8-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 8-K


                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

       Date of Report (Date of earliest event reported) September 24, 2004
                                                        ------------------

                              DATATEC SYSTEMS, INC.
                             ----------------------
               (Exact Name of Registrant as Specified in Charter)


        Delaware                      000-20688                 94-2914253
        --------                      ---------                 ----------
(State or Other Jurisdiction         (Commission             (IRS Employer
     of Incorporation)               File Number)            Identification No.)


               1275 Alderman Drive, Alpharetta, GA           30005
          -------------------------------------------------------------
             (Address of Principal Executive Offices)      (Zip Code)

        Registrant's telephone number, including area code (770) 667-8488
                                                           --------------


                      23 Madison Road, Fairfield, NJ 07004
          -------------------------------------------------------------
          (Former Name or Former Address, if Changed Since Last Report)


          Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

          |_| Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)

          |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)

          |_| Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))

          |_| Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))





ITEM 1.02    TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.

          Datatec Industries, Inc. and IBM Credit LLC ("IBM") are parties to
that certain Working Capital Financing Agreement (IWCF) dated November 10, 2000
(the "Credit Facility"). As of July 1, 2004, Datatec Industries, Inc. entered
into a Second Amended and Restated Forbearance Agreement (the "Agreement") with
IBM in which IBM, subject to the satisfaction of certain conditions, agreed to
forbear certain loan defaults, increase the principal amount of the Credit
Facility and extend the term of the Credit Facility to August 31, 2005. All of
such conditions have not been met. Accordingly, on September 24, 2004, Datatec
Systems, Inc. and Datatec Industries, Inc. received notification from IBM that
it is terminating its forbearance under the Agreement. In addition, the
notification contains declaration of additional defaults. A copy of the
notification from IBM is attached hereto as Exhibit 99.1 and incorporated herein
by reference.

ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS.

      (c)    Exhibits.

             Exhibit No.     Description
             -----------     -----------

             99.1            Letter dated September 24, 2004 from IBM Credit LLC
                             to Datatec Industries, Inc. regarding termination
                             of its agreement to forbear.





                                   SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.



                                        DATATEC SYSTEMS, INC.
                                             (Registrant)



Date:       September 24, 2004          By: /s/ Richard K. Davis
                                           -------------------------------------
                                        Name:  Richard K. Davis
                                        Title: Vice President and General
                                               Counsel

EX-99

                       [GRAPHIC OMITTED][GRAPHIC OMITTED]

                                                                    Exhibit 99.1

September 24, 2004


Datatec Industries, Inc.
23 Madison Road
Fairfleld, NJ 07004

Attn.: Mr. Rod Dorsey
Chief Financial Officer

Re: Termination of IBM Credit's agreement to forbear

Dear Mr. Dorsey:

Reference is hereby made to the Inventory and Working Capital Financing
Agreement (IWCF) dated November 10, 2000 by and between Datatec Industries, Inc.
("Datatec") and IBM Credit LLC ("IBM Credit") (as amended, supplemented and
otherwise modified from time to time, the "Credit Agreement"), and the Second
Amended and Restated Forbearance Agreement dated July 1, 2004 (the
"Forbearance"). All capitalized terms not herein defined shall have the meaning
set forth in the Credit Agreement or the Forbearance.

Datatec has failed to meet its monthly Minimum Monthly Net Income financial
covenant for the month of July 2004 (actual of ($479,365) against a covenant of
$450,000). In addition, Datatec failed to provide its monthly balance sheet and
cash flow statements for the month ending July 31, 2004. Each such failure
represents an additional Default under the Forbearance (such Defaults, the "July
Defaults"). The July Defaults shall be deemed additional Events of Default.
Therefore Datatec has failed to meet a condition of the Forbearance that no
additional Default or Event of Default shall occur.

As a result of the July Default, and the projections received from Datatec
forecasting that Datatec will not meet its Minimum Monthly Net Income for the
remainder of 2004 (an admission which IBM Credit deems to be a failure by
Datatec to satisfy the condition set forth in Section 6.(G) of the Forbearance),
IBM Credit elects to terminate its agreement to forbear. Effective immediately,
(i) any future advances or other financial accommodations to Datatec shall be at
the discretion of IBM Credit, and (ii) all cash and proceeds of Accounts
received to the Special Account shall be applied to the Obligations of Datatec.

Datatec will not make distributions, loans, advances, contributions or payments
of money or goods to any Affiliate, Subsidiary or parent company or any officer,
director or stockholder of Datatec or its Affiliates, Subsidiaries, or parent
company except as is allowed in Section 8.14 of the Credit Agreement. Datatec
shall continue to pay when due all amounts under the Credit Agreement and to
direct all payments by Datatec's Account debtors to the Lockbox. IBM Credit





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retains all of its rights and remedies contained in the Forbearance, the Credit
Agreement and the Guaranties, including the right to make immediate demand as a
result of Datatec's Existing Events of Default, the July Defaults or any other
Event of Default as provided thereunder. IBM Credit may exercise any and all
rights and remedies of a secured party under the Uniform Commercial Code and any
other rights and remedies it may have under applicable law. Neither this
termination, nor any of IBM Credit's actions or inaction shall be deemed to be a
waiver of any such rights or remedies.

This letter does not constitute an amendment of the Credit Agreement or the
Forbearance. IBM Credit does not waive or consent to any existing Defaults
including but not limited to any other Events of Default which may have occurred
in addition to those referenced in the Forbearance. IBM Credit expects Datatec,
at all times, to strictly adhere to all provisions of the Credit Agreement and
the Forbearance and to perform its obligations thereunder accordingly.


Sincerely,


/s/ Thomas Harahan
Thomas Harahan
Manager, Credit


Cc:  H&H Communications, Inc. (Guarantor)
     Datatec Systems, Inc. (Guarantor)
     Bruce Gordon (IBM Credit)
     Sam Koda (IBM Credit)