UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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, 1998
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 SMALL BUSINESS ISSUER 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)
(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 Exchange Act 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 4, 1998, 4,416,202 shares of .01 par value Common Stock of the
registrant were outstanding, not
including treasury shares
Index schedule found on Page No. 15
Page 1 of 16 pages.
-1-
<PAGE>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1.Financial Statements
Condensed Consolidated Balance Sheets-
March 31, 1998 and September 30, 1997 3
Condensed Consolidated Statements of Income-
Six Months ended March 31, 1998 and 1997 4
Condensed Consolidated Statements of Income-
Three Months ended March 31, 1998 and 1997 5
Condensed Consolidated Statements of Cash Flows-
Six Months ended March 31, 1998 and 1997 6
Notes to Condensed Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of Financial Condition 10-14
and Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on form 8-K 15
SIGNATURES 16
-2-
<PAGE>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
March 31,
1998 September 30,
(Unaudited) 1997
---------------- ----------------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $6,055,666 $5,602,412
Accounts receivable, net of allowance for doubtful accounts 2,846,932 3,194,128
Inventories (Note 2) 4,368,965 4,844,366
Prepaid expenses and other current assets 475,203 553,540
---------------- ----------------
Total current assets 13,746,766 14,194,446
Property, plant and equipment-at cost 638,614 494,220
Less: Accumulated depreciation and amortization 307,412 276,832
---------------- ----------------
331,202 217,388
---------------- ----------------
Security deposits and other non current assets 58,373 59,470
---------------- ----------------
$14,136,341 $14,471,304
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY :
CURRENT LIABILITIES:
Accounts payable $2,911,809 $4,403,787
Accrued expenses 1,489,565 1,100,745
---------------- ----------------
Total current liabilities 4,401,374 5,504,532
---------------- ----------------
SHAREHOLDERS' EQUITY
Common stock $.01 par value; 10,000,000 shares authorized, 4,485,802 and
4,465,302 issued as of March 31, 1998 and September 30, 1997 44,858 44,653
respectively
Additional paid-in capital 10,418,175 10,344,844
Accumulated deficit (429,067) (1,228,772)
Treasury Stock, at cost, 81,200 and 59,200 shares respectively (Note 5) (298,999) (193,953)
---------------- ----------------
9,734,967 8,966,772
---------------- ----------------
$14,136,341 $14,471,304
================ ================
</TABLE>
See accompanying notes to consolidated financial statements
-3-
<PAGE>
<TABLE>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Six months Six months
ended ended
March 31, March 31,
1998 1997
(Unaudited) (Unaudited)
----------------- ------------------
<S> <C> <C>
NET SALES $17,401,235 $12,852,113
COST OF SALES 13,192,004 9,895,261
----------------- ------------------
Gross Profit 4,209,231 2,956,852
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,849,464 2,014,286
RESEARCH & DEVELOPMENT EXPENSES 348,281 239,399
----------------- ------------------
Income from operations 1,011,486 703,167
OTHER INCOME (EXPENSE):
Interest income 120,395 127,773
Other, net 60,639 (11,503)
----------------- ------------------
Income before income tax provision 1,192,520 819,437
INCOME TAX PROVISION (Note 4) 392,815 185,927
----------------- ------------------
Net income $799,705 $633,510
----------------- ------------------
----------------- ------------------
Net income per share-basic (Note 3) $0.18 $0.14
Net income per share-diluted (Note 3) $0.18 $0.14
================= ==================
</TABLE>
See accompanying notes to consolidated financial statements
-4-
<PAGE>
<TABLE>
<CAPTION>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three months Three months
ended ended
March 31, March 31,
1998 1997
(Unaudited) (Unaudited)
------------------ -----------------
<S> <C> <C>
NET SALES $7,825,490 $6,305,925
COST OF SALES 5,956,060 4,977,971
------------------ -----------------
Gross Profit 1,869,430 1,327,954
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,327,545 1,010,624
RESEARCH & DEVELOPMENT EXPENSES 174,018 130,650
------------------ -----------------
Income from operations 367,867 186,680
OTHER INCOME (EXPENSE):
Interest income 59,849 56,709
Other, net 19,910 (4,818)
------------------ -----------------
Income before income tax provision 447,626 238,571
INCOME TAX PROVISION (Note 4) 147,000 55,000
------------------ -----------------
Net income $300,626 $183,571
------------------ -----------------
Net income per share-basic (Note 3) $0.07
$0.04
Net income per share-diluted (Note 3) $0.07
$0.04
================ ================
See accompanying notes to consolidated financial statements
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months Six months
ended ended
March 31, March 31,
1998 1997
(Unaudited) (Unaudited)
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $799,705 $633,510
------------------ ------------------
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 31,674 21,264
Provision for uncollectible accounts receivable 10,000 5,500
Provision for system board obsolescence 50,000 20,000
Compensation paid in stock 29,656 -
Changes in curent assets and liabilities:
Accounts receivable 337,199 98,264
Inventories 425,401 (3,113,262)
Prepaid expenses and other current assets 78,337 (170,262)
Accounts payable (1,491,978) 1,571,459
Accrued expenses 388,820 169,696
------------------ ------------------
(140,891) (1,397,341)
------------------ ------------------
Net cash provided by (used in) operating activities 658,814 (763,831)
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (144,394) (58,819)
------------------ ------------------
Net cash used in investing activities (144,394) (58,819)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (105,046) (155,879)
Proceeds from the exercise of stock options 43,880 -
------------------ ------------------
Net cash used by financing activities (61,166) (155,879)
------------------ ------------------
Net increase (decrease) in cash and cash equivalents 453,254 (978,529)
CASH AND CASH EQUIVALENTS, beginning of period 5,602,412 6,559,175
------------------ ------------------
CASH AND CASH EQUIVALENTS, end of period $6,055,666 $5,580,646
================== ==================
SUPPLEMENTAL DISCLOSURES:
Income taxes paid $36,062 $10,087
================== ==================
See accompanying notes to consolidated financial statements
</TABLE>
-6-
<PAGE>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
included herein have been prepared in accordance with generally accepted
accounting principles for interim period reporting in conjunction with the
instructions to Form 10-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, 1997 Form 10-KSB.
The operating results for the three months and six months March 31,
1998 are not necessarily indicative of the results to be expected for the
September 30, 1998 year end.
NOTE 2. INVENTORIES
Inventories have been valued at the lower of average cost or market.
The components of inventory at March 31, 1998 and September 30, 1997 consist of:
March 31, September 30,
1998 1997
---- ----
Component Parts $ 1,231,460 $ 1,545,790
Work in Progress 954,794 2,181,249
Finished Goods 2,182,711 1,117,327
----------- -----------
$ 4,368,965 $ 4,844,366
=========== ===========
NOTE 3. NET INCOME PER SHARE
In 1997, The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards Number 128, "Earnings per Share." Statement
128 replaced the previously reported primary and fully diluted earnings per
share. Unlike primary earnings per share, basic earnings per share excludes
any dilutive effects of options, warrants and convertible securities.
Diluted earnings per share is very similar to the previously reported fully
diluted earnings per share. Net income per share amounts for the three
months and six months ended March 31, 1998 and 1997 have been presented or,
as in the case of the prior year, restated to conform to Statement 128
requirements. Conformity to Statement 128 did not have a material affect on
the previous year's reported second quarter and year to date earnings per
share.
-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 basic
and diluted per share computation:
Three Months Ended
March 31,
1998 1997
---- ----
Weighted average shares outstanding-basic 4,400,524 4,435,580
Common stock equivalents 148,965 7,521
---------- ----------
Weighted average shares outstanding-diluted 4,549,489 4,443,101
---------- ---------
Six Months Ended
March 31,
1998 1997
---- ----
Weighted average shares outstanding-basic 4,403,382 4,445,999
Common stock equivalents 115,809 6,880
----------- -----------
Weighted average shares outstanding-diluted 4,518,991 4,452,879
----------- -----------
On November 8, 1996, the Company approved a stock repurchase program. On
December 17, 1997, the buyback plan was extended until December 31, 1998 (See
note 5). Shares outstanding for the quarter and six months ended March 31, 1998
reflect a reduction on a weighted average basis for the repurchased shares.
Weighted average shares for the quarter and six months ended March 31, 1997 have
been restated to reflect the provisions of SFAS Number 128.
NOTE 4. INCOME TAXES
Income taxes are based on annualized statutory rates for federal and state
income taxes. The provision for income taxes reflects an annualized effective
tax rate after deductions for the utilization of restricted carry forwards,
adjusted for applicable federal and state alternative minimum tax provisions.
The benefits of these operating loss carry forwards had previously been subject
to a 100% valuation allowance. However, based on actual fiscal 1997 taxable
income and projected fiscal 1998 taxable income, management has reduced the
valuation allowance accordingly. The amount of future reductions in the
valuation allowance will be predicated on projected results for future years.
-8-
<PAGE>
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5. STOCK REPURCHASE PROGRAM
On November 8, 1996, the Company approved a stock repurchase program
for the repurchase of up to 300,000 shares of its own stock. The Company will
use the repurchased shares for certain employee benefit programs. On December
17, 1997, the stock repurchase program was extended by a resolution of the Board
of Directors until December 31, 1998. Through March 31, 1998, the Company had
repurchased 81,200 shares for $298,999 at an average purchase price of
approximately $3.68 per share.
-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, 1998 versus March 31, 1997
- -------------------------------------------------------------
Net sales for the six months ended March 31, 1998 were $17,401,235
compared to $12,852,113 for the comparable period in the prior fiscal year,
resulting in an increase of $4,549,122 or 35%. The increase in sales was
primarily due the expansion of the Company's domestic distribution and retail
channels, continued sales growth in Europe, plus strong sales to direct
corporate customers.
Net sales of the Company's products are summarized as follows:
<TABLE>
<CAPTION>
Six Months Ended March 31, Increase
1998 1997 (Decrease)%
----- ---- -----------
$
<S> <C> <C> <C>
System Sales 196,426 $ 259,323 (24)
Video & Conferencing Boards 17,204,809 12,592,790 37
---------- ---------- ---
Total Company Sales $ 17,401,235 $ 12,852,113 35
=========== =========== ===
</TABLE>
Unit sales of digital video and conferencing boards increased to approximately
169,000 as compared to approximately 154,000 for the prior year. Sales to
domestic customers for the six month period were 26% of net sales for the
current fiscal year and 35% for the prior year. Sales to international customers
were 74% of net sales for the current year and 65% for the comparable six month
period of last year.
Gross profit increased to $4,209,231 from $2,856,852, an increase of
$1,252,379 or 42% over the comparable prior fiscal year period. The gross profit
percentage was 24% for the current six month period ended March 31, 1998
compared to 23% for the prior fiscal year. For the prior fiscal year ended
September 30, 1997, margins finished at 22%. The increase in margins during the
current fiscal year was primarily due to a program of hedging foreign sales,
primarily for German Marks and British Sterling, started in August 1997 which
has stabilized the effect of foreign currency fluctuations, lower custom duties
and the absorption of manufacturing overhead over a greater number of units.
Selling, general and administrative expenses increased $835,178 over
the prior year, but as a percentage of revenue remained relatively stable at
approximately 16% for the six month periods ended March 31, 1998 and 1997. The
increase in expenses was primarily due to increased sales and marketing expenses
of $687,046, which is a result of the Company's commitment to
- 10-
<PAGE>
Item 2. Management's Discussion and Analysis -Continued
increasing its domestic market presence and is mainly for higher personnel
costs due to an increased outside sales staff, increased commissions resulting
from the 35% sales increase plus higher marketing and promotional costs in
support of increased distribution and retail locations; higher technical support
costs of $25,936 for additional staff required to consistently maintain a high
level of customer support in light of the Company's expanding customer base and
higher general and administrative costs of $130,761, mainly for contractual wage
increases, higher rent, utilities and building costs for the Company's sales
office in California, which opened in June 1997 and higher communication costs
due to increased voice and internet usage.
Research and development expenses increased $108,882 or approximately
45%. The increase was due to the strategic addition of personnel which is in
line with the Company's commitment to expand its engineering research and
development resources to continually enhance current products and further
develop future product lines.
The Company had net other income of $181,034 compared to net other
income of $116,270 for the corresponding six months of the preceding fiscal
year. The increase in net other income was primarily foreign currency exchange
rate gains as a result of favorable foreign rates. Provision for income taxes
increased to $392,815 or an effective tax rate of 33% in fiscal 1998 compared
to$185,927 or an effective tax rate of 22.5% for fiscal 1997. The increase in
the effective tax rate is due to the utilization of all the unrestricted net
operating loss carry forwards in fiscal 1997, leaving only restricted net
operating loss carry forwards which can be utilized to offset current year
taxable income.
As a result of all of the above, the Company recorded a net profit
after taxes for the six months ended March 31, 1998 of $799,705, which resulted
in basic and diluted earnings per share of $0.18 on weighed average basic and
diluted shares outstanding of 4,403,382 and 4,518,991, as opposed to a net
income after taxes of $633,610, which resulted in basic and diluted earnings per
share of $0.14 on weighted average basic and diluted shares of 4,445,999 and
4,452,879 for the corresponding prior fiscal year.
Three Month Period ended March 31, 1998 versus March 31, 1997
- --------------------------------------------------------------
Net sales for the three months ended March 31, 1998 were $7,825,490
compared to $6,305,925 for the comparable quarter of the prior fiscal year,
resulting in an increase of $1,519,565 or 24%. The increase in sales was
primarily due the expansion of the Company's domestic distribution and retail
channels, continued sales growth in Europe, plus strong sales to direct
corporate customers.
-11-
<PAGE>
Item 2. Management's Discussion and Analysis -Continued
Net sales of the Company's products are summarized as follows:
<TABLE>
Three Months Ended March 31, Increase
1998 1997 (Decrease)%
------ ---- -----------
$
<S> <C> <C> <C>
System Sales 106,802 $ 79,981 34
Video & Conferencing Boards 7,718,688 6,225,944 24
--------- --------- ---
Total Company Sales $ 7,825,490 $ 6,305,925 24
-======== ========== ====
</TABLE>
Unit sales of digital video and conferencing boards increased to approximately
74,000 as compared to approximately 72,000 for the prior year. Sales to domestic
customers for the three month period were 29% of net sales for the current
quarter and 32% for the prior year's quarter. Sales to international customers
were 71% of net sales for the current quarter and 68% for the comparable quarter
of last year.
Gross profit increased to $1,869,430 from $1,327,954, an increase of
$541,476 or 41% over the prior comparable fiscal year period. The gross profit
percentage was 24% for the current quarter and 21% the quarter ended March 31,
1997. The increase in margins during the current fiscal year was primarily due
to a program of hedging foreign sales, primarily for German Marks and British
Sterling, started in August 1997 which has stabilized the effect of foreign
currency fluctuations, lower custom duties and the absorption of manufacturing
overhead over a greater number of units.
Selling, general and administrative expenses increased $316,921 over the
prior year's second quarter, but as a percentage of revenue remained relatively
stable at approximately 17% when compared to 16% for the three months ended
March 31, 1997. The increase in expenses was primarily due to increased sales
and marketing expenses of $321,593, which is a result of the Company's
commitment to increasing its domestic market presence and is mainly for higher
personnel costs due to an increased outside sales staff plus higher marketing
and promotional costs in support of increased distribution and retail locations;
higher technical support costs of $6,532 for additional staff required to
consistently maintain a high level of customer support in light of the Company's
expanding customer base; and higher general and administrative costs of $45,355,
mainly for contractual wage increases, higher rent, utilities, and building
costs for the Company's sales office in California, which opened in June 1997
and higher communication costs due to increased voice and internet usage.
Research and development expenses increased $43,368 or approximately 33%.
The increase was due to the strategic addition of personnel which is in line
with the Company's commitment to expand its engineering research and development
resources to continually enhance current products and further develop future
product lines.
-12-
<PAGE>
Item 2. Management's Discussion and Analysis -Continued
The Company had net other income of $79,759 for the March 31, 1998
three month period compared to net other income of $51,891 for the corresponding
quarter of the preceding fiscal year. The increase in net other income was
primarily foreign currency exchange rate gains as a result of favorable foreign
rates. Provision for income taxes increased to $147,000 or an effective tax rate
of 33% in fiscal 1998 compared to $55,000 or an effective tax rate of 22.5% for
fiscal 1997. The increase in the effective tax rate is due to the utilization of
all the unrestricted net operating loss carry forwards in fiscal 1997, leaving
only restricted net operating loss carry forwards which can be utilized to
offset current year taxable income. .
As a result of all of the above, the Company recorded a net profit
after taxes for the three months ended March 31, 1998 of $300,626, which
resulted in basic and diluted earnings per share of $0.07 on weighed average
basic and diluted shares outstanding of 4,400,524 and 4,549,489 as opposed to a
net income after taxes of $183,571, which resulted in basic and diluted earnings
per share of $0.04 on weighted average basic and diluted shares of 4,435,580 and
4,443,101 for the corresponding quarter of the prior fiscal year.
Over the prior two fiscal years, the company has experienced certain
revenue trends. Since the Company's products are primarily sold through
distributors and retailers, the Company has historically recorded stronger sales
results during the Company's first quarter (October to December), which due to
the holiday season is a strong quarter for computer equipment sales. In
addition, the Company's international sales, mostly into the European market,
have been 66% and 54% of sales for fiscal 1997 and 1996 and are 74% for the
first six months of fiscal 1998. Due to this, the Company's sales for its fourth
fiscal quarter (July to September) can potentially be impacted by the reduction
of activity in Europe during the July and August summer holiday period.
To offset the above cycles, the Company is targeting a wide range of
customer types in order to moderate the seasonality of the retail sales.
Liquidity and Capital Resources
The Company had a net cash position of $6,055,666, working capital of
$9,345,392 and shareholders' equity of $9,734,967 as of March 31, 1998. The
significant items of cash provided by and cash (used ) are detailed below:
Net income(adjusted for non cash items) $ 891,379
Reduction in investments of current assets 840,937
Decrease in current liabilities-net ( 1,103,158)
Purchase of Property, Plant & Equipment ( 144,394)
Purchase of treasury stock ( 105,046)
Other 73,536
-13-
<PAGE>
Liquidity and Capital Resources-continued
Net cash of $629,158 provided by operating activities was primarily due
to cash generated from the company's net income and cash provided by the
reduction of current assets, mainly receivables and inventory, offset partially
by cash used in the reduction of current liabilities, which were mainly vendor
accounts payable. Additional cash was used to purchase fixed assets and treasury
stock.
The Company's asset based credit facility expired on February 28, 1998.
The company has chosen not to renew the loan facility The Company feels it is in
a position to obtain new financing at more competitive rates, and is currently
seeking new institutions to replace the expired loan facility.
On November 8, 1996, the Company approved a stock repurchase program
for the repurchase of up to 300,000 shares of its own stock. The Company will
use the repurchased shares for certain employee benefit programs. On December
17, 1997 stock repurchase program was extended by a resolution of the Board of
Directors until December 31, 1998. As of March 31, 1998, the Company had
repurchased 81,200 shares for $298,999 at an average purchase price of
approximately $3.68 per share.
The Company believes that its current cash position and its internally
generated cash flow will be sufficient to satisfy the Company's anticipated
operating needs for a least the ensuing twelve months.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS AND RISK FACTORS
From time to time, information provided by the company, statements made by
its employees or information provided in its Securities and Exchange Commission
filings, such as information contained in this Form 10-QSB, including certain
statements under "Management's Discussion and Analysis of Financial Condition
and Results of Operations" may contain forward looking information. The words
"Estimate, "Plan", "Intend" "Believes, "Expect" and similar expressions are
intended to identify forward looking statements. Such forward looking statements
involve and are subject to known and unknown risks, uncertainties and other
factors which could cause the actual results, performance and achievements of
the Company to be materially different from any future results, performance (
financial or operating), or achievements expressed or implied by such forward
looking statements. Such factors include, among others, the following: rapid
changes in technology; lack of funds for future research; competition,
proprietary patents and rights of others; loss of major customers; loss of
sources of supply for digital video processing chips; non-availability of
management; government regulation; currency fluctuations; and the inability of
the Company to profitably sell its products. The market price of the Company's
common stock may be volatile at times in response to fluctuation in the
company's quarterly operating results, changes in analysts' earnings estimates,
market conditions in the computer hardware industry, seasonality of the business
cycle, as well as general conditions and other factors external to the Company.
-14-
<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 12,1998 at the
offices of the Company and were approved by the votes as indicated:
No. 1: Election of Directors
The following directors were elected by the votes as indicated to serve
until the election and qualification of their respective successors:
For Withheld
Kenneth A. Aupperle 4,275,507 21,900
Kenneth Plotkin 4,275,507 21,900
Leonard Neuhaus 3,914,460 382,515
Bernard Herman 4,285,475 11,500
No. 2: Adoption of the 1998 Incentive Plan
The 1998 Incentive Stock Option Plan for 350,000 shares which had been
adopted by the board of directors on December 17, 1997 was approved by a vote of
the shareholders as indicated:
For Against Abstain
2,304,469 107,225 15,950
There were 1,802,444 broker non votes.
No: 3: Appointment of BDO Seidman LLP as independent auditors
The appointment of BDO Seidman LLP as independent auditors for the
fiscal year ended September 30, 1998 was approved by the vote as indicated:
For Against Abstain
4,272,275 10,400 12,800
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
(b) 4.5.1 Form of 1998 Incentive Stock Option Plan is incorporated by
reference to Exhibit 1 to the Company's proxy statement for its meeting of March
12, 1998.
(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, 1998 By: /s/ Kenneth Plotkin
KENNETH PLOTKIN
Vice President and
Chief Executive Officer
Date: May 7, 1998 By: /S/ Gerald Tucciarone
GERALD TUCCIARONE
Treasurer and Chief
Financial Officer
-16-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 6,055,666
<SECURITIES> 0
<RECEIVABLES> 2,846,932
<ALLOWANCES> (110,000)
<INVENTORY> 4,368,965
<CURRENT-ASSETS> 13,746,766
<PP&E> 638,614
<DEPRECIATION> 307,412
<TOTAL-ASSETS> 14,136,341
<CURRENT-LIABILITIES> 4,401,374
<BONDS> 0
0
0
<COMMON> 44,858
<OTHER-SE> 9,690,109
<TOTAL-LIABILITY-AND-EQUITY> 14,136,341
<SALES> 17,401,235
<TOTAL-REVENUES> 17,401,235
<CGS> 13,192,004
<TOTAL-COSTS> 3,197,745
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10,000
<INTEREST-EXPENSE> 0
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</TABLE>
