| 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (Registrant’s telephone  number, including area code)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| x YES           ̈ NO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  ̈ YES           ̈ NO Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  (See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act). |

|  ̈  LARGE ACCELERATED FILER     |  ̈  ACCELERATED  FILER |
|-----------------------------------------------|------------------------------------------------|
|  ̈ NON-ACCELERATED FILER                  | x  SMALLER REPORTING COMPANY         |
| (Do not check if a smaller reporting company) |                                           |

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|                                                                                                                                             |   | Page no. |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|
|                                                                                                                                             |   |     |   |
| PART I. FINANCIAL INFORMATION                                                                                                                    |   |     |   |
|                                                                                                                                             |   |     |   |
| Item 1. Financial Statements                                                                                                                     |   |     |   |
|                                                                                                                                             |   |     |   |
| Consolidated Balance Sheets – March  31, 2011 (unaudited) and September 30, 2010                                            |   |     | 3      |   |
|                                                                                                                                             |   |     |   |   |
| Consolidated Statements of Operations - Three Months ended March 31, 2011 (unaudited) and 2010 (unaudited)                                       |   |     | 4      |   |
|                                                                                                                                             |   |     |   |   |
| Consolidated Statements of Operations - Six Months ended March 31, 2011 (unaudited) and 2010 (unaudited)                                         |   |     | 5      |   |
|                                                                                                                                             |   |     |   |   |
| Consolidated Statements of Other Comprehensive Loss Three Months and Six Months  ended March 31, 2011 (unaudited) and 2010 (unaudited) |   |     | 6      |   |
|                                                                                                                                             |   |     |   |   |
| Consolidated Statements of Cash Flows - Six Months ended March 31, 2011 (unaudited) and 2010 (unaudited)                                         |   |     | 7      |   |
|                                                                                                                                             |   |     |   |   |
| Notes to Consolidated Financial Statements                                                                                                       |   |     | 8-12   |   |
|                                                                                                                                             |   |     |   |   |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations                                              |   |     | 13-21  |   |
|                                                                                                                                             |   |     |   |   |
| Item 3. Quantitative and Qualitative Disclosures about Market Risks                                                                              |   |     | 22     |   |
|                                                                                                                                             |   |     |   |   |
| Item  4. Controls and Procedures                                                                                                       |   |     | 22     |   |
|                                                                                                                                             |   |     |   |   |
| PART II.  OTHER INFORMATION                                                                                                            |   |     |   |   |
|                                                                                                                                             |   |     |   |   |
| Item 6. Exhibits                                                                                                                                 |   |     | 23-24  |   |
|                                                                                                                                             |   |     |   |   |
| Signatures                                                                                                                                       |   |     | 25     |   |

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| HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES |
|-----------------------------------------|
| CONSOLIDATED BALANCE SHEETS             |

|                                                                                                            |   | March 31,2011(unaudited) |       |   | September 30,2010 |   |
|-----------------------------------------------------------------------------------------------------------------|--------|-------------------------------|------------|--------|------------------------|--------|
| Assets:                                                                                                         |   |                          |       |   |                   |   |
| Cash and cash  equivalents                                                                            |   | $                             | 5,455,432  |   |                   | $      | 7,057,904 |   |
| Trade  receivables, net of  various allowances                                              |   |                          | 2,888,904  |   |                   |   | 4,403,194 |   |
| Other non trade receivables                                                                                     |   |                          | 1,719,590  |   |                   |   | 2,355,834 |   |
| Inventories                                                                                                     |   |                          | 11,796,902 |   |                   |   | 11,450,565 |   |
| Deferred tax asset-current                                                                                      |   |                          | 1,082,096  |   |                   |   | 1,310,204 |   |
| Prepaid expenses and other current assets                                                                       |   |                          | 1,156,928  |   |                   |   | 980,087 |   |
| Total current assets                                                                                            |   |                          | 24,099,852 |   |                   |   | 27,557,788 |   |
|                                                                                                            |   |                          |       |   |                   |   |   |   |
| Intangible assets, net                                                                                          |   |                          | 3,563,848  |   |                   |   | 3,941,266 |   |
| Property, plant and equipment, net                                                                              |   |                          | 454,366    |   |                   |   | 544,959 |   |
| Security deposits and other non-current assets                                                                  |   |                          | 106,241    |   |                   |   | 106,241 |   |
| Deferred tax asset-non current                                                                                  |   |                          | 708,304    |   |                   |   | 610,734 |   |
| Total assets                                                                                                    |   | $                             | 28,932,611 |   |                   | $      | 32,760,988 |   |
|                                                                                                            |   |                          |       |   |                   |   |   |   |
| Liabilities and  Stockholders’  Equity:                                               |   |                          |       |   |                   |   |   |   |
| Current Liabilities:                                                                                            |   |                          |       |   |                   |   |   |   |
| Accounts payable                                                                                                |   | $                             | 5,891,116  |   |                   | $      | 7,306,221 |   |
| Accrued expenses  fees                                                                                |   |                          | 4,593,864  |   |                   |   | 4,955,540 |   |
| Accrued expenses                                                                                                |   |                          | 9,908,706  |   |                   |   | 10,266,495 |   |
| Income taxes payable                                                                                            |   |                          | 309,752    |   |                   |   | 252,090 |   |
| Total current  liabilities                                                                            |   |                          | 20,703,438 |   |                   |   | 22,780,346 |   |
|                                                                                                            |   |                          |       |   |                   |   |   |   |
| Stockholders' Equity:                                                                                           |   |                          |       |   |                   |   |   |   |
| Common stock, $.01 par value; 25,000,000 shares authorized, 10,882,823 and 10,842,274 issued, respectively |   |                          | 108,828    |   |                   |   | 108,423 |   |
| Additional paid-in capital                                                                                      |   |                          | 17,986,661 |   |                   |   | 17,739,330 |   |
| Retained deficit                                                                                                |   |                          | (3,232,473 | )      |                   |   | (1,050,886 | ) |
| Accumulated other comprehensive loss                                                                            |   |                          | (4,228,295 | )      |                   |   | (4,410,677 | ) |
| Treasury Stock, at cost, 760,479 shares                                                                         |   |                          | (2,405,548 | )      |                   |   | (2,405,548 | ) |
| Total stockholders' equity                                                                                      |   |                          | 8,229,173  |   |                   |   | 9,980,642 |   |
| Total  liabilities and  stockholders' equity                                                |   | $                             | 28,932,611 |   |                   | $      | 32,760,988 |   |

----

| HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES |
|-----------------------------------------|
| CONSOLIDATED STATEMENTS OF OPERATIONS   |
| (UNAUDITED)                             |

|                                                    |   | Three months ended March 31, |       |
|---------------------------------------------------------|--------|--------------------------------------------------|------------|
|                                                    |   | 2011                                             |       |   | 2010 |   |
|                                                    |   |                                             |       |   |   |   |
| Net sales                                               |   | $                                                | 10,324,162 |   |   | $ | 13,847,079 |   |
| Cost  of sales                                |   |                                             | 7,102,764  |   |   |   | 9,981,288 |   |
| Gross profit                                            |   |                                             | 3,221,398  |   |   |   | 3,865,791 |   |
|                                                    |   |                                             |       |   |   |   |   |   |
| Selling, general and  administrative expenses |   |                                             | 3,513,871  |   |   |   | 3,777,737 |   |
| Research and development expenses                       |   |                                             | 1,142,913  |   |   |   | 1,005,101 |   |
| Loss  from operations                         |   |                                             | (1,435,386 | ) |   |   | (917,047 | ) |
|                                                    |   |                                             |       |   |   |   |   |   |
| Other  income (expense):                      |   |                                             |       |   |   |   |   |   |
| Interest  income                              |   |                                             | 1,616      |   |   |   | 1,435 |   |
| Foreign currency  gain (loss)                 |   |                                             | (27,060    | ) |   |   | 61,875 |   |
| Total  other income (expense)                 |   |                                             | (25,444    | ) |   |   | 63,310 |   |
| Loss before tax provision                               |   |                                             | (1,460,830 | ) |   |   | (853,737 | ) |
| Deferred tax benefit                                    |   |                                             | (69,188    | ) |   |   | 0 |   |
| Current tax expense                                     |   |                                             | 51,725     |   |   |   | 49,136 |   |
|  Net loss                                          |   | $                                                | (1,443,367 | ) |   | $ | (902,873 | ) |
|                                                    |   |                                             |       |   |   |   |   |   |
| Net  loss  per share:               |   |                                             |       |   |   |   |   |   |
| Basic and diluted                                       |   | $                                                | (0.14      | ) |   | $ | (0.09 | ) |

----

| HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES |
|-----------------------------------------|
| CONSOLIDATED STATEMENTS OF OPERATIONS   |
| (UNAUDITED)                             |

|                                                    |   | Six months ended March 31, |       |
|---------------------------------------------------------|--------|------------------------------------------------|------------|
|                                                    |   | 2011                                           |       |   | 2010 |   |
|                                                    |   |                                           |       |   |   |   |
| Net sales                                               |   | $                                              | 23,187,108 |   |   | $ | 31,725,437 |   |
| Cost  of sales                                |   |                                           | 15,618,472 |   |   |   | 22,637,249 |   |
| Gross profit                                            |   |                                           | 7,568,636  |   |   |   | 9,088,188 |   |
|                                                    |   |                                           |       |   |   |   |   |   |
| Selling, general and  administrative expenses |   |                                           | 7,288,575  |   |   |   | 8,110,260 |   |
| Research and development expenses                       |   |                                           | 2,239,692  |   |   |   | 2,175,172 |   |
| Loss  from operations                         |   |                                           | (1,959,631 | ) |   |   | (1,197,244 | ) |
|                                                    |   |                                           |       |   |   |   |   |   |
| Other  income (expense):                      |   |                                           |       |   |   |   |   |   |
| Interest  income                              |   |                                           | 3,175      |   |   |   | 2,894 |   |
| Interest expense                                        |   |                                           | -          |   |   |   | (4,347 | ) |
| Foreign currency gain                              |   |                                           | 4,463      |   |   |   | 61,635 |   |
| Total  other income                           |   |                                           | 7,638      |   |   |   | 60,182 |   |
| Loss before tax provision                               |   |                                           | (1,951,993 | ) |   |   | (1,137,062 | ) |
| Deferred tax expense                                    |   |                                           | 130,538    |   |   |   | - |   |
| Current tax expense                                     |   |                                           | 99,056     |   |   |   | 100,362 |   |
|  Net loss                                          |   | $                                              | (2,181,587 | ) |   | $ | (1,237,424 | ) |
|                                                    |   |                                           |       |   |   |   |   |   |
| Net  loss  per share:               |   |                                           |       |   |   |   |   |   |
| Basic and diluted                                       |   | $                                              | (0.22      | ) |   | $ | (0.12 | ) |

----

| HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES                        |
|----------------------------------------------------------------|
| CONSOLIDATED STATEMENTS OF OTHER  COMPREHENSIVE LOSS |
| (UNAUDITED)                                                    |

|                                             |   | Three months ended March 31, |       |
|--------------------------------------------------|--------|--------------------------------------------------|------------|
|                                             |   | 2011                                             |       |   | 2010 |   |
| Net loss                                         |   | $                                                | (1,443,367 | ) |   | $ | (902,873 | ) |
| Foreign currency translation gain (loss)         |   |                                             | 21,771     |   |   |   | (546,772 | ) |
| Forward exchange contracts marked to market gain |   |                                             | 22,191     |   |   |   | 23,911 |   |
| Other  comprehensive loss              |   | $                                                | (1,399,405 | ) |   | $ | (1,425,734 | ) |

|                                                    |   | Six months ended March 31, |       |
|---------------------------------------------------------|--------|------------------------------------------------|------------|
|                                                    |   | 2011                                           |       |   | 2010 |   |
| Net loss                                                |   | $                                              | (2,181,587 | ) |   | $ | (1,237,424 | ) |
| Foreign currency translation gain (loss)                |   |                                           | 182,989    |   |   |   | (669,012 | ) |
| Forward exchange contracts marked to market gain (loss) |   |                                           | (607       | ) |   |   | 21,487 |   |
| Other  comprehensive loss                     |   | $                                              | (1,999,205 | ) |   | $ | (1,884,949 | ) |

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| HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES |
|-----------------------------------------|
| CONSOLIDATED STATEMENTS OF CASH FLOWS   |
| (UNAUDITED)                             |

|                                                                                                 |   | Six months ended March 31, |       |
|------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|------------|
|                                                                                                 |   | 2011                                           |       |   | 2010 |   |
| Net loss                                                                                             |   | $                                              | (2,181,587 | ) |   | $ | (1,237,424 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating  activities: |   |                                           |       |   |   |   |   |   |
| Depreciation and amortization                                                                        |   |                                           | 119,899    |   |   |   | 138,468 |   |
| Amortization of intangible assets                                                                    |   |                                           | 377,418    |   |   |   | 377,418 |   |
| Stock  compensation expense                                                                |   |                                           | 200,938    |   |   |   | 212,502 |   |
| Deferred tax expense                                                                                 |   |                                           | 130,538    |   |   |   | - |   |
| Sales reserve, net                                                                                   |   |                                           | (110,569   | ) |   |   | 223,300 |   |
| Bad debt reserve                                                                                     |   |                                           | -          |   |   |   | 40,000 |   |
| Inventory reserve                                                                                    |   |                                           | 179,000    |   |   |   | - |   |
| Other  items                                                                               |   |                                           | (53,620    | ) |   |   | 18 |   |
| Changes in current assets and liabilities                                                            |   |                                           |       |   |   |   |   |   |
| Accounts receivable and other non trade receivables                                                  |   |                                           | 2,511,053  |   |   |   | 1,354,543 |   |
| Inventories                                                                                          |   |                                           | (797,091   | ) |   |   | (674,918 | ) |
| Prepaid expenses and other current assets                                                            |   |                                           | (187,525   | ) |   |   | (216,478 | ) |
| Accounts payable                                                                                     |   |                                           | (1,380,157 | ) |   |   | (1,527,858 | ) |
| Accrued expenses  and other current liabilities                                            |   |                                           | (459,560   | ) |   |   | 2,826,842 |   |
| Total adjustments                                                                                    |   |                                           | 530,324    |   |   |   | 2,753,837 |   |
| Net cash provided by  (used in) operating activities                                       |   |                                           | (1,651,263 | ) |   |   | 1,516,413 |   |
| Cash Flows From Investing Activities:                                                                |   |                                           |       |   |   |   |   |   |
| PCTV acquisition                                                                                     |   |                                           | -          |   |   |   | (511,332 | ) |
| Purchases of property, plant and equipment                                                           |   |                                           | (29,306    | ) |   |   | (22,734 | ) |
| Net cash used in investing activities                                                                |   |                                           | (29,306    | ) |   |   | (534,066 | ) |
| Cash Flows From Financing Activities:                                                                |   |                                           |       |   |   |   |   |   |
| Proceeds from the exercise of stock options and employee  stock purchases                  |   |                                           | 46,798     |   |   |   | 9,332 |   |
| Net cash provided by financing activities                                                            |   |                                           | 46,798     |   |   |   | 9,332 |   |
| Effect of exchange rates on cash                                                                     |   |                                           | 31,299     |   |   |   | (647,525 | ) |
| Net (decrease) increase  in cash and cash equivalents                                      |   |                                           | (1,602,472 | ) |   |   | 344,154 |   |
| Cash and cash equivalents, beginning of period                                                       |   |                                           | 7,057,904  |   |   |   | 8,368,342 |   |
| Cash and cash equivalents, end of period                                                             |   | $                                              | 5,455,432  |   |   | $ | 8,712,496 |   |
|                                                                                                 |   |                                           |       |   |   |   |   |   |
| Supplemental disclosures:                                                                            |   |                                           |       |   |   |   |   |   |
| Interest paid                                                                                        |   |                                           | -          |   |   | $ | 4,340 |   |
| Income taxes paid                                                                                    |   | $                                              | 61,816     |   |   | $ | 106,451 |   |

----

| HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES    |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| (UNAUDITED)                                |

|   | · | Trade receivables from sales to customers |
|--------|--------|-------------------------------------------|

|   | · | Allowances, consisting of sales and bad debt |
|--------|--------|----------------------------------------------|

|   | · | Receivables pertaining to component parts purchased from the Company at cost by the Company’s  contract manufacturers which are excluded from sales |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | General services tax (GST) and value added tax (VAT) reclaimable on goods purchased by the Company’s Asian and European locations |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other minor non-trade receivables |
|--------|--------|-----------------------------------|

----

| HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES    |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| (UNAUDITED)                                |

|                                   |   | March 31, |       |   | September 30, |   |
|----------------------------------------|--------|----------------|------------|--------|--------------------|--------|
|                                   |   | 2011           |       |   | 2010               |   |
| Trade receivables                      |   | $              | 7,240,872  |   |               | $      | 9,123,726 |   |
| Allowance for doubtful accounts        |   |           | (383,773   | )      |               |   | (383,773 | ) |
| Sales reserve                          |   |           | (3,968,195 | )      |               |   | (4,336,759 | ) |
| Net trade receivables                  |   | $              | 2,888,904  |   |               | $      | 4,403,194 |   |
| Receivable from contract manufacturers |   | $              | 1,211,465  |   |               | $      | 1,846,949 |   |
| GST and VAT taxes receivables          |   |           | 433,849    |   |               |   | 439,745 |   |
| Other                                  |   |           | 74,276     |   |               |   | 69,140 |   |
| Total other non trade receivables      |   | $              | 1,719,590  |   |               | $      | 2,355,834 |   |

|            |   | March 31, |       |   | September 30, |   |
|-----------------|--------|----------------|------------|--------|--------------------|--------|
|            |   | 2011           |       |   | 2010               |   |
| Component parts |   | $              | 4,438,709  |   |               | $      | 3,565,643 |   |
| Finished goods  |   |           | 7,358,193  |   |               |   | 7,884,922 |   |
| Total inventory |   | $              | 11,796,902 |   |               | $      | 11,450,565 |   |

|                                                             |   | Three months ended |       |   | Six months ended |   |
|------------------------------------------------------------------|--------|------------------------------|------------|--------|----------------------------|--------|
|                                                             |   | March 31,               |       |   | March 31,             |   |
|                                                             |   | 2011                         |       |   | 2010                       |   |   | 2011 |   |   | 2010 |   |
| Weighted average shares outstanding-basic                        |   |                         | 10,106,679 |   |                       |   | 10,065,344 |   |   |   | 10,094,920 |   |   |   | 10,062,545 |   |
| Number of shares issued on the assumed exercise of stock options |   |                         | -          |   |                       |   | - |   |   |   | - |   |   |   | - |   |
| Weighted average shares outstanding-diluted                      |   |                         | 10,106,679 |   |                       |   | 10,065,344 |   |   |   | 10,094,920 |   |   |   | 10,062,545 |   |

----

| HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES    |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| (UNAUDITED)                                |

|   | · | Analog TV tuner products |
|--------|--------|--------------------------|

|   | · | Digital  TV tuner, and combination analog and digital TV tuner, products |
|--------|--------|------------------------------------------------------------------------------------|

|   | · | Other non-TV tuner products |
|--------|--------|-----------------------------|

----

| HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES    |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| (UNAUDITED)                                |

|                                                                               |   | Three months ended March 31, |       |   | Six months ended March 31, |   |
|------------------------------------------------------------------------------------|--------|--------------------------------------------------|------------|--------|------------------------------------------------|--------|
| Product line sales                                                       |   | 2011                                             |       |   | 2010                                           |   |   | 2011 |   |   | 2010 |   |
| Analog TV tuner products                                                           |   | $                                                | 215,309    |   |                                           | $      | 135,719 |   |   | $ | 745,885 |   |   | $ | 430,189 |   |
| Digital and combination analog and  digital TV  tuner products |   |                                             | 9,555,742  |   |                                           |   | 11,799,562 |   |   |   | 21,428,564 |   |   |   | 27,588,278 |   |
| Other non-TV tuner products                                                        |   |                                             | 553,111    |   |                                           |   | 1,911,798 |   |   |   | 1,012,659 |   |   |   | 3,706,970 |   |
| Total sales                                                                        |   | $                                                | 10,324,162 |   |                                           | $      | 13,847,079 |   |   | $ | 23,187,108 |   |   | $ | 31,725,437 |   |

|                   |   | Three months ended March 31, |   |   | Six months ended March 31, |   |
|------------------------|--------|--------------------------------------------------|--------|--------|------------------------------------------------|--------|
| Geographic region |   | 2011                                             |   |   | 2010                                           |   |   | 2011 |   |   | 2010 |   |
| The Americas           |   |                                             | 58     | %      |                                           |   | 45 | % |   |   | 60 | % |   |   | 44 | % |
| Europe                 |   |                                             | 40     | %      |                                           |   | 52 | % |   |   | 38 | % |   |   | 53 | % |
| Asia                   |   |                                             | 2      | %      |                                           |   | 3 | % |   |   | 2 | % |   |   | 3 | % |
| Total                  |   |                                             | 100    | %      |                                           |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

|                                    |   | Three months ended March 31, |    |   | Six months ended March 31, |   |
|-----------------------------------------|--------|--------------------------------------------------|---------|--------|------------------------------------------------|--------|
|                                    |   | 2011                                             |    |   | 2010                                           |   |   | 2011 |   |   | 2010 |   |
| Tax expense on international operations |   | $                                                | 41,725  |   |                                           | $      | 39,136 |   |   | $ | 79,056 |   |   | $ | 80,362 |   |
| State taxes                             |   |                                             | 10,000  |   |                                           |   | 10,000 |   |   |   | 20,000 |   |   |   | 20,000 |   |
| Deferred tax (benefit) expense          |   |                                             | (69,188 | )      |                                           |   | - |   |   |   | 130,538 |   |   |   | - |   |
| Tax (benefit) provision                 |   | $                                                | (17,463 | )      |                                           | $      | 49,136 |   |   | $ | 229,594 |   |   | $ | 100,362 |   |

----

| HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES    |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| (UNAUDITED)                                |

----

|                                                           |   | Three    |       |   | Three    |   |       |     |   |   |                          |   |   |   |   |   |     |   |
|----------------------------------------------------------------|--------|----------|------------|--------|----------|--------|------------|----------|--------|--------|-------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                                                           |   | Months   |       |   | Months   |   |       |     |   |   |                          |   |   |   |   |   |     |   |
|                                                           |   | Ended    |       |   | Ended    |   |       | Variance |   |   | Percentage of sales |   |
|                                                           |   | 03/31/11 |       |   | 03/31/10 |   |       | $        |   |   | 2011                          |   |   | 2010   |   |   | Variance |   |
|                                                           |   |     |       |   |     |   |       |     |   |   |                          |   |   |   |   |   |     |   |
| Net Sales                                                      |   | $        | 10,324,162 |   |     | $      | 13,847,079 |     |   | $      | (3,522,917                    | )      |   |   | 100.00 | %      |     |   | 100.00 | % |   |   | - |   |
| Cost of sales                                                  |   |     | 7,102,764  |   |     |   | 9,981,288  |     |   |   | (2,878,524                    | )      |   |   | 68.80  | %      |     |   | 72.08 | % |   |   | -3.28 | % |
| Gross Profit                                                   |   |     | 3,221,398  |   |     |   | 3,865,791  |     |   |   | (644,393                      | )      |   |   | 31.20  | %      |     |   | 27.92 | % |   |   | 3.28 | % |
| Gross Profit %                                                 |   |     | 31.20      | %      |     |   | 27.92      | %        |   |   | 3.28                          | %      |   |   |   |   |     |   |   |   |   |   |   |   |
| Expenses:                                                      |   |     |       |   |     |   |       |     |   |   |                          |   |   |   |   |   |     |   |   |   |   |   |   |   |
| Sales & marketing                                          |   |     | 2,225,185  |   |     |   | 2,406,232  |     |   |   | (181,047                      | )      |   |   | 21.55  | %      |     |   | 17.38 | % |   |   | 4.17 | % |
| Sales & marketing-PCTV                                     |   |     | 100,591    |   |     |   | 112,924    |     |   |   | (12,333                       | )      |   |   | 0.97   | %      |     |   | 0.82 | % |   |   | 0.15 | % |
| Technical support                                              |   |     | 109,230    |   |     |   | 123,329    |     |   |   | (14,099                       | )      |   |   | 1.06   | %      |     |   | 0.89 | % |   |   | 0.17 | % |
| General & administrative                                   |   |     | 752,991    |   |     |   | 808,853    |     |   |   | (55,862                       | )      |   |   | 7.29   | %      |     |   | 5.84 | % |   |   | 1.45 | % |
| General & administrative-PCTV                              |   |     | 73,224     |   |     |   | 69,234     |     |   |   | 3,990                         |   |   |   | 0.71   | %      |     |   | 0.50 | % |   |   | 0.21 | % |
| Amortization of intangible assets                              |   |     | 188,709    |   |     |   | 188,709    |     |   |   | -                             |   |   |   | 1.83   | %      |     |   | 1.36 | % |   |   | 0.47 | % |
| Selling, general and administrative stock compensation expense |   |     | 63,941     |   |     |   | 68,456     |     |   |   | (4,515                        | )      |   |   | 0.62   | %      |     |   | 0.49 | % |   |   | 0.13 | % |
| Total  selling, general and administrative expense   |   |     | 3,513,871  |   |     |   | 3,777,737  |     |   |   | (263,866                      | )      |   |   | 34.03  | %      |     |   | 27.28 | % |   |   | 6.75 | % |
| Research  and development                            |   |     | 685,715    |   |     |   | 524,483    |     |   |   | 161,232                       |   |   |   | 6.64   | %      |     |   | 3.79 | % |   |   | 2.85 | % |
| Research  and development-PCTV                       |   |     | 420,671    |   |     |   | 442,823    |     |   |   | (22,152                       | )      |   |   | 4.07   | %      |     |   | 3.20 | % |   |   | 0.87 | % |
| Research and development stock compensation expense            |   |     | 36,527     |   |     |   | 37,795     |     |   |   | (1,268                        | )      |   |   | 0.35   | %      |     |   | 0.27 | % |   |   | 0.08 | % |
| Total expenses                                                 |   |     | 4,656,784  |   |     |   | 4,782,838  |     |   |   | (126,054                      | )      |   |   | 45.09  | %      |     |   | 34.54 | % |   |   | 10.55 | % |
| Loss from operations                                           |   |     | (1,435,386 | )      |     |   | (917,047   | )        |   |   | (518,339                      | )      |   |   | -13.89 | %      |     |   | -6.62 | % |   |   | -7.27 | % |
|                                                           |   |     |       |   |     |   |       |     |   |   |                          |   |   |   |   |   |     |   |   |   |   |   |   |   |
| Other income (expense) :                                       |   |     |       |   |     |   |       |     |   |   |                          |   |   |   |   |   |     |   |   |   |   |   |   |   |
| Interest income                                                |   |     | 1,616      |   |     |   | 1,435      |     |   |   | 181                           |   |   |   | 0.02   | %      |     |   | 0.01 | % |   |   | 0.01 | % |
| Foreign currency                                               |   |     | (27,060    | )      |     |   | 61,875     |     |   |   | (88,935                       | )      |   |   | -0.26  | %      |     |   | 0.45 | % |   |   | -0.71 | % |
| Total other income (expense)                                   |   |     | (25,444    | )      |     |   | 63,310     |     |   |   | (88,754                       | )      |   |   | -0.24  | %      |     |   | 0.46 | % |   |   | -0.70 | % |
| Loss  before tax provision                           |   |     | (1,460,830 | )      |     |   | (853,737   | )        |   |   | (607,093                      | )      |   |   | -14.13 | %      |     |   | -6.16 | % |   |   | -7.97 | % |
| Deferred tax benefit                                           |   |     | (69,188    | )      |     |   | -          |     |   |   | (69,188                       | )      |   |   | -0.67  | %      |     |   | 0.00 | % |   |   | -0.67 | % |
| Current tax expense                                            |   |     | 51,725     |   |     |   | 49,136     |     |   |   | 2,589                         |   |   |   | 0.50   | %      |     |   | 0.35 | % |   |   | 0.15 | % |
| Net  loss                                            |   | $        | (1,443,367 | )      |     | $      | (902,873   | )        |   | $      | (540,494                      | )      |   |   | -13.96 | %      |     |   | -6.51 | % |   |   | -7.45 | % |

----

|         |   |                |       |   |                |   |       | Increase   |   |   | Increase        |   |   |                                  |   |   |   |   |
|--------------|--------|---------------------|------------|--------|---------------------|--------|------------|------------|--------|--------|-----------------|--------|--------|---------------------------------------|--------|--------|--------|--------|
|         |   |                |       |   |                |   |       | (decrease) |   |   | (decrease)      |   |   | Percentage of sales by |   |
|         |   | Three Months   |       |   | Three Months   |   |       | Dollar     |   |   | dollar          |   |   | geographic region                |   |
|         |   | ended 03/31/11 |       |   | ended 03/31/10 |   |       | Variance   |   |   | variance % |   |   | 2011                                  |   |   | 2010   |   |
| The Americas |   |                | 5,986,441  |   |                |   | 6,318,133  |       |   |   | (331,692        | )      |   |                                  | -5     | %      |   |   | 58 | % |   |   | 46 | % |
| Europe       |   |                | 4,112,624  |   |                |   | 7,141,656  |       |   |   | (3,029,032      | )      |   |                                  | -42    | %      |   |   | 40 | % |   |   | 52 | % |
| Asia         |   |                | 225,097    |   |                |   | 387,290    |       |   |   | (162,193        | )      |   |                                  | -42    | %      |   |   | 2 | % |   |   | 3 | % |
| Total        |   | $                   | 10,324,162 |   |                | $      | 13,847,079 |       |   | $      | (3,522,917      | )      |   |                                  | -25    | %      |   |   | 100 | % |   |   | 100 | % |

|                                             |   | Increase (decrease) |       |
|--------------------------------------------------|--------|--------------------------|------------|
| Decreased sales                                  |   | $                        | (1,361,628 | ) |
| Decrease due to weaker Euro to USD exchange rate |   |                     | (77,905    | ) |
| Higher gross profit on sales mix                 |   |                     | 397,892    |   |
| Lower production and production related costs    |   |                     | 397,248    |   |
| Total decrease in gross profit                   |   | $                        | (644,393   | ) |

|                                          |   | Increase (decrease) |   |
|-----------------------------------------------|--------|--------------------------|--------|
| Higher gross profit on sales mix              |   |                     | 4.25   | % |
| Decrease due weaker Euro to USD exchange rate |   |                     | -1.15  | % |
| Lower production and production related costs |   |                     | 0.18   | % |
| Total increase in gross profit percentage     |   |                     | 3.28   | % |

----

|   | · | Shift in sales to products with a higher average unit sales price resulted in a gross profit percentage increase of 4.25%. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | A decrease in the Euro to USD exchange rate from $1.3839 for the three months ended March 31, 2010 to $1.3680 for the three months ended March 31, 2011 resulted in a gross profit decrease of 1.15%. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Lower production  and production related costs such as building overhead, packaging costs, freight costs and labor costs at a third party facility resulted in a gross profit increase of 0.18%. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              |   | Three months ended March 31, |      |
|-----------------------------------|--------|-----------------------------------|-----------|
|                              |   | Dollar Costs                      |      |   | Percentage of Sales |   |
|                              |   |                              |      |   |   |   |   | Increase |   |   |   |   |   |   |   |   | Increase |   |
|                              |   | 2011                              |      |   | 2010 |   |   | (Decrease) |   |   | 2011 |   |   | 2010 |   |   | (Decrease) |   |
| Sales and marketing-HCW           |   | $                                 | 2,225,185 |   |   | $ | 2,406,232 |   |   | $ | (181,047 | ) |   |   | 21.55 | % |   |   | 17.38 | % |   |   | 4.17 | % |
| Sales and marketing-PCTV          |   |                              | 100,591   |   |   |   | 112,924 |   |   |   | (12,333 | ) |   |   | 0.97 | % |   |   | 0.82 | % |   |   | 0.15 | % |
| Technical  support      |   |                              | 109,230   |   |   |   | 123,329 |   |   |   | (14,099 | ) |   |   | 1.06 | % |   |   | 0.89 | % |   |   | 0.17 | % |
| General and administrative-HCW    |   |                              | 752,991   |   |   |   | 808,853 |   |   |   | (55,862 | ) |   |   | 7.29 | % |   |   | 5.84 | % |   |   | 1.45 | % |
| General and administrative-PCTV   |   |                              | 73,224    |   |   |   | 69,234 |   |   |   | 3,990 |   |   |   | 0.71 | % |   |   | 0.50 | % |   |   | 0.21 | % |
| Amortization of intangible assets |   |                              | 188,709   |   |   |   | 188,709 |   |   |   | - |   |   |   | 1.83 | % |   |   | 1.36 | % |   |   | 0.47 | % |
| Stock compensation                |   |                              | 63,941    |   |   |   | 68,456 |   |   |   | (4,515 | ) |   |   | 0.62 | % |   |   | 0.49 | % |   |   | 0.13 | % |
| Total                             |   | $                                 | 3,513,871 |   |   | $ | 3,777,737 |   |   | $ | (263,866 | ) |   |   | 34.03 | % |   |   | 27.28 | % |   |   | 6.75 | % |

|                                                   |   | Three months ended March 31, |    |
|--------------------------------------------------------|--------|-----------------------------------|---------|
|                                                   |   | 2011                              |    |   | 2010 |   |
| Tax expense on international operations |   | $                                 | 41,725  |   |   | $ | 39,136 |   |
| State taxes                                            |   |                              | 10,000  |   |   |   | 10,000 |   |
| Deferred tax benefit                                   |   |                              | (69,188 | ) |   |   | - |   |
| Tax (benefit) provision                                |   | $                                 | (17,463 | ) |   | $ | 49,136 |   |

----

----

|                                                           |   | Six      |       |   | Six      |   |       |     |   |   |                          |   |   |   |   |   |     |   |
|----------------------------------------------------------------|--------|----------|------------|--------|----------|--------|------------|----------|--------|--------|-------------------------------|--------|--------|--------|--------|--------|----------|--------|
|                                                           |   | Months   |       |   | Months   |   |       |     |   |   |                          |   |   |   |   |   |     |   |
|                                                           |   | Ended    |       |   | Ended    |   |       | Variance |   |   | Percentage of sales |   |
|                                                           |   | 03/31/11 |       |   | 03/31/10 |   |       | $        |   |   | 2011                          |   |   | 2010   |   |   | Variance |   |
|                                                           |   |     |       |   |     |   |       |     |   |   |                          |   |   |   |   |   |     |   |   |   |   |   |   |   |
| Net Sales                                                      |   | $        | 23,187,108 |   |     | $      | 31,725,437 |     |   | $      | (8,538,329                    | )      |   |   | 100.00 | %      |     |   | 100.00 | % |   |   | -26.91 | % |
| Cost of sales                                                  |   |     | 15,618,472 |   |     |   | 22,637,249 |     |   |   | (7,018,777                    | )      |   |   | 67.36  | %      |     |   | 71.35 | % |   |   | -3.99 | % |
| Gross Profit                                                   |   |     | 7,568,636  |   |     |   | 9,088,188  |     |   |   | (1,519,552                    | )      |   |   | 32.64  | %      |     |   | 28.65 | % |   |   | 3.99 | % |
| Gross Profit %                                                 |   |     | 32.64      | %      |     |   | 28.65      | %        |   |   | 3.99                          | %      |   |   |   |   |     |   |   |   |   |   |   |   |
| Expenses:                                                      |   |     |       |   |     |   |       |     |   |   |                          |   |   |   |   |   |     |   |   |   |   |   |   |   |
| Sales & marketing                                          |   |     | 4,735,515  |   |     |   | 5,307,047  |     |   |   | (571,532                      | )      |   |   | 20.41  | %      |     |   | 16.73 | % |   |   | 3.69 | % |
| Sales & marketing-PCTV                                     |   |     | 197,989    |   |     |   | 237,637    |     |   |   | (39,648                       | )      |   |   | 0.85   | %      |     |   | 0.75 | % |   |   | 0.10 | % |
| Technical support                                              |   |     | 219,948    |   |     |   | 244,502    |     |   |   | (24,554                       | )      |   |   | 0.95   | %      |     |   | 0.77 | % |   |   | 0.18 | % |
| General & administrative                                   |   |     | 1,500,413  |   |     |   | 1,644,530  |     |   |   | (144,117                      | )      |   |   | 6.47   | %      |     |   | 5.18 | % |   |   | 1.28 | % |
| General & administrative-PCTV                              |   |     | 129,408    |   |     |   | 162,214    |     |   |   | (32,806                       | )      |   |   | 0.56   | %      |     |   | 0.51 | % |   |   | 0.05 | % |
| Amortization of intangible assets                              |   |     | 377,418    |   |     |   | 377,418    |     |   |   | -                             |   |   |   | 1.63   | %      |     |   | 1.19 | % |   |   | 0.44 | % |
| Selling, general and administrative stock compensation expense |   |     | 127,884    |   |     |   | 136,912    |     |   |   | (9,028                        | )      |   |   | 0.55   | %      |     |   | 0.43 | % |   |   | 0.12 | % |
| Total  selling, general and administrative expense   |   |     | 7,288,575  |   |     |   | 8,110,260  |     |   |   | (821,685                      | )      |   |   | 31.42  | %      |     |   | 25.56 | % |   |   | 5.86 | % |
| Research  and development                            |   |     | 1,341,665  |   |     |   | 1,152,240  |     |   |   | 189,425                       |   |   |   | 5.79   | %      |     |   | 3.63 | % |   |   | 2.15 | % |
| Research  and development-PCTV                       |   |     | 824,973    |   |     |   | 947,342    |     |   |   | (122,369                      | )      |   |   | 3.56   | %      |     |   | 2.99 | % |   |   | 0.57 | % |
| Research and development stock compensation expense            |   |     | 73,054     |   |     |   | 75,590     |     |   |   | (2,536                        | )      |   |   | 0.32   | %      |     |   | 0.24 | % |   |   | 0.09 | % |
| Total expenses                                                 |   |     | 9,528,267  |   |     |   | 10,285,432 |     |   |   | (757,165                      | )      |   |   | 41.09  | %      |     |   | 32.42 | % |   |   | 8.67 | % |
| Loss from operations                                           |   |     | (1,959,631 | )      |     |   | (1,197,244 | )        |   |   | (762,387                      | )      |   |   | -8.45  | %      |     |   | -3.77 | % |   |   | -4.68 | % |
|                                                           |   |     |       |   |     |   |       |     |   |   |                          |   |   |   |   |   |     |   |   |   |   |   |   |   |
| Other income (expense) :                                       |   |     |       |   |     |   |       |     |   |   |                          |   |   |   |   |   |     |   |   |   |   |   |   |   |
| Interest income                                                |   |     | 3,175      |   |     |   | 2,894      |     |   |   | 281                           |   |   |   | 0.01   | %      |     |   | 0.01 | % |   |   | 0.00 | % |
| Interest  (expense)                                  |   |     | -          |   |     |   | (4,347     | )        |   |   | 4,347                         |   |   |   | 0.00   | %      |     |   | -0.01 | % |   |   | 0.01 | % |
| Foreign currency                                               |   |     | 4,463      |   |     |   | 61,635     |     |   |   | (57,172                       | )      |   |   | 0.02   | %      |     |   | 0.19 | % |   |   | -0.17 | % |
| Total other income                                             |   |     | 7,638      |   |     |   | 60,182     |     |   |   | (52,544                       | )      |   |   | 0.03   | %      |     |   | 0.19 | % |   |   | -0.16 | % |
| Loss  before tax provision                           |   |     | (1,951,993 | )      |     |   | (1,137,062 | )        |   |   | (814,931                      | )      |   |   | -8.42  | %      |     |   | -3.58 | % |   |   | -4.84 | % |
| Deferred tax expense                                           |   |     | 130,538    |   |     |   | -          |     |   |   | 130,538                       |   |   |   | 0.56   | %      |     |   | 0.00 | % |   |   | 0.56 | % |
| Current tax expense                                            |   |     | 99,056     |   |     |   | 100,362    |     |   |   | (1,306                        | )      |   |   | 0.43   | %      |     |   | 0.32 | % |   |   | 0.11 | % |
| Net  loss                                            |   | $        | (2,181,587 | )      |     | $      | (1,237,424 | )        |   | $      | (944,163                      | )      |   |   | -9.41  | %      |     |   | -3.90 | % |   |   | -5.51 | % |

----

|         |   |           |       |   |           |   |       | Increase   |   |   | Increase   |   |   |                   |   |   |   |   |
|--------------|--------|----------------|------------|--------|----------------|--------|------------|------------|--------|--------|------------|--------|--------|------------------------|--------|--------|--------|--------|
|         |   |           |       |   |           |   |       | (decrease) |   |   | (decrease) |   |   | Percentage of sales by |   |
|         |   | Six Months     |       |   | Six Months     |   |       | Dollar     |   |   | dollar     |   |   | geographic region      |   |
|         |   | ended 03/31/11 |       |   | ended 03/31/10 |   |       | Variance   |   |   | variance % |   |   | 2011                   |   |   | 2010   |   |
| The Americas |   | $              | 13,880,329 |   |           | $      | 13,981,230 |       |   | $      | (100,901   | )      |   |                   | -1     | %      |   |   | 60 | % |   |   | 44 | % |
| Europe       |   |           | 8,818,755  |   |           |   | 16,954,082 |       |   |   | (8,135,327 | )      |   |                   | -48    | %      |   |   | 38 | % |   |   | 54 | % |
| Asia         |   |           | 488,024    |   |           |   | 790,125    |       |   |   | (302,101   | )      |   |                   | -38    | %      |   |   | 2 | % |   |   | 2 | % |
| Total        |   | $              | 23,187,108 |   |           | $      | 31,725,437 |       |   | $      | (8,538,329 | )      |   |                   | -27    | %      |   |   | 100 | % |   |   | 100 | % |

|                                          |   | Increase (decrease) |       |
|-----------------------------------------------|--------|--------------------------|------------|
| Decreased sales                               |   | $                        | (3,361,341 | ) |
| Decrease due weaker Euro to USD exchange rate |   |                     | (422,186   | ) |
| Higher gross profit on sales mix              |   |                     | 963,417    |   |
| Change in warranty repair reserve             |   |                     | 150,787    |   |
| Lower production and production related costs |   |                     | 1,149,771  |   |
| Total decrease in gross profit                |   | $                        | (1,519,552 | ) |

|                                                    |   | Increase (decrease) |   |
|---------------------------------------------------------|--------|--------------------------|--------|
| Higher gross profit on sales mix                        |   |                     | 4.01   | % |
| Decrease due to weaker Euro to USD exchange rate        |   |                     | -1.03  | % |
| Change in  warranty  repair reserve |   |                     | 0.65   | % |
| Lower production and production related costs           |   |                     | 0.36   | % |
| Total increase in gross profit percentage               |   |                     | 3.99   | % |

|   | · | Shift in sales to products with a higher average unit sales price resulted in a gross profit percentage increase of 4.01%. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | A decrease in the Euro to USD exchange rate from $1.4306 for the six months ended March 31, 2010 to $1.3636 for the six months ended March 31, 2011 resulted in a gross profit decrease of 1.03%. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Change in warranty repair reserve to reflect changes in estimate based on actual experience resulted in gross profit increase of 0.65% |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Lower production  and production related costs such as building overhead, packaging costs, freight costs and labor costs at a third party facility resulted in a gross profit increase of 0.36%. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              |   | Six months ended March 31, |      |
|-----------------------------------|--------|------------------------------------------------|-----------|
|                              |   | Dollar Costs                              |      |   | Percentage of Sales |   |
|                              |   |                                           |      |   |   |   |   | Increase |   |   |   |   |   |   |   |   | Increase |   |
|                              |   | 2011                                           |      |   | 2010 |   |   | (Decrease) |   |   | 2011 |   |   | 2010 |   |   | (Decrease) |   |
| Sales and marketing-HCW           |   | $                                              | 4,735,515 |   |   | $ | 5,307,047 |   |   | $ | (571,532 | ) |   |   | 20.41 | % |   |   | 16.73 | % |   |   | 3.69 | % |
| Sales and marketing-PCTV          |   |                                           | 197,989   |   |   |   | 237,637 |   |   |   | (39,648 | ) |   |   | 0.85 | % |   |   | 0.75 | % |   |   | 0.10 | % |
| Technical  support      |   |                                           | 219,948   |   |   |   | 244,502 |   |   |   | (24,554 | ) |   |   | 0.95 | % |   |   | 0.77 | % |   |   | 0.18 | % |
| General and administrative-HCW    |   |                                           | 1,500,413 |   |   |   | 1,644,530 |   |   |   | (144,117 | ) |   |   | 6.47 | % |   |   | 5.18 | % |   |   | 1.28 | % |
| General and administrative-PCTV   |   |                                           | 129,408   |   |   |   | 162,214 |   |   |   | (32,806 | ) |   |   | 0.56 | % |   |   | 0.51 | % |   |   | 0.05 | % |
| Amortization of intangible assets |   |                                           | 377,418   |   |   |   | 377,418 |   |   |   | - |   |   |   | 1.63 | % |   |   | 1.19 | % |   |   | 0.44 | % |
| Stock compensation                |   |                                           | 127,884   |   |   |   | 136,912 |   |   |   | (9,028 | ) |   |   | 0.55 | % |   |   | 0.43 | % |   |   | 0.12 | % |
| Total                             |   | $                                              | 7,288,575 |   |   | $ | 8,110,260 |   |   | $ | (821,685 | ) |   |   | 31.42 | % |   |   | 25.56 | % |   |   | 5.86 | % |

|                                    |   | Six months ended March 31, |    |
|-----------------------------------------|--------|------------------------------------------------|---------|
|                                    |   | 2011                                           |    |   | 2010 |   |
| Tax expense on international operations |   | $                                              | 79,056  |   |   | $ | 80,362 |   |
| State taxes                             |   |                                           | 20,000  |   |   |   | 20,000 |   |
| Deferred tax expense                    |   |                                           | 130,538 |   |   |   | - |   |
| Tax provision                           |   | $                                              | 229,594 |   |   | $ | 100,362 |   |

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|                       |   | March 31, 2011 |      |   | September 30, 2010 |   |
|----------------------------|--------|--------------------------|-----------|--------|------------------------------|--------|
| Cash                       |   | $                        | 5,455,432 |   |                         | $      | 7,057,904 |   |
| Working Capital            |   |                     | 3,396,414 |   |                         |   | 4,777,442 |   |
| Stockholders’ Equity |   |                     | 8,229,173 |   |                         |   | 9,980,642 |   |

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|                                                                    |   | Operating  |       |   | Investing  |   |    | Financing  |   |   |   |   |
|-------------------------------------------------------------------------|--------|------------|------------|--------|------------|--------|---------|------------|--------|--------|--------|--------|
|                                                                    |   | Activities |       |   | Activities |   |    | Activities |   |   | Total  |   |
| Sources of cash:                                                        |   |       |       |   |       |   |    |       |   |   |   |   |   |   |   |   |
| Decrease in accounts receivable and other non trade Receivables         |   | $          | 2,511,053  |   |       | $      | -       |       |   | $      | -      |   |   | $ | 2,511,053 |   |
| Proceeds from employee stock purchases                                  |   |       | -          |   |       |   | -       |       |   |   | 46,798 |   |   |   | 46,798 |   |
| Effect of exchange rates on cash                                        |   |       | 31,299     |   |       |   | -       |       |   |   | -      |   |   |   | 31,299 |   |
| Total sources of cash                                                   |   |       | 2,542,352  |   |       | $      | -       |       |   |   | 46,798 |   |   |   | 2,589,150 |   |
| Less cash used for:                                                     |   |       |       |   |       |   |    |       |   |   |   |   |   |   |   |   |
| Decrease  in  accounts payable and accrued expenses |   |       | (1,839,717 | )      |       |   | -       |       |   |   | -      |   |   |   | (1,839,717 | ) |
| Net loss adjusted for non cash items                                    |   |       | (1,337,983 | )      |       |   | -       |       |   |   | -      |   |   |   | (1,337,983 | ) |
| Increase in inventory                                                   |   |       | (797,091   | )      |       |   | -       |       |   |   | -      |   |   |   | (797,091 | ) |
| Increase in prepaid expenses and other current assets              |   |       | (187,525   | )      |       |   | -       |       |   |   | -      |   |   |   | (187,525 | ) |
| Capital equipment purchases                                             |   |       | -          |   |       |   | (29,306 | )          |   |   | -      |   |   |   | (29,306 | ) |
| Total  cash usage                                             |   |       | (4,162,316 | )      |       |   | (29,306 | )          |   |   | -      |   |   |   | (4,191,622 | ) |
| Net cash decrease                                                       |   | $          | (1,619,964 | )      |       | $      | (29,306 | )          |   | $      | 46,798 |   |   | $ | (1,602,472 | ) |

|                        |   | Payments due by period |    |
|-----------------------------|--------|---------------------------------------|---------|
|                        |   | Total                                 |    |   | Less than 1 year |   |   | 1-3 years |   |   | 3 to 5 years |   |
| Operating lease obligations |   | $                                     | 939,658 |   |   | $ | 516,158 |   |   | $ | 394,031 |   |   | $ | 29,469 |   |

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| 3.1    |   | Certificate of Incorporation (1)                                                                                                                                                                                                     |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                 |
| 3.1.1  |   | Certificate of Amendment of the Certificate of Incorporation, dated July 14, 2000 (2)                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                 |
| 3.2    |   | By-laws, as amended to date (3)                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                 |
| 4.1    |   | Form of Common Stock Certificate (1)                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                 |
| 31.1   |   | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                              |
|   |   |                                                                                                                                                                                                                                 |
| 31.2   |   | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                              |
|   |   |                                                                                                                                                                                                                                 |
| 32     |   | Certification 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 |

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|   |    |     |
|--------|--------------|--------------------|

|   | (1) | Denotes document filed as an Exhibit to our Registration Statement on Form SB-2 (No. 33- 85426), as amended, effective January 10, 1995 and incorporated herein by reference. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Denotes document filed as an Exhibit to our Form 10-K for the period ended September 30, 2006, and incorporated herein by reference. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Denotes document filed as an Exhibit to our Form 8-K dated December 26, 2007 and incorporated herein by reference. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------|

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|   |                    |   |   | HAUPPAUGE DIGITAL INC.                         |
|--------|-------------------------|--------|--------|------------------------------------------------|
|   |                    |   |   |                                           |
| Date:  | May  13, 2011 |   | By:    | /s/Kenneth Plotkin                             |
|   |                    |   |   | KENNETH  PLOTKIN                     |
|   |                    |   |   | Chief Executive Officer, Chairman of the       |
|   |                    |   |   | Board, President (Principal Executive Officer) |
|   |                    |   |   |                                           |
| Date:  | May  13, 2011 |   | By:    | /s/Gerald Tucciarone                           |
|   |                    |   |   | GERALD TUCCIARONE                              |
|   |                    |   |   | Treasurer, Chief Financial Officer,            |
|   |                    |   |   | (Principal Financial Officer and Principal     |
|   |                    |   |   | Accounting Officer) and Secretary              |

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