UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




FORM
10-Q/A


Amendment
#2







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





For
the quarterly period ended September 30, 2008





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 registrant as specified in its charter)









Delaware
            
            04-2942832(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)




900
      Middlesex Turnpike, Billerica, MA
            
            01821(Address
      of principal executive offices)
            
            (Zip
      Code)





(978)
663-7677


(Registrant’s
telephone number, including area code)







(Former
name, former address and former fiscal year, if changed since last
report.)







Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.    Yes  x
    No   ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
accelerated filer   ̈    Accelerated
filer   ̈





Non-accelerated
filer   ̈    (Do
not check if a smaller reporting company)    Smaller
reporting company  x





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 Common Stock outstanding at November 21, 2008 was
4,274,496.








EXPLANATORY
NOTE





This
Amendment to the Quarterly Report on Form 10-Q for National Datacomputer Inc.
(the “Company”) for the quarterly period ended September 30, 2008, as filed with
the Securities and Exchange Commission on January 15, 2009, is being filed to
remove a previous disclosure regarding the fact that financial statements
included in the Company’s Form 10-Q for such quarterly period had not been
reviewed by the Company’s Independent Registered Public Accounting Firm. In
addition, this amended Quarterly Report on Form 10-Q includes certain additional
disclosures regarding the Company’s liquidity and capital resources, and also
reflects a correction to the Company’s basic and diluted net loss per share
attributable to common stockholders for the nine month period ended September
30, 2008 as a result of a correction to the weighted average shares outstanding
for that period.










NATIONAL
DATACOMPUTER, INC.


INDEX






PART
      I.   FINANCIAL INFORMATIONItem
      1.   Financial
      Statements:
              Page
      No.Balance
      Sheets as of September 30, 2008 and December 31, 2007
              3Statements
      of Operations for the three and nine months ended September 30, 2008 and
      2007
              4Statement
      of Stockholders’ Deficit for the nine months ended September 30,
      2008
              5Statements
      of Cash Flows for the nine months ended September 30, 2008 and
      2007
              6Notes
      to Financial Statements
              7Item
      2.   Management’s Discussion and Analysis or Plan of
      Operation
              12Item 3.Quantitative and Qualitative
      Disclosures about Market Risk
              19Item
      4.   Controls and Procedures
              19PART
      II.   OTHER INFORMATIONItem 1.Legal Proceedings
              20Item 2.Unregistered Sales of Equity Securities and Use of
      Proceeds
              20Item 3.Defaults upon Senior Securities
              20Item 4.Submissions of Matters to a Vote of Security
Holders
              20Item 5.Other Information
              21Item
      6.Exhibits
              21Signatures
              22Exhibit
      Index
              23








2


NATIONAL
DATACOMPUTER, INC.


BALANCE
SHEETS




September
      30,
              
              
              December
      31,2008
              
              
              2007(Unaudited)
              
              
              (Audited)AssetsCurrent
      Assets:Cash
              
              $
              163,830
              
              
              $
              257,019Accounts
      receivable, net of allowance for doubtful accounts of
    $3,000
              
              
              158,897
              
              
              
              76,158Inventories,
      net
              
              
              —
              
              
              
              2,401Deferred
      hardware and software costs
              
              
              669,401
              
              
              
              799,623Prepaid
      expenses
              
              
              278,348
              
              
              
              52,317Total
      current assets
              
              
              1,270,476
              
              
              
              1,187,518Prepaid
      expenses
              
              
              —
              
              
              
              19,811Property
      and equipment, net
              
              
              46,840
              
              
              
              56,826Capitalized
      software development costs, net
              
              
              4,116
              
              
              
              9,289Total
      Assets
              
              $
              1,321,432
              
              
              $
              1,273,444Liabilities
      and Stockholders' Deficit:Current
      Liabilities:Current
      obligations under capital lease
              
              $
              21,903
              
              
              $
              19,093Note
      payable
              
              
              —
              
              
              
              18,125Accounts
      payable
              
              
              788,712
              
              
              
              1,422,629Customer
      deposits
              
              
              1,190
              
              
              
              9,964Accrued
      payroll and related taxes
              
              
              40,310
              
              
              
              52,535Other
      accrued expenses
              
              
              72,959
              
              
              
              98,210Deferred
      revenues
              
              
              1,235,823
              
              
              
              508,058Total
      current liabilities
              
              
              2,160,897
              
              
              
              2,128,614Obligations
      under capital lease, net of current portion
              
              
              9,419
              
              
              
              27,680Total
      Liabilities
              
              
              2,170,316
              
              
              
              2,156,294Commitments
      and contingenciesStockholders'
      Deficit:Preferred
      stock, $0.001 par value; 3,333 shares authorized; no shares issued or
      outstanding
              
              
              —
              
              
              
              —Common
      stock, $0.001 par value; 6,000,000 shares authorized; 4,274,496 and
      2,382,829 shares issued and outstanding at September 30, 2008 and December
      31, 2007
              
              
              4,275
              
              
              
              2,383Capital
      in excess of par value
              
              
              15,970,302
              
              
              
              15,551,667Accumulated
      deficit
              
              
              (16,823,461
              )
              
              
              (16,436,900
              )Total
      Stockholders' Deficit
              
              
              (848,884
              )
              
              
              (882,850
              )Total
      Liabilities and Stockholders' Deficit
              
              $
              1,321,432
              
              
              $
              1,273,444


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






3


NATIONAL
DATACOMPUTER, INC.


STATEMENTS
OF OPERATIONS


(Unaudited)


Three
      Months Ended
              
              
              Nine
      Months EndedSeptember
      30,
              
              
              September
      30,
              
              
              September
      30,
              
              
              September
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007Revenues:Product
              
              $
              19,175
              
              
              $
              444,686
              
              
              $
              1,006,077
              
              
              $
              797,739Services
              
              
              139,950
              
              
              
              222,982
              
              
              
              635,215
              
              
              
              683,279Total
      Revenues
              
              
              159,125
              
              
              
              667,668
              
              
              
              1,641,292
              
              
              
              1,481,018Cost
      of revenues
              
              
              175,858
              
              
              
              511,986
              
              
              
              1,188,807
              
              
              
              1,029,243Gross
      Profit
              
              
              (16,733
              )
              
              
              155,682
              
              
              
              452,485
              
              
              
              451,775Operating
      expenses:Selling
      and marketing
              
              
              94,321
              
              
              
              76,758
              
              
              
              251,152
              
              
              
              243,378General
      and administrative
              
              
              216,951
              
              
              
              175,048
              
              
              
              586,003
              
              
              
              625,507311,272
              
              
              
              251,806
              
              
              
              837,155
              
              
              
              868,885Loss
      from operations
              
              
              (328,005
              )
              
              
              (96,124
              )
              
              
              (384,670
              )
              
              
              (417,110
              )Other
      income (expense):Interest
      income
              
              
              132
              
              
              
              1,518
              
              
              
              2,650
              
              
              
              6,013Gain
      (loss) on currency exchange
              
              
              784
              
              
              
              12,543
              
              
              
              2,768
              
              
              
              20,561Interest
      expense
              
              
              (2,325
              )
              
              
              (3,398
              )
              
              
              (7,309
              )
              
              
              (8,048
              )Net
      loss
              
              
              (329,414
              )
              
              
              (85,461
              )
              
              
              (386,561
              )
              
              
              (398,584
              )Calculation
      of net loss per common share:Basic
      and diluted net loss per share attributable tocommon stockholders
      (restated)
              
              $
              (0.12
              )
              
              $
              (0.04
              )
              
              $
              (0.16
              )
              
              $
              (0.18
              )Weighted
      average shares (basic and diluted) (restated)
              
              
              2,670,375
              
              
              
              2,382,829
              
              
              
              2,478,678
              
              
              
              2,179,156








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






4
 
 NATIONAL
DATACOMPUTER, INC.
 STATEMENT
OF STOCKHOLDERS' DEFICIT




Common
      Stock
              
              
              Capital
      in
              
              
              
              
              
              TotalPar
              
              
              excess
              
              
              Accumulated
              
              
              stockholders'Shares
              
              
              value
              
              
              of par value
              
              
              deficit
              
              
              deficitBalance
      at December 31, 2007 (Audited)
              
              
              2,382,829
              
              
              $
              2,383
              
              
              $
              15,551,667
              
              
              $
              (16,436,900
              )
              
              $
              (882,850
              )Net
      loss
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (386,561
              )
              
              
              (386,561
              )Net
      proceeds from raised capital
              
              
              1,891,667
              
              
              
              1,892
              
              
              
              413,108
              
              
              
              
              
              
              
              415,000Stock
      based compensation related to options
      granted
              
              
              —
              
              
              
              —
              
              
              
              5,527
              
              
              
              —
              
              
              
              5,527Balance
      at September 30, 2008 (Unaudited)
              
              
              4,274,496
              
              
              $
              4,275
              
              
              $
              15,970,302
              
              
              $
              (16,823,461
              )
              
              $
              (848,884
              )








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




5
 
 NATIONAL
DATACOMPUTER, INC.
 STATEMENTS
OF CASH FLOWS
 (Unaudited)












Nine
      Months EndedSeptember
      30,
              
              
              September
      30,2008
              
              
              2007OPERATING
      ACTIVITIES:Net loss
              
              $
              (386,561
              )
              
              $
              (398,584
              )Adjustments
      to reconcile net loss to net cash used for operating
      activities:Depreciation
      and amortization
              
              
              30,567
              
              
              
              26,051Stock
      based compensation related to options granted
              
              
              5,527
              
              
              
              2,266Changes
      in assets and liabilities:(Increase) decrease in accounts receivable
              
              
              (82,739
              )
              
              
              21,757Decrease
      in inventories
              
              
              2,401
              
              
              
              6,402Decrease
      (increase) in deferred hardware and software costs
              
              
              130,222
              
              
              
              (2,363
              )Increase
      in other prepaid expenses
              
              
              (206,220
              )
              
              
              (74,635
              )(Decrease)
      increase in accounts payable
              
              
              (633,917
              )
              
              
              152,197Decrease
      in customer deposits
              
              
              (8,774
              )
              
              
              (10,099
              )Decrease
      in accrued expenses
              
              
              (37,476
              )
              
              
              (28,277
              )Increase
      in deferred revenues
              
              
              727,765
              
              
              
              100,575Net
      cash used for operating activities
              
              
              (459,205
              )
              
              
              (204,710
              )Cash
      flows from investing activities:Purchases
      of property and equipment
              
              
              (15,408
              )
              
              
              (15,187
              )Additions
      to capitalized software development costs
              
              
              —
              
              
              
              (1,674
              )Net
      cash used for investing activities
              
              
              (15,408
              )
              
              
              (16,861
              )Cash
      flows from financing activities:Net
      proceeds from additional capital raised
              
              
              415,000
              
              
              
              262,165Principal
      payments on note payable
              
              
              (18,125
              )
              
              
              (22,085
              )Principal payments on obligations under
      capital lease
              
              
              (15,451
              )
              
              
              (9,509
              )Net
      cash provided by financing activities
              
              
              381,424
              
              
              
              230,571Net
      (decrease) increase in cash
              
              
              (93,189
              )
              
              
              9,000Cash,
      beginning of period
              
              
              257,019
              
              
              
              162,783Cash,
      end of period
              
              $
              163,830
              
              
              $
              171,783Supplemental
      Disclosure of Cash Flow Information:Cash
      paid for interest
              
              $
              6,848
              
              
              $
              8,048Non-cash
      investing and financing activities:Accrued
      compensation paid with stock
              
              $
              —
              
              
              
              21,250Deferred
      compensation paid with stock
              
              $
              —
              
              
              
              15,000Acquisition
      of property and equipment under capital lease
              
              $
              —
              
              
              
              48,539








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


6


NATIONAL
DATACOMPUTER, INC.


NOTES
TO UNAUDITED FINANCIAL STATEMENTS





1.   
Basis of presentation:





Company





National
Datacomputer 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
application-specific software, data communication, handheld computers, related
peripherals and accessories, as well as associated education and
support.





General





The
unaudited financial statements included herein have been presented pursuant to
the rules of the Securities and Exchange Commission (the “SEC”) for quarterly
reports on Form 10-Q. The financial statements do not include all of the
information and note disclosure required by accounting principles generally
accepted in the United States of America. Preparing financial statements
requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses. In the opinion of
management, these statements include all adjustments, consisting only of normal,
recurring adjustments necessary for a fair presentation of the financial
position of National Datacomputer, Inc. (the “Company”) as of September 30,
2008, and the results of their operations and cash flows for the three and nine
months ended September 30, 2008 and 2007. 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, 2007, which are
included in the Company’s Form 10-KSB. The year-end condensed balance sheet data
was derived from audited financial statements.





Reverse
Stock Split





On July
31, 2008, our Board of Directors approved a reverse stock split and established
a ratio of 1-for-15. This move followed a vote at our Annual Shareholders’
Meeting on June 24, 2008, in which shareholders authorized the Board to effect
the reverse stock split. Upon market open on July 31, 2008, our common stock
began trading on a split-adjusted basis under the new trading symbol
"NDCP.”





The
number of shares of our authorized common stock was reduced from 50,000,000
shares as of July 30, 2008, to approximately 3,333,333 shares post-split. The
number of shares reserved for issuance under our stock option plans was also
reduced proportionately. As a result of the reverse stock split, every 15 shares
of common stock that was issued and outstanding was automatically combined into
one issued and outstanding share, without any change in the par value of such
shares. No fractional shares were issued in connection with the reverse stock
split. Stockholders who would be entitled to fractional shares will receive cash
in lieu of receiving fractional shares. The reverse stock split affected all
shares of common stock, stock options and warrants of NDI outstanding as of
immediately prior to the effective time of the reverse stock split.





All
shares of common stock have been adjusted to reflect a 1 for 15 reverse stock
split which was effective July 31, 2008.














7


2.   
Liquidity and Capital Resources





We have
an accumulated deficit of approximately $16,823,000 through September 30, 2008.
As a result of our 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, 2007 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. In prior
periods, 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.  We also 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 2,022,616 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 $350,000 to be used as working capital.





During
July and September 2008, our executive officer together with members of our
Board of Directors and one additional investor agreed to invest an aggregate of
$415,000 in exchange for an aggregate of 1,891,667 shares of our common stock.
These funds were used to provide us with needed working capital





We
continue exploring all opportunities to improve our financial condition by
pursuing potential revenues sources through increased marketing efforts. There
is a possibility that we may not realize adequate revenues in the near future to
meet cash flow requirements, and therefore might require us to implement further
cost saving actions 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 2008. There can be no assurance that such financing, if
required, will be available on reasonable terms, if at all.







3.   
Recent accounting pronouncements:





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 adoption of
SFAS No. 157 with respect to financial assets and liabilities in the first
quarter of 2008 had no effect on the Company’s results of operations or
financial position. In addition, the Company is evaluating the impact of SFAS
No. 157 for measuring nonfinancial assets and liabilities on future results of
operations and financial position.




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
without having to apply complex hedge accounting provisions.  The
adoption of SFAS No. 159 in the first quarter of 2008 did not have an impact on
the Company’s results of operations or financial position.




8


In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations,”
which changes how business acquisitions are accounted.  SFAS No. 141R
requires the acquiring entity in a business combination to recognize all (and
only) the assets acquired and liabilities assumed in the transaction and
establishes the acquisition-date fair value as the measurement objective for all
assets acquired and liabilities assumed in a business combination.  Certain
provisions of this standard will, among other things, impact the determination
of acquisition-date fair value of consideration paid in a business combination
(including contingent consideration); exclude transaction costs from acquisition
accounting; and change accounting practices for acquired contingencies,
acquisition-related restructuring costs, in-process research and development,
indemnification assets and tax benefits.  SFAS No. 141R is effective
for the Company for business combinations and adjustments to an acquired
entity’s deferred tax asset and liability balances occurring after
December 31, 2008.  The Company is currently evaluating the future
impacts and disclosures of this standard.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51.” This
statement is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008. SFAS No. 160 requires
the recognition of a noncontrolling interest (minority interest) as equity in
the consolidated financial statements and separate from the parent’s equity. The
amount of net income attributable to the noncontrolling interest will be
included in consolidated net income on the face of the income statement. SFAS
No. 160 amends certain of ARB No. 51’s consolidation procedures for
consistency with the requirements of SFAS No. 141(R). This statement
requires changes in the parent’s ownership interest of consolidated subsidiaries
to be accounted for as equity transactions. This statement also includes
expanded disclosure requirements regarding the interests of the parent and its
noncontrolling interest. The Company is currently evaluating the future impacts
and disclosures of this standard.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities,” which changes the disclosure requirements
for derivative instruments and hedging activities. SFAS No. 161 requires
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS No. 133, “Accounting for Derivative Instruments
and Hedging Activities” and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This statement’s
disclosure requirements are effective for fiscal years and interim periods
beginning after November 15, 2008. The Company is currently evaluating the
future impacts and disclosures of this standard.







4.   
Restatement:





This
amended Form 10Q/A includes a restatement of basic and diluted earnings per
share for the nine month period ended September 30, 2008 as a result of a
correction to the weighted average shares outstanding as previously disclosed in
our Form 10Q/A, filed on January 15, 2009.  The following table
summarizes the adjusted information:




As
      OriginallyReported
              
              
              As
      RestatedWeighted
      average shares outstanding (basic and diluted)
              
              
              3,116,163
              
              
              
              2,478,678Basic
      and diluted net loss per share attributable to common
      stockholder
              
              $
              (0.12
              )
              
              $
              (0.16
              )









9


5.   
Share-based payments:





The
Company accounts for share-based compensation according to the provisions of
SFAS No. 123(R), “Share−based Payment”, which establishes 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).





During
the nine months ended September 30, 2008 and 2007, share-based compensation
expense amounted to $5,527 and $2,266, respectively.





During
the three months ended September 30, 2008 and 2007, share-based compensation
expense amounted to $2,008 and $1,363, respectively.





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 rate.  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 granted in the nine months ended September 30,
2008.    Estimates of fair values are not intended to
predict actual future events or the value ultimately realized by persons who
receive equity awards.





Stock
options outstanding and related disclosures have been adjusted to reflect a 1
for 15 reverse stock split which was effective July 31, 2008.





The
weighted average grant date fair value of options granted was $0.18 and $0.41
during the nine months ended September 30, 2008 and 2007, respectively. The fair
value of options at date of grant was estimated using the Black-Scholes
option-pricing model with the following assumptions:





Nine
      Months ended
            
            Nine
      Months endedSeptember 30, 2008
            
            September 30, 2007Expected
      option term (1)
            
            6.25
      years
            
            6.25
      yearsExpected
      volatility factor (2)
            
            103.8%
            
            99.6%Risk-free
      interest rate (3)
            
            2.62%
            
            4.57%Expected
      annual dividend rate
            
            0%
            
            0%





(1)  The
option life was determined using the simplified method for estimating expected
option life, which qualifies as “plain-vanilla” options.


(2)  The
stock volatility for each grant is determined based on the review of the
experience of the weighted average of historical monthly price changes of the
Company’s common stock over the most recent six years, which approximates the
expected option life of the grant of 6.25 years.


(3)  The
risk-free interest rate for periods equal to the expected term of the share
option is based on the U.S. Treasury yield curve in effect at the time of
grant.








10


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 September 30, 2008, there were options
to purchase 13,333 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.
As of September 30, 2008, there were options to purchase 1,332 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 133,333 shares of common stock of the Company was
reserved for issuance in accordance with the terms of the 2007 Plan. On June 24,
2008, upon stockholders approval the maximum number of shares reserved for
issuance under the 2007 Plan was increased to 200,000.





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 September 30, 2008,
there were 91,664 options outstanding under the 2007 Plan and 108,333 shares
available for grant under the 2007 Plan.




The
following table summarizes information about stock options outstanding at
September 30, 2008:





Number
      of shares
            
            
            Weighted
      average exercise price
            
            
            Remaining
      contractual life in years
            
            
            Aggregate
      intrinsic valueOutstanding
      at December 31, 2007
            
            
            89,663
            
            
            $
            2.26Granted
            
            
            16,666
            
            
            
            0.23Exercised
            
            
            —Cancelled/forfeited
            
            
            —Outstanding
      at September 30, 2008
            
            
            106,329
            
            
            
            1.94
            
            
            
            7.56
            
            
            $
            —Options
      vested or expected to vest at September 30, 2008 (1)
            
            
            96,246
            
            
            
            2.10
            
            
            
            7.44
            
            
            $
            —Options
      exercisable at September 30, 2008
            
            
            33,415
            
            
            $
            5.22
            
            
            
            4.89
            
            
            $
            —





(1)  In
addition to the vested options, the Company expects a portion of the unvested
options to vest at some point in the future.  Options expected to vest
are calculated by applying an estimated forfeiture rate to the unvested
options.





6.   
Income Taxes:




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
2007 Form 10-KSB, the Company has a valuation allowance against
the full amount of its net deferred tax assets.










11


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 and there is no interest or penalties as management
believes the Company has no uncertain tax position at September 30,
2008.




The
Company is subject to U.S. federal income tax as well as well as income tax of
certain state jurisdictions. The Company has not been audited by the I.R.S. or
any states in connection with income taxes. The period from 2004-2007 remains
open to examination by the I.R.S. and state authorities.








ITEM
2.    Management’s Discussion and Analysis or Plan of
Operation.





The
following discussion provides an analysis of the financial condition and results
of operations of the Company and 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, 2007.




The
discussion below 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 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, 2007, filed on March 28, 2008.




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.





Summary





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 application-specific
software, data communication, handheld computers, related peripherals, and
accessories, as well as associated education and support.





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® which we developed in 1988. The RouteRider
software, running on our first generation of rugged handheld Datacomputer®
(“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.









12


Although
our Datacomputers running our original RouteRider software are still available
for purchase, we have now channeled all of our experience into new portable and
highly parameterized Route Accounting solution software named RouteRider LE®,
(“RRLE”). RRLE is a mobile sales force automation application designed to
increase efficiency, improve productivity and make companies more profitable and
competitive by allowing sales and distribution personnel to gather, enter and
share data at the point of work. It has been designed to run on the very latest
industry standard MicrosoftTMoperating systems and architectures which increases our market potential
by running on industry preferred operating systems and handheld
devices.





During
2006 we divested ourselves from our audit business to better concentrate our
efforts on our new Route Accounting solution. The hand-held route solution,
interfacing with the J.D. Edwards system, we delivered in 2006 to an
internationally recognized company in the food services industry has been
successful and the company has continued to deploy additional routes in Europe.
During the last quarter of 2007, we contracted to deliver a comprehensive RRLE
Direct Store Delivery solution to a major national bakery, and also to a major
bottling company. The combined orders have a value of approximately $2,000,000
with delivery scheduled in 2008.





Results
of Operations





Three
months ended September 30, 2008 compared to three months ended September 30,
2007.





For the
three months ended September 30, 2008, we reported a net loss of $329,414
compared to a net loss of $85,461 for the three months ended September 30, 2007.
The increased loss was a direct result of lower revenues and increased operating
expenses.





Revenue and Gross
Profit





Total
revenues decreased 76% to $159,125 for the three months ended September 30, 2008
from $667,668 for the three months ended September 30, 2007. Total product
revenues decreased 96% to $19,175 for the three months ended September 30, 2008
from $444,686 for the comparable prior period. The decrease was due to lower
sales of our new route software product, RRLE. Total service revenues decreased
37% to $139,950 for the three months ended September 30, 2008 from $222,982 for
the comparable prior period. The decrease is a direct result of lower
maintenance and repair contracts for our Datacomputers.





We
experienced a negative gross profit of $16,733 for the three months ended
September 30, 2008, compared to $155,682 or 23% of revenues for the prior
comparable period.  The decline in gross profit was due to our
decreased product sales and lower professional service billings.





Operating
Expenses





Selling and marketing expenses for the
three months ended September 30, 2008 were $94,321 compared to $76,758 for the
prior comparable period, an increase of $17,563 or 23%.  The increase
is due primarily to higher expensesto support marketing of our flagship
RouteRider LETM Direct Store Delivery solution for the Beverage, Baking, Coffee
& Tea, Dairy, and Snack Food industries.





General
and administrative expenses for the three months ended September 30, 2008 were
$216,951compared to $175,048 for the prior comparable period, an increase of
$41,903 or 24%. The increase is a result of higher legal and professional fees
related to the company’s reverse stock split.










13


Nine
months ended September 30, 2008 compared to Nine months ended September 30,
2007.





For the
Nine months ended September 30, 2008, we reported a net loss of $386,561
compared to a net loss of $398,584 for the Nine months ended September 30, 2007.
The reduced loss was a direct result of higher revenues combined with lower
payroll costs, resulting from reduced manpower, along with reduced legal and
directors’ fees.




Revenue and Gross
Profit





Total
revenues increased 11% to $1,641,292 for the nine months ended September 30,
2008 from $1,481,018 for the nine months ended September 30, 2007. Total product
revenues increased 26% to $1,006,077 for the nine months ended September 30,
2008 from $797,739 for the comparable prior period. The increase was due to
higher sales of our new route software product, RRLE, offset by decreased sales
of our Datacomputers. Total service revenues decreased 7% to $635,215 for the
nine months ended September 30, 2008 from $683,279 for the comparable prior
period. The decrease is a direct result of lower maintenance and repair
contracts for our Datacomputers, offset by higher billings of our professional
services for RRLE implementation projects.





Gross
profit was $452,485 or 28% of revenues for the nine months ended September 30,
2008, compared to $451,775 or 31% of revenues for the prior comparable
period.  The decreased profit was due to sales during the nine months
ended September 30, 2007 carrying a higher profit than the nine months ended
September 30, 2008.





Operating
Expenses





Selling
and marketing expenses for the nine months ended September 30, 2008 were
$251,152 compared to $243,378 for the prior comparable period, an increase of
$7,774 or 3%.  The increase is due primarily to higher commission
expenses resulting from higher revenues.





General
and administrative expenses for the nine months ended September 30, 2008 were
$586,003 compared to $625,507 for the prior comparable period, a decrease of
$39,504 or 6%. The decrease is a result of reduced legal and directors’ fees
combined with lower payroll costs resulting from reduced manpower. These were
offset by higher professional fees related to the company’s reverse stock
split.







Liquidity
and Capital Resources





We used
cash of $459,205 and $204,710 for operating activities for the nine months ended
September 30, 2008 and 2007, respectively. For the nine months ended September
30, 2008, our principal operating cash was used to fund our loss from operations
combined with a decrease in accounts payable, along with an increase in accounts
receivable and prepaid expenses, offset by a decrease in deferred hardware and
software cost and an increase in deferred revenues related to new orders for
RRLE scheduled for completion in the later part of 2008. For the nine months
ended September 30, 2007, our principal operating cash was used to fund our loss
from operations combined with an increase in prepaid expenses, along with a
decrease in accrued expenses and customer deposits, offset by an increase in
accounts payable and deferred revenues.









14


We used
cash of $15,408 and $16,861 for investing activities from operations for the
nine months ended September 30, 2008 and 2007, respectively. The cash was used
for the purchase of capital equipment. As of September 30, 2008, we had no
material commitments for capital expenditures.





We
generated cash of $381,424 and $230,571 for financing activities for the nine
months ended September 30, 2008 and 2007, respectively. During the nine months
ended September 30, 2008, we raised capital in the amount of $415,000, and made
payments on obligations under our notes payable and capital leases. During the
nine months ended September 30, 2007, we raised capital, net of expenses, in the
amount of $262,165 and made payments on obligations under our notes payable and
capital leases.





We have
an accumulated deficit of approximately $16,823,000 through September 30, 2008.
As a result of our 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, 2007 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. In prior
periods, 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.  We also 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 2,022,616 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 $350,000 to be used as working capital.





During
July and September 2008, our executive officer together with members of our
Board of Directors and one additional investor, agreed to invest an aggregate of
$415,000 in exchange for an aggregate of 1,891,667 shares of our common stock.
These funds were used to provide us with needed working capital





We
continue exploring all opportunities to improve our financial condition by
pursuing potential revenues sources through increased marketing efforts. There
is a possibility that we may not realize adequate revenues in the near future to
meet cash flow requirements, and therefore might require us to implement further
cost saving actions 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 2008. There can be no assurance that such financing, if
required, will be available on reasonable terms, if at all.




Commitments,
Contractual Obligations and 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, 2007.





As of
September 30, 2008, 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,
2007.







15


Concentration
of Credit Risk





The
Company sells its products to customers principally in the United States of
America. During the first nine months of 2008, three customers accounted for
approximately 84% of our total revenues.





Critical
Accounting Policies and Estimates





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 product 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 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
revenue arrangements sometimes involve multiple elements (i.e. products 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.  When products
and services are sold together and fair values have been established, revenue
related to the hardware is generally recognized when title and risk of loss have
passed, and revenue related to services are recognized as the services are
provided.  If fair values of the various elements have not been
established, we defer all revenue until all elements have been
delivered.





For
revenue arrangements with multiple deliverables that include or represent
software products and services as well as any non-software deliverables for with
a software deliverable is essential to its functionality, we recognize revenue
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, and if so, whether vendor-specific objective evidence (VSOE) of fair
value exists, no significant obligations with regard to installation on
implementation remain, and customer acceptance, when applicable, is
obtained.  Our revenue arrangements may include hardware, software,
services and maintenance.  If software is essential to the
functionality of the hardware, we generally defer the recognition of revenue
related to the hardware until the






16


software
revenue can be recognized.  If services are essential to the
functionality of the software, revenue related to the services are also deferred
until the software revenue can be recognized.  If the only undelivered
element is maintenance for which VSOE of fair value can be established, revenue
related to the software and the related elements is recognized upon customer
acceptance of the software.  The maintenance will then be recognized
ratably over the contract term.





Service
revenue that is not essential to the functionality of a software product is
recognized as the services are provided on a time and materials
basis.





Hardware
and software maintenance that is not sold as part of a multiple element
arrangement 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.





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.





Capitalized
Software Research and Development Costs.





Costs
associated with the development of computer software are charged to operations
prior to the establishment of technological feasibility, as defined by Statement
of Financial Accounting Standards (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.





17


Stock-Based
Compensation





The
Company accounts for share-based compensation according to the provisions of
SFAS No. 123(R), “Share-based Payment”, which establishes 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).




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.





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.





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.





Recent
accounting pronouncements





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 adoption of
SFAS No. 157 with respect to financial assets and liabilities in the first
quarter of 2008 had no effect on the Company’s results of operations or
financial position. In addition, the Company is evaluating the impact of SFAS
No. 157 for measuring nonfinancial assets and liabilities on future results of
operations and financial position.




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
without having to apply complex hedge accounting provisions.  The
adoption of SFAS No. 159 in the first quarter of 2008 did not have an impact on
the Company’s results of operations or financial position.




In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations,”
which changes how business acquisitions are accounted.  SFAS No. 141R
requires the acquiring entity in a business combination to recognize all (and
only) the assets acquired and liabilities assumed in the transaction and
establishes the acquisition-date fair value as the measurement objective for all
assets acquired and liabilities assumed in a business combination.






18


Certain
provisions of this standard will, among other things, impact the determination
of acquisition-date fair value of consideration paid in a business combination
(including contingent consideration); exclude transaction costs from acquisition
accounting; and change accounting practices for acquired contingencies,
acquisition-related restructuring costs, in-process research and development,
indemnification assets and tax benefits.  SFAS No. 141R is effective
for the Company for business combinations and adjustments to an acquired
entity’s deferred tax asset and liability balances occurring after
December 31, 2008.  The Company is currently evaluating the future
impacts and disclosures of this standard.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51.” This
statement is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008. SFAS No. 160 requires
the recognition of a noncontrolling interest (minority interest) as equity in
the consolidated financial statements and separate from the parent’s equity. The
amount of net income attributable to the noncontrolling interest will be
included in consolidated net income on the face of the income statement. SFAS
No. 160 amends certain of ARB No. 51’s consolidation procedures for
consistency with the requirements of SFAS No. 141(R). This statement
requires changes in the parent’s ownership interest of consolidated subsidiaries
to be accounted for as equity transactions. This statement also includes
expanded disclosure requirements regarding the interests of the parent and its
noncontrolling interest. The Company is currently evaluating the future impacts
and disclosures of this standard.




In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities,” which changes the disclosure requirements
for derivative instruments and hedging activities. SFAS No. 161 requires
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS No. 133, “Accounting for Derivative Instruments
and Hedging Activities” and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This statement’s
disclosure requirements are effective for fiscal years and interim periods
beginning after November 15, 2008. The Company is currently evaluating the
future impacts and disclosures of this standard.






ITEM
3.     Quantitative and Qualitative Disclosures about
Market Risk





No
discussion is required pursuant to Form 10-Q Instruction to paragraph
305(c).






ITEM
4.     Controls and Procedures




a)  
 Evaluation of Disclosure
Controls and Procedures. We have conducted an evaluation under the
supervision of the Chief Executive Officer and the Chief Accounting Officer (its
principal executive officer and principal financial officers, respectively),
regarding the effectiveness of the Company’s disclosure controls and procedures
(as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act of 1934) as
of September 30, 2008. Based on the aforementioned evaluation, management has
concluded that our disclosure control and procedures were not effective as of
September 30, 2008 because of the existence of two material weaknesses in our
internal control over financial reporting related to (i) our finance group’s
inability to perform the testing of internal controls on financial reporting due
to our limited number of personnel engaged in accounting and finance functions
and a resulting lack in the segregation of duties, and (ii) the potential
inability of our accounting staff to handle certain complex accounting issues.
In addition, as a result of the fact that our September 30, 2008 Form 10-Q was
originally filed without a review having been performed by our Independent
Registered Public Accounting Form, our Independent Registered Public Accounting
firm has concluded that as of September 30, 2008 a material weakness existed
related to our disclosure controls and procedures, specifically with regards
disclosures and procedures mandated by Securities and Exchange Commission
regulations.




(b)    Changes in Internal Control over
Financial Reporting




No
changes in our internal control over financial reporting occurred during the
quarter ended September 30, 2008 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.


19


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 July
28, 2008, Anthony Stafford purchased 66,667 shares of our common stock at a
price of $0.75 per share for a total cash consideration of $50,000.





On
September 18, 2008 Anthony Stafford, William Berens, Jack MacKinnon and other
investors purchased 1,825,000 shares of our common stock at a price of $0.20 for
a total cash consideration of $365,000.







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 August 5, 2008, on June 24, 2008, we
submitted the following matters to a vote of our stockholders:




1.
            To
      elect the Company’s director nominees to the Board of
      Directors.




2.
            To
      approve an amendment to the Company’s Certificate of Incorporation, as
      amended (the “Certificate of Incorporation”) that Article Fourth of the
      Company’s Certificate of Incorporation be amended to effect a 1-for-15
      reverse stock split of the issued and outstanding shares of the Company’s
      common stock;




3.
            To
      approve an amendment to the Restated Company’s Certificate of
      Incorporation to reduce  the number of authorized shares of
      common stock;




4.
            To
      amend the 2007 Employee, Director and Consultant Stock Plan by increasing
      the shares of the Company’s common stock for grant under that plan from
      2,000,000 to 3,000,000 shares (which shares available for grant shall be
      reduced to 200,000 shares following the reverse stock
    split;




5.
            To
      ratify the appointment of Carlin, Charron & Rosen, LLP as the
      independent registered public accounting firm of the
    Company;







The votes
for each of the proposals were as follows:




FOR:
              AGAINST
              ABSTAINProposal
      1.  29,975,674
              -0-
              343Proposal
      2.  29,925,670
              50,923
              83Proposal
      3.  29,925,793
              50,775
              108Proposal
      4.  29,872,903
              51,028
              52,745Proposal
      5.  29,975,750
              661
              265





20


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.



















































21


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.March
      9, 2009
              By:
              /s/ William
      B. BerensWilliam
      B. BerensPresident
      and Chief Executive Officer (principal executive officer)


March
      9, 2009
                By:
                /s/ Bruna
      BucacciBruna
      BucacciChief
      Accounting Officer (principal financial and accounting officer)




































22


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.


















































































23