Datatec Systems Announces First Quarter FY 2002 Operating Results; Reduces Net Loss by 84% Compared With the Preceding Quarter and Generates Positive EBITDA.

    Business Editors

      FAIRFIELD, N.J.--(BUSINESS WIRE)--Sept. 13, 2001--Datatec Systems,
Inc. (Nasdaq: DATC), a provider of technology deployment services and
software tools, today reported results for the first quarter ended
July 31, 2001.
      The Company also announced today that Raymond R. Koch has rejoined
Datatec in the capacity of President and Chief Operating Officer.

      Highlights of the report are:

      --  Revenues were $18.2 million, an increase of 17% over the
        preceding quarter

      --  eDeploy sales were $825,000 - the second largest quarterly
        revenues ever, compared with $118,000 in the preceding quarter
        and an increase of 599%

      --  Gross Margins improved to 35% from 13% in the preceding
        quarter, an increase of 22%

      --  SG&A Expenses were $7.4 million, a reduction of 37% from the
        preceding quarter

      --  EBITDA was $201,000 versus a loss of $8.2 million in the
        preceding quarter

      --  The loss per share was 5 cents compared with a loss of 32
        cents in the preceding quarter, a reduction of 84%

      --  Total 12 month backlog now stands at $60.5 million, with a
        total pipeline of $227 million compared with $62.2 million and
        $224 million respectively in the preceding quarter.

      --  With the Company's adoption of SFAS No. 142 "Goodwill and
        Other Intangible Assets", goodwill is no longer subject to
        amortization. The goodwill amortization for the period would
        have been $109,000.

      Commenting on the quarter, Isaac Gaon, Chairman and CEO said, "Our
first quarter results clearly demonstrate a highly successful
turnaround as a result of our broad and deep restructuring efforts
over the past nine months. All aspects of our operations have improved
significantly versus the previous quarter and we see these positive
trends continuing throughout the year. Our cash flow and profit
break-even points are now substantially reduced which positions us
extraordinarily well going forward."
      Mr. Gaon continued, "While business conditions remain challenging
in the technology industry as a whole, Datatec's indirect sales model
is providing us with an increasing number of business relationships
and growth opportunities that should offset any further contraction
within our industry. This gives us confidence that when economic
conditions eventually do improve, Datatec's growth and profit
potential will be enormous. I would also like to emphasize how very
pleased I am to welcome Ray Koch back to Datatec. Ray's extensive
experience and business acumen will allow us to accelerate our strong
recovery, thus permitting me to focus my efforts on immediate
financial and longer range strategic issues."
      Datatec will discuss its first quarter results in an investor
conference call on Monday September 17, 2001 at 8:30 a.m. EDT.
Conference call details are:

           US & Canada Toll Free              888-566-5786
           International                      415-228-3901
           Password                           Q1
           Conference Leader                  Bob Engelberg

      About Datatec Systems, Inc.

      Fairfield, NJ-based Datatec Systems specializes in the rapid,
large-scale market absorption of networking technologies. Datatec's
deployment services utilize a software-enabled implementation model to
configure, integrate and roll out new technology solutions using a
"best practices" structured process. Its customers include Fortune
1000 companies and world-class technology providers. Datatec stock is
listed on the Nasdaq Stock Market (DATC). For more information, visit
http://www.datatec.com .

      This Press Release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Such forward-looking
statements involve risks and uncertainties which may cause the actual
results or objectives to be materially different from those expressed
or implied by such forward-looking statements.
-0-


                         DATATEC SYSTEMS, INC.
                      CONSOLIDATED BALANCE SHEETS


                                  April 30, 2001     July 31, 2001

ASSETS

 CURRENT ASSETS

  CASH & CASH EQUIVALENTS              571,000          172,000
  ACCOUNTS RECEIVABLE, NET          22,990,000       23,819,000
  INVENTORY                          5,273,000        4,343,000
  PREPAID EXPENSES & OTHER             792,000          718,000

                                    ----------       ----------
   TOTAL CURRENT ASSETS             29,626,000       29,052,000

 LONG TERM ASSETS

  PROPERTY & EQUIPMENT, NET          5,050,000        4,659,000
  GOODWILL                           2,665,000        2,665,000
  OTHER ASSETS                       6,155,000        5,671,000

                                    ----------       ----------
   TOTAL LONG TERM ASSETS           13,870,000       12,995,000

                                    ----------       ----------
  TOTAL ASSETS                      43,496,000       42,047,000
                                    ==========       ==========

LIABILITIES & SHAREHOLDERS'
 EQUITY (DEFICIT)

 CURRENT LIABILITIES

  SHORT TERM DEBT                   14,122,000       17,553,000
  ACCOUNTS PAYABLE & ACCRUED
   LIABILITIES                      17,402,000       14,206,000
  DUE TO RELATED PARTIES             1,414,000        1,414,000

                                    ----------       ----------
   TOTAL CURRENT LIABILITIES        32,938,000       33,173,000

  LONG TERM DEBT                        14,000                0

  MINORITY INTEREST                  9,675,000        9,695,000

SHAREHOLDERS' EQUITY (DEFICIT)         869,000         (821,000)

                                    ----------       ----------
 TOTAL LIABILITIES &
  SHAREHOLDERS' EQUITY
  (DEFICIT)                         43,496,000       42,047,000
                                    ==========       ==========


                         Datatec Systems, Inc.
                 Consolidated Statements of Operations


                           Q1 FY 02       Q1 FY 01       Q1 FY 01
                           For the        For the        For the
                         Period Ended   Period Ended   Period Ended
                         July 31, 2001  July 31,2000   April 30,2001

Revenue                   18,248,000     24,663,000    15,647,000

Cost of Goods Sold        11,874,000     16,027,000    13,637,000

Gross Profit               6,374,000      8,636,000     2,010,000
Gross Profit Margin               35%            35%           13%

SG&A Expense               7,403,000      9,064,000    11,795,000

Operating Loss            (1,029,000)      (428,000)   (9,785,000)

Interest expense, net        582,000        325,000       537,000

Income Tax Expense                 -              -       400,000

Income before Minority
 Interest                 (1,611,000)      (753,000)  (10,722,000)

Minority Interest            170,000        171,000       170,000

Net Loss                  (1,781,000)      (924,000)  (10,892,000)

Earnings per share              (.05)          (.03)         (.32)

Weighted average
 shares outstanding       33,844,000     33,463,000    33,741,000



                         Datatec Systems, Inc.
                            EBITDA Analysis

                         Q1 FY 02       Q1 FY 01        Q4 FY 01

Revenue
   Deployment          17,423,000      23,584,000      15,529,000
   eDeploy                825,000       1,079,000         118,000

                       ----------      ----------      ----------
Total Revenue          18,248,000      24,663,000      15,647,000
                       ----------      ----------      ----------

EBITDA                    201,000         720,000      (8,167,000)

Depreciation &
 Amortization           1,230,000       1,148,000       1,618,000
Interest & Minority
 Interest                 752,000         496,000         707,000
Income Taxes                    -               -         400,000

                        ---------       ---------      ----------
Net Income (Loss)      (1,781,000)       (924,000)    (10,892,000)
                        =========       =========      ==========


    --30--nf/ny*

    CONTACT: Datatec Systems, Fairfield
             Bob Engelberg, 905/477-9977, ext. 239
             [e-mail]

    KEYWORD: NEW JERSEY
    INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS SOFTWARE CONFERENCE CALLS
 EARNINGS
    SOURCE: Datatec Systems