<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

      [x]           Quarterly report under Section 13 or 15(d) of the Securities
                    Exchange Act of 1934

                    For the quarterly period ended June 30, 2003

      [ ]           Transition report under Section 13 or 15(d) of the
                    Exchange Act For the transition period from
                    _______________________ to _____________


                        Commission file number 333-86873

                               HOME DIRECTOR, INC.
              (Exact Name of Small Business Issuer in Its Charter)

              Delaware                                   52-2143430
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
      incorporation or organization)


        2525 Collier Canyon Road, Livermore, California              94551
            (Address of Principal Executive Offices)              (Zip Code)

                    Issuer's telephone number: (925) 373-0438




                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 3,751,467 as of August 14, 2003


Transitional Small Business Disclosure Format (Check one): Yes ____; No  __x__
                                                                           -






<PAGE>






                                TABLE OF CONTENTS



                                                                         PAGE

PART I
Item 1. Financial Statements............................................   3
Item 2  Management's Discussion and Analysis or Plan of Operation.......  12
Item 3. Controls and Procedures.........................................  15

PART II
Item 1. Legal Proceedings...............................................  16
Item 2. Changes in Securities and Use of Proceeds.......................  16
Item 3. Defaults in Senior Securities...................................  16
Item 4. Submission of Matters to a Vote of Security Holders.............  16
Item 5. Other Information...............................................  17
Item 6. Exhibits and Reports on Form 8-K................................  17

Signatures .............................................................  18
Certifications .........................................................  19


CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

     This document contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are
subject to risks and uncertainties and are based on the beliefs and assumptions
of management of Home Director, based on information currently available to
management. The use of words such as "believes," "expects," "anticipates,"
"intends," "plans," "estimates," "should," "likely" or similar expressions,
indicates a forward-looking statement.

     Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. Future results may differ materially from
those expressed in the forward-looking statements. Many of the factors that will
determine these results are beyond the ability of Home Director to control or
predict. Stockholders are cautioned not to put undue reliance on any
forward-looking statements. For those statements, Home Director claims the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.

          The identification in this document of factors that may affect future
performance and the accuracy of forward-looking statements is meant to be
illustrative and by no means exhaustive. All forward-looking statements should
be evaluated with the understanding of their inherent uncertainty.

                                       2
<PAGE>




                                     PART I

ITEM 1. FINANCIAL STATEMENTS


                               HOME DIRECTOR, INC.
                           Consolidated Balance Sheets
                       June 30, 2003 and December 31, 2002
<TABLE>
<CAPTION>

                                          ASSETS                              (Unaudited)
                                          ------
                                                                             June 30, 2003        Dec  31,  2002
Current assets:                                                            ---------------      -----------------
<S>                                                                             <C>                 <C>
    Cash and cash equivalents                                              $       215,879       $      2,557,214
    Accounts receivable, net of allowances                                       1,950,886              1,226,479
    Inventories, net of allowances                                               1,543,137              1,499,014
    Other current assets                                                           161,204                140,366
                                                                           ---------------       ----------------
                Total current assets                                             3,871,106              5,423,073
Property and equipment, net                                                        546,166                645,328
Customer lists, net of accumulated amortization                                     94,978                108,844
Goodwill, net of accumulated amortization                                        5,825,652              5,825,652
                                                                           ---------------       ----------------
                                                                           $    10,337,902       $     12,002,897
                                                                           ===============       ================

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      -------------------------------------

Current liabilities:
    Accounts payable and accrued expenses                                  $     1,939,813       $      2,249,712
    Payables to related parties                                                        ---                291,793
    Notes payable                                                                  125,000                125,000
    Current portion of capital lease obligations                                   110,822                125,626
                                                                           ---------------       ----------------
                Total current liabilities                                        2,175,635              2,792,131
Capital lease obligations, less current portion                                     85,376                123,781

Other Long Term Liabilities                                                         462,426                    ---
Commitments and contingencies (Note 6)
    Shareholders' equity:
    Common stock, $0.01 par value
        Authorized - 40,000,000 shares
        Issued and outstanding - 3,751,467 shares                                   37,515                 37,515
    Additional paid-in capital                                                  75,739,080             75,699,296
    Accumulated deficit                                                        (68,162,130)           (66,649,826)
                                                                           ---------------       ----------------
                Total shareholders' equity                                       7,614,465              9,086,985
                                                                           ---------------       ----------------
                                                                           $    10,337,902       $     12,002,897
                                                                           ===============       ================
</TABLE>


              See accompanying notes to these financial statements.

                                       3
<PAGE>

<TABLE>
<CAPTION>

                               HOME DIRECTOR, INC.
                      Consolidated Statements of Operations
         For the Three & Six Month Periods Ended June 30, 2003 and 2002
                                   (Unaudited)

                                                  For the three months ended                         For the six months ended
                                                  --------------------------                         ------------------------
                                              June 30, 2003         June 30, 2002              June 30, 2003          June 30, 2002
                                              -------------         -------------              -------------          -------------
<S>                                        <C>                          <C>                       <C>                    <C>

Revenue
                                           $2,496,909            $2,839,466                 $4,960,985            $5,347,982
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
Costs and expenses:
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
  Cost of revenue
                                           1,407,865             1,966,339                  2,854,495             3,613,159
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
  General and administrative
                                           718,247               1,222,537                  1,362,565             1,821,968
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
  Sales and marketing
                                           662,194               629,790                    1,303,439             1,167,380
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
  Research and development
                                           55,524                158,175                    154,702               361,837
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
  Depreciation and amortization
                                           100,218               233,710                    194,890               465,973
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
  Provision for abandonment of facility
                                           590,000               ---                        590,000               ---
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
  Gain on extinguishment of certain
   liabilities                             ---                   (4,660,413)                ---                   (4,660,413)
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
        Total costs and expenses
                                           $3,534,048            $(449,862)                 $6,460,091            $2,769,904
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
Income (Loss) from operations
                                           $(1,037,139)          $3,289,328                 $(1,499,106)          $2,578,078
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
Other expense, net
                                           (15,730)              (875,585)                  (13,198)              (879,301)
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
Net income (loss)
                                           $(1,052,869)          $2,413,743                 $(1,512,304)          $1,698,777
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
Comprehensive income (loss)
                                           $(1,052,869)          $2,413,743                 $(1,512,304)          $1,698,777
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
Net income (loss) per common share - basic and diluted:
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------

------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
    Shares used in computing basic net
income (loss) per common share             3,751,467             622,828                    3,751,467             619,871
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
   Shares used in computing diluted net
income (loss) per common share             3,751,467             768,243                    3,751,467             1,093,249
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------

------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
Net income (loss) per share
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
   Basic:
                                           $(.28)                $3.88                      $(.40)                $2.74
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------
  Diluted:
                                           $(.28)                $3.14                      $(.40)                $1.55
------------------------------------------ --------------------- -------------------- ----- --------------------- -----------------

</TABLE>

              See accompanying notes to these financial statements.

                                       4
<PAGE>

<TABLE>
<CAPTION>
                               HOME DIRECTOR, INC.
                      Consolidated Statements of Cash Flows
                 For the Six Months Ended June 30, 2003 and 2002
                                   (Unaudited)
                                                                                      2003                   2002
                                                                           ---------------      ------------------------
<S>     <C>                                                                         <C>                   <C>
Cash flows from operating activities:
    Net income (loss)                                                      $    (1,512,304)     $       1,698,777
    Adjustments to reconcile net loss to net cash used in
      operating activities:
        Depreciation and amortization                                              194,890                465,973
        Provision for abandonment of facility                                      590,000                    ---
        Gain from extinguishment of certain liabilities                                ---             (4,660,413)
        Noncash expenses from warrant issuances                                        ---                235,677
        Interest expense on debt discount and amortization of
          deferred financing fees                                                      ---                794,689
        Changes in operating assets and liabilities, net of
           assets and liabilities acquired:
        Accounts receivable                                                       (724,407)              (670,659)
        Inventories                                                                (44,123)               157,776
        Other current assets                                                       (20,838)               128,415
        Accounts payable and accrued expenses                                     (397,689)            (2,177,941)
                                                                           ----------------     ------------------
                Net cash used in operating activities                           (1,914,471)            (4,027,706)
                                                                           ----------------     ------------------
Cash flows from investing activities:
    Purchases of property and equipment                                            (81,862)                (4,216)
    Merger costs                                                                       ---               (626,363)
                                                                           ---------------      ------------------
                Net cash used in investing activities                              (81,862)              (630,579)
                                                                           ----------------     ------------------
Cash flows from financing activities:
    Net payments of payables to related parties                                   (291,793)                   ---
    Repayment of capital lease obligations                                         (53,209)              (219,714)
    Proceeds from issuance of common stock                                             ---                 33,436
    Proceeds from issuance of convertible notes                                        ---              7,226,683
    Debt financing costs                                                               ---             (1,015,319)
                                                                           ---------------      ------------------
                Net cash provided by (used in) financing
                   activities                                                     (345,002)             6,025,086
                                                                           ----------------     -----------------
Net increase (decrease) in cash and cash equivalents                            (2,341,335)             1,366,801

Cash and cash equivalents at beginning of period                                 2,557,214                563,046
                                                                           ---------------      -----------------

Cash and cash equivalents at end of period                                 $       215,879      $       1,929,847
                                                                           ===============      =================



                Supplemental Disclosure of Cash Flow Information

                                                                                      2003                   2002
                                                                           ----------------      ---------------------
Cash paid during the quarter
    Interest                                                               $        17,316      $          11,250
                                                                           ===============      =================
</TABLE>


              See accompanying notes to these financial statements.

                                       5
<PAGE>





                               Home Director, Inc.
              Condensed Notes to Consolidated Financial Statements
                                   (Unaudited)

Note 1 -     Basis of Presentation and Description of Business
             -------------------------------------------------

             Home Director Technologies Inc. (formerly Home Director, Inc.
"HDT") was incorporated on October 13, 1999 under the laws of the State of
Delaware. On December 19, 2002, HDT was acquired by Netword, Inc. (now Home
Director, Inc.) in a merger of Netword's special purpose subsidiary into HDT
(the "Merger"). In the Merger, HDT's stockholders received shares of Netword
common stock in accordance with the exchange ratio described in the merger
agreement. Upon completion of the Merger, HDT's stockholders owned approximately
86% of the outstanding Netword common stock. The Merger was treated as a reverse
merger, with HDT being the acquirer for accounting purposes. The pre-acquisition
financial statements of HDT became the historical financial statements of the
combined companies. The transaction was accounted for as the issuance of common
stock by HDT for the net monetary assets of Netword, accompanied by a
recapitalization to reflect the legally issued and outstanding shares of the
merged companies. Pre-acquisition stockholders' equity of HDT was retroactively
restated for the equivalent number of shares of Netword received by HDT in the
Merger, with differences between the par value of Netword's and HDT's stock
recorded as paid-in capital. Transaction costs ($1,544,926 as of June 30, 2003)
related to the Merger were also charged directly to equity. The transaction did
not result in any additional goodwill or other intangible assets. All common
share and per share amounts for all periods presented in the accompanying
consolidated financial statements have been retroactively restated to reflect
the effect of the Merger. References in these notes to "the Company" are
references to HDT as it existed before the Merger and the combined companies
after the Merger.

             The Company, which is headquartered in Livermore, California,
commenced operations on December 8, 1999, subsequent to acquiring the assets of
and assuming certain liabilities of IBM Corporation's Home Director business
unit. The Company operates in a single industry, the provision of infrastructure
components for home networking, and is engaged in the design, sale and
installation of home networking products and services for the new home
construction market.

             In January 2003, the Company transferred all of the intellectual
property associated with Netword to Netword's subsidiary, Rabbit Media, Inc.,
and subsequently sold all of the stock of Rabbit Media, Inc. to a director and
the former President of Netword. As consideration for the sale, the buyer agreed
to indemnify the Company for future claims related to the Netword intellectual
property in the event that such claims are not discharged by Rabbit Media, Inc.
and to pay the Company 10% of any consideration that it receives from any sale
of the Rabbit Media, Inc. stock within two years after the date of the
agreement.

Principles of Consolidation

             The  accompanying  consolidated  financial  statements  include
the  accounts  of  Home  Director,   Inc.  (formerly  Netword,   Inc.)  and  its
wholly-owned  subsidiaries,  HDT and Digital  Interiors,  Inc.  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

Unaudited Interim Financial Statements

             The accompanying unaudited interim financial statements have been
prepared in accordance with generally accepted accounting principles and
applicable Securities and Exchange Commission (SEC) regulations for interim
financial information. These financial statements are unaudited and, in the
opinion of management, include all adjustments necessary to present fairly the
balance sheets, statements of operations and statements of cash flows for the
periods presented in accordance with accounting principles generally accepted in
the United States. 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 SEC rules and
regulations. Operating results for the six months ended June 30, 2003 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003. These financial statements and notes should be read in
conjunction with the financial statements and notes thereto for the year ended
December 31, 2002 included in the Company's annual report on Form 10-KSB filed
with the SEC on March 31, 2003. The balance sheet at December 31, 2002 has been
derived from the audited consolidated financial statements of the Company.

                                       6
<PAGE>


                               Home Director, Inc.
              Condensed Notes to Consolidated Financial Statements
                                   (Unaudited)


Summary of Significant Accounting Policies

USE OF ESTIMATES

             The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Significant estimates include
the allowance for doubtful accounts, the allowance for obsolete and slow-moving
inventory and estimates regarding the recoverability of long-lived assets.
Actual results can differ from those estimates.

CASH AND CASH EQUIVALENTS

             The Company considers all highly liquid investments purchased with
an original or remaining maturity of less than three months at the date of
purchase to be cash equivalents.

INVENTORIES

             Inventories consist of finished goods and are stated at the lower
of cost or market. Cost is determined by the weighted average costing method.

CREDIT RISK, SIGNIFICANT CUSTOMERS AND CONCENTRATIONS

             Financial instruments that potentially subject the Company to
credit risk consist principally of accounts receivable and cash investments.
Receivables are unsecured. The Company provides an allowance for doubtful
accounts equal to the estimated losses expected to be incurred in the collection
of accounts receivable.

             Cash and cash equivalents consist of cash deposits, money market
funds and highly rated commercial paper held at banks. Deposits held at banks
may at times exceed the amount of insurance provided. Generally, these deposits
may be redeemed upon demand and therefore bear minimal risk.

             As of June 30, 2003, two customers accounted for 35% of the
accounts receivable balance and one customer accounted for 36% of the revenue
for the six months ended June 30, 2003 and two customers accounted for 47% of
the revenue for the quarter ended June 30, 2003. As of December 31, 2002, two
customers accounted for 53% and 57% of the accounts receivable balance and
annual revenue, respectively.

              The Company is not currently dependent upon any single
manufacturer and it believes that alternative manufacturing sources would be
readily available without material delay in the event of the interruption of
supplies from any of its current sources.

INCOME (LOSS) PER SHARE

              In accordance with SFAS 128, basic and diluted net income (loss)
per common share has been computed using the weighted-average number of shares
of common stock outstanding during the period.

              The effect of options to purchase 643,306 shares of the Company's
common stock outstanding during the three and six month periods ended June 30,
2003 were not included in the computation of diluted net loss per share because
their effect would be anti-dilutive.

              The effect of warrants to purchase 584,439 shares of the Company's
common stock outstanding during the three and six month periods ended June 30,
2003 were not included in the computation of diluted net loss per share because
their effect would be anti-dilutive.




                                        7
<PAGE>

                               Home Director, Inc.
              Condensed Notes to Consolidated Financial Statements
                                   (Unaudited)


REVENUE RECOGNITION

             The Company generally recognizes product revenue when persuasive
evidence of an arrangement exists, delivery has occurred, the fee is fixed or
determinable, and collectibility is reasonably assured. The Company accrues for
sales returns, rebate programs and warranty costs based on its experience.

             The Company recognizes revenue on certain builder installation
projects under the percentage of completion method, based primarily on contract
revenue milestones. On certain other installation projects, the Company
recognizes revenue using the percentage of completion method, based upon actual
costs incurred compared to total estimated contract costs under the project.
Changes to total estimated contract costs or losses, if any, are recognized in
the period in which they are determined. For these other installation projects,
revenue recognized in excess of amounts billed of $248,315 and $208,648 at June
30, 2003 and December 31, 2002, respectively, is classified as current assets
under "Accounts Receivable." Amounts billed in excess of revenue recognized to
date of $17,675 and $25,106 at June 30, 2003 and December 31, 2002,
respectively, are classified as current liabilities under "Accounts Payable and
Accrued Expenses."

PROPERTY AND EQUIPMENT

             Property and equipment is recorded at cost and depreciated using
the straight-line method over their estimated useful lives which generally range
from two to five years. Property and equipment includes certain equipment under
capital leases. These items are depreciated over the shorter of the lease period
or the estimated useful life of the equipment.

INTANGIBLE ASSETS

             In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
Other Intangible Assets," which is required to be applied for fiscal years
beginning after December 15, 2001. The Company has adopted SFAS 142 as of
January 1, 2002. SFAS 142 eliminates the amortization of goodwill and certain
other intangible assets. It also requires the Company to complete a test for
impairment of these assets annually, as well as a transitional goodwill
impairment test within six months from the date of adoption. The results of
these tests did not indicate additional impairment of the Company's recorded
goodwill.

INCOME TAXES

             The Company accounts for income taxes using the liability method
which requires the recognition of deferred tax assets or liabilities for the
temporary differences between the financial reporting and tax bases of the
Company's assets and liabilities and for tax carryforwards at enacted statutory
rates in effect for the years in which the differences are expected to reverse.
The effect on deferred taxes of a change in tax rates is recognized in income in
the period that includes the enactment date. In addition, valuation allowances
are established when necessary to reduce deferred tax assets to the amounts
expected to be realized. The Company has not recorded any income tax expense or
benefit as a result of its available net operating loss carryforwards, which are
fully reserved by a valuation allowance.

ACCOUNTING FOR STOCK-BASED COMPENSATION

             As permitted by Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("SFAS 123"), the Company has
elected to account for its stock-based compensation to employees and outside
directors, where appropriate, under the provisions of Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and
related interpretations and amendments. Under APB 25, because the exercise price
of the Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

                                       8
<PAGE>

                              Home Director, Inc.
              Condensed Notes to Consolidated Financial Statements
                                   (Unaudited)


RECENT ACCOUNTING PRONOUNCEMENTS

             In August 2001, the Financial Accounting Standards Board issued
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
which is effective for fiscal years beginning after December 15, 2001. This
statement supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of," and portions of Accounting
Principles Board Opinion No. 30, "Reporting Results of Operations - Reporting
the Effects of Disposal of a Segment of a Business." SFAS 144 provides a single
accounting model for long-lived assets to be disposed of and changes the
criteria that would have to be met in order to classify an asset as
held-for-sale. The provisions of SFAS No. 144 generally are to be applied
prospectively.

             In June 2002, the Financial Accounting Standards Board issued SFAS
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities",
which is effective for fiscal years beginning after December 15, 2002, with
earlier application encouraged. This statement addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity" (including Certain Costs Incurred in a Restructuring). The provisions
of SFAS No. 146 are to be applied prospectively from the date of adoption.

             In April 2002, the Financial Accounting Standards Board issued SFAS
No. 145, Rescission of FASB Statements No. 4, 44 and 65, Amendment of FASB
Statement No. 13 and Technical Corrections. SFAS No. 145 rescinds SFAS No. 4,
"Reporting Gains and Losses from Extinguishment of Debt," and an amendment of
that statement, SFAS No. 64, "Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements." The statement will require gains or losses from
extinguishment of debt to be classified as operating items, as opposed to
extraordinary items, unless they meet the more stringent criteria of APB No. 30.
The statement requires retroactive reclassification for comparative financial
statements issued after adoption.

             The Company began applying SFAS No. 145 as of the beginning of its
December 31, 2003 year and for the six months ended June 30, 2003, has
reclassified the extraordinary gain from extinguishment of certain liabilities
to operating income in its comparative financial statements issued after
adoption. This reclassification did not have an impact on previously reported
net loss.

             In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure-an amendment of FASB
Statement No. 123," ("SFAS 148"). This statement amends FASB Statement No. 123,
"Accounting for Stock-Based Compensation." ("SFAS 123") to provide alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, the statement
amends the disclosure requirements of SFAS 123 to require prominent disclosures
in both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on
reported results. The amendments to SFAS 123 regarding disclosure are effective
for financial statements for fiscal years ending after December 15, 2002. The
Company is in the process of analyzing whether or not it will adopt fair value
methodology under SFAS 148.

             At June 30, 2003, the Company has a stock-based compensation plan
(the "Plan"), more fully described in the Company's proxy statement for its 2003
annual meeting of stockholders. The Company accounts for the Plan under the
recognition and measurement principals of APB Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations. No stock-based employee
compensation is reflected in net income, as all options granted under the Plan
had an exercise price equal to the market value of the underlying common stock
on the date of grant.

                                       9
<PAGE>

                               Home Director, Inc.
              Condensed Notes to Consolidated Financial Statements
                                   (Unaudited)


             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 to stock-based employee compensation.
<TABLE>
<CAPTION>

                    (In thousands, except per share amounts)
                                                                              June 30.              June 30,
                                                                                  ----                  ----
<S>                                                                                <C>                 <C>
                                                                                   2003                2002
                                                                            -------------------- ----------------
             Net income (loss), as reported                                $         (1,512,304)  $     1,698,777
             Deduct:  Total stock-based employee compensation
              expense determined under fair value based method for
              all awards, net of income tax effects                                    (783,824)         (23,165)
                                                                           --------------------- ----------------
             Pro forma net income (loss)                                   $         (2,296,128) $     1,675,612
                                                                           ===================== =================

             Net income (loss) per share:
                Basic - as reported                                        $              (0.40) $         2.74
                                                                           ===================== =================

                Diluted - as reported                                      $              (0.40) $         1.55
                                                                           ===================== =================

                   Basic - proforma                                        $              (0.61) $         2.70
                                                                           ===================== =================


                Diluted - proforma                                         $              (0.61) $         1.53
                                                                           ===================== ==================
</TABLE>



Note 2 -     Capital Stock

             On April 1, 2002, the Company's Board of Directors approved a
one-for-ten reverse common stock split which was subsequently approved by the
Company's stockholders as of May 2, 2002. An amendment to the Company's
Certificate of Incorporation effecting the stock split was filed with the State
of Delaware on May 2, 2002. All common share and per common share amounts for
all periods presented in the accompanying consolidated financial statements have
been restated to reflect the effect of this common stock split.

             As of June 30, 2003, the Company had authorized 40,000,000 shares
of common stock with a par value of $0.01. The Company also had authorized
2,000,000 shares of preferred stock, which are undesignated, with a par value of
$0.01.

Note 3 -     Common Stock Reserved for Future Issuance

             At June 30, 2003, the Company had reserved a total of 1,540,570 of
its authorized 40,000,000 shares of common stock for future issuance as follows:

   Outstanding common stock warrants                                750,570
   Possible future issuance of common stock warrants                 40,000
   Outstanding stock options                                        643,306
   Possible future issuance under stock option plan                 106,694
                                                               ------------
                                                                  1,540,570



                                       10
<PAGE>

                     Home Director, Inc.
    Condensed Notes to Consolidated Financial Statements
                         (Unaudited)


Note 4 -     Related Party Transactions

             In February 2002, Donald B. Witmer, chairman of the Board of
Directors and chief executive officer of the Company, Robert Wise, president,
chief operating officer and a director of the Company, and Spencer Trask Venture
Partners, LLC ("Spencer Trask"), an affiliate of the Company's financial adviser
and one of its principal shareholders, purchased $110,000, $55,000 and $270,000
of HDT's exchangeable notes, respectively, which included 17,127 detachable
warrants to purchase the HDT common stock at $.70 per share. The exchangeable
notes were exchangeable into convertible notes upon satisfying the minimum sale
requirements of the private placement of convertible debt. These notes were
exchanged for an equal principal amount of HDT's convertible notes in May 2002.
Of the $705,000 proceeds received by HDT, $230,481 was assigned as the fair
value of the detachable warrants. The exchangeable notes contained a beneficial
conversion feature determined to be $230,481 at the date of issuance. These
amounts were recorded as an increase to interest expense during the quarter
ended June 30, 2002 when the notes were exchanged into secured convertible
notes. In fiscal 2002 (prior to the Merger), HDT sold $9,200,000 principal
amount of its 8% secured convertible notes which were converted into HDT common
stock at a price of $.10 per share immediately prior to the Merger. Upon the
Merger, all outstanding shares of HDT (including the shares that were issued
upon conversion of HDT's convertible notes) were exchanged for shares of Netword
common stock at the rate of 36.3 shares of the HDT common stock for each share
of Netword common stock.

Note 5-      Provision for Abandonment of Facility

             In June 2003, the Company exited its Durham, North Carolina
warehouse facility and relocated the operations to its Livermore, California
facility. As a result, the Company recorded a provision of $590,000 related to
the remaining lease commitment associated with the Durham facility. This
provision is included as part of accounts payable and accrued expenses and other
long-term liabilities on the accompanying balance sheet. There were no severance
costs associated with this abandonment.

         On June 17, 2003, Tri-Center Realty, Inc. ("Tri-Center") filed a
complaint against HDT in the State of North Carolina, Superior Court Division.
Tri-Center, the landlord of HDT's warehouse in Durham, North Carolina, has
alleged breach of contract and is seeking $555,000 in damages. The outcome of
such complaint or the Company's attempt to resolve the matter outside of the
courts cannot be predicted at this time.

Note 6 -     Contingencies

             The Company is subject to various legal proceedings and claims,
which have arisen in the ordinary course of its business and have not been fully
adjudicated. It is impossible at this time for the Company to predict with any
certainty the outcome of such litigation, and we cannot assure you that any
liability arising from this litigation will not be material in relation to the
Company's consolidated financial position or results of operations.

               On June 18, 2001, Point West Ventures, LP ("Point West") filed a
complaint against HDT and Spencer Trask Ventures, Inc., the placement agent for
HDT's Series B convertible preferred stock financing in the New York State
Supreme Court. Point West, one of the investors in that financing, has alleged
misrepresentation in connection with that financing and is seeking rescission of
its $500,000 investment. As of December 31, 2002, Point West was in receivership
and, although the receiver may wish to pursue this action at a later date, the
proceedings have been stayed.

         On June 17, 2003, Tri-Center Realty, Inc. ("Tri-Center") filed a
complaint against HDT in the State of North Carolina, Superior Court Division.
Tri-Center, the landlord of HDT's warehouse in Durham, North Carolina, has
alleged breach of contract and is seeking $555,000 in damages. The outcome of
such complaint or the Company's attempt to resolve the matter outside of the
courts cannot be predicted at this time.

                                       11
<PAGE>



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

     The following discussion of our financial condition and results of
operations should be read together with the financial statements and related
notes included elsewhere in this report. Some of the statements in this section
that are not historical facts are forward-looking statements. You are cautioned
that the forward-looking statements contained in this section are estimates and
predictions, and that our actual results could differ materially from those
anticipated in the forward-looking statements due to risks, uncertainties or
actual events differing from the assumptions underlying these statements. The
risks, uncertainties, and assumptions include, but are not limited to, those
disclosed in our annual report on Form 10-KSB for our fiscal year ended December
31, 2002.

OVERVIEW

         We are Home Director, Inc. Until December 19, 2002, we were known as
Netword, Inc. On that date, we changed our name and acquired all of the stock of
Home Director Technologies, Inc. (formerly Home Director, Inc. and referred to
in this report as "HDT"). The acquisition was accomplished by the merger of
Netword's special purpose subsidiary into HDT (the "Merger"). As a result of the
Merger, the former stockholders of HDT acquired a majority of the voting
interests in Netword; consequently, the Merger was treated as a reverse
acquisition, with HDT treated as the acquirer for accounting purposes. The
pre-Merger financial statements of HDT are treated as the historical financial
statements of the combined companies. At the time of the Merger, Netword had no
continuing operations. Its historical results would not be meaningful if
combined with the historical results of HDT. As a result of the Merger, the
business of HDT is now our only business.

         Our revenues consist primarily of revenues from the sale of home
networking hardware and services.

         Research and development expenses consist primarily of salaries and
related personnel expenses, subcontracted research expenses, and technology
license expenses. As of June 30, 2003, all research and development costs have
been expensed as incurred. We believe that continued investment in research and
development is critical to attaining our strategic objectives.

         General and administrative expenses consist primarily of expenses for
executive, finance and administrative personnel, professional fees, and other
general corporate expenses. As we add personnel and incur additional costs
related to the growth of our business, general and administrative expenses will
also increase.

         In 2002, HDT raised approximately $8.9 million (excluding $0.27 million
received from Netword) through the private sale of convertible notes and used a
portion of the proceeds to satisfy approximately $7.0 million in debt in a
restructuring whereby HDT paid its creditors approximately $2.5 million. The
notes automatically converted into shares of HDT common stock immediately before
the Merger and were then exchanged for shares of our common stock in the Merger.

CRITICAL ACCOUNTING POLICIES

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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.
We believe the following critical accounting policies, which have been discussed
by senior management and our audit committee, have significant effect in the
preparation of our consolidated financial statements.

         Revenue Recognition. We generally recognize product revenue upon its
shipment. We also recognize revenue using the percentage of completion method on
installation projects, primarily by comparing contractual billing milestones
with total contract value. Accounting for revenue from services, payment of
upfront fees, and achievement of contract-specific milestones involves
management making assessments of business conditions and estimates regarding
timing and cost of work associated with the revenue. Over time, these estimates
may be adjusted based on then-current circumstances, resulting in adjustment to
revenues. Changes to total estimated contract costs or losses, if any, are
recognized in the period in which they are identified.

         Allowance for Doubtful Accounts. Accounts receivable are unsecured and
we maintain allowances for doubtful accounts for estimated losses from
customers' inability to make payments. We assess each account that is more than
90 days delinquent or others when information known to us indicates amounts may
be uncollectable; in order to estimate the appropriate level of the allowance,
we consider such factors as historical bad debts, current customer
credit-worthiness, changes in customer payment patterns and any correspondence
with the customer. If the financial condition of our customers were to
deteriorate and impair their ability to make payments, additional allowances
might be required in future periods and it could have a material adverse effect
on our financial condition and results of operation.


                                      12
<PAGE>

         Inventory. We present inventory value at the lower of cost or market
and net of valuation allowances for excess and obsolete units. Establishing this
reserve requires estimates of sales volumes and pricing. To the extent that we
are not able to correctly anticipate these trends, additional reserves may be
required in future periods.

         Intangible Assets and Goodwill. Intangible assets include costs in
excess of net assets acquired ("goodwill") and other purchased intangibles. The
carrying amounts of goodwill and intangibles are reviewed annually under new
accounting standards and if facts and circumstances suggest they may be
impaired. If this review indicates that goodwill and intangibles will not be
recoverable, as determined based on the undiscounted cash flows of the entity
acquired, the carrying amount of the goodwill and other intangibles are reduced
to their estimated fair value. This requires us to estimate such factors as
future sales volumes and costs of business produced by these intangibles. To the
extent that we are not able to correctly anticipate these trends, additional
adjustments to estimated fair value may be required in future periods.

         Valuation of Warrants and Other Equity Instruments. We have entered,
and may continue to enter, into transactions whereby we grant warrants to
purchase stock to non-employees or issue convertible debt instruments whose
terms include beneficial conversion features. These transactions sometimes
require us to determine the fair value of non-exchange traded instruments. The
development of these fair values requires significant judgment and estimates by
management. We disclose the principal assumptions used in determining these fair
values in our financial statements and we believe these assumptions are
reasonable. However, the use of different valuation models, or differing
assumptions from ours, could cause materially different values to be assigned
these instruments and could have a significant impact, positive or negative, on
our reported results of operations.

RESULTS OF OPERATIONS

         Three and Six Months Ended June 30, 2003 and 2002

          Total revenues consisted of revenues from the sale of home networking
hardware and services. Revenues for the second quarter were $2,497,000 in 2003,
compared to $2,839,000 in the second quarter of 2002, a decrease of 12% and
primarily attributable to reduced hardware sales. On a year-to-date basis
revenues were $4,961,000 in 2003, compared to $5,348,000 in 2002, a decrease of
7% and also primarily attributable to reduced hardware sales. Thus far this year
we have signed new contracts to provide networking solutions to SummerHill
Homes, Richmond American Homes-Los Angeles Division, Greystone Homes, Passport
Homes, L&D Construction, Cobblestone Homes and Jonathan Homes and on
April 17, 2003, we entered into an agreement with Sears, under which Sears uses
our home networking solutions nationwide in its Connected Home initiative.
Furthermore, we plan to expand our business into new geographic areas by way of
one or more strategic acquisitions of local or regional home networking
integrators. There can be no assurance, however, that our revenues will increase
as a result of the above mentioned contracts, that we will be able to complete
any future strategic acquisitions or that any such acquisitions will be
beneficial.

            Total costs and expenses were $3,534,000 for the second quarter of
2003, compared to ($450,000) in the second quarter of 2002. On a year-to-date
basis total costs and expenses were $6,460,000 in 2003, compared to $2,770,000
in 2002. The increase in both periods was primarily attributable to the gain on
extinguishment of certain liabilities of $4,660,000 recorded in the second
quarter of 2002. Total costs and expenses, excluding the provision for the
abandonment of the North Carolina facility of $590,000 which was recorded in the
second quarter of 2003 and the gain on extinguishment of certain liabilities of
$4,660,000 recorded in the second quarter of 2002, decreased by $1,267,000 (or
30%) in the second quarter of 2003, compared to the second quarter of 2002. On a
year-to-date basis costs and expenses, excluding the provision for abandonment
of the facility and the gain on extinguishment of liabilities referred to above,
decreased by $1,560,000 (or 21%) in 2003, compared to 2002. We believe that
comparing the total cost and expenses as adjusted for abandonment of the
facility and gain on extinguishment of the liabilities referred to above is
meaningful because it allows the reader to compare results of operations without
one-time charges and expenses. The reduction in total costs and expenses
(excluding the items described above) is primarily attributable to reduced cost
of revenues (58% of revenues in 2003 compared to 68% in 2002) caused by lower
hardware product costs and service installation costs, general and
administrative and depreciation and amortization costs. While we believe that we
will continue to have favorable expense comparisons in future periods, from
time-to-time, we may incur additional professional fees as we attempt to expand
our business into new geographic areas, especially by way of one or more
strategic acquisitions.

            Interest expense for the six months ended June 30, 2002 was
adversely affected by certain expenses related to the Company's sale of
convertible notes. The charges include interest accrued on the convertible notes
(subsequently paid in common stock in December 2002) and the amortization of
costs of the sale of convertible notes, which together totaled nearly $900,000
in the second quarter of 2002.
                                       13
<PAGE>
     Our net loss in the second quarter of 2003 was approximately $1,053,000, as
compared to net income of approximately $2,414,000 in 2002. On a year-to-date
basis, the net loss for the first six months of 2003 was $1,512,000 as compared
to net income of $1,699,000 for the first six months of 2002. The change was
primarily attributable to the gain on extinguishment of certain liabilities
recorded in the second quarter of 2002. The table below reconciles our reported
net income (loss) to our adjusted net income (loss) ("Adjusted Loss") by
excluding the items indicated below:
<TABLE>
<CAPTION>

------------------------------------------ ------------------------------------------  --------------------------------------------
                                                  For the three months ended                    For the six months ended
                                                  --------------------------                    ------------------------
                                             June 30, 2003         June 30, 2002         June 30, 2003          June 30, 2002
                                              -------------         -------------         -------------          -------------
<S>                                        <C>                   <C>                   <C>                       <C>
Net income (loss) - as reported            $ (1,052,869)         $ 2,413,743           $(1,512,304)              1,698,777
------------------------------------------ --------------------- --------------------  --------------------- ----------------------
Adjustments:
------------------------------------------ --------------------- --------------------  --------------------- ----------------------
  Provision for abandonment of facility
                                               590,000            ---                      590,000                     ---
------------------------------------------ --------------------- --------------------  --------------------- ----------------------
  Gain on extinguishment of certain
   liabilities                                  ---              (4,660,413)              ---                   (4,660,413)
------------------------------------------ --------------------- --------------------  --------------------- ----------------------
  Other expense
  Interest and other expense
  associated with convertible notes             ---                 875,585               ---                      875,585
------------------------------------------ --------------------- --------------------  --------------------- ----------------------
Adjusted Loss                              $(462,869)           $(1,371,085)           $  (922,304)             $(2,086,051)

</TABLE>

            The Adjusted Loss from operations for the second quarter of 2003 was
$463,000 compared to an Adjusted Loss from operations of $1,371,000 for the
second quarter of 2002 - a decrease of 66%. On a year-to-date basis the Adjusted
Loss from operations for 2003 was $922,000 as compared to an Adjusted Loss from
operations of $2,086,000 for 2002 - a decrease of 56%.

LIQUIDITY AND CAPITAL RESOURCES

         Since inception, HDT financed its operations primarily through the sale
of equity securities. As of June 30, 2003, we had cash, cash equivalents,
investments and interest receivable totaling approximately 216,000.

         Cash used in the first six months of 2003 has totaled $2.3 million. Of
that amount approximately $730,000 was used for payments for Merger related
expenses for legal, accounting and financial advisory services. The balance was
primarily used to fund the cash operating loss ($909,000) and an increase in
accounts receivable ($724,000.)

         Net cash used in operating activities was $1.9 million for the six
months ended June 30, 2003 and $4.0 million for the six months ended June 30,
2002. Net cash used for both periods in operating activities was primarily due
to increases in accounts receivable, funding of operating losses and
payments to reduce accounts payable. Payments to reduce accounts payable in 2003
were primarily attributable to payments for legal and accounting fees of
$480,000 related to the Merger.

         Net cash used in investing activities was $81,000 for the six months
ended June 30, 2003 and $630,000 for the six months ended June 30, 2002. Cash
was used during 2003 to purchase property and equipment. Cash was used during
2002 primarily for merger costs.

         Net cash used in financing activities was $345,000 for the six months
ended June 30, 2003 and net cash provided by financing activities during the six
months ended June 30, 2002 was $6.0 million. Net cash used in financing
activities during 2003 was primarily as a result of the payment of a $250,000
fee to the Company's financial adviser in connection with the Merger, and the
net cash provided by financing activities during 2002 was primarily proceeds
from the issuance of HDT's convertible notes which were converted into shares of
HDT common stock immediately before the Merger.

         We believe that the available cash resources and funds generated from
operations will be sufficient to finance our operations for at least the next
twelve months; however, the achievement of our fiscal 2003 business plan is
critical to maintaining adequate liquidity and we cannot assure you that we have
sufficient funds to finance our operations for the next twelve months.
Furthermore, we may need to raise additional capital to fund expansion of our
business into new geographic areas, including potential strategic acquisitions,
and to provide additional working capital. To the extent feasible, we may be
able to pay for those acquisitions through issuance of shares of our common
stock or other of our equity or debt securities. We expect to seek additional
capital, when needed, through sales of additional equity or debt securities
and/or institutional loans; there can be no assurance that capital will be
available from such sources on acceptable terms, or at all.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

         The Company and its subsidiaries are parties to various leases related
to office facilities and certain other equipment. We are also obligated to make
payments related to our long-term borrowings.

                                       14
<PAGE>




         The minimum commitments under non-cancellable capital and operating
leases at June 30, 2003 are as follows:

                                 (In thousands)
           Year                                Capital            Operating
         Ending                                Leases                Leases
         ------                        -----------------    ------------------
         2003 - Remainder              $          61,277    $          377,577
         2004                                    106,071               343,957
         2005                                     27,611               257,326
         2006                                      1,239               194,986
         2007                                        ---               200,493
         Thereafter                                  ---                33,492
                                       -----------------    ------------------
         Total minimum payments        $         196,198    $        1,407,831
                                       =================    ==================


ITEM 3. CONTROLS AND PROCEDURES

     CEO, President and CFO Certifications. Attached as exhibits to this
quarterly report are the certifications of the CEO, President and the CFO
required by Rules 13a-15 and 15d-15 the Securities Exchange Act of 1934 (the
"Certifications"). This section of the quarterly report contains the information
concerning the evaluation of Disclosure Controls and changes to Internal
Controls over Financial Reporting referred to in the Certifications and this
information should be read in conjunction with the Certifications for a more
complete understanding of the topics presented.

Disclosure Controls. Disclosure Controls are procedures that are designed for
the purpose of ensuring that information required to be disclosed in our reports
filed under the Securities Exchange Act of 1934 (such as this quarterly report),
is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms.

Internal Controls over Financial Reporting. Internal Controls over Financial
Reporting means a process designed by, or under the supervision of, our
principal executive and principal financial officers, or persons performing
similar functions, and effected by our board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America ("GAAP"), and includes those policies and procedures
that:

 -pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of our assets;

 -provide reasonable assurance our transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP, and that our
receipts and expenditures are being made only in accordance with authorizations
of our management and directors; and

 -provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on our consolidated financial statements.

Limitations on the Effectiveness of Controls. Our management, including the CEO,
President and CFO, do not expect that our Disclosure Controls or Internal
Controls over Financial Reporting will prevent all error and all fraud. A
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Because of the limitations in all control systems, no evaluation of our
controls can provide absolute assurance that all control issues and instances of
fraud, if any, have been detected. Further, the design of any control system is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions. Because of these inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected.

Changes to Internal Controls over Financial Reporting. In accordance with the
SEC's requirements, the CEO, President and CFO note that, during the quarter
ended June 30, 2003, there have been no significant changes in Internal Controls
over Financial Reporting or in other factors that have affected or are
reasonably likely to materially affect Internal Controls over Financial
Reporting, including any corrective actions with regard to significant
deficiencies and material weaknesses.

Conclusions regarding Disclosure Controls. Based upon the required evaluation of
Disclosure Controls, the CEO, President and CFO have concluded, as of June 30,
2003, that, subject to the limitations noted above, the Company's Disclosure
Controls are effective to provide reasonable assurance that material information
relating to Home Director and its consolidated subsidiaries is made known to
management, including the CEO, President and CFO.

                                       15


<PAGE>


                                     PART II

ITEM 1. LEGAL PROCEEDINGS

             The Company is subject to various legal proceedings and claims,
which have arisen in the ordinary course of its business and have not been fully
adjudicated. It is impossible at this time for the Company to predict with any
certainty the outcome of such litigation, and we cannot assure you that any
liability arising from this litigation will not be material in relation to the
Company's consolidated financial position or results of operations.

               On June 18, 2001, Point West Ventures, LP ("Point West") filed a
complaint against HDT and Spencer Trask Ventures, Inc., the placement agent for
HDT's Series B convertible preferred stock financing in the New York State
Supreme Court. Point West, one of the investors in that financing, has alleged
misrepresentation in connection with that financing and is seeking rescission of
its $500,000 investment. As of December 31, 2002, Point West was in receivership
and, although the receiver may wish to pursue this action at a later date, the
proceedings have been stayed.

                On June 17, 2003, Tri-Center Realty, Inc. ("Tri-Center")
filed a complaint against HDT in the State of North Carolina, Superior Court
Division. Tri-Center, the landlord of HDT's warehouse in Durham, North Carolina,
has alleged breach of contract and is seeking $555,000 in damages. The outcome
of such complaint or the Company's attempt to resolve the matter outside of the
courts cannot be predicted at this time.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

RECENT SALES OF UNREGISTERED SECURITIES

         During the quarter ended June 30, 2003, pursuant to our Stock Option
Plan, we granted options to certain of our directors, officers and employees to
purchase an aggregate of 57,500 shares of Common Stock at an exercise price
equivalent to the fair value on their respective grant dates. Such grants were
exempt from registration pursuant to Section 4(2) of the Securities Act, since
they were made to a small number of informed persons who were provided with all
information relevant to their investment decisions. None of the options have
been exercised, and we plan to register the offering of Common Stock pursuant to
the options.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

            Our Annual Meeting of Stockholders was held on June 26, 2003.
Holders of an aggregate of 3,751,467 shares of our common stock at the close of
business on April 29, 2003 were entitled to vote at the meeting, of which
2,192,263 were present in person or represented by proxy. At such meeting, the
Company's stockholders voted as follows:

          Proposal 1.

            To elect eight directors to serve until the 2004 Annual Meeting of
Stockholders or until their respective successors shall have been duly elected
and qualified.
<TABLE>
<CAPTION>

------------------------------------- ----------------------------------- -----------------------------------
<S>              <C>                            <C>                                   <C>
          NAME OF NOMINEE                TOTAL VOTE FOR EACH NOMINEE        TOTAL VOTE WITHHELD FROM EACH
          ---------------                ---------------------------        ------------------------------
                                                                                       NOMINEE
------------------------------------- ----------------------------------- -----------------------------------

Donald B. Witmer                      2,129,996                           62,267
------------------------------------- ----------------------------------- -----------------------------------

Robert N. Wise                        2,129,709                           62,554
------------------------------------- ----------------------------------- -----------------------------------

Vijay Bobba                           2,158,992                           33,271
------------------------------------- ----------------------------------- -----------------------------------

Robert B. Clasen                                                          33,271
                                      2,158,992
------------------------------------- ----------------------------------- -----------------------------------

Kent M. Klineman                      2,142,243                           50,020
------------------------------------- ----------------------------------- -----------------------------------

Ezra P. Mager                         2,158,992                           33,271
------------------------------------- ----------------------------------- -----------------------------------

Stephen B. Ste. Marie                 2,158,992                           33,271
------------------------------------- ----------------------------------- -----------------------------------

Michael L. Wise                       2,129,298                           62,965
------------------------------------- ----------------------------------- -----------------------------------
</TABLE>
                                       16


<PAGE>

          No other persons were nominated, or received votes, for election as
directors of the Company at the 2003 Annual Meeting of Stockholders. There were
no abstentions or broker non-votes with respect to this proposal.

          Proposal 2.

            To increase the number of shares of the Company's common stock
available under the Company's Stock Option Plan from 600,000 shares of common
stock to 750,000 shares of common stock.
<TABLE>
<CAPTION>
<S>         <C>                                     <C>                               <C>

------------------------------------- ----------------------------------- -----------------------------------
     TOTAL VOTE FOR PROPOSAL 2          TOTAL VOTE AGAINST PROPOSAL 2        ABSTENTIONS FROM PROPOSAL 2
     -------------------------          -----------------------------        ---------------------------

2,010,481                             171,149                             10,633
------------------------------------- ----------------------------------- -----------------------------------

          There were no broker non-votes with respect to Proposal 2.

          Proposal 3.

            To ratify the appointment of Mahoney Cohen & Company CPA, PC as the
Company's independent auditors for the fiscal year ending December 31, 2003.

------------------------------------- ----------------------------------- -----------------------------------
     TOTAL VOTE FOR PROPOSAL 3          TOTAL VOTE AGAINST PROPOSAL 3        ABSTENTIONS FROM PROPOSAL 3
     -------------------------          -----------------------------        ---------------------------

2,178,287                                      3,201                      10,675
------------------------------------- ----------------------------------- -----------------------------------


          There were no broker non-votes with respect to Proposal 3.

ITEM 5:  OTHER INFORMATION

None.



ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits

10.1     Agreement dated as of April 17, 2003 by and between Sears, Roebuck and Co. and Home Director, Inc.*
31.1     Certification of Chief Executive Officer pursuant to Rule 13a-15 or
         15d-15(a) of the Securities Exchange Act of 1934, as amended.
31.2     Certification of President pursuant to Rule 13a-15 or 15d-15(a) of the Securities Exchange Act of 1934,
         as amended.
31.3     Certification of Chief Financial Officer pursuant to Rule 13a-15 or
         15d-15(a) of the Securities Exchange Act of 1934, as amended.
32.1     Certification of Chief Executive Officer in accordance with Section 906 of the Sarbones-Oxley of 2002.
32.2     Certification of President in accordance with Section 906 of the Sarbones-Oxley of 2002.
32.3     Certification of Chief Financial Officer in accordance with Section 906 of the Sarbones-Oxley of 2002.


*  Portions  of  this  agreement  have  been  omitted  pursuant to a request for
confidential  treatment. The term "confidential treatment" and the mark "*" used
throughout  this exhibit means that the material has been omitted and separately
filed  with  the  SEC.


</TABLE>

(b)    Reports on Form 8-K

None.



                                       17

<PAGE>



                                   SIGNATURES

     In accordance with section 13 or 15(d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                                      HOME DIRECTOR, INC.
                                      (Registrant)

                                      By: /s/ Donald B. Witmer
                                      ------------------------------------
                                      Donald B. Witmer
                                      Chairman and Chief Executive Officer

                                      By: /s/ Robert N. Wise
                                      ------------------------------------
                                      Robert N. Wise
                                      President and Chief Operating Officer

                                      By: /s/ Daryl Stemm
                                      ------------------------------------
                                      Daryl Stemm
                                      Chief Financial Officer and Secretary



Date:  August 15, 2003


                                       18






<PAGE>