UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20459
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to __________
Commission file number 1-13550
-------
HAUPPAUGE DIGITAL, INC.
-----------------------
(Exact name of registrant as specified in its charter)
DELAWARE 11-3227864
-------- ----------
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
91 Cabot Court, Hauppauge, New York 11788
-----------------------------------------
(Address of principal executive offices)
(516) 434-1600
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
YES X NO
---- -----
As of May 7, 1996, 2,756,183 shares of .01 par value Common Stock of
the registrant were outstanding.
Index Schedule found on Page No. 14
Page 1 of 16 pages.
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<PAGE>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
----------------------------------------
INDEX
-----
Page No.
--------
PART I. FINANCIAL INFORMATION
- -----------------------------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-
March 31, 1996 and September 30, 1995 3
Condensed Consolidated Statements of Operations-
Six Months ended March 31, 1996 and 1995 4
Condensed Consolidated Statements of Operations-
Three Months ended March 31, 1996 and 1995 5
Condensed Consolidated Statements of Cash Flows-
Six Months ended March 31, 1996 and 1995 6
Notes to Condensed Consolidated Financial
Statements 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-13
PART II. OTHER INFORMATION
- --------------------------
Item 6. Exhibits and Reports on Form 8-K 14-15
SIGNATURES 16
- ----------
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
- -----------------------------
Item 1. Financial Statements
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
As of
March 31, 1996 As of
(Unaudited) September 30, 1995
--------------- -----------------
CURRENT ASSETS:
Cash and Cash Equivalents.......... $566,002 $1,214,940
Accounts receivable, net of
allowance for doubtful accounts . 955,106 1,146,865
Inventories (Note 2)............... 2,534,896 2,187,981
Prepaid expenses and other
current assets................... 233,064 192,689
----------- ----------
Total current assets..... 4,289,068 4,742,475
----------- -----------
Property, plant and equipment-
-at cost 358,157 334,443
Less: Accumulated depreciation
and amortization................. 210,300 193,188
------- -------
147,857 141,255
----------- ----------
SECURITY DEPOSITS AND OTHER ASSETS...... 60,550 62,085
----------- ----------
$4,497,475 $4,945,815
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable................... 1,706,645 2,645,268
Accrued expenses................... 831,403 625,174
----------- ----------
Total current liabilities..... 2,538,048 3,270,442
----------- ---------
SHAREHOLDERS' EQUITY
Common stock $.01 par value;
10,000,000 shares authorized,
2,756,183 issued and outstanding
as of March 31, 1996 and
September 30, 1995................ 27,562 27,562
Additional paid-in capital .........4,141,343 4,141,343
Accumulated deficit................(2,209,478) (2,493,532)
----------- ----------
1,959,427 1,675,373
------------ ----------
$4,497,475 $4,945,815
============ ==========
See notes to condensed consolidated financial statements
-3-
<PAGE>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS AND OPERATIONS
For the Six For the Six
Months Ended Months Ended
March 31, 1996 March 31, 1995
(Unaudited) (Unaudited)
--------------- --------------
NET SALES.................... $8,239,378 $5,120,026
COST OF SALES................ 6,264,755 3,990,929
--------------- --------------
Gross Profit............ 1,974,623 1,129,097
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.. 1,493,174 1,316,590
RESEARCH & DEVELOPMENT EXPENSES. 201,270 89,391
--------------- -------------
Income, (loss) from operations 280,179 (276,884)
OTHER INCOME (EXPENSE):
Interest Expense, net..... 15,858 (5,333)
Private Placement financing
costs (Note 4)....... - (572,674)
Miscellaneous Income...... 8,017 28,699
-------------- --------------
Income, (loss) before
income tax provision.. 304,054 (826,192)
INCOME TAX PROVISION (Note 5).. 20,000 -
-------------- --------------
Net income, (loss) $284,054 ($826,192)
============== ===============
Net income, (loss) per share.... $ 0.10 ($0.41)
============== ===============
Weighted average shares
outstanding (Note 3)....... 2,756,183 2,007,623
============= =========
See notes to condensed consolidated financial statements
-4-
<PAGE>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS AND OPERATIONS
For the Three For the Three
Months Ended Months Ended
March 31, 1996 March 31, 1995
(Unaudited) (Unaudited)
--------------- --------------
NET SALES.................... $3,729,161 $2,966,220
COST OF SALES................ 2,795,946 2,310,930
--------------- --------------
Gross Profit............ 933,215 655,290
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.. 746,114 700,031
RESEARCH & DEVELOPMENT EXPENSES. 107,393 47,613
--------------- -------------
Income, (loss) from operations 79,708 (92,354)
OTHER INCOME (EXPENSE):
Interest income,(expense)net. 6,042 8,260
Miscellaneous Income...... 5,677 25,029
-------------- --------------
Income, (loss) before
income tax provision.. 91,427 (59,065)
INCOME TAX PROVISION (Note 5).. 10,000 -
-------------- --------------
Net income, (loss) $ 81,427 ($ 59,065)
============== ===============
Net income, (loss) per share.... $ 0.03 ($0.02)
============== ===============
Weighted average shares
outstanding (Note 3)....... 2,756,183 2,622,850
============== ===============
See notes to condensed consolidated financial statements
-5-
<PAGE>
<PAGE>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six For the Six
Months Ended Months Ended
March 31, 1996 March 31, 1995
(Unaudited) (Unaudited)
-------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income, (loss).............. $284,054 ($826,192)
-------- ----------
Adjustments to reconcile net income,
(loss) to net cash (used in)
provided by operating activities:
Depreciation and amortization.... 18,646 15,003
Provision for uncollectible accounts
receivable....................... 10,000 21,000
Provision for system board obsolescence. 28,000 55,000
Private placement financing costs .. - 572,674
Rent expense funded by
principal shareholders......... - -
Increase (decrease) in cash resulting
from changes in operating assets
and liabilities:
Accounts receivable................. 181,759 (444,378)
Inventories......................... (374,915) (1,360,809)
Prepaid expenses and other
current assets................. (40,375) (134,760)
Accounts payable.................... (938,622) 848,855
Accrued expenses.................... 206,229 140,342
--------- ---------
(909,278) (287,073)
--------- ---------
Net cash used in operating
activities..................... (625,224) (1,113,265)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of machinery and equipment. (23,714) -
Purchase of software rights.......... - (13,156)
Security deposits.................... - (483)
-------- -----
Net cash used in investing
activities................ (23,714) (13,639)
-------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from private placement
offering............................. - 477,304
Net proceeds from Initial Public Offering. - 3,267,023
Principal payment on bank loan............ - (395,000)
Principal payment on private placement
bridge loan.......................... - (600,000)
---------- ---------
Net cash provided by financing
activities........................... 0 2,749,327
---------- ---------
Net increase (decrease) in cash and
cash equivalents...................... (648,938) 1,622,423
CASH AND CASH EQUIVALENTS,
beginning of period................... 1,214,940 151,408
---------- ---------
CASH AND CASH EQUIVALENTS,
end of period......................... $566,002 $1,773,831
========== ==========
SUPPLEMENTAL DISCLOSURES:
Interest paid.............................. - $43,667
=========== ==========
Income taxes paid.......................... $8,182 $19,163
=========== ============
See notes to condensed consolidated financial statements
<PAGE>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
included herein have been prepared in accordance with generally accepted
accounting principles for interim period reporting in conjunction with the
instructions to Form 10-QSB. Accordingly, these statements do not include
all of the information required by generally accepted accounting principles
for annual financial statements, and are subject to year-end adjustments.
In the opinion of management, all known adjustments (consisting of normal
recurring accruals and reserves) necessary to present fairly the quarterly
financial results for the period have been included. It is suggested that
these interim statements be read in conjunction with the financial
statements and related notes included in the Company's September 30, 1995
Form 10-KSB.
The operating results for the three months and six months ended March
31, 1996 are not necessarily indicative of the results to be expected for
the September 30, 1996 year end.
NOTE 2. INVENTORIES
Inventories have been valued at the lower of average cost or market.
The components of inventory at March 31, 1996 and September 30, 1995 consist
of:
March 31, September 30,
1996 1995
Component Parts $ 855,994 $ 738,846
Work in Progress 1,129,250 974,706
Finished Goods 549,652 474,429
---------- ----------
$2,534,896 $2,187,981
========== ==========
NOTE 3. NET INCOME (LOSS) PER SHARE
Net income and loss per share have been computed on the basis of
weighted average common shares outstanding for each period presented.
-7-
<PAGE>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Net income (loss) per share - continued
Weighted average shares outstanding listed below were used in the per
share computation:
Three Months Ended Six Months Ended
March 31, March 31,
1996 1995 1996 1995
---- ---- ---- ----
2,756,183 2,622,850 2,756,183 2,007,623
During the quarter ended March 31, 1996, the Company's stock did not trade
at an average price that was in excess of the exercise price for the
Company's Class A warrants. Therefore, the warrants, which in certain
circumstances are considered as a component of weighted average shares
outstanding, were not included in the calculation of weighted average
shares. The Company has 1,476,183 Class A Warrants outstanding, exercisable
at $3.75 per share, commencing January 10, 1996 and expiring on January 9,
2000.
NOTE 4. PRIVATE PLACEMENT FINANCING COSTS
Through a private placement offering consummated on October 12, 1994,
for gross proceeds of $600,000, the Company issued $600,000 in principal
amount of promissory notes bearing interest at 5% per annum and such number
of units comprised of the Company's common stock and class A redeemable
common stock purchase warrants as shall equal $18,750 divided by the IPO
unit price of $3.15. The resulting 142,850 units of common stock is
determined by dividing $18,750 by the offering price of $3.15 per unit and
multiplying that result by 24 private placement units ($600,000 divided by
$25,000 per unit), rounded to exclude fractional shares. These units were
issued in conjunction with the Company's January 10, 1995 initial public
offering (IPO). The promissory notes were subject to mandatory repayments.
On January 17, 1995, the $600,000 plus accrued interest of $7,910 was
repaid. All the units issued to the former noteholders were registered with
the Securities and Exchange Commission concurrently with the IPO.
It was the opinion of management, based on certain factors such as: 1)
the nature of the borrowing, 2) the Company's financial position and 3) the
economic environment, that the 5% interest rate on the promissory notes did
not reflect the effective financing costs when considering the value of the
units of common stock and warrants issued. Accordingly, $449,978 (the value
of 142,850 units at the IPO price of $3.15) was charged to operations under
the caption "Private Placement Financing Costs" in the quarter ended
December 31, 1994. Additionally, $122,696 of fees and costs relating to the
private placement were charged to operations within the same caption in the
quarter ended December 31, 1994.
-8-
<PAGE>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5. INCOME TAXES
Income taxes are based on annualized statutory rates for federal and
state income taxes. The provision for income taxes reflects the effect of
restricted and unrestricted net operating loss carryforwards adjusted for
the applicable federal and state alternative minimum tax provisions.
NOTE 6. LINE OF CREDIT
On March 28, 1996, Hauppauge Computer Works, Inc, a wholly owned
subsidiary of Hauppauge Digital, Inc., entered into a Credit Agreement with
the MTB Bank. The Credit Agreement provides for, among other things, a two
year asset based line of credit, whereby the Company may borrow up to
$1,100,000, which increases to $1,600,000 upon receipt of the Company's
audited September 30, 1996 consolidated financial statements. Advances shall
be made on a revolving basis based on 70% of eligible domestic and foreign
receivables not older than 90 days. The Agreement provides that foreign
receivables must be credit insured, except for Reuters, which the MTB Bank
has verbally agreed to exclude from the credit insurance provision. Upon
satisfactory review of the Company's September 30, 1996 financial and
accounts receivable performance, the advance rate for eligible credit
insured foreign receivables will increase to 80%. An interest rate of 2 1/2
% above MTB's prime commercial lending rate on a floating basis will be
charged on all advances. The credit line is secured by the assets of the
Company. In addition, the Company, HCW Distributing Corp., Hauppauge
Computer Works GmbH, Hauppauge Computer Works Ltd., Kenneth R. Aupperle and
Kenneth Plotkin, have guaranteed the obligations of Hauppauge Computer
Works, Inc.. The quarantees of Messrs. Aupperle and Plotkin are each limited
to of 20% of the borrowings outstanding with a cap of $150,000 each and a
minimum of $50,000. The loan requires the Company to maintain a consolidated
net worth of $1,750,000 until September 30, 1996 and $2,000,000 thereafter.
If the Company does not meet the requirements of these and other existing
covenants, the Company will be in default per the Credit Agreement. The
Company is prohibited from paying cash dividends during the term of the
Credit Agreement. As of March 31, 1996, the Company has not utilized this
loan facility.
-9-
<PAGE>
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
Results of Operations
- ---------------------
Six Month Period ended March 31, 1996 versus March 31, 1995
- -----------------------------------------------------------
Sales for the six months ended March 31, 1996 were $8,239,378, compared to
$5,120,026 for the comparable period in the prior fiscal year, resulting in
an increase of $3,119,352 or 61%. The increase in sales was primarily due
to the investment of the IPO proceeds during the prior fiscal year in
increased marketing and production capabilities. The ability of the Company
to procure additional inventory and expand production sources enabled the
Company to gain market share and meet the increased sales demand.
Net sales of the Company's products are summarized as follows:
Six Months Ended March 31, Increase
1996 1995 (Decrease)%
---- ---- -----------
P.C. System Sales $ 845,588 $ 581,335 45
Win/TV Boards 7,393,790 4,538,691 63
---------- ---------- --
Total Company Sales $8,239,378 $5,120,026 61
========== ==========
Unit sales of Win/TV boards, the Company's digital video TV board, increased
to approximately 33,200 as compared to approximately 16,400 for the prior
year, resulting in an increase of 102%. Sales to domestic customers for the
six month period were 38% of net sales for the current year and 34% for the
prior year. Sales to international customers, which were primarily in U.S.
Dollars, were 62% of net sales for the current year and 66% for the
comparable period of last year.
Gross profit increased to $1,974,623 from $1,129,097, an increase of
$845,526 or 75% over the prior comparable fiscal year period. The gross
profit percentage increased to 24% from 22%. The increase in the margin
percentage was due to lower component costs resulting from the economies
gained by purchasing larger volumes of inventory plus fixed production costs
absorbed over a greater number of units, which lowered the labor costs per
unit.
Though selling, general and administrative expenses increased $176,584
over the prior year, they declined to 18% of revenue in the current year
compared to 26% of revenue for the six months ended March 31, 1995. The
increase in expenses was primarily due to increased sales and marketing
expenses of $207,316, mainly due to intensified marketing programs for
advertising and trade shows plus increased commissions because of higher
sales, increased general and administrative of $47,626, mainly for increased
compensation costs for new personnel and wage increases offset by $42,726 in
lower support and freight costs.
-10-
<PAGE>
ITEM 2. Management's Discussion and Analysis-Continued
- ---------------------------------------------------------
Research and development expenses increased $111,879 or approximately
125%. The increase was due to the infusion of new capital from the Company's
January 1995 IPO, which was used to expand the Company's engineering research
and development resources to enhance current products and further develop
future product lines.
The Company had net other income of $23,875 for the March 31, 1996 six
month period as opposed to net other expense of $549,308 for the
corresponding six months of the preceding fiscal year. The increase in net
other income was primarily due to the non recurring private placement
financing costs of $572,674 charged to operations in the first fiscal quarter
of 1995 plus higher interest income.
As a result of all of the above, the Company recorded a net profit after
taxes for the six months ended March 31, 1996 of $284,054 or $0.10 per share
as opposed to a net loss after taxes (which taxes for the prior year were
nominal) of ($826,192) or ($0.41) per share.
Three Month Period ended March 31, 1996 versus March 31, 1995
- -------------------------------------------------------------
Net sales for the three months ended March 31, 1996 were $3,729,161,
compared to $2,966,220 for the comparable period in the prior fiscal year,
resulting in an increase of $762,941 or 26%. The increase in sales was
primarily due to the investment of the IPO proceeds during the prior fiscal
year in increased marketing and production capabilities. The ability of the
Company to procure additional inventory and expand production sources enabled
the Company to gain market share and meet the increased sales demand.
Net sales of the Company's products are summarized as follows:
Three Months Ended March 31, Increase
1996 1995 (Decrease)%
---- ---- -----------
P.C. System Sales $ 443,012 $ 303,824 46
Win/TV Boards 3,286,149 2,662,396 23
---------- ---------- --
Total Company Sales $3,729,161 $2,966,220 26
========== ===========
Unit sales of Win/TV boards, the Company's digital video TV card, increased
to approximately 13,200 as compared to approximately 9,104 for the prior
year, resulting in an increase of 45%. Sales to domestic customers for the
three month period were 43% of net sales for the current year and 32% for the
prior year. Sales to international customers, which were primarily in U.S.
Dollars, were 57% of net sales for the current year and 68% for the
comparable period of last year.
-11-
<PAGE>
ITEM 2. Management's Discussion and Analysis-Continued
- ---------------------------------------------------------
Fiscal 1996 second quarter sales were approximately 17% lower than sales
for the first fiscal quarter. Sales for the fiscal first quarter were
impacted by the surge of consumer buying during the holiday season. The
general slowdown of consumer purchases after the holiday season, which causes
distributors and retailers to curtail purchases and sell off existing
inventories, resulted in the lower fiscal second quarter sales as compared
to the fiscal first quarter.
Gross profit increased to $933,215 from $655,290, an increase of
$277,925 or 42% over the prior comparable fiscal year period. The gross
profit percentage increased to 25% from 22%. The increase in the margin
percentage was due to lower component costs resulting from the economies
gained by purchasing larger volumes of inventory plus fixed production costs
absorbed over a greater number of units, which lowered the labor costs per
unit.
Though selling, general and administrative expenses increased $46,083
over the prior year, they declined to 20% of revenue in the current quarter
compared to 24% of revenue for the three months ended March 31, 1995. The
increase in expenses was primarily due to increased sales and marketing
expenses of $94,469, mainly due to intensified marketing programs for
advertising and trade shows plus increased commissions because of higher
sales offset by $34,179 in lower support and freight costs.
Research and development expenses increased $59,780 or approximately
126%. The increase was due to the infusion of new capital from the Company's
January 1995 IPO, which was used to expand the Company's engineering research
and development resources to enhance current products and further develop
future product lines.
The Company had net other income of $11,719 for the March 31, 1996
three month period compared to net other income of $33,289 for the
corresponding three months of the preceding fiscal year. The decrease in net
other income from the same quarter in the prior year was due to lower foreign
currency gains and lower interest earned on excess funds.
As a result of all of the above, the Company recorded a net profit after
taxes for the three months ended March 31, 1996 of $81,427 or $0.03 per share
as opposed to a net loss after taxes (which taxes for the prior year were
nominal) of ($59,065) or ($0.02) per share.
-12-
<PAGE>
ITEM 2. Management's Discussion and Analysis-Continued
- ---------------------------------------------------------
Liquidity and Capital Resources
- -------------------------------
The Company had a net cash position of $566,002, working capital of
$1,751,019 and shareholders' equity of $1,959,427 as of March 31, 1996. For
the six months ended March 31, 1996, $625,224 was used to fund operating
activities. The major components of cash usage were $374,915 invested in
inventories and $732,393 used to reduce current vendor liabilities, offset
partially by a $181,759 reduction in customer accounts receivable and cash
derived from the six month profit of $284,054.
On March 28, 1996, Hauppauge Computer Works, Inc, a wholly owned
subsidiary of Hauppauge Digital, Inc., entered into a Credit Agreement with
the MTB Bank. The Credit Agreement provides for, among other things, a two
year asset based line of credit, whereby the Company may borrow up to
$1,100,000, which increases to $1,600,000 upon receipt of the Company's
audited September 30, 1996 consolidated financial statements. Advances shall
be made on a revolving basis based on 70% of eligible domestic and foreign
receivables not older than 90 days. The Agreement provides that foreign
receivables must be credit insured, except for Reuters, which the MTB Bank
has verbally agreed to exclude from the credit insurance provision. Upon
satisfactory review of the Company's September 30, 1996 financial and
accounts receivable performance, the advance rate for eligible credit insured
foreign receivables will increase to 80%. An interest rate of 2 1/2 % above
MTB's prime commercial lending rate on a floating basis will be charged on
all advances. The credit line is secured by the assets of the Company. In
addition, the Company, HCW Distributing Corp., Hauppauge Computer Works GmbH,
Hauppauge Computer Works Ltd., Kenneth R. Aupperle and Kenneth Plotkin, have
guaranteed the obligations of Hauppauge Computer Works, Inc.. The quarantees
of Messrs. Aupperle and Plotkin are each limited to of 20% of the borrowings
outstanding with a cap of $150,000 each and a minimum of $50,000. The loan
requires the Company to maintain a consolidated net worth of $1,750,000 until
September 30, 1996 and $2,000,000 thereafter. If the Company does not meet
the requirements of these and other existing covenants, the Company will be
in default per the Credit Agreement. The Company is prohibited from paying
cash dividends during the term of the Credit Agreement. As of March 31, 1996,
the Company has not utilized this loan facility.
The Company believes that its recently completed bank financing plus its
internally generated cash flow will be sufficient to satisfy the Company's
anticipated operating needs for a least the ensuing twelve months.
-13-
<PAGE>
PART II. OTHER INFORMATION
- ---------------------------
Item 4 Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The following propositions were submitted to the shareholders for
approval at the annual meeting of shareholders held on March 5, 1996 at 10:00
a.m. at the offices of the Company and were approved as indicated:
No. 1: ELECTION OF DIRECTORS
To serve for the term continuing through the next annual meeting and
until the election and qualification of their respective successors.
FOR WITHHELD
--- --------
Kenneth R. Aupperle 2,642,389 8,350
Kenneth Plotkin 2,642,389 8,350
Laura Aupperle 2,641,039 9,700
Dorothy Plotkin 2,641,039 9,700
Leonard Neuhaus 2,410,697 240,042
No. 2: Proposal to approve the adoption of the 1996 Non-Qualified Stock
Option Plan in the form attached to the proxy statement.
FOR 1,639,329 AGAINST 219,975 ABSTAIN 4,000
No. 3: Proposal to ratify the appointment of BDO Seidman, LLP Certified
Public Accountants, as the independent auditors to examine the financial
statements of the Company for the fiscal year ended September 30, 1996.
FOR 2,644,489 AGAINST 5,750 ABSTAIN 500
Item 5 Other Information
-----------------
On March 28, 1996 Hauppauge Computer Works, Inc., the Company's wholly
owned subsidiary, entered into a credit facility with the MTB Bank. The
credit facility provides for, among other things, a two year line of credit
whereby the Company may borrow up to $1,100,000, which sum shall increase to
$1,600,000 upon receipt by the bank of the Company's September 30, 1996
consolidated financial statements, with interest payable at 2 1/2% above the
bank's prime commercial lending rate and subject to the terms of the loan
agreements with the bank. See Exhibit 10.13 for a copy of the credit
agreement between MTB Bank and Hauppauge Computer Works, Inc..
-14-
<PAGE>
PART II. OTHER INFORMATION-CONTINUED
- -------------------------------------
Item 6 Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
- ------------
10.13 Credit Agreement between MTB Bank and Hauppauge Computerworks, Inc.,
dated March 28, 1996 which is incorporated by reference to Exhibit 10.13 of
the Post-Effective Amendment #3 to the Registration Statement on Form SB-2.
(b) Reports on Form 8-K
- -----------------------
None
-15-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HAUPPAUGE DIGITAL, INC.
-----------------------
Registrant
Date: May 7, 1996 By /s/ KENNETH PLOTKIN
----------- --------------------
KENNETH PLOTKIN
Vice President and
Chief Executive Officer
Date: May 7, 1996 By /s/ GERALD TUCCIARONE
----------- ----------------------
GERALD TUCCIARONE
Treasurer and Chief
Financial Officer
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1996 SEP-30-1995
<PERIOD-END> MAR-31-1996 MAR-31-1995
<CASH> 566,002 1,214,940
<SECURITIES> 0 0
<RECEIVABLES> 955,106 1,146,865
<ALLOWANCES> 68,858 62,000
<INVENTORY> 2,534,896 2,187,981
<CURRENT-ASSETS> 4,289,068 4,742,475
<PP&E> 358,157 334,443
<DEPRECIATION> 210,300 193,188
<TOTAL-ASSETS> 4,497,475 4,945,815
<CURRENT-LIABILITIES> 2,538,048 3,270,442
<BONDS> 0 0
27,562 27,562
0 0
<COMMON> 0 0
<OTHER-SE> 1,931,865 1,647,811
<TOTAL-LIABILITY-AND-EQUITY> 4,497,475 4,945,815
<SALES> 8,239,378 5,120,026
<TOTAL-REVENUES> 8,239,378 5,120,026
<CGS> 6,264,755 3,990,929
<TOTAL-COSTS> 1,694,444 1,405,981
<OTHER-EXPENSES> 23,875 531,614
<LOSS-PROVISION> 10,000 21,000
<INTEREST-EXPENSE> 0 17,694
<INCOME-PRETAX> 304,054 (826,192)
<INCOME-TAX> 20,000 0
<INCOME-CONTINUING> 284,054 (826,192)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 284,054 (826,192)
<EPS-PRIMARY> .10 (.41)
<EPS-DILUTED> .10 (.41)
</TABLE>
