UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                                       
                           WASHINGTON, D.C., 20459
                                       
                                 FORM 10-QSB

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

For the quarterly period ended December 31, 1996
                               ------------------
     
                              OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ______ to __________

               Commission file number   1-13550
                                        -------

               HAUPPAUGE DIGITAL, INC.                            
               -----------------------

            (Exact name of registrant as specified in its charter)

          DELAWARE                      11-3227864    
          --------                      ----------
          (State or other               (I.R.S. Employer
           jurisdiction of              Identification No.)
          incorporation or
           organization)

               91 Cabot Court, Hauppauge, New York 11788
               -----------------------------------------
               (Address of principal executive offices)

                         (516) 434-1600
                         --------------
                    (Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
               YES   X                  NO
                    ----                  -----

As of February 4, 1997, 4,444,102 shares of .01 par value Common Stock of the
registrant were outstanding.

Page 1 of 12 pages.

                                  -1-

<PAGE>

                HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
                ----------------------------------------

                                 INDEX
                                 -----


                                                          Page No.
                                                          --------
PART I. FINANCIAL INFORMATION
-----------------------------
                   
Item 1. Financial Statements                                                  
                                                                              
                                                                              
     Condensed Consolidated Balance Sheets-
          December 31, 1996 and September 30, 1996            3

     Condensed Consolidated Statements of Operations-
          Three Months ended December 31, 1996 and 1995       4

     Condensed Consolidated Statements of Cash Flows-
          Three Months ended December 31, 1996 and 1995       5

     Notes to Condensed Consolidated Financial Statements   6-7 

Item 2.  Management's Discussion and Analysis of Financial 
          Condition and Results of Operations               8-10


PART II.  OTHER INFORMATION
---------------------------

Item 6.  Exhibits and Reports on Form 8-K                     11

SIGNATURES                                                    12
----------
                                                                              
                                                                              
                                   -2-

<PAGE>

                   HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS

                         ASSETS
                                       As of           As of 
                                   December 31,    September 30,
                                        1996            1996
                                   (Unaudited)      (Unaudited)
                                   ------------     -----------
CURRENT ASSETS:
 Cash . . . . . . . . . .          $ 5,842,822       $6,559,175
 Accounts receivable, net  
   of allowance for doubtful 
   accounts. . . . . . .             3,191,616        1,835,882
 Inventories (Note 2). .             4,979,745        3,138,961
 Prepaid expenses and other
   current assets . . . . . . .        273,015          191,161
                                    ----------       ----------
     Total Current Assets . . .     14,287,198       11,725,179
                                    ----------       ----------

 Property, plant and equipment
   at-cost . . . . . . . . . . .       393,221          374,218
 Less: Accumulated depreciation
   and amortization . . . . . .        238,653          228,678
                                   -----------      -----------
                                       154,568          145,540
                                   -----------      -----------
 SECURITY DEPOSITS AND
      OTHER ASSETS                      59,224           59,881
                                   -----------      -----------
                                   $14,500,990      $11,930,600
                                   ===========      ===========

                     LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
 Accounts payable. . . . . . .       4,756,390        2,818,832
 Accrued expenses. . . . . . .       1,198,658          936,851
                                   -----------        ---------
     Total Current Liabilities       5,955,048        3,755,683


 SHAREHOLDERS' EQUITY
   Common Stock $.01 par value;
   10,000,000 shares authorized 
   4,465,302 issued as of December 
   31, 1996 and September 30, 1996      44,653           44,653
   Additional paid-in
   capital . . . . . . . . . .      10,344,844       10,344,844
   Accumulated deficit . . . .      (1,764,641)      (2,214,580)
   Treasury Stock-at cost (Note 5)     (78,914)               -
                                   ===========       ===========
                                     8,545,942        8,174,917
                                   -----------       ----------
                                   $14,500,990      $11,930,600
                                   ===========       ==========

         See notes to condensed consolidated financial statements

                                   -3-

<PAGE>


                   HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS

                                    Three Months Ended December 31,
                                       1996             1995
                                   (Unaudited)      (Unaudited)
                                   ----------        -----------

SALES . . . . . . . . . . . . .    $ 6,546,188       $ 4,510,217

COST OF SALES . . . . .  . . . .     4,917,290         3,468,809
                                   -----------      ------------
   Gross Profit  . . . . . . .       1,628,898         1,041,408

SELLING, GENERAL & ADMINISTRATIVE
   EXPENSES . . . . . . . . . . .    1,003,662           747,060
RESEARCH & DEVELOPMENT
   EXPENSES  . . . . . . . . .         108,749            93,877
                                   -----------      ------------
   Income, from operations             516,487           200,471

OTHER INCOME (EXPENSE):
   Interest income . . . . . .          71,064             9,816
   Miscellaneous income (expense)       (6,685)            2,340
                                   -----------       -----------
   Income before income
     tax provision . . . . .  . .      580,866           212,627

INCOME TAX PROVISION (Note 4)          130,927            10,000
                                   -----------       ----------- 
   Net Income                         $449,939          $202,627
                                   ===========       ===========


Net income per share. . . . . .          $0.10             $0.07
                                   ===========       ===========

Weighted average shares
   outstanding (Note 3)  . . .       4,456,191         2,756,183
                                   ===========       ===========


     See notes to condensed consolidated financial statements

                                   -4-

<PAGE>

                 HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                                           Three Months Ended December 31, 
                                                  1996           1995
                                                (Unaudited)    (Unaudited)
                                                -----------    -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                      $449,939       $ 202,627
Adjustments to reconcile net income to 
  net cash (used in) provided by operating
  activities:
  Depreciation and amortization                     10,632           9,433
  Provision for uncollectible accounts
  receivable                                         3,000           5,000
  Provision for system board obsolescence           10,000          10,000
Increase (decrease) in cash resulting from
  changes in operating assets and liabilities:
  Accounts receivable                           (1,358,736)       (356,271)
  Inventories                                   (1,850,784)       (734,261)
  Prepaid expenses and other current assets        (81,854)         48,632
  Accounts payable                               1,937,560         183,070
  Accrued expenses                                 261,807          78,120
                                                ----------       ---------
                                                (1,068,375)       (756,277)
                                                -----------      ----------
     Net cash used in operating activities        (618,436)       (553,650)
                                                -----------      ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment       (19,003)         (3,450)
                                                  ---------      ----------
     Net cash used in investing activities         (19,003)         (3,450)

CASH FLOWS FROM FINANCING ACTIVITIES:
 Purchase of Treasury Stock                        (78,914)              -
                                                  ---------      --------- 
     Net cash used by financing activities         (78,914)              -
                                                  ---------      --------- 
     Net decrease in cash                         (716,353)        (557,100)

CASH, beginning of period                        6,559,175       1,214,940
                                                  ---------      ----------
CASH, end of period                             $5,842,822        $657,840
                                                  =========      ==========

SUPPLEMENTAL DISCLOSURES:
  Income taxes paid                                 $5,467          $4,286
                                                  =========      ==========

               See notes to condensed consolidated financial statements

                                   -5-

<PAGE>



                     HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES               
 
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                (Unaudited)


NOTE 1. BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements
included herein have been prepared in accordance with generally accepted
accounting principles for interim period reporting in conjunction with the
instructions to Form 10-QSB. Accordingly, these statements do not include all
of the information required by generally accepted accounting principles for
annual financial statements, and are subject to year-end adjustments. In the
opinion of management, all known adjustments (consisting of normal recurring
accruals and reserves) necessary to present fairly the quarterly financial
results for the period  have been included. It is suggested that these interim
statements be read in conjunction with the financial statements and related
notes included in the Company's September 30, 1996 Form 10-KSB.

     The operating results for the three months ended December 31, 1996 are not
necessarily indicative of the results to be expected for the September 30, 1997
year end.

NOTE 2.  INVENTORIES

     Inventories have been valued at the lower of average cost or market. The
components of inventory at December 31, 1996 and September 30, 1996 consist
of:

                                       December 31,   September 30,
                                          1996            1996 
                                       -----------    ------------
           Component Parts             $1,347,394     $  849,324         
           Work in Process              2,952,968      1,861,391
           Finished Goods                 679,383        428,246
                                       -----------    ------------
                                       $4,979,745     $3,138,961


NOTE 3.  NET INCOME PER SHARE

     Net income per share has been computed on the basis of weighted average
common shares for each period presented.            


                                    -6-

<PAGE>

                     HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
                               (Unaudited)

Net income per share - continued
--------------------------------

     Weighted average shares outstanding listed below were used in the
per share computation:
 
                               Three Months Ended
                                     December 31,
                                  1996          1995
                                  ----          ----
                               4,456,191    2,756,183

On November 8, 1996, the Company approved a stock repurchase program
(See note 5). Shares outstanding for the quarter reflect a reduction on
a weighted average basis for the repurchased shares. For the prior year's
quarter ended December 31, 1995, the Company's stock did not trade at an
average price that was in excess of the exercise price for the  Company's
Class A warrants that were outstanding at the time. Therefore, the
warrants were not included in the weighted average shares outstanding.  


NOTE 4.  INCOME TAXES                                                   

    Income taxes are based on statutory rates for federal and state income
taxes. The provision for income taxes reflects an annualized effective
tax rate after deductions for the utilization of restricted and
unrestricted net operating loss carryforwards, adjusted for the
applicable federal and state alternative minimum tax provisions. The benefits
of these operating loss carryforwards had previously been subjected to a 
100% valuation allowance.  However, based on projected fiscal 1997 taxable
income, management has reduced the valuation allowance accordingly.  Future
reductions in the valuation allowance will be predicated on projected results
for future years which are not available.


NOTE 5.  STOCK REPURCHASE PROGRAM

     On November 8, 1996, the Company approved a stock repurchase program
for the repurchase of up to 300,000 shares of its own stock. The
repurchased shares will be used by the Company for certain employee
benefit programs. As of December 31, 1996, the Company had repurchased
21,200 shares for $78,914 at an average purchase price of approximately
$3.72 per share.  


                                    -7-

<PAGE>

ITEM 2.          Management's Discussion and Analysis of
                 Financial Condition and Results of Operations
                 ---------------------------------------------

Results of Operations
---------------------

Three Month Period ended December 31, 1996 versus December 31, 1995
-------------------------------------------------------------------

    Net sales for the three months ended December 31, 1996 were $6,546,188, 
compared to $4,510,217 for the comparable period in the prior fiscal year, 
resulting in an increase of $2,035,971 or 45%. The increase in sales were 
primarily due to the shipments of several new digital video TV products 
introduced domestically and internationally during the latter part of fiscal 
1996, coupled with the commencement of shipments during the first quarter of
the Company's video conferencing board, currently sold on an OEM basis. 
The Company's cash position also contributed to sales growth by providing
the resources required to sufficiently fund its sales, marketing and
procurement programs. 

     Net sales of the Company's products are summarized as follows:

                                   Three Months Ended December 31,   Increase
                                               1996           1995  (Decrease)%
                                               ----           ----   ----------
   System Sales                           $  179,342       $ 402,576    (124)
   Digital Video and Conferencing Boards   6,366,846       4,107,641      55
                                           ---------       ---------    -----
   Total Company Sales                    $6,546,188      $4,510,217      45 
                                           =========      ==========  =======

Unit sales of digital video and conferencing  boards increased to approximately
82,000 as compared to approximately 20,000 for the corresponding prior year's
quarter, resulting in an increase of approximately 310%. Sales to domestic
customers for the three month period were 38% of net sales for the current
year and 33% for the prior year. Sales to international customers, which were
primarily in U.S. Dollars, were 62% of net sales for the current year and 67% 
for the comparable period of last year.

     Gross profit increased to $1,628,898 from $1,041,408, an increase of
$587,490 or 56% over the prior year's first fiscal quarter. The gross profit 
percentage increased to approximately 25% as compared to approximately 23% 
for the three months ended December 31, 1995. The effect of lower component
costs resulting from the economies gained by purchasing larger volumes of
inventory plus the absorption of fixed production labor costs over a greater
number of units negated the effect of somewhat lower margins on OEM sales.

     Though selling, general and administrative expenses increased $256,602
over last year's first fiscal quarter, they declined to 15% of revenue in
the current three month period compared to 17% of revenue for the three 
months ended December 31, 1995.   The increase in expenses was 
primarily due to increased sales and marketing expenses

                                             -8- 

<PAGE>
                                                                        
ITEM 2.   Management's Discussion and Analysis-Continued
--------------------------------------------------------

of $163,428, mainly for higher personnel costs due to an increased
outside sales staff, increased commissions resulting from the 45% sales
increase; higher technical support costs of $20,698 for the additional
staff required to consistently maintain a high level of customer support
and higher general and administrative expenses of $24,568, mainly for
contractual wage increases, insurance premiums for D&O insurance and the
amortization of costs relating to the Company's bank line of credit.  
                                                  
     Research and development expenses increased $14,872 or approximately
16%. The increase was due to the infusion of new capital from the
Company's January 1995 public offering and July 1996 conversion of the
Company's Class A Warrants, which has enabled the Company to expand its
engineering research and development resources to enhance current
products and further develop future product lines.                      
                                      
      The Company had net other income of $64,379 for the December 31,
1996 three month period as compared to net other income of $12,156 for
the corresponding three months of the preceding fiscal year. The increase
to net other income was primarily due to the higher interest income
earned from the investing of the cash received from the July 1996 warrant
conversion.                                     

      As a result of all the above, the Company recorded a net profit after 
taxes for the three months ended December 31, 1996 of $449,939 or $0.10 per 
share as opposed to a net income after taxes of $202,627 or $0.07 per share
for the corresponding prior year quarter.              

     Over the prior two fiscal years, the Company has experienced certain
revenue trends. Since a major portion of the Company's products are sold
through distributors and retailers, the Company has historically recorded
stronger sales results during the Company's first fiscal quarter (October
to December), which due to the holiday season, is a strong quarter for
computer equipment sales. In addition, the Company's international sales,
mostly into the European market, have been 54% and 70% of sales for
fiscal 1996 and 1995 and 62% for the first fiscal quarter. Due to this,
the Company's sales for its fourth fiscal quarter (July to September) are
impacted by the reduction of activity experienced with Europe during the
July and August summer holiday period.   

     To offset the above cycles, the Company is working to increase its
penetration of the domestic retail market to create counterbalancing
domestic sales.  Since it is difficult to control the seasonality of
retail sales, the Company is also looking to establish strategic OEM
alliances to produce a consistent level of annual revenue to help offset
the seasonality of the retail segment of its business.  

                                     -9-

<PAGE>

ITEM 2.    Management's Discussion and Analysis-Continued
---------------------------------------------------------

Liquidity and Capital Resources
-------------------------------

     The Company had a net cash position of $5,842,822, working capital
of $8,332,150 and shareholders' equity of $8,545,942 as of December 31,
1996. The significant items of cash sources and (uses) is detailed as
follows:

      Net income (adjusted for non cash items)     $    473,571
      Investments in current assets                  (3,291,374)
      Increase in current liabilities-net             2,199,367 
      Purchase of treasury stock                        (78,914) 

Net cash of ($618,436) used in operating activities was primarily due to cash
used to finance accounts receivable and inventory attributed to the growth in
sales, offset partially by operations funded by accounts payable and cash
generated by the Company's net income.

     The Company currently has in place an asset based bank line of credit.
Advances are to be made on a revolving basis based on a formula of eligible
domestic and foreign receivables not older than 90 days.  As of December
31, 1996, the Company has not utilized this loan facility.

     On November 8, 1996, the Company approved a stock repurchase program
for the repurchase of up to 300,000 shares of its own stock. The
repurchased shares will be used by the Company for certain employee
benefit programs. As of December 31, 1996, the Company had repurchased
21,200 shares for $78,914 at an average purchase price of approximately
$3.72 per share.  

     The Company believes that its current cash position, internally
generated cash flow and its asset based line of credit, will be
sufficient to satisfy the Company's anticipated operating needs for at
least the ensuing twelve months.                                        
      
Risk Factors
------------

     From time to time, information provided by the company, statements
made by its employees or information provided in its Securities and
Exchange Commission filings, including information contained in this Form
10-QSB, may contain forward looking information. The Company's actual
future results may differ materially from those projections or statements
made in such forward looking information as a result of various risks and
uncertainties, including but not limited to rapid changes in technology,
lack of funds for research and development, competition, proprietary

                              -10-

<PAGE>

patents and rights of others, loss of major customers, loss of sources of
supply for its digital video processing chips, non-availability of
management, government regulation, and the inability of the Company to
profitably sell its products. The market price of the Company's common
stock may be volatile at times in response to fluctuation in the
Company's quarterly operating results, changes in analysts' earnings
estimates, market conditions in the computer hardware industry, as well
as general conditions and other factors external to the Company.



PART II. OTHER INFORMATION
--------------------------

Item 6   Exhibits and Reports on Form 8-K
         --------------------------------

         (a) Exhibits
             --------
              None       

         (b) Reports on Form 8-K
             -------------------

             On November 8, 1996, the Company filed Form 8-K under Other 
             Events, stating that the Company's Board of Directors approved 
             the adoption of a stock repurchase program, pursuant to which 
             the Company may repurchase up to 300,000 shares of its own 
             common stock.  Purchases made by the Company in the open market
             will be made pursuant to Rule 10b-18 of the Securities Exchange
             Act of 1934.

                                     -11-

<PAGE>
    
                                 SIGNATURES
                                 ----------

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

                                 HAUPPAUGE DIGITAL, INC.
                                 -----------------------
                                 Registrant



Date: February 4, 1997                By /s/ KENNETH PLOTKIN
      ----------------                   -------------------------------
                                             KENNETH  PLOTKIN
                                             Vice President and
                                             Chief Executive Officer

Date: February 4, 1997                By  /s/ GERALD TUCCIARONE
      ----------------                    ------------------------------
                                              GERALD TUCCIARONE
                                              Treasurer and Chief
                                              Financial Officer


                                -12-