Microsoft Word 10.0.2627;23


                                  UNITED STATES
                       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 October 31, 2003

                                       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 Technologies, 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)

                                 (631) 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  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

                                 [ ] Yes [X] No


As  of  December  5,  2003  there  were  7,990,215  outstanding  shares  of  the
registrant's Common Stock.



<PAGE>


                 MANCHESTER TECHNOLOGIES, INC. AND SUBSIDIARIES



                                Table of Contents

PART I.            FINANCIAL INFORMATION                                   Page
-------            ---------------------                                   ----

Item 1.   Condensed Consolidated Balance Sheets as of October 31, 2003
           (unaudited) and July 31, 2003                                      3

          Condensed  Consolidated  Statements of Operations for the
           Three Months Ended October 31, 2003 and 2002 (unaudited)           4

          Condensed  Consolidated  Statements of Cash Flows for the
           Three Months Ended October 31, 2003 and 2002 (unaudited)           5

          Notes to Unaudited Condensed Consolidated Financial Statements      6

Item 2.   Management's  Discussion and Analysis of Financial Condition
           and Results of Operations                                          9

Item 3.   Quantitative and Qualitative Disclosures About Market Risk         17

Item 4.   Controls and Procedures                                            17


PART II.    OTHER INFORMATION



Item 6.     Exhibits and Reports                                             18





















<PAGE>


                         PART I - FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS

                 Manchester Technologies, Inc. and Subsidiaries
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (in thousands, except per share amounts)
<TABLE>
<CAPTION>

                                                                 October 31, 2003        July 31, 2003
                                                                     (Unaudited)         -------------
                                                                   ----------------
<S>                                                                   <C>                    <C>
Assets
Current assets:
  Cash and cash equivalents                                            $ 10,667               $ 8,553
  Accounts receivable, net                                               33,671                35,117
  Inventory                                                               8,916                 9,605
  Deferred income taxes                                                     603                   603
  Prepaid income taxes                                                    1,404                 1,704
  Prepaid expenses and other current assets                                 429                   709
                                                                      ---------              --------

         Total current assets                                            55,690                56,291

Property and equipment, net                                              13,891                13,985
Goodwill, net                                                             6,439                 6,439
Deferred income taxes                                                       757                   757
Other assets                                                                227                   278
                                                                      ---------              --------

Total assets                                                            $77,004               $77,750
                                                                        =======                ======

Liabilities and shareholders' equity
Current liabilities:
  Accounts payable and accrued expenses                                 $23,610               $24,752
   Deferred service contract revenue                                        802                   666
   Current portion of capital lease obligations                             220                   212
                                                                        -------               -------

         Total current liabilities                                       24,632                25,630

Deferred compensation payable                                               263                   263
Capital lease obligations, net of current portion                         7,864                 7,923
                                                                         ------                ------

         Total liabilities                                               32,759                33,816
                                                                        -------               -------

Shareholders' equity:
  Preferred stock, $.01 par value; 5,000 shares
    authorized, none issued                                                   -                     -
  Common stock, $.01 par value; 25,000  shares authorized,
    7,990 issued and outstanding                                             80                    80
  Additional paid-in capital                                             18,942                18,942
  Deferred compensation                                                     (13)                  (13)
  Retained earnings                                                      25,236                24,925
                                                                        -------                ------

         Total shareholders' equity                                      44,245                43,934
                                                                        -------                ------

         Total liabilities and shareholders' equity                     $77,004               $77,750
                                                                        =======               =======
</TABLE>

See notes to unaudited condensed consolidated financial statements.

                                       3
<PAGE>

                 Manchester Technologies, Inc. and Subsidiaries
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                   Three months ended
                                                October 31,        October 31,
                                                   2003               2002
                                               ------------     ----------------

<S>                                                <C>                  <C>
Revenue
     Products                                       $70,452             $64,715
     Services                                         4,248               3,570
                                                   --------             -------

                                                     74,700              68,285
                                                    -------              ------
Cost of revenue
     Products                                        62,726              56,918
     Services                                         3,078               2,403
                                                   --------             -------

                                                     65,804              59,321
                                                    -------              ------

     Gross profit                                     8,896               8,964

Selling, general and administrative expenses          8,290               8,840
                                                   --------             -------

     Income from operations                             606                 124

Interest and other income (expense), net                (87)                140
                                                  ----------            -------

     Income before income taxes                         519                 264

Income tax provision                                    208                 106
                                                   --------             -------

     Net income                                     $   311              $  158
                                                    =======              ======

Net income per share
     Basic                                          $  0.04              $ 0.02
                                                    =======              ======
     Diluted                                        $  0.04              $ 0.02
                                                    =======              ======

Weighted average shares outstanding
     Basic                                            7,990               7,990
                                                    =======               =====
     Diluted                                          8,251               7,991
                                                    =======               =====

</TABLE>







See notes to unaudited condensed consolidated financial statements.

                                       4
<PAGE>



                 Manchester Technologies, Inc. and Subsidiaries
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                             Three months ended
                                                                     October 31,         October 31,
                                                                        2003                2002
                                                                      --------            --------


<S>                                                                  <C>                <C>
Cash flows from operating activities:
   Net income                                                        $   311             $     158

   Adjustments to reconcile net income to net cash
    from operating activities:
      Depreciation and amortization                                      609                   564
      Provision for doubtful accounts                                    283                   125
      Change in assets and liabilities:
        Accounts receivable                                            1,163                   685
        Inventory                                                        689                (1,031)
        Prepaid income taxes                                             300                   (71)
        Prepaid expenses and other current assets                        280                   179
        Other assets                                                      51                    13
        Accounts payable and accrued expenses                         (1,142)                 (419)
        Deferred service contract revenue                                136                  (333)
                                                                     -------               -------
           Net cash provided by (used in) operating activities         2,680                  (130)
                                                                      ------               --------
Cash flows from investing activities:
      Capital expenditures                                              (515)                 (188)
                                                                      -------               -------
           Net cash used in investing activities                        (515)                 (188)
                                                                      -------               -------
Cash flows from financing activities:
      Payments on capital lease obligations                              (51)                    -
                                                                     --------             --------

           Net cash used in financing activities                         (51)                    -
                                                                     --------            ---------
Net increase (decrease) in cash and cash equivalents                   2,114                  (318)
Cash and cash equivalents at beginning of period                       8,553                 8,963
                                                                      ------                 -----
Cash and cash equivalents at end of period                           $10,667               $ 8,645
                                                                     =======               =======
</TABLE>







See notes to unaudited condensed consolidated financial statements.

                                       5
<PAGE>


                 Manchester Technologies, Inc. and Subsidiaries
         Notes to Unaudited Condensed Consolidated Financial Statements
                 (in thousands, except share and per share data)
                                   (Unaudited)

 1.    Organization and Basis of Presentation

     Manchester  Technologies,  Inc. and its subsidiaries  ("Manchester,"  "we,"
"us," or "the Company") is a single-source  solutions  provider  specializing in
hardware  and  software  procurement,  display  technology,  custom  networking,
security, IP telephony, remote management,  application  development/e-commerce,
storage, and enterprise and Internet solutions. The Company offers its customers
single-source  solutions  customized  to  their  information  systems  needs  by
integrating  its analysis,  design and  implementation  services with  hardware,
software, networking products and peripherals from leading vendors. In addition,
we offer a complete line of products and peripherals for our customers'  display
technology requirements. The Company operates in a single segment.

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

     The accompanying  financial  information should be read in conjunction with
the financial  statements,  including the notes  thereto,  for the annual period
ended July 31, 2003.  The financial  information  included  herein is unaudited;
however, such information reflects all adjustments  (consisting solely of normal
recurring  adjustments) that are, in the opinion of management,  necessary for a
fair statement of results for the interim periods. In the opinion of management,
the accompanying unaudited condensed consolidated financial statements have been
prepared  in  accordance  with U.S.  generally  accepted  accounting  principles
("GAAP") for interim  financial  information  and with the  instructions to Rule
10-01 of Regulation  S-X. The results of  operations  for the three month period
ended  October  31,  2003 are not  necessarily  indicative  of the results to be
expected for future interim periods or the entire year.

   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,
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  representing  542,500 and 801,000
shares for the three months ended October 31, 2003 and 2002, respectively,  have
been excluded from the  calculation  of diluted net income per share as they are
antidilutive.  The following table  reconciles the denominators of the basic and
diluted per share computations. For each period, the numerator is the net income
as reported.
<TABLE>
<CAPTION>

                                                          Three months ended
                                              October 31, 2003                  October 31, 2002
                                              ----------------                  ----------------
                                                          Per share                           Per share
                                         Shares           amount             Shares            amount
                                         ------           ------             ------            ------
<S>                                      <C>                <C>              <C>                 <C>
      Basic                              7,990,000          $0.04            7,990,000           $0.02
                                                            =====                                 ====
      Effect of dilutive options           261,000                               1,000
                                        ----------                           ---------

      Diluted                            8,251,000          $0.04            7,991,000           $0.02
                                         =========          =====            =========           =====

</TABLE>

                                       6
<PAGE>

3.        Accounting for Stock-Based Compensation

     The Company records  compensation expense for employee stock options if the
current market price of the  underlying  stock exceeds the exercise price on the
date of the grant. On August 1, 1996, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation"
("SFAS  123").  The Company has  elected not to  implement  the fair value based
accounting  method for employee stock  options,  but has elected to disclose the
pro forma net income and net income per share for employee  stock option  grants
made  beginning  in fiscal  1996 as if such  method had been used to account for
stock-based compensation cost as described in SFAS 123.

     The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25"), and related interpretations for stock
options and other  stock-based  awards while disclosing pro forma net income and
net income per share as if the fair value method had been applied in  accordance
with SFAS 123.

     The Company  applies the intrinsic  value method as outlined in APB 25, and
related  interpretations  in  accounting  for stock options  granted.  Under the
intrinsic value method,  no  compensation  expense is recognized if the exercise
price of the Company's  employee  stock  options  equals the market price of the
underlying  stock on the date of grant.  Since the  Company has issued all stock
option grants at market value, no compensation  cost has been  recognized.  SFAS
123 requires that the Company provide pro forma information regarding net income
and net income per share as if compensation  cost for the Company's stock option
programs had been determined in accordance with the fair value method prescribed
therein.  During fiscal 2003, the Company adopted the disclosure portion of SFAS
No. 148,  "Accounting for Stock-Based  Compensation - Transition and Disclosure"
requiring  quarterly  SFAS  123  pro  forma  disclosure.   The  following  table
illustrates  the effect on net income and net income per share as if the Company
had measured the compensation cost for the Company's stock option programs under
the fair value method in each period presented.
<TABLE>
<CAPTION>


                                                    Three Months Ended
                                           October 31, 2003    October 31, 2002
                                           ----------------    ----------------
<S>                                               <C>                <C>
      Net income, as reported                     $   311            $  158
      Deduct:  Total stock-based
       employee compensation expense
       determined under fair value
       method for all awards, net of
       related tax effects                           (166)             (160)
                                                   -------           -------

      Net income (loss) - pro forma               $   145           $    (2)
                                                   ======           ========

      Net income (loss) per share:
       Basic - as reported                        $  0.04          $  0.02
       Basic - pro forma                          $  0.02          $  0.00

       Diluted - as reported                      $  0.04          $  0.02
       Diluted - pro forma                        $  0.02          $  0.00
</TABLE>

4.       Goodwill and Other Intangible Assets

     In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 142,  "Goodwill and Other  Intangible  Assets" (SFAS No. 142).  SFAS No. 142
requires that goodwill and intangible assets with indefinite useful lives no
                                        7
<PAGE>

longer be amortized,  but instead be tested for  impairment  at least  annually.
This  pronouncement  also requires that intangible  assets with estimable useful
lives be amortized over their respective estimated useful lives and reviewed for
impairment in accordance  with SFAS No. 144,  "Accounting  for the Impairment or
Disposal of Long-Lived Assets."

     The Company adopted the provisions of SFAS No. 142 as of August 1, 2001. In
accordance with SFAS No. 142,  goodwill is allocated to reporting  units,  which
are either the  operating  segment or one  reporting  level below the  operating
segment. The Company determined that its reporting unit for purposes of applying
the provisions of SFAS No. 142 was its operating segment.  The Company's initial
impairment  review  indicated  that  there was no  impairment  as of the date of
adoption. Fair value for goodwill was determined based on discounted cash flows.

     Also  required  by SFAS No.  142, on an annual  basis,  the  Company  tests
goodwill and other intangible assets for impairment. To determine the fair value
of these intangible  assets,  there are many assumptions and estimates used that
directly  impact the results of the  testing.  In making these  assumptions  and
estimates,  the Company  uses set  criteria  that are  reviewed  and approved by
various  levels of management,  and the Company  estimates the fair value of its
reporting units by using discounted cash flow analyses.

     Accumulated  amortization  for the  Company's  goodwill  was  approximately
$1,116 at both October 31, 2003 and July 31, 2003. In  accordance  with SFAS No.
142, no  goodwill  amortization  expense was  recorded  for the  quarters  ended
October 31, 2003 and 2002.

     As of October 31, 2003 and July 31, 2003, there were no intangible  assets,
other than  goodwill,  subject  or not  subject  to  amortization.  There was no
amortization  expense for intangible  assets subject to amortization  during the
quarters ended October 31, 2003 and 2002.

5.       Line of Credit

     The Company has available a line of credit with a financial  institution in
the  aggregate  amount of $15.0  million.  At October 31, 2003,  no amounts were
outstanding  under this line,  which  expires on January 31,  2005.  The line of
credit facility  requires the Company to maintain  certain  financial ratios and
covenants.  At October 31, 2003, the Company was not in compliance  with all the
financial  ratios and covenants  required.  The Company received a waiver of its
requirements from its banks as of and for the period ended October 31, 2003.

6.        Recently Issued Accounting Standards

     In January 2003, the FASB issued  Interpretation No. 46,  "Consolidation of
Variable Interest  Entities," ("FIN 46") an interpretation of ARB No. 51. FIN 46
addresses consolidation by business enterprises of variable interest entities as
defined in the  Interpretation.  In October 2003, the FASB, with the issuance of
its proposed  Interpretation,  "Consolidation of Variable Interest  Entities:  A
Modification of FASB Interpretation No. 46", proposed significant changes in how
companies   identify   variable  interest  entities  and  determine  who  should
consolidate  them  under FIN 46.  The  proposed  Interpretation  of FIN 46 would
clarify a number of  provisions  and relax  certain of its  requirements.  Other
changes  being  proposed  would  make it more  likely  that  potential  variable
interest entities are identified and consolidated,  and some would add difficult
judgments.  FIN 46 applies  immediately to variable  interest  entities  created
after January 31, 2003 and to variable  interest entities in which an enterprise
obtains an interest after that date. For variable  interest  entities created or
acquired prior to February 1, 2003, the provision of FIN 46, as revised, must be
applied for the first interim or annual  period ending after  December 15, 2003.
Accordingly,  the Company will adopt the provisions of FIN 46 during the quarter
ended January 31, 2004. The Company does not believe that the adoption of FIN 46
will have a significant impact on the Company's  financial  condition or results
of operations.

                                       8

<PAGE>


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

         Forward Looking Statements

     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 appearing elsewhere in this
report and with the Company's annual report on Form 10-K for the year ended July
31, 2003. The following discussion contains certain  forward-looking  statements
within the meaning of the Securities Act of 1933, as amended, and Section 21E of
the Securities and Exchange Act of 1934, as amended,  which  statements are made
pursuant to the safe harbor  provisions  of The  Private  Securities  Litigation
Reform Act of 1995. Forward-looking statements are generally identifiable by the
use  of  the  words   "believes,"   "intends,"   "expects,"   "will,"   "plans,"
"anticipates,"  or  similar  expressions.  Forward  looking  statements  are not
historical  facts, are based on the Company's beliefs and expectations as of the
date of this report, 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  and the risk  factors  described  in the
Company's  other  filings  from time to time with the  Securities  and  Exchange
Commission.   Readers  are  cautioned  not  to  place  undue   reliance  on  any
forward-looking  statements,  which reflect management's opinions only as of the
date  hereof.  We  undertake  no  obligation  to revise or publicly  release the
results of any revision to any forward-looking statements.

General

     We are an  integrator  and  reseller of  computer  hardware,  software  and
networking products,  primarily for commercial  customers,  and a distributor of
display technology  solutions and plasma display monitors,  primarily to dealers
and  system  integrators.   We  offer  our  customers  single-source  solutions,
customized to their information systems needs, by integrating  analysis,  design
and implementation  services with hardware,  software,  networking  products and
peripherals  from  leading  vendors.  To date,  most of our  revenues  have been
derived  from  product  sales.  We  generally  do not  develop or sell  software
products. However, certain computer hardware products sold by us are loaded with
prepackaged software products.

Certain Trends and Uncertainties

     General.   The  technology   industry  is  characterized  by  a  number  of
potentially adverse business conditions,  including pricing pressures,  evolving
distribution channels,  market consolidation and a decline in the rate of growth
in sales of personal  computers.  Heightened  price  competition  among  various
manufacturers,  integrators  or resellers of  technology  products may result in
reduced per unit revenue and declining gross profit margins.  As a result of the
intense price competition  within our industry,  we have experienced  increasing
pressure on our gross profit and  operating  margins with respect to our sale of
products. Our inability to compete successfully on the pricing of products sold,
or a  continuing  decline  in gross  margins  on  products  sold due to  adverse
industry  conditions or competition,  may have a material  adverse effect on our
business, financial condition and results of operations.

     Value-Added  Services.  An integral part of our strategy is to increase our
value-added  services  revenue.  These services  generally  provide higher gross
margins than those associated with the sale of products.  This strategy requires
us, among other things, to attract and retain highly skilled technical employees
in a  competitive  labor  market,  provide  additional  training  to  our  sales
representatives  and enhance our existing service  management  system. We cannot
predict  whether we will be  successful  in  increasing  our focus on  providing
value-added  services,  and the  failure  to do so may have a  material  adverse
effect on our business, results of operations and financial condition.

     Geographic Considerations. On September 11, 2001, the World Trade Center in
New York  City and the  Pentagon  in  Washington,  D.C.  were  the  subjects  of

                                       9
<PAGE>

terrorist  attacks. A significant part of our business is generated from our New
York City and  Baltimore/Washington,  D.C. offices. We cannot predict the impact
that potential  future  attacks may have on our business,  results of operations
and financial condition. In addition, given the concentration of our business in
these geographic  areas,  our business could be materially  affected by economic
conditions   and   other   significant   events   in  the  New  York   City  and
Baltimore/Washington, D.C. areas.

     Management of Growth.  Our strategy,  encompassing the expansion of service
offerings,  the  expansion of existing  offices,  and the  establishment  of new
regional  offices,  has  challenged  and will  continue to challenge  our senior
management and infrastructure. We cannot predict our ability to respond to these
challenges.  If we fail to effectively manage our planned growth, there may be a
material  adverse  effect on our business,  results of operations  and financial
condition.

     Personnel  Issues.  The success of our strategy  depends in large part upon
our ability to attract and retain highly skilled  technical  personnel and sales
representatives,   including  independent  sales  representatives,   in  a  very
competitive  labor  market.  The loss of a  significant  number of our  existing
technical personnel or sales representatives,  difficulty in hiring or retaining
additional technical personnel or sales representatives,  or reclassification of
our sales representatives as employees may have a material adverse effect on our
business, results of operations and financial condition.

     Competition.   The  technology   industry  is   characterized   by  intense
competition.  We directly  compete with local,  regional  and  national  systems
integrators,  value-added  resellers  and  distributors  as well as with certain
technology  manufacturers  that market  through  direct sales forces  and/or the
Internet. The technology industry has recently experienced,  and may continue to
experience,   a  significant   amount  of  consolidation   through  mergers  and
acquisitions,  and manufacturers of personal computers may increase  competition
by offering a range of services in addition to their current product and service
offerings.  In the  future,  we may face  further  competition  from new  market
entrants and  possible  alliances  between  existing  competitors.  In addition,
certain  suppliers and  manufacturers  have been, and  additional  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, and may also choose to market services directly to end users. Some
of our  competitors  have or may have,  greater  financial,  marketing and other
resources, and may offer a broader range of products and services, than us. 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.  We may not be able to compete
successfully in the future with these or other current or potential competitors.

     Vendor  Relationships and Product  Availability.  Our business is dependent
upon  our  relationships  with  major  manufacturers  and  distributors  in  the
technology  industry.   Many  aspects  of  our  business  are  affected  by  our
relationships with major manufacturers,  including product availability, pricing
and related  terms,  and  reseller  authorizations.  The  increasing  demand for
display technology solutions and ancillary equipment has resulted in significant
product shortages from time to time,  because  manufacturers have been unable to
produce  sufficient  quantities of certain products to meet demand. In addition,
many manufacturers have adopted "just in time" manufacturing principles that can
reduce the immediate  availability  of a wide range of products at any one time.
We cannot predict that  manufacturers  will maintain an adequate supply of these
products to satisfy all the orders of our customers or that,  during  periods of
increased demand,  manufacturers will provide products to us, even if available,
or at discounts previously offered to us. In addition, we cannot assure you that
the pricing and related terms offered by major  manufacturers will not adversely
change in the future. Our failure to obtain an adequate supply of products,  the
loss of a major manufacturer, the deterioration of our relationship with a major
manufacturer  or our inability in the future to develop new  relationships  with
other  manufacturers  may  have a  material  adverse  effect  on  our  business,
financial condition and results of operations.

     Certain   manufacturers   offer  market  development   funds,   cooperative
advertising and other promotional programs to systems integrators,  distributors
and computer  resellers.  We rely on these funds for many of our advertising and

                                       10
<PAGE>

promotional  campaigns.  In recent years,  manufacturers  have generally reduced
their level of support with respect to these programs,  which has required us to
increase  spending of our own funds to obtain the same level of advertising  and
promotion.  If manufacturers continue to reduce their level of support for these
programs, or discontinue them altogether,  we would have to further increase our
advertising and promotion spending,  which may have a material adverse effect on
our business, financial condition and results of operations.

     Our  profitability  has been  affected  by our  ability  to  obtain  volume
discounts from certain  manufacturers,  which has been dependent,  in part, upon
our  ability  to sell  large  quantities  of  products  to  computer  resellers,
including value added resellers. Our sales to resellers have been made at profit
margins   generally  less  favorable  than  our  sales  directly  to  commercial
customers.  Our  inability to sell  products to computer  resellers  and thereby
obtain the desired volume discounts from manufacturers or to expand our sales to
commercial  customers  sufficiently  to  offset  our  need to rely on  sales  to
computer resellers may have a material adverse effect on our business, financial
condition and results of operations.

     Changing  Technology;  Inventory  Risk.  The markets for our  products  and
services  are   characterized  by  rapidly  changing   technology  and  frequent
introduction of new hardware and software products and services. This may render
many existing products and services noncompetitive, less profitable or obsolete.
Our  continued  success  will  depend  on our  ability  to keep  pace  with  the
technological   developments  of  new  products  and  services  and  to  address
increasingly  sophisticated customer requirements.  Our success will also depend
upon our  abilities  to address  the  technical  requirements  of our  customers
arising  from new  generations  of computer  technologies,  to obtain  these new
products from present or future  suppliers and vendors at reasonable  costs,  to
educate and train our employees as well as our  customers  with respect to these
new products or services and to integrate  effectively and efficiently these new
products into both our internal systems and systems developed for our customers.
We may not be successful in  identifying,  developing and marketing  product and
service developments or enhancements in response to these technological changes.
Our failure to respond  effectively  to these  technological  changes may have a
material  adverse  effect on our  business,  financial  condition and results of
operations.

     Rapid  product  improvement  and  technological   change  characterize  the
technology  industry.  This results in relatively  short product life cycles and
rapid product obsolescence,  which can place inventory at considerable valuation
risk. Certain of our suppliers provide price protection to us, which is intended
to reduce the risk of inventory  devaluation due to price  reductions on current
products.  Certain of our suppliers also provide stock  balancing to us pursuant
to which we are able to  return  unsold  inventory  to a  supplier  as a partial
credit against  payment for new products.  There are often  restrictions  on the
dollar amount of inventory that we can return at any one time.  Price protection
and stock  balancing  may not be  available  to us in the future,  and,  even if
available,  these measures may not provide complete  protection against the risk
of excess or obsolete inventories. Certain manufacturers have reduced the period
for which they provide price protection and stock balancing rights.  Although we
maintain a sophisticated  proprietary  inventory  management  system,  we cannot
assure you that we will continue to successfully  manage our existing and future
inventory.  Our failure to successfully  manage our current or future  inventory
may have a material  adverse  effect on our  business,  financial  condition and
results of operations.

     As a result  of the  rapid  changes  that  are  taking  place in  computer,
networking and display technologies, product life cycles are short. Accordingly,
our product offerings change  constantly.  Prices of products change frequently,
with  generally  higher  prices early in the life cycle of the product and lower
prices near the end of the product's  life cycle.  The  technology  industry has
experienced  rapid  declines in average  selling  prices of personal  computers,
peripherals  and display  technology.  In some  instances,  we have 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 we
will be able to offset  declines in average  selling  prices with  increases  in
units shipped.

     Management.  The  Company  is highly  dependent  upon the  services  of the
members of its senior  management  team,  particularly  Barry R. Steinberg,  the
Company's founder, Chairman of the Board, President and Chief Executive Officer.
The  loss of any  member  of the  Company's  senior  management  team may have a
material adverse effect on its business.

                                       11
<PAGE>

     Maximizing Shareholder Value. The Company periodically considers methods of
enhancing  shareholder  value,  including,  without  limitation,   acquisitions,
divestitures,  business combinations,  and strategic partnering. There can be no
assurance  that we will  consummate any such  transactions,  be able to identify
suitable candidates for any such transactions or to negotiate  successfully such
transactions  at a price  or on terms  and  conditions  favorable  to us and our
shareholders.  Acquisitions  may be of  significant  size and may include assets
that  are  outside  our  geographic  territories  or are  ancillary  to our core
business strategy.

     Quarterly  Variations.  Our 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 our products and services,  the  introduction  of new hardware
and software  technologies  with  improved  features,  the  introduction  of new
services  by us and our  competitors,  changes  in the  level  of our  operating
expenses,  competitive  conditions  and  economic  conditions.  As a result,  we
believe that period-to-period comparisons of our operating results should not be
relied upon as an indication of future performance.  In addition, the results of
any quarterly  period are not  necessarily  indicative of results to be expected
for a full fiscal year.

     Microsoft  Litigation.  Most of the  personal  computers  we  sell  utilize
operating  systems  developed  by  Microsoft  Corporation.   The  United  States
Department  of  Justice  has  brought  a  successful  antitrust  action  against
Microsoft.  On November  12,  2002,  the United  States  District  Court for the
District of Columbia issued an order entering a final judgment in the action. We
believe  that the  final  judgment,  if  implemented,  will not have a  material
adverse effect on our business,  results of operations and financial  condition.
However, the final judgment has been appealed, and we cannot predict the outcome
of the appeal or the effect that any  modifications  to the final judgment would
have on our business, results of operations or financial condition.

     Information  Technology  Systems.  Our success is  dependent in part on the
accuracy,  proper  utilization  and continuing  development  of our  information
technology systems, including our business application systems, Internet servers
and  telephony  system.  The  quality  and our  utilization  of the  information
generated by our information technology systems affects, among other things, our
ability  to conduct  business  with our  customers,  manage  our  inventory  and
accounts receivable,  purchase,  sell, ship and invoice our products efficiently
and on a timely  basis and  maintain  cost-efficient  operations.  While we have
taken  steps to protect our  information  technology  systems  from a variety of
threats,  including computer viruses and malicious hackers,  we cannot guarantee
that  such  steps  will  be  effective.  If  there  is a  disruption  to  or  an
infiltration of our information  technology systems, it could significantly harm
our business and results of operations.

     This discussion of uncertainties is by no means exhaustive, but is designed
to  highlight  important  factors  that may impact  the  Company's  outlook  and
results.


      E-Commerce

     We utilize two websites each  incorporating an electronic  commerce system.
The sites, located at www.e-manchester.com and  www.electrograph.com  allow both
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. We have made,
and expect to continue to make, significant  investments and improvements in our
e-commerce capabilities. There can be no assurance that we will be successful in
enhancing and increasing our business through our expanded Internet presence.

Critical Accounting Policies

     Financial  Reporting  Release No. 60, which was released by the  Securities
and Exchange Commission,  encourages all registrants,  including the Company, to
include a discussion  of "critical"  accounting  policies or methods used in the
preparation of financial statements. The preparation of financial statements and
related disclosures in conformity with accounting  principles generally accepted
in  the  United  States  of  America  requires  management  to  make  judgments,
assumptions and estimates that affect the amounts  reported in the  consolidated
financial  statements  and  accompanying  notes.  Note  1  to  the  consolidated
financial statements in the Annual Report on Form 10-K for the fiscal year ended
July 31, 2003 describes the significant  accounting policies and methods used in

                                       12
<PAGE>

the preparation of the consolidated financial statements. The following critical
accounting  policies are impacted  significantly  by judgments,  assumptions and
estimates used in the preparation of the consolidated financial statements.

     Revenue from product  sales is  recognized  when title and risk of loss are
passed  to the  customer,  which is  generally  at the time of  shipment  to the
customer.  Revenue from  services is  recognized  when the related  services are
performed.  When product  sales and  services are bundled,  revenue is generally
recognized  separately  upon  delivery  of the  product  and  completion  of the
installation.  Service  contract  fees are  deferred and  recognized  as revenue
ratably over the period of the applicable  contract.  Deferred  service contract
revenue  represents the unearned  portion of service  contract fees. The Company
generally does not develop or sell software products.  However, certain computer
hardware  products  sold by the  Company are loaded  with  prepackaged  software
products.  The net  impact on the  Company's  financial  statements  of  product
returns, primarily for defective products, has been insignificant.

     The  allowance  for  doubtful  accounts is based on our  assessment  of the
collectibility  of  specific  customer  accounts  and the aging of the  accounts
receivable.  If there is a deterioration of a major customer's credit worthiness
or actual defaults are higher than our historical  experience,  our estimates of
the recoverability of amounts due us could be adversely affected.

     Inventory purchases and commitments are based upon future demand forecasts.
If there is a sudden and  significant  decrease  in demand for our  products  or
there is a higher risk of  inventory  obsolescence  because of rapidly  changing
technology  and  customer  requirements,  we may be  required  to  increase  our
inventory allowances and our gross margin could be adversely affected.

     We perform goodwill  impairment tests on an annual basis and between annual
tests in certain circumstances. In assessing the recoverability of the Company's
goodwill,  the Company must make various assumptions  regarding estimated future
cash flows and other factors in  determining  the fair values of the  respective
assets.  If these estimates or their related  assumptions  change in the future,
the Company may be required  to record  impairment  charges for these  assets in
future periods.  Any such resulting  impairment charges could be material to the
Company's results of operations.

                                       13



<PAGE>


      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 for the
                                                        Three Months Ended
                                                            October 31,

                                                      2003              2002
                                                      ----              ----

<S>                                                    <C>              <C>
           Revenue
                Products                                94.3%            94.8%
                Services                                 5.7              5.2
                                                      ------           ------

           Total revenue                               100.0            100.0
                                                       -----            -----

           Cost of revenue
                Products                                89.0             88.0
                Services                                72.5             67.3
                                                       -----            -----

           Total cost of revenue                        88.1             86.9
                                                       -----            -----
           Gross profit
                Products                                11.0             12.0
                Services                                27.5             32.7
                                                       -----            -----

           Total Gross Profit                           11.9             13.1

           Selling, general and
              administrative expenses                   11.1             12.9
                                                       -----            -----
           Income from operations                        0.8              0.2

           Interest and other income (expense), net     (0.1)             0.2
                                                       ------           -----
           Income before income taxes                    0.7              0.4

           Income tax provision                          0.3              0.2
                                                       -----            -----

           Net income                                    0.4%             0.2%
                                                       =====            =====
</TABLE>

Three Months Ended October 31, 2003 Compared with Three Months Ended October 31,
2002

     Revenue.  Revenue  increased by $6.4 million or 9% to $74.7 million for the
three  months  ended  October 31, 2003 from $68.3  million for the three  months
ended  October 31,  2002.  Revenue  from the sale of products  increased by $5.7
million or 9% while revenue from service offerings  increased by $0.7 million or
19%. The increase in product revenue is primarily a result of increased sales of
display   monitors,   primarily  large  screen  flat  panel  displays,   by  our
Electrograph   subsidiary.   The  increase  in  service   revenue  is  primarily
attributable  to the Company's  continued focus on growing its sales of services
and solutions to its existing customer base and to new customers, as well as the
growth of sales of services that are delivered by manufacturers or vendors.

                                       14
<PAGE>

     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 rebates  provided by  manufacturers  related to volume
incentives  and/or targets  achieved by the Company and/or specific  sales.  All
other  operating  costs are  included  in selling,  general  and  administrative
expenses,  which are offset in part by certain market development funds provided
by manufacturers. Gross profit decreased by $68,000 or 1%, from $9.0 million for
the three  months  ended  October 31, 2002 to $8.9  million for the three months
ended October 31, 2003 while as a percentage of revenue,  gross profit decreased
from 13.1% for the three  months  ended  October 31, 2002 to 11.9% for the three
months ended  October 31, 2003.  Gross  profit from product  sales  decreased by
$71,000 or 1% while gross  profit  from  service  offerings  was the same as the
previous  period.  As a  percentage  of revenue,  gross  profit from the sale of
products  decreased  from 12.0% for the three months  ended  October 31, 2002 to
11.0% for the three  months  ended  October  31, 2003  primarily  as a result of
increased  sales of lower  margin  products  due to  increased  competition  and
pricing  pressure.  As a  percentage  of revenue,  gross profit from the sale of
services  declined  from 32.7% for the three  months  ended  October 31, 2002 to
27.5% for the three  months  ended  October 31, 2003 due to  increased  sales of
lower margin services that are delivered by manufacturers or vendors.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses decreased by $550,000,  or 6% from $8.8 million for the
three months  ended  October 31, 2002 to $8.3 million for the three months ended
October 31, 2003. The decrease is  principally  due to decreased rent expense of
approximately  $300,000 as a result of the capital  leases  entered  into by the
Company in March 2003,  decreased  telephone expenses of approximately  $160,000
and decreased advertising costs of approximately $490,000, primarily as a result
of market development funds received from manufacturers for pre-approved  market
development  activities.  These decreases were partially offset by increased bad
debt expense of  approximately  $370,000  primarily  due to one  customer.  As a
percentage of revenue,  selling,  general and administrative  expenses decreased
from 12.9% for the three  months  ended  October 31, 2002 to 11.1% for the three
months ended October 31, 2003.

     Interest  and Other  Income  (Expense),  net.  Interest  and  other  income
(expense), net, decreased by approximately $230,000 from income of approximately
$140,000  for  the  three  months  ended  October  31,  2002  to an  expense  of
approximately  $87,000 for the three months ended  October 31, 2003.  The amount
for the three months ended October 31, 2003 included  approximately  $155,000 of
interest  expense related to the interest  portion of the capital leases entered
into by the  Company in March 2003 offset by  interest  income of  approximately
$68,000  earned on the  Company's  cash  investments.  The  amount for the three
months ended October 31, 2002  included  income of  approximately  $113,000 from
insurance  proceeds received by the Company and interest income of approximately
$26,000 earned on the Company's cash investments.

     Income Tax  Provision.  Our  effective  tax rate was 40.1% the three months
ended October 31, 2003 and 40.2% for the three months ended October 31, 2002.

Liquidity and Capital Resources

     Our  primary  sources  of cash and cash  equivalents  have been  internally
generated  working capital from  profitable  operations.  The Company's  working
capital at October 31, 2003 and July 31, 2003 was  approximately  $31.1  million
and $30.7 million, respectively.

     Operations  for the three  months  ended  October 31, 2003 and 2002,  after
adding back non-cash items, provided cash of approximately $1.2 million and $0.8
million,  respectively.  During such periods,  other changes in working  capital
provided  (used)  cash  of  approximately   $1.5  million  and  ($1.0)  million,
respectively, resulting in cash being provided by (used in) operating activities
of  approximately  $2.7  million  and  ($130,000),  respectively.  Our  accounts
receivable and accounts payable balances, as well as our inventory balances, 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.

                                       15
<PAGE>

     Investment  activities for the three months ended October 31, 2003 and 2002
used cash of approximately  $515,000 and $188,000,  respectively.  For the three
months  ended  October 31, 2003 and  October  31, 2002 these  amounts  consisted
solely of additions to property and equipment.

     For the three months ended October 31, 2003 financing  activities used cash
of  approximately   $51,000.   This  amount  consisted  solely  of  payments  on
capitalized lease obligations.  Financing  activities did not provide or use any
cash for the three months ended October 31, 2002.

     We have  available  a line of credit with a  financial  institution  in the
aggregate  amount of $15.0  million.  At  October  31,  2003,  no  amounts  were
outstanding  under this line,  which  expires on January 31,  2005.  The line of
credit facility  requires the Company to maintain  certain  financial ratios and
covenants.  At October 31, 2003, the Company was not in compliance  with all the
financial  ratios and covenants  required.  The Company received a waiver of its
requirements from its banks as of and for the period ended October 31, 2003.

     We believe that our 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  2004  which  ends on July 31,
2004. We currently have no material commitments for capital expenditures,  other
than  operating  and capital  leases that the Company has  committed  to for its
facilities and certain  tangible  property.  Future capital  requirements of the
Company  include those for the growth of working  capital items such as accounts
receivable and inventory, the purchase of equipment, expansion of facilities, as
well  as  the  possible  opening  of new  offices,  potential  acquisitions  and
expansion of the Company's  service and  e-commerce  capabilities.  In addition,
there  are  no   transactions,   arrangements  and  other   relationships   with
unconsolidated  entities or other persons that are  reasonably  likely to affect
liquidity or the availability of, or requirements for, capital resources.

     The Company regularly examines  opportunities for strategic acquisitions of
other  companies  or lines of business  and  anticipates  that it may issue debt
and/or equity securities either as direct consideration for such acquisitions or
to  raise  additional  funds to be used (in  whole  or in part) in  payment  for
acquired securities or assets. The issuance of such securities could be expected
to have a dilutive  impact on the  Company's  shareholders,  and there can be no
assurance as to whether or when any acquired business would contribute  positive
operating results commensurate with the associated investment.



                                       16
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The  Company is not  exposed  to  significant  market  risks.  The  Company
primarily  invests its cash in mutual funds  consisting of U.S.  Government  and
Government  Agency  Securities,  Municipal  Bonds  and  Corporate  Fixed  Income
securities.  Neither  a 100 basis  point  increase  nor  decrease  from  current
interest rates would have a material effect on the Company's financial position,
results of operations or cash flows.


ITEM 4.  CONTROLS AND PROCEDURES

     Within  90  days  prior  to  the  filing  of  this  report,  the  Company's
management,  including the Company's Chief Executive Officer and Chief Financial
Officer,  evaluated  the  effectiveness  of  the  design  and  operation  of the
Company's  disclosure controls and procedures as defined in Rule 14(c) under the
Securities Exchange Act of 1934 (the "Exchange Act"). Based upon the evaluation,
the Chief  Executive  Officer  and the Chief  Financial  Officer  concluded  the
Company's  disclosure  controls and procedures were  effective,  in all material
respects,  in timely  alerting  them to  material  information  relating  to the
Company  (including  its  consolidated  subsidiaries)  and to  ensure  that  the
information  required to be  disclosed  in the  reports  the  Company  files and
submits under the Exchange Act is recorded,  processed,  summarized and reported
as and when required.

     There have been no significant  changes in the Company's  internal controls
or in  other  factors  subsequent  to the  date  of the  evaluation  that  could
significantly affect these controls.



                                       17
<PAGE>



                           PART II - OTHER INFORMATION

      ITEM 6.     EXHIBITS AND REPORTS

(a)      Exhibits

          31.1 - Certification by Barry R. Steinberg,  Chief Executive  Officer,
               Pursuant  to 18 U.S.  C.  Section  1350,  as Adopted  Pursuant to
               Section 302 of the Sarbanes-Oxley Act of 2002.

          31.2 - Certification by Elan Yaish, Chief Financial Officer,  Pursuant
               to 18 U.S. C. Section 1350, as Adopted Pursuant to Section 302 of
               the Sarbanes-Oxley Act of 2002.

          32.1 - Certification by Barry R. Steinberg,  Chief Executive  Officer,
               Pursuant  to 18 U.S.  C.  Section  1350,  as Adopted  Pursuant to
               Section 906 of the Sarbanes-Oxley Act of 2002.

          32.2 - Certification by Elan Yaish, Chief Financial Officer,  Pursuant
               to 18 U.S. C. Section 1350, as Adopted Pursuant to Section 906 of
               the Sarbanes-Oxley Act of 2002.

       (b)    Reports on Form 8-K

1.   Form 8-K filed September 5, 2003  disclosing  Press Release dated September
     5, 2003  regarding a write-down  of between $2.3 million and $2.5  million,
     pre-tax,  relating  to  the  closing  of  the  operations  of  its  Donovan
     Consulting Group subsidiary.

2.   Form 8-K filed October 28, 2003 disclosing  Press Release dated October 27,
     2003  reporting  earnings for the fourth quarter and fiscal year ended July
     31, 2003.



                                       18
<PAGE>







                          MANCHESTER TECHNOLOGIES, 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 TECHNOLOGIES., INC.
                                           (Registrant)


DATE:   December 11, 2003              /S/ Barry R. Steinberg
                                       ----------------------------------------
                                      Barry R. Steinberg
                                      President and Chief Executive Officer



DATE:   December 11, 2003             /S/ Elan Yaish
                                      -----------------------------------------

                                      Elan Yaish
                                      Vice President Finance
                                      and Chief Financial Officer




<PAGE>