--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                   FORM 10-QSB

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

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1996
                         COMMISSION FILE NUMBER 0-15885

                           NATIONAL DATACOMPUTER, INC.
             (Exact name of Registrant as specified in its charter)

               DELAWARE                               04-2942832
   (State or other  jurisdiction of         (IRS Employer Identification #)
   incorporation  or  organization)

     900 Middlesex Turnpike, Bldg. 5
               Billerica, Ma.                          01821
 (Address of principal executive offices)            (Zip Code)

         Registrant's telephone number including area code (508)663-7677

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

Indicate by check mark whether the registrant has filed all reports  required to
be filed by  section 13 or 15 (d) of the  Securities  and  Exchange  Act of 1934
during the preceding 12 months (or 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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of September 30, 1996.

COMMON STOCK, $0.02 PAR VALUE                               4,952,616
    (Title of each class)                              (number of shares)






                           NATIONAL DATACOMPUTER, INC.

                                      INDEX

                          PART I. FINANCIAL INFORMATION



                                                                        Page No.
                                                                        --------

ITEM 1.  FINANCIAL STATEMENTS:

         Statement of Operations
           Three and nine months ended Sept 30, 1996 and 1995...............  3

         Balance Sheet
           September 30, 1996 and December 31, 1995.........................  4

         Statement of Cash Flows
           Nine months ended September 30, 1996 and 1995....................  5

         Notes to Financial Statements......................................  6



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
          AND RESULTS OF OPERATIONS.........................................  7



                           PART II. OTHER INFORMATION


ITEM 1.  Legal Proceedings.................................................. 10

ITEM 2.  Changes in Securities.............................................. 10

ITEM 3.  Defaults upon Senior Securities.................................... 10

ITEM 4.  Submissions of Matters to a Vote of Security Holders............... 10

ITEM 5.  Other Information.................................................. 10

ITEM 6.  Exibits and Reports on Form 8 - K.................................. 10


SIGNATURES.................................................................. 11


                                       2





<TABLE>
<CAPTION>

NATIONAL DATACOMPUTER, INC.
STATEMENT OF OPERATIONS
----------------------------------------------------------------------------------------------------------------------------------


                                                          Third Fiscal Quarter                       Cumulative Nine Months
                                                                Ended                                       Ended
                                                 --------------------------------------          ---------------------------------

                                                      Sept 30               Sept 30               Sept 30             Sept 30
                                                       1996                   1995                 1996                1995
                                                              (Unaudited)                                  (Unaudited)


<S>                                               <C>                  <C>                      <C>                 <C>

Revenues
       Net product revenue                        $     870,124        $    1,284,449            $   3,325,301       $ 4,745,982
       Service and other revenue                        266,804               208,327                  775,769           699,837
                                                  --------------       ---------------           --------------      ------------

                                                      1,136,928             1,492,776                4,101,070         5,445,819

Cost of sales and services                              585,867               784,915                1,967,040         2,409,623
                                                  --------------       ---------------           --------------      ------------

                                                        551,061               707,861                2,134,030         3,036,196
                                                  --------------       ---------------           --------------      ------------

Operating expenses:
       Research and development                         363,868               200,911                  926,599           619,372
       Selling, general and administrative              870,744               761,156                2,457,970         2,383,735
                                                  --------------       ---------------           --------------      ------------

                                                      1,234,612               962,067                3,384,569         3,003,107
                                                  --------------       ---------------           --------------      ------------

Income (loss) from operation                           (683,551)             (254,206)              (1,250,539)           33,089

Other income (expense):
       Other income                                      17,009                   262                   22,783             1,112
       Interest expense                                  (2,538)              (21,839)                 (20,651)          (56,524)
                                                  --------------       ---------------           --------------      ------------

Net loss                                          $    (669,080)       $     (275,783)           $  (1,248,407)      $   (22,323)
                                                  ==============       ===============           ==============      ============

Adjusted net loss  per share                      $        (0.15)      $        (0.08)           $       (0.29)      $     (0.01)
                                                  ==============       ===============           ==============      ============

Weighted average shares and dilutive
       shares equivalent outstanding                  4,920,611             3,318,216                4,786,598         2,684,162
                                                  ==============       ===============           ==============      ============




                                                  The accompanying notes are an integral part
                                                        of these financial statements

</TABLE>



                                       3




<TABLE>
<CAPTION>

NATIONAL DATACOMPUTER, INC.
BALANCE SHEET
----------------------------------------------------------------------------------------------------------------------------------

                                                                                          Sept 30,                December 31,
                                                                                            1996                     1995
                                                                                        (Unaudited)
<S>                                                                               <C>                         <C>

Assets
Current Assets:
     Cash and cash equivalents                                                    $           1,530,155      $                470
     Accounts receivable, less allowance for doubtful accounts                                  971,253                 1,198,894
     Inventories                                                                              1,389,869                 1,292,336
     Other current assets                                                                        42,236                    17,132
                                                                                  ----------------------     ---------------------

          Total current assets                                                                3,933,513                 2,508,832

Property and equipment, net                                                                     214,428                   145,853
                                                                                  ----------------------     ---------------------

                                                                                  $           4,147,941      $          2,654,685
                                                                                  ======================     =====================

Liabilities and stockholders' equity (deficit) Current Liabilities:
     Current portion of long-term debt                                            $              71,508      $              6,572
     Account payable                                                                            209,903                   333,991
     Accrued payroll and related taxes                                                          179,007                   287,736
     Accrued professional fees                                                                   67,651                   275,013
     Accrued rent and utilities                                                                  63,823                   125,984
     Accrued expenses - other                                                                   366,870                   418,100
     Deferred revenues, current portion                                                         569,757                   608,571
     Deferred compensation                                                                       45,742                    55,059
                                                                                  ----------------------     ---------------------

          Total current liabilities                                                           1,574,261                 2,111,026

Long-term debt                                                                                   26,307                   442,970
Deferred revenues                                                                               267,540                   267,540
                                                                                  ----------------------     ---------------------

                                                                                              1,868,108                 2,821,536
                                                                                  ----------------------     ---------------------

Stockholders' equity (deficit)
     Preferred stock, Series A convertible, $0.001 par value; 20 shares
          authorized; 0 shares issued and outstanding at 9/30/96 and 12/31/95     $          -               $         -
     Preferred stock, $0.001 par value; 50,000 shares authorized;
          0 shares  issued and  outstanding  at 9/30/96 and  12/31/95
     Preferred stock, Series B convertible $0.001 par value; 4,200 shares
          authorized; 4,200 and 0 shares issued and outstanding at 9/30/96 
          and 12/31/95                                                                        3,685,206                -
     Common stock, $0.02 par value; 10,000,000 shares authorized;
          4,952,616 and 4,677,743 shares issued and outstanding at
          September 30, 1996 and December 31, 1995, respectively.                                99,052                    93,555
     Capital in excess of par value                                                           9,517,098                 9,438,978
     Accumulated deficit                                                                    (10,670,254)               (9,297,847)
     Notes receivable - employees                                                              (351,269)                 (351,269)
     Preferred stock subscription receivable                                                 -                            (50,268)
                                                                                  ----------------------     ---------------------

          Total stockholders' equity (deficit)                                                2,279,833                  (166,851)
                                                                                  ----------------------     ---------------------

                                                                                  $           4,147,941      $          2,654,685
                                                                                  ======================     =====================


                                                   The accompanying notes are an integral part
                                                          of these financial statements

</TABLE>


                                       4




<TABLE>
<CAPTION>



NATIONAL DATACOMPUTER, INC.
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
-----------------------------------------------------------------------------------------------------------------------------------

                                                                                     FOR THE NINE MONTHS ENDED

                                                                            Sept 30,                       Sept 30,
                                                                              1996                           1995
                                                                          (Unaudited)                     (Unaudited)
<S>                                                                      <C>                              <C>

Cash flows from operating activities:
     Net income (loss)                                                      (1,248,407)               $          (22,323)
     Adjustments to reconcile net income (loss) to net
          cash provided by (used for) operating activities:
          Depreciation and amortization                                         41,631                            51,634
          Gain on sale of property and equipment                                (1,780)
          Changes in assets and liabilities:
              (Increase) decrease in accounts receivable                       227,641                          (490,834)
              (Increase) decrease in inventories                               (97,533)                           67,162
              (Increase) decrease in other current assets                      (25,104)                         (354,470)
              (Decrease) increase in accounts payable                         (124,088)                          (41,670)
              (Decrease) increase in debt                                       (7,784)
              (Decrease) increase in accrued expenses
                   and deferred compensation                                  (522,799)                         (453,090)
              (Decrease) increase in deferred revenues                         (38,814)                          149,550
                                                                      -----------------               -------------------

     Net cash provided by (used for) operating activities                   (1,797,037)                       (1,094,041)
                                                                      -----------------               -------------------

Cash flow from investing activities:
     Purchase of property and equipment                                        (17,741)                          (26,042)
     Proceeds from sale of property and equipment                                5,650                         -
                                                                      -----------------               -------------------

     Net cash used for investing activities                                    (12,091)                          (26,042)
                                                                      -----------------               -------------------

Cash flow from financing activities:
     Proceeds from preferred stock, net of issuance costs                    3,685,206                         1,517,627
     Repayment of borrowings                                                  (440,278)                        -
     Proceeds from issuance of stock                                            50,000                         -
     Investment receivable                                                      50,268                         -
     Stock offering cost                                                        (6,383)                        -
                                                                      -----------------               -------------------

     Net cash provided by (used for) finincing activities                    3,338,813                         1,517,627
                                                                      -----------------               -------------------

Net increase (decrease) in cash and cash equivalent                          1,529,685                           397,544
Cash at beginning of year                                                          470                           148,294
                                                                      -----------------               -------------------

Cash and cash equivalent  at end of period                                   1,530,155                $          545,838
                                                                      =================               ===================



                                           The accompanying notes are an integral part
                                                of these financial statements

</TABLE>


                                       5





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

In the opinion of Management,  the accompanying  unaudited financial  statements
include all  adjustments  and normal  recurring  accruals  necessary  to present
fairly the financial  position,  results of operations  and changes in financial
position.

ORGANIZATION

National  Datacomputer,  Inc. (the "Company") designs,  develops,  manufactures,
markets,  and services a line of hand-held battery powered  microprocessor-based
data  collection  products and computers and associated  peripherals  for use in
mobile operations.

EARNINGS PER SHARE
The  computations of earnings (loss) per share are based on the weighted average
number of common shares  outstanding;  common equivalent shares are not included
as the effect of such would be considered anti-dilutive.

INVENTORIES

         Inventories consisted of:          September 30,       December 31,
                                                1996               1995
                                             -----------        -----------

         Raw Materials                       $  301,008          $  279,885
         Work-in-process                        575,716             535,316
         Finished goods                         513,145             477,135
                                             ----------          ----------

         Total                               $1,389,869          $1,292,336
                                             ----------          ----------


         Inventories  are stated at the lower of cost  (first-in,  first-out) or
market.


REVENUE RECOGNITION:
The company  generally  recognizes  revenues for product upon shipment.  Service
revenue is recognized ratably over the contractual period.

RESEARCH AND DEVELOPMENT AND COMPUTER  SOFTWARE  DEVELOPMENT COSTS
The statement of Financial  Accounting  Standards No. 86 ("SFAS-86") states that
the software development costs incurred after the establishment of technological
feasibility  and up to the general release of the software should be capitalized
and written off over a three year period.  These costs include  coding,  testing
and  product  quality  assurance.  The  Company  has  charged all these costs to
operations as incurred.  During the first nine months ended  September 30, 1995,
$327,112 was capitalized and included in the Balance Sheet under "Other Assets".
This figure was expensed by December 31, 1995.


                                       6





MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS.

         The following  discussion  and analysis  should be read in  conjunction
with the financial statements and notes thereto appearing elsewhere herein.

RESULTS OF OPERATIONS


         THIRD  QUARTER  ENDED  SEPTEMBER  30, 1996  COMPARED WITH THIRD QUARTER
ENDED SEPTEMBER 30, 1995.

         Revenues  decreased 24% to $1,136,928 for the "Third Quarter 1996" from
$1,492,776 for the "Third  Quarter 1995".  The decrease in revenue was caused by
decreased sales of the Company's Datacomputers,  due primarily to a delay in the
penetration  of the  Bakery  market  awaiting  completion  of  installation  and
training at several Bakery customers.  The Company expects continued accelerated
growth in the Beer market.  Since entering into an agreement with Anheuser-Busch
in March 1993, which selected the Company as one of two hand-held  manufacturers
authorized to sell their  products to  Anheuser-Busch  distributors,  sales have
been increasing each year at a rate of approximately 30%.

         Service and other  revenues  increased to $266,804 in the Third Quarter
1996 from $208,327 in the Third Quarter of 1995, an increase of 28%. The Company
expects  that  service and other  revenues  will  continue to rise over the next
several years as the Company's  installed base of hand-held  computers continues
to expand.

         Costs and  operating  expenses  increased  to  $1,820,479  in 1996 from
$1,746,982  in 1995,  an increase  of 4%. As a  percentage  of sales,  costs and
operating  expenses  increased  to 160% in 1996 from 117% in 1995.  The  Company
expects that costs and operating expenses will decrease as a percentage of sales
over the next several years, primarily as a results of increased sales without a
proportional  increase in operating costs,  since the current level of operating
expenses is projected to support a higher level of sales than achieved in 1995.

         Research and  development  expenses  increased to $363,868 in 1996 from
$325,961 in 1995,  (In the third  quarter of 1995,  $125,050 of the $325,961 was
capitalized  under  SFAS-86  and was  included  in balance  sheet  under  "Other
Assets").  As a percentage of sales, research and development expenses increased
to 32% in 1996 from 22% for the same  period in 1995.  The  Company  expects  to
continue funding research and development effort to enhance current products and
to develop future products.

         Selling,  general and administrative  expenses increased to $870,744 in
the  third  quarter  of 1996 from  $761,156  in the third  quarter  of 1995,  an
increase of 14%. As a percentage of sales,  selling,  general and administrative
expenses  increased  to 77% in 1996 from 51% in 1995.  The increase is primarily
due to creation of new positions in the


                                       7





Company's sales and marketing staff.  The Company expects that selling,  general
and administrative expenses going forward will decrease as a percentage of sales
due to anticipated  increased sales without  proportional  increases in selling,
general and administrative expenses.
                               
         The Company's operating loss for the Third Quarter of 1996 was $669,080
compared  to an  operating  loss of $275,783  for the same period in 1995.  This
reflects  the  decrease  in the  Company's  sales and the  increase  in expenses
discussed above.

         NINE MONTHS ENDED  SEPTEMBER  30, 1996  COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1995.

         Revenues for the first nine months of 1996  decreased 25% to $4,101,070
from  $5,445,819 for the same period in 1995. The current period  includes sales
to each of the following markets:  Bakery,  Beer, Dairy, Office Coffee,  Uniform
and Inventory Services.

         Cost and operating expenses for the first nine months of 1996 decreased
to  $5,351,609  from  $5,412,730  in 1955, a decrease of 1%. As a percentage  of
sales,  costs and operating expenses increased to 130% in 1996 from 99% in 1995.
The  Company  expects  that costs and  operating  expenses  will  decrease  as a
percentage  of sales  over the next  several  years,  primarily  as a result  of
increased sales, without proportional increase in operating costs.

         Research and  development  expenses  decreased to $926,599 in the first
nine months of 1996 from  $946,484  for the same  period in 1995.  (In the first
nine months of 1995 $327,112 of the $946,484 was  capitalized  under SFAS-86 and
was included in the Balance  Sheet under  "Other  Assets").  As a percentage  of
sales,  research and development  expenses increased to 23% in 1996 from 17% for
the same period in 1995. The Company  expects to maintain  ongoing  Hardware and
Software programs  necessary to enhance current products,  and to develop future
products.

         Selling, general and administrative expenses increased to $2,457,970 in
the first nine months of 1996 from  $2,383,735  in 1995, an increase of 3%. As a
percentage of sales, selling,  general and administrative  expenses increased to
60% in 1996 from 44% in 1995.  The increase is primarily  due to creation of new
positions in the Company's sales and marketing  staff.  The Company expects that
selling,  general and  administrative  expenses going forward will decrease as a
percentage of sales due to  anticipated  increased  sales  without  proportional
increases in selling, general and administrative expenses.


                                       8





LIQUIDITY AND CAPITAL RESOURCES

         During  the  first  nine  months  of  1996,  the  Company  successfully
completed two private  placements,  under  Regulation S, through the issuance of
convertible  preferred  stock.  The first equity  placement  closed on April 26,
1996,  at which time the Company  issued 3,000  shares of "Series B  Convertible
Preferred  Stock" with net proceeds of $2,667,000.  The second equity  placement
was  completed  on June 28,  1996,  with the sale of 1,200  shares of  "Series B
Convertible Preferred Stock" with net proceeds of $1,018,000.

         The proceeds were used to fund the operating loss of $1,248,407 for the
first nine months of 1996 and payment of liabilities.  Part of the proceeds were
used to pay-off the $440,000  due under the line of credit.  As a result of this
payment,  the bank returned the certificates of deposits to Mr. Mackinnon,  (the
Company former President).

          The capital lease relates to capital equipment leased during the third
quarter of 1996 in the amount of $96,335.  The lease has a term of 4 years, with
monthly payments of $2,957 due through 2000.

          In the  first  nine  months  of 1995,  the  negative  cash  flow  from
operation  was  due to an  increase  in  accounts  receivable,  as a  result  of
increased sales, and the capitalization of software development.

         The  Company   manages  its  working  capital  and,  based  on  current
projections,  believes that the current equity financing will enable the Company
to meet working capital requirements for at least the next twelve to twenty-four
months.

PREFERRED CONVERTIBLE STOCK

         The  holders  of  shares of Series B  Convertible  Preferred  Stock are
entitled to  receive,  in addition  to any  dividends,  interest  equal to eight
percent  (8%)  per  annum of the  stated  value  of such  Series  B  Convertible
Preferred Stock.  Such interest will accrue from the Original Issuance Date, and
shall be payable, in cash or Common Stock, on a quarterly basis, commencing with
the fiscal  quarter ended June 30, 1996.  Payment of interest due hereunder with
respect to those  shares of Series B  Convertible  Preferred  Stock that  remain
issued and outstanding at the end of each of the Company's  fiscal quarter shall
be made within 15 business days after the filing with the SEC of the  applicable
report.
         At the end of September 30, 1996,  the Company has accrued  interest in
the amount of $124,000,  which was recorded as a reduction of retained earnings.
Also at the end of September 30, 1996,  $40,000 of the accrued interest was paid
to the holders with the issuance of Common Stock.


                                       9






                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         The  Company  is  not  presently   involved  in  any  material  pending
litigation.

ITEM 2. CHANGES IN SECURITIES

         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 AND REPORTS ON FORM 8 - K

         (a)      Exibits
                  (27)   Financial Data Schedule.

         (b)      Form 8-K was filed on 9/16/96.



                                       10





                                   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.



                                      /s/ Malcolm M. Bibby
November 13, 1996                     --------------------------------
                                       Malcolm M. Bibby
                                       President


                                      /s/ Gerald S. Eilberg
November 13, 1996                     --------------------------------
                                      Gerald S. Eilberg
                                      Vice President, Finance and Administration
                                      Chief Financial Officer


                                       11