U.
      S.
      Securities and Exchange Commission




Washington,
      D.C. 20549




**FORM
      10-QSB**




**(** **Mark
      One** **)**




xQuarterly
      Report
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934


For
      the
      quarterly period ended June 30, 2007




or




oTransition
      Report Pursuant to Section 13
      of 15(d) of the Securities Exchange Act of 1934


For
      the
      Transition Period From ____________ to ______________





Commission
      File number 000-23025







NOTIFY
      TECHNOLOGY CORPORATION





(Exact
      name of small business issuer as specified in its charter)




CALIFORNIA
            77-0382248(State
                or other jurisdiction of
              incorporation
                or organization)
            (IRS
                Employer Identification No.)





1054
      South De Anza Blvd.


San
      Jose,
      CA 95129





(Address
      of principal executive offices)




(408)
      777-7920


(Issuer’s
      telephone number)









Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      of
      15(d) of the Exchange Act during the past 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 o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act.)




YesoNox




As
      of
      June 30, 2007 there were 13,968,995 shares of Common Stock
      outstanding.




Transitional
      Small Business Disclosure Format




YesoNox







INDEX




PART
                I. FINANCIAL INFORMATIONItem
                1.
            Condensed
                Financial Statements:Condensed
                Balance Sheets as of June 30, 2007 (unaudited) and September 30,
                2006
            3Condensed
                Statements of Operations for the three and nine-month periods ended
                June
                30, 2007 and 2006 (unaudited)
            4Condensed
                Statements of Cash Flows for the nine-month periods ended June 30,
                2007
                and 2006 (unaudited)
            5Notes
                to the Condensed Financial Statements (unaudited)
            6Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            10Item
                3.
            Controls
                and Procedures
            20PART
                II. OTHER INFORMATIONItem
                6.
            Exhibits
            20SIGNATURES
            
            21







**PART
      I. FINANCIAL INFORMATION**





**Item
      1.**  **Financial
      Statements**





**NOTIFY
      TECHNOLOGY CORPORATION**


**CONDENSED
      BALANCE SHEETS**




**June 30****,**
                **2007**
              
              **September 30,**
                **2006**(unaudited)
              
              (1)**Assets**Current
                  assets:Cash
                  and cash equivalents
              
              $
              877,488
              
              $
              829,406Accounts
                  receivable, net
              
              
              420,623
              
              
              436,509Other
                  current assets
              
              
              44,254
              
              
              53,135Total
                  current assets
              
              
              1,342,365
              
              
              1,319,050Property
                  and equipment, net
              
              
              96,644
              
              
              99,623Total
                  assets
              
              $
              1,439,009
              
              $
              1,418,673**Liabilities
                  and shareholders' deficit**Current
                  liabilities:Current
                  portion of capital lease obligations
              
              $
              10,705
              
              $
              18,219Accounts
                  payable
              
              
              43,660
              
              
              37,722Accrued
                  payroll and related liabilities
              
              
              188,074
              
              
              231,200Deferred
                  revenue
              
              
              1,969,259
              
              
              1,623,606Other
                  accrued liabilities
              
              
              116,273
              
              
              122,432Total
                  current liabilities
              
              
              2,327,971
              
              
              2,033,179Long
                  term portion of capital lease obligations
              
              
              3,171
              
              
              9,201Total
                  liabilities
              
              
              2,331,142
              
              
              2,042,380Shareholders'
                  deficit:Preferred
                  stock, $0.001 par value, 5,000,000 shares authorized
              
              
              —
              
              
              —Common
                  stock, $0.001 par value, 30,000,000 shares authorized, 13,968,955
                  shares
                  issued and outstanding
              
              
              13,969
              
              
              13,969Additional
                  paid-in capital
              
              
              23,340,206
              
              
              23,310,903Accumulated
                  deficit
              
              
              (24,246,308
              )
              
              (23,948,579
              )Total
                  shareholders’ deficit
              
              
              (892,133
              )
              
              (623,707
              )Total
                  liabilities and shareholders' deficit
              
              $
              1,439,009
              
              $
              1,418,673
 (1)
          The
          information in this column was derived from our audited financial statements
          for
          the year ended September 30, 2006




See
      accompanying notes to unaudited condensed financial
      statements


3


**NOTIFY
      TECHNOLOGY CORPORATION**


**CONDENSED
      UNAUDITED STATEMENTS OF OPERATIONS**




**Three-Month
                Periods********Ended**
              **June
                30,**
            
            **Nine-Month
                Periods********Ended**
              **June
                30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**Revenue:Product
                revenue
            
            $
            937,607
            
            $
            745,606
            
            $
            2,720,694
            
            $
            2,707,495Service
                revenue
            
            
            —
            
            
            191,909
            
            
            237,991
            
            
            637,784Total
                revenue
            
            
            937,607
            
            
            937,515
            
            
            2,958,685
            
            
            3,345,279Cost
                of Revenue:Product
                cost
            
            
            5,371
            
            
            2,420
            
            
            13,677
            
            
            459,816Service
                cost
            
            
            —
            
            
            —
            
            
            —
            
            
            15,375Royalty
                payments
            
            
            25,543
            
            
            20,855
            
            
            75,656
            
            
            56,753Total
                cost of sales
            
            
            30,914
            
            
            23,275
            
            
            89,333
            
            
            531,944Gross
                profit
            
            
            906,693
            
            
            914,240
            
            
            2,869,352
            
            
            2,813,335Operating
                expenses:Research
                and development
            
            
            328,035
            
            
            250,589
            
            
            945,062
            
            
            713,035Sales
                and marketing
            
            
            369,618
            
            
            403,320
            
            
            1,247,004
            
            
            1,221,606General
                and administrative
            
            
            302,926
            
            
            334,681
            
            
            977,692
            
            
            970,746Total
                operating expenses
            
            
            1,000,579
            
            
            988,590
            
            
            3,169,758
            
            
            2,905,387Loss
                from operations
            
            
            (93,886
            )
            
            (74,350
            )
            
            (300,406
            )
            
            (92,052
            )Other
                income (expense), net
            
            
            120
            
            
            (1,353
            )
            
            2,677
            
            
            1,537Proceeds
                from sale of patents
            
            
            —
            
            
            250,000
            
            
            —
            
            
            250,000Loss
                on fair value of warrants
            
            
            —
            
            
            (312,667
            )
            
            —
            
            
            (457,919
            )Net
                loss
            
            $
            (93,766
            )
            $
            (138,370
            )
            $
            (297,729
            )
            $
            (298,434
            )Basic
                net loss per share
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.02
            )
            $
            (0.02
            )Basic
                weighted average shares outstanding
            
            
            13,968,995
            
            
            13,968,995
            
            
            13,968,995
            
            
            13,968,995





See
      accompanying notes to unaudited condensed financial statements




4


**NOTIFY
      TECHNOLOGY CORPORATION**


**CONDENSED
      STATEMENTS OF CASH FLOWS**




**Nine-Month
                Periods**
              **Ended
                June 30,****2007**
            
            **2006**(Unaudited)**Cash
                flows provided by operating activities:**Net
                loss
            
            $
            (297,729
            )
            $
            (298,434
            )Adjustments
                  to reconcile net loss to cash provided byoperating
                  activities:Depreciation
                and amortization
            
            
            31,607
            
            
            52,733Proceeds
                from the sale of patents
            
            
            —
            
            
            (250,000
            )Fair
                value of warrant liability
            
            
            —
            
            
            457,919Gain
                from the sale of property and equipment
            
            
            (3,000
            )
            
            (1,982
            )Stock
                based compensation
            
            
            29,303
            
            
            —Changes
                in operating assets and activities:Accounts
                receivable
            
            
            15,886
            
            
            (51,805
            )Other
                current assets
            
            
            8,881
            
            
            13,537Accounts
                payable
            
            
            5,938
            
            
            (34,946
            )Deferred
                revenue
            
            
            345,653
            
            
            416,417Other
                accrued liabilities
            
            
            (49,285
            )
            
            (132,591
            )Net
                cash provided by operating activities
            
            
            87,254
            
            
            170,848**Cash
                flows provided by (used in) investing activities:**Purchase
                of property and equipment
            
            
            (28,628
            )
            
            (7,726
            )Proceeds
                from the sale of patents
            
            
            
            
            
            250,000Proceeds
                from the sale of fixed assets
            
            
            3,000
            
            
            1,600Net
                cash provided by (used) in investing activities
            
            
            (25,628
            )
            
            243,874**Cash
                flows used in financing activities:**Principal
                payments on capital lease obligations
            
            
            (13,544
            )
            
            (18,521
            )Net
                cash used in financing activities
            
            
            (13,544
            )
            
            (18,521
            )Net
                increase in cash and cash equivalents
            
            
            48,082
            
            
            396,200Cash
                and cash equivalents at beginning of period
            
            
            829,406
            
            
            424,228Cash
                and cash equivalents at end of period
            
            $
            877,488
            
            $
            820,428Non-cash
                investing activities:Property
                and equipment acquired through capital lease
            
            $
            —
            
            $
            6,156Supplemental
                disclosure of cash informationCash
                paid for interest
            
            $
            1,164
            
            $
            1,892Cash
                paid for taxes
            
            $
            —
            
            $
            300





See
      accompanying notes to unaudited condensed financial statements


5


**NOTIFY
      TECHNOLOGY CORPORATION**


**NOTES
      TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**





1.  BASIS
      OF
      PRESENTATION





The
      accompanying unaudited condensed financial statements of Notify Technology
      Corporation (referred to as “the Company”, “we”, “us” and “our” unless the
      context otherwise requires) have been prepared in accordance with accounting
      principles generally accepted in the United States of America for interim
      financial information and the instructions of Regulation S-B Item 310(b) and
      Article 10 of Regulation S-X. The condensed financial statements included herein
      are unaudited but include all adjustments (consisting only of normal recurring
      adjustments), which we consider necessary for a fair presentation of the
      financial position at such date and the operating results and cash flows for
      those periods. Although we believe that the disclosures in these condensed
      financial statements are adequate to make the information presented not
      misleading, certain information normally included in financial statements and
      related footnotes prepared in accordance with accounting principles generally
      accepted in the United States of America have been condensed or omitted pursuant
      to the rules and regulations of the Securities and Exchange Commission (SEC).
      The accompanying condensed financial statements should be read in conjunction
      with the financial statements and notes thereto included in our Annual Report
      on
      Form 10-KSB for the year ended September 30, 2006.





Results
      for any interim period are not necessarily indicative of results for any other
      interim period or for the entire year.





2.  LIQUIDITY
      AND CAPITAL RESOURCES




During
      fiscal 2006 and the nine-month period ended June 30, 2007, we funded our
      operations through a combination of our gross profit earned from revenue and
      existing cash balances. Our ability to fund our recurring losses from operations
      depends upon success of our NotifyLink wireless e-mail notification market
      solutions. We continue to evaluate our opportunities to obtain further
      financing. We have no current intention to obtain financing. If financing were
      to become available on reasonable terms, we would consider the advisability
      of
      obtaining financing.




A
      significant characteristic of our business is the sale of our products
      customarily in the form of annual contracts paid for upon signing but the
      revenue amortized over the twelve-month service period. As our installed base
      grows, this practice increases the deferred revenue liability on the balance
      sheet as we add new contracts faster than old contracts expire. The major cost
      of operations is comprised of (1) the engineering design of our product offered
      for sale and (2) the physical sale of a contract that requires both direct
      sales
      effort and customer service hours to facilitate a trial period of our software
      prior to purchase. The change in the NotifyLink deferred revenue to $1,969,259
      as of June 30, 2007 from $1,623,606 as of September 31, 2006 is an indicator
      of
      product sales improvement during the period. Deferred revenue also represents
      the obligation to service the contracts underlying the revenue. However, the
      cash flow required to service the contracts is significantly less than the
      amortized revenue recognized each month.




We
      generated revenue from the service portion of our Visual Got Mail Solution
      through the end of February 2007 when our customer for this product terminated
      the program due to a merger and reorganization. The service was terminated
      on
      schedule at the end of February 2007 and the equipment relocated to support
      our
      enterprise product line. Consequently, the Visual Got Mail Solution ended its
      product life after five years and no longer generates revenue. There are no
      warranty obligations outstanding or perceived redeployment
      opportunities.




Our
      continued operations depend on the cash flow from the NotifyLink product line.
      We have largely replaced the revenue that was lost from the Visual Got Mail
      Solution program but its termination will make it particularly important that
      we
      continue to increase NotifyLink revenues. In the event our NotifyLink revenue
      is
      interrupted, we would have to reduce our operations to service our existing
      contract obligations  unless
      we
      secured additional financing. If we were unable to achieve NotifyLink revenue
      improvements or secure financing, we would have to restructure our business
      to
      reduce costs.


6


**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**




In
      the
      event we require additional capital, we cannot predict whether we will be able
      to obtain financing on commercially reasonable terms, if at all. Any future
      financings may take the form of debt or equity securities or a combination
      of
      debt and equity, including convertible notes or warrants. In the event we are
      required to obtain additional financing, we cannot predict whether we could
      successfully conclude a financing with any new investors. Minimally, we expect
      that any additional financing could result in a substantial dilution of the
      equity and voting interests of our current shareholders.





3.  NET
      INCOME (LOSS) PER SHARE





The
      net
      loss per share for the three-month period ended June 30, 2007 was a loss of
      $(0.01) compared to a loss of $(0.01) for the same period in the prior year.
      Options to purchase 2,961,000 and 3,362,333 shares of Common Stock and warrants
      to purchase 1,871,651 and 1,871,651 shares of Common Stock were outstanding
      at
      June 30, 2007 and 2006, respectively, but were excluded from the shares used
      to
      calculate loss per share as their effect would be anti-dilutive.





4.  FINANCING
      ACTIVITIES





In
      accordance with The Emerging Issues Task Force (EITF) Issue No. 00-19,
“Accounting for Derivative Financial Instruments Indexed to, and Potentially
      Settled in a Company’s Stock,” the terms of our warrants for Common shares
      issued in connection with our Series A Preferred offering issued on July 20,
      2001, qualified for treatment as a liability on our balance sheet at their
      fair
      value during much of fiscal 2006.





On
      September 12, 2006, the Company entered into an amendment (the “Warrants
      Amendment”) to the Warrants to Purchase Shares of Common Stock dated as of July
      20, 2001 (the “Warrants”) with Commonwealth
      Associates, L.P. (“Commonwealth”) and other holders of Warrants holding in the
      aggregate fifty-four percent (54%) of the outstanding Series A Warrants (as
      defined in the Warrants).





The
      Warrants Amendment amended the terms that made the Warrants subject to EITF
      00-19 and allowed them to be reclassified as equity on September 12, 2006 at
      the
      then calculated value using the Black-Scholes option-pricing model.




In
      addition, we have outstanding 9.2685 Unit Purchase Options that, if ever
      executed, provides for the issuance of 926,772 common shares and 324,397
      warrants. On September 12, 2006, the Company entered into an amendment (the
      “Option Amendment”) to one of the Unit Purchase Options issued
      in
      connection with the July 2001 Preferred Stock Offering of the Company (the
“Unit
      Purchase Options”) with Commonwealth Associates, L.P. (Commonwealth).




In
      order
      to amend each of the outstanding Unit Purchase Options, the holder of each
      such
      Unit Purchase Option is required to execute a separate Option Amendment with
      the
      Company. Commonwealth’s Unit Purchase Option represents approximately
      thirty-seven percent (37%) of the outstanding Unit Purchase Options. All
      remaining outstanding Unit Purchase Options other than Commonwealth’s remain
      subject to their original terms. None of the Option Warrants are presently
      outstanding and will be issued only upon exercise of the Unit Purchase Options.
      Because all of the Option Warrants were not amended as a result of the Option
      Amendments, the Company could be required in the future to recognize additional
      charges under EITF 00-19, which would have an adverse effect on its future
      operating results.





On
      May
      29, 2007, Commonwealth, along with a number of other investors, sold their
      securities, including Unit Purchase Options, to 21X Investments, LP. 21X
      Investments LP is beneficially owned by David Brewer, a director of Notify
      Technology Corporation since February 2000.





5.  ACCOUNTING
      FOR STOCK BASED COMPENSATION




On
      October 1, 2006 the Company adopted Statement of Financial Accounting Standards
      (SFAS) No. 123 (revised 2004), “Share-Based Payment,” requiring the Company to
      recognize expense related to the fair value of its employee stock option awards.
      The Company recognizes the cost of all share-based awards on a graded vesting
      basis over the vesting period of the award. Total stock compensation expense
      recognized by the Company during the nine-months ended June 30, 2007 was
      $29,303.


7


**NOTIFY
          TECHNOLOGY CORPORATION**
 **NOTES
          TO CONDENSED FINANCIAL
          STATEMENTS(UNAUDITED)**




Prior
      to
      October 1, 2006, the Company accounted for its stock option plans under the
      recognition and measurement provisions of APB Opinion No. 25, “Accounting for
      Stock Issued to Employees,” and related Interpretations, as permitted by SFAS
      No. 123, “Accounting for Stock-Based Compensation.”  Effective October 1,
      2006, the Company adopted the fair value recognition provisions of SFAS No.
      123(R), using the modified-prospective-transition method. Under that transition
      method, compensation cost recognized in fiscal 2007 includes: (a) compensation
      cost for all share-based payments granted prior to, but not yet vested as of
      October 1, 2006, based on the grant date fair value estimated in accordance
      with
      the original provisions of SFAS No. 123, and (b) compensation cost for all
      share-based payments granted subsequent to October 1, 2006, based on the
      grant-date fair value estimated in accordance with the provisions of SFAS No.
      123(R). Results for prior periods have not been restated.




As
      a
      result of adopting SFAS 123(R) on October 1, 2006, the Company’s income before
      income taxes and net income for the period ended June 30, 2007, was $29,303
      lower than if the Company had continued to account for share-based compensation
      under Opinion 25. The basic earnings per share for the nine-month period ended
      June 30, 2007 would have been $(0.02), if the Company had not adopted SFAS
      No.
      123(R).  Prior to the adoption of SFAS No. 123(R), the Company presented
      all tax benefits of deductions resulting from the exercise of stock options
      as
      operating cash flows in the Statement of Cash Flows. Beginning on October 1,
      2006 the Company changed its cash flow presentation in accordance with SFAS
      No.
      123(R) which requires the cash flows resulting from the tax benefits resulting
      from tax deductions in excess of the compensation cost recognized for those
      options (excess tax benefits) to be classified as financing cash
      flows.




The
      Company did not grant any options in the nine-month period ended June 30, 2007.




The
      Company estimated the fair value of its option awards granted prior to October
      1, 2006 using the Black-Scholes option-pricing formula. The Black-Scholes option
      pricing model was used with the following weighted-average assumptions for
      grants made in the following years:




Black-Scholes
                Option Valuation Assumptions
            
            2006
            
            2005
            
            2004Fair
                value of options granted during the period
            
            $
            15,600
            
            $
            101,982
            
            $
            30,777Expected
                term (in years)
            
            
            4.0
            
            
            4.0
            
            
            4.0Expected
                volatility
            
            
            140
            %
            
            132
            %
            
            117
            %Expected
                dividend yield
            
            
            0.0
            %
            
            0.0
            %
            
            0.0
            %Risk
                free rate
            
            
            3.0
            %
            
            3.5
            %
            
            5.0
            %




The
      following table illustrates the effect on net income and earnings per share
      if
      the Company had applied the fair value recognition provisions of SFAS 123
“Accounting for Stock-Based Compensation,” to options granted under the
      Company’s stock option plans during the three and nine-month periods ended June
      30, 2006. For purposes of this pro forma disclosure, the value of the options
      is
      amortized to expense on a graded vesting basis over a three-year vesting period
      and forfeitures are recognized as they occur. The Company’s pro forma
      information follows for the three and nine-months ended June 30, 2006:


Three-Month
                Period Ended
              
              Nine-Month
                Period EndedJune
                  30, 2006Net
                  income, as reported
              
              $
              (138,370
              )
              $
              (298,434
              )Total
                  stock-based employee compensation expense determined
                  under
                fair
                  value based method for all option awards, net of related tax
                  effects
              
              
              (24,950
              )
              
              (76,646
              )Pro
                  forma net income
              
              $
              (163,320
              )
              $
              (375,080
              )Basic
                  earnings per share as reported
              
              $
              (.01
              )
              $
              (.02
              )Basic
                  earnings per share pro forma
              
              $
              (.01
              )
              $
              (.03
              )




8




**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**


The
      following table summarizes the stock option transactions for the nine-months
      ended June 30, 2007:




Stock
                Options
            
            Shares
            
            Weighted
              Average
              Price
            
            Aggregate
              Intrinsic ValueOutstanding
                at October 1, 2006
            
            
            3,225,000
            
            $
            1.18
            
            
            —Granted
            
            
            —
            
            
            —
            
            
            —Exercised
            
            
            —
            
            
            —
            
            
            —Forfeited
            
            
            (264,000
            )
            
            0.79
            
            
            —Outstanding
                at June 30, 2007
            
            
            2,961,000
            
            $
            1.21
            
            
            —Exercisable
                at June 30, 2007
            
            
            2,855,499
            
            $
            1.22
            
            
            —





The
      aggregate intrinsic value of options exercised during the nine-months ended
      June
      30, 2007 and June 30, 2006 was zero.





6.  PRODUCT
      WARRANTY





The
      Company warranted its legacy products for twelve months against material
      defects. Since the Company shipped its last hardware product in 2004 it had
      no
      product under warranty during the three or nine-month period ended June 30,
      2007.





7.  RECENT
      ACCOUNTING PRONOUNCEMENTS




In
      June
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes — an interpretation of FASB Statement
      No. 109” (FIN 48). FIN 48 prescribes a recognition threshold and
      measurement attribute for financial statement recognition and measurement of
      a
      tax position taken or expected to be taken in a tax return, and also provides
      guidance on derecognition, classification, interest and penalties, accounting
      in
      interim periods, disclosure, and transition. FIN 48 is effective for fiscal
      years beginning after December 15, 2006. The Company is currently
      evaluating the impact of adopting FIN 48 on its financial
      statements.




9




**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**


In
      September 2006, the FASB issued FASB Statement No. 157, Fair Value
      Measurements (SFAS 157). The standard provides guidance for using fair
      value to measure assets and liabilities. The standard also responds to
      investors’ requests for expanded information about the extent to which
      companies’ measure assets and liabilities at fair value, the information used to
      measure fair value, and the effect of fair value measurements on earnings.
      The
      standard applies whenever other standards require or permit assets or
      liabilities to be measured at fair value. The standard does not expand the
      use
      of fair value in any new circumstances. SFAS 157 must be adopted
      prospectively as of the beginning of the year it is initially applied.
      SFAS 157 is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and interim periods within those fiscal
      years. The Company is currently evaluating the impact this standard will have
      on
      its financial statements.




In
      September 2006, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 108, “Considering the Effects of Prior Year Misstatements
      when Quantifying Misstatements in the Current Year Financial Statements”
(SAB 108). SAB 108 addresses how the effects
      of prior-year uncorrected misstatements should be considered when quantifying
      misstatements in current-year financial statements. SAB 108 requires an
      entity to quantify misstatements using a balance sheet and income-statement
      approach and to evaluate whether either approach results in quantifying an
      error
      that is material in light of relevant quantitative and qualitative factors.
      The
      guidance is applicable for fiscal years ending after November 15, 2006. The
      Company currently does not believe that SAB 108 will have a material impact
      on its financial statements.




8.  CAPITAL
      LEASE OBLIGATIONS




During
      the three-month period ended March 31, 2007, the Company entered into a two-year
      extension of the lease of its San Jose, California facility and now expires
      in
      March 2009.


Future
      minimum lease payments under the lease are as follows:




For
                the fiscal year ending September 30,2007
            
            $
            35,1212008
            
            
            70,2422009
            
            
            35,121Total
                minimum lease payments
            
            $
            140,484


**Item
      2.**  **Management’s
      Discussion and Analysis of Financial Condition and Results of Operations**




**FORWARD
      LOOKING STATEMENTS**




This
      Quarterly Report on Form 10-QSB contains forward-looking statements, within
      the
      meaning of Section 27A of the Securities Act of 1933 and Section 21E
      of the Securities Exchange Act of 1934, which involve risks and
      uncertainties. Forward-looking statements generally include words such as “may,”
“will,” “plans,” “seeks,” ”expects,” “anticipates,” “outlook,” “intends,”
“believes” and words of similar import as well as the negative of those terms.
      In addition, any statements that refer to expectations, projections or other
      characterizations of future events or circumstances, including any underlying
      assumptions, are forward-looking statements. All forward-looking statements
      included in this Quarterly Report on Form 10-QSB, including, but not limited
      to,
      statements regarding the future growth of our wireless product line; statements
      regarding future revenue from our products; statements regarding our future
      success; statements regarding future costs; statements regarding future research
      and development efforts; statements regarding competition in the market for
      wireless products; statements regarding future patent applications; statements
      regarding future financial results; statements regarding future plans to extend
      our product line; statements regarding the sufficiency of our existing cash
      balances to fund our operations; and statements regarding the effect of future
      financings on our existing shareholders are based on current expectations and
      are subject to important factors that could cause actual results to differ
      materially from those projected in the forward-looking statements. Such
      important factors include, but are not limited to, those discussed below under
      “Risk Factors” and elsewhere in this Quarterly Report and in other documents we
      file with the U.S. Securities and Exchange Commission. When reading the sections
      titled "Results of Operations" and "Financial Condition," you should also read
      our unaudited condensed financial statements and related notes included
      elsewhere herein, our Annual Report on Form 10-KSB for the fiscal year ended
      September 30, 2006, and the section below entitled "Risk Factors." We disclaim
      any obligation to update any forward-looking statements as a result of
      developments occurring after the date of this Quarterly Report.




10


**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**




**RESULTS
      OF OPERATIONS**




***Three-Month
      Periods Ended June 30, 2007 and 2006***




*Revenue*




Revenue
      consists of net revenue from the sale of NotifyLink software licenses, software
      installation fees and the sale of third party software products. Software
      revenue is recognized on a straight-line basis over the term of each contract.
      Installation revenue is recognized upon completion of trial activity and
      finalizing the software agreement. Third party software revenue is recognized
      upon delivery.





Revenue
      for the three-month period ended June 30, 2007 was flat at $937,607 versus
      $937,515 for the three-month period ended June 30, 2006. Although the gross
      revenue number appears unchanged, the NotifyLink product line revenue actually
      increased 26% to offset the loss in Visual Got Mail service revenue in the three
      month period ended June 30, 2006. The wireless NotifyLink product line revenue
      improved to $937,607 from $745,606 for the three-month periods ended June 30,
      2007 and 2006, respectively but the service portion of the Visual Got Mail
      Solution, which ended in February 2007, was zero in the three-month period
      ended
      June 30, 2007 compared to $191,909 in the comparable period of fiscal 2006.
      The
      Visual Got Mail Solution service revenue terminated as a result of our customer
      for that product merging with another entity.





Our
      NotifyLink product line is an email and Personal Information Management (PIM)
      system designed for business users. We provide secure real time wireless
      synchronization of email, calendar, contacts and tasks, supporting any
      BlackBerry, Palm and Windows Mobile Wireless device on all major cellular voice
      and data networks worldwide. The NotifyLink solution provides users with
      bi-directional mobile “automatic” synchronization of emails sent to end users’
email mailbox and all emails originated forwarded and replied to from the mobile
      device will be synchronized with the user’s desktop. The transmitted information
      keeps personal calendars continually up to date at both the server level and
      the
      mobile device level.




The
      Visual Got Mail Solution service consisted of a subscription service, operated
      by us, which linked Consumer Premise Equipment (CPE) hardware product to our
      customer’s voice mail platform. We received a monthly subscription service fee
      for each active voice mail user on our customer’s service. In June 2004, our
      sole customer for this solution made a decision to cease marketing the product
      that our services support and the installed base of customers slowly declined.
      Our customer finally terminated the product that our service supports on
      February 28, 2007. Consequently, our contract ended at the same
      time.





We
      sell
      our products primarily in the United States directly to business users and
      resellers. The NotifyLink and Visual Got Mail Solution revenue accounted for
      100% and 0%, respectively, of total revenue in the three-month period ended
      June
      30, 2007 and 79% and 21%, respectively, of total revenue in the three-month
      period ended June 30, 2006.




*Cost
      of Revenue*




Cost
      of
      revenue consists primarily of the server center costs and third party royalty
      fees on our NotifyLink sales. Cost of revenue increased to $30,914 in the
      three-month period ended June 30, 2007 from $23,275 for the three-month period
      ended June 30, 2006. The increase in the cost of revenue is due to royalty
      fees
      calculated on a larger sales base.




11




**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**


Our
      gross
      margin was relatively unchanged at 96.7% in the three-month period ended June
      30, 2007 compared to a gross margin of 97.5% in the three-month period ended
      June 30, 2006. The high gross margin in the three-month period ended June 30,
      2007 is due to the major costs of the business consisting of product design
      and
      sales and support, both of which fall below the gross profit line in operating
      expenses.




Our
      gross
      margin has historically been affected by a number of factors, including product
      mix, product demand, pricing pressures, warranty costs, and timing. The most
      significant historical fluctuations have been associated with our legacy CPE
      product sales but we have ceased manufacturing and selling CPE. We are still
      subject to product demand and pricing pressures as our sales have transitioned
      to software and service products but we will no longer experience the more
      significant changes that have been historically caused by varying mixes of
      hardware, software and service revenue.





*Research
      and development*





Research
      and development expenses consist primarily of personnel costs and support
      expenses. Research and development expenses increased to $328,035 for the
      three-month period ended June 30, 2007 from $250,589 for the three-month period
      ended June 30, 2006. This increase reflects the growth in our design and test
      staff required to support our expanding product lines and the advance of
      wireless devices available to users. Research and development is a critical
      factor in a growing technical market. The proliferation of new devices
      introduced into the wireless market has also increased engineering support
      for
      our product. Consequently, we expect to continue to invest in this area as
      resources allow. There can be no assurance that the market will continue to
      accept our wireless products.





*Sales
      and marketing*




Sales
      and
      marketing expenses consist primarily of personnel, travel costs and sales
      commissions related to our sales effort of the NotifyLink product line. Sales
      and marketing costs decreased to $369,618 for the three-month period ended
      June
      30, 2007 from $403,320 for the three-month period ended June 30, 2006. We use
      an
      internal sales force and a customer support staff to facilitate the NotifyLink
      sales process.




We
      anticipate that sales and marketing expenses will increase in future quarters
      as
      we hire additional sales and customer support personnel and attempt to expand
      our existing referral base and create new distribution channels.





*General
      and administrative*





General
      and administrative expenses consist of general management and finance personnel
      costs, insurance expense, occupancy costs, professional fees, stock based
      compensation expense and other general corporate
      expenses. General and administrative expenses increased to $302,926 for the
      three-month period ended June 30, 2007 from $334,681 for the three-month period
      ended June 30, 2006.





We
      expect
      that general and administrative expenses may increase in future quarters as
      we
      become subject to more of the requirements mandated by Sarbanes-Oxley
      Act.




***Nine-Month
      Periods Ended June 30, 2007 and 2006***




*Revenue*




Revenue
      for the nine-month period ended June 30, 2007 decreased to $2,958,685 from
      $3,345,279 for the nine-month period ended June 30, 2006. Product mix continued
      to play an important role in the change during this period. Our wireless
      NotifyLink product line revenue improved to $2,720,694 from $2,021,125 for
      the
      nine-month periods ended June 30, 2007 and 2006, respectively, but the service
      portion of the Visual Got Mail Solution, which ended in February 2007 was
      $237,991 in the nine-month period ended June 30, 2007 compared to $1,288,016
      in
      the comparable period of fiscal 2006. The Visual Got Mail Solution service
      revenue terminated as a result of our customer merging with another entity.




12


**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**


Our
      NotifyLink product line is an email and Personal Information Management (PIM)
      system designed for business users. The Visual Got Mail Solution service
      consisted of a subscription service, operated by us, which linked CPE hardware
      product to our customer’s voice mail platform. Our customer finally terminated
      the product that our service supports on February 28, 2007. Consequently, our
      contract ended at the same time.





We
      sell
      our products primarily in the United States directly to business users and
      resellers. The NotifyLink and Visual Got Mail Solution revenue accounted for
      92%
      and 8%, respectively, of total revenue in the nine-month period ended June
      30,
      2007 and 60% and 39%, respectively, of total revenue in the nine-month period
      ended June 30, 2006. The Visual Got Mail revenue was concentrated in one
      customer with the NotifyLink revenue spread out among many different customers
      during the nine-month period ended June 30, 2007.




*Cost
      of Revenue*




Cost
      of
      revenue consists of inventory costs on hardware sales and server center costs
      and third party royalty fees on our NotifyLink sales. Cost of revenue decreased
      significantly to $89,333 in the nine-month period ended June 30, 2007 from
      $531,944 for the nine-month period ended June 30, 2006. The decrease in the
      cost
      of revenue is due to the cost of hardware products in fiscal 2006 versus solely
      software and service costs in fiscal 2007.




Our
      gross
      margin increased to 97.0% in the nine-month period ended June 30, 2007 compared
      to a gross margin of 84.1% in the nine-month period ended June 30, 2006. The
      increase is directly related to the changed product mix where cost of sales
      for
      hardware products reduced the fiscal 2006 gross profit and was absent from
      the
      fiscal 2007 cost of sales. There will be no more hardware cost of sales in
      the
      foreseeable future as we have discontinued the hardware product
      line.




Our
      gross
      margin has historically been affected by a number of factors, including product
      mix, product demand, pricing pressures, warranty costs, and timing. The most
      significant historical fluctuations have been associated with our legacy CPE
      product sales but we have ceased manufacturing and selling CPE. We are still
      subject to product demand and pricing pressures as our sales have transitioned
      to software and service products but we do not believe will experience the
      more
      significant changes that have been historically caused by hardware versus
      software and service sales.





*Research
      and development*





Research
      and development expenses consist primarily of personnel costs and support
      expenses. Research and development expenses increased to $945,062 for the
      nine-month period ended June 30, 2007 from $713,035 for the nine-month period
      ended June 30, 2006. This increase reflects the growth in our design and test
      staff required to support our expanding product lines and the advance of
      wireless devices available
      to users. The proliferation of new devices introduced into the wireless market
      has also increased engineering support for our product. Research and development
      is a critical factor in a growing technical market. Consequently, we expect
      to
      continue to invest in this area as resources allow. There can be no assurance
      that the market will continue to accept our wireless products.





*Sales
      and marketing*




Sales
      and
      marketing expenses consist primarily of personnel, travel costs and sales
      commissions related to our sales effort of the NotifyLink product line. Sales
      and marketing costs increased to $1,247,004 for the nine-month period ended
      June
      30, 2007 from $1,221,606 for the nine-month period ended June 30, 2006. We
      use
      an internal sales force and a customer support staff to facilitate the
      NotifyLink sales process. The Visual Got Mail Solution sales have been
      completely supported at the executive staff level and its termination will
      not
      result in any saving in sales and marketing costs.




13


**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**


We
      anticipate that sales and marketing expenses will increase in future quarters
      as
      we hire additional sales and customer support personnel and attempt to expand
      our existing referral base and create new distribution channels.





*General
      and administrative*





General
      and administrative expenses consist of general management and finance personnel
      costs, insurance expense, occupancy costs, professional fees, stock based
      compensation expense and other general corporate expenses. General and
      administrative expenses increased to $977,692 for the nine-month period ended
      June 30, 2007 from $970,746 for the nine-month period ended June 30, 2006.





**LIQUIDITY
      AND CAPITAL RESOURCES**




During
      fiscal 2006 and the nine-month period ended June 30, 2007, we funded our
      operations through a combination of our gross profit earned from revenue and
      existing cash balances. Our ability to fund our recurring losses from operations
      depends upon success of our NotifyLink wireless e-mail notification market
      solutions. We continue to evaluate our opportunities to obtain further
      financing. We have no current intention to obtain financing. If financing were
      to become available on reasonable terms, we would consider the advisability
      of
      obtaining financing.




A
      significant characteristic of our business is the sale of our products
      customarily in the form of annual contracts paid for upon signing but the
      revenue amortized over the twelve-month service period. As our installed base
      grows, this practice increases the deferred revenue liability on the balance
      sheet as we add new contracts faster than old contracts expire. The major cost
      of operations is comprised of (1) the engineering design of our product offered
      for sale and (2) the physical sale of a contract that requires both direct
      sales
      effort and customer service hours to facilitate a trial period of our software
      prior to purchase. The change in the NotifyLink deferred revenue to $1,969,259
      as of June 30, 2007 from $1,623,606 as of September 30, 2006 is an indicator
      of
      product sales improvement during the period. Deferred revenue also represents
      the obligation to service the contracts underlying the revenue. However, the
      cash flow required to service the contracts is significantly less than the
      amortized revenue recognized each month.




We
      generated revenue from the service portion of our Visual Got Mail Solution
      through the end of February 2007 when our customer for this product terminated
      the program due to a merger and reorganization. The service was terminated
      on
      schedule in March 2007 and the equipment relocated to support our enterprise
      product line. Consequently, the Visual Got Mail Solution ended its product
      life
      after five years and no longer generates revenue. There are no warranty
      obligations outstanding or perceived redeployment opportunities.




Our
      continued operations depend on the cash flow from the NotifyLink product line.
      We have largely replaced the revenue that was lost from the Visual Got Mail
      Solution program but its termination will make it particularly important that
      we
      continue to increase NotifyLink revenues. In the event our NotifyLink revenue
      is
      interrupted, we would have to reduce our operations to service our existing
      contract obligations  unless
      we
      secured additional financing. If we were unable to achieve NotifyLink revenue
      improvements or secure
      financing, we would have to restructure our business to reduce costs.




In
      the
      event we require additional capital, we cannot predict whether we will be able
      to obtain financing on commercially reasonable terms, if at all. Any future
      financings may take the form of debt or equity securities or a combination
      of
      debt and equity, including convertible notes or warrants. In the event we are
      required to obtain additional financing, we cannot predict whether we could
      successfully conclude a financing with any new investors. Minimally, we expect
      that any additional financing could result in a substantial dilution of the
      equity and voting interests of our current shareholders.




14


**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**


At
      June
      30, 2006, we had cash and cash equivalents of $877,487. Over the last several
      years, we have financed our operations primarily through revenue from operations
      and existing cash balances. The net cash generated by operating activities
      equaled $87,253 in the nine-month period ended June 30, 2007 versus net cash
      generated by operating activities of $170,848 in the nine-month period ended
      June 30, 2006. The cash generated by operations in the nine-month period ended
      June 30, 2007 was a combination of a net loss of $297,730, a decrease in
      accounts receivable of $15,886, an increase in deferred revenue of $345,653
      and
      a decrease of accounts payable of $5,938. The net cash provided in the
      nine-month period ended June 30, 2006 was largely attributable to an increase
      in
      the fair value of warrants liability of $457,919 and an increase in deferred
      revenue of $416,417. Despite this favorable performance, we anticipate that
      we
      will have negative cash flow from time to time in operating activities in future
      quarters and years.




Net
      cash
      used in investing activities was an outflow of $25,628 and a net inflow of
      $243,874 for the nine-month periods ended June 30, 2007 and 2006, respectively.
      The net cash outflow in the nine-month period ended June 30, 2007 was due to
      capital purchases partially offset by the sale of fixed assets. The net cash
      outflow in the nine-month period ended June 30, 2006 was due to proceeds from
      the sale of patents partially offset by capital purchases.




Net
      cash
      used by financing activities was an outflow of $13,544 and an outflow of $18,521
      for the nine-month periods ended June 30, 2007 and 2006, respectively due to
      payments on capital leases.




**OFF-BALANCE
      SHEET ARRANGEMENTS**




We
      have
      no off balance sheet arrangements as defined by Item 303(c) of Regulation
      S-B.




**RISK
      FACTORS**




We
      operate in a dynamic and rapidly changing business environment that involves
      numerous risks and uncertainties. The following section lists some, but not
      all,
      of these risks and uncertainties, which may have a material adverse effect
      on
      our business, financial condition or results of operations.




**A
      significant portion of our revenue has been derived from the sale of a single
      solution to a single customer and that customer has discontinued the program
      our
      product supports**




For
      the
      nine-month period ended June 30, 2007, 8% of our revenue came from the sale
      of
      our Visual Got Mail Solution service to a single competitive provider of local
      phone services. In July 2004, the customer changed its business position in
      the
      market in which our product is sold and terminated its outbound marketing
      efforts. Although our customer continued to purchase our service product from
      us
      until February 28, 2007, they have since discontinued the program that our
      product supports and terminated our service. We have no alternative distribution
      channel for our Visual Got Mail Solution and, in the future, we will have to
      rely exclusively on our NotifyLink product revenue to support operations. If
      we
      are unable to increase our NotifyLink product revenues for any reason, it would
      have a material and adverse effect on our business, operating results, and
      financial condition.




**We
      have a history of losses, and there is no assurance of future
      profitability**




We
      commenced operations in August 1994 and through January 1996 were engaged
      primarily in research and development. We introduced the Visual Got Mail
      Solution in fiscal 2001 and made a subsequent decision in fiscal 2003 to refocus
      our strategy on developing and selling software applications for the wireless
      data market. Accordingly, our business has changed substantially in recent
      years, making it difficult to make period-to-period comparisons of our
      operations, and we face all of the risks and uncertainties encountered by early-stage
      companies. For the fiscal years ended September 30, 2006, 2005 and 2004, we
      incurred net losses of $314,892, $557,452 and $655,908, respectively. We
      incurred a net loss of $297,729 for the nine-month period ended June 30, 2007
      and as of June 30, 2007 we had an accumulated deficit of $24,246,308 and a
      working capital deficit of $985,606. Although we were cash positive in fiscal
      2006 and for the first nine-months of fiscal 2007, we anticipate having negative
      cash flow from operating activities from time to time in future quarters and
      years. We also expect to incur further operating losses in future quarters
      and
      years until such time, if ever, as there is a substantial increase in orders
      for
      our products and product sales generating sufficient revenue to fund our
      continuing operations. There can be no assurance that sales of our products
      will
      ever generate significant revenue, that we will ever generate positive cash
      flow
      from our operations or that we will attain or thereafter sustain profitability
      in any future period.




15


**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**


**If
      we are unable to market our wireless software products and achieve industry
      acceptance quickly, we could lose existing and potential customers and our
      sales
      would decrease**




We
      continue to invest in our wireless products in order to grow our revenue and
      improve our financial condition. We need to market improved wireless software
      products on a timely basis to keep pace with technological developments,
      emerging industry standards, and the growing needs of our sophisticated
      customers. We intend to extend our product offerings primarily through our
      NotifyLink product line primarily into the Internet Message Access Protocol
      (IMAP) product base. However, we may experience difficulties in marketing these
      new products, and our inability to timely and cost-effectively introduce them
      and future enhancements, or the failure of these new products or enhancements
      to
      achieve market acceptance, could seriously harm our business. Life cycles of
      wireless software products are difficult to predict, because the market for
      such
      products is new and evolving and characterized by rapid technological change,
      frequent enhancements to existing products and new product introductions,
      changing customer needs and evolving industry standards. The introduction of
      competing products that employ new technologies and emerging industry standards
      could render our products and services obsolete and unmarketable or shorten
      the
      life cycles of our products and services. The emergence of new industry
      standards might require us to redesign our products. If our products are not
      in
      compliance with industry standards that become widespread, our customers and
      potential customers may not purchase our products.




**If
      the market for wireless data communications devices does not grow, we may not
      successfully sell our NotifyLink products**




The
      overall market for wireless data communications devices has experienced
      significant growth in recent years. The success of our NotifyLink Enterprise
      and
      Hosted products depends upon this growth. There can be no assurance that the
      market for wireless software products will continue to grow, that firms within
      the industry will adopt our software products for integration with their
      wireless data communications solutions, or that we will be successful in
      independently establishing product markets for our wireless software products.
      We cannot predict that growth of our NotifyLink products will continue or
      maintain itself at the current level. If the various markets in which our
      software products compete fail to grow, or grow more slowly than we currently
      anticipate, or if we were unable to establish product markets for our new
      software products, our business, results of operation and financial condition
      would be materially adversely affected.




**We
      may be unable to generate the capital necessary to support our planned level
      of
      research and development activities or to manufacture and market our products.
      Financing may not be available to us when and if required or on commercially
      reasonable terms**




At
      June
      30, 2007, we had an accumulated deficit of $24,246,308 and incurred a net loss
      of $297,729 for the nine-month period ended June 30, 2007. We had a working
      capital deficit at that date of $985,606. Our recently developed NotifyLink
      products will need to attain favorable market acceptance in order for us to
      be
      able to continue our research and development activities and to fund operating
      expenses at current levels. Regardless, because our NotifyLink wireless product
      line has not provided sufficient contributions to our revenue to date to operate
      profitably without the contribution of our Visual Got Mail Solution service
      revenue, the success of our business operations will depend upon a significant
      favorable market acceptance for our new wireless software products and our
      ability to obtain further financing. Obtaining additional financing will be
      subject to a number of factors including market conditions, investor acceptance
      of our business plan, and investor sentiment. These factors may make the timing,
      amount, terms and conditions of additional financing unattractive or unavailable
      to us. If we are unable to raise additional financing, we will have
      to
      rely on our operations for cash flow or significantly reduce our spending,
      delay
      or cancel planned activities or substantially change our current corporate
      structure. In such an event, we intend to implement expense reduction plans
      in a
      timely manner. However, these actions would have material adverse effects on
      our
      business, results of operations, and prospects, resulting in a possible failure
      of our business. Any financing would be expected to substantially dilute the
      interests of our existing stockholders.




16


**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**


**Our
      quarterly operating results may vary**




We
      anticipate that we will experience significant fluctuations in our operating
      results in the future. Fluctuations in operating results may cause the price
      of
      our common stock to be volatile. Operating results may vary as a result of
      many
      factors, including the following:




·
            our
                level of research and development;




·
            our
                sales and marketing activities;




·
            announcements
                by us or our competitors;




·
            size
                and timing of orders from
                customers;




·
            new
                product introductions by us or our
                competitors;




·
            future
                market acceptance of our products;




·
            licensing
                costs of patent conflicts; and




·
            price
                erosion.




Each
      of
      the above factors is difficult to control and forecast. Thus, they could have
      a
      material adverse effect on our business, financial condition and results of
      operations.




Notwithstanding
      the difficulty in forecasting future sales, we generally must undertake research
      and development and sales and marketing activities and other commitments months
      or years in advance. Accordingly, any shortfall in product revenue in a given
      quarter may materially adversely affect our financial condition and results
      of
      operations because we are unable to adjust expenses during the quarter to match
      the level of product revenue, if any, for the quarter. Due to these and other
      factors, we believe that quarter to quarter comparisons of our results of
      operations are not necessarily meaningful and should not be relied upon as
      indications of future performance.




**We
      depend on a limited number of potential customers and need to develop marketing
      channels**




We
      are
      building a formal referral channel and participate in informal referral
      arrangements with several wireless carriers, 2way wireless device manufacturers
      and one net ware company for the sale of our NotifyLink products and services
      where our products assist in the sale of their products. We have a limited
      direct sales force to sell our NotifyLink products and services to eventual
      users and we rely upon both formal and informal referral arrangements to provide
      leads for our NotifyLink products. To date, most of our referral arrangements
      are formal and we will receive referrals only to the extent that our referral
      partners successfully refer our products and services to potential users. There
      can be no assurance that we will achieve a significant volume of sales of our
      NotifyLink products and services to end users or will continue to receive
      referrals through our formal arrangements. Our Enterprise solution product
      is
      sold into an emerging market and we have not yet achieved sufficient growth
      in
      our sales to operate profitably without contribution from our Visual Got Mail
      Solution. The termination of the Visual Got Mail Solution makes it more
      important we increase our NotifyLink business.




We
      are
      expanding our distribution channels for our wireless products by participating
      in national and regional trade shows, promotions with strategic partners,
      training programs for telephone and wireless carrier sales representatives
      and
      presenting at Novell GroupWise user meetings across the United States. We cannot
      predict whether these activities will result in increased wireless revenue.
      We
      also have limited international sales due to limited resources to build a
      reseller network. Our management will need to expend time and effort to develop
      these channels. Our customer profile has changed from volume sales to a limited
      number of large telecommunication customers to relatively small sales to a
      large
      number of business customers. We have expanded our internal sales force in
      response. We are building experience selling into the wireless market
      but lack the resources to recruit experts in the wireless market. We may not
      be
      able to adapt our traditional marketing and distribution programs to expand
      our
      distribution channels and any marketing efforts undertaken by or on behalf
      of us
      may not be successful.




17


**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**


**Our
      products may suffer from defects**




Most
      of
      our products consist of software and services related to our wireless NotifyLink
      product line. Our NotifyLink products incorporate a mix of new and proven
      technology that has been tested extensively, but may still contain undetected
      design flaws. A failure by us to detect and prevent a design flaw or a
      widespread product defect could materially adversely affect the sales of the
      affected product and our other products and materially adversely affect our
      business, financial condition and operating results.




We
      have
      stopped production and development of our Visual Got Mail Solution product
      and
      all products in the field are out of warranty so we have no exposure from
      unknown defects from this product line.




**We
      face significant competition**




We
      believe the market for our wireless products is highly competitive and that
      competition is likely to intensify. In the market for wireless email
      notification and management software, we compete with Research In Motion
      Limited, Visto and the Good Technology division of Motorola. We expect that
      to
      the extent that the market for our products develops, competition will intensify
      and new competitors will enter the market. We may not be able to compete
      successfully against existing and new competitors as the market for our products
      evolves and the level of competition increases. A failure to compete
      successfully against existing and new competitors would materially and adversely
      affect our business, revenue, operating results, and financial
      condition.




**Our
      products may not be accepted**




We
      first
      launched our NotifyLink product line in November 2000. We have since released
      improved versions and expanded our NotifyLink product offerings. Although the
      sales of our NotifyLink product has grown significantly over the last few years,
      the revenue from this product line alone has not yet been sufficient to bring
      us
      to profitability.




We
      intend
      to continue to devote engineering, sales and marketing efforts to our NotifyLink
      product line and to promote general consumer and business interest in our
      products. There can be no assurance that such efforts will be successful or
      that
      significant market demand for our products will ever develop.




**Delisting
      from the Nasdaq SmallCap Market may affect the liquidity of our trading market
      and the market price of our common stock**




Since
      September 4, 2002, our common stock has been quoted on the Over-the-Counter
      Bulletin Board. Our shareholders could find it difficult to dispose of or to
      obtain accurate quotations as to the market value of, our common stock. In
      addition, delisting may make our common stock ineligible for use as, or make
      our
      common stock substantially less attractive as, collateral for margin and purpose
      loans, for investment by financial institutions under their internal policies
      or
      state legal investment laws, as consideration in the financing of future
      acquisitions of businesses or assets by us, and for issuance by us in future
      capital raising transactions any of which could cause the market price of our
      common stock to decrease. Delisting subjects our common stock to the “penny
      stock rules” contained in Section 15(g) of the Securities Exchange Act of
      1934.




**We
      depend on key executives**




Our
      potential for success depends significantly on key management employees,
      including our Chairman, President and Chief Executive Officer, Paul F. DePond,
      our Vice President of Development, Rhonda Chicone-Shick and our Chief Financial
      Officer, Gerald W. Rice. We have entered into employment agreements with these
      three key management employees. The loss of their services or those of any
      of
      our other key employees would materially adversely affect us. We also believe
      that our future success will depend in large part on our ability to attract
      and
      retain additional highly skilled technical, management, sales and
      marketing personnel. If we were unable to hire the necessary personnel, the
      development of new products and enhancements to current products would likely
      be
      delayed or prevented. Competition for these highly-skilled employees is intense.
      Therefore, there can be no assurance that we will be successful in retaining
      our
      key personnel and in attracting and retaining the personnel we require for
      expansion.




18


**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**


**Our
      intellectual property may not be adequately protected and we may infringe the
      rights of others**




We
      regard
      various features and design aspects of our products as proprietary and we rely
      primarily on a combination of copyright, trademark laws and employee and
      third-party nondisclosure agreements to protect our proprietary rights. In
      fiscal 2006, we sold our rights to several patents for legacy products no longer
      in production. Our software products are generally not subject to patent claims
      although we intend to continue to apply for patents, as appropriate, for our
      future technologies and products. There are few barriers to entry into the
      market for our products, and there can be no assurance that any patents we
      apply
      for will be granted, that any issued patents will be enforceable or valid,
      or
      that the scope of our patents or any patents granted in the future will be
      broad
      enough to protect us against the use of similar technologies by our competitors.
      There can be no assurance, therefore, that any of our competitors, some of
      whom
      have far greater resources than we do, will not independently develop
      technologies that are substantially equivalent or superior to our
      technology.




**Our
      stock price may be volatile**




The
      market price for our common stock may be affected by a number of factors,
      including the announcement of new products or product enhancements by us or
      our
      competitors, the loss of services of one or more of our executive officers
      or
      other key employees, quarterly variations in our or our competitors' results
      of
      operations, changes in earnings estimates, developments in our industry, sales
      of substantial numbers of shares of our common stock in the public market,
      general market conditions and other factors, including factors unrelated to
      our
      operating performance or the operating performance of our competitors. In
      addition, stock prices for many companies in the technology sector have
      experienced wide fluctuations that have often been unrelated to the operating
      performances of these companies. These factors and fluctuations, as well as
      general economic, political and market conditions, such as recessions, may
      materially adversely affect the market price of our common stock.




**Our
      charter provisions may discourage acquisition bids**




Our
      Articles of Incorporation gives our board of directors the authority to issue
      an
      aggregate of 5,000,000 shares of preferred stock and to determine the price,
      rights, preferences, privileges and restrictions, including voting rights for
      these shares, without any further vote or action by our shareholders. The rights
      of the holders of our common stock will be subject to, and may be adversely
      affected by, the rights of the holders of any preferred stock that may be issued
      in the future. The issuance of preferred stock, while providing flexibility
      in
      connection with possible acquisition and other corporate purposes, could have
      the effect of making it more difficult for a third party to acquire a majority
      of our outstanding voting stock.




**One
      director holds a large percentage of our stock and his interests may differ
      from
      other stockholders**




On
      May
      29, 2007, Commonwealth Associates, LLC, along with a number of other investors,
      sold their securities, including Unit Purchase Options, to 21X Investments
      LLC.




As
      of
      June 30, 2007, Mr. David Brewer, beneficially owned, in the aggregate,
      approximately 55% of our outstanding common stock assuming the conversion of
      all
      outstanding warrants, preferred unit options and options held by 21X Investments
      LLC that were exercisable within 60 days of June 30, 2007. Mr. Brewer has been
      a
      director of Notify since February 2000. Because of this beneficial ownership
      and
      his management roll in 21X Investments LLC, Mr. Brewer will have a significant
      influence over most matters requiring approval by stockholders, including the
      election of directors, any amendments to our certificate of incorporation and
      significant corporate transactions.




On
      June
      21, 2007, the Board of Directors passed a resolution reducing the size of the
      Board from seven members to five members. Prior to this event, two vacancies
      existed because of two Board member resignations, one due to business reasons
      and one as a result of no longer holding an investment interest in
      Notify.


19


**NOTIFY
        TECHNOLOGY CORPORATION**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS(UNAUDITED)**


**Our
      articles of incorporation limit the liability of officers and directors and
      we
      have entered into indemnification agreements with them**




Our
      Articles of Incorporation eliminate, in certain circumstances, the liability
      of
      our directors for monetary damages for breach of their fiduciary duties as
      directors. We have also entered into indemnification agreements with each of
      our
      directors and officers. Each of these indemnification agreements provides that
      we will indemnify the indemnitee against expenses, including reasonable
      attorneys' fees, judgments, penalties, fines, and amounts paid in settlement
      actually and reasonably incurred by them in connection with any civil or
      criminal action or administrative proceeding arising out of their performance
      of
      duties as a director or officer, other than an action instituted by the director
      or officer. These indemnification agreements also require that we indemnify
      the
      director or other party thereto in all cases to the fullest extent permitted
      by
      applicable law. Each indemnification agreement permits the director or officer
      that is party thereto to bring suit to seek recovery of amounts due under the
      indemnification agreement and to recover the expenses of such a suit if they
      are
      successful.





**Item
      3.**  **Controls
      and Procedures**




(a)  Evaluation
      of Disclosure Controls and Procedures .





Our
      chief
      executive officer and our chief financial officer, after evaluating our
      disclosure controls and procedures (as defined in the rules and regulation
      of
      the Securities and Exchange Commission under the Securities Exchange Act of
      1934
      (the "Exchange Act"), as of the end of the period covered by this Quarterly
      Report on Form 10-QSB, have concluded that our disclosure controls and
      procedures are effective to ensure that information we are required to disclose
      in reports that we file or submit under the Exchange Act is accumulated and
      communicated to our management, including our Chief Executive Officer and Chief
      Financial Officer, as appropriate, to allow timely decisions regarding required
      disclosures, and that such information is recorded, processed, summarized and
      reported within the time periods specified in Securities and Exchange Commission
      rules and forms.




(b)  Changes
      in Internal Controls .




During
      the period covered by this Quarterly Report on Form 10-QSB, there were no
      significant changes in our internal controls over financial reporting or in
      other factors that have materially affected, or are reasonably likely to
      materially affect, our internal controls over financial
      reporting.





**PART
      II.**  **OTHER
      INFORMATION**




**Item
      6.**  **Exhibits**




(a)
            Exhibits:31.1
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200231.2
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200232.1
            Certification
                of Chief Executive Officer and Chief Financial Officer under Section
                906
                of the Sarbanes-Oxley Act of 2002




20




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


NOTIFY
                TECHNOLOGY CORPORATIONDated:
                August 14, 2007/s/ Gerald
              W. RiceChief
                Financial Officer
              (Principal
                  Financial and Accounting
                  Officer)




21