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

                                    FORM 10-Q

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

For the quarterly period ended  March 31,  2003

                                       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 jurisdiction of                          (I.R.S. Employer
incorporation or organization)                             identification No.)

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

                                 (631) 434-1600
                           (Issuer's telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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
                                        -         --
Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act) Yes      No  X
                                               --       -

As of April 28,  2003,  8,863,265  shares of .01 par value  Common  Stock of the
registrant were outstanding, not including treasury shares.

<PAGE>

                    HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES

                                      INDEX


PART I. FINANCIAL INFORMATION


Item 1.Financial Statements                                             Page No.

Condensed Consolidated Balance Sheets-
   March 31, 2003 (unaudited) and September 30, 2002                           3

Condensed Consolidated Statements of Income-
   Six Months ended March 31, 2003 (unaudited) and 2002 (unaudited)            4

Condensed Consolidated Statements of Income-
   Three Months ended March 31, 2003 (unaudited) and 2002 (unaudited)          5

Condensed Consolidated Statements of Other Comprehensive Income -
   Three months and six months ended March 31, 2003 (unaudited)
   and 2002 (unaudited)                                                        6

Condensed Consolidated Statements of Cash Flow-
  Six Months ended March  31 , 2003 (unaudited) and 2002 (unaudited)           7

Notes to Condensed Consolidated Financial Statements                        8-12

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations                                                  13-25

Item 3. Quantitative and Qualitative Disclosures about Market Risks           25

Item  4. Controls and Procedures                                              26

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings                                                    26

Item 6.  Exhibits and Reports on form 8-K                                     26

SIGNATURES                                                                    27

CERTIFICATIONS                                                             28-29


                                       2
<PAGE>



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements




                    HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                         March 31,        September 30
                                                                                            2003               2002
                                                                                        (Unaudited)
                                                                               -----------------------------------------
Assets:

Current Assets:
<S>                                                                                   <C>                 <C>
    Cash and cash  equivalents                                                        $   4,660,775       $ 4,964,522
    Accounts receivable, net of various allowances  of  $2,887,000                        7,056,504         5,182,738
    Income taxes receivable                                                                 501,000           501,000
    Inventories                                                                           8,897,662         8,091,495
    Prepaid expenses and other current assets                                               612,278           416,734
                                                                               ---------------------------------------
               Total current assets                                                      21,728,219        19,156,489

    Property, plant and equipment, net                                                      599,093           611,054
    Security deposits and other non current assets                                           78,376            78,616
                                                                               ---------------------------------------
                                                                                       $  22,405,688      $19,846,159
                                                                               =======================================

Liabilities and  Stockholders'  Equity :

Current Liabilities:
    Accounts payable                                                                   $   7,209,169      $ 6,105,588
    Accrued expenses                                                                       2,144,443        1,442,475
    Income taxes payable                                                                     362,666          331,484
                                                                               ---------------------------------------
              Total current liabilities                                                    9,716,278        7,879,547

Stockholders' Equity
    Common stock $.01 par value; 25,000,000 shares authorized, 9,405,322
      and 9,392,164  issued, respectively                                                     94,053           93,923
    Additional paid-in capital                                                            12,265,542       12,233,170
    Retained earnings                                                                      1,831,006          914,019
    Accumulated other comprehensive income ( loss)                                            (3,975)         187,074
    Treasury Stock, at cost, 542,067, and 514,317 shares, respectively                    (1,497,216)      (1,461,574)
                                                                               ---------------------------------------
             Total stockholders' equity                                                   12,689,410       11,966,612
                                                                               ---------------------------------------
                                                                                      $   22,405,688      $19,846,159
                                                                               =======================================
</TABLE>

                                       3

See accompanying notes to consolidated financial statements
<PAGE>


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

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                         Six months ended March 31,
                                                                                    ----------------------------------
                                                                                              2003            2002
                                                                                    ----------------------------------

<S>                                                                                      <C>             <C>
Net Sales                                                                                $29,439,344     $22,811,233
Cost of Sales                                                                             22,148,910      17,068,511
                                                                                    ---------------------------------
    Gross Profit                                                                           7,290,434       5,742,722

Selling, General and  Administrative Expenses                                              5,430,774       4,461,373
Research & Development Expenses                                                              941,324         723,437
                                                                                    ---------------------------------
    Income from operations                                                                   918,336         557,912

Other Income (expense):
  Interest income                                                                             10,005          21,628
  Foreign currency                                                                           (15,494)         18,036
  Non operational USD to Euro currency re-measurement                                         43,140         (54,140)
                                                                                    ---------------------------------
Other  income (expense)                                                                       37,651         (14,476)
                                                                                    ---------------------------------
      Income  before taxes on income                                                         955,987         543,436
Tax  provision                                                                                39,000          42,500
                                                                                    ---------------------------------
      Net income                                                                            $916,987        $500,936
                                                                                    =================================
Net income per shares:
    Basic and Diluted                                                                          $0.10           $0.06
                                                                                    =================================

</TABLE>


     See accompanying notes to consolidated financial statements

                                       4

<PAGE>

                    HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                       Three months ended March 31,
                                                                                    ---------------------------------
                                                                                              2003            2002
                                                                                    ---------------------------------

<S>                                                                                      <C>             <C>
Net Sales                                                                                $13,918,858     $10,748,433
Cost of Sales                                                                             10,549,386       7,924,737
                                                                                    ---------------------------------
    Gross Profit                                                                           3,369,472       2,823,696

Selling, General and  Administrative Expenses                                              2,724,472       2,294,614
Research & Development Expenses                                                              448,251         364,413
                                                                                    ---------------------------------
    Income  from operations                                                                  196,749         164,669

Other  Income (expense):
  Interest   income                                                                            4,034          12,338
  Foreign currency                                                                            (3,147)         10,455
  Non operational USD to Euro currency re-measurement                                         75,396          49,492
                                                                                    ---------------------------------
Other  income (expense)                                                                       76,283          72,285
                                                                                    ---------------------------------
      Income  before taxes on income                                                         273,032         236,954
Tax  provision                                                                                12,517          20,000
                                                                                    ---------------------------------
      Net income                                                                           $ 260,515       $ 216,954
                                                                                    =================================

Net income  per shares:
    Basic and Diluted                                                                          $0.03           $0.02
                                                                                    =================================

</TABLE>

           See accompanying notes to consolidated financial statements

                                       5

<PAGE>


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



<TABLE>
<CAPTION>
                                                            Three months  ended  March  31,
                                                               2003               2002
                                                               ----               ----

<S>                                                        <C>                 <C>
Net income                                                 $ 260,515           $ 216,954
Forward exchange contracts marked to market                  163,879                   -
Foreign currency translation gain  (loss)                     13,318            (105,381)
                                                     --------------------------------------------
Other  comprehensive income                                $ 437,712           $ 111,573
                                                     ============================================


                                                              Six months  ended  March  31,
                                                               2003               2002
                                                               ----               ----

Net income                                                 $ 916,987          $  500,936
Forward exchange contracts marked to market                 (355,095)                  -
Foreign currency translation gain  (loss)                    164,046           (110,398)
                                                     --------------------------------------------
Other comprehensive income                                 $ 725,938          $  390,538
                                                     ============================================
</TABLE>


     See accompanying notes to consolidated financial statements

                                       6

<PAGE>


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

<TABLE>
<CAPTION>
                                                                            Six months ended March  31,
                                                                             2003                2002

                                                                     ------------------------------------
  Net income                                                                 $916,987           $500,936
                                                                     ------------------------------------
   Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
<S>                                                                           <C>                <C>
     Depreciation and amortization                                            137,530            167,161
     Provision for uncollectible accounts receivable                                -             20,000
     Other non cash items                                                      19,241             20,008

   Changes in current assets and liabilities:

      Accounts receivable                                                  (2,064,815)         1,207,347
      Inventories                                                            (806,167)           384,022
      Prepaid expenses and other current assets                              (195,544)           (11,046)
     Accounts payable and other current liabilities                         1,836,731            146,490
                                                                     ------------------------------------
        Total adjustments                                                  (1,073,024)         1,933,982
                                                                     ------------------------------------
   Net cash (used in) provided by operating activities                       (156,037)         2,434,918
                                                                     ------------------------------------

Cash Flows From Investing Activities:
    Purchases of property, plant and equipment                               (125,569)           (46,503)
                                                                     ------------------------------------
       Net cash used in investing activities                                 (125,569)           (46,503)
                                                                     ------------------------------------

Cash Flows From Financing Activities:
    Proceeds from employee stock purchases                                     13,501             15,304
    Purchase of treasury stock                                                (35,642)           (41,011)
                                                                     ------------------------------------
        Net cash used in financing activities                                 (22,141)           (25,707)
                                                                     ------------------------------------
        Net( decrease)  increase in cash and cash equivalents                (303,747)         2,362,708

Cash and cash equivalents, beginning of period                              4,964,522          4,422,239
                                                                     ------------------------------------
Cash and cash equivalents, end of period                                 $  4,660,775        $ 6,784,947
                                                                     ====================================

Supplemental disclosures:
   Income taxes paid                                                     $      4,945        $    25,386
                                                                     ===================================

See accompanying notes to consolidated financial statements
</TABLE>


                                       7

<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-Q.  Accordingly,  these statements do not include all of the information
required  by  generally  accepted  accounting  principles  for annual  financial
statements.  In the opinion of management,  all known adjustments (consisting of
normal  recurring  accruals  and  reserves)  necessary  to  present  fairly  the
financial  position,  results of operations and cash flows for the three and six
month  periods  ended March 31, 2003 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, 2002 Form 10-K.

The  operating  results for the three and six month periods ended March 31, 2003
are not  necessarily  indicative of the results to be expected for the September
30, 2003 year end.

Note 2. Derivative Financial Instruments

The strength or weakness of the U.S.  Dollar  against the Euro and British Pound
Sterling impacts our financial results. Changes in exchange rates may positively
or negatively affect our revenues, gross margins,  operating income and retained
earnings (which are all expressed in U.S. Dollars). We use derivatives to reduce
our exposure to fluctuations in foreign  currencies.  Foreign  currency  forward
contracts are used to hedge the foreign  currency  market  exposures  underlying
forecasted  sales  transactions  with  customers.  As of March 31, 2003,  we had
foreign currency contracts  outstanding of approximately  $3,716,900 against the
delivery of the Euro.  The contracts  expire  through June 2003.  Our accounting
policies for these  instruments  designate such instruments as cash flow hedging
transactions.  We do not enter into such contracts for speculative  purposes. We
record all  derivative  gains and losses on the balance  sheet as a component of
stockholders'  equity under the caption  "Accumulated other comprehensive income
(loss)".  The Company  recorded a deferred gain of $163,879 for the three months
ended  March 31,  2003.  As of March 31,  2003,  a  deferred  loss of  $164,176,
reflecting the cumulative mark to market loss of our  derivatives,  was recorded
as a component of accumulated other comprehensive income on the balance sheet.

For the three months and six months ended March 31, 2003, we recorded a decrease
in sales of $ 609,100 and  $1,158,700,  respectively,  related to our  contracts
that  closed  during  these  periods  and the  changes  in the fair value of our
derivative contracts.  For the three months and six months ended March 31, 2002,
we recorded an increase in sales of $ 62,300 and $97,000, respectively,  related
to our  contracts  that closed  during these periods and the changes in the fair
value of our derivative contracts

Note 3. Inventories

Inventories  have been  valued  at the  lower of  average  cost or  market.  The
components of inventory consist of:

                                       March 31,             September 30,
                                        2003                     2002
                                        ----                     ----

     Component Parts                 $ 2,640,095             $2,842,460
     Work in Progress                          -                 42,616
     Finished Goods                    6,257,567              5,206,419
                                       ---------              ---------
                                      $8,897,662             $8,091,495
                                      ==========             ==========

                                       8
<PAGE>

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

Note 4. Net Income Per Share

Basic net income per share  includes no dilution and is computed by dividing net
income by the  weighted  average  number of common  shares  outstanding  for the
period. Diluted net income per share reflects, in the periods in which they have
a dilutive  effect,  the  dilution  which would occur upon the exercise of stock
options.  A reconciliation  of the shares used in calculating  basic and diluted
net income per share is as follows:

<TABLE>
<CAPTION>
                                                                        Three Months Ended              Six months Ended
                                                                              March  31,                   March 31,
                                                                          2003           2002         2003           2002
                                                                          ----           ----         ----           ----

<S>                                                                     <C>           <C>           <C>           <C>
 Weighted average shares outstanding-basic                              8,862,774     8,893,147     8,860,578     8,890,175
 Number of shares issued on the assumed exercise of stock options          97,047       127,184        57,357       174,622
                                                                        ---------     ---------     ---------     ---------
 Weighted average shares outstanding-diluted                            8,959,821     9,020,331     8,917,935     9,064,797
                                                                        =========     =========     =========     =========
</TABLE>
Options to purchase  1,240,122  and  1,145,322  shares of common stock at prices
ranging $1.47 to $ 10.06 and $1.91 and $10.06,  respectively,  were  outstanding
for the three month periods  ending March 31, 2003 and 2002,  respectively,  but
were not included in the computation of diluted  earnings per share because they
were anti-dilutive.

Options to purchase  1,455,425  and  1,025,822  shares of common stock at prices
ranging $1.35 to $ 10.06 and $2.31 and $10.06,  respectively,  were  outstanding
for the six month periods ending March 31, 2003 and 2002, respectively, but were
not included in the computation of diluted  earnings per share because they were
anti-dilutive

Note 5.  Accumulated other comprehensive income ( loss)

The  Euro is the  functional  currency  of the  Company's  European  subsidiary,
Hauppauge  Digital Europe Sarl.  Assets and  liabilities of this  subsidiary are
translated  to U.S.  Dollars at the spot  exchange rate in effect at end of each
reporting  period,  while equity accounts are translated to U.S.  Dollars at the
historical rate in effect at the date of the contribution. Operating results are
translated  to U.S.  Dollars at the  average  prevailing  exchange  rate for the
period,  with the exception of sales which are translated to U.S. Dollars at the
average monthly forward exchange contract rate. The use of translating  accounts
at the spot,  historical and average  exchange rates results in foreign currency
translation gains or losses.  These translation gains losses are recorded on the
balance sheet under accumulated other comprehensive income.

The  company  uses  forward  exchange   contracts  to  reduce  our  exposure  to
fluctuations  in foreign  currencies.  Mark to market  gains and losses on these
open  contracts  result  from the  difference  between the USD value of our open
foreign  currency  forward  contracts at the average contract rate as opposed to
the same contracts  translated at the month end spot rate. The Company qualifies
for cash flow hedge  accounting  as prescribed  under FAS 133,  which allows the
Company to record the mark to market  gains and losses in the equity  section of
our balance sheet under accumulated other comprehensive income.

As of March 31, 2003,  appearing in the equity section under " Accumulated other
comprehensive income (loss)" was a deferred loss of $3,975, which consisted of a
deferred translation gain of $160,201 and a deferred loss of $164,176 due to the
mark to market  losses on the  difference  between the value of our open forward
exchange contracts at the contract rates versus the same contracts valued at the
period ending forward rate.

The Company's  Asian  subsidiary  reports its financial  position and results of
operations in the reporting currency of the Company.

                                       9
<PAGE>



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

Note 6. Revenue Recognition

We sell through a sales channel which consist of retailers and distributors. Our
prices are fixed consistently over the entire sales channel. The majority of our
customers are granted open payment terms. Those customers deemed as large credit
risks either pay in advance or issue us a letter of credit.

The Company requires the customer to submit a purchase order to the Company. The
price of the product and payment  terms are fixed per the terms of the  purchase
order.  Upon  shipment of the order to the  customer,  the title to the goods is
passed to the customer.  The customer is legally  obligated to pay for the order
within the payment terms stated on the customer's purchase order. The obligation
to insure  the  boards  and the cost of any  pilferage  while in the  customer's
possession is the responsibility of the customer.  The product we sell is a plug
and play  computer  board that is stocked on the  shelves of  retailers,  and is
subject to the normal consumer  traffic that retail stores  attract.  Aside from
normal  store  promotions  such as end-caps  and  advertisements  in the store's
circular,  the Company has no further  obligation to assist in the resale of the
product.

The  Company  offers it  customers  a right of return,  but does not offer stock
balancing. Our accounting complies with SFAS 48 as typically at the end of every
quarter, the Company, based on historical data, creates a sales reserve based on
the previous six months sales.  Due to seasonal  nature of our business  coupled
with the changing economic environment, management exercises some judgement with
regard to the historical data to arrive at the reserve.

Note 7. Product segment and Geographic Information

The Company  sells a family or group of products  called WinTV  boards.  Using a
television signal source which can be either through a cable hookup, terrestrial
antenna or digital  satellite,  the WinTV family of products  allow a PC user to
watch TV in a resizable window on their PC. Our products are either sold, or can
be sold by the same retailers and distributors in our marketing channel, and are
sold directly to OEM  customers.  The company  evaluates its product lines under
the functional  categories of analog and digital  products.  Sales by functional
category are as follows:

<TABLE>
<CAPTION>
                                Three months ended March 31,          Six months ended March 31,
                                  2003              2002                2003            2002
                                  ----              ----                ----            ----
Product line sales
------------------
<S>                           <C>              <C>                <C>              <C>
Analog sales                  $ 10,245,978     $   9,054,595      $ 21,539,440     $ 19,532,712
Digital sales                    3,672,880         1,693,838         7,899,904        3,278,521
                                ----------        ----------        ----------       ----------
                              $ 13,918,858     $  10,748,433      $ 29,439,344     $ 22,811,233
                             ==============    ==============    ==============    ============
</TABLE>

The Company sells its product through a worldwide  network of  distributors  and
retailers. European sales accounted for 68% and 77% of sales for the three moths
ended March 31, 2003 and 2002 and 69% and 77% of sales for the six months  ended
March  31,  2003 and  2002,  respectively.  Sales by  geographic  region  are as
follows:
<TABLE>
<CAPTION>
                                        Three months ended March 31,      Six months ended March 31,
Sales percent by geographic region           2003       2002                2003            2002
----------------------------------           ----       ----                ----            ----

<S>                                           <C>        <C>                 <C>             <C>
United States                                 30%        21%                 29%             21%
Germany                                       34%        40%                 32%             40%
United Kingdom                                13%         9%                 15%             12%
France/Italy                                   9%        16%                 10%             12%
Spain/Portugal                                 4%         4%                  4%              4%
Sweden/Finland                                 3%         3%                  3%              3%
Belgium/Switzerland/Holland                    4%         4%                  4%              4%
Asia                                           1%         2%                  2%              2%
Other                                          2%         1%                  1%              2%
                                               --         --                  --              --
    Total                                    100%        100%                100%            100%
                                             ====        ====                ====            ====
</TABLE>
                                       10
<PAGE>
                    HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note  8.    Stock-Based Compensation

The Company applies Accounting  Principles Board Opinion No. 25, "Accounting for
Stock  Issued  to  Employees",   ("APB  25"),  and  related  interpretations  in
accounting for its employee stock options. Under APB 25, no compensation expense
is recorded so long as the quoted  market  price of the stock at the date of the
grant is equal to the exercise price.

Pro forma  information  regarding  net  income and  earnings  per share has been
determined as if the Company had accounted for its employee  stock options under
the fair value method of Financial  Accounting Standards Board Statement No. 123
"Accounting for Stock-Based  Compensation",  ("FAS 123").  The weighted  average
fair value of options granted during the three months and six months ended March
31,  2003 and March 31, 2002 was $0.43 and $0.42,  respectively.  The fair value
for these  options  was  estimated  at the date of grant  using a  Black-Scholes
option pricing model with the following  weighted  average  assumptions  for the
three and six months ended March 31, 2003 and March 31, 2002: risk-free interest
rates of 3.25%,  volatility factor of the expected market price of the Company's
Common  Stock  of 40%,  assumed  dividend  yield of 0%,  and a  weighted-average
expected life of the option of 5 years.

Under the  accounting  provisions  of FAS 123, the  Company's net income and net
income per share  would have been  adjusted to the pro forma  amounts  indicated
below:

<TABLE>
<CAPTION>
                                                             Three months ended               Six months ended
                                                       -------------------------------- ----------------------------
                                                          March 31,      March 31,        March 31,        March 31,
                                                             2003           2002             2003            2002
                                                       -------------------------------- ----------------------------
<S>                                                       <C>            <C>              <C>             <C>
Net income (loss) as reported.......................      $260,515       $216,954         $916,987        $500,936
   Deduct:  Total stock-based employee compensation
     expense determined under fair value method,
     net of related taxes ..........................       (11,626)       (19,865)         (23,252)        (39,730)
                                                          --------       --------         --------        --------
Pro forma net income (loss)                               $248,889       $197,089         $893,735        $461,206
                                                          =========      ========         ========        ========

Net income per  share - as reported:

Basic and diluted...................................      $   0.03       $   0.02         $   0.10        $  0.06
                                                          ========       ========         ========        =======
Net income per  share - pro forma:
Basic and diluted...................................      $   0.03       $   0.02         $   0.10        $  0.05
                                                          ========       ========         ========        =======
</TABLE>

Note 9. Arrangements with Off-Balance Sheet Risk - Guarantees

In November 2002, the FASB issued  Interpretation  No. 45 (FIN 45),  Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of the  Indebtedness of Others,  which clarifies the  requirements of
SFAS No. 5, Accounting for Contingencies,  relating to a guarantor's  accounting
for and  disclosures  of certain  guarantees  issued.  FIN 45 requires  enhanced
disclosures for certain guarantees. It also requires certain guarantees that are
issued or modified after December 31, 2002, including certain third-party

                                       11
<PAGE>

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

Note 9. Arrangements with Off-Balance Sheet Risk - Guarantees-continued

guarantees,  to be initially  recorded on the balance  sheet at fair value.  For
guarantees issued on or before December 31, 2002,  liabilities are recorded when
and if payments become probable and estimable.  FIN 45 has the general effect of
delaying  recognition  for a portion of the revenue  for product  sales that are
accompanied  by  certain   third-party   guarantees.   The  financial  statement
recognition provisions became effective prospectively beginning January 1, 2003.
The Company  has not entered  into any new  guarantees,  not have they  ammended
their existing guarantee since the effective date.

We occupy a facility located in Hauppauge,  New York and use it as our executive
offices and for the testing, storage, and shipping of our products. The building
is owned by a partnership  comprised of certain of our  principal  stockholders'
and is leased to us under a lease agreement  expiring on January 31, 2006, which
may be extended,  at our option, for an additional three years. The premises are
subject  to two  mortgages  which  have  been  guaranteed  by us upon  which the
outstanding  principal  amount due as of March 31,  2003 was  $787,000.  The two
mortgages  guaranteed  expire on Janauary  31,  2010,  at which time the related
gurantees expire.






                                       12
<PAGE>

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

Six Month Period ended March 31, 2003 Compared to March 31, 2002


Results of operations  for the six months ended March 31, 2003 compared to March
31, 2002 are as follows:

<TABLE>
<CAPTION>
                                                         Six            Six
                                                         Months         Months
                                                         Ended          Ended        Variance        Percentage of sales
                                                         3/31/03        3/31/02         $            2003   2002  Variance
                                                         -------        -------      --------        ----   ----  --------
<S>                                                  <C>               <C>           <C>           <C>     <C>
Net Sales                                            $  29,439,344     22,811,233    6,628,111     100.0%  100.0%        -
Cost of sales                                           22,148,910     17,068,511    5,080,399      75.2%   74.8%     0.4%
                                                     -------------     ----------    ---------     ------  ------   ------
Gross Profit                                             7,290,434      5,742,722    1,547,712      24.8%   25.2%    -0.4%
Gross Profit %                                              24.76%         25.17%       -0.41%

Costs:
Sales & Marketing                                        3,701,409      2,872,261      829,148      12.6%   12.5%     0.1%
Technical Support                                          199,775        191,343        8,432       0.7%    0.9%    -0.2%
General & Administrative                                 1,529,590      1,397,769      131,821       5.2%    6.2%    -1.0%
                                                     -------------     ----------    ---------     ------  ------   ------
Total Selling General and Administrative costs           5,430,774      4,461,373      969,401      18.5%   19.6%    -1.1%
Research & Development                                     941,324        723,437      217,887       3.2%    3.2%     0.0%
                                                     -------------     ----------    ---------     ------  ------   ------
Total Costs                                              6,372,098      5,184,810    1,187,288      21.7%   22.8%    -1.1%
                                                     -------------     ----------    ---------     ------  ------   ------
Net operating income                                       918,336        557,912      360,424       3.1%    2.4%     0.7%

Other income (expense)
Interest income                                            10,005          21,628      (11,623)      0.0%    0.1%    -0.1%
Foreign currency                                          (15,494)         18,036      (33,530)     -0.1%    0.2%    -0.3%
Non operational USD to Euro re-measurement                 43,140         (54,140)      97,280       0.1%   -0.2%     0.3%
                                                     ------------      ----------    ---------     ------  ------   ------
  Total other income (expense)                             37,651         (14,476)      52,127       0.0%    0.1%    -0.1%
                                                     ------------      ----------    ---------     ------  ------   ------
Income  before taxes                                      955,987         543,436      412,551       3.1%    2.5%     0.6%
Taxes on income
                                                           39,000          42,500       (3,500)      0.1%    0.2%    -0.1%
                                                     ------------      ----------    ---------     ------  ------   ------
Net income                                                916,987         500,936      416,051       3.0%    2.3%     0.7%
                                                     ============      ==========    =========     ======  ======   ======
</TABLE>

Net sales for the six months ended March 31, 2003 increased  $6,628,111 compared
to last year. Domestic and European sales increased by $3,868,052 and $2,899,067
while Asian sales decreased $139,008 as follows

<TABLE>
<CAPTION>
                                                       Increase
                                                      (decrease)    Increase     Percentage of sales
                 Six Months         Six  Months         Dollar     (decrease)    Geographic region
Location        ended 3/31/03      ended 3/31/02       Variance    Variance %      2003        2002
                -------------      -------------     ----------    ----------    ---------------------

<S>             <C>                <C>               <C>               <C>           <C>        <C>
Domestic        $ 8,675,369        $ 4,807,317       $3,868,052        80%           29%        21%
Europe           20,381,092         17,482,025        2,899,067        17%           69%        77%
Asia                382,883            521,891         (139,008)      -27%            2%         2%
                -----------        -----------       ----------       ----          ---        ---
  Total         $29,439,344        $22,811,233       $6,628,111        29%          100%       100%
                ===========        ===========       ==========       ====          ====       ===
</TABLE>

The primary forces contributing to the sales increase were:

-       Digital and digital satellite products:$4,621,383
-       Analog and personal video recorder sales:$2,006,728

                                       13
<PAGE>

Six Month Period  ended March  31, 2003 Compared to  March 31, 2002-continued

Net sales to domestic  customers  were 29% of net sales for the six months ended
March 31, 2003  compared to 21% for the six months  ended  March 31,  2002.  Net
sales to  European  customers  were 69% of net  sales  compared  to 77% for same
period of last year. Net sales to Asian customers were 2% for both years.

Gross profit increased $1,547,712 for the six months ended March 31, 2003. Gross
profit percentage for the six months ended March 31, 2003 was 24.76% compared to
25.17% for the prior year.

The increases and (decreases) in the gross profit are detailed below:

                                                                   Increase
                                                                  (decrease)
                                                                  ----------

Due to  increased sales                                           $2,152,873
Due to higher margins on assembled boards                            140,934
Due to OEM sales                                                    (423,311)
Due to increases in labor related and other costs                   (322,784)
                                                                  ---------
      Total  increase  in gross profit                            $1,547,712
                                                                  ==========


The  decrease in gross  profit  percentage  of (0.41)% for the six months  ended
March 31, 2003 compared to the six months ended March 31, 2002 is as follows:

                                                                     Increase
                                                                    (decrease)
                                                                    ----------

Due to higher margins on assembled boards                               0.51%
Due to OEM sales                                                       (1.51)%
Due to labor related and other costs as a lower percent of sales        0.59%
                                                                        -----
Net  decrease                                                          (0.41%)

The improved margin  percentage on assembled  boards was primarily  derived from
unit price  reductions  from our  suppliers  and  subcontractors  coupled with a
larger sales mix of digital  video  satellite and analog video  products,  which
yield a higher gross margin,  offset  somewhat by sales of lower average  margin
digital entertainment products.

OEM sales require minimal sales promotional and advertising  support compared to
boards sold to retailers,  but also yield a lower margin. OEM sales were minimal
during the first six months of fiscal  2002.  The higher mix of OEM boards  sold
during the first six months of fiscal 2003 resulted in a 1.51% margin decrease.

The increase in the gross margin percent of 0.59% due to labor related and other
costs is due to the  increase  in net  sales of  29.06%  being in  excess of the
increase in labor related and other costs of 18.87%.

The  chart  below   illustrates   the   components   of  Selling,   General  and
Administrative expenses:


<TABLE>
<CAPTION>
                                            Six months ended March  31,
                                                  Dollar Costs                                 Percentage of Sales
                                     -------------------------------------------------------------------------------------------
                                                                                  Increase                             Increase
                                             2003                2002             (Decrease)      2003      2002      (Decrease)
                                             ----                ----             ----------      ----      ----      ----------
<S>                                      <C>                <C>                   <C>             <C>        <C>           <C>
Sales and Marketing                      $3,701,409         $2,872,261            $829,148        12.6%      12.5%         0.1%
Technical  Support                          199,775            191,343               8,432         0.7%       0.9%        -0.2%
General and Administrative                1,529,590          1,397,769             131,821         5.2%       6.2%        -1.0%
                                         -----------         ----------           ---------       ----       ----        -----
    Total                                $5,430,774         $4,461,373            $969,401        18.5%      19.6%        -1.1%
                                         ===========        ===========           =========       =====      =====       =====
</TABLE>

Selling,  General and Administrative  expenses increased $969,401 from the prior
year. As a percentage of sales,  Selling,  General and  Administrative  expenses
decreased by 1.1% when compared to the six months ended March 31, 2002.

                                       14
<PAGE>

Six Month Period ended March 31, 2003 Compared to March 31, 2002-continued


The increase in Sales and  Marketing  expense of $829,148  which  accounted  for
about 85% of the total increase in Selling, General and Administrative expenses,
was mainly due to:


-    Higher advertising costs of $610,033 due to higher sales based co-operative
     advertising,  higher  customer  rebate  realization  and increased  special
     promotions
-    Higher commissions payments of $140,288 due to increased sales
-    Increased European sales office costs of $195,417
-    Lower  trade  show  costs of  $130,051  due to smaller  show  presence  and
     frequency

The increase in General and Administrative expenses of $131,821 was primarily
due to:

-    Addition of senior executive officer $94,168
-    Higher legal costs of $31,349
-    Increased travel costs of $21,641
-    Decreased  amortization  costs of $30,631 due to amortization in full of an
     intangible asset during fiscal 2002

Research and Development  expenses  increased $217,887 or approximately 30%. The
increase was mainly due to higher  compensation costs attributable to additional
staff and increased  material and contract  services  cost for current  projects
under development.

Other income (expense)

Net other income for the six months ended March 31, 2003 was $37,651 compared to
net other  expense of  ($14,476)  for the six  months  ended  March 31,  2003 as
detailed below:

                                                      Six months ended March 31,
                                                          2003         2002
                                                          ----         ----

  Interest income                                        $10,005    $ 21,628
  Foreign currency transaction gains (losses)            (15,494)     18,036
  Non operational USD to Euro currency re-measurement     43,140     (54,140)
                                                         -------    --------
  Total other income  (expense)                          $37,651    $(14,476)
                                                         =======    ========

The decrease in total other expense was due to the lower losses  resulting  from
the Non  operational  USD to Euro currency  re-measurements  and lower  interest
income due to lower investment yields.

Non Operational USD to Euro currency re-measurement

We follow the rules  prescribed  in  paragraph  15 of SFAS 52 "Foreign  Currency
Translation", which states that accounts denominated in a currency other than an
entities functional currency need to be re-measured into the entities functional
currency,  and any gain or loss from this  re-measurement  are  included  in the
determination of net income.

Since the functional  currency of Hauppauge  Digital Europe Sarl ("HDE Sarl") is
the Euro,  any asset,  liability  or equity  accounts  which are  invested in or
purchased  using U.S.  Dollars or Great British  Pounds by HDE Sarl are revalued
into Euros at the end of each  period.  The gains or losses on HDE Sarl's  books
resulting from the  revaluation of U.S.  Dollar and Great British Pound accounts
into Euros are booked on the  Company's  profit and loss  statement in the other
income  (loss)  section  under the  description  "Non   operational  USD to Euro
currency re-measurement."

Primarily due to a decrease in U.S Dollar denominated  inventory and an increase
in U.S denominated  liabilities on HDE Sarl's books,  HDE Sarl experienced a net
asset decrease of $1,458,833 for the six month period ending September 30, 2002.
The  increase in the value of the Euro versus the U.S.  Dollar  coupled with the
decrease in net assets resulted in a re-measurement  gain of $43,240 for the six
months ended March 31, 2003.

                                       15
<PAGE>

Six Month Period ended March 31, 2003 Compared to March 31, 2002-continued

Accumulated other comprehensive income (loss)

The Euro is the functional  currency of the Company's European  subsidiary,  HDE
Sarl.  Assets and liabilities of this subsidiary are translated to U.S.  Dollars
at the exchange rate in effect at the end of each reporting period, while equity
accounts are translated to U.S.  Dollars at the historical rate in effect at the
date of the  contribution.  Operating  results are translated to U.S. Dollars at
the average prevailing exchange rate for the period, with the exception of sales
which are translated to U.S.  Dollars at the average  monthly  forward  exchange
contract rate. The use of differing  exchange rates results in foreign  currency
translation  gains or losses.  Since the Euro  accounts on books result in a net
asset  position  (total  Euro  assets  are in  excess of Euro  liabilities),  an
increase in the Euro value  results in a deferred  gain for the  translation  of
Euro  accounts to U.S.  Dollars.  For the six months ended March 31,  2003,  the
Company recorded deferred translation gains $164,046. Recorded as a component of
accumulated other comprehensive income on the balance sheet as of March 31, 2003
was a cumulative translation gain of $160,201.

The  Company  uses  forward  exchange   contracts  to  reduce  our  exposure  to
fluctuations  in foreign  currencies.  Mark to market  gains and losses on these
open  contracts  result  from the  difference  between the USD value of our open
foreign  currency  forward  contracts at the average contract rate as opposed to
the same  contracts  translated  at the  month end  forward  rate.  The  Company
qualifies  for cash flow hedge  accounting as  prescribed  under FAS 133,  which
allows the  Company to record the mark to market  gains and losses in the equity
section of our balance sheet under accumulated other  comprehensive  income. For
the six months  ended  March 31,  2003,  the  Company  recorded as part of other
comprehensive  income  a  mark  to  market  loss  of  $355,095,  reflecting  the
difference  between open  contracts  at  September  30, 2002 and March 31, 2003.
Recorded as a component of accumulated other comprehensive income on the balance
sheet as of  March  31,  2003  was a  cumulative  mark to  market  loss for open
contracts of $164,176.

As stated above, accumulated other comprehensive income (loss) consists of two
components:

-    Translation gains and losses
-    FAS 133 mark to  market  gains  and  losses  on our open  foreign  exchange
     contracts

The table below details the gains and losses  recorded for the  components  that
make up accumulated other comprehensive income (loss):

<TABLE>
<CAPTION>
                                                  Balance       October to     Balance      January to    Balance
Accumulated other comprehensive income (loss)       as of      December 2002    as of       March 2003     as of
                                                September 30,      Gains      December 31,     Gains       March 31,
                                                   2002          (losses)       2002         (losses)       2003
                                                -------------  ------------   ------------  ----------    ----------
<S>                                             <C>            <C>            <C>           <C>          <C>
Translation  gains and (losses)                 $ (3,845)      $ 150,728      $ 146,883     $ 13,318     $ 160,201
FAS 133 mark to market adjustments               190,919        (518,974)      (328,055)     163,879      (164,176)
                                                ---------      ---------      ---------     --------     ---------
                                                $187,074       $(368,246)     $(181,172)    $177,197     $  (3,975)
                                                ========       ==========     ==========    ========     =========
</TABLE>

Tax provision

Our net tax  provision  for the six months  ended  March 31, 2003 and 2002 is as
follows:

                                                 Six months ended March 31,
                                                    2003              2002
                                                   ------            ------
Tax (benefit) attributable to U.S operations     $(212,000)        $(477,000)
Tax  expense  European operations                   39,000            42,500
Deferred tax asset valuation allowance             212,000           477,000
                                                 ---------         ---------
Net tax provision                                $39,000           $  42,500
                                                 =========         =========

                                       16
<PAGE>


Six Month Period  ended March  31, 2003 Compared to  March 31, 2002-continued

Effective October 1, 1999, we restructured our foreign operations. The result of
the restructuring eliminated the foreign sales corporation and established a new
Luxembourg  corporation,  which  functions  as the  entity  which  services  our
European customers.  The new structure created separate domestic and foreign tax
entities,  with the  Luxembourg  entity  paying a  license  fee to our  domestic
operation for use of the Hauppauge  name.  For the last three fiscal years,  our
domestic  operation has incurred losses.  We analyzed the future  realization of
our  deferred  tax assets as of March 31, 2003 and we  concluded  that under the
present  circumstances,  it would be  appropriate  for us to record a  valuation
allowance  against the increase in the deferred  tax asset  attributable  to the
current quarter's loss from domestic operations.

As a result of all of the above items mentioned in the  Management's  Discussion
and Analysis of Financial  Condition and Results of Operations,  we recorded net
income of $916,987 for the six months ended March 31,  2003,  which  resulted in
basic and diluted net income per share of $0.10 on  weighted  average  basic and
diluted  shares of  8,860,578  and  8,917,935,  respectively,  compared to a net
income of $500,936 for the six months ended March 31,  2002,  which  resulted in
basic and  diluted  net loss per share of $0.06 on  weighted  average  basic and
diluted shares of 8,890,175 and 9,064,797, respectively.

Options to purchase  1,455,425  and  1,025,822  shares of common stock at prices
ranging $1.35 to $ 10.06 and $2.31 and $10.06,  respectively,  were  outstanding
for the six month periods ending March 31, 2003 and 2002, respectively, but were
not included in the computation of diluted  earnings per share because they were
anti-dilutive.

Results of operations-three  Month Period ended March 31, 2003 Compared to March
31, 2002

Results of  operations  for the three  months  ended March 31, 2003  compared to
March 31, 2002 are as follows:

<TABLE>
<CAPTION>
                                                      Three           Three
                                                      Months          Months
                                                      Ended           Ended       Variance         Percentage of sales
                                                      3/31/03         3/31/02        $             2003    2002  Variance
                                                      --------        ----------  --------         ----    ----  --------


<S>                                                   <C>             <C>          <C>             <C>     <C>
Net Sales                                             $13,918,858     $10,748,433  $3,170,425      100.0%  100.0%       -
Cost of sales                                          10,549,386       7,924,737   2,624,649       75.8%   73.8%     2.0%
                                                      -----------     ----------   ----------      -----   -----     ----
Gross Profit                                            3,369,472       2,823,696     545,776       24.2%   26.2%    -2.0%
Gross Profit %                                             24.21%          26.27%      -2.06%

Costs:
Sales & Marketing                                       1,838,397       1,494,242     344,155       13.2%   13.9%    -0.7%
Technical Support                                         101,415          94,108       7,307        0.7%    0.9%    -0.2%
General   & Administrative                                784,660         706,264      78,396        5.5%    6.5%    -1.0%
                                                      -----------     -----------  ----------      -----   -----     -----
Total Selling General and Administrative costs          2,724,472       2,294,614     429,858       19.4%   21.3%    -1.9%
Research & Development                                    448,251         364,413      83,838        3.2%    3.4%    -0.2%
                                                      -----------     -----------  ----------      -----   -----     -----
Total Costs                                             3,172,723       2,659,027     513,696       22.6%   24.7%    -2.1%
                                                      -----------     -----------  ----------      -----   -----     -----
Net operating income                                      196,749         164,669      32,080        1.6%    1.5%     0.1%

Other income (expense)
Interest income                                             4,034          12,338      (8,304)       0.0%    0.1%    -0.1%
Foreign currency                                           (3,147)         10,455     (13,602)       0.0%    0.1%    -0.1%
Non operational USD to Euro re-measurement                 75,396          49,492      25,904        0.5%    0.5%     0.0%
                                                      -----------     -----------   ---------      -----   -----     ----
  Total other income (expense)                             76,283          72,285       3,998        0.5%    0.7%    -0.2%
                                                      -----------     -----------   ---------      -----   -----     -----
Income  before taxes                                      273,032         236,954      36,078        2.1%    2.2%    -0.1%
Taxes on income                                            12,517          20,000      (7,483)       0.1%    0.2%    -0.1%
                                                      -----------     -----------   ---------      -----   -----     -----
Net income                                                260,515         216,954    $ 43,561        2.0%    2.0%    -0.0%
                                                      ===========     ===========   =========      =====   =====     =====
</TABLE>


                                       17
<PAGE>


Three  Month Period ended March  31, 2003 Compared to March  31, 2002-continued

Net  sales for the three  months  ended  March  31,  2003  increased  $3,170,425
compared to March 31, 2002.  Domestic and European sales increased by $1,946,496
and $1,256,053 while Asian sales decreased $32,124 as follows:

<TABLE>
<CAPTION>
                                                        Increase
                                                       (decrease)            Increase     Percentage of sales
Location      Three  Months      Three  Months          Dollar               (decrease)   Geographic region
              ended 3/31/03      ended 3/31/02          Variance             Variance %     2003        2002
              -------------      -------------        -------------          ---------    --------    ------

<S>           <C>                  <C>                <C>                       <C>          <C>         <C>
Domestic      $   4,195,241        $   2,248,745      $   1,946,496             87%          30%         21%
Europe            9,526,393            8,270,340          1,256,053             15%          68%         77%
Asia                197,224              229,348            (32,124)           -14%           2%          2%
              --------------       -------------      --------------           ----         ---          ---
  Total       $  13,918,858        $  10,748,433      $   3,170,425             29%         100%        100%
              ==============       =============      ==============            ===         ====        ====
</TABLE>

     The primary forces contributing to the sales increase were:

-    Sales of digital and digital satellite product:$1,979,042
-    Analog and personal video recorder sales:$1,191,383

Net sales to  domestic  customers  were 30% of net sales for the  quarter  ended
March 31, 2003 compared to 21% for the quarter  ended March 31, 2003.  Net sales
to European customers were 68% of net sales compared to 77% for the same quarter
of last year. Net sales to Asian customers were 2% for both quarters.

Gross profit increased $545,776 for the three months ended March 31, 2003. Gross
profit  percentage for the three months ended March 31, 2003 was 24.21% compared
to 26.27% for the prior year's second quarter.

     The increases and (decreases) in the gross profit are detailed below:

                                                              Increase
                                                             (decrease)
                                                             ----------

Due to  increased sales                                      $1,011,554
Due to higher margins on assembled boards                        54,025
Due to OEM sales                                               (257,906)
Due to increases in labor related and other costs              (261,897)
                                                               --------
      Total  increase  in gross profit                       $  545,776
                                                             ==========

     The decrease in gross profit percentage of 2.06% for the three months ended
     March 31,  2003  compared to the three  months  ended March 31, 2002 was as
     follows:


                                                                       Increase
                                                                      (decrease)
                                                                      ----------

Due to higher margins on assembled boards                                0.44%
Due to OEM sales                                                        (2.42)%
Due to labor  related and other costs as a higher percent of sales      (0.08)%
                                                                        -------
Net  decrease                                                           (2.06)%
                                                                        =======

The improved margin  percentage on assembled  boards was primarily  derived from
unit price  reductions  from our  suppliers  and  subcontractors  coupled with a
larger sales mix of digital  video  satellite and analog video  products,  which
yield a higher gross margin,  offset  somewhat by sales of lower average  margin
digital entertainment products.

OEM sales require minimal sales promotional and advertising  support compared to
boards sold to retailers,  but also yield a lower margin. OEM sales were minimal
during the three  month  period  ending  March 31,  2002.  The higher mix of OEM
boards sold during the three month period  ending  March 31, 2003  resulted in a
2.42% margin decrease.

The decrease in the gross margin  percent of 0.08% relating to labor related and
other costs is due to the  increase  in labor  related and other costs of 30.75%
being in excess of the increase in net sales of 29.50%.

                                       18
<PAGE>


Three  Month Period ended March  31, 2003 Compared to March  31, 2002-continued

The  chart  below   illustrates   the   components   of  Selling,   General  and
Administrative expenses:


<TABLE>
<CAPTION>
                                    Three months ended March  31,
                                          Dollar Costs                     Percentage of Sales
                               ---------------------------------------- ------------------------------
                                                           Increase                            Increase
                                   2003         2002      (Decrease)      2003      2002      (Decrease)
                                   ----         ----      ----------      ----      ----      ----------
 <S>                            <C>           <C>           <C>            <C>       <C>           <C>
Sales and Marketing            $1,838,397    $1,494,242    $ 344,155      13.2%     13.9%        -0.7%
Technical  Support                101,415        94,108        7,307       0.7%      0.9%        -0.2%
General and Administrative        784,660       706,264       78,396       5.5%      6.5%        -1.0%
                               ----------    ----------    ----------     ----      ----         ----
    Total                      $2,724,472    $2,294,614    $ 429,858      19.4%     21.3%        -1.9%
                               ==========    ==========    ==========     ====      ====         ====
</TABLE>

Selling,  General and Administrative  expenses increased $429,858 from the prior
year's  second  quarter.  As  a  percentage  of  sales,  Selling,   General  and
Administrative  expenses  decreased  by 1.9% when  compared to the three  months
ended March 31, 2002.

The increase in Sales and  Marketing  expense of $344,155,  which  accounted for
about 80% of the total increase in Selling, General and Administrative expenses,
was mainly due to:

-    Higher advertising costs of $259,986 due to higher sales based co-operative
     advertising,  higher  customer  rebate  realization  and increased  special
     promotions
-    Higher commissions payments of $70,291 due to increased sales
-    Increased European sales office costs of $67,896
-    Lower  trade  show  costs of  $64,206  due to  smaller  show  presence  and
     frequency

The increase in General and Administrative expenses of $78,396 was primarily due
to:

-    Addition of senior executive officer $47,085
-    Higher legal costs of $11,293
-    Increased insurance of $9,084
-    Increased travel costs of $7,241
-    Decreased  amortization  costs of $15,725 due to amortization in full of an
     intangible asset during fiscal 2002

Research and Development  expenses  increased $83,838 or approximately  23%. The
increase was mainly due to higher  compensation costs attributable to additional
staff and increased material and contract services cost for current  development
projects.

Other income (expense)

Net other income for the three months ended March 31, 2003 was $76,283  compared
to net other  income of $72,285  for the three  months  ended  March 31, 2002 as
detailed below:


                                                    Three months ended March 31,
                                                         2003         2002
                                                         ----         ----
  Interest income                                      $ 4,034       $12,338
  Foreign currency transaction gains (losses)           (3,147)       10,455
  Non operational USD to Euro currency re-measurement   75,396        49,492
                                                        ------       -------
  Total other income  (expense)                        $76,283       $72,285
                                                       =======       =======

The increase in total other income was due to the higher  gains  resulting  from
the Non  operational  USD to Euro currency  re-measurements  and lower  interest
income due to lower investment yields.


                                       19
<PAGE>

Three Month Period ended March 31, 2003 Compared to March 31, 2002-continued

Non Operational USD to Euro currency re-measurement

We follow the rules  prescribed  in  paragraph  16 of SFAS 52 "Foreign  Currency
Translation", which states that accounts denominated in a currency other than an
entities functional currency need to be re-measured into the entities functional
currency,  and any gain or loss from this  re-measurement  are  included  in the
determination of net income.

Since the functional  currency of Hauppauge  Digital Europe Sarl ("HDE Sarl") is
the Euro,  any asset,  liability  or equity  accounts  which are  invested in or
purchased  using U.S.  Dollars or Great British  Pounds by HDE Sarl are revalued
into Euros at the end of each  period.  The gains or losses on HDE Sarl's  books
resulting from the  revaluation of U.S.  Dollar and Great British Pound accounts
into Euros are booked in the  Company's  profit and loss  statement in the other
income  (loss)  section  under the  description  " Non  operational  USD to Euro
currency re-measurement."

Primarily due to a decrease in U.S Dollar denominated  inventory and receivables
on the books on HDE Sarl's books,  HDE Sarl  experienced a net asset decrease of
$1,173,678 for the three month period ending March 31, 2003. The increase in the
Euro versus the U.S Dollar coupled with the decrease in net assets resulted in a
re-measurement gain of $75,396 for the three months ended March 31, 2003.

Accumulated other comprehensive income (loss)

The Euro is the functional  currency of the Company's European  subsidiary,  HDE
Sarl.  Assets and liabilities of this subsidiary are translated to U.S.  Dollars
at the exchange rate in effect at the end of each reporting period, while equity
accounts are translated to U.S.  Dollars at the historical rate in effect at the
date of the  contribution.  Operating  results are translated to U.S. Dollars at
the average prevailing exchange rate for the period, with the exception of sales
which are translated to U.S.  Dollars at the average  monthly  forward  exchange
contract rate. The use of differing  exchange rates results in foreign  currency
translation gains or losses. Since the Euro accounts on Sarl's books result in a
net asset  position  (total Euro assets are in excess of Euro  liabilities),  an
increase in the Euro value  results in a deferred  gain for the  translation  of
Euro accounts to U.S.  Dollars.  For the three months ended March 31, 2003,  the
Company recorded deferred translation gains of $13,218.  Recorded as a component
of accumulated other  comprehensive  income on the balance sheet as of March 31,
2003 was a cumulative translation gain of $160,201.

The  Company  uses  forward  exchange   contracts  to  reduce  our  exposure  to
fluctuations  in foreign  currencies.  Mark to market  gains and losses on these
open  contracts  result  from the  difference  between the USD value of our open
foreign  currency  forward  contracts at the average contract rate as opposed to
the same  contracts  translated  at the  month end  forward  rate.  The  Company
qualifies  for cash flow hedge  accounting as  prescribed  under FAS 133,  which
allows the  Company to record the mark to market  gains and losses in the equity
section of our balance sheet under accumulated other  comprehensive  income. For
the three  months ended March 31,  2003,  the Company  recorded as part of other
comprehensive  income  a  mark  to  market  gain  of  $163,879,  reflecting  the
difference  between  open  contracts  at December  31, 2002 and March 31,  2003.
Recorded as a component of accumulated other comprehensive income on the balance
sheet as of  March  31,  2003  was a  cumulative  mark to  market  loss for open
contracts of $164,176.

As stated above,  accumulated other comprehensive  income (loss) consists of two
components:

-    Translations gains and losses
-    FAS 133 mark to  market  gains  and  losses  on our open  foreign  exchange
     contracts


                                       20
<PAGE>

Three Month Period ended March  31, 2003 Compared to March  31, 2002-continued

The table below details the gains and losses  recorded for the  components  that
make up accumulated other comprehensive income (loss):
<TABLE>
<CAPTION>

                                            Balance       October to      Balance     January to   Balance
Accumulated other comprehensive income       as of       December 2002     as of      March 2003    as of
(loss)                                    September 30,     Gains       December 31,     Gains     March 31,
                                             2002         (losses)         2002        (losses)     2003
                                             ----         --------         ----       --------      ----

<S>                                       <C>            <C>            <C>           <C>          <C>
Translation  gains and (losses)           $ (3,845)      $ 150,728      $ 146,883     $ 13,318     $160,201
FAS 133 mark to market adjustments         190,919        (518,974)      (328,055)     163,879     (164,176)
                                          ---------      ---------      ---------     --------     --------
                                          $187,074       $(368,246)     $(181,172)    $177,197     $ (3,975)
                                          =========      =========      =========     ========     =========
</TABLE>

Tax provision

Our net tax  provision  for the three months ended March 31, 2003 and 2002 is as
follows:

                                                Three months ended March  31,
                                                    2003              2002
                                                   ------            ------
Tax (benefit) attributable to U.S operations      $(155,500)        $(248,000)
Tax  expense  European operations                    12,517            20,000
Deferred tax asset valuation allowance              155,500           248,000
                                                  ---------         ---------
Net tax provision                                 $  12,517         $  20,000
                                                  =========         =========


Effective October 1, 1999, we restructured our foreign operations. The result of
the restructuring eliminated the foreign sales corporation and established a new
Luxembourg  corporation,  which  functions  as the  entity  which  services  our
European customers.  The new structure created separate domestic and foreign tax
entities,  with the  Luxembourg  entity  paying a  license  fee to our  domestic
operation for use of the Hauppauge  name.  For the last three fiscal years,  our
domestic  operation has incurred losses.  We analyzed the future  realization of
our  deferred  tax  assets as of March 31 2003 and we  concluded  that under the
present  circumstances,  it would be  appropriate  for us to record a  valuation
allowance  against the increase in the deferred  tax asset  attributable  to the
current quarter's loss from domestic operations.


As a result of all of the above items mentioned in the  Management's  Discussion
and Analysis of Financial  Condition and Results of Operations,  we recorded net
income of $260,515 for the three months ended March 31, 2003,  which resulted in
basic and diluted net income per share of $0.03 on  weighted  average  basic and
diluted shares of 8,862,774 and 8,959,821,  compared to a net income of $216,954
for the three months ended March 31, 2002,  which  resulted in basic and diluted
net income per share of $0.02 on weighted  average  basic and diluted  shares of
8,893,147 and 9,020,331, respectively.

Options to purchase  1,240,122  and  1,145,322  shares of common stock at prices
ranging $1.05 to $ 10.06 and $1.91 and $10.06,  respectively,  were  outstanding
for the three month periods  ending March 31, 2003 and 2002,  respectively,  but
were not included in the computation of diluted  earnings per share because they
were anti-dilutive.

Seasonality

As our sales are primarily to the consumer market, we have experienced certain
seasonal revenue trends. Our peak sales quarter, due to holiday season sales of
computer equipment, is our first fiscal quarter (October to December), followed
by our fourth fiscal quarter (July to September). In addition, our international
sales, mostly


                                       21
<PAGE>

Seasonality-continued

in the  European  market,  were 73%,  77% and 71%  of sales for the years  ended
September 30, 2002, 2001 and 2000, respectively. Our fiscal fourth quarter sales
(July to  September)  can be  potentially  impacted by the reduction of activity
experienced in Europe during the July and August summer holiday period.

To offset the above cycles, we target a wide range of customer types in order to
moderate the seasonal nature of our retail sales.

Liquidity and Capital Resources

Our cash, working capital and stockholders' equity position is disclosed below:

                                 March  31        September 30
                                   2003               2002
                                   ----               ----

Cash                           $   4,660,775    $   4,964,522
Working Capital                   12,011,941       11,276,942
Stockholders' Equity              12,689,410       11,966,612

We had cash and cash equivalents as of March 31, 2003 of $4,660,775,  a decrease
of $303,747 over September 30, 2002.

The decrease was due to:

Net income adjusted for non cash items                            $ 1,073,758
Increase in accounts payable and other current liabilities          1,836,731
Proceeds from employee stock purchases                                 13,501
Less cash used for:
Increase in accounts receivable                                    (2,064,815)
Increase in inventories                                              (806,167)
Increase in prepaid expenses and other current assets                (195,544)
Purchases of fixed assets                                            (125,569)
Purchase of treasury stock                                            (35,642)
                                                                  ------------
   Net increase in cash                                           $  (303,747)
                                                                  ===========

Net cash of $156,037 used in operating activities was primarily due to cash used
to fund increases in accounts receivable of $2,064,815, increase in inventory of
$806,167 and increases in prepaid  assets and other  current  assets of $195,544
offset somewhat by an increase in accounts payable and other current liabilities
of  $1,836,731  and net income  adjusted for non cash items of  $1,073,758.  The
increase  in  accounts  receivable  was the  result of an  increase  in sales of
$3,170,425 for the three months ended March 31, 2003 over the three months ended
March 31, 2002.

Cash of $125,569  and $35,642 was used to  purchase  fixed  assets and  purchase
treasury  stock.  Proceeds  from the stock  purchased by  employees  through the
employee  stock  purchase plan  provided  additional  cash of $13,501.

Our  bank  facility  with JP  Morgan  Chase  expired  in April  2002.  It is the
intention of the Company to procure a new credit facility on terms acceptable to
the  Company,  however,  there  can  be no  assurance  that  we  will  secure  a
replacement line of credit at competitive terms.

On November 8, 1996, we approved a stock  repurchase  program.  The program,  as
amended,  authorizes  the Company to repurchase up to 850,000  shares of our own
stock.  We intend to use the  repurchased  shares for certain  employee  benefit
programs.  On December 17, 1997, the stock repurchase  program was extended by a
resolution  of our Board of  Directors.  As of March 31,  2003,  we held 542,067
treasury  shares  purchased  for  $1,497,216  at an  average  purchase  price of
approximately $2.76 per share.

We  believe  that our cash and cash  equivalents  as of March  31,  2003 and our
internally generated cash flow will provide us with sufficient liquidity to meet
our currently foreseeable short-term and long-term capital needs.




                                       22
<PAGE>

Future Contractual  Obligations

The following table shows the Company's contractual obligations related to lease
obligations as of March 31, 2003:


                                                  Payments due by period
Contractual obligations           Total           1 year         1-3 years
-----------------------        --------          ---------       ---------

Operating lease obligations    $ 2,146,471       $ 670,098       $ 1,476,373
                               ===========       ===========     ===========

Critical Accounting Policies and Estimates

Financial  Reporting  Release  No.  60,  requires  all  companies  to  include a
discussion of critical accounting policies or methods used in the preparation of
financial statements.

We believe the following  critical  accounting  policies  affect the significant
judgments and estimates used in the preparation of the our financial statements:

-    Revenue Recognition
-    Management's estimates
-    Hedging program for sales denominated in a foreign currency
-    Translation  of  assets  and  liabilities  denominated  in  non  functional
     currencies on our European financial statements

Revenue Recognition

Our revenues are primarily derived from the sale of computer boards which enable
you to view  television  programs on your personal  computer.  Sales of computer
boards are commonly classified as computer hardware.  Our sales are primarily to
retailers,  distributors  and  original  equipment  manufacturers.  Sales to our
customers are documented by a purchase  order which  describes the conditions of
sale. Sales are recorded when products are shipped to our customers. The product
price is fixed and  determinable,  collection  of the  resulting  receivable  is
probable  and product  returns are  reasonably  estimable.  Revenue from freight
charged to customers is  recognized  when products are shipped.  Provisions  for
customer  returns  and other  adjustments  are  provided  for in the  period the
related sales are recorded based upon historical data.

Management's Estimates

The discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements which have been prepared in
accordance with accounting  principles  generally accepted in the United States.
The  preparation  of these  financial  statements  requires  management  to make
estimates and judgments that affect the reported amounts of assets,  liabilities
and related  disclosure of contingent  assets and liabilities at the date of the
consolidated  financial  statements  and the  reported  amounts for revenues and
expenses during the reporting period. On an ongoing basis,  management evaluates
estimates,  including  those related to sales  provisions,  as described  above,
income  taxes,  bad debts,  inventory  reserves and  contingencies.  We base our
estimates on historical data, when available,  experience,  and on various other
assumptions  that are believed to be  reasonable  under the  circumstances,  the
combined results of which form the basis for making judgments about the carrying
values of assets  and  liabilities  that are not  readily  apparent  from  other
sources. Actual results may differ from these estimates.

Since October 1, 1999, our European  subsidiary has  historically  accounted for
approximately  68% to 77 % of our  net  sales.  All of our  European  sales  are
denominated in local currencies, primarily the Euro. As a result of this, we are
a net receiver of currencies other than the U.S Dollar.  Changes in the exchange
rate subject us to market risks  resulting  from the  fluctuation of the Euro to
the U.S.  Dollar.  In an attempt to minimize these risks,  we enter into forward
exchange contracts with financial institutions.


                                       23
<PAGE>


Critical Accounting Policies and Estimates-continued

We do not enter into contracts for speculative  purposes.  We enter into monthly
window contracts covering an average period of three months based on existing or
anticipated future sales and inventory  purchases.  Although we enter into these
contracts  to reduce  the  short  term  impact of  currency  rate  changes,  the
following risks are still inherent in hedging the Euro sales.

-    Actual sales may fluctuate  from our  estimates,  resulting in contracts in
     excess of collections
-    Short term  volatility of currency  markets has the potential to reduce the
     effectiveness of our hedging program
-    Historical volatility of the Euro has the potential to impact our revenues,
     gross margins and operating income
-    The  magnitude  of the success of our  hedging  program is  dependent  upon
     movements in the Euro  exchange  rates.  These  movements  are difficult to
     predict  over an  extended  period of time.

Translation of assets and liabilities  denominated in non functional  currencies
on our European financial statements

The functional currency of our European subsidiary is the Euro. In preparing our
consolidated  financial  statements,  we are  required to  translate  assets and
liabilities  denominated in a non functional  currency,  mainly U.S. Dollars, to
Euros on the books of our European subsidiary.  This process results in exchange
gains and losses  depending on the changes in the Euro to U.S.  Dollar  exchange
rate. Under the relevant accounting guidance,  we are obligated to include these
gains and losses on our statement of operations, which we report in other income
or  expense   under  the  caption  "Non   operational   USD  to  Euro   currency
re-measurement".

The extent of these gains and losses can  fluctuate  greatly from month to month
depending on the change in the exchange  rate,  causing  results to vary widely.
Due to the past  volatility  of the Euro,  it is  difficult to forecast the long
term trend of these gains and losses.

Inflation

While  inflation  has not had a material  effect on our  operations in the past,
there can be no assurance that we will be able to continue to offset the effects
of inflation on the costs of our products or services through price increases to
our customers  without  experiencing a reduction in the demand for our products;
or that  inflation  will not have an overall  effect on the  computer  equipment
market that would have a material affect on us.

Euro

On January 1, 1999,  the Euro was adopted in Europe as the common legal currency
among 11 of the 15 member countries of the European Community. On that date, the
participating  countries  established  fixed Euro  conversion  rates  (i.e.  the
conversion  exchange rate between their existing  currencies and the Euro).  The
Euro  now  trades  on  currency   exchanges   and  is  available   for  non-cash
transactions.  A new European  Central Bank was  established to direct  monetary
policy for the participating countries.


                                       24
<PAGE>


Euro-continued

Prior to the adoption of the Euro,  we billed our  European  customers in German
Marks or British Pounds, depending upon which currency the customer preferred to
be billed in.  Effective  January 1, 1999, we began  invoicing our customers who
are  located  in the eleven  member  countries  in Euros.  We  continue  to bill
customers  located in the United  Kingdom in British  Pounds.  The  benefits  to
billing customers in Euros were twofold:


-    Our foreign  currency  hedging  program was streamlined to the Euro and the
     British Pound
-    The pricing  from  country to country  was  harmonized,  eliminating  price
     differences between countries due to the fluctuating local currencies

We handled the  conversion to the Euro without any material  disruptions  to our
operations.

Item 3.  Quantitative and Qualitative Disclosures about Market Risks

Derivatives and Hedging Activities

Due to extensive  sales to European  customers  with payment made to us in those
local  currencies and limited  expenses paid in local  currencies,  we are a net
receiver of currencies  other than the U.S.  Dollar.  As such, we benefit from a
weak Dollar and are negatively affected by a strong Dollar relative to the major
worldwide   currencies,   especially  the  Euro  and  British  Pound   Sterling.
Consequently, changes in exchange rates expose us to market risks resulting from
the fluctuations in the foreign currency  exchange rates to the U.S. Dollar.  We
attempt  to  reduce  these  risks by  entering  into  foreign  exchange  forward
contracts with financial institutions to protect against currency exchange risks
associated with our foreign denominated sales.

Although we do not try to hedge against all possible foreign currency  exposures
because we can not fully  estimate the size of our  exposure,  the  contracts we
procure  are  specifically  entered  into  to as a  hedge  against  existing  or
anticipated  foreign  currency  exposure.  We do not enter  into  contracts  for
speculative  purposes.  Although we maintain  these programs to reduce the short
term impact of changes in currency exchange rates, when the U.S. Dollar sustains
a long term  strengthening  position against the foreign currencies in countries
where we sell our products,  our revenues,  gross margins,  operating income and
retained  earnings  can be  adversely  affected.  Factors  that could impact the
effectiveness of our hedging program include  volatility of the currency markets
and availability of hedging instruments.

The strength or weakness of the U.S.  Dollar  against the Euro and British Pound
Sterling impacts our financial results. Changes in exchange rates may positively
or negatively affect our revenues, gross margins,  operating income and retained
earnings (which are all expressed in U.S. Dollars). We use derivatives to reduce
our exposure to fluctuations in foreign  currencies.  Foreign  currency  forward
contracts,  are used to hedge the foreign currency market  exposures  underlying
forecasted  sales  transactions  with  customers.  As of March 31, 2003,  we had
foreign currency contracts  outstanding of approximately  $3,716,900 against the
delivery of the Euro.  The contracts  expire  through June 2003.  Our accounting
policies for these  instruments are based on its designation of such instruments
as cash flow  hedging  transactions.  We do not enter  into such  contracts  for
speculative  purposes.  We record all derivative gains and losses on the balance
sheet as a component  of  stockholders'  equity  under the caption  "Accumulated
other  comprehensive  income  (loss)".  As of March 31, 2003, a deferred loss of
$164,176  reflecting the net mark to market loss of our derivatives was recorded
as a component of accumulated other comprehensive income on our balance sheet.

For the three months and six months ended March 31, 2003, we recorded a decrease
in sales of $609,100 and $1,158,700  related to our contracts that closed during
these periods and the changes in the fair value of our derivative contracts. For
the three months and six months ended March 31, 2002, we recorded an increase in
sales of $62,300 and $97,000  related to our contracts  that closed during these
periods and the changes in the fair value of our derivative contracts.


                                       25
<PAGE>

Item 4. Controls and Procedures

The  Company's  Chief  Executive   Officer  and  Chief  Financial  Officer  have
concluded,  based on their  evaluation  as of a date within 90 days prior to the
filing  date  of  this  report,  that  the  Company's  disclosure  controls  and
procedures are effective to ensure that information  required to be disclosed by
the  Company  in the  reports  filed or  submitted  by it under  the  Securities
Exchange  Act of 1934,  as  amended,  is  recorded,  processed,  summarized  and
reported  within the time  periods  specified  in the  Securities  and  Exchange
Commission's  rules and forms, and include  controls and procedures  designed to
ensure that information  required to be disclosed by the Company in such reports
is accumulated and communicated to the Company's management, including the Chief
Executive  Officer and Chief Financial  Officer,  as appropriate to allow timely
decisions regarding required disclosure.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
such  evaluation  including any  corrective  actions with regard to  significant
deficiencies and material weaknesses.

Special Note Regarding Forward Looking Statements

This  Quarterly  Report  contains  forward-looking  statements  as that  term is
defined in the federal  securities laws. The events described in forward-looking
statements  contained in this Quarterly  Report may not occur.  Generally  these
statements  relate to business  plans or  strategies,  projected or  anticipated
benefits  or  other  consequences  of our  plans  or  strategies,  projected  or
anticipated  benefits  from  acquisitions  to be  made  by  us,  or  projections
involving  anticipated  revenues,  earnings  or other  aspects of our  operating
results. The words "may," "will," "expect," "believe,"  "anticipate," "project,"
"plan,"  "intend,"  "estimate,"  and "continue," and their opposites and similar
expressions are intended to identify forward-looking  statements. We caution you
that these statements are not guarantees of future performance or events and are
subject to a number of uncertainties, risks and other influences (including, but
not limited to,  those set forth in our Annual  Report on Form 10-K for the year
ended  September  30,  2002),  many of which are  beyond our  control,  that may
influence  the accuracy of the  statements  and the  projections  upon which the
statements are based.  Our actual results,  performance and  achievements  could
differ  materially  from those  expressed  or  implied in these  forward-looking
statements.  We  undertake  no  obligation  to  publicly  update or  revise  any
forward-looking  statements,  whether  from new  information,  future  events or
otherwise.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

We were  informed  by counsel  for the estate of the late Mr.  Kenneth  Aupperle
("Estate")  that they have  filed a Demand  for  Arbitration  with the  American
Arbitration  Association  claiming  property rights and interest in the Company,
certain  amounts  due  and  owing  to the  Estate  based  on  various  corporate
agreements with Mr. Aupperle and certain insurance  policies,  such amount to be
no less than $2,500,000. We are proceeding to arbitrate the claims. Based on the
preliminary  information presented to us, management believes that the claim and
the basis for proceeding with  arbitrating  such claim is without merit and will
vigorously defend it.

Item 6. Exhibits and Reports on Form 8-K

(a)      Exhibits

99.1 Certificate of Chief Executive Officer and Chief Financial Officer Pursuant
     to 18 U.S.C.  Section  1350,  as Adopted  Pursuant  to  Section  906 of the
     Sarbanes-Oxley Act of 2002

(b) Reports on form 8-K

 None

                                       26
<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:  May 15, 2003                          By: /s/ Kenneth Plotkin
       ------------                             ---------------------------
                                                KENNETH  PLOTKIN
                                                Chief Executive Officer and
                                                Director



Date:  May 15, 2003                          By: /s/ Gerald Tucciarone
       -------------                            ---------------------------
                                                GERALD TUCCIARONE
                                                Treasurer and Chief
                                                Financial Officer






                                       27
<PAGE>


                                 CERTIFICATIONS

I, KENNETH PLOTKIN, certify that:

     1.   I have  reviewed  this  quarterly  report  on Form  10-Q of  HAUPPAUGE
          DIGITAL, INC.;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c)   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent functions):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this  quarterly  report  whether  there  were  significant  changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.

                                    By: /s/ Kenneth Plotkin   Date: May 15, 2003
                                       ---------------------
                                       KENNETH PLOTKIN
                                       Chief Executive Officer and Director


I, GERALD TUCCIARONE, certify that:

     1.   I have  reviewed  this  quarterly  report  on Form  10-Q of  HAUPPAUGE
          DIGITAL, INC.;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;
          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and
          c)   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent functions):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this  quarterly  report  whether  there  were  significant  changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.


                    By: /s/ Gerald Tucciarone              Date: May 15, 2003
                       --------------------------------          ------------
                       GERALD TUCCIARONE
                       Treasurer and Chief Financial Officer