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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB
(MARK ONE)

    (X)    QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

                 For the Quarterly Period Ended: March 31, 2006

                                       OR

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

              For the transition period from _________ to _________

                         COMMISSION FILE NUMBER 0-15885

                           NATIONAL DATACOMPUTER, INC.
        (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                       04-2942832
(STATE OR OTHER JURISDICTION OF                  (IRS EMPLOYER IDENTIFICATION #)
 INCORPORATION OR ORGANIZATION)

                   900 MIDDLESEX TURNPIKE, BILLERICA, MA 01821
               (Address of principal executive offices) (Zip Code)

        REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: (978) 663-7677

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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such report(s), and (2)
has been subject to such filing requirements for the past ninety (90) days.
[x] Yes [ ] No

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [ ] Yes [x] No

The number of shares of the Registrant's common stock, par value $0.08,
outstanding as of May 15, 2006 was 22,586,681.
================================================================================
<PAGE>

                           NATIONAL DATACOMPUTER, INC.
                                      INDEX
                          PART I. FINANCIAL INFORMATION

                                                                        Page No.
                                                                        --------
ITEM 1. FINANCIAL STATEMENTS:

        Balance Sheets as of March 31, 2006 (unaudited)
        and December 31, 2005 ..............................................3

        Statements of Operations for the three months ended
        March 31, 2006 and 2005 (unaudited).................................4

        Statement of Stockholders' Equity (Deficit) for the
        three months Ended March 31, 2006 (unaudited).......................5

        Statements of Cash Flows for the three months ended
        March 31, 2006 and 2005 (unaudited).................................6

        Notes to Financial Statements.......................................7


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..........13

ITEM 3. CONTROLS AND PROCEDURES............................................17


                           PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings..................................................18

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds........18

ITEM 3. Defaults upon Senior Securities....................................18

ITEM 4. Submissions of Matters to a Vote of Security Holders...............18

ITEM 5. Other Information..................................................18

ITEM 6. Exhibits...........................................................18


SIGNATURES.................................................................19

EXHIBIT INDEX..............................................................20

                                        2
<PAGE>

                           NATIONAL DATACOMPUTER, INC.
                                  BALANCE SHEET
                                   (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE><CAPTION>
                                                                  March 31,       December 31,
                                                                    2006              2005
                                                                ------------      ------------
<S>                                                             <C>               <C>
Assets
Current Assets:
     Cash                                                       $    109,923      $    125,508
     Accounts receivable, net of allowance for
        doubtful accounts of $1,296                                  183,974           139,161
     Inventories                                                     190,713           175,919
     Prepaid expenses                                                 45,924            47,008
                                                                ------------      ------------
       Total current assets                                          530,534           487,596
Property and equipment, net                                           64,832            64,274
Capitalized software development costs, net                           25,270            37,021
                                                                ------------      ------------
       Total Assets                                             $    620,636      $    588,891
                                                                ============      ============

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
     Current obligations under capital lease                    $      3,615      $      3,544
     Notes payable, current portion                                   73,391            54,000
     Accounts payable                                                326,858           317,279
     Customer deposits                                               197,277           256,756
     Accrued payroll and related taxes                               146,637           157,627
     Other accrued expenses                                           89,748            78,174
     Deferred revenues                                               439,848           349,286
                                                                ------------      ------------
       Total current liabilities                                   1,277,374         1,216,666
Note payable, net of current portion                                  29,216              --
Obligations under capital lease, net of current portion                8,744             9,450
                                                                ------------      ------------
       Total Liabilities                                           1,315,334         1,226,116
                                                                ------------      ------------

Convertible Preferred Stock                                        4,072,721         4,005,971
                                                                ------------      ------------

Commitments

Stockholders' Equity (Deficit):
     Preferred stock, Series A convertible, $0.001
       par value; 20 shares authorized; no shares issued
       or outstanding                                                   --                --

     Common stock, $0.08 par value; 30,000,000 shares
       authorized; 22,586,681 shares issued and outstanding
       at March 31, 2006 and December 31, 2005                     1,806,933         1,806,933

     Capital in excess of par value                               12,733,072        12,733,072
     Accumulated deficit                                         (19,307,424)      (19,183,201)
                                                                ------------      ------------
       Total Stockholders' Equity (Deficit)                       (4,767,419)       (4,643,196)
                                                                ------------      ------------
       Total Liabilities and Stockholders' Equity (Deficit)     $    620,636      $    588,891
                                                                ============      ============
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.

                                        3
<PAGE>

                           NATIONAL DATACOMPUTER, INC.
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)
--------------------------------------------------------------------------------
<TABLE><CAPTION>
                                                                      Three Months Ended
                                                                ------------------------------
                                                                  March 31,         March 31,
                                                                    2006              2005
                                                                ------------      ------------
<S>                                                             <C>               <C>
Revenues:
    Product                                                     $    308,522      $    507,588
    Services                                                         463,015           295,289
                                                                ------------      ------------
       Total Revenues                                                771,537           802,877

Cost of revenues                                                     392,598           401,666
                                                                ------------      ------------

       Gross Profit                                                  378,939           401,211
                                                                ------------      ------------

Operating expenses:
    Research and development                                          80,439            94,461
    Selling and marketing                                            115,432           139,342
    General and administrative                                       238,811           275,797
                                                                ------------      ------------
                                                                     434,682           509,600
                                                                ------------      ------------
Loss from operations                                                 (55,743)         (108,389)

Other income (expense):
    Interest income                                                      263             1,064
    Gain on currency exchange                                            656              --
    Interest expense                                                  (2,649)           (1,053)
                                                                ------------      ------------
Net loss                                                        $    (57,473)     $   (108,378)
                                                                ============      ============

Calculation of net loss per common share:

Net loss                                                        $    (57,473)     $   (108,378)
Preferred stock preferences                                          (66,750)          (66,750)
                                                                ------------      ------------
Net loss attributable to common stockholders                    $   (124,223)     $   (175,128)
                                                                ============      ============
Basic and diluted net loss per share attributable to
    common stockholders                                         $      (0.01)     $      (0.01)
                                                                ============      ============
Weighted average shares outstanding                               22,586,681        22,134,181
                                                                ============      ============
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.

                                        4
<PAGE>

                          NATIONAL DATACOMPUTER, INC.
                  STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                                  (Unaudited)
--------------------------------------------------------------------------------
<TABLE><CAPTION>
                                                 Common Stock
                                ----------------------------------------------
                                                                   Capital in                           Total
                                                     Par             excess        Accumulated      stockholders'
                                   Shares           value         of par value       deficit       equity (deficit)
                                ------------     ------------     ------------     ------------      ------------
<S>                               <C>            <C>              <C>              <C>               <C>
Balance at January 1, 2006        22,586,681     $  1,806,933     $ 12,733,072     ($19,183,201)     ($ 4,643,196)

Net loss                                --               --               --            (57,473)          (57,473)

Interest on preferred stock             --               --               --            (66,750)          (66,750)
                                ------------     ------------     ------------     ------------      ------------
Balance at March 31, 2006         22,586,681     $  1,806,933     $ 12,733,072     ($19,307,424)     ($ 4,767,419)
                                ============     ============     ============     ============      ============
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.

                                        5
<PAGE>

                           NATIONAL DATACOMPUTER, INC.
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
--------------------------------------------------------------------------------
<TABLE><CAPTION>
                                                                       Three Months Ended
                                                                ------------------------------

                                                                  March 31,         March 31,
                                                                    2006              2005
                                                                ------------      ------------
<S>                                                             <C>               <C>
Cash flows from operating activities:
     Net loss                                                   $    (57,473)     $   (108,378)
     Adjustments to reconcile net loss to net
         cash provided by (used for) operating activities:
         Interest on loan                                              2,033              --
         Depreciation and amortization                                24,476            32,288
         Changes in assets and liabilities:
             Increase in accounts receivable                         (44,813)          (39,472)
             (Increase) decrease in inventories                      (14,794)           45,794
             Decrease (increase) in other current assets               1,084           (10,121)
             Increase in accounts payable                             62,153            28,594
             Decrease in customer deposits                           (59,479)          (13,171)
             Increase in accrued expenses                                583            12,297
             Increase (decrease) in deferred revenues                 90,562           (77,142)
                                                                ------------      ------------
     Net cash provided by (used for) operating activities              4,332          (129,311)
                                                                ------------      ------------

Cash flows from investing activities:
     Purchases of property and equipment                             (13,282)           (5,607)

                                                                ------------      ------------
     Net cash used for investing activities                          (13,282)           (5,607)
                                                                ------------      ------------

Cash flows from financing activities:
     Principal payment on note payable                                (6,000)             --
     Principal payments on obligations
         under capital lease                                            (635)           (6,270)
                                                                ------------      ------------
     Net cash used for financing activities                           (6,635)           (6,270)
                                                                ------------      ------------

Net decrease in cash                                                 (15,585)         (141,188)
Cash, beginning of period                                            125,508           266,463
                                                                ------------      ------------

Cash, end of period                                             $    109,923      $    125,275
                                                                ============      ============

Supplemental Disclosure of Cash Flow Information:

     Cash paid for interest                                     $        616      $      1,053
     Non-cash investing and financing activities:
         Accrued interest on preferred stock charged to
             accumulated deficit                                $     66,750      $     66,750
         Accounts payable converted to note payable             $     52,574      $       --
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.

                                        6
<PAGE>

                           NATIONAL DATACOMPUTER, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. ORGANIZATION

     National Datacomputer, Inc. (the "Company") designs, manufactures, services
and distributes rugged, programmable hand-held computers, data collection
devices, printers and associated accessories. We are also a leading implementer
of software solutions, such as our Microsoft(TM) DOS(R)-based RouteRider proDUCT
and the Microsoft(TM) Pocket PC(R)-based RouteRider LE product, for people who
need portable solutions in THE field rather than at a desk. We also provide
additional software solutions specific to the inventory service market.

     BASIS OF PRESENTATION

     The financial statements included in this report have been prepared by the
Company pursuant to the rules and regulations of the Unites States Securities
and Exchange Commission for interim financial reporting and include all
adjustments (consisting only of normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation). These financial
statements have not been audited.

     Certain information and footnotes disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted pursuant
to such rules and regulations for interim reporting. The Company believes that
the disclosures contained herein are adequate to make the information presented
not misleading. However, these financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's annual report for the year ended December 31, 2005, which are included
in the Company's Form 10-KSB.

     The year-end condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
accounting principles generally accepted in the United States of America.

     LIQUIDITY AND CAPITAL RESOURCES

     The Company has incurred an accumulated deficit of approximately $19.3
million through March 31, 2006. As a result of this accumulated deficit and our
cash position, the report of our independent registered public accounting firm
relating to the financial statements as of and for the year ended December 31,
2005 contains an explanatory paragraph regarding substantial doubt about the
Company's ability to continue as a going concern. The Company's plans to address
the situation are

                                        7
<PAGE>

presented below. However, there are no assurances that these plans will be
successful or sufficient.

     In the event our operations continue to be unprofitable or do not generate
sufficient cash to fund the business, or if we fail to obtain additional
financing, management will have to substantially reduce its level of operations.
These circumstances raise substantial doubt about our ability to continue as a
going concern. These financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

     As of March 31, 2006, the Company had approximately $110,000 in cash. In
order to improve our cash position, we have taken a number of steps to reduce
and control our expenses. During the fourth quarter of 2005 and the first
quarter of 2006 we initiated cost reduction programs such as reducing our
manpower by approximately 21%, decreasing our facilities by approximately 25%
and diminishing our health insurance premiums by increasing employees'
contributions. These programs will be instrumental in reducing our annual
operating expenses by approximately $650,000, and we believe that based on our
current level of expenses and sales we currently have sufficient cash to fund
our operations through the end of 2006.

     We have re-aligned our spending from administration and manufacturing to
maintain key development programs while carefully managing our overall cash
usage. We are exploring all opportunities to improve our financial condition by
aggressively pursuing sales potentials. There is a possibility that the latter
might not result in adequate revenues in the near future to meet cash flow
requirements, and therefore might require us to implement further cost saving
action or attempt to obtain additional financing.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     USE OF ESTIMATES

     The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.

     REVENUE RECOGNITION

     We recognize revenue when there is persuasive evidence of an arrangement,
title and risk of loss have passed, delivery has occurred or the services have
been rendered, the sales price is fixed or determinable and collection of the
related receivable is reasonably assured. Title and risk of loss passes to the
customer at the time of delivery of the product to a common carrier. At the time
of the transaction, we assess

                                        8
<PAGE>

whether the sales price is fixed or determinable based upon the payment terms of
the arrangement. If a significant portion of the sales price is not due with
normal payment terms, the sales price may not be deemed fixed and revenue would
be recognized as the amounts become due.

     Our product revenue is recognized upon delivery provided that customer
acceptance criteria can be demonstrated prior to shipment. Where the criteria
cannot be demonstrated prior to shipment, or in the case of new products,
revenue is deferred until acceptance has been received. We recognize revenue for
maintenance services ratably over the contract term, which is generally one year
or less.

     WARRANTY AND RETURN POLICY

     The Company's warranty policy provides 90-day coverage on all parts and
labor on all products. The policy with respect to sales returns provides that a
customer may not return inventory except at the Company's option. The Company's
warranty costs have historically been insignificant.

     ACCOUNTS RECEIVABLE

     The Company records trade receivables at their principal amount, adjusted
for write-offs and allowances for uncollectable amounts. The Company reviews its
trade receivables monthly, and determines, based on management's knowledge and
the customer's payment history, any write-off or allowance that may be
necessary. The Company follows the practice of writing off uncollectable amounts
against the allowance provided for such accounts.

     INVENTORIES

     Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method. The Company evaluates its
inventories to determine excess or slow moving products based on quantities on
hand, current orders and expected future demand. For those items in which the
Company believes it has an excess supply or for those items that are obsolete,
the Company estimates the net amount that the Company expects to realize from
the sale of such products and records an allowance.

     SHIPPING AND HANDLING COSTS

     Shipping and handling costs are classified as a component of cost of goods
sold. The Company accounts for shipping and handling costs passed on to
customers as revenues.

                                        9
<PAGE>

     PROPERTY AND EQUIPMENT

     Property and equipment are recorded at cost and depreciated over the
estimated useful lives of the assets using the straight-line method. Leasehold
improvements are amortized over the shorter of the useful lives or the remaining
terms of the related leases. Maintenance and repair costs are charged to
operations as incurred.

     LONG-LIVED ASSETS

     In accordance with Statement of Financial Accounting Standards ("SFAS") No.
144 "Accounting for the Impairment or Disposal of Long-Lived Assets," the
Company reviews the carrying values of its long-lived assets for possible
impairment whenever events or changes in circumstances indicate that the
carrying amounts of the assets may not be recoverable. Any long-lived assets
held for disposal are reported at the lower of their carrying amounts or fair
values less costs to sell.

     CAPITALIZED SOFTWARE DEVELOPMENT COSTS

     Costs associated with the development of computer software are charged to
operations prior to establishment of technological feasibility, as defined by
SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased,
or Otherwise Marketed". Costs incurred subsequent to the establishment of
technological feasibility and prior to the general release of the products are
capitalized.

     Capitalized software costs are amortized on a product-by-product basis. The
annual amortization is the greater of the amount computed using (a) the ratio
that current gross revenue for a product bears to the total of current and
anticipated future gross revenues for that product or (b) the straight-line
method over the remaining estimated economic life of the product. Amortization
begins when the product is available for general release to the customer.

     INCOME TAXES

     The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires the recognition of deferred taxes
for the difference between the financial statement and tax bases of assets and
liabilities, utilizing current tax rates. Deferred tax benefit or expense is
recognized as a result of the change in the deferred asset or liability during
the year. Valuation allowances are established, if necessary, to reduce the
deferred tax asset to the amount that will more likely than not be realized.

     NET LOSS PER SHARE

     Basic net loss per share is computed by dividing net loss, after deducting
certain amounts associated with the Company's preferred stock, by the weighted
average

                                       10
<PAGE>

number of common shares outstanding for the period. Diluted earnings per share
is computed using the weighted average number of common shares outstanding and
gives effect to all dilutive common share equivalents outstanding during the
period.

     Common share equivalents consist of 2,328,784 and 2,380,209 shares of
common stock which may be issuable upon exercise of outstanding stock options,
warrants, and the conversion of preferred stock at March 31, 2006 and 2005,
respectively. All common share equivalents have been excluded from the
calculation of weighted average shares outstanding, as their inclusion would be
anti-dilutive.

     Interest payable to preferred stockholders, the fair value of inducements
to convert preferred stock into common stock, and any discounts implicit in the
conversion terms upon issuance of preferred stock are subtracted from the net
loss to determine the amount of net loss attributable to common stockholders.

     SHARE-BASED COMPENSATION

     Effective January 1, 2006, the Company adopted the provisions of Statement
of Financial Accounting Standards (SFAS) 123R, SHARE-BASED PAYMENT, which
establishes accounting for equity instruments exchanged for employee services.
Under the provisions of SFAS 123(R), share-based compensation cost is measured
at the grant date, based on the fair value of the award, and is recognized as an
expense over the employee's requisite service period (generally the vesting
period of the equity grant). Prior to January 1, 2006, the Company accounted for
share-based compensation to employees in accordance with Accounting Principles
Board (APB) Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and
related interpretations. The Company also followed the disclosure requirements
of SFAS 123, ACCOUNTING FOR STOCK-BASED COMPENSATION. The Company elected to
adopt the modified prospective transition method as provided by SFAS 123(R) and,
accordingly, financial statement amounts for the prior periods presented in the
Form 10-QSB have not been restated to reflect the fair value method of expensing
share-based compensation.

     The Company estimates the fair value of stock options using the
Black-Scholes valuation model. Key input assumptions used to estimate the fair
value of stock options include the exercise price of the award, the expected
option term, the expected volatility of the Company's stock over the option's
expected term, the risk-free interest rate over the option's expected term, and
the Company's expected annual dividend yield. The Company believes that the
valuation technique and the approach utilized to develop the underlying
assumptions are appropriate in calculating the fair values of the Company's
stock options. Estimates of fair value are not intended to predict actual future
events or the value ultimately realized by persons who receive equity awards.

     At the date of adoption, there were no unvested options outstanding and no
options were granted during the quarter ended March 31, 2006. Consequently,
there was no

                                       11
<PAGE>

share-based compensation expense recorded during the quarter ended March 31,
2006.

     Additionally, for the quarter ended March 31, 2005, there was no proforma
disclosure of stock based compensation expense because there were no unvested
options outstanding as of the beginning of the quarter and no options granted
during the quarter.

3. STOCK OPTIONS

     On August 19, 1997, the Board of Directors adopted the 1997 Stock Option
Plan ("1997 Plan") which provided for issuance of both incentive stock options
and non-qualified options to employees. A maximum of 200,000 shares of common
stock was reserved for issuance in accordance with the terms of the 1997 Plan.
The 1997 Plan now only provides for the issuance of non-qualified options since
stockholder approval was not obtained. As of March 31, 2006, there were options
to purchase 200,000 shares of common stock outstanding and no shares available
for grant under the 1997 Plan.

     On January 1, 1998, the Board of Directors adopted the 1998 Stock Option
Plan ("1998 Plan") which provides for issuance of non-qualified options to
employees. A maximum of 300,000 shares of common stock of the Company was
reserved for issuance in accordance with the terms of the 1998 Plan. As of March
31, 2006, there were options to purchase 20,000 shares of common stock
outstanding and 250,000 shares available for grant under the 1998 Plan.

     The following table summarizes information about stock options outstanding
at March 31, 2006:

                                                                    Weighted
                               Weighted average                 Average exercise
                                  Remaining        Number of        price of
   Exercise        Number     Contractual life,     Options         options
    price       Outstanding       In years        Exercisable     Exercisable
   --------     -----------   -----------------   -----------   ----------------

     $0.75        220,000            3.4            220,000          $0.75



                                       12
<PAGE>

4. INVENTORIES

     Inventories consist of the following:        MARCH 31,     DECEMBER 31,
                                                    2006            2005
                                                 ---------       ---------
     Raw material                                $ 119,744       $  84,496
     Work-in-process                                18,039          79,232
     Finished goods                                 52,930          12,191
                                                 ---------       ---------

                                   Total         $ 190,713       $ 175,919
                                                 =========       =========


ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

OVERVIEW

     Our mission is to provide solutions through the use of mobile information
systems in the distribution and inventory control market segment within the
product supply chain. We design, manufacture, market, sell, and service
computerized systems used to automate the collection, processing, and
communication of information related to product sales and inventory control. Our
products and services include data communication, application-specific software,
hand-held computers, related peripherals, and accessories, as well as associated
education and support services for our hardware and software products. We were
organized as a Delaware corporation in 1986 and began active operations in 1987
following our merger with an established computer systems engineering business.
Since that time we have delivered hardware and software solutions to the
distribution and inventory audit markets we have targeted.

     Our hand-held Datacomputer computers include a microprocessor, keyboard,
LCD displays, and full alphabetic and numeric character sets. Our Datacomputers
are designed to be highly reliable, tolerant to human error, and easy to use.
They are shock resistant, and operate over a wide temperature range. Our current
generation Datacomputer, the DC5, was launched in the beginning of 2001 into the
Inventory Audit Specialist marketplace. The DC5 is designed as a rugged,
Microsoft Windows CE based mobile Datacomputer with optional radio frequency
(RF) connectivity to provide fast, real-time, wireless transmission of collected
data to a host computer, a process that can greatly reduce the cost of inventory
data collection and management.

     We are also a leading implementer of software solutions, such as our
Microsoft(TM) DOS(R)-based RouteRIDER product and the Microsoft(TM) Pocket
PC(R)-based RouteRider LE product, for people who need portable solutionS IN the
field rather than at a desk. We also provide additional software solutions
specific to the inventory service market.

                                       13
<PAGE>

RESULTS OF OPERATIONS

     THREE MONTHS ENDED MARCH 31, 2006 COMPARED TO THREE MONTHS ENDED MARCH 31,
2005.

     For the three months ended March 31, 2006 (the "2006 Period"), we reported
a net loss of $57,473 compared to a net loss of $108,378 for the three months
ended March 31, 2005 (the "2005 Period").

     Our total revenues for the 2006 Period decreased 4% to $771,537 from
$802,877 for the 2005 Period.

     Product revenues for the 2006 Period decreased 39% to $308,522 compared to
$507,588 for the 2005 Period. The decrease is a direct result of fewer sales of
our route service products running our original DOS-based version RouteRider
software as we migrate over to our new generation software product, RouteRider
LE ("RRLE"). RRLE is a portable and highly parameterized Route Accounting
solution, which is designed to run on industry standard operating systems (e.g.
Microsoft's PocketPC 2002, PocketPC 2003 and soon WindowsMobile2005), databases
and utilizes cellular, Wi-Fi, and Bluetooth communications protocols. We
currently have a backlog for RRLE of approximately $700,000 which we expect will
be shipped by the second quarter of 2006.

     Service revenues for the 2006 Period increased 57% to $463,015 compared to
$295,289 for the 2005 Period. This increase is a result of revenue recognized
for the implementation and training of our new RRLE software.

     Gross profit for the 2006 Period was $378,939 or 49% of revenues as
compared to $401,211 or 50% of revenues for the 2005 Period. The slight decrease
in gross profit is due to decreased product revenues.

     OPERATING EXPENSES

     Total operating expenses for the 2006 Period decreased 15% to $434,682
compared to $509,600 for the 2005 Period.

Operating expenses consist of the following for the three months ended:

                                       14
<PAGE>

--------------------------------------------------------------------------------
                                                    VARIANCE IN     VARIANCE IN
                              2006        2005          $'S              %
-------------------------  ----------  ----------  -------------  --------------
Research and development    $ 80,439    $ 94,461     ($14,022)         (15%)
-------------------------  ----------  ----------  -------------  --------------
Selling and marketing        115,432     139,342      (23,910)         (17%)
-------------------------  ----------  ----------  -------------  --------------
General and
administrative               238,811     275,797      (36,986)         (13%)
-------------------------  ----------  ----------  -------------  --------------
         TOTAL              $434,682    $509,600     ($74,918)         (15%)
--------------------------------------------------------------------------------

     Research and development expenses for the 2006 Period decreased 15% to
$80,439 compared to $94,461 for the 2005 Period. The decrease is due to planned
reductions in personnel and in the use of outside subcontractors as a result of
diminished spending on internally developed product software.

     Selling and marketing expenses for the 2006 Period decreased 17% to
$115,432 compared to $139,342 for the 2005 Period. The decreased is due to
planned reduction in personnel and in the use of outside consultants.

     General and administrative expenses for the 2006 Period decreased 13% to
$238,811 compared to $275,797 for the 2005 Period. The decrease is due to
planned reduction in personnel, lower professional fees and lower rental
expenses as a result of reduced space facilities.

     LIQUIDITY AND CAPITAL RESOURCES

     We had a negative working capital of $746,840 as of March 31, 2006 as
compared to a negative working capital of $729,070 as of December 31, 2005.
During the three months ended March 31, 2006, our operating activities provided
cash of $4,332. Our principal operating cash requirements were to fund our loss
from operations of $57,473, along with an increase in trade receivable of
$44,813, an increase in inventory of $14,794, and a decrease in customer
deposits of $59,479 partially offset by an increase in deferred revenue of
$90,562, an increase in accounts payable of $62,153 and non-cash activities for
depreciation and amortization of $24,476.

     During the three months ended March 31, 2006, we used cash of $13,282 for
investing activities. The cash was used for the purchase of capital equipment.
As of March 31, 2006, we had no material commitments for capital expenditures.

     During the three months ended March 31, 2006, we used cash of $6,635 to
make payments on obligations under our notes payable and capital leases.

                                       15
<PAGE>

     We have an accumulated deficit of approximately $19,307,000 through March
31, 2006. As a result of this accumulated deficit and our cash position, the
report of our independent registered public accounting firm contained an
explanatory paragraph regarding substantial doubt about the Company's ability to
continue as a going concern at December 31, 2005. The Company's plans to address
the situation are presented below. However, there are no assurances that these
plans will be successful or sufficient.

     In order to improve our cash position, we have taken a number of steps to
reduce and control our expenses. During the fourth quarter of 2005 and the first
quarter of 2006 we initiated cost reduction programs such as reducing our
manpower by approximately 21%, decreasing our space facilities by approximately
25% and diminishing our health insurance premiums by increasing employees'
contribution. These programs will be instrumental in reducing our annual
operating expenses by approximately $650,000. We believe that based on our
current revenue expectations, the expected timing of such revenues, and our
current level of expenses we have sufficient cash to fund our operations through
the end of 2006.

     We have re-aligned our spending from administration and manufacturing to
maintain key development programs while carefully managing our overall cash
usage. We are exploring all opportunities to improve our financial condition by
aggressively pursuing sales potentials. There is a possibility that the latter
might not result in adequate revenues in the near future to meet cash flow
requirements, and therefore might require us to implement further cost saving
action or attempt to obtain additional financing.

    We maintain adequate levels of inventory and have not experienced any
interruption of supplies or services from vendors.

FORWARD LOOKING STATEMENTS

     The foregoing discussion and analysis should be read in conjunction with
the unaudited financial statements and notes thereto appearing elsewhere herein
and our Annual Report on Form 10-KSB filed with the Securities and Exchange
Commission for the year ended December 31, 2005.

     This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
that involve risks and uncertainties. We generally use words such as "believe,"
"may," "could," "will," "intend," "expect," "anticipate," "plan," and similar
expressions to identify forward-looking statements. You should not place undue
reliance on these forward-looking statements. Our actual results could differ
materially from those anticipated in the forward-looking statements for many
reasons, including the risks described above and elsewhere in this report.

     Although we believe the expectations reflected in the forward-looking
statements are reasonable, they relate only to events as of the date on which
the statements are made, and we cannot assure you that our future results,
levels of activity, performance or achievements will meet these expectations.
Moreover, neither we nor any other person

                                       16
<PAGE>

assumes responsibility for the accuracy and completeness of the forward-looking
statements. We do not intend to update any of the forward-looking statements
after the date of this report to conform these statements to actual results or
to changes in our expectations, except as required by law.

ITEM 3.

CONTROLS AND PROCEDURES

     (a) Evaluation of Disclosure Controls and Procedures.

     Our principal executive officer and principal financial officer, after
evaluating the effectiveness of our disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the
period covered by this Quarterly Report on Form 10-QSB, have concluded that,
based on such evaluation, our disclosure controls and procedures were adequate
and effective to ensure that material information relating to us, was made known
to them by others within the Company, particularly during the period in which
this Quarterly Report on Form 10-QSB was being prepared. In designing and
evaluating our disclosure controls and procedures, our management recognizes
that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and our management necessarily is required to apply its judgment in evaluating
the cost-benefit relationship of possible controls and procedures.

     (b) Changes in Internal Controls.

     There were no changes in our internal control over financial reporting,
identified in connection with the evaluation of such internal control that
occurred during our last fiscal quarter, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.









                                       17
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     We are not a party to any legal proceedings.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     Not Applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     Not Applicable.

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not Applicable.

ITEM 5. OTHER INFORMATION

     Not Applicable

ITEM 6. EXHIBITS

     (a) Exhibits

           31.1    Certification of the Chief Executive Officer
           31.2    Certification of the Chief Accounting Officer
           32.1    Certification pursuant to Section 906 of the Sarbanes-Oxley
                   Act of 2002.








                                       18
<PAGE>

                                   SIGNATURES

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


                                         NATIONAL DATACOMPUTER, INC.


May 16, 2006                             /s/ William B. Berens
                                         ----------------------------
                                         William B. Berens
                                         President and Chief Executive Officer
                                         (principal executive officer)

May 16, 2006                             /s/ Bruna Bucacci
                                         ----------------------------
                                         Bruna Bucacci
                                         Chief Accounting Officer (principal
                                         financial and accounting officer)


















                                       19
<PAGE>

                                  EXHIBIT INDEX

EXHIBIT NO.               TITLE

   31.1     Certification of the Chief Executive Officer.
   31.2     Certification of the Chief Accounting Officer.
   32.1     Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
            2002.


























                                       20