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 December 31, 2002

                                       OR

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

For the transition period from _______ to ________

                         Commission file number 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 January 31, 2003, 8,863,265 shares of .01 par value Common Stock of the
registrant were outstanding, not including treasury shares.








<TABLE>
<CAPTION>


                    HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES

                                      INDEX


PART I. FINANCIAL INFORMATION


Item 1.Financial Statements
                                                                                                                  Page No.

<S>                                                                                                                   <C>
Condensed Consolidated Balance Sheets -                                                                               3
   December 31,  2002 (unaudited) and September 30, 2002

Condensed Consolidated Statements of Income -
  Three  Months ended December 31, 2002 (unaudited) and 2001 (unaudited)                                              4

Condensed Consolidated Statements of  Other Comprehensive Income -
  Three months ended December 31, 2002 (unaudited) and 2001 (unaudited)                                               5

Condensed Consolidated Statements of Cash Flow-
  Three  Months ended December 31, 2002 (unaudited) and 2001 (unaudited)                                             6

Notes to Condensed Consolidated Financial Statements                                                                 7-9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations                       10-17

Item 3. Quantitative and Qualitative Disclosures about Market Risks                                                   18

Item  4. Control and Procedures                                                                                       19

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings                                                                                            19

Item 6.  Exhibits and Reports on form 8-K                                                                             19

SIGNATURES                                                                                                            20

CERTIFICATIONS                                                                                                      21-22

</TABLE>


<PAGE>


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


<TABLE>
<CAPTION>

                    HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                                    December 31,
                                                                                      2002              September 30,
                                                                                   (Unaudited)           2002
                                                                                   -----------------------------------------
                                          ASSETS

 Current Assets:
<S>                                                                                <C>                    <C>
     Cash and cash  equivalents                                                    $   5,297,777          4,964,522
     Accounts receivable, net of various allowances  of  $2,887,000                    8,234,513          5,182,738
      Income taxes receivable                                                            501,000            501,000
     Inventories                                                                      11,091,471          8,091,495
     Prepaid expenses and other current assets                                           592,753            416,734
                                                                                   -----------------------------------------
                                                                                   -----------------------------------------
                Total current assets                                                  25,717,514          19,156,489

     Property, plant and equipment, net                                                  592,716             611,054
     Security deposits and other non current assets                                       78,376              78,616
                                                                                   -----------------------------------------
                                                                                   $  26,388,606        $ 19,846,159
                                                                                   -----------------------------------------
                                                                                   -----------------------------------------
Liabilities and  Stockholders' Equity:

 Current Liabilities:
    Accounts payable                                                               $  11,630,005           6,105,588
    Accrued expenses                                                                   2,171,257           1,442,475
    Income taxes payable                                                                 352,539             331,484
                                                                                   -----------------------------------------
              Total current liabilities                                               14,153,801           7,879,547

 Stockholders' Equity
    Common stock $.01 par value; 25,000,000 shares authorized, 9,397,960
          and 9,392,164  issued, respectively                                             93,980              93,923
     Additional paid-in capital                                                       12,248,722          12,233,170
     Retained earnings                                                                 1,570,491             914,019
     Accumulated other comprehensive income ( loss)                                     (181,172)            187,074
    Treasury Stock, at cost, 542,067, and 514,317 shares, respectively                (1,497,216)         (1,461,574)
                                                                                   -----------------------------------------
             Total stockholders' equity                                               12,234,805          11,966,612
                                                                                   -----------------------------------------
                                                                                   $  26,388,606         $19,846,159
                                                                                   -----------------------------------------
                                                                                   -----------------------------------------
</TABLE>


 See accompanying notes to consolidated financial statements

                                       3

<PAGE>

<TABLE>
<CAPTION>

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


                                                                                     Three months ended  December31,
                                                                                    ----------------------------------
                                                                                           2002            2001
                                                                                    ----------------------------------

<S>                                                                                  <C>                 <C>
Net Sales                                                                            $ 15,520,486        $ 12,062,800
Cost of Sales                                                                          11,599,524           9,143,774
                                                                                    ---------------------------------
    Gross Profit                                                                        3,920,962           2,919,026

Selling, General and  Administrative Expenses                                           2,706,302           2,166,759
Research & Development Expenses                                                           493,073             359,024
                                                                                    ---------------------------------
    Income from operations                                                                721,587             393,243

Other Income (expense):
  Interest income                                                                           5,971               9,290
  Foreign currency                                                                        (12,347)              7,581
  Non operational USD to Euro currency re-measurement                                     (32,256)           (103,632)
                                                                                    ---------------------------------
Other income (expense)                                                                    (38,632)            (86,761)
                                                                                    ---------------------------------
      Income before taxes on income                                                       682,955             306,482
Tax provision                                                                              26,483              22,500
                                                                                    ---------------------------------
      Net income                                                                      $   656,472       $     283,982
                                                                                    ---------------------------------
                                                                                    ---------------------------------
Net income per shares:
    Basic                                                                                   $0.07              $0.03
    Diluted                                                                                 $0.07              $0.03
                                                                                    ---------------------------------
                                                                                    ---------------------------------


          See accompanying notes to consolidated financial statements

                                       4
</TABLE>


<PAGE>
                     HAUPPAUGE DIGITAL, INC AND SUBSIDIARIES
         CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME


                                               Three months  ended  December 31,
                                                   2002             2001
                                                   -----            -----
Net income                                       $ 656,472         $283,982
Forward exchange contracts marked to market       (518,974)             -

Foreign currency translation gain  (loss)          150,728           (5,017)

                                                -------------------------------
Other  comprehensive income                       $288,226         $278,965
                                                -------------------------------
                                                -------------------------------





See accompanying notes to consolidated financial statements










                                        5


<PAGE>




<TABLE>
<CAPTION>

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

                                                                         Three months ended  December 31,

                                                                          2002                  2001
                                                                     ------------------------------------
<S>                                                                     <C>                  <C>
  Net income                                                            $656,472             $283,982
                                                                     ------------------------------------
   Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
     Depreciation and amortization                                        69,708               83,614
     Provision for uncollectible accounts receivable                           -               10,000
     Other non cash items                                                  9,741               13,451
  Changes in current assets and liabilities:
      Accounts receivable                                             (3,420,021)          (1,173,501)
      Inventories                                                     (2,999,976)           1,171,783
      Prepaid expenses and other current assets                         (176,019)             106,048
     Accounts payable and other current liabilities                    6,274,254             (229,247)
                                                                     ------------------------------------
        Total adjustments                                               (242,313)             (17,852)
                                                                     ------------------------------------
  Net cash provided by operating activities                              414,159              266,130
                                                                     ------------------------------------

Cash Flows From Investing Activities:
    Purchases of property, plant and equipment                           (51,370)             (22,453)
                                                                     ------------------------------------
      Net cash used in investing activities                              (51,370)             (22,453)
                                                                     ------------------------------------

Cash Flows From Financing Activities:
    Proceeds from employee stock purchases                                 6,108                8,933

    Purchase of treasury stock                                           (35,642)             (37,081)
                                                                     ------------------------------------
        Net cash used in  financing activities                           (29,534)             (28,148)
                                                                     ------------------------------------
        Net increase in cash and cash equivalents                        333,255              215,529

Cash and cash equivalents, beginning of period                         4,964,522            4,422,239
                                                                     ------------------------------------
Cash and cash equivalents, end of period                           $   5,297,777        $   4,637,768
                                                                     ------------------------------------
                                                                     ------------------------------------
Supplemental disclosures:
   Income taxes paid                                               $       4,945        $      14,660
                                                                     ------------------------------------
                                                                     ------------------------------------

</TABLE>

 See accompanying notes to consolidated financial statements
                                       6

<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 month
period ended  December 31, 2002 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 month period ended  December 31 , 2002 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 December 31, 2002, we had
foreign currency contracts  outstanding of approximately  $5,761,700 against the
delivery of the Euro.  The contracts  expire  through April 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 December 31, 2002, a deferred loss of
$328,055, reflecting the net mark to market loss of our derivatives was recorded
on the balance sheet.

For the three months ended December 31, 2002 and 2001, we recorded approximately
$ 549,600 as a decrease to net sales and $34,700 as an increase to net sales
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:

                                   December 31,            September 30,
                                      2002                     2002
                                      ----                      ----
     Component Parts              $ 4,883,341               $2,842,460
     Work in Progress                     -                     42,616
     Finished Goods                 6,208,130                5,206,419
                                    ---------                ---------
                                  $11,091,471               $8,091,495
                                  ===========               ==========

                                       7
<PAGE>

<TABLE>
<CAPTION>

                    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:                                              Three Months Ended
                                                                                    December  31,
                                                                                    -------------
                                                                                  2002         2001
                                                                                  ----         -----
<S>                                                                            <C>            <C>
 Weighted average shares outstanding-basic                                     8,858,431      8,886,472

 Number of shares issued on the assumed exercise of stock options                 19,750        218,987
                                                                               ---------      ---------
 Weighted average shares outstanding-diluted                                   8,878,181      9,105,459
                                                                               =========      =========


</TABLE>




Options to  purchase  1,462,826  and  820,681  shares of common  stock at prices
ranging $1.35 to $ 10.06 and $2.31 and $10.06,  respectively,  were  outstanding
for the three month period ending December 31, 2002 and 2001, 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 S.a.r.l.  Assets and liabilities of this subsidiary are
translated  to  U.S.  dollars  at the  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 differing  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 December 31, 2002,  appearing in the equity  section  under "  Accumulated
other  comprehensive  income  (loss)"  was a deferred  loss of  $181,172,  which
consisted  of a deferred  translation  gain of $146,883  and a deferred  loss of
$328,055  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 spot rate.

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

                                       8
<PAGE>


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

Note  6.  Recent Accounting Pronouncements


In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No.
4, 44 and 64,  Amendment of FASB No. 13, and  Technical  Corrections"  (SFAS NO.
145").  SFAS No.  145  rescinds  the  provisions  of SFAS  No.  4 that  requires
companies  to classify  certain  gains and losses from debt  extinguishments  as
extraordinary  items,  eliminates  the  provisions  of SFAS No. 44 regarding the
Motor  Carrier Act of 1980 and amends the  provisions  of SFAS No. 13 to require
that certain lease modifications be treated as sale leaseback transactions.  The
provisions of SFAS No. 145 related to classification of debt extinguishments are
effective for fiscal years beginning after May 15, 2002. Earlier  application is
encouraged.  The  adoption  of SFAS No. 145 is not  expected  to have a material
impact on the financial positions or results of operation of the Company.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities".  SFAS No. 146 addresses financial accounting
and  reporting  for  costs  associated  with  exit or  disposal  activities  and
nullifies  Emerging  Issues  Task  Force  ("EITF")  Issue No.  94-3,  "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity  (including Certain Costs Incurred in a  Restructuring)."  SFAS No. 146
requires  that a  liability  for a cost  associated  with an  exit  or  disposal
activity be  recognized  when the  liability is incurred.  This  statement  also
established  that fair value is the  objective  for initial  measurement  of the
liability.  The  provisions  of SFAS No. 146 are  effective for exit or disposal
activities  that are initiated after December 31, 2002. The Company is currently
evaluating  the impact,  if any, of SFAS NO. 146 on its  consolidated  financial
statements.

In December 2002, the Financial  Accounting  Standards Board (the "FASB") issued
Statement of Financial  Accounting Standards Board ("SFAS") No. 148, "Accounting
for Stock-Based  Compensation - Transition and Disclosure - an amendment of FASB
Statement  No.  123 ." SFAS  No.  148  amends  SFAS  No.  123,  "Accounting  for
Stock-Based  Compensation," to provide  alternative  methods of transition for a
voluntary  change to the fair value based method of accounting  for  stock-based
employee  compensation.   In  addition,  SFAS  No.  148  amends  the  disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and
interim  financial  statements  about the method of accounting  for  stock-based
employee compensation and the effect on the method used on reported results. The
disclosure  requirements  apply to all  companies  for fiscal years ending after
December 15, 2002. Due to the recent release of this  pronouncement,  management
has not yet determined whether the Company will adopt this voluntary change.




                                       9

<PAGE>


<TABLE>
<CAPTION>

Item 2.    Management's Discussion and Analysis of   Financial Condition and
----------------------------------------------------------------------------
Results of Operations Three Month Period ended December 31, 2002 compared to
----------------------------------------------------------------------------
December 31, 2001
-----------------
                                                             Three          Three
                                                            Months          Months
                                                             Ended          Ended    Variance         Percentage of sales
                                                          12/31/02         12/31/01    $             2002    2001  Variance
                                                         ----------       ----------   ---           ----    ----  --------


<S>                                                     <C>              <C>           <C>           <C>     <C>          <C>
Net Sales                                               $ 15,520,486     12,062,800    3,457,686     100.0%  100.0%       0
Cost of sales                                             11,599,524      9,143,774    2,455,750      74.7%   75.8%     -1.1%
                                                         -----------     ----------   ----------      -----   -----      -----
Gross Profit                                               3,920,962      2,919,026    1,001,936      25.3%   24.2%      1.1%
Gross Profit %                                                25.3%          24.2%         1.1%

Costs:
Sales & Marketing                                          1,863,012      1,378,019      484,993      12.0%   11.4%      0.6%
Technical Support                                             98,360         97,235        1,125       0.6%    0.8%     -0.2%
General & Administrative                                     744,930        691,505       53,425       4.8%    5.7%      -0.9%
                                                          ----------       --------      -------       ----    ----      -----
Total Selling General and Administrative costs             2,706,302      2,166,759      539,543      17.4%   17.9%      -0.5%
Research & Development                                       493,073        359,024      134,049       3.2%    3.0%       0.2%
                                                          ----------       --------     --------       ----    ----       ----
Total Costs                                                3,199,375      2,525,783      673,592      20.6%   20.9%      -0.3%
                                                          ----------     ----------     --------      -----   -----      -----
Net operating income                                         721,587        393,243      328,344       4.7%    3.3%       1.4%

Other income (expense)
----------------------
Interest income                                                5,971          9,290      (3,319)       0.0%    0.1%      -0.1%
Foreign currency                                             (12,347)         7,581     (19,928)      -0.1%    0.1%      -0.2%
Non operational USD to Euro re-measurement  (loss)           (32,256)      (103,632)     71,376       -0.2%   -0.9%       0.7%
                                                            ---------      ---------     -------      -----   -----       ----
  Total other income (expense)                               (38,632)       (86,761)     48,129       -0.3%   -0.7%       0.4%
                                                            --------       --------      -------      -----   -----       ----
Income  before taxes                                         682,955        306,482      376,473       4.4%    2.6%       1.8%
Taxes on income                                               26,483         22,500        3,983       0.2%    0.2%       0.0%
                                                           ---------        -------       ------       ----    ----       ----
Net income                                               $   656,472    $   283,982   $  372,490       4.2%    2.4%       1.8%
                                                         ===========    ===========   ==========       ====    ====       ====

</TABLE>

Net sales for the three months  ended  December  31, 2002  increased  $3,457,686
compared to December 2001.  Domestic and European sales  increased by $1,921,556
and $1,643,014 while Asian sales decreased $106,884 as follows:
<TABLE>
<CAPTION>


                                                                        Increase
                                                                       (decrease)        Increase            Percentage of sales
Location                       Three Months      Three Months            Dollar         (decrease)           geographic region
--------                      ended 12/31/02     ended 12/31/01         Variance        Variance %            2002       2001
                              --------------     --------------         --------        ----------            -----      ----

<S>                          <C>                  <C>                <C>                    <C>                <C>         <C>
Domestic                     $   4,480,128        $   2,558,572      $   1,921,556          75%                29%         21%
Europe                          10,854,699            9,211,685          1,643,014          18%                70%         76%
Asia                               185,659              292,543           (106,884)        -37%                 1%          3%
                                  --------             --------          ---------         ----                ---         ---
  Total                     $   15,520,486        $  12,062,800      $   3,457,686          29%               100%        100%
                             ==============       =============      =============          ===               ====        ====

</TABLE>

     The primary forces contributing to the sales increase were:

o Introduction of Digital Entertainment Center product in Europe
o Sales of new generation personal video recorder product
o Sales of Digital Video Satellite products in Europe
o Analog and personal video recorder OEM sales
o Strong sales of our USB external TV tuner boards

                                       10

<PAGE>

Results of operations December 31, 2002 and December 31, 2001-continued
-----------------------------------------------------------------------

Net sales to  domestic  customers  were 29% of net sales for the  quarter  ended
December 31, 2002 compared to 21% for the quarter ended  December 31, 2001.  Net
sales to European  customers  were 70% of net sales compared to 76% for the same
quarter of last year. Net sales to Asian customers were 1% compared to 3%.

Gross profit increased  $1,001,936 for the three months ended December 31, 2002.
Gross profit  percentage for the three months ended December 31, 2002 was 25.36%
compared to 24.20% for the prior year's first quarter.

The increases and (decreases) in the gross profit are detailed below:
                                                                    Increase
                                                                   (decrease)
                                                                   ----------
Due to  increased sales                                           $ 1,083,015
Due to lower margins on assembled boards                              (20,192)
Due to increases in labor related and other costs                     (60,887)
                                                                     --------
      Total  increase  in margins                                  $1,001,936
                                                                   ==========

The increase in gross profit percentage of 1.06% for the three months ended
December 31, 2002 compared to the three months ended December 31, 2001:
                                                                    Increase
                                                                   (decrease)
                                                                   ----------
Decrease in margin on assembled boards                               (0.13)%
Labor related and other costs as a lower percent of sales             1.19%
                                                                      ----
Net increase                                                          1.06%
                                                                      =====

 Items contributing to the decrease in margin on assembled boards were:

o    A higher  percentage  of OEM sales during the first quarter of fiscal 2003.
     OEM sales during the first quarter of fiscal 2002 were minor

o    Product mix of sales with lower margins


For the three months ended  December 31, 2002,  the increase in the gross profit
percent  of 1.19%  related  to labor  related  and  other  costs  was due to the
percentage  increase  in  sales of  28.66%  being in  excess  of the  percentage
increase in labor  related and other costs of 7.09%,  resulting  in a decline in
labor related and other costs as a percentage of net sales

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

<TABLE>
<CAPTION>

                                       Three months ended December 31,
                                       -------------------------------
                                               Dollar Costs                                            Percentage of Sales
                                       ----------------------------------------------------------------------------------------
                                                                          Increase                                   Increase
                                     2002             2001               (Decrease)            2002       2001      (Decrease)
                                     ----             ----               ----------           -----       ----      ----------
<S>                               <C>               <C>                   <C>                 <C>         <C>           <C>
Sales and Marketing               $1,863,012        $1,378,019            $484,993            12.0%       11.4%         0.6%
Technical  Support                    98,360            97,235               1,125             0.6%        0.8%        -0.2%
General and Administrative           744,930           691,505              53,425             4.8%        5.7%        -0.9%
                                    --------          --------             ------             ----       -----         -----
    Total                         $2,706,302        $2,166,759           $ 539,543            17.4%       17.9%        -0.5%
                                  ==========        ==========           =========           ======      ======        ======


</TABLE>


Results of operations  December 31, 2002 and  2001-continued

Selling General and  Administrative  expenses  increased $539,543 from the prior
year's  first  quarter.  As  a  percentage  of  sales,   Selling,   General  and
Administrative  expenses  decreased  by 0.5% when  compared to the three  months
ended December 31, 2001.

The increase in Sales and Promotional  expense of $484,993,  which accounted for
about 90% of the total increase in Selling, General and Administrative expenses,
was mainly due to:

o    Higher advertising costs of $353,047 due to higher sales based co-operative
     advertising,  higher  customer  rebate  realization  and increased  special
     promotions
o    Higher  commissions  payments of $69,997 due to increased sales
o    Increased European sales office costs of $124,557
o    Lower  trade  show  costs of  $67,137  due to  smaller  show  presence  and
     frequency


The increase in General and Administrative expenses of $53,425 was primarily due
to:

o    Addition of senior executive officer $43,927
o    Higher legal costs of $20,056
o    Decreased  amortization  costs of $13,906 due to amortization in full of an
     intangible asset during fiscal 2002

Research and Development  expenses  increased $134,049 or approximately 38%. 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  expense  for the three  months  ended  December  31, 2002 was $38,632
compared to net other expense of $86,761 for the three months ended December 31,
2001 as detailed below:

<TABLE>
<CAPTION>

                                                                                Three months ended December 31,
                                                                                    2002             2001
                                                                                    ----             ----
<S>                                                                             <C>               <C>
 Interest income                                                                $  5,971          $  9,290
 Foreign currency transaction gains (losses)                                     (12,347)            7,581
 Non operational USD to Euro currency re-measurement                             (32,256)         (103,632)
                                                                                ---------        ---------
  Total other income  (expense)                                                 $(38,632)        $ (86,761)
                                                                                =========        ==========
</TABLE>

The decrease in total other expense was due to the lower losses  resulting  from
the Non  Operational  USD to  Euro  Currency  Re-measurements  offset  by  lower
interest income due to lower investment yields.

Non Operational USD to Euro Currency  Re-measurement  results from the revaluing
from U.S. dollars to Euros any U.S. dollar denominated assets and liabilities on
the books of our Luxembourg based subsidiary, Hauppauge Digital Europe S.a.r.l..
Since the functional  currency of Hauppauge Digital Europe S.a.r.l. is the Euro,
any asset, liability or equity accounts which are invested in or purchased using
U.S. dollars by Hauppauge Digital Europe S.a.r.l. need to be revalued into Euros
at the end of each reporting period. This revaluation of U.S. dollar denominated
accounts into Euros results in a non transactional  re-measurement gain or loss,
which  we  have   classified  as  "  Non   operational   USD  to  Euro  currency
re-measurement."

                                       12
<PAGE>


Results of operations  December 31, 2002 and  2001-continued
------------------------------------------------------------
Tax provision (benefit)

Our net tax provision for the three months ended December 31, 2002 and 2001 is
as follows:

<TABLE>
<CAPTION>

                                                          Three months ended December 31,
                                                               2002              2001
                                                              ------            ------
<S>                                                         <C>             <C>
Tax (benefit) attributable to U.S operations                $(56,700)       $ (229,000)
Tax  expense  European operations                             26,483            22,500
Deferred tax asset valuation allowance                        56,700           229,000
                                                              -------          --------
Net tax provision                                           $ 26,483        $   22,500
                                                              ======          =========
</TABLE>


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 December 31, 2002 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.

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.  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  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

As of December 31, 2002,  appearing in the equity  section  under "  Accumulated
other  comprehensive  income  (loss)"  was a deferred  loss of  $181,172,  which
consisted  of a deferred  translation  gain of $146,883  and a deferred  loss of
$328,055  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 spot rate.

The components of accumulated other  comprehensive  income (loss) as of December
31, 2002 are shown below:
<TABLE>
<CAPTION>

                                                                                                     October-December     Ending
                                                                            Beginning Balance             Other           balance
                                                                                As of                  comprehensive       As of
                                                                                9/30/02                income (loss)     12/31/02
                                                                            -----------------        ---------------     --------
<S>                                                                           <C>                      <C>                  <C>
Translation gains (loss) on Hauppauge Digital Europe S.a.r.l Euro accounts    $ ( 3,845)               $ 150,728         $ 146,883
translated to USD
Mark to market gains (loss) per FAS 133 on open foreign currency contracts       190,919                (518,974)         (328,055)
                                                                                -------                 ---------        ----------
Accumulated other comprehensive income (loss)                                  $ 187,074              $ (368,246)       $ (181,172)
                                                                               =========               ===========      ===========

</TABLE>

                                       13

<PAGE>

Results of operations  December 31, 2002 and  2001-continued
-------------------------------------------------------------

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 $656,472 for the three months ended December 31, 2002,  which resulted
in basic and diluted net income per share of $0.07 on weighted average basic and
diluted  shares of  8,858,431  and  8,878,181,  respectively,  compared to a net
income of $283,982 for the three months ended December 31, 2001,  which resulted
in basic and diluted net loss per share of $0.03 on weighted  average  basic and
diluted  shares of 8,886,472 and  9,105,459,  respectively.  Options to purchase
1,462,826 and 820,681  shares of common stock at prices  ranging from $1.35 to $
10.06 and from $2.31 to $10.06,  respectively,  were  outstanding  for the three
month  period  ending  December  31, 2002 and 2001,  respectively,  but were not
included in the  computation of diluted net income or net loss 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 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 seasonality of retail sales.

Liquidity and Capital Resources

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

                                  December 31            September 30
                                     2002                     2002
                                   -------                    ----

Cash                           $   5,297,777          $   4,964,522
Working Capital                   11,563,713             11,276,942
Stockholders' Equity              12,234,805             11,966,612

We had cash and cash equivalents as of December 31, 2002 of $5,297,777, an
increase of $333,255 over September 30, 2002.

The increase was due to:

Net income adjusted for non cash items                                  $735,921
Increase in accounts payable and other current liabilities             6,274,254
Proceeds from employee stock purchases                                     6,108
Less cash used for:
Increase in accounts receivable                                      (3,420,021)
Increase in inventories                                              (2,999,976)
Increase in prepaid expenses and other current assets                  (176,019)
Purchases of fixed assets                                               (51,370)
Purchase of treasury stock                                              (35,642)
                                                                        --------
   Net increase in cash                                                 $333,255
                                                                        ========

Net cash of $414,159  provided by  operating  activities  was  primarily  due an
increase in accounts payable and other current liabilities of $6,274,254 and net
income adjusted for non cash items of $735,921,  offset somewhat by cash used to
fund increases in accounts  receivable of  $3,420,021,  increase in inventory of
$2,999,976 and increases in prepaid assets and other current assets of $176,019.
The  increase in accounts  receivable  was the result of an increase in sales of
$3,457,686  for the three months  ended  December 31, 2002 over the three months
ended December 31, 2001.

                                       14
<PAGE>


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

Cash of $51,370  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 $6,108.

On April 5, 2001 the Company  extended its agreement with Chase  Manhattan Bank,
to provide it with a $6,500,000 credit facility.  The facility is secured by our
assets,  and  expired in fiscal  2002.  It is the  intention  of the  Company to
procure a new credit facility on terms acceptable to the Company.

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 December 31, 2002, 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 December 31, 2002 and our
internally generated cash flow will provide us with sufficient liquidity to meet
our currently foreseeable short-term and long-term capital needs.

Future Contractual Obligations
-----------------------------

The following table shows the Company's contractual obligations related to lease
obligations    as   of   December   31,    2002:

                                        Payments due by period
Contractual obligations            Total        1   year       1-3   years
Operating lease obligations     $ 2,257,425    $ 664,677       $ 1,592,748


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:

o        Revenue Recognition
o        Management's estimates
o        Hedging program for sales denominated in a foreign currency
o        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.

                                       15
<PAGE>


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

Critical Accounting Policies and Estimates-continued
----------------------------------------------------

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.

Hedging  program for sales denominated in a  foreign currency
-------------------------------------------------------------

Our European subsidiary accounts for approximately 70% to 75 % 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.

We do not enter into contracts for speculative  purposes.  We enter into monthly
window  contracts  covering an average period of six months based on existing or
anticipated  future sales.  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.

o    Actual sales may fluctuate  from our  estimates,  resulting in contracts in
     excess of collections
o    Short term  volatility of currency  markets has the potential to reduce the
     effectiveness of our hedging program
o    Historical volatility of the Euro has the potential to impact our revenues,
     gross margins and operating income
o    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.

                                       16
<PAGE>

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.

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:

o    Our foreign  currency  hedging  program was streamlined to the Euro and the
     British Pound
o    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. See Item 7A- Market Risks.

Recent Accounting Pronouncements
--------------------------------

In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No.
4, 44 and 64,  Amendment of FASB No. 13, and  Technical  Corrections"  (SFAS NO.
145").  SFAS No.  145  rescinds  the  provisions  of SFAS  No.  4 that  requires
companies  to classify  certain  gains and losses from debt  extinguishments  as
extraordinary  items,  eliminates  the  provisions  of SFAS No. 44 regarding the
Motor  Carrier Act of 1980 and amends the  provisions  of SFAS No. 13 to require
that certain lease modifications be treated as sale leaseback transactions.  The
provisions of SFAS No. 145 related to classification of debt extinguishments are
effective for fiscal years beginning after May 15, 2002. Earlier  application is
encouraged.  The  adoption  of SFAS No. 145 is not  expected  to have a material
impact on the financial positions or results of operation of the Company.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities".  SFAS No. 146 addresses financial accounting
and  reporting  for  costs  associated  with  exit or  disposal  activities  and
nullifies  Emerging  Issues  Task  Force  ("EITF")  Issue No.  94-3,  "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity  (including Certain Costs Incurred in a  Restructuring)."  SFAS No. 146
requires  that a  liability  for a cost  associated  with an  exit  or  disposal
activity be  recognized  when the  liability is incurred.  This  statement  also
established  that fair value is the  objective  for initial  measurement  of the
liability.  The  provisions  of SFAS No. 146 are  effective for exit or disposal
activities  that are initiated after December 31, 2002. The Company is currently
evaluating  the impact,  if any, of SFAS NO. 146 on its  consolidated  financial
statements.

In December 2002, the Financial  Accounting  Standards Board (the "FASB") issued
Statement of Financial  Accounting Standards Board ("SFAS") No. 148, "Accounting
for Stock-Based  Compensation - Transition and Disclosure - an amendment of FASB
Statement No. 123 ." SFAS No. 148 amends SFAS No. 123,

                                       17
<PAGE>


Recent Accounting Pronouncements-continued
-------------------------------------------

"Accounting for Stock-Based  Compensation,"  to provide  alternative  methods of
transition  for a voluntary  change to the fair value based method of accounting
for  stock-based  employee  compensation.  In addition,  SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee  compensation and the effect on the method used on reported
results.  The  disclosure  requirements  apply to all companies for fiscal years
ending after December 15, 2002. Due to the recent release of this pronouncement,
management has not yet determined  whether the Company will adopt this voluntary
change.

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 December 31, 2002, we had
foreign currency contracts  outstanding of approximately  $5,761,700 against the
delivery of the Euro.  The contracts  expire  through April 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 December 31, 2002, a deferred loss of
$328,055  reflecting the net mark to market loss of our derivatives was recorded
on the balance sheet.

For the three months ended December 31, 2002 and 2001, we recorded approximately
$ 549,600 as a decrease  to net sales and  $34,700 as an  increase  to net sales
related to the changes in the fair value of our derivative contracts.

                                       18
<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
-------------------------------------------------

Certain  statements  in this  Release  constitute  "forward-looking  statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company,  or industry  results,  to be materially  different from any future
results,   performance   or   achievements   expressed   or   implied   by  such
forward-looking  statements.  Such factors  include,  among other things,  those
described in the Company's filings with the Securities and Exchange  Commission,
including  but not limited to the  Company's  Annual Report in Form 10-K for the
fiscal year ended September 30, 2002.

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

Item 1  Legal Proceedings
        -----------------


Reference  is made to our Annual Report on Form 10-K for the fiscal year ended
September 30, 2002 for a discussion of certain legal proceedings.

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

(a)      Exhibits
         --------

         None

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

         None




                                   SIGNATURES

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


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




Date:  February 13, 2003                 By:  /s/ Kenneth Plotkin
       -----------------                     ----------------------
                                             KENNETH  PLOTKIN
                                             President and
                                             Chief Executive Officer



Date:  February 13, 2003                  By:/s/ Gerald Tucciarone
       -----------------                     ------------------------
                                             GERALD TUCCIARONE
                                             Treasurer and Chief
                                             Financial Officer
















                                       20
<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: February 13, 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: February 13, 2003
                               --------------------            -----------------
                               GERALD TUCCIARONE
                               Treasurer and Chief Financial Officer