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

                                  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, 2007

                                       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
 INCORPORATION OR ORGANIZATION)                               IDENTIFICATION #)


                   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.
Yes [X] No [_]

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

The number of shares of the Registrant's common stock, par value $0.001,
outstanding as of May 1, 2007 was 35,242,438.

Transitional Small Business Disclosure Format.  Yes [_]  No [X]

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<PAGE>
                           NATIONAL DATACOMPUTER, INC.
                                      INDEX




                                                                        Page No.
                                                                        --------

                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS:

        Balance Sheets as of March 31, 2007
           and December 31, 2006 ..............................................3

        Statements of Operations for the three months
           ended March 31, 2007 and 2006.......................................4

        Statement of Stockholders' Deficit for the three months
           ended March 31, 2007................................................5

        Statements of Cash Flows for the three months
           ended March 31, 2007 and 2006.......................................6

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


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.............11


ITEM 3. CONTROLS AND PROCEDURES...............................................16




                           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.....................................................19


ITEM 6. Exhibits..............................................................19


        SIGNATURES............................................................20


        EXHIBIT INDEX.........................................................21







                                        2
<PAGE>
                           NATIONAL DATACOMPUTER, INC.
                                 BALANCE SHEETS

================================================================================
<TABLE><CAPTION>
                                                                   March 31,     December 31,
                                                                     2007            2006
                                                                 ------------    ------------
<S>                                                              <C>             <C>
Assets
Current Assets:
   Cash                                                          $    255,316    $    162,783
   Accounts receivable, net of allowance for doubtful accounts
    of $3,000                                                         367,804          98,985
   Inventories, net                                                    10,996          10,000
   Deferred hardware and software costs                               316,401          15,064
   Prepaid expenses                                                    90,956           8,785
                                                                 ------------    ------------
        Total current assets                                        1,041,473         295,617
Property and equipment, net                                            29,812          22,539
Capitalized software development costs, net                            13,708          15,615
                                                                 ------------    ------------
        Total Assets                                             $  1,084,993    $    333,771
                                                                 ============    ============

Liabilities and Stockholders' Deficit:
Current Liabilities:
   Current obligations under capital lease                       $      3,908    $      3,844
   Note payable, current portion                                       24,249          27,775
   Accounts payable                                                   769,818         366,229
   Customer deposits                                                   13,831          24,911
   Accrued payroll and related taxes                                  145,125         146,485
   Other accrued expenses                                             110,584         155,587
   Deferred revenues                                                  630,899         248,913
                                                                 ------------    ------------
        Total current liabilities                                   1,698,414         973,744
Note payable, net of current portion                                   10,448          18,125
Obligations under capital lease, net of current portion                 5,444           6,420
                                                                 ------------    ------------
        Total Liabilities                                           1,714,306         998,289
                                                                 ------------    ------------

Commitments and contingencies

Stockholders' Deficit:
   Preferred stock, $0.001 par value; 50,000 shares authorized;
     no shares issued or outstanding                                       --              --

   Common stock, $0.001 par value; 50,000,000 shares authorized;
     35,242,438 and 26,640,866 shares issued and outstanding at
     March 31, 2007 and December 31, 2006, respectively                35,242          26,641

   Capital in excess of par value                                  15,500,178      15,225,364
   Accumulated deficit                                            (16,164,733)    (15,916,523)
                                                                 ------------    ------------
        Total Stockholders' Deficit                                  (629,313)       (664,518)
                                                                 ------------    ------------
        Total Liabilities and Stockholders' Deficit              $  1,084,993    $    333,771
                                                                 ============    ============
</TABLE>

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

                                        3
<PAGE>
                           NATIONAL DATACOMPUTER, INC.
                            STATEMENTS OF OPERATIONS

================================================================================
<TABLE><CAPTION>
                                                                      THREE MONTHS ENDED
                                                                 ----------------------------
                                                                   March 31,       March 31,
                                                                     2007            2006
                                                                 ------------    ------------
<S>                                                              <C>             <C>
Revenues:
   Product                                                       $     66,728    $     54,889
   Services                                                           230,965         374,481
                                                                 ------------    ------------
        Total Revenues                                                297,693         429,370

Cost of revenues                                                      207,364         183,452
                                                                 ------------    ------------

        Gross Profit                                                   90,329         245,918
                                                                 ------------    ------------

Operating expenses:
   Research and development                                                --          18,852
   Selling and marketing                                               84,548          94,054
   General and administrative                                         255,980         226,311
                                                                 ------------    ------------
                                                                      340,528         339,217
                                                                 ------------    ------------
Loss from operations                                                 (250,199)        (93,299)

Other income (expense):
   Interest income                                                      2,636             263
   Gain (loss) on currency exchange                                     1,131             656
   Interest expense                                                    (1,778)         (2,649)
                                                                 ------------    ------------
Loss from continuing operations                                      (248,210)        (95,029)

   Income from discontinued operations (Note 1)                            --          37,556
                                                                 ------------    ------------
Net loss                                                         $   (248,210)   $    (57,473)
                                                                 ============    ============

Calculation of net loss per common share:

Net loss                                                         $   (248,210)   $    (57,473)
Preferred stock preferences                                                --         (66,750)
                                                                 ------------    ------------
Net loss attributable to common stockholders                     $   (248,210)   $   (124,223)
                                                                 ============    ============
Basic and diluted net loss per share attributable to
common stockholders:
   Loss from continuing operations                               $      (0.01)   $      (0.01)
   Income from discontinued operations                                     --            0.00
   Preferred stock preferences                                             --           (0.00)
                                                                 ------------    ------------
   Net loss attributable to common stockholders                  $      (0.01)   $      (0.01)
                                                                 ============    ============

Weighted average shares                                            26,735,389      22,586,681
                                                                 ============    ============
</TABLE>

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

                                        4
<PAGE>
                           NATIONAL DATACOMPUTER, INC.
                       STATEMENT OF STOCKHOLDERS' DEFICIT

================================================================================
<TABLE><CAPTION>

                                             COMMON STOCK
                                      ---------------------------    CAPITAL IN                       TOTAL
                                                          PAR          EXCESS      ACCUMULATED    STOCKHOLDERS'
                                         SHARES          VALUE      OF PAR VALUE     DEFICIT         DEFICIT
                                      ------------   ------------   ------------   ------------   ------------
<S>                                   <C>            <C>            <C>            <C>            <C>
Balance at December 31, 2006            26,640,866   $     26,641   $ 15,225,364   $(15,916,523)  $   (664,518)

Net loss                                        --             --             --       (248,210)      (248,210)

Issuance of stock in satisfaction
 of accrued interest                     8,037,336          8,037         (8,037)            --             --

Additional capital raised, net of
 costs of $87,835 (Note 1)                      --             --        262,165             --        262,165

Issuance of stock in satisfaction
 of accrued compensation                   564,236            564         20,686             --         21,250
                                      ------------   ------------   ------------   ------------   ------------

Balance at March 31, 2007               35,242,438   $     35,242   $ 15,500,178   $(16,164,733)  $   (629,313)
                                      ============   ============   ============   ============   ============
</TABLE>





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

                                        5
<PAGE>
                           NATIONAL DATACOMPUTER, INC.
                            STATEMENTS OF CASH FLOWS

================================================================================
<TABLE><CAPTION>

                                                                          THREE MONTHS ENDED
                                                                     ----------------------------
                                                                       March 31,       March 31
                                                                         2007            2006
                                                                     ------------    ------------
<S>                                                                  <C>             <C>
OPERATING ACTIVITIES:
    Net loss                                                         $   (248,210)   $    (57,473)
    Less: Income from discontinued operations                                  --         (37,556)
                                                                     ------------    ------------
    Loss from continuing operations                                      (248,210)        (95,029)
        Adjustments to reconcile net loss to net
             cash provided by (used for) operating activities:
             Interest on loan                                                  --           2,033
             Depreciation and amortization                                  6,904           9,615
             Changes in assets and liabilities:
                 Increase in accounts receivable                         (268,819)        (38,683)
                 Increase in inventories                                     (996)             --
                 Increase in deferred hardware and software costs        (301,337)             --
                 (Increase) decrease in other prepaid expenses            (82,171)          1,924
                 Increase in accounts payable                             403,589          62,338
                 (Decrease) Increase in customer deposits                 (11,080)         21,321
                 (Decrease) increase in accrued expenses                  (25,113)          9,922
                 Increase in deferred revenues                            381,986          90,562
                                                                     ------------    ------------
    Net cash (used for) provided by continuing operations                (145,247)         64,003
    Net cash used for discontinued operations                                  --         (59,671)
                                                                     ------------    ------------
    Net cash (used for) provided by operating activities                 (145,247)          4,332
                                                                     ------------    ------------

Cash flows from investing activities:
    Purchases of property and equipment                                   (12,270)        (13,282)
                                                                     ------------    ------------
    Net cash used for investing activities - continuing operations        (12,270)        (13,282)
                                                                     ------------    ------------

Cash flows from financing activities:
    Net proceeds from additional capital raised                           262,165              --
    Principal payments on note payable                                    (11,203)         (6,000)
    Principal payments on obligations under capital lease                    (912)           (635)
                                                                     ------------    ------------
    Net cash provided by (used for) financing activities -
      continuing operations                                               250,050          (6,635)
                                                                     ------------    ------------

Net increase (decrease) in cash                                            92,533         (15,585)
Cash, beginning of period                                                 162,783         125,508
                                                                     ------------    ------------

Cash, end of period                                                  $    255,316    $    109,923
                                                                     ============    ============

Supplemental Disclosure of Cash Flow Information:

    Cash paid for interest                                           $      1,778    $        616
    Non-cash investing and financing activities:
        Accrued compensation paid with stock                         $     21,250    $         --
        Accounts payable converted to note payable                   $         --    $     52,574
        Accrued interest on preferred stock charged to
           accumulated deficit                                       $         --    $     66,750
</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") is engaged exclusively in
providing solutions through the use of mobile information systems in the
distribution market segment within the product supply chain. We design, 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, handheld computers, related peripherals, and
accessories, as well as associated education and support services for our
hardware and software products.

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 footnote 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, 2006, 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

    We have an accumulated deficit of approximately $16,200,000 through March
31, 2007. As a result of this deficit and our cash position, the report of our
independent registered public accounting firm as of and for the year ended
December 31, 2006 contains an explanatory paragraph regarding substantial doubt
about our ability to continue as a going concern. We have taken numerous steps
to address this situation. During the fiscal year ended December 31, 2006, we
divested ourselves of our audit business line in connection with a transaction
relating to shares of our preferred and common stock held

                                        7
<PAGE>
by a majority holder of our capital stock. On November 29, 2006, we entered into
an arrangement with A.S.T., Inc. ("AST") and Phyle Industries, Inc. ("Phyle")
pursuant to which we sold our audit business line to AST in exchange for 4,150
shares of our preferred stock (representing all of our issued and outstanding
preferred stock).

     During January 2007 acting as agent for certain new investors interested in
purchasing shares of our common stock, we caused the transfer of 30,339,236
shares of our common stock, together with accrued but unpaid stock dividends
(representing approximately 90% of our common stock in the aggregate) that Phyle
had previously purchased from Capital Bank Grawe Gruppe AG ("CapitalBank").
These investors paid Phyle $250,000 for the purchase of our common stock and
agreed to also provide us a capital infusion of $350,000 to be used for working
capital.

    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 potential sales. 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 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 2007. However, there are no assurances that these plans will be
successful or sufficient.


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.

NET LOSS PER SHARE
------------------

    Basic and diluted loss per share is calculated by dividing net loss
attributable to common stockholders by the weighted-average number of common
shares outstanding.

    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.

                                        8
<PAGE>
SHARE-BASED COMPENSATION
------------------------

    Effective January 1, 2006, the Company adopted the provisions of SFAS
123(R), SHARE-BASED PAYMENT, which established accounting for equity instruments
exchanged for employee services. Under 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).


    There was no share-based compensation expense recorded during the three
months ended March 31, 2007 or 2006.


3.  STOCK OPTION PLANS

    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. As of March 31, 2007, 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, 2007, there were options to purchase 20,000 shares of common stock
outstanding and no shares available for grant under the 1998 Plan.

     On March 30, 2007, the Board of Directors adopted the 2007 Employee,
Director and Consultant Stock Option Plan ("2007 Plan") which provides for the
issuance of both incentive and non-qualified stock options to employees,
consultants and directors. A maximum of 2,000,000 shares of common stock of the
Company was reserved for issuance in accordance with the terms of the 2007 Plan.
Upon the approval of the 2007 Plan, our 1997 Plan and our 1998 Plan terminated.
All outstanding options under our 1997 and 1998 Stock Option Plans will remain
in effect, but no additional option grants may be made. As of March 31, 2007,
there were no options outstanding and 2,000,000 shares available for grant under
the 2007 Plan.

    The following table summarizes information about stock options outstanding
at March 31, 2007:

                                        9
<PAGE>
                                                                   Weighted
                               Weighted average                 Average exercise
                                  Remaining        Number of        price of
                   Number     Contractual life,     Options         options
Exercise price  Outstanding        In years       Exercisable     Exercisable
--------------------------------------------------------------------------------

    $ 0.75        220,000            1.7            220,000          $0.75



4.  INVENTORIES

    Inventories consist of the following:          MARCH 31,      DECEMBER 31,
                                                     2007             2006
                                                 ------------     ------------
    Raw material                                 $         --     $         --
    Work-in-process                                    10,000           10,000
    Finished goods                                        966               --
                                                 ------------     ------------
         Total                                   $     10,966     $     10,000
                                                 ============     ============



5.  RECENT ACCOUNTING PRONOUNCEMENTS

    The Company adopted the provisions of FASB Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 9" ("FIN 48"), on January 1, 2007. FIN 48 requires that the impact
of tax positions be recognized in the financial statements if they are more
likely than not to be sustained upon examination, based on the technical merits
of the position. As discussed in the financial statements in the 2006 Form
10-KSB, the Company has a valuation allowance against the full amount of its net
deferred tax assets The Company currently provides a valuation allowance against
deferred tax assets when it is more likely than not that some portion, or all of
its deferred tax assets, will not be realized. The implementation of FIN 48 had
no effect on the Company's financial position or results of operations. We
recognize interest accrued related to unrecognized tax benefits in interest
expense. Penalties, if incurred, are recognized as a component of income tax
expense.

    In September 2006, the FASB issued SFAS No. 157, "FAIR VALUE MEASUREMENTS".
SFAS 157 prescribes a single definition of fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The Company
does not believe the adoption of SFAS 157 will have a material impact on its
financial condition or results of operations. SFAS 157 is effective for the
Company's interim reporting period beginning January 1, 2008.

    In February 2007, the FASB issued SFAS No. 159, "THE FAIR VALUE OPTION FOR
FINANCIAL ASSETS AND FINANCIAL Liabilities." This statement permits entities to
choose to measure many financial instruments and certain other items at fair
value. The objective is to improve financial reporting by providing entities
with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently


                                       10
<PAGE>
without having to apply complex hedge accounting provisions. The Company does
not believe the adoption of SFAS 159 will have a material impact on its
financial condition or results of operations. SFAS 159 is effective for the
Company's interim reporting period beginning January 1, 2008.



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 market segment within the product supply chain. We
design, 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, handheld computers, related
peripherals, and accessories, as well as associated education and support
services for our hardware and software products.

    From the very beginning we designed our software solution based on the
customer's unique specifications. Our first entry into the market was a
DOS-based Route Accounting software solution named RouteRider(R) which we
developed in 1988. ThE RouteRider software, running on our first generation of
rugged handheld Datacomputer(R) ("Datacomputer") the DC3.0, waS originally
designed and built for an office coffee service company. Since that time
multiple generations of Datacomputers (DC3X, DC4 and DC4CE) were designed and
brought to market and our software application was improved customer by customer
and market by market. To date we have provided dependable solutions for
distribution markets such as baking, dairy, beer, soda, water, wine and spirits.

    Although our Datacomputers running our original RouteRider software are
still available for purchase, we have now channeled all of our experience into a
new portable and highly parameterized Route Accounting solution designed to run
on the very latest industry standard Microsoft(TM) operating systems and
architectures which increases our market potential BY running on industry
preferred operating systems and handheld devices.

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, 2006.

    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

                                       11
<PAGE>
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
in the Company's filings with the Security and Exchange Commission, including
its Annual Report on Form 10-KSB for the year ended December 31, 2006.

    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 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.


RESULTS OF OPERATIONS

    THREE MONTHS ENDED MARCH 31, 2007 COMPARED TO THREE MONTHS ENDED MARCH 31,
2006.

    For the three months ended March 31, 2007, we reported a net loss of
$248,210 compared to a net loss of $57,473 for the three months ended March 31,
2006.

    Total revenues decreased $131,677, or 31% from $429,370 for the three months
ended March 31, 2006 to $297,693 for the three months ended March 31, 2007, due
primarily to lower billings of our professional services of our new route
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 WindowsMobile2005), and databases. RRLE
utilizes cellular, Wi-Fi, and Bluetooth communications protocols. At March 31,
2007, we had a backlog for RRLE of approximately $400,000 which we expect will
all be shipped during the second quarter of 2007.

    Gross profit for the three months ended March 31, 2007 was $90,329, or 30%
of revenues, compared to approximately $245,918 or 57% of revenues for the three
months ended March 31, 2006. The decrease profit is a direct result of our lower
revenues.

    OPERATING EXPENSES

    We incurred no expenses for research and development for the three months
ended March 31, 2007, as compared to $18,852 for the three months ended March
31, 2006. The decrease is due the sale our audit business line to AST in
November 2006.

                                       12
<PAGE>
    Selling and marketing expenses for the three months ended March 31, 2007
were $84,548 compared to $94,054 for the three months ended March 31, 2006, a
decrease of $9,506 or 10%. The decrease is due a decrease in sales commissions
due to lower revenues.

    General and administrative expenses for the three months ended March 31,
2007 were $255,980 compared to $226,311 for the three months ended March 31,
2006, an increase of $29,669 or 13%. The increase is a result of expenses
related to our annual stockholders' meeting along with higher directors' fees.

LIQUIDITY AND CAPITAL RESOURCES

    We used cash of $145,247 and generated cash of $64,003 from operating
activities from continuing operations for the three months ended March 31, 2007
and 2006, respectively. For the three months ended March 31, 2007, our principal
operating cash for continuing operations was used to fund our loss from
operations combined with increases in accounts receivable, inventory and prepaid
expenses, offset by an increase in accounts payable and deferred revenues. For
the three months ended March 31, 2006, our principal operating cash for
continuing operations was generated by an increase in deferred revenues and
accounts payable along with a decrease in customer deposits, offset by our loss
from operations along with an increase in accounts receivable.

    We used cash of $12,270 and $13,282 for investing activities from continuing
operations for the three months ended March 31, 2007 and 2006, respectively. The
cash was used for the purchase of capital equipment. As of March 31, 2007, we
had no material commitments for capital expenditures.

    We generated cash of $250,050 and used cash of $6,635 for financing
activities from continuing operations for the three months ended March 31, 2007
and 2006, respectively. During the three months ended March 31, 2007, we raised
capital, net of expenses, in the amount of $262,165. During the three months
ended March 31, 2006, cash was used to make payments on obligations under our
notes payable and capital leases.

    We have an accumulated deficit of approximately $16,200,000 through March
31, 2007. As a result of this 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, 2006 contains an
explanatory paragraph regarding substantial doubt about our ability to continue
as a going concern. We have taken numerous steps to address this situation.
During the fiscal year ended December 31, 2006, we divested ourselves of our
audit business line in connection with a transaction relating to shares of our
preferred and common stock held by a majority holder of our capital stock. On
November 29, 2006, we entered into an arrangement with A.S.T., Inc. ("AST") and
Phyle Industries, Inc. ("Phyle") pursuant to which we sold our audit business
line to AST in exchange for 4,150 shares of our preferred stock (representing
all of our issued and outstanding preferred stock).

                                       13
<PAGE>
    During January 2007 acting as agent for certain new investors interested in
purchasing shares of our common stock, we caused the transfer of 30,339,236
shares of our common stock, together with accrued but unpaid stock dividends
(representing approximately 90% of our common stock in the aggregate) that Phyle
had previously purchased from Capital Bank Grawe Gruppe AG ("CapitalBank").
These investors paid Phyle $250,000 for the purchase of our common stock and
agreed to also provide us a capital infusion of $350,000 to be used for working
capital.

    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 potential sales. 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 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 2007.

OFF-BALANCE SHEET ARRANGEMENTS

    Our only off-balance sheet arrangements are non-cancelable operating leases
entered into in the ordinary course of business, as discussed in our Annual
Report on Form 10-KSB for the year ended December 31, 2006.

CONTRACTUAL OBLIGATIONS

      As of March 31, 2007, there are no material changes in our contractual
obligations as disclosed in our Annual Report on Form 10-KSB for the year ended
December 31, 2006.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

    The Company's financial statements and accompanying notes are prepared in
accordance with accounting principles generally accepted in the United States of
America (U.S. GAAP). Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management's application of accounting policies. Critical accounting policies
for the Company include revenue recognition, share-based compensation,
impairment of long-lived assets, inventory reserves, and allowance for doubtful
accounts.

    REVENUE RECOGNITION
    -------------------

    We recognize the majority of our revenue in accordance with SEC Staff
Accounting Bulletin No. 104, "REVENUE RECOGNITION IN FINANCIAL STATEMENTS".
Revenue related to product sales is recognized upon shipment provided that title
and risk of loss have passed to the customer, there is persuasive evidence of an
arrangement, the sales price is fixed or

                                       14
<PAGE>
determinable, collection of the related receivable is reasonably assured and
customer acceptance criteria, if any, have been successfully demonstrated. Where
the criteria cannot be demonstrated prior to shipment, or in the case of new
products, revenue is deferred until acceptance has been received. Our sales
contracts provide for the customer to accept title and risk of loss at the time
of delivery of the product to a common carrier.

    Our transactions sometimes involve multiple elements (i.e. systems and
services). Revenue under multiple arrangements is recognized in accordance with
Emerging Issues Task Force ("EITF") Issue No. 00-21, "ACCOUNTING FOR REVENUE
ARRANGEMENTS WITH MULTIPLE DELIVERABLES". Under this method, if an element is
determined to be a separate unit of accounting, the revenue for the element is
based on fair value and determined by verifiable objective evidence, and
recognized at time of delivery. If the arrangement has an undeliverable element,
we ensure that we have objective and reliable evidence of the fair value of the
undeliverable element. Fair value is determined based upon the price charged
when the element is sold separately.

    We recognize revenue for software licenses in accordance with the American
Institute of Certified Public Accountants ("AICPA")'s Statement of Position
97-2, "SOFTWARE REVENUE RECOGNITION" ("SOP 97-2"). The application of SOP 97-2
requires judgment, including whether a software arrangement includes multiple
elements. License revenue is recognized upon customer acceptance, provided that
persuasive evidence of an arrangement exists, no significant obligations with
regards to installation or implementation remain, fees are fixed or
determinable, and collectibility is probable.

    Hardware and software maintenance is marketed under annual and multi-year
arrangements and revenue is recognized ratably over the contract maintenance
term.

    ACCOUNTS RECEIVABLE
    -------------------

    The Company records trade receivables at their principal amount, adjusted
for write-offs and allowances for uncollectible 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 uncollectible 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.

                                       15
<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.

    STOCK-BASED COMPENSATION
    ------------------------

    Effective January 1, 2006, the Company adopted the provisions of Statement
of Financial Accounting Standards (SFAS) 123(R), 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).


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.

                                       16
<PAGE>
    (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.

ITEM 3A (T) CONTROLS AND PROCEDURES

    This quarterly report does not include a report of management's assessment
regarding internal control over financial reporting or an attestation report of
the Company's independent registered public accounting firm due to a transition
period established by the rules of the Securities and Exchange Commission.

























                                       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

    On January 23, 2007, Anthony Stafford, and his four children, purchased
20,226,157 shares of our common stock from a prior stockholder. Subsequently,
Mr. Stafford joined our Board of Directors. On March 30, 2007, upon receipt of
stockholders approval at a special meeting of stockholders, we sold 7,079,155
shares of our common stock to our executive officers and members of our Board of
Directors, as described in Item 12 "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTION." set forth in our Annual Report on Form 10-KSB. On March 30, 2007,
we issued 564,236 shares of our common stock to each of our directors as part of
their compensation earned during 2006.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

    Not Applicable.


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

    As described in our Form 8-K filing on April 5, 2007, on March 30, 2007, we
submitted the following matters to a vote of our stockholders:

    1.   To approve an amendment to the Company's Certificate of Incorporation,
         as amended (the "Certificate of Incorporation") to increase the number
         of authorized shares of the Company's common stock;
    2.   To approve an amendment to the Company's Certificate of Incorporation
         to decrease the par value of the Company's common stock;
    3.   To approve an amendment to the Company's Certificate of Incorporation
         to authorize the issuance of serial preferred stock, with authority
         vested in the Board of Directors of the Company to prescribe the
         classes, series and number of each class or series of the preferred
         stock of the Company and the voting powers, designations, preferences
         limitations, restrictions and relative rights of each class or series
         of the preferred stock of the Company ;
    4.   To adopt the 2007 Employee, Director and Consultant Stock Plan and to
         reserve 2,000,000 shares of the Company's common stock for grant under
         that plan;
    5.   To approve the sale and issuance of shares of the Company's common
         stock to the Company's current executive officers and members of the
         Board of Directors.


                                       18
<PAGE>
    Our stockholders voted in favor of the above matters as described in the
report on Form 8-K.


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.
















                                       19
<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 15, 2007                        /s/ William B. Berens
                                    -------------------------------------
                                    William B. Berens
                                    President and Chief Executive Officer
                                    (principal executive officer)




May 15, 2007                        /s/ Bruna Bucacci
                                    -------------------------------------
                                    Bruna Bucacci
                                    Chief Accounting Officer
                                    (principal financial and accounting officer)












                                       20
<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.
























                                       21