UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q/A


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

                  For the quarterly period ended April 30, 2004

                                                               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) 951-8100
              (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 June 7, 2004 there were 8,070,551  outstanding  shares of the registrant's
Common Stock.
<page>

                                Explanatory Note

     Manchester Technologies,  Inc. (the "Company") is filing this Amendment No.
1 to its Form 10-Q for the quarter  ended April 30, 2004 to amend the  Quarterly
Report on Form 10-Q for the quarter ended April 30, 2004 previously filed by the
Company  (the  "Original  April 30,  2004 Form  10-Q"),  in order to reflect the
Company's  decision to exclude  separate  disclosure of cash flows pertaining to
discontinued  operations  in the nine  months  ended  April  30,  2004 cash flow
statement, presented in our Condensed Consolidated Statements of Cash Flows. The
reclassification  of the nine months  ended  April 30, 2004 cash flow  statement
will have no impact on the  statements of operations or the balance sheet of the
Company in any period presented.

     Because of the changes to our  Condensed  Consolidated  Statements  of Cash
Flows, we are amending the Original April 30, 2004 Form 10-Q to:

o Revise Part I Item 1, Financial Statements.  The revisions appear in:
     -    The Company's Condensed Consolidated  Statements of Cash Flows for the
          nine months ended April 30, 2004.
     -    Note 2 to  Condensed  Consolidated  Financial  Statements  in the last
          paragraph of "Discontinued Operations."

o Revise Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations. We have revised the first paragraph in "Cash Flows" under
the heading "Liquidity and Capital Resources."

     As  part  of  this  Amendment  No.  1,  the  Company  is  also  filing  new
certifications  from our Chief  Executive  Officer and Chief  Financial  Officer
(Exhibits 31.1, 31.2, 32.1 and 32.2).

     No attempt  has been made in this Form 10-Q/A to update  other  disclosures
presented in the original Form 10-Q, except as described above. This Form 10-Q/A
does not reflect events  occurring after the filing of the original Form 10-Q or
modify or update those disclosures, except as described above. Accordingly, this
Form  10-Q/A  should  be read in  conjunction  with our  filings  made  with the
Securities and Exchange Commission subsequent to the filing of the original Form
10-Q, including any amendments to those filings.

                                       2

<PAGE>


               MANCHESTER TECHNOLOGIES, INC. AND SUBSIDIARIES

                                Table of Contents

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

Item 1.     Condensed Consolidated Balance Sheets as of
                   April 30, 2004  (unaudited) and July 31, 2003             4

            Condensed Consolidated Statements of Operations for the
                   Three Months  and Nine Months Ended
                      April 30, 2004 and 2003 (unaudited)                    5

            Condensed Consolidated Statements of Cash Flows for the
                   Nine Months Ended April 30, 2004 and 2003 (unaudited)     6

            Notes to Unaudited Condensed Consolidated Financial Statements   7

Item 2.     Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                      11

Item 3.     Quantitative and Qualitative Disclosures About Market Risk      19

Item 4.     Controls and Procedures                                         20


PART II.    OTHER INFORMATION

 Item 6.    Exhibits and Reports on Form 8-K                                21

                                       3


<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1.   Condensed Consolidated Financial Statements

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

                                                             April 30, 2004          July 31, 2003
                                                               (Unaudited)           -------------
                                                               -----------
<S>                                                              <C>                   <C>
Assets
Current assets:
  Cash and cash equivalents                                      $13,241               $ 8,553
  Accounts receivable, net                                        33,297                35,117
  Inventory                                                       25,805                 9,605
  Deferred income taxes                                              603                   603
  Prepaid taxes                                                       42                 1,704
  Prepaid expenses and other current assets                          703                   709
  Assets held for sale                                             2,881                     -
                                                                 -------            ----------

         Total current assets                                     76,572                56,291

Property and equipment, net                                       12,894                13,985
Goodwill, net                                                      3,735                 6,439
Deferred income taxes                                                757                   757
Other assets                                                         134                   278
                                                                    ----                   ---

Total assets                                                     $94,092               $77,750
                                                                  ======                ======

Liabilities and shareholders' equity
Current liabilities:
  Accounts payable and accrued expenses                          $40,992               $24,752
   Deferred service contract revenue                                   -                   666
   Current portion of capital lease obligations                      237                   212
                                                                 -------               -------

         Total current liabilities                                41,229                25,630

Deferred compensation payable                                        263                   263
Capital lease obligations, net of current portion                  7,749                 7,923
                                                                   -----               -------

         Total liabilities                                        49,241                33,816
                                                                  ------               -------

Shareholders' equity:
  Preferred stock, $.01 par value; 5,000 shares
   authorized, none issued                                             -                     -

  Common stock, $.01 par value; 25,000 shares authorized,
   8,071 and 7,990 shares issued and outstanding                      81                    80
  Additional paid-in capital                                      19,249                18,942

  Deferred compensation                                              (13)                  (13)

  Retained earnings                                               25,534                24,925
                                                                  ------                ------

         Total shareholders' equity                               44,851                43,934
                                                                  ------                ------

         Total liabilities and shareholders' equity              $94,092               $77,750
                                                                  ======               =======
</TABLE>



See notes to unaudited condensed consolidated financial statements.

                                       4

<PAGE>

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

                                                 Three months ended April 30,     Nine months ended April 30,
                                                    2004            2003           2004                2003
                                                    ----            ----           ----                ----
<S>                                                <C>            <C>            <C>                 <C>
Revenue                                            $42,448        $36,533        $132,943            $123,636

Cost of Revenue                                     38,509         33,137         119,712             110,432
                                                    ------         ------         -------             -------
       Gross profit                                  3,939          3,396          13,231              13,204


Selling, general and
    administrative expenses                          3,149          2,847           9,735               8,657
                                                     -----          -----           -----               -----
       Income from operations                          790            549           3,496               4,547
Interest and other income (expense), net               (70)           (22)           (166)                146
                                                       ----           ---             ----                ---
       Income from continuing operations
           before income taxes                         720            527           3,330               4,693
Income tax provision                                   288            211           1,312               1,877
                                                      ----            ---           -----               -----
Income from continuing operations                      432            316           2,018               2,816
                                                      ----            ---           -----               -----

Discontinued operations
       Loss from operations of
           discontinued component                     (714)          (484)         (2,314)             (4,594)
       Income tax benefit                              285            194             905               1,837
                                                     -----            ---             ---               -----

       Loss from discontinued operations             (429)           (290)         (1,409)             (2,757)
                                                     -----           -----         -------             -------

Net income                                          $   3         $    26        $    609             $    59
                                                     ====          ======         =======              ======

Income per share from continuing operations
   Basic                                            $0.05           $0.04           $0.25               $0.35
                                                     ====            ====            ====                ====

   Diluted                                          $0.05           $0.04           $0.24               $0.35
                                                     ====            ====            ====                ====

Loss per share from discontinued operations
   Basic                                           $(0.05)         $(0.04)         $(0.18)             $(0.35)
                                                     =====           =====           =====               =====

   Diluted                                         $(0.05)         $(0.04)         $(0.17)             $(0.35)
                                                     ====            =====           =====               =====

Net income per share
   Basic                                            $0.00           $0.00           $0.08                $0.01
                                                     ====            ====            ====                 ====

   Diluted                                          $0.00           $0.00           $0.07                $0.01
                                                     ====            ====            ====                 ====

Weighted average
  shares outstanding
                                                         =
  Basic                                              8,070          7,990            8,017              7,990
                                                     =====          =====            =====              =====
  Diluted                                            8,533          7,990            8,364              7,990
                                                     =====          =====            =====              =====
</TABLE>


See notes to unaudited condensed consolidated financial statements.


                                       5

<PAGE>



                 Manchester Technologies, Inc. and Subsidiaries
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                         Nine months ended
                                                                                   April 30,            April 30,
                                                                                    2004                  2003
                                                                                    ----                  ----

<S>                                                                                <C>                  <C>

Cash flows from operating activities:
   Net income                                                                     $    609               $    59

   Adjustments to reconcile net income to net
    cash from operating activities:
      Depreciation and amortization                                                  1,674                 1,402
      Provision for doubtful accounts                                                  489                   (94)
      Equity based compensation expense                                                 24                     -

      Changes in assets and liabilities:
        Accounts receivable                                                          1,331                 3,341
        Inventory                                                                  (16,200)               (3,630)
        Prepaid income taxes                                                         1,662                  (294)
        Prepaid expenses and other current assets                                        6                  (325)
        Other assets                                                                   144                   347
        Accounts payable and accrued expenses                                       15,551                 2,078
        Deferred service contract revenue                                               23                  (263)
                                                                                       ----                 -----



           Net cash provided by operating activities                                 5,313                 2,621
                                                                                     -----                ------

Cash flows from investing activities:
      Capital expenditures                                                            (760)                 (718)
                                                                                   -------                  ----

           Net cash used in investing activities                                      (760)                 (718)
                                                                                   --------                 -----
Cash flows from financing activities:
      Proceeds from exercise of stock options                                          284                     -
      Payments on capital lease obligations                                           (149)                  (16)
                                                                                    -------              --------

           Net cash provided by (used in) financing activities                         135                   (16)
                                                                                    ------               --------

Net increase in cash and cash equivalents                                            4,688                 1,887
Cash and cash equivalents at beginning of period                                     8,553                 8,963
                                                                                     -----               --------

Cash and cash equivalents at end of period                                         $13,241               $10,850
                                                                                    ======                =======

Capital lease obligations incurred to acquire buildings                            $     -                $8,200
                                                                                   =======                ======
</TABLE>

See notes to unaudited condensed consolidated financial statements.


                                       6


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

1.       Organization and Basis of Presentation

     The condensed  consolidated  financial  statements  include the accounts of
Manchester Technologies,  Inc. and its wholly-owned subsidiaries  (collectively,
"Manchester," "we," "us," or "the Company").  As discussed further in Note 2, on
May 28, 2004, the Company sold its end-user information  technology  fulfillment
and professional services business.  Prior to such sale, Manchester  specialized
in hardware and software  procurement,  display  technology,  custom networking,
security, IP telephony, remote management,  application  development/e-commerce,
storage,   and  enterprise  and  Internet  solutions,   offering  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.  Subsequent
to  such  sale,  the  Company  will  continue  distributing  display  technology
solutions and plasma display monitors and computer hardware primarily to dealers
and system integrators and will no longer provide any professional services. The
Company operates in a single segment.

     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 and nine month
periods ended April 30, 2004 are not necessarily indicative of the results to be
expected for future interim periods or the entire year.

2.       Discontinued Operations

     On May 28,  2004,  the Company  sold its  end-user  information  technology
fulfillment  and  professional  services  business  to  ePlus,  inc.,  a leading
provider  of  Enterprise  Cost  Management,  in an  all  cash  transaction.  The
transaction  included the sale to ePlus of the customer list of the business and
certain  related  equipment,  the  assumption by ePlus of certain  contracts and
liabilities pertaining to the business, the hiring by ePlus of approximately 135
Manchester employees involved in the business, and an option to purchase certain
inventory of the business to be determined at a subsequent date. The transaction
did not include, and Manchester  retained,  the balance of the inventory and all
of the accounts  receivable  of the  business  sold.  The Company will  continue
distributing  display  technology  solutions  and plasma  display  monitors  and
computer hardware primarily to dealers and system integrators.

     The  purchase  price for the  acquisition  was  approximately  $5,000.  The
Company  estimates  that it will  record a gain of  approximately  $1,500 in its
fourth quarter ended July 31, 2004 as a result of the transaction.

     Assets held for sale of the  disposal  group  included on the  accompanying
condensed consolidated balance sheet as of April 30, 2004 consist of goodwill of
$2,704 and  property and  equipment,  net of $177.  Liabilities  of the disposal
group  include  deferred  revenue of $689,  which has been  included in accounts
payable and accrued expenses on the accompanying  condensed consolidated balance
sheet as of April 30, 2004.

     In accordance with SFAS 144,  "Accounting for the Impairment or Disposal of
Long-Lived  Assets",  the results of  operations  from the sale of the  end-user
information  technology fulfillment and professional services business have been
recorded as discontinued  operations in the accompanying  condensed consolidated
statements

                                       7

<PAGE>

of operations.  The revenue from discontinued  operations was $34,976
and $27,411 for the three  months  ended April 30, 2004 and 2003,  respectively.
The loss from operations of the discontinued component was $(714) and $(484) for
the three months ended April 30, 2004 and 2003,  respectively.  The revenue from
discontinued  operations was $98,975 and $89,135 for the nine months ended April
30, 2004 and 2003,  respectively.  The loss from operations of the  discontinued
component was $(2,314) and $(4,594) for the nine months ended April 30, 2004 and
2003, respectively.


     The  presentation  of the  statement of  operations  for the three and nine
months  ended  April 30,  2003 has been  reclassified  to  reflect  discontinued
operations.  The  balance  sheet as of July 31,  2003  and,  as a result  of the
Company's  decision to exclude  separate  disclosure of cash flows pertaining to
discontinued  operations  in the nine  months  ended  April 30,  2004 cash flows
statement,  the statement of cash flows for the nine months ended April 30, 2003
has not been reclassified to reflect discontinued operations.


3.        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  153,000 and 843,000
shares for the three  months  ended April 30, 2004 and 2003,  respectively,  and
429,000  and 843,000  shares for the nine months  ended April 30, 2004 and 2003,
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  from  continuing  operations  as  reported  and the per share
amounts below represent income per share from continuing operations.
<TABLE>
<CAPTION>
                             Three months ended April 30,                    Nine months ended April 30,
                                2004               2003                      2004                   2003
                                ----               ----                      ----                   ----
                                   Per share              Per share                 Per share             Per share
                   Shares           amount      Shares    amount        Shares      amount       Shares   amount
                   ------           ------      ------    ------        ------      ------       ------   ------
                                                  (shares in thousands)
<S>                      <C>          <C>        <C>        <C>          <C>          <C>          <C>      <C>
         Basic           8,070        $0.05      7,990      $0.04        8,017        $0.25        7,990    $0.35
                                      =====                 =====                      ====                 =====


         Effect of
          dilutive
           options         463                                             347
                           ---                    ----                     ---                     -----

         Diluted         8,533        $0.05      7,990     $0.04         8,364        $0.24        7,990    $0.35
                         =====         ====      =====     =====          ====        =====        =====    =====
</TABLE>


 4.       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 (loss) and net income  (loss) per share for employee  stock
option  grants  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
(loss)  and net income  (loss)  per share as if the fair  value  method had been
applied in accordance with SFAS 123.

                                       8

<PAGE>

     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 or exceeds 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 at
the time of grant.  For 50,000  options that were  repriced  subsequent to their
date of grant, the Company is applying variable accounting to those options. The
related  equity-based  compensation  expense was $24 for the nine  months  ended
April 30, 2004. SFAS 123 requires that the Company provide pro forma information
regarding net income  (loss) and net income (loss) 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 (loss) and
net income (loss) 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 April 30,       Nine Months Ended April 30,
                                                        2004           2003            2004               2003
                                                        ----           ----            ----               ----

<S>                                                       <C>              <C>         <C>                <C>
      Net income, as reported                             $3               $26         $609               $ 59

      Add: Stock-based compensation
        expense included in net income
       net of related tax effects                         14                 -           14                  -

      Deduct:  Total stock-based
       employee compensation expense
       determined under fair value
       method for all awards, net of
       related tax effects                              (119)             (123)        (405)              (369)
                                                        -----             -----        -----              -----

      Net income (loss) - pro forma                    $(102)             $(97)        $218              $(310)
                                                         ====               ===         ===                ====

      Net income (loss) per share:
       Basic - as reported                            $0.00             $(0.00)       $0.08              $0.01
                                                       ====               =====        ====               ====
       Basic - pro forma                             $(0.01)            $(0.01)       $0.03             $(0.04)
                                                       =====              =====       =====               =====

       Diluted - as reported                          $0.00             $(0.00)       $0.07              $0.01
                                                       ====               =====        ====               ====
       Diluted - pro forma                           $(0.01)            $(0.01)       $0.03             $(0.04)
                                                       =====              =====        ====               =====
</TABLE>

5.       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
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.
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.

                                       9

<PAGE>
     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 unit by using discounted cash flow analyses.

         Accumulated amortization for the Company's goodwill was approximately
$647 and $1,116 at April 30, 2004 and July 31, 2003, respectively. In accordance
with SFAS No. 142, no goodwill amortization expense was recorded for the three
months and nine months ended April 30, 2004 and 2003.


         As discussed in Note 2, $2,704 of goodwill, which was net of
accumulated amortization of $469, has been included in assets held for sale as
of April 30, 2004. The amount of the goodwill classified as held for sale was
determined based on a relative fair value approach in accordance with SFAS No.
142.

         As of April 30, 2004 and July 31, 2003, the Company had no intangible
assets other than goodwill.


                                       10

<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.


Overview

     On May 28,  2004,  the Company  sold its  end-user  information  technology
fulfillment  and  professional  services  business  to  ePlus,  inc.,  a leading
provider  of  Enterprise  Cost  Management,  in an  all  cash  transaction.  The
transaction  included the sale to ePlus of the customer list of the business and
certain  related  equipment,  the  assumption by ePlus of certain  contracts and
liabilities pertaining to the business, the hiring by ePlus of approximately 135
Manchester employees involved in the business, and an option to purchase certain
inventory of the business to be determined at a subsequent date. The transaction
did not include, and Manchester  retained,  the balance of the inventory and all
of the accounts  receivable  of the  business  sold.  The Company will  continue
distributing  display  technology  solutions  and plasma  display  monitors  and
computer hardware primarily to dealers and system integrators.

     Prior to the sale we were 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  offered  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.  Through
April 30, 2004,  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.

         While the Company was able to grow the revenues of the IT products and
services business, the continued pressure on margins and increased competition
with respect to the sale of IT products caused the Company to review its
business operations with the goal of aligning the Company's operations with what
management perceived as growth opportunities in the technology marketplace. As a
result, the Company decided to exit the end-user IT products and services
business as it pertains to selling to end users with the expectation that this
would reduce costs and allow the Company to focus primarily on its display
solutions business and explore other areas of growth.

         The purchase price for the acquisition was approximately $5.0 million.
The Company estimates that it will record a gain of approximately $1.5 million
in its fourth quarter ended July 31, 2004 as a result of the transaction.

                                       11

     Revenue from continuing operations for the quarter ended April 30, 2004 was
$42.4  million as compared with $36.5  million for the  comparable  quarter last
year. The Company reported income from continuing  operations for the quarter of
$432,000  or $0.05 per  diluted  share as  compared  with  $316,000 or $0.04 per
diluted share reported a year ago.

     Revenue from continuing operations for the nine months ended April 30, 2004
was $132.9  million as compared with $123.6 million for the first nine months of
last  year.  Income  from  continuing  operations  for the nine  months was $2.0
million or $0.24 per diluted  share as compared  with $2.8  million or $0.35 per
diluted share reported a year ago.

     The sale to ePlus of our  end-user IT product and  services  business  will
enable us to focus our  resources on our display  solutions  business.  We are a
dominant  player in the  display  technology  market,  and we believe  that this
market  will  continue  to grow in the  years to come.  Revenues  from  sales of
display solutions increased by 21% as compared to the third quarter of last year
and 17% as compared to the first nine months of last year.

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 selling price
of display  products and peripherals and computer  hardware.  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  Products and Services.  An integral part of our strategy is to
increase  our  value-added  products and services  revenue.  These  products and
services  generally  provide higher gross margins than those associated with the
sale of commodity  products.  We cannot predict whether we will be successful in
increasing  our focus on providing  value-added  products and services,  and the
failure to do so may have a material adverse effect on our business,  results of
operations and financial condition.

     Management  of  Growth.   Our  strategy,   encompassing  the  expansion  of
offerings, exploring other areas of growth 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.

     Competition.   The  technology   industry  is   characterized   by  intense
competition.  We directly compete with local, regional and national 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 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  manufacturers  have been, and additional  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 distribution channels, 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.

                                       12

<PAGE>

     Vendor  Relationships and Product  Availability.  Our business is dependent
upon our relationships with major manufacturers in the technology industry. Many
aspects  of  our  business  are  affected  by  our   relationships   with  major
manufacturers,  including product  availability,  pricing and related terms. 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.

     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 resellers.  Our inability to
obtain the  desired  volume  discounts  from  manufacturers  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  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  technologies,  to obtain these new products from present or
future  manufacturers 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  manufacturers  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 manufacturers  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  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 display technology products. In some instances,  we
have been able to offset these price  declines with  increases in units shipped.
There can be no

                                       13

<PAGE>
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. The loss of any member of the Company's
senior management team may have a material adverse effect on its business.

     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.

     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 a website incorporating an electronic commerce system. The site,
located  at  www.electrograph.com  allows  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

     The  Company's  discussion  and  analysis of its  financial  condition  and
results of operations is based on its consolidated  financial statements,  which
have been prepared in accordance with accounting  principles  generally accepted
in the United  States.  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 the
preparation of the consolidated  financial  statements.  The following  critical
accounting policies are impacted


                                       14

<page>
significantly by judgments, assumptions and estimates used in the preparation of
the consolidated financial statements.

     Revenue  Recognition.  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.  The  Company  generally  does not  develop  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

     Allowance for Doubtful  Accounts.  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. 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.

     Goodwill.  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.

                                       15

<PAGE>
      Results of Operations

     The  following  table sets forth,  for the periods  indicated,  information
derived from the  Company's  condensed  consolidated  statements  of  operations
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,

                                                        2004        2003         2004          2003
                                                        ----        -----        ----         -----

<S>                                                    <C>         <C>          <C>            <C>
Revenue                                                100.0%      100.0%       100.0%         100.0%

Cost of Revenue                                         90.7        90.7         90.0           89.3
                                                        ----        ----         ----           ----
       Gross profit                                      9.3         9.3         10.0           10.7


Selling, general and
    administrative expenses                              7.4         7.8          7.3            7.0
                                                         ---         ---          ---            ---
       Income from operations                            1.9         1.5          2.6            3.7
Interest and other income (expense), net                (0.2)       (0.1)        (0.1)           0.1
                                                         ----       ----          ----           ---
       Income from continuing operations
          before income taxes                            1.7         1.4          2.5            3.8
Income tax provision                                     0.7         0.6          1.0            1.5
                                                        ----         ---          ---            ---
Income from continuing operations                        1.0         0.9          1.5            2.3
                                                        ----         ---          ---            ---

Discontinued operations
       Loss from operations of
           discontinued component                       (1.7)       (1.3)        (1.7)          (3.7)
       Income tax benefit                                0.7         0.5          0.7            1.5
                                                     -------         ---          ---            ---

       Loss on discontinued operations                 (1.0)        (0.8)        (1.1)          (2.2)
                                                       -----        -----        -----          -----

Net income                                               0.0%        0.1%         0.5%           0.0%
                                                        =====       =====         ====          =====
</TABLE>

     Three  Months Ended April 30, 2004  Compared  with Three Months Ended April
30, 2003

     Revenue.  Revenue increased by $5.9 million or 16% to $42.4 million for the
three months ended April 30, 2004 from $36.5  million for the three months ended
April 30, 2003. The increase in revenue is primarily a result of increased sales
of display technology solutions,  primarily large screen flat panel displays, as
a result of the growth in the industry which is anticipated to continue to grow.
This increase was partially  offset by a decrease in sales of computer  hardware
to dealers and system integrators.

     Gross  Profit.  Cost of revenue  includes the direct costs of products sold
and freight.  All other  operating  costs are  included in selling,  general and
administrative  expenses.  Gross profit  increased by $0.5 million or 16%,  from
$3.4 million for the three months ended April 30,

                                       16

<PAGE>

2003 to $3.9  million  for the  three  months  ended  April  30,  2004  and as a
percentage  of revenue,  gross  profit was 9.3% for the three months ended April
30, 2003 and April 30, 2004.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses increased by $302,000, or 11% from $2.8 million for the
three  months  ended April 30, 2003 to $3.1  million for the three  months ended
April 30, 2004. The increase is  principally  due to an increase in salaries and
other  personnel  costs of  approximately  $78,000  reflecting  the  increase in
employee headcount and associated costs with respect to the continuing growth of
the business,  increased sales commissions of approximately  $70,000,  increased
tradeshow costs of approximately  $163,000 and an aggregate increase of $186,000
of various  other  selling  and general and  administrative  expenses.  This was
partially  offset by a recovery of bad debt  expense of  $287,000  reduced by an
increase  in bad debt  expense  of  approximately  $92,000 in the  period.  As a
percentage of revenue,  selling,  general and administrative  expenses decreased
from 7.8% for the three months ended April 30, 2003 to 7.4% for the three months
ended April 30, 2004.

     Interest  and Other  Income  (Expense),  net.  Interest  and  other  income
(expense),  net,  increased  by $48,000 from an expense of $22,000 for the three
months  ended April 30, 2003 to an expense of $70,000 for the three months ended
April 30, 2004.  This is primarily a result of the interest  expense  related to
the interest  portion of the capital leases entered into by the Company in March
2003  of   approximately   $85,000  offset   partially  by  interest  income  of
approximately $37,000 earned on the Company's cash investments.

     Income Tax Provision. Our effective tax rate was 40.0% for the three months
ended April 30, 2004 and April 30, 2003.

     Discontinued  Operations.  In accordance with SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets",  the results of operations for the
end-user information  technology  fulfillment and professional services business
have been  recorded as  discontinued  operations on the  accompanying  condensed
consolidated statements of operations. The net loss from discontinued operations
was  $429,000  and  $290,000 for the three months ended April 30, 2004 and 2003,
respectively.  The  presentation of discontinued  operations in the statement of
operations for the three months ended April 30, 2003 has been reclassified.


     Nine Months  Ended April 30, 2004  Compared to Nine Months  Ended April 30,
2003

     Revenue.  Revenue increased by $9.3 million or 8% to $132.9 million for the
nine months  ended April 30, 2004 from $123.6  million for the nine months ended
April 30, 2003. The increase in revenue is primarily a result of increased sales
of display technology solutions,  primarily large screen flat panel displays, as
a result of the growth in the industry which is anticipated to continue to grow.
This increase was partially  offset by a decrease in sales of computer  hardware
to dealers and system integrators.

     Gross  Profit.  Gross profit  remained  relatively  the same  increasing by
$27,000 or 0.0%,  during the nine months ended April 30, 2004 as compared to the
nine months  ended April 30, 2003 and as a percentage  of revenue,  gross profit
decreased  from 10.7% for the nine months  ended April 30, 2003 to 10.0% for the
nine months  ended  April 30,  2004.  Our gross  margins  have been  impacted by
increased competition and pricing pressure resulting in lower gross margins.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses  increased by approximately  $1.1 million,  or 12% from
$8.7  million for the nine months  ended April 30, 2003 to $9.7  million for the
nine months ended April 30, 2004. The increase is principally due to an increase
in salaries and other  personnel costs in the amount of  approximately  $135,000
reflecting the increase in employee  headcount and associated costs with respect
to the  continuing  growth  of the  business,  increased  sales  commissions  of
approximately $158,000,  increased insurance costs of approximately $196,000 due
to an increase in rates,  increased  tradeshow costs of  approximately  $90,000,
increased bad debt expense of approximately $184,000 resulting from the increase
in sales and increased  depreciation costs of approximately $134,000 as a result
of the  increase in capital  expenditures  in the  period.  As a  percentage  of
revenue, selling, general and administrative

                                       17

<PAGE>

expenses  increased  from 7.0% for the nine months  ended April 30, 2003 to 7.3%
for the nine months ended April 30, 2004.

     Interest  and Other  Income  (Expense),  net.  Interest  and  other  income
(expense),  net, decreased by approximately $312,000 from income of $146,000 for
the nine months ended April 30, 2003 to an expense of approximately $166,000 for
the nine months  ended  April 30,  2004.  The amounts for the nine months  ended
April 30, 2004 included  approximately  $258,000 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  $92,000 earned on the Company's
cash  investments.  The amount for the nine months ended April 30, 2003 included
the receipt of insurance  proceeds in the amount of $113,000 and interest income
of approximately $33,000 earned on the Company's cash investments.

     Income Tax Provision (Benefit).  Our effective tax rate was 39.4% and 40.0%
for the nine months ended April 30, 2004 and April 30, 2003, respectively.

     Discontinued  Operations.  In accordance with SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets",  the results of operations for the
end-user information  technology  fulfillment and professional services business
have been  recorded as  discontinued  operations on the  accompanying  condensed
consolidated statements of operations. The net loss from discontinued operations
was $1.4  million and $2.8  million for the nine months ended April 30, 2004 and
2003, respectively. The presentation of discontinued operations in the statement
of operations for the nine months ended April 30, 2003 has been reclassified.

      Liquidity and Capital Resources

      Working Capital
      ---------------

     Our  primary  sources  of cash and cash  equivalents  have been  internally
generated  working capital from  profitable  operations.  The Company's  working
capital at April 30, 2004 and July 31, 2003 was approximately  $35.3 million and
$30.7 million, respectively.

      Cash Flows
      ----------


     Operations for the nine months ended April 30, 2004 and 2003,  after adding
back  non-cash  items,  provided  cash of  approximately  $2.8  million and $1.4
million,  respectively.  During such periods,  other changes in working  capital
provided  cash of  approximately  $2.5 million and $1.3  million,  respectively,
resulting in cash being provided by operating  activities of approximately  $5.3
million and $2.6 million,  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. The increase in inventory and accounts  payable during the
nine  months  ended  April 30,  2004 of  approximately  $16.2  million and $15.6
million,  respectively,  is a result of the increase in sales in the period,  as
well as increased  inventory  purchases  due to special  product  offerings  and
volume discounts received from manufacturers.

     Investing activities for the nine months ended April 30, 2004 and 2003 used
cash of approximately $760,000 and $718,000,  respectively.  For the nine months
ended April 30, 2004 and 2003 these  amounts  consisted  solely of  additions to
property and equipment.

     For the nine  months  ended April 30,  2004 and 2003  financing  activities
provided (used) cash of approximately $135,000 and $(16,000),  respectively. For
the nine months ended  April,  2004 this amount  consisted of proceeds  from the
exercise  of stock  options of  approximately  $284,000  offset by  $149,000  of
payments on capitalized lease  obligations.  For the nine months ended April 30,
2003, this amount consisted solely of payments on capitalized lease obligations.

                                       18

<PAGE>
      Line of Credit
      --------------

     We have  available  a line of credit with a  financial  institution  in the
aggregate  amount  of  $15.0  million.  At  April  30,  2004,  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 April  30,  2004,  the  Company  was in  compliance  with all the
specified financial ratios and covenants.

      Financial Commitments
      ---------------------

     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 and potential acquisitions.

     As part of the sale to ePlus,  inc. of the Company's  end-user  information
technology  fulfillment and professional services business,  ePlus, inc. entered
into certain sublease and assignment agreements with the Company with respect to
certain of the Company's  facilities.  The Company is awaiting  landlord consent
for  these  agreements  to  take  effect.   There  are  no  other  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 following table represents the Company's financial commitments as
of April 30, 2004:
<TABLE>
<CAPTION>

                                               Less than        1 - 3              4 - 5         After
                                 Total         1 Year           Years              Years           5 Years
                                 -------------------------------------------------------------------------
                                                       (in thousands)
<S>                                <C>             <C>           <C>              <C>             <C>
       Capital leases              $7,986          $237          $  940           $854            $5,955
       Operating leases             2,331           629           1,494             75               133
                                    -----         -----           -----             --               ---

       Total                      $10,317          $866          $2,434           $929            $6,088
                                   ======           ===           =====            ===             =====
</TABLE>

     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.


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.

                                       19

<PAGE>

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.

                                       20

<PAGE>
PART II - OTHER INFORMATION


ITEM 6. Exhibits and Reports on Form 8-K

(a)      Exhibits

     2  - Asset Purchase and Sale  Agreement by and between ePlus  Technology,
          Inc. and Manchester Technologies, Inc. dated May 28, 2004 (x)

     2.1  -  Services  Agreement  by and  between  ePlus  Technology,  Inc.  and
          Manchester Technologies, Inc. dated May 28, 2004 (x)

     2.2  - Escrow Agreement by and between ePlus Technology,  Inc.,  Manchester
          Technologies,  Inc. and Joel Rothlein,  as Escrow Agent, dated May 28,
          2004 (x)

     2.3  - Sub-Lease  by and between  Manchester  Technologies,  Inc. and ePlus
          Technology, Inc., dated May 28, 2004 (x)

     2.4  - Sub-Lease  by and between  Manchester  Technologies,  Inc. and ePlus
          Technology, Inc., dated May 28, 2004 (x)

     2.5  - Sub-Lease  by and between  Manchester  Technologies,  Inc. and ePlus
          Technology, Inc., dated May 28, 2004 (x)

     2.6  - Assignment of Lease by and between Manchester Technologies, Inc. and
          ePlus Technology, Inc., dated May 28, 2004 (x)

     2.7  - Assignment of Lease by and between Manchester Technologies, Inc. and
          ePlus Technology, Inc., dated May 28, 2004 (x)

     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.

     (x)  Previously filed as an exhibit to the Company's Current Report on Form
          8-K (File No.:  000-21695) dated June 10, 2004 and incorporated herein
          by reference.

(b) Reports on Form 8-K

1.   Form 8-K filed March 9, 2004  disclosing  Press Release dated March 9, 2004
     reporting earnings for the second quarter ended January 31, 2004.

                                       21

<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:   July 5, 2004                 /S/ Barry  R. Steinberg
                                         ------------------------------
                                        Barry R. Steinberg
                                        Chief Executive Officer


DATE:   July 5, 2004                 /S/ Elan Yaish
                                        ----------------------------------
                                        Elan Yaish
                                        Vice President Finance, Chief Financial
                                        Officer and Assistant Secretary

                                       22