<PAGE>
18



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended April 30, 1999

                                       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 0-21695

                         Manchester Equipment Co., Inc.
             (Exact name of registrant as specified in its charter)

                               New York 11-2312854
                (State or other jurisdiction of (I.R.S. Employer
             Incorporation or organization) Identification Number)

                                 160 Oser Avenue
                            Hauppauge, New York 11788
              (Address of registrant's principal executive offices)

                                 (516) 435-1199
              (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 the number of shares  outstanding  of each of the  issuer's  classes of
stock, as of the latest practicable date.

         There  were  8,096,600  outstanding  shares of COMMON  STOCK at June 3,
1999.






<PAGE>



                 MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES

                                      Index

PART I.       FINANCIAL INFORMATION                                       Page

Item 1.       Condensed Consolidated Balance Sheets
                     April 30, 1999 (unaudited) and July 31, 1998           3

              Condensed Consolidated Statements of Income
                     Three months and nine months ended
                      April 30, 1999 and 1998 (unaudited)                   4

              Condensed Consolidated Statements of Cash Flows
                     Nine months ended April 30, 1999 and 1998 (unaudited)  5

              Notes to Condensed Consolidated Financial Statements          6

Item 2.       Management's Discussion and Analysis of Financial
                     Condition and Results of Operations                    8


PART II.      OTHER INFORMATION

Item 1.       Legal Proceedings                                            15

Item 4.       Submission of Matters to a Vote of Security Holders          15

Item 6.       Exhibits and Reports                                         15


















<PAGE>



PART I  FINANCIAL INFORMATION

ITEM 1.            Financial Statements

                 Manchester Equipment Co., Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheets
                       (in thousands except share amounts)

                                                 April 30, 1999   July 31, 1998
                                                 (Unaudited)
                                                 -----------      -------------
Assets:
  Cash and cash equivalents                            $ 11,951       $   7,816
  Investments                                                 -           1,501
  Accounts receivable, net                               25,788          26,296
  Inventory                                               8,037           9,167
  Deferred income taxes                                     482             482
  Prepaid income taxes                                      159               -
  Prepaid expenses and other current assets                 196             290
                                                            ---             ---
         Total current assets                            46,613          45,552

  Property and equipment, net                             6,182           5,975
  Goodwill, net                                           4,997           4,325
  Deferred income taxes                                     475             475
  Other assets                                              306             567
                                                            ---             ---
                                                        $58,573         $56,894
                                                        =======         =======
Liabilities:
  Current maturities under capital
   lease obligation                                    $      8         $    82
  Accounts payable and accrued expenses                  19,526          18,358
  Deferred service revenue                                  574             775
  Income taxes payable                                        -             225
                                                            ---             ---
         Total current liabilities                       20,108          19,440

  Deferred compensation payable                             109             109
                                                            ---             ---

         Total liabilities                               20,217          19,549
                                                         ------          ------

Shareholders' equity:
  Preferred stock, $.01 par value; 5,000,000
   shares authorized, none issued                             -               -
  Common stock, $.01 par value; 25,000,000 shares
    authorized, 8,096,600 issued and outstanding             81              81
  Additional paid-in capital                             18,820          18,767
  Deferred compensation                                     (44)            (64)
  Retained earnings                                      19,499          18,561
                                                         ------          ------
         Total shareholders' equity                      38,356          37,345
                                                         ------          ------
                                                        $58,573         $56,894
                                                        =======         =======
See notes to condensed consolidated financial statements.
                                                                   3


<PAGE>




                 Manchester Equipment Co., Inc. and Subsidiaries
                   Condensed Consolidated Statements of Income
                    (in thousands, except per share amounts)
                                    Unaudited
<TABLE>
<CAPTION>

                                       Three months ended April 30,      Nine months ended  April 30,
                                          1999             1998               1999          1998
<S>                                     <C>               <C>             <C>             <C>
Revenue
       Products                         $52,956           $52,655          $160,409       $147,071
       Services                           1,834             1,514             5,269          3,526
                                          -----             -----             -----         ------
                                         54,790            54,169           165,678        150,597
                                         ------            ------           -------        -------
Cost of revenue
       Products                          45,053            45,026           138,501        126,292
       Services                           1,241             1,160             3,406          2,626
                                          -----             -----             -----          -----
                                         46,294            46,186           141,907        128,918
                                         -------           ------           -------        -------

       Gross profit                       8,496             7,983            23,771         21,679

Selling, general and
    administrative expenses               8,073             7,086            22,482         19,490
                                          -----             -----            ------         ------

       Income from operations               423               897             1,289          2,189

Interest expense                            ( 2)              ( 5)               (7)           (38)
Interest income                             116                82               336            486
                                            ---           -------               ---            ---

       Income before income taxes           537               974             1,618          2,637

Provision for income taxes                  240               387               680          1,057
                                            ---               ---               ---          -----

       Net income                         $ 297              $587              $938         $1,580
                                          =====              ====              ====         ======

Net Income per share
   Basic                                  $0.04           $  0.07             $0.12          $0.19
                                          =====           =======             =====          =====
   Diluted                                $0.04           $  0.07             $0.12          $0.19
                                          =====           =======             =====          =====

Weighted average
  shares outstanding
  Basic                                   8,097             8,542             8,097          8,533
                                          =====             =====             =====          =====
  Diluted                                 8,097             8,548             8,097          8,535
                                          =====             =====             =====          =====

</TABLE>

See notes to condensed consolidated financial statements.




<PAGE>



                 Manchester Equipment Co., Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                 (in thousands)
<TABLE>
<CAPTION>

                                                             For the nine months
                                                                ended April 30,
                                                                1999      1998
                                                                   (Unaudited)
                                                                 -------------
<S>                                                          <C>         <C>

Cash flows from operating activities:
         Net income                                           $  938     $1,580
  Adjustments to reconcile net income
    to net cash from operating activities:
         Depreciation and amortization                         1,325        900
         Allowance for doubtful accounts                         167        288
         Stock compensation expense                               73         44
  Change in assets and liabilities net of
    the effects of acquisition:
         Decrease (increase) in accounts receivable              341     (4,063)
         Decrease in inventory                                 1,130      5,424
         Increase  in prepaid expenses and
             other current assets                                (65)      (124)
         Decrease in other assets                                261         21
         (Decrease) increase in accounts payable and
             accrued expenses                                  1,168     (6,367)
         (Decrease) increase in deferred service
          contract revenue                                      (201)         8
         Decrease  in income taxes  payable                     (225)         -
         Sale of investments                                   1,501      1,907
                                                              ------      -----
       Net cash provided by (used in)operating activities      6,413       (382)
                                                               -----        ---
Cash flows from investing activities:
         Capital expenditures                                 (1,333)    (2,525)
         Payment for acquisition, net of cash acquired          (871)    (2,921)
                                                                 ---      -----

         Net cash used in investing activities                (2,204)    (5,446)
                                                              ------      -----

Cash flows from financing activities:
         Net repayments of borrowings                              -     (1,274)
         Payments on capital lease obligations                   (74)       (77)
         Purchase of  treasury stock                               -        (99)
         Payments on notes payable - other                         -       (481)
                                                                 ---        ---
Net cash used in financing activities                            (74)    (1,931)
                                                                  --      -----
Net increase (decrease) in cash and cash equivalents           4,135     (7,759)
         Cash and cash equivalents at beginning of period      7,816     15,049
                                                               -----      -----
Cash and cash equivalents at end of period                   $11,951     $7,290
                                                             =======     ======
</TABLE>

See notes to condensed consolidated financial statements.


<PAGE>



                 Manchester Equipment Co., Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements

   1. Operations and Basis of Presentation

         Manchester  Equipment  Co., Inc. (the  "Company") is an integrator  and
      reseller of computer hardware, software and networking products, primarily
      for commercial customers.  The Company offers its customers  single-source
      solutions  customized  to their  information  systems  needs by  combining
      value-added  services with  hardware,  software,  networking  products and
      peripherals from leading vendors.

         Sales of  hardware,  software  and  networking  products  comprise  the
      majority of the Company's revenue. The Company has entered into agreements
      with  certain  suppliers  and  manufacturers  which  provide  the  Company
      favorable  pricing and limited  price  protection  in the event the vendor
      reduces its prices.

         In the opinion of the Company,  the  accompanying  unaudited  Condensed
      Consolidated  Financial Statements contain all adjustments  (consisting of
      only  normal and  recurring  accruals)  necessary  to  present  fairly the
      financial  position of the Company as of April 30, 1999 and the results of
      operations  for the three  months and nine months ended April 30, 1999 and
      1998 and cash flows for the nine  months  ended  April 30,  1999 and 1998.
      Although the Company believes that the disclosures  herein are adequate to
      make the information not misleading,  these financial statements should be
      read in conjunction  with the audited  financial  statements and the notes
      thereto for the year ended July 31, 1998, included in the Company's Annual
      Report on Form 10-K as filed with the Securities and Exchange Commission.

   2. Net Income Per Share

         Basic net income per share has been  computed by dividing net income by
      the weighted  average  number of common  shares  outstanding.  Diluted net
      income per share has been  computed by dividing net income by the weighted
      average number of common shares outstanding,  plus the assumed exercise of
      dilutive  stock options and warrants,  less the number of treasury  shares
      assumed to be  purchased  from the  proceeds of such  exercises  using the
      average market price of the Company's  common stock during each respective
      period.  Stock options and warrants are excluded from the  calculation  of
      diluted net income per share when the result would be antidilutive.


   3.  Acquisition of Coastal Office Products Inc.:

         On January 2, 1998, the Company acquired all of the outstanding  shares
      of Coastal Office Products,  Inc. ("Coastal"),  a reseller and provider of
      microcomputer  services  and  peripherals  to  companies  in  the  greater
      Baltimore, Maryland area. The acquisition, which has been accounted for as
      a  purchase,  consisted  of a cash  payment of $3.1  million  at  closing,
      $871,000  paid on March 15,  1999,  based  upon  Coastal  meeting  certain
      targeted  results for calendar 1998,  plus a potential  future  contingent
      payment.  The future  contingent  payment of up to $1,050,000 for calendar
      1999 will be determined based upon Coastal  achieving  certain agreed upon
      increases  in revenue and pretax  income for calendar  1999 over  calendar
      1997  amounts.  The  cash  payments  were  made  from the  Company's  cash
      balances. The contingent payment, if any, would be paid in cash (or, under
      certain  conditions,  in  Company  common  stock) on March 15,  2000.  The
      selling shareholders received employment agreements that also provided for
      the  issuance  of 20,000  shares of common  stock.  The fair  value of the
      common stock,  amounting to $80,000 was recorded as deferred  compensation
      and is being expensed over the three year vesting period.

         Operating results of Coastal are included in the Condensed Consolidated
      Statements  of  Income  from  the  date of  acquisition.  The  acquisition
      resulted  in  goodwill  of  $3,836,000  which  is being  amortized  on the
      straight-line basis over 20 years.
                                       6
<PAGE>

        The following unaudited pro forma consolidated results of operations for
     the nine months  ended  April 30, 1998 assume that the Coastal  acquisition
     occurred  on August 1, 1997 and reflect the  historical  operations  of the
     purchased   business   adjusted  for  lower  interest  on  invested  funds,
     contractually   revised  officer   compensation   and  rent  and  increased
     amortization,   net  of  applicable   income  taxes,   resulting  from  the
     acquisition:

                                                Nine months ended
                                                 April 30, 1998
                                             (in thousands,  except
                                                per share amounts)

                  Revenue                            $154,172
                  Net income                            1,605
                  Net income per share                  $0.19

         The pro forma results of operations are not  necessarily  indicative of
      the actual results that would have occurred had the acquisition  been made
      at the  beginning  of the  period,  or of  results  which may occur in the
      future.

4.       Repurchase of Common Stock

         On May 3,  1999,  the  Company  announced  that its Board of  Directors
      authorized  the  expenditure  through  April 2000 of up to $2.0 million to
      repurchase its common stock.  To date no repurchases  have been made under
      this program.

                                       7


<PAGE>




      ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               RESULTS OF OPERATIONS

           The  following  discussion  and analysis of financial  condition  and
      results of operations of the Company  should be read in  conjunction  with
      the condensed consolidated financial statements and notes thereto included
      elsewhere  in this  Quarterly  Report on Form 10-Q and with the  Company's
      Annual Report on Form 10-K. This discussion and analysis  contains certain
      forward-looking  statements  within the meaning of the  Securities  Act of
      1933, as amended,  and Section 21E of the Securities Exchange Act of 1934,
      as  amended,  which  are not  historical  facts,  and  involve  risks  and
      uncertainties  that could cause actual results to differ  materially  from
      the results anticipated in those forward-looking  statements.  These risks
      and uncertainties  include, but are not limited to, those set forth below,
      those set forth in the  Company's  Annual Report on Form 10-K for the year
      ended July 31, 1998,  and those set forth in the  Company's  other filings
      from time to time with the Securities and Exchange Commission.

      General

           Manchester  is an  integrator  and  reseller  of  computer  hardware,
      software and networking products,  primarily for commercial customers. The
      Company offers its customers  single-source  solutions customized to their
      information systems needs by combining value-added services with hardware,
      software,  networking  products and peripherals from leading  vendors.  To
      date,  most of the Company's  revenue has been derived from product sales.
      The Company generally does not develop or sell software products. However,
      certain  computer  hardware  products  sold by the Company are loaded with
      pre-packaged software products.

           As a result of intense price competition within the computer industry
      as  well  as  other  industry  conditions,  the  Company  has  experienced
      increasing  pressure on per unit prices as well as on its gross profit and
      operating  margins  with respect to the sale of  products.  The  Company's
      strategy includes increasing its focus on providing  value-added  services
      with operating margins that are higher than those obtained with respect to
      the sale of products.  The Company has experienced a significant  increase
      in selling,  general and administrative  expenses primarily in the form of
      increased  personnel costs, in connection with the  implementation of this
      strategy.  The  Company's  future  performance  will depend in part on its
      ability to manage  successfully  a continuing  shift in its  operations to
      value-added services.

           The Company  directly  competes  with local,  regional  and  national
      systems  integrators,  value-added  resellers ("VARs") and distributors as
      well as with certain  computer  manufacturers  that market  through direct
      sales  forces  and/or the  Internet.  In the future,  the Company may face
      further  competition  from new  market  entrants  and  possible  alliances
      between  existing   competitors.   In  addition,   certain  suppliers  and
      manufacturers  may choose to market products directly to end users through
      a direct  sales force  and/or the  Internet  rather than or in addition to
      channel distribution. Some of the Company's competitors have, or may have,
      greater financial,  marketing and other resources, and may offer a broader
      range of products and services, than the Company. As a result, they may be
      able to respond more quickly to new or emerging technologies or changes in
      customer  requirements,  benefit from greater purchasing economies,  offer
      more aggressive  hardware and service pricing or devote greater  resources
      to the promotion of their products and services. There can be no assurance
      that the Company will be able to compete  successfully  in the future with
      these or other current or potential future competitors.

           The Company's business is dependent upon its relationships with major
      manufacturers in the computer industry. There can be no assurance that the
      pricing  and  related  terms  offered  by  major  manufacturers  will  not
      adversely  change in the future.  The failure to obtain an adequate supply
      of products,  the loss of a major  manufacturer,  the deterioration of the
      Company's   relationship  with  a  major  manufacturer  or  the  Company's
      inability  in  the  future  to  develop  new   relationships   with  other
      manufacturers  could  have a  material  adverse  effect on  the  Company's
      business, results of operations and financial condition.
                                       8
<PAGE>
           The Company's largest customer  accounted for approximately 8% and 8%
      (or $12,692,000,  and $11,355,000,  respectively) of the Company's revenue
      for each of the nine months  ended April 30, 1999 and 1998,  respectively,
      substantially  all of which  revenue was derived from the sale of hardware
      products.  This  customer  accounted for 7% of revenue for the fiscal year
      ended July 31,  1998.  There can be no  assurance  that the  Company  will
      continue to derive substantial revenue from this customer.

           The  Company's  profitability  has been  enhanced  by its  ability to
      obtain  volume  discounts  from  certain  manufacturers,  which  has  been
      dependent in part upon the Company's  ability to sell large  quantities of
      products to computer resellers,  including VARs. There can be no assurance
      that the Company  will be able to continue to sell  products to  resellers
      and thereby obtain the desired  discounts from the  manufacturers  or that
      the Company will be able to increase sales to end-users to offset the need
      to rely upon sales to resellers.

           The markets for the Company's products and services are characterized
      by rapidly changing technology and frequent  introductions of new hardware
      and software  products and services,  which render many existing  products
      noncompetitive, less profitable or obsolete. The Company believes that its
      inventory controls have contributed to its ability to respond  effectively
      to these technological changes. As of April 30, 1999 and 1998, inventories
      represented  14% and  11%,  respectively,  of total  assets.  For the nine
      months ended April 30, 1999 and 1998, annualized inventory turnover was 28
      and 30 times,  respectively.  Inventory turned 17 times in the fiscal year
      ended July 31, 1998.  The failure of the Company to anticipate  technology
      trends or to continue to  effectively  manage its  inventory  could have a
      material adverse effect on the Company's  business,  results of operations
      and financial condition.

           The  Company  believes  its  controls  on  accounts  receivable  have
      contributed  to its  profitability.  The  Company's  annualized  bad  debt
      expense  represented  less than 0.2% of total  revenue in each of the nine
      month  periods  ended April 30,  1999 and 1998.  For the fiscal year ended
      July 31, 1998, bad debt expense represented 0.2% of total revenues.

           The Company's  quarterly  revenue and  operating  results have varied
      significantly  in the past and are  expected  to  continue to do so in the
      future.  Quarterly revenue and operating results generally  fluctuate as a
      result  of the  demand  for  the  Company's  products  and  services,  the
      introduction  of new  hardware  and software  technologies  with  improved
      features,  the  introduction  of new  services  by  the  Company  and  its
      competitors, changes in the level of the Company's operating expenses, the
      timely availability of product supply, competitive conditions and economic
      conditions. In particular,  the Company currently is increasing certain of
      its  fixed  operating  expenses,   including  a  significant  increase  in
      personnel,  as part of its  strategy  to increase  its focus on  providing
      higher margin,  value-added  services.  Accordingly,  the Company believes
      that  period-to-period  comparisons of its operating results should not be
      relied upon as an  indication  of future  performance.  In  addition,  the
      results  of any  quarterly  period  are not  indicative  of  results to be
      expected for a full fiscal year.

           As a result of rapid  changes  that are taking  place in computer and
      networking technologies,  product life cycles are short. Accordingly,  the
      Company's product offerings change  constantly.  Prices of products change
      with  generally  higher  prices early in the life cycle of the product and
      lower  prices  near the end of the  product's  life cycle.  Recently,  the
      computer industry has experienced rapid declines in average selling prices
      of personal  computers.  In some  instances,  the Company has been able to
      offset these price declines with increases in units shipped.  There can be
      no assurance  that average  selling prices will not continue to decline or
      that the Company will be able to offset declines in average selling prices
      with increases in units shipped.

           Most  of  the  personal  computers  shipped  by the  Company  utilize
      operating  systems developed by Microsoft  Corporation.  The United States
      Department of Justice has brought an antitrust  action against  Microsoft,
      which could delay the introduction and distribution of Microsoft products.
      The potential  unavailability of Microsoft  products could have a material
      adverse  effect on the  Company's  business,  results  of  operations  and
      financial condition.
                                       9
<PAGE>
      Year 2000 Issue

         Many  existing  computer  systems,  including  certain of the Company's
      internal systems as well as those that the Company sells to customers, use
      only the last two digits to identify years in the date field. As a result,
      those  systems may not  accurately  distinguish  years in the 21st century
      from years in the 20th  century,  or may not function  properly when faced
      with years later than 1999.  This problem is generally  referred to as the
      "Year 2000 Issue."  Computer  systems that are able to deal correctly with
      dates after 1999 are referred to as "Year-2000-Compliant."

      Year 2000 Readiness Disclosure

         The Company has undertaken a complete and thorough review of all of its
      operations to determine  those aspects which involve or are dependent upon
      a  computer  application.  The  Company  is  reviewing  the  software  and
      operating  systems  for  each  such  application  to  determine  if  it is
      Year-2000-Compliant.   Any  such  system  or  application   which  is  not
      Year-2000-Compliant  is being modified or upgraded to assure the Company's
      continued ability to operate without interruption.  Manchester's year 2000
      project has been underway for over a year. This is aimed at ensuring that,
      when the year 2000 arrives,  all applications used on Manchester's  AS/400
      computer system are year 2000  compliant.  As of May 3, 1999 the following
      tasks have been completed:

     o    All programs containing date manipulations, calculations or comparison
          routines have been identified.

     o    All of these programs have been modified to be year 2000 compliant.

     o    Physical  database files and  supporting  logical views of these files
          that contain date data and sequencing by date have been identified and
          these files have been modified as required to be year 2000 compliant.

     Manchester's communications, local, and wide area networks have been tested
     or represented (by the manufacturers) to be year 2000 compliant, with a few
     minor exceptions that should be resolved  shortly.  Our status as of May 3,
     1999 is as follows:

     o    The local area network  operations systems have been represented to be
          year 2000 compliant by the manufactures/publishers.

     o    The network servers have been represented to be year 2000 compliant by
          the manufacturers.

     o    An audit of all wide area network  devices has been  completed and the
          recommended changes have been made.

     o    An audit has been  completed  assessing  the  compliance  level of all
          computers and recommended upgrades have been made.

     o    We continue to audit software  applications on the local area network.
          Products  that  are  identified  as  non-compliant  are  either  being
          upgraded or removed.

     o    The telephone  system has been  represented by the  manufacturer to be
          year 2000 compliant.

     o    We have received  assurances of compliance from vendors of other types
          of equipment (e.g.  alarm,  HVAC),  either via  correspondence or from
          information on their websites.

     Testing and  monitoring  will be on going  throughout the rest of the year.
     The Company is in the process of obtaining  assurances  regarding Year 2000
     compliance  from other  companies  upon which it may rely for  products  or
     services.

         The  Company  expects  to  implement   successfully   the  systems  and
     programming  changes  necessary to address the Year 2000 Issue. The Company
                                       10
<PAGE>
     expects to implement  these changes using  primarily  internal  information
     technology and other personnel.  Moreover,  the Company does not expect the
     costs associated with that  implementation  to be material to the Company's
     financial position or results of operations.

         With  respect to  products  sold to  customers,  the  Company  does not
     warrant any  products  sold as  Year-2000-Compliant.  Instead,  the Company
     refers customers to any warrantees provided by the product's manufacturers.

          The Company  believes the most reasonably  likely worst case Year 2000
     scenario would include a combination of some or all of the following:

     o    Internal information technology modules or systems may fail to operate
          or may give  erroneous  information.  Such  failure  could  result  in
          shipping  delays,  inability  to generate or delays in  generation  of
          financial  reports  and  statements,   inability  of  the  Company  to
          communicate  among its various offices,  and computer network downtime
          resulting in inefficiencies and higher payroll expenses.

     o    Components in HVAC, lighting,  telephone, security and similar systems
          might fail, causing such systems to fail.

     o    Communications  with  customers  and vendors that the Company  depends
          upon may fail or give erroneous  information.  These types of problems
          could  result in such  difficulties  as the  inability  to  receive or
          process  customer  orders,  shipping  delays,  or sale of  products at
          erroneous  prices.  Furthermore,  customers  may be unable  to, or may
          suffer delays, in remitting payments to the Company on a timely basis.

     o    The  unavailability  of  products  as a result of Year  2000  problems
          experienced by one or more key vendors of the Company,  or as a result
          of  changes  in  inventory  levels at  aggregators,  VARs and  similar
          providers in response to an  anticipated  Year 2000 problem and/or the
          inability of the Company to develop  alternative  sources for products
          may  result in the  inability  of the  Company  to obtain an  adequate
          supply of products.

     o    Products sold to some of the Company's customers could fail to perform
          some or all of their  intended  functions.  In such a  situation,  the
          Company's  maximum  obligation  would  be to  repair  or  replace  the
          defective  products  to the extent the  Company is  required  to do so
          under manufacturer reimbursed warranty programs.

         The Company  believes its plans for  addressing  the Year 2000 Issue as
      outlined  above are  adequate to handle the most  reasonably  likely worst
      case  scenario.  The  Company  does not  believe  it will incur a material
      financial  impact for the risk of  failure,  or from the costs  associated
      with  assessing  the risks of failure,  arising  from the Year 2000 Issue.
      Consequently,  the Company  does not intend to create a  contingency  plan
      other than as set forth above. In addition, if the Company's assessment of
      its vendors, when completed,  indicates that certain product shortages can
      be anticipated, the Company may adjust its plans accordingly, although the
      Company  does  believe  that it has the  capacity to maintain  significant
      levels of inventory.

         The statements  above describing the Company's plans and objectives for
      handling  the Year  2000  Issue and the  expected  impact of the Year 2000
      Issue on the  Company are  forward-looking  statements.  Those  statements
      involve risks and uncertainties  that could cause actual results to differ
      materially from the results discussed above. Factors that might cause such
      a difference include, but are not limited to, delays in executing the plan
      outlined  above and  increased or  unforeseen  costs  associated  with the
      implementation  of the plan and any  necessary  changes  to the  Company's
      systems.  Any inability on the part of the Company to implement  necessary
      changes in a timely fashion could have an adverse effect on future results
      of operations.  Moreover,  even if the Company successfully implements the
      changes  necessary  to  address  the  Year  2000  Issue,  there  can be no
      assurance  that the Company will not be adversely  affected by the failure
      of others to become Year-2000-Compliant.

      Acquisition of Coastal Office Products Inc.:

         On January 2, 1998, the Company acquired all of the outstanding  shares
      of Coastal Office Products,  Inc. ("Coastal"),  a reseller and provider of
                                       11
<PAGE>
     microcomputer   services  and  peripherals  to  companies  in  the  greater
     Baltimore, Maryland area. The acquisition,  which has been accounted for as
     a  purchase,  consisted  of a cash  payment  of $3.1  million  at  closing,
     $871,000  paid on March  15,  1999,  based  upon  Coastal  meeting  certain
     targeted  results for calendar  1998,  plus a potential  future  contingent
     payment.  The future  contingent  payment of up to $1,050,000  for calendar
     1999 will be determined  based upon Coastal  achieving  certain agreed upon
     increases in revenue and pretax income for calendar 1999 over calendar 1997
     amounts. The cash payments were made from the Company's cash balances.  The
     contingent  payment,  if any,  would  be paid in cash  (or,  under  certain
     conditions,  in  Company  common  stock) on March  15,  2000.  The  selling
     shareholders  received  employment  agreements  that also  provided for the
     issuance  of 20,000  shares of common  stock.  The fair value of the common
     stock,  amounting to $80,000 was recorded as deferred  compensation  and is
     being expensed over the three year vesting period.

          Operating   results  of  Coastal  are   included   in  the   Condensed
     Consolidated  Statements  of  Income  from  the  date of  acquisition.  The
     acquisition  resulted in goodwill of $3,836,000 which is being amortized on
     the straight-line basis over 20 years.

     E-Commerce

          On January 18, 1999 the Company  officially  launched  its new website
     and   electronic    commerce   system.    The   new   site,    located   at
     www.manchesterequipment.com  allows existing customers,  corporate shoppers
     and others to find product  specifications,  compare products,  check price
     and  availability  and place and track orders quickly and easily 24 hours a
     day seven days a week.  The  Company  has made,  and expects to continue to
     make,   significant   investments   and   improvements  in  its  e-commerce
     capabilities. There can be no assurance that the Company will be successful
     in enhancing  and  increasing  its business  through its expanded  Internet
     presence.

      Results of Operations

         The following table sets forth, for the periods indicated,  information
      derived from the  Company's  Condensed  Consolidated  Statements of Income
      expressed as a percentage of related revenue or total revenue.
<TABLE>
<CAPTION>

                                                                       Percentage of Revenue
                                             Three Months Ended          Nine Months Ended
                                                  April 30,                   April 30,
                                            1999           1998           1999         1998
                                            ----           -----          ----         ----
        <S>                                 <C>            <C>           <C>           <C>
           Product sales                    96.7%          97.2%         96.8%         97.7%
           Services                          3.3            2.8           3.2           2.3
                                             ---            ---           ---           ---
           Total revenue                   100.0          100.0         100.0         100.0
                                           -----          -----         -----         -----

           Cost of product sales            85.1           85.6          86.3          85.9
           Cost of  services                67.7           76.6          64.6          74.5
                                            ----           ----          ----          ----
                Cost of revenue             84.4           85.3          85.7          85.6
                                            ----           ----          ----          ----

           Product gross profit             14.9           14.4          13.7          14.1
           Services gross profit            32.3           23.4          35.4          25.5
                                            ----           ----          ----          ----
                Gross profit                15.5           14.7          14.3          14.4
           Selling, general and
              administrative expenses       14.7           13.1          13.5          12.9
                                            ----           ----          ----          ----
           Income from operations            0.8            1.6           0.8           1.5
           Interest and other income, net    0.2            0.2           0.2           0.3
                                            ----            ---           ---           ---
           Income before income taxes        1.0            1.8           1.0           1.8
           Provision for income taxes        0.4            0.7           0.4           0.7
                                             ---            ---           ---           ---
           Net income                        0.6%           1.1%          0.6%          1.1%
                                             ===            ===           ===           ===
 </TABLE>
                                     12
<PAGE>
     Three Months Ended April 30, 1999  Compared to Three Months Ended April 30,
     1998

          Revenue.  The Company's revenue increased  slightly from $54.2 million
     for the three  months  ended April 30, 1998 to $54.8  million for the three
     months ended April 30, 1999.  Product revenue  increased by $301,000 (0.6%)
     due  primarily  to  increases  in  revenue  generated  from  the  Company's
     Electrograph  and Coastal  subsidiaries,  as well as higher average selling
     prices for personal  computers.  These increases were partially offset by a
     reduction  in the number of personal  computers  sold  during the  quarter.
     Service  revenue  increased  $320,000  (21%) as a result  of the  Company's
     continued emphasis on providing value-added services.

          Gross  Profit.  Cost of revenue  includes the direct costs of products
     sold,  freight and the personnel costs associated with providing  technical
     services,  offset in part by certain market  development  funds provided by
     manufacturers.  All other operating costs are included in selling,  general
     and administrative  expenses.  Gross profit increased $513,000 or 6.4% from
     $8.0  million for the third  quarter of fiscal 1998 to $8.5 million for the
     most  recent  fiscal  quarter.  Gross  profit  from  the  sale of  products
     increased  by $274,000  while  gross  profits  from the  service  offerings
     increased  by  $239,000.  The  changes  in  gross  profit  from the sale of
     products  primarily results from the changes in revenue discussed above. As
     a percentage of revenue,  gross profit increased to 15.5% in fiscal 1999 as
     compared to 14.7% in fiscal 1998. Competitive  pressures,  changes in types
     of products or services sold and product availability result in fluctuation
     in gross profit.

          Selling,  General and Administrative  Expenses.  Selling,  general and
     administrative  expenses  increased  $987,000 or 13.9% from $7.1 million in
     the third  quarter of fiscal 1998 to $8.1  million in the third  quarter of
     fiscal 1999.  This increase is principally a result of higher  salaries and
     personnel  costs related to the Company's  increased  emphasis on providing
     value-added services and enhancing its electronic commerce capabilities and
     higher depreciation and amortization costs.

          Interest Income. Interest income increased from $82,000 in fiscal 1998
     to  $116,000  in fiscal  1999 due to higher  cash  balances  available  for
     investment.

          Provision for Income Taxes. The effective income tax rate increased to
     45% of income  before  income  taxes as  compared  to 40% in the prior year
     period principally as a result of certain non deductible expenses.

     Nine Months  Ended April 30, 1999  Compared To Nine Months  Ended April 30,
     1998

          Revenue. The Company's revenue increased by $15.1 million (10.0%) from
     $150.1  million for the first nine months of fiscal 1998 to $165.7  million
     for the first nine months of fiscal 1999.  The increase is due to increased
     revenue from the Company's  Electrograph and Coastal subsidiaries partially
     offset  by lower per unit  prices  for  personal  computers.  Revenue  from
     services  increased  by 49% over  service  revenue for the prior nine month
     fiscal  period  while  product  revenue  increased by 9.1% from fiscal 1998
     amounts.

          Gross Profit.  Gross profit  increased  $2.1 million (9.7%) from $21.7
     million for the first nine  months of fiscal 1998 to $23.8  million for the
     most recent nine month period.  Margins on product sales  declined to 13.7%
     versus  14.1% due to  changes  in  product  mix while  margins  on  service
     offerings  improved from 25.5% to 35.4% primarily due to increased  revenue
     and improved personnel utilization in the technical services area.

          Selling,  General and Administrative  Expenses.  Selling,  general and
     administrative  expenses  increased  by $3.0  million  (15.4%)  from  $19.5
     million in fiscal 1998 to $22.5 in fiscal 1999.  This increase is primarily
     due to increases in the personnel  infrastructure  as the Company continues
     to build its sales and service  organization  and  increase its emphasis on
     providing  value added  services and costs  associated  with  enhancing the
     Company's  e-commerce  capabilities,  as well as  higher  depreciation  and
     amortization expenses.

          Interest Income.  Interest income decreased due to lower cash balances
     available for investment.
                                       13
<PAGE>
          Provision For Income Taxes. The effective income tax rate increased to
     42% of pre tax income as  compared  to 40% in the prior year due to certain
     non deductible expenses.

     Liquidity and Capital Resources

          The  Company's  primary  sources  of  financing  have been  internally
     generated  working capital from profitable  operations and a line of credit
     from a financial institution.

          For the  nine  months  ended  April  30,  1999,  cash  generated  from
     operating  activities was $6.4 million consisting  primarily of net income,
     non cash charges  (principally  depreciation and amortization) and the sale
     of investments.  Reductions in accounts receivable and inventory as well as
     an increase in accounts  payable and accrued expenses also contributed cash
     generated from operations.  The Company's accounts  receivable and accounts
     payable  and  accrued  expenses  balances  as  well  as its  investment  in
     inventory  can fluctuate  significantly  from one period to the next due to
     the receipt of large  customer  orders or payments or variations in product
     availability   and  vendor  shipping   patterns  at  any  particular  date.
     Generally,   the  Company's   experience  is  that  increases  in  accounts
     receivable,  inventory  and  accounts  payable  and accrued  expenses  will
     coincide  with  growth  in  revenue  and  increased  operating  levels.  In
     addition,  during the nine months  ended  April 30,  1999 the Company  used
     approximately $1.3 million for capital  expenditures,  and paid $871,000 in
     contingent purchase price relating to the acquisition of Coastal.

          The  Company  has   available  a  line  of  credit  with  a  financial
     institution in the aggregate amount of $15.0 million. As of April 30, 1999,
     no amounts are outstanding under this line.

          The  Company  believes  that  its  current  balances  in cash and cash
     equivalents,  expected cash flows from operations and available  borrowings
     under the line of credit  will be  adequate  to support  current  operating
     levels for the foreseeable future, specifically through at least the end of
     fiscal  1999.  On May 3,  1999,  the  Company  announced  that its Board of
     Directors  authorized the expenditure,  through April,  2000, of up to $2.0
     million to repurchase its common stock.  To date, no repurchases  have been
     made under this program.  The Company currently has no material commitments
     for  capital  expenditures.  Future  capital  requirements  of the  Company
     include  those for the growth of  working  capital  items such as  accounts
     receivable  and  inventory  and the purchase of equipment  and expansion of
     facilities  as well as the  possible  opening of new offices and  potential
     acquisitions.
                                       14

<PAGE>



      PART II - OTHER INFORMATION

      Item 1.              Legal Proceedings

           None.

      Item 2.              Changes in Securities

              None.

      Item 4.              Submission of Matters to a Vote of Security Holders

             On  April  15,  1999  the  Company  held  its  Annual   Meeting  of
      Shareholders  to (1) elect six  Directors  to serve  until the 2000 Annual
      Meeting of Shareholders;  and (2) ratify the  reappointment of KPMG LLP as
      independent auditors of the Company for the year ending July 31, 1999.

             The  results of the voting for the  election of  Directors  were as
follows:
<TABLE>
<CAPTION>
                                                                                          Broker
             Nominee                        For              Withheld      Abstain      Non-votes
             --------------                 ---              --------      -------      ---------
<S>                                      <C>                  <C>              <C>           <C>
          Barry R. Steinberg             7,372,709            317,615          0             0
          Joel G. Stemple                7,673,109             17,215          0             0
          Joel Rothlein                  7,673,109             17,215          0             0
          Bert Rudofsky                  7,673,109             17,215          0             0
          Michael E. Russell             7,673,109             17,215          0             0
          Julian Sandler                 7,673,109             17,215          0             0
</TABLE>

          Accordingly,  each of six  nominees  received a plurality of the total
     votes that were cast.

          The results of the voting on the  ratification  of the  appointment of
      KPMG LLP as the Company's independent auditors were as follows:
                                                                        Broker
                    For              Against          Abstain         Non-votes
                    ---              -------          -------         ---------
                 7,678,619            6,165            5,540              0

          Accordingly,  the number of shares voted for the  ratification  of the
      appointment  of KPMG LLP  constituted a majority of the shares  present in
      person or represented by proxy.

      Item 6.     Exhibits and Reports

      (a)     Exhibits

       Exhibit No.           Description
       -----------           ------------
         27                  Financial Data Schedule


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

      None




                                       15
<PAGE>

 MANCHESTER EQUIPMENT CO., INC.

                                   Signatures

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


                                         MANCHESTER EQUIPMENT CO., INC.
                                              (Registrant)



DATE:  June 7, 1999                       /s/ Barry Steinberg
                                          -------------------
                                           Barry Steinberg
                                           President and Chief Executive Officer



DATE:  June 7, 1999                       /s/ Joseph Looney
                                          -----------------
                                          Joseph Looney
                                          Chief Financial Officer

                                       16
<PAGE>