full-time basis as of January 25, 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, and 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 Company's 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 5.

<PAGE>

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 of the Company since January 1997 and
as a Director of the Company since October 1996. As of the date of this
prospectus, Mr. Maught is on medical leave from the Company. 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.

<PAGE>

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").

<TABLE>
<CAPTION>
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/ PAYOUTS SATION
POSITIONS YEAR SALARY BONUS(S) ($)(3) ($) SARs(#) ($) ($)
- --------- ---- ------- -------- --------- --------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel P. Ginns, 1998 252,681 --- 32,000(4) 10,000(5) --- --- ---
Chief Executive 1997 261,035(1) 24,000 27,000(4) 10,000(5) --- --- ---
Officer, 1996 17,500 --- --- --- 15,000 --- ---
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) --- --- ---
President and 1996 13,500 --- --- --- 15,000 --- ---
Director

James D. 1998 124,905 --- --- --- --- --- ---
Sturgeon, Jr., 1997 123,882 --- --- --- 1,750 --- ---
Vice President, 1996 118,646 --- --- --- 10,000 --- ---
Marketing

</TABLE>

<PAGE>

(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.

<TABLE>
<CAPTION>
% 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
--------------- -------------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
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. ---- ---- ---- ----

</TABLE>

(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.

<TABLE>
<CAPTION>
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
---- ------------ -------- -------------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
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.

</TABLE>

<PAGE>

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

<PAGE>

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 currently remains outstanding.

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.

<PAGE>

COMMON STOCK

Of the 8,296,670 shares of Common Stock being registered hereunder,
4,211,769 shares of Common Stock were issued to the Selling Shareholders in
private transactions. The remaining shares are issuable upon the exercise of the
4,084,901 Warrants discussed below under "Warrants."

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.

WARRANTS

Of the Warrants to purchase 4,084,901 shares of Common Stock, which
shares are being registered hereby, Warrants to purchase 309,341 shares of
Common Stock were part of an issue to 12 investors in connection with the
private placement of $1,850,000 Subordinated Notes in November, 1996. Each of
these Warrants entitles the holder to purchase, one share of our Common Stock,
at a price of $1.50 per share, (subject to adjustment), at any time until
November 2001. We have the right to redeem the Warrants at any time prior to the
expiration of the exercise period, provided that the closing sale price of our
Common Stock as reported on the American Stock Exchange, or other exchange on
which the Common Stock is listed, shall have for a period of twenty consecutive
days prior to the notice of such redemption equaled or exceeded 200% of the
Warrant exercise price.

Warrants to purchase 2,075,560 shares of Common Stock were issued to
approximately 7 investors in connection with the private placement of $3,450,000
of 10% Subordinated Notes Due 2000 in December, 1998. Each of these Warrants
entitles the holder to purchase, at a price of $1.50 per share, subject to
adjustment, one share of our Common Stock until December 2003. Warrants for the
purchase of 1,229,800 shares of Common Stock are exercisable in full at any time
commencing with the date of issuance. The warrants for the purchase of the
remaining 845,760 shares of Common Stock are exercisable at a rate of 3,000
Warrants per quarter per $100,000 principal amount of the 10% Subordinated Notes
purchased, commencing with the calendar quarter ending December 31, 1998 until
the calendar quarter ending September 30, 2000. We have the right to redeem the
Warrants at any time prior to the expiration of the exercise period for a price
equal to the exercise price, provided that the closing sale price of our Common
Stock (as reported on the American Stock Exchange, or other exchange on which
the Common Stock is

<PAGE>

listed) equaled or exceeded $3.00 per share for a period of twenty consecutive
days prior to the notice of such redemption. As part of that arrangement, the
Company is required to file this Registration Statement.

Warrants to purchase 1,500,000 shares of Common Stock were issued to 3
investors in connection with the private placement of 1,500,000 shares of Common
Stock in May 1999. Each of these Warrants entitles the holder to purchase one
share of our Common Stock at any time until May 2004, at a per share price
(subject to adjustment) equal to 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. We have the right to call 25% of
the Warrants upon 30 calendar days written notice to the holder, provided that
our Common Stock trades at a price equal to or greater than $3.00 per share for
20 consecutive trading days prior to the date of the call notice to the holder,
and provided further that this registration statement has been declared
effective.

Warrants to purchase 200,000 shares of Common Stock were issued to
Continental Capital and Equity Corp. pursuant to a Marketing Access Program
Marketing Agreement. Holders may exercise these warrants at any time until in
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.

With respect to each of the foregoing Warrants, we have reserved an
equivalent number of shares of Common Stock for issuance on exercise of the
Warrants. The Warrants are nontransferable, and may be exercised in whole or in
part, subject to the limitations discussed above.

Any Warrant holders who do not exercise their Warrants prior to the
conclusion of the exercise period will forfeit the right to purchase the shares
of Common Stock underlying the Warrants and any outstanding Warrants will become
void and be of no further force or effect.

The exercise price of each of the foregoing Warrants and the number of
shares to be obtained upon the exercise of the Warrants are subject to
adjustment in certain circumstances including a stock split of, or stock
dividend on, or a reclassification of the Common Stock. Holders of the Warrants
have no voting, preemptive, liquidation or other rights of a shareholder, and no
dividends will be declared on the Warrants.

We are registering the shares of Common Stock underlying the Warrants
pursuant to Registration Rights Agreements or other contractual obligations
between us and the holders of the Warrants. We have agreed to pay all
registration expenses incurred in connection with the registration of the Common
Stock issuable upon exercise of the Warrants.

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 May 8, 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.

<PAGE>

AMOUNT OF PERCENT OF SHARES
BENEFICIAL OWNER SHARES BENEFICIALLY OWNED
---------------- BENEFICIALLY ------------------
OWNED
------------
Daniel P. Ginns (1) 839,375 (2) 4.4%
Douglas Friedenberg (1) 1,092,205 (3) 5.7%
Adrien A. Maught (1) 589,375 (4) 3.1%
John W. O'Leary (1) 26,875 (5) *
William B. Pandos (1) 0 *
James D. Sturgeon, Jr. (1) 14,000 (6) *
Richard Love (1) 351,160 (7) 1.8%
Vincent J. Cahill(1) 10,937 (8) *
All Executive Officers and Directors as a *
-------------- ---
Group (8 People) 2,923,927 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) 6.37%

*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 9,375
shares of Common Stock subject to non-qualified stock options presently
exercisable at $1.25 per share. Excludes 5,625 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 9,375
shares of Common Stock subject to non-qualified stock options presently
exercisable at $1.25 per share. Also includes the holdings of each of the
following, as to each of which Mr. Freidenberg 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 9,375
shares of Common Stock subject to non-qualified stock options that are
presently exercisable at $1.25 per share. Excludes 5,625 shares of Common
Stock subject to non-qualified stock options not exercisable during the next
60 days.

<PAGE>

(5) Includes 1,875 shares of Common Stock subject to non-qualified stock
options that are presently exercisable at $1.88 per share. Excludes 13,125
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 1,875 shares of Common Stock subject to
non-qualified stock options that are presently exercisable at $1.94 per
share. Excludes 13,125 shares of Common Stock subject to non-qualified stock
options not exercisable during the next 60 days

(8) Includes 937 shares of Common Stock subject to non-qualified stock
options that are presently exercisable at $1.31 per share. Excludes 14,063
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 May 8, 1999 by each Selling
Shareholder .

<PAGE>

SHARES ISSUED SHARES SHARES
BENEFICIALLY SHARES TO SUBJECT TO BENEFICIALLY
OWNED PRIOR BE SOLD IN WARRANTS OWNED AFTER
SELLING SHAREHOLDERS TO THE THE TO BE SOLD OFFERING
OFFERING OFFERING IN THE (AND
(1) OFFERING PERCENT)
-------- ---------- -----------
<S> <C> <C> <C> <C>
Robert London 1,460,000 1,460,000 0 (*)
Michael Rich 30,000 30,000 0 (*)
Rich Family Partnership, LLC 144,625 100,625 44,000 (2) 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 (2) 0 (*)
Peter Wyman 31,667 16,667 (2) 15,000 (*)
Peter Sosnkowski IRA (3) 16,667 16,667 (2)
Firebird Overseas Ltd. (3) 476,911 282,857 80,002 (2) 114,052 (*)
Firebird Partners LP (3) 193,347 162,619 30,728 (*)
Euro-Dutch Company (3) 185,905 162,571 23,334 (2) 0 (*)
Evergreen Worldwide Investment 0 (*)
Fund 83,335 83,335 (2) 0 (*)
Neal & Company 83,335 83,335 (2) 0 (*)
Allen Ozdemir 33,334 33,334 (2) 0 (*)
Quilcap Corporation: (4) 0 (*)
Little Wing LP 637,392 (5) 822,786 (2)
Little Wing Too LP 68,856 (6) 88,758 (2) 0 (*)
Quilcap International Corporation : 0 (*)
Tradewinds Fund Ltd. (7) 492,718 (8) 636,016 (2)
Cannell Capital Management: (9) 0 (*)
Cuttyhunk Fund Limited 101,500 (10) 154,000 (2)
Tonga Partners LP 188,500 (11) 286,000 (2) 0 (*)
The Manufacturer's Life Insurance 0 (*)
Company (U.S.A.) 150,000 150,000
Settondown Capital International, 0 (*)
Ltd. 500,000 250,000 250,000 (12)
Headwaters Capital 2,000,000 1,000,000 1,000,000 (12) 0 (*)
Manchester Asset Management, 0 (*)
Ltd. 500,000 250,000 250,000 (12) 0 (*)
Continental Capital & Equity Corp. 304,348 104,348 200,000 (13) 0 (*)
------- ------- ------------
TOTAL: 7,957,856 4,211,769 4,084,901
*less than 1%

</TABLE>

Notes:

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

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

(3) These entities are affiliates of Douglas Freidenberg, a director of
the Company.

(4) 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.

<PAGE>

(5) 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 quarter through
September 30, 2000.

(6) 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 quarter through
September 30, 2000.

(7) 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.

(8) 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 quarter through
September 30, 2000.

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

(10) 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 quarter through
September 30, 2000.

(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 19,500 per quarter through
September 30, 2000.

(12) 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).

(13) Represents 100,000 shares of Common Stock underlying warrants
exercisable at $2.00 per share and 100,000 shares of Common Stock
underlying warrants exercisable at $4.00 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.

<PAGE>

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, we dismissed Ernst & Young LLP as our
certifying accountants and engaged Deloitte & 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.

On February 18, 1998, our certifying accountants, Deloitte & 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 concerning the classification of certain
inventoried parts as long-term and 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.

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.

<PAGE>

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 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 _________________________________________ .

EXPERTS

The consolidated financial statements included in this prospectus and
in the Registration Statement have been audited by ________________, 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
offices: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 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.

<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
UNAUDITED INTERIM FINANCIAL STATEMENTS FOR THE FISCAL QUARTER ENDING JANUARY 24, 1999

Consolidated Balance Sheet as of January 24, 1999......................................................... F-2
Consolidated Statements of Operations for the three months ended January 24, 1999 and January 25, 1998.... F-3
Consolidated Statements of Cash Flows for the three months ended January 24, 1999 and January 25, 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

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

</TABLE>

F-1

<PAGE>

CONSOLIDATED DATAMETRICS CORPORATION
BALANCE SHEET
<TABLE>
<CAPTION>
January 24, 1999
(In thousands, except for share data) (unaudited)
------------------------------------ --------------------
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $275
Accounts receivable, net of allowance for
doubtful accounts of $195,000 2,287
Inventory, net 4,421
Prepaid expenses and other current assets 10

------------------
Total current assets 6,993

Property and Equipment, at Cost:
Land 420
Building 1,042
Machinery and equipment 3,312
Furniture, fixtures & computer equipment 2,562
Leasehold improvements 71

------------------
7,407
Accumulated depreciation and amortization (5,221)

------------------
Net property and equipment 2,186
Inventoried parts 3,200
Other Assets 762

------------------
$13,141

==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $1,852
Accounts payable 1,024
Accrued commissions and payroll 182
Accrued warranty 30
Other accrued expenses 393
Other accrued liabilities 1,225

------------------
Total current liabilities 4,706

Long-Term Debt, Less current maturities 3,896
Loan Payable 746

------------------
Total liabilities 9,348

------------------
Commitments and Contingencies
Stockholders Equity
Common stock, $.01 par value--40,000,000 shares
authorized; 17,172,879 shares issued and
outstanding 172
Additional paid-in capital 39,455
Accumulated deficit (35,834)
------------------
Total stockholders' equity 3,793

------------------
$13,141
See accompanying notes.
==================
</TABLE>

F-2

<PAGE>

CONSOLIDATED DATAMETRICS CORPORATION
STATEMENTS OF OPERATIONS

(Unaudited) For The Three Months For The Three Months
Ended Ended
January 24, 1999 January 25, 1998
(In thousands, except per share data)
- ------------------------------------- ==============================================================
<S> <C> <C>
SALES $1,586 $1,525
Cost of sales 1,084 1,588
Research & development 62 136
Selling, general & administrative 867 1,026
Lease settlement expense 1,225 -

----------------------- ----------------------------
Operating Loss (1,652) (1,225)
Interest expense, net 124 87

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

Net loss ($1,776) (1,312)
======================= ============================

============================
Loss per share of common stock:
Basic and diluted ($0.11) ($0.08)

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

WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
Basic and diluted 16,578 15,031
--------------------- -----------------

</TABLE>

See accompanying notes

F-3

<PAGE>

CONSOLIDATED STATEMENTS OF DATAMETRICS CORPORATION
CASH FLOWS
(Unaudited)
For The Three Month Period
<TABLE>
<CAPTION>

(In thousands)(Brackets denote cash outflows) January 24, 1999 January 25, 1998
- --------------------------------------------- ----------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (1,776) (1,312)
Adjustments:
Depreciation and amortization 121 152

Changes in assets and liabilities
Accounts receivable (308) 1,377
Inventory (281) (792)
Prepaid expenses and other current assets 45 2
Other Assets 48 16
Accounts payable (10) (504)
Accrued commission and payroll (43) (125)
Other accrued expenses 1,178 (43)
Advance and progress payments from customers - (63)
Other long-term liabilities - 12

------------------ --------------------------
Net cash used in operating activities (1,026) (1,280)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment - (922)

------------------ --------------------------
Net cash used in investing activities - (922)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolving line of credit 426 3,358
Payments on revolving line of credit (2,095) (3,131)
Payment on capitalized lease obligations (17) (6)
Borrowings on long-term debt 1,200 899
Payments on long-term debt - (85)
Proceeds from the issuance of common stock and 1,559 2,002
warrants

------------------ --------------------------
Net cash provided by financing activities 1,073 3,037

------------------ --------------------------
Net increase in cash and cash equivalents 47 835
Cash and cash equivalents at the beginning of the 228 200
period

------------------ --------------------------
CASH AND CASH EQUIVALENTS AT THE END OF $275 $1,035
THE PERIOD

================== ==========================
Cash paid during the period for:
Interest $37 $132
Income Taxes - -

Non-Cash Transactions
Exchange of 7% Convertible Debentures for 10%
Senior Subordinated Notes Due 2000 (1750) ---
Exchange of Senior Subordinated Debentures for
10% Senior Subordinated Notes Due 2000 (500) ---

See accompanying notes.

</TABLE>

F-4

<PAGE>

DATAMETRICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

January 24,1999
(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
andregulations, 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 October 25, 1998 year-end financial statements
included herein.

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 financial position and 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,
rather the Company evaluates all inventory for obsolescence on a periodic basis
and records estimated reserves.

Inventories as of January 24, 1999 consist of the following:

Inventories of parts and sub-assemblies $11,184,000
Contracts in progress 1,065,000
Finished goods 200,000
----------------
12,449,000
Less non current inventories (3,200,000)
Less reserve for obsolescence (4,828,000)
$ 4,421,000

3. ISSUANCE OF SUBORDINATED NOTES AND COMMON STOCK

On December 29, 1998, the Company closed a private placement of
approximately $3.45 million of 10% Subordinated Notes due in December 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

F-5

<PAGE>

DATAMETRICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

January 24,1999
(Unaudited)

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.

4. NEW ACCOUNTING STANDARDS.

The Company has adopted Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income," and No. 131, "Disclosure About
Segments of an Enterprise and Related Information." The adoption of these
standards have no impact on the Company's financial statements and disclosure.

5. SUBSEQUENT EVENTS. In April 1998, the owner of the premises the Company
formerly occupied in Woodland Hills, California, sued for the balance of all
rent due through the end of the extant lease agreement plus damages. On March 2,
1999, the Los Angeles Superior Court, Los Angeles, California, signed a judgment
in the suit in favor of the owner, which judgment has been settled and has been
satisfied pursuant to a Mutual Release and Settlement Agreement with the owner.
Under the Agreement, the Company has paid a total of $900,000 in cash and issued
150,000 shares of Common Stock to the owner. The Company is registering the
shares of Common Stock hereunder, and under certain circumstances, the Company
will issue additional shares of Common Stock to the extent that the market price
of its Common Stock falls below certain levels. The Company also has the right
to repurchase the shares under certain circumstances. Since the minimum amount
guaranteed by the Company is $375,000 in Common Stock, the Common Stock was
valued at $2.50 per share. Based on the above, the Company has accrued
approximately $1,200,000 at January 24, 1999 related to this matter.

In March 1999, the Company sold an aggregate $400,000 of 10% Bridge
Notes which are unsecured and mature on May 9, 1999. In connection therewith,
the Company also issued an aggregate 200,000 5-year Warrants to purchase the
Common Stock of the Company at a price of $1.00 per share. The Bridge Notes have
now been repaid.

In May 1999, the Company sold an aggregate 1,500,000 shares of its
Common Stock to approximately 3 investors for an aggregate purchase price of
$1,500,000. In connection therewith, the Company also issued Warrants to
purchase up to 1,500,000 shares of its Common Stock at a purchase price equal to
the lesser of $1.35 per share or the volume-weighted average price of the Common
Stock for the 20 trading days immediately preceding the notice of exercise.

F-6

<PAGE>

[This Page Intentionally Left Blank]

F-7

<PAGE>

DATAMETRICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
October 25,
1998
-----------
(In thousands, except for share data)
ASSETS (Note 6)
---------------
<S> <C>
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
</TABLE>

See accompanying notes.

F-8

<PAGE>

DATAMETRICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

Fiscal Years Ended
------------------------------------
October 25, October 26,
1998 1997
(In thousands, except per share data)
<S> <C> <C>
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
========= ==========
</TABLE>

See accompanying notes.

F-9

<PAGE>

DATAMETRICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

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

(In thousands, except share data)
<S> <C> <C> <C> <C> <C>
Balances at October 27, 1996.............. 12,264,408 123 32,577 (27,687) 5,013
Issuance of common stock and 1,018,760 10 1,600 ___ 1,610
warrants..................................
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 2,280,337 23 3,733 ___ 3,756
warrants..................................
Net Loss.................................. ----- -- (3,270) (3,270)
------------ ---------- ------ -------- ---------

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

</TABLE>

See accompanying notes.

F-10

<PAGE>

DATAMETRICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Fiscal Years Ended
October 25, October 26,
1998 1997
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss.....................................................................$(3,270) $(3,101)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of excess of acquired net assets over cost.................... - -
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
====== ======
</TABLE>
See accompanying notes.

F-11
<PAGE>
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-12
<PAGE>

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-13

<PAGE>

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.

F-14

<PAGE>

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

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.

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.

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.

F-15

<PAGE>

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.

F-16

<PAGE>

DATAMETRICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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-17

<PAGE>

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

F-18

<PAGE>

DATAMETRICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

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.

F-19

<PAGE>

DATAMETRICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(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).

(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.

F-20

<PAGE>

DATAMETRICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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-21

<PAGE>

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)
<S> <C> <C>

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

</TABLE>

F-22

<PAGE>

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)
<S> <C> <C> <C> <C> <C>
$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
===== ==== ======= === =======
</TABLE>

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.

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:

F-23

<PAGE>

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

(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 ofpayment.

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.

F-24

<PAGE>

DATAMETRICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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-25

<PAGE>

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
<S> <C>
Special Information Regarding Forward Looking Statements............................................ 2
Prospectus Summary.................................................................................. 2
Risk Factors........................................................................................ 5
Use of Proceeds.................................................................................... 10
Market for Common Stock............................................................................ 10
Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 11
Business........................................................................................... 15
Management......................................................................................... 21
Certain Relationships and Related Transactions..................................................... 25
Description of Securities.......................................................................... 25
Security Ownership of Management and Certain Beneficial Owners..................................... 27
Security Ownership of Selling Shareholders......................................................... 29
Plan of Distribution............................................................................... 31
Changes in and Disagreements with Accountants...................................................... 32
Indemnification of Directors and Officers.......................................................... 32
Legal Matters...................................................................................... 33
Experts............................................................................................ 33
Additional Information............................................................................. 39
Financial Statements.............................................................................. F-1

</TABLE>

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

8,296,670 Shares

Common Stock

DATAMETRICS CORPORATION

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

May 28, 1999

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

<PAGE>

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.........................$ 3,000
Legal fees and expenses......................$25,000
Accounting fees and expenses.................$ 5,000
Transfer agent fees and expenses.............$______
Printing and mailing costs...................$______
Total........................................$33,000

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

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.

II-1

<PAGE>

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.

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.

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).

II-2

<PAGE>

4.1 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).

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

4.3 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).

4.4 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.)

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

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

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

4.8 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).

4.9 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).

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

5.1 Opinion of Counsel as to the legality of the securities
being registered [to be filed by pre-effective amendment
to this Registration Statement].

10.3 Employment Agreement of Daniel P. Ginns dated as of August
12, 1997. [to be filed by pre-effective amendment to this
Registration Statement].

10.4 Employment Agreement of Adrien A. Maught, Jr. dated as of
August 12, 1997. [to be filed by pre-effective amendment
to this Registration Statement].

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).

II-3
<PAGE>

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 to be filed as
Exhibit 5.1).

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

24.2 Consent of Auditors [to be filed by pre-effective
amendment to this Registration Statement].

27.1 Financial Data Schedule.

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).

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.

II-4

<PAGE>

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.

(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.

II-5

<PAGE>

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
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 May 28, 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
- --------- ----- ----
/s/ ADRIEN A. MAUGHT Chief Operating Officer, May 28, 1999
- ---------------------------- President and Director
Adrien A. Maught

/s/ WILLIAM B. PANDOS Chief Financial Officer and May 28, 1999
- ---------------------------- Treasurer
William B. Pandos

/s/ DOUGLAS S. FRIEDENBERG Director May 28, 1999
- ----------------------------
Douglas S. Friedenberg

Director May __, 1999
- ----------------------------
John W. O'Leary

/s/ RICHARD J. LOVE Director May 28, 1999
- ----------------------------
Richard J. Love

/s/ VINCENT J. CAHILL Director May 28, 1999
- ----------------------------
Vincent J. Cahill

II-6