<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

                  For The Quarterly Period Ended:    February 28, 2002
                                                     -----------------

                                       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: 0-21367

                             DATA TRANSLATION, INC.
          -----------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                                 04-3332230
  --------------------------------       ---------------------------------------
  (State or other jurisdiction of         I.R.S. Employer Identification Number)
   organization or incorporation)

                                 100 Locke Drive
                             Marlboro, Massachusetts
          ----------------------------------------------------------------
                    (Address of principal executive offices)

                                      01752
          ----------------------------------------------------------------
                                   (Zip code)

                                 (508) 481-3700
          ----------------------------------------------------------------
              (Registrant's telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 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
                                                             -----      -----


As of March 31, 2002 there were 3,511,312 shares of the issuer's common stock
outstanding.

Transitional Small Business Disclosure Format (check one):  Yes        No  X
                                                                -----    -----




<PAGE>

                                                                    Page 2 of 13

                     DATA TRANSLATION, INC. AND SUBSIDIARIES



                                      INDEX
                                      -----

                                                                        Page No.
                                                                        --------
 Part I - Financial Information:
    Consolidated Balance Sheets as of February 28, 2002 and
        November 30, 2001 ...................................................  3

    Consolidated Statements of Operations for the Three Months
        Ended February 28, 2002 and February 28, 2001........................  4

    Consolidated Statements of Cash Flows for the Three Months
        Ended February 28, 2002 and February 28, 2001........................  5

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

    Management's Discussion and Analysis of
        Financial Condition and Results of Operations........................ 10

    Signature................................................................ 13

<PAGE>

                                                                    Page 3 of 13


PART I.  FINANCIAL INFORMATION

                     DATA TRANSLATION, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                  February 28,       November 30,
                                                                                      2002               2001
                                                                                  ------------       ------------
<S>                                                                               <C>                <C>
Current Assets:
               Cash and cash equivalents                                          $  3,549,000       $  3,618,000
               Marketable securities                                                   115,000            115,000
               Accounts receivable, net of reserves of
                 $248,000 and $273,000 in 2002 and 2001, respectively                1,501,000          1,480,000
               Inventories                                                           1,369,000          1,324,000
               Prepaid expenses                                                        395,000            390,000
                                                                                  ------------       ------------
                    Total current assets                                             6,929,000          6,927,000

Equipment and Leasehold Improvements, net                                              393,000            469,000

Other Assets, net                                                                       26,000             77,000
                                                                                  ------------       ------------

Total Assets                                                                      $  7,348,000       $  7,473,000
                                                                                  ============       ============


Current Liabilities:
               Accounts payable                                                   $    999,000       $    857,000
               Accrued expenses                                                      1,865,000          1,844,000
                                                                                  ------------       ------------
                    Total current liabilities                                        2,864,000          2,701,000

Stockholders' Investment:
               Preferred Stock, $.01 par value,
                  Authorized - 5,000,000 shares; none issued                              --                 --
               Common Stock, $.01 par value,
                  Authorized - 30,000,000 shares; 3,568,412 shares issued in
                  2002 and 2001; 3,511,947 shares outstanding in 2002 and
                  2001 respectively                                                     36,000             36,000
               Treasury Stock, common, at cost-
                  56,465 shares in 2002 and 2001                                      (227,000)          (227,000)
               Capital in excess of par value                                       14,643,000         14,642,000
               Accumulated deficit                                                  (9,911,000)        (9,611,000)
               Cumulative translation adjustment                                       (57,000)           (68,000)
                                                                                  ------------       ------------

                    Total stockholders' investment                                   4,484,000          4,772,000
                                                                                  ------------       ------------

Total Liabilities and Stockholders' Investment                                    $  7,348,000       $  7,473,000
                                                                                  ============       ============
</TABLE>


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

<PAGE>

                                                                    Page 4 of 13


                     DATA TRANSLATION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     Three Months Ended
                                               February 28,      February 28,
                                                   2002              2001
                                               -----------       -----------
<S>                                            <C>               <C>
Net sales                                      $ 2,769,000       $ 4,187,000

Cost of sales                                    1,323,000         1,810,000
                                               -----------       -----------

     Gross profit                                1,446,000         2,377,000

Research and development expenses                  640,000           771,000
Selling and marketing expenses                     732,000         1,226,000
General and administrative expenses                383,000           459,000
                                               -----------       -----------

     Loss from operations                         (309,000)          (79,000)

Interest income                                     10,000            26,000
                                               -----------       -----------

     Net loss                                  $  (299,000)      $   (53,000)
                                               ===========       ===========

Basic and diluted net loss per share           $     (0.09)      $     (0.02)
                                               ===========       ===========

Basic and diluted weighted average number
     of common shares outstanding                3,511,000         2,244,000
                                               ===========       ===========
</TABLE>

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

<PAGE>

                                                                    Page 5 of 13


                     DATA TRANSLATION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                  Three Months Ended
                                                                            February 28,      February 28,
                                                                                2002              2001
                                                                            -----------       -----------
<S>                                                                         <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                  $  (299,000)      $   (53,000)
  Adjustments to reconcile net loss to
   net cash used in operating activities-
                     Depreciation and amortization                               74,000           144,000
                     Change in current assets and liabilities-

                       Accounts receivable                                      (21,000)         (269,000)
                       Inventories                                              (45,000)         (150,000)
                       Prepaid expenses                                          (5,000)           99,000
                       Accounts payable                                         142,000              --
                       Accrued expenses                                         (21,000)
                                                                                                   81,000
                                                                            -----------       -----------

                     Net cash used in operating activities                     (134,000)         (310,000)
                                                                            -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
                     Purchases of equipment and leasehold improvements           (6,000)          (59,000)
                     Purchases of marketable securities                        (115,000)         (115,000)
                     Maturity of marketable securities                          115,000           114,000
                     Decrease ( Increase) in other assets                        51,000            (2,000)
                                                                            -----------       -----------

                     Net cash provided by investing activities                   45,000           (62,000)
                                                                            -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
                     Proceeds from stock plans                                     --              41,000


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

                    Net cash provided by financing activities                      --              41,000
                                                                            -----------       -----------

EXCHANGE RATE EFFECTS                                                            20,000            38,000
                                                                            -----------       -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            (69,000)         (293,000)
CASH AND CASH EQUIVALENTS, beginning of period                                3,618,000         2,741,000
                                                                            -----------       -----------
CASH AND CASH EQUIVALENTS, end of period                                      3,549,000         2,448,000
                                                                            ===========       ===========
</TABLE>


<PAGE>

                                                                    Page 6 of 13



                     DATA TRANSLATION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  Basis of Presentation

        In the opinion of management, these unaudited consolidated financial
statements and disclosures reflect all adjustments necessary for fair
presentation. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the full year.

        Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements and the notes thereto included in the latest audited financial
statements of Data Translation, Inc. and its subsidiaries (the "Company"), which
are contained in the Company's 2001 Annual Report on Form 10-KSB, filed with the
Securities and Exchange Commission on February 28, 2002.

        The preparation of financial statements in conformity with generally
accepted accounting principles 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 those estimates.

2. Cash Equivalents and Marketable Securities

        Cash equivalents are carried at cost which approximates market value and
have maturities of less than three months. Cash equivalents include money market
accounts, overnight time deposits, and U.S. Treasury bills.

        The Company accounts for marketable securities in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 115, Accounting for
Certain Investments in Debt and Equity Securities. Under this standard, the
Company is required to classify all investments in debt and equity securities
into one or more of the following three categories: held-to-maturity,
available-for-sale or trading. The Company's marketable securities mature in
August 2002 and are classified as held-to-maturity as the Company has the
positive intent and ability to hold to maturity. Marketable securities are
reported at amortized cost, which approximates fair market value. The Company's
cash equivalents and marketable securities are invested in highly rated
government securities.

3. Derivatives

        Effective December 1, 2000 the Company adopted SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities. SFAS No. 133 requires that
all derivatives, including foreign currency exchange contracts, be recognized on
the balance sheet at fair value. Derivatives that are not hedges must be
recorded at fair value through earnings. If a derivative is a hedge, depending
on the nature of the hedge, changes in the fair value of the derivative are
either offset against the change in fair value of assets, liabilities or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value is to be immediately recognized in earnings.
The adoption of SFAS No. 133 resulted in an immaterial cumulative effect on
income and other comprehensive income for the Company.

<PAGE>

                                                                    Page 7 of 13


4. Segment Reporting and Geographic Information

        (a) Segment Reporting

        The Company adopted SFAS No. 131, Disclosures About Segments of an
Enterprise and Related Information, in the fiscal year ended November 30, 1999.
SFAS No. 131 establishes standards for reporting information regarding operating
segments in annual financial statements and requires selected information for
those segments to be presented in interim financial reports issued to
stockholders. SFAS No. 131 also establishes standards for related disclosures
about products and services and geographic areas. Operating segments are
identified as components of an enterprise about which separate financial
information is available for evaluation by the chief decision maker, or decision
making group, in making decisions how to allocate resources and assess
performance. The Company's chief operating decision-maker, as defined under SFAS
No. 131, is the chief executive officer.

        The Company's reportable segments are Core and Commercial(TM). The Core
segment is composed of the data acquisition, imaging and machine vision business
which consists of plug-in cards and Windows-based software that provide an
integrated, high performance system solution to the general scientific and
industrial, test and measurement marketplace. The commercial segment is composed
of a plug-in video capture card, Broadway, which is a high-performance video
capture and encoding system for Windows 98 and Windows NT PCs. The accounting
policies of the segments are the same as those described in the summary of
significant accounting policies contained in the Company's 2001 Annual Report on
Form 10-KSB, filed with the Securities and Exchange Commission on February 28,
2002. The Company evaluates performance based on revenues and operating margin.
Revenues are attributed to geographic areas based on where the customer is
located. Segment information for the three months ended February 28, 2002 and
2001 is as follows:

<TABLE>
<CAPTION>

                                                            Core        Commercial        Total
                                                        ----------      ----------      ----------
<S>                                                      <C>             <C>             <C>
For the three months ended February 28, 2002:

Revenues from unaffiliated customers ..............      $2,519,000      $  250,000      $2,769,000
Cost of  sales ....................................       1,206,000         117,000       1,323,000
Research and development ..........................         635,000           5,000         640,000
                                                         ----------      ----------      ----------
Operating margin (1) ..............................      $  678,000      $  128,000      $  806,000
                                                         ==========      ==========      ==========
For the three months ended February 28, 2001:
Revenues from unaffiliated customers ..............      $3,867,000      $  320,000      $4,187,000
Cost of sales .....................................       1,653,000         157,000       1,810,000
Research and development ..........................         768,000           3,000         771,000
                                                         ----------      ----------      ----------
Operating margin (1) ..............................      $1,446,000      $  160,000      $1,606,000
                                                         ==========      ==========      ==========
</TABLE>



(1)  The Operating Margins reported reflect only the expenses of the line of
     business and do not represent the actual margins for each operating segment
     since they do not contain an allocation for selling and marketing, general
     and administrative and other corporate expenses incurred in support of the
     line of business.

     Loss Reconciliation:

<TABLE>
<CAPTION>
                                                                   Three Months Ended
                                                             February 28,      February 28,
                                                                 2002              2001
                                                             -----------       -----------
<S>                                                          <C>               <C>
Total operating margin for reportable segments ........      $   806,000       $ 1,606,000
Selling and marketing expenses ........................         (732,000)       (1,226,000)
General and administrative expenses ...................         (383,000)         (459,000)
Interest income .......................................           10,000            26,000
                                                             -----------       -----------
             Net loss .................................      $  (299,000)      $   (53,000)
                                                             ===========       ===========
</TABLE>



<PAGE>

                                                                    Page 8 of 13


      (b) Geographic Information

<TABLE>
<CAPTION>
                                                                       United
                                                  United States       Kingdom         Germany        Eliminations    Consolidated
                                                   -----------      -----------     -----------      -----------      -----------
<S>                                                <C>              <C>             <C>              <C>              <C>
For the three months ended February 28, 2002:
Sales to unaffiliated customers (1) ............   $ 2,118,000      $   302,000     $   349,000      $      --        $ 2,769,000
Sales or transfers between geographic areas ....       281,000             --              --           (281,000)            --
                                                   -----------      -----------     -----------      -----------      -----------
Total net sales ................................   $ 2,399,000      $   302,000     $   349,000      $  (281,000)     $ 2,769,000
                                                   ===========      ===========     ===========      ===========      ===========
Net loss .......................................   $  (249,000)     $    (8,000)    $   (23,000)     $   (19,000)     $  (299,000)
                                                   ===========      ===========     ===========      ===========      ===========

Property and equipment .........................   $   353,000      $    38,000     $    14,000      $   (12,000)     $   393,000
                                                   ===========      ===========     ===========      ===========      ===========

For the three months ended February 28, 2001:
Sales to unaffiliated customers (1) ............   $ 3,180,000      $   417,000     $   590,000      $      --        $ 4,187,000
Sales or transfers between geographic areas ....       511,000             --              --           (511,000)            --
                                                   -----------      -----------     -----------      -----------      -----------
Total net sales ................................   $ 3,391,000      $   417,000     $   590,000      $  (511,000)     $ 4,187,000
                                                   ===========      ===========     ===========      ===========      ===========
Net loss .......................................   $  (135,000)     $    38,000     $    44,000      $      --        $   (53,000)
                                                   ===========      ===========     ===========      ===========      ===========
Property and equipment .........................   $   735,000      $    58,000     $    25,000      $   (13,000)     $   805,000
                                                   ===========      ===========     ===========      ===========      ===========
</TABLE>


Foreign sales from the United States to unaffiliated customers for the three
months ended February 28, 2002 and 2001 were approximately $512,000, and
$816,000, respectively.

5.  Inventories

        Inventories are stated at the lower of first-in, first-out (FIFO) cost
or market and consist of the following:

<TABLE>
<CAPTION>
                                   February 28,    November 30,
                                        2002           2001
                                    ----------     ----------
<S>                                 <C>            <C>
            Raw material ......     $  942,000     $  951,000
            Work-in-process....        183,000        116,000
            Finished goods.....        244,000        257,000
                                    ----------     ----------
                                    $1,369,000     $1,324,000
                                    ==========     ==========
</TABLE>


Work-in-process and finished goods inventories include material, labor and
manufacturing overhead. Management performs periodic reviews of inventory and
disposes of items not required by their manufacturing plan and reduces the
carrying cost of inventory items to the lower of cost or market (with market
value generally defined as the lower of replacement cost or net realizable
value).

6.  Net Loss Per Common Share

        Basic net loss per share is computed by dividing net loss by the
weighted average number of common shares outstanding during the period. The
dilutive effect of potential common stock, consisting of outstanding stock
options, is determined using the treasury stock method in accordance with SFAS
128. Diluted net loss per share for the three months ended February 28, 2002 and
February 28, 2001 is the same as basic net loss per share since the inclusion of
the potential common stock equivalents would be antidilutive due to the losses
in all periods presented. As of February 28, 2002 and 2001, 0 and 29,000 common
equivalent shares respectively, have been excluded from the calculation of
diluted earnings per share.

<PAGE>


                                                                    Page 9 of 13


7.  Stockholder's Investment

        In March 2000, the FASB issued Interpretation No. 44, Accounting for
Certain Transactions Involving Stock Compensation-An Interpretation of APB
Opinion No. 25. The interpretation clarifies the application of Opinion 25 in
certain situations, as defined. The interpretation became effective on July 1,
2000, and covers certain events that occur after December 15, 1998. The effects
of applying this interpretation should be recognized on a prospective basis from
the effective date. On December 16, 1998, the Company's board authorized the
repricing of employee options to purchase 100,000 shares of common stock from an
exercise price of $3.00 per share to an exercise price of $1.50 per share, which
represented the fair market value of the Company's common stock on the date of
repricing. As of February 28, 2002, 66,667 options were still outstanding and
are subject to variable plan accounting through the earlier of the exercise or
termination of the options. There was no effect on earnings during the first
quarter of fiscal 2002.

        On February 21, 2002, the Company announced an offer to certain holders
of outstanding options to purchase Data Translation common stock the opportunity
to exchange and cancel their outstanding options to purchase shares of Data
Translation common stock for new options to purchase the same number of shares
covered by the options tendered for exchange. This offer is voluntary and must
be accepted by individual option holders in writing. All options having an
exercise price of $4.00 or more per share that are currently outstanding under
our 1996 Stock Option Plan are eligible. In addition, the option holder must
continue to be an employee of the Company on the date of grant of new options,
which will be on or about the first business day that is at least six months and
one day following the date of cancellation of eligible options. The new options
will vest over two years from the date of issuance. One third of the option will
be vested as of the date of issuance of the new option and one fourth of the
remaining unvested portion of the option will vest every six months from the
date of issuance of the new option. The offer expired at 5:00 p.m., Eastern
Standard Time, on Friday, March 22, 2002. Pursuant to the offer, we have
accepted for exchange and cancellation options to purchase an aggregate of
362,800 shares of Data Translation common stock, representing approximately 99%
of the shares subject to options that were eligible for exchange in the offer.
Subject to the terms and conditions described in the exchange offering, we will
grant new options to purchase up to an aggregate of 362,800 shares of Data
Translation common stock on September 26, 2002 in exchange for the options
surrendered in the offer.

<PAGE>

                                                                   Page 10 of 13


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

Forward Looking Statements

        This Form 10-Q may contain "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, including, without
limitation, with respect to (i) the Company's anticipated liquidity position,
(ii) market conditions and trends in the markets in which the Company
participates, (iii) the Company's ability to meet its current operating
requirements, (iv) the impact on the Company's business results of operations,
and financial condition of contingencies over which the Company has no control,
and (vi) certain other statements identified or qualified by words such as
"likely", "will", "suggests", "may", "would", "could", "should", "expects",
"anticipates", "estimates", "plans", "projects", "believes", "is optimistic
about", or similar expressions (and variants of such words of expressions).
Investors are cautioned that forward-looking statements are inherently
uncertain. These forward-looking statements represent the best judgment of the
Company as on the date of this Form 10-Q and the Company cautions readers not to
place undue reliance on such statements. Actual performance and results of
operations may differ materially from those projected or suggested in the
forward-looking statements due to certain risks and uncertainties including,
without limitation, risks described under the heading "Certain Factors That May
Affect Future Results" in the Company's 2001 Annual Report on Form 10-KSB, filed
with the Securities and Exchange Commission on February 28, 2002.

Results of Operations

        The following table sets forth certain consolidated statement of
operations data as a percentage of net sales.

<TABLE>
<CAPTION>
                                                         Three Months Ended
                                                            February 28,
                                                         --------------------
                                                          2002         2001
                                                         ------       ------
<S>                                                      <C>          <C>
Net sales ........................................        100.0%       100.0%

gross profit .....................................         52.2         56.8
Research and development expenses ................         23.1         18.4
Selling and marketing expenses ...................         26.4         29.3
General and administrative expenses ..............         13.8         11.0
                                                         ------       ------
Loss from operations .............................        (11.2)        (1.8)
Interest (expense) income and other, net .........          0.4          0.6
                                                         ------       ------

Net loss .........................................        (10.8)%       (1.2)%
                                                         ======       ======
</TABLE>

Comparison of First Fiscal Quarter of 2002 to First Fiscal Quarter of 2001:

        Net sales for the fiscal quarter ended February 28, 2002 were
$2,769,000, a decrease of $1,418,000, or 33.9%, from the same period a year ago.
The decrease was attributable primarily to lower sales of the Company's core and
commercial products. Additionally, the Company believes that it is currently in
the midst of an acceptance period as newly released products are being
introduced to the marketplace to replace the Company's legacy products. The
Company will have to manage successfully the transition from the legacy products
in order to maintain the appropriate level of revenue to support the Company's
expense base.

        Gross profit for the fiscal quarter ended February 28, 2002 was 52.2%,
compared to 56.8% in the comparable quarter of the prior year. The decrease in
gross profit from the comparable prior year period was the result of a less
favorable product mix.

<PAGE>

                                                                   Page 11 of 13


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS
                                   (CONTINUED)

        The loss from operations for the first fiscal quarter of 2002 was
$309,000, compared to a loss from operations of $79,000 in the comparable
quarter of the prior year. The decrease in income is primarily a result of lower
than expected sales and a less favorable gross margin as a result of product
mix. Operating expenses for the first quarter of fiscal 2002 were $1,755,000,
representing 63.3% of sales, compared to $2,456,000, representing 58.7% of
sales, in the prior year period. Research and development expenses for the first
quarter of fiscal 2002 were $640,000, representing 23.1% of sales, compared to
$771,000, representing 18.4% of sales, for the comparable period of the prior
year. The decrease in R&D is primarily the result of reduced headcount and
salaries. Sales and marketing expenses for the first quarter of fiscal 2002 were
$732,000, representing 26.4% of sales, compared to $1,226,000, representing
29.3% of sales, in the prior year period. The decrease in sales and marketing is
primarily the result of reduced headcount, salaries and marketing programs.
General and administrative expenses were $383,000 for the first quarter of
fiscal 2002, representing 13.8% of sales, compared to $459,000, representing
11.0% of sales, for the same period last year. The decrease in general and
administrative expenses is primarily the result of reduced headcount, salaries
and professional fees within the general and administrative departments.

        The net loss for the fiscal quarter ended February 28, 2002 was
$299,000, or $0.09 per diluted share, compared to a net loss of $53,000, or
$0.02 per diluted share, for the same period in 2001.

Liquidity and Capital Resources

        As of February 28, 2002, the Company had cash, cash equivalents and
marketable securities totaling $3,664,000, as compared to cash, cash equivalents
and marketable securities of $3,733,000 as of November 30, 2001.

        In the first three months of 2002, the Company used $134,000 for
operating activities, resulting from a net loss and increases in accounts
receivable, inventory and prepaids, partially offset by increases in accounts
payable and accrued expenses.

        The Company received $45,000 from investing activities in the first
three months of 2002, principally as a result of decreases in other assets.

        Given currently available funds, the Company believes that it will be
able to meet its current operating requirements for the next twelve months. If
the Company is unsuccessful in increasing revenues or if its liquidity position
deteriorates, the Company will need to secure external financing in order to
meet its ongoing expenses. Therefore, the Company is pursuing possible financing
alternatives, but there can be no assurance that the Company will be successful
in obtaining any required financing.

Critical Accounting Policies

        (a) Revenue Recognition

        The Company recognizes revenue from sales to end users, resellers and
distributors upon shipment, provided persuasive evidence of an arrangement
exists, the sales price is fixed or determinable and collection of the related
receivable is probable. Warranty costs are estimated and recorded by the Company
at the time of revenue recognition.

        In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements.
This bulletin established additional guidelines for revenue recognition. The
Company's revenue recognition policy complies with this pronouncement.

        (b) Inventories and Obsolete and Excess Inventory

        Inventories are valued at the lower of first-in, first-out ("FIFO") cost
or market value as such, costs have been reduced to reflect decreases in market
value based on excess and obsolete inventories. The estimated allowance is based
on management's review of inventories on hand compared to estimated future usage
and sales.

<PAGE>

                                                                   Page 12 of 13


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS
                                   (CONTINUED)

(c) Allowance for Uncollectible Accounts Receivable

        We perform ongoing credit evaluations of our customers and adjust credit
limits based upon payment history and the customer's current credit worthiness,
as determined by our review of their current credit information. We continuously
monitor collections and payments from our customers and maintain a provision for
uncollectible receivables based upon our historical experience and any specific
customer collection issues that we have identified. While such credit losses
have historically been within our expectations and the provisions established,
we cannot guarantee that we will continue to experience the same credit loss
rates that we have in the past. A significant change in the liquidity or
financial position of a key customer could have a material adverse impact on the
collectability of our accounts receivables and our future operating results.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The Company does not engage in trading market risk sensitive instruments
or "other than trading" instruments that are likely to expose the Company to
market risk, whether interest rate, foreign currency exchange, commodity price
or equity price risk. At February 28, 2002, the Company had entered into certain
forward foreign exchange contracts in order to hedge specific future monthly
obligations denominated in Euros. The Company does not hold or transact in
financial instruments for purposes other than risk management. To a certain
extent, the Company is exposed to market risk related to changes in foreign
currency exchange rates. These exposures may change over time as business
practices evolve and could have a material adverse effect on the Company's
business, financial condition and results of operations. Historically, the
Company's primary foreign currency exchange rate exposure has been related to
the operations of its European subsidiaries. Through February 28, 2002, foreign
currency fluctuations have not had a material impact on the Company's financial
position or results of operations.

<PAGE>
                                                                   Page 13 of 13


                                    SIGNATURE

        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.

                                         DATA TRANSLATION, INC.




Date:    April 15, 2002                       By: /s/ Michael A. DiPoto
                                                  -----------------------------
                                                  Michael A. DiPoto
                                                  Vice President Finance
                                                  and Chief Financial Officer