Investor Contacts:  Gerald Tucciarone
Chief Financial Officer
631/434-1600 extension 306


       HAUPPAUGE DIGITAL REPORTS FISCAL 2004 THIRD QUARTER AND NINE MONTH
                                FINANCIAL RESULTS
       ------------------------------------------------------------------

 Net sales increase of approximately 38% and 24% for the quarter and nine month
                       period over the prior fiscal year.
   --------------------------------------------------------------------------

HAUPPAUGE,  NY - August 11, 2004 - Hauppauge  Digital,  Inc.  (NASDAQ:  HAUP), a
leading  developer of digital video TV and data broadcast  receiver products for
personal  computers,  today  reported  financial  results  for the fiscal  third
quarter and nine month period ended June 30, 2004.

THIRD  QUARTER RESULTS
----------------------
Net sales were $13.8 million for the third quarter compared to $10.0 million for
the previous year's third quarter,  an increase of approximately  38%. Increases
in sales of our  personal  video  recorder  products  in  addition  to the sales
increase of retail TV tuners for laptop  computers  coupled with the increase in
the Euro  exchange  rate  were the  primary  forces  responsible  for the  sales
increase.

Gross profit percentage increased to 25.79% for the third quarter, compared with
a gross  profit  percentage  of 22.52% for the previous  year's  third  quarter.
Product cost  reductions,  a favorable sales mix of higher gross margin products
and the  increase  in the Euro  exchange  rate were mainly  responsible  for the
increases.

Selling,   General  and   Administrative   costs  increased  by  $289,887.   The
strengthening  of the value of the Euro to the U.S.  dollar was  responsible for
$69,628 of the increase,  while increases in sales related promotional  expenses
and marketing programs plus higher costs  attributable to professional  services
contributed to the remaining increase in SGA expenses. Spending for research and
development  increased  $24,759,  mainly due to the  addition  of  research  and
development  personnel.

Net income for the third fiscal  quarter  increased to $168,637 as compared to a
net loss of $855,465 for the third quarter  ended June 30, 2003.  Net income per
share was $0.02 on a basic and diluted basis compared to net a loss per share of
$0.10 on a basic and diluted basis for the prior year's third quarter.

NINE MONTH   RESULTS
--------------------
Net sales  were $48.8  million  for the nine month  period  ended June 30,  2004
compared to $39.4 million for the previous  year,  an increase of  approximately
24%.  Increases in the sales of our personal video recorder  products,  European
digital TV receiver products,  TV tuners for laptop computers,  the introduction
of the MediaMVP plus the increase in the Euro exchange rate were primary  forces
responsible for the sales increases.

Gross profit percentage increased to 26.77% for the nine month period,  compared
with a gross profit  percentage  of 24.19% for the previous  year.  Product cost
reductions,  a  favorable  sales mix of higher  gross  margin  products  and the
increase in the Euro exchange rate were mainly  responsible  for the  increases.

Selling,   General  and  Administrative  costs  increased  by  $1,203,498.   The
strengthening  of the value of the Euro to the U.S.  dollar was  responsible for
$471,462 of the increase,  while increases in sales related promotional expenses
and  marketing  programs plus  increased  legal costs and fees  attributable  to
professional  services  contributed  to the remaining  increase in SGA expenses.
Spending for research and  development  decreased  $61,901,  mainly due to lower
contracted third party software  development costs and lower compensation costs.

Net income for the nine month period increased to $1,705,887 compared to $61,522
for the same period in the prior year.  Basic net income per share was $0.19 and
diluted  net  income per share was  $0.18,  compared  to net income per share of
$0.01 on a basic and diluted  basis for the prior year.  The nine month  results
include $633,250 in arbitration and litigation charges, which reduced net income
by $0.07 per share on a diluted basis.

DISCUSSION OF RESULTS
---------------------
Ken Plotkin,  Hauppauge's  Chief Executive  Offices stated "Although we began to
see signs of our seasonal  slowdown  towards the end of our third  quarter,  the
combination  of sales growth in our target  product  lines,  higher margin sales
mix,  manufacturing  unit  cost  reductions  and a  favorable  Euro to US dollar
exchange  rate helped spur the sales and profit  increase  over the third fiscal
quarter of last year.  Also,  during the quarter we ramped up our  research  and
development  resources,  establishing  a new research and  development  facility
off-shore,  and we are forging ahead with new and updated  product lines that we
plan to introduce  during latter part of our fourth quarter and the first fiscal
quarter of 2005."

ABOUT HAUPPAUGE DIGITAL
-----------------------
Hauppauge Digital, Inc. is a leading developer of analog and digital TV receiver
products for the personal computer market. Through its Hauppauge Computer Works,
Inc. and Hauppauge  Digital Europe Sarl  subsidiaries,  the Company  designs and
develops analog and digital TV receivers that allow PC users to watch television
on their PC screen in a resizable window and enable the recording of TV shows to
a hard disk, digital video editing, video conferencing,  receiving of digital TV
transmissions, and the display of digital media stored on a computer to a TV set
via a home network.  The Company is headquartered  in Hauppauge,  New York, with
administrative  offices in New York, Luxembourg,  Singapore,  Ireland and Taiwan
and sales offices in Germany,  London,  Paris, The Netherlands,  Sweden,  Italy,
Spain, Singapore,  Taiwan and California. The Company's Internet web site can be
found at http://www.hauppauge.com.

--------------------------------------------------------------------------------
     Certain statements in this Release constitute "forward-looking  statements"
     within the meaning of the Private Securities Litigation Reform Act of 1995.
     Such   forward-looking   statements   involve  known  and  unknown   risks,
     uncertainties  and  other  factors  which may  cause  the  actual  results,
     performance or  achievements  of the Company,  or industry  results,  to be
     materially  different from any future results,  performance or achievements
     expressed  or  implied by such  forward-looking  statements.  Such  factors
     include,  among other things, those described in the Company's filings with
     the Securities and Exchange Commission,  including, but not limited to, the
     Company's  Annual  Report on form 10-K for the fiscal year ended  September
     30, 2003.
--------------------------------------------------------------------------------


                           [ Financial Table Follows ]



<PAGE>




                    HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                       Three months ended June  30,
                                                                                    ---------------------------------
                                                                                            2004          2003
                                                                                    ---------------------------------

<S>                                                                                     <C>              <C>
Net Sales                                                                               $13,794,292      $10,010,782
Cost  of Sales                                                                           10,236,138        7,756,306
                                                                                    ---------------------------------
    Gross Profit                                                                          3,558,154        2,254,476

Selling, General and  Administrative Expenses                                             2,928,064        2,638,177
Research & Development Expenses                                                             512,606          487,847
  Litigation proceeding                                                                    (73,000)                -
                                                                                    ---------------------------------
    Income (loss)  from operations                                                          190,484         (871,548)

Other  Income:
  Interest   income                                                                           1,237            3,143
  Foreign currency                                                                               60           12,940
                                                                                    ---------------------------------
Other  income                                                                                 1,297           16,083
                                                                                    ---------------------------------
      Income  (loss) before taxes on income                                                 191,781         (855,465)
Tax  provision                                                                               23,144                -
                                                                                    ---------------------------------
      Net income  (loss)                                                                 $  168,637      $  (855,465)
                                                                                    ================================

Net income (loss) per share:
    Basic and Diluted                                                                        $0.02          ($0.10)
                                                                                             ======         =======

Weighted average shares-basic                                                             9,047,561        8,869,832
Weighted average shares-diluted                                                          10,019,697        8,869,832
                                                                                         ==========        =========
</TABLE>


<PAGE>



                    HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                       Nine  months ended June 30,
                                                                                    ---------------------------------
                                                                                            2004          2003
                                                                                    ---------------------------------

<S>                                                                                     <C>              <C>
Net Sales                                                                               $48,828,873      $39,450,126
Cost  of Sales                                                                           35,758,126       29,905,216
                                                                                    ---------------------------------
    Gross Profit                                                                         13,070,747        9,544,910

Selling, General and  Administrative Expenses                                             9,272,449        8,068,951
Research & Development Expenses                                                           1,367,270        1,429,171
Arbitration proceeding                                                                      206,250                -
Litigation proceeding                                                                       427,000                -
                                                                                    --------------------------------
    Income  from operations                                                               1,797,778           46,788

Other  Income:
  Interest   income                                                                           4,373           13,148
  Foreign currency                                                                           21,959           40,586
                                                                                    ---------------------------------
Other  income                                                                                26,332           53,734
                                                                                    ---------------------------------
      Income  before taxes on income                                                      1,824,110          100,522
Tax  provision                                                                              118,223           39,000
                                                                                    ---------------------------------
      Net income                                                                         $1,705,887          $61,522
                                                                                    ================================
Net income  per share:
    Basic                                                                                     $0.19            $0.01
    Diluted                                                                                   $0.18            $0.01
                                                                                    ================================


Weighted average shares-basic                                                             8,943,087        8,863,663
Weighted average shares-diluted                                                           9,692,475        9,007,288
                                                                                          =========        =========
</TABLE>


<PAGE>




                    HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                              June  30,         September 30,
                                                                                                2004                2003
                                                                                            (Unaudited)           (Audited)

                                                                                     -----------------------------------------
Assets:

 Current Assets:
<S>                                                                                          <C>                 <C>
     Cash and cash  equivalents                                                              $  9,427,652      $    5,838,160
     Receivables, net of  various allowances                                                    7,047,567           9,182,758
     Inventories                                                                                7,519,023           5,474,374
     Prepaid expenses and other current assets                                                    792,829             546,328
                                                                                     -----------------------------------------
              Total current assets                                                             24,787,071          21,041,620

     Property, plant and equipment, net                                                           428,240             532,516
     Security deposits and other non current assets                                                77,342              76,216
                                                                                     -----------------------------------------
                                                                                             $ 25,292,653       $  21,650,352
                                                                                     ========================================
 Liabilities and  Stockholders'  Equity:

 Current Liabilities:
    Accounts payable                                                                         $  6,971,191       $   7,452,867
    Accrued expenses                                                                            3,793,391           2,539,678
    Income taxes payable                                                                          202,222             189,122
                                                                                     -----------------------------------------
              Total current liabilities                                                        10,966,804          10,181,667

 Stockholders' Equity
    Common stock $.01 par value; 25,000,000 shares authorized,
        9,668,898 and 9,420,315  issued, respectively                                              96,689              94,203
     Additional paid-in capital                                                                12,770,663          12,302,119
     Retained earnings                                                                          1,805,874              99,987
     Accumulated other comprehensive income                                                     1,149,839             469,592
    Treasury Stock, at cost, 542,067 shares                                                    (1,497,216)         (1,497,216)
                                                                                     -----------------------------------------
              Total stockholders' equity                                                       14,325,849          11,468,685
                                                                                     -----------------------------------------
                                                                                             $ 25,292,653        $ 21,650,352
                                                                                     ========================================
</TABLE>

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