17



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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


                  For the quarterly period ended April 30, 2002


                                       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


As of June 12, 2002, 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
                    April 30, 2002  (unaudited) and July 31, 2001             3


             Condensed Consolidated  Statements of Income Three months and
                    nine months ended April 30, 2002 and 2001 (unaudited)     4


             Condensed  Consolidated  Statements of Cash Flows Nine months
                    ended April 30, 2002 and 2001 (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



PART II.     OTHER INFORMATION




Item 6.      Exhibits and Reports on Form 8-K                                16























<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>

                                                    April 30, 2002 July 31, 2001
                                                      (Unaudited)  -------------
                                                      -----------


<S>                                                      <C>           <C>
Assets:
  Cash and cash equivalents                              $ 8,073       $14,493
  Accounts receivable, net                                32,085        25,135
  Inventory                                               13,229         7,546
  Deferred income taxes                                      459           459
  Prepaid income taxes                                       401            43
  Prepaid expenses and other current assets                  612           362
                                                             ---           ---

         Total current assets                             54,859        48,038

Property and equipment, net                                6,671         6,300
Goodwill, net                                              8,311         6,148
Deferred income taxes                                        842           842
Other assets                                                 618           455
                                                             ---           ---

                                                         $71,301       $61,783
                                                          ======        ======

Liabilities:
  Accounts payable and accrued expenses                  $24,135       $15,259
  Deferred service contract revenue                          533           807
                                                             ---           ---

         Total current liabilities                        24,668        16,066
Deferred compensation payable                                162           162
                                                             ---           ---

         Total liabilities                                24,830        16,228
                                                          ------        ------

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                                      (23)          (38)
  Retained earnings                                       27,472        26,571
                                                          ------        ------

         Total shareholders' equity                       46,471        45,555
                                                          ------        ------

                                                         $71,301       $61,783
                                                          ======        ======
</TABLE>

See notes to condensed consolidated financial statements
                                       3

<PAGE>



                 Manchester Technologies, Inc. and Subsidiaries
                   Condensed Consolidated Statements of Income
                    (in thousands, except per share amounts)
                                    Unaudited

<TABLE>
<CAPTION>

                                     Three months ended April 30,   Nine months ended April 30,
                                      2002                2001            2002        2001
                                      ----                ----            ----        ----
<S>                                   <C>               <C>            <C>          <C>
Revenue

       Products                       $61,678           $66,522        $185,837     $214,984
        Services                        3,453             2,076           8,959        5,644
                                        -----             -----           -----        -----
                                       65,131            68,598         194,796      220,628
                                       ------            ------         -------      -------

Cost of revenue
       Products                        53,391            57,151         160,470      188,194
       Services                         2,699             1,682           6,724        3,995
                                        -----             -----           -----        -----

                                       56,090            58,833         167,194      192,189
                                       ------            ------         -------      -------

       Gross profit                     9,041             9,765          27,602       28,439


Selling, general and
    administrative expenses             8,480             8,734          26,269       26,592
                                        -----             -----          ------       ------
       Income from operations             561             1,031           1,333        1,847

Interest income                            40               116             162          407
                                           --               ---             ---          ---

       Income before income taxes         601             1,147           1,495        2,254

Provision for income taxes                237               482             594          927
                                          ---               ---             ---          ---
Net income                               $364              $665            $901       $1,327
                                          ===               ===             ===        =====

Net income per share
   Basic                                $0.05             $0.08          $0.11         $0.16
                                         ====              ====           ====          ====

   Diluted                              $0.05             $0.08          $0.11         $0.16
                                         ====              ====           ====          ====

Weighted average
  shares outstanding

  Basic                                 7,990             8,005           7,990        8,051
                                        =====             =====           =====        =====
  Diluted                               7,992             8,005           7,991        8,080
                                        =====             =====           =====        =====

</TABLE>

See notes to condensed consolidated financial statements.

                                       4
<PAGE>





                 Manchester Technologies, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                 (in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                   For the nine months ended
                                                                           April 30,
                                                                       2002         2001
                                                                       ----         ----

<S>                                                                   <C>         <C>
Cash flows from operating activities:
          Net income                                                   $ 901       $ 1,327


 Adjustments to reconcile net income to net cash from
   operating activities:
         Depreciation and amortization                                1,514         1,636
         Allowance  for doubtful accounts                                20           405
         Stock compensation expense                                      15            22
         Tax benefit from exercise of options                             -            77

  Change in assets and liabilities, net of the effects
    of acquisitions:
         (Increase) decrease  in accounts receivable                 (6,704)        7,484
         Increase in inventory                                       (5,546)       (3,443)
         (Increase) decrease in prepaid income taxes                   (358)          441
         Increase  in prepaid expenses and
             other current assets                                      (230)         (124)
         (Increase) decrease in other assets                           (163)           60
         Increase (decrease) in accounts payable and
             accrued expenses                                         8,355        (6,173)
         Decrease in deferred service revenue                          (274)         (295)
                                                                       ----          ----
       Net cash (used in) provided by
        operating activities                                         (2,470)        1,417
                                                                      -----         -----
Cash flows from investing activities:
       Capital expenditures                                          (1,779)       (1,471)
       Payments for acquisitions, net of cash acquired               (1,613)            -
                                                                    -------         -----
         Net cash used in investing activities                       (3,392)       (1,471)
                                                                     -------        -----

Cash flows from financing activities:
         Payments on notes payable - bank                              (515)            -
         Payments on notes payable - other                              (43)          (18)
         Purchase and retirement of  common stock                         -          (621)
         Issuance of common stock upon exercise of options                -             6
                                                                      -----          ----

              Net cash used in financing activities                    (558)         (633)
                                                                       -----         -----

Net decrease  in cash and cash equivalents                           (6,420)         (687)

         Cash and cash equivalents at beginning of period            14,493        16,156
                                                                     ------        ------
Cash and cash equivalents at end of period                           $8,073       $15,469
                                                                      =====        ======
</TABLE>

See notes to 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)


   1.    Organization and Basis of Presentation


         Manchester  Technologies,  Inc.,  ("Manchester,"  "we,"  "us,"  or  the
      "Company"), is a single-source solutions provider specializing in hardware
      and software  procurement,  custom  networking,  storage,  enterprise  and
      Internet solutions. Manchester engineers provide answers to companies' MIS
      needs by combining comprehensive analysis, design and integration services
      with a complete line of competitively priced products and peripherals from
      the industry's leading vendors.

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

         In the opinion of the Company,  the  accompanying  unaudited  Condensed
      Consolidated  Financial Statements contain all adjustments  (consisting of
      only  normal and  recurring  accruals)  necessary  to  present  fairly the
      Company's financial  position,  results of operations and cash flows as of
      the dates and for the  periods  presented.  The  operating  results of the
      interim period presented are not necessarily  indicative of the results to
      be achieved for future  interim  periods or the entire year.  Although the
      Company  believes  that the  disclosures  herein are  adequate to make the
      information not misleading,  these financial  statements should be read in
      conjunction  with the audited  financial  statements and the notes thereto
      for the year ended July 31, 2001,  included in the Company's Annual Report
      on Form 10-K as filed with the Securities and Exchange Commission.


   2.    Net Income Per Share


         Basic net income per share has been  computed by dividing net income by
      the weighted  average  number of common  shares  outstanding.  Diluted net
      income per share has been  computed by dividing net income by the weighted
      average number of common shares outstanding,  plus the assumed exercise of
      dilutive  stock options and warrants,  less the number of treasury  shares
      assumed to be  purchased  from the  proceeds of such  exercises  using the
      average market price of the Company's  common stock during each respective
      period. Stock options and warrants representing 908,000 and 881,000 shares
      for the three  months  ended  April 30, 2002 and 2001,  respectively,  and
      919,000  and 663,000  shares for the nine months  ended April 30, 2002 and
      2001,  respectively,  are  excluded  from the  calculation  of diluted net
      income per share since the result  would be  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>

                                                  (shares in thousands)
                             Three months ended April 30,                       Nine months ended April 30,
                                2002               2001                       2002                   2001
                                ----               ----                       ----                   ----
                                   Per share              Per share               Per share             Per share
                   Shares           amount      Shares    amount        Shares    amount      Shares     amount
                   ------           ------      ------    ------        ------    ------       ------    ------
<S>                      <C>          <C>        <C>        <C>          <C>        <C>          <C>      <C>
         Basic           7,990        $0.05      8,005      $0.08        7,990      $0.11        8,051    $0.16
                                       ====                 =====                    ====                  ====

         Effect of
          dilutive
           options           2                       -                       1                      29
                         -----                     ---                    ----                      --

         Diluted         7,992        $0.05      8,005      $0.08        7,991      $0.11        8,080    $0.16
                         =====         ====      =====      =====        =====       ====       ======    =====
</TABLE>
                                        6


<PAGE>

  3.    Acquisition of Donovan Consulting Group, Inc.

          On August 29, 2001, the Company acquired all of the outstanding  stock
     of Donovan  Consulting  Group,  Inc.  ("Donovan"),  a Delaware  corporation
     headquartered near Atlanta,  Georgia.  Donovan is a technical services firm
     that  delivers  Wireless  LAN  solutions  to  customers   nationwide.   The
     acquisition,  which has been  accounted  for as a purchase,  consisted of a
     cash  payment  of  $1,500  plus  potential  future   contingent   payments.
     Contingent  payments  of up to $1,000 may be payable on each of November 2,
     2002 and November 2, 2003 based upon Donovan achieving certain  agreed-upon
     increases  in  revenue  and  pre-tax  earnings.   In  connection  with  the
     acquisition, the Company assumed approximately $435 of bank debt and $43 of
     other debt, which were subsequently  repaid.  Donovan was acquired in order
     to  strengthen  the Company's  position in the wireless LAN arena.  Donovan
     allows the Company to offer total Wireless LAN solutions including state of
     the art products as well as the services  necessary to have those  products
     operate optimally.

          Operating   results  of  Donovan  are   included   in  the   condensed
     consolidated  statement of income from the acquisition  date. The estimated
     fair value of tangible assets and  liabilities  acquired was $497 and $869,
     respectively. The excess of the aggregate purchase price over the estimated
     fair value of the tangible net assets  acquired was  approximately  $1,872.
     The factors that contributed to the determination of the purchase price and
     the resulting goodwill include the significant growth expected in this area
     due to the  combination  of the Company's  long history of strong  customer
     relationships,  financial  strength and  stability  coupled with  Donovan's
     product  offerings and highly skilled  technical staff. The $1,872 will not
     be  amortized;  however,  it will  be  subject  to  impairment  testing  in
     accordance with Statement No. 142, "Goodwill and Other Intangible Assets."

          The  presentation of supplemental  pro forma financial  information is
     deemed immaterial.

      Acquisition of e.Track Solutions, Inc.
      --------------------------------------

          On November 9, 2001, the Company acquired all of the outstanding stock
      of  e.Track   Solutions,   Inc.   ("e.Track"),   a  New  York  corporation
      headquartered in Pittsford,  New York.  e.Track is a business and software
      services firm that delivers business,  Internet and information technology
      solutions  to  customers  nationwide.  The  acquisition,  which  has  been
      accounted for as a purchase, consisted of cash payments of $290 (including
      debt assumed and  subsequently  repaid).  e.Track was acquired in order to
      allow the Company to offer our  customers  customized  software  solutions
      along with the products and services that we have traditionally offered.

          Operating   results  of  e.Track  are   included   in  the   condensed
      consolidated statements of income from the acquisition date. The estimated
      fair value of tangible assets and liabilities  acquired was $116 and $192,
      respectively.  The excess of aggregate  purchase  price over the estimated
      fair value of the tangible net assets  acquired was $291. The factors that
      contributed to the  determination  of the purchase price and the resulting
      goodwill  include the expectation that the combination of e.Track's highly
      skilled technical staff, coupled with the Company's financial strength and
      customer base, will result in significant growth at e.Track going forward.
      The $291 will not be amortized;  however, it will be subject to impairment
      testing  in  accordance  with  Statement  No.  142,  "Goodwill  and  Other
      Intangible Assets."

          The  presentation of supplemental  pro forma financial  information is
     deemed immaterial.


4.       Statement of Cash Flow Information

      Supplemental disclosure of cash flow information:
 <TABLE>
 <CAPTION>
                                             Nine months ended April 30,
                                                   2002               2001
                                                   ------             ----
                                                         (in thousands)
<S>                                                  <C>               <C>
      Cash paid for income taxes                     $952              $93
                                                     =====             ===

</TABLE>
                                       7

<PAGE>



5.    Accounting for Business Combinations, Goodwill and Other Intangible Assets

           In July 2001,  the  Financial  Accounting  Standards  Board  ("FASB")
      issued SFAS No. 141 "Business  Combinations,"  and SFAS No. 142, "Goodwill
      and  Other  Intangible  Assets."  SFAS No.  141  specifies  criteria  that
      intangible  assets  acquired  in a  business  combination  must meet to be
      recognized and reported  apart from  goodwill.  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  in
      accordance  with the  provision of SFAS No. 142. 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. 121.

           The Company has adopted the provisions of SFAS Nos. 141 and 142 as of
      August 1, 2001.  The Company has evaluated its existing  goodwill that was
      acquired in prior purchase  business  combinations and has determined that
      an adjustment or  reclassification  to intangible assets at August 1, 2001
      was not  required in order to conform to the new  criteria in SFAS No. 141
      for recognition apart from goodwill.

         The Company was required to test goodwill for  impairment in accordance
      with the  provisions  of SFAS No. 142 by January 31, 2002.  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 142 was its operating segment.  During the
      quarter,  the Company  completed  its  initial  impairment  review,  which
      indicated  that there was no impairment  as of the date of adoption.  Fair
      value for goodwill was determined based on discounted cash flows.

                  Goodwill amortization for the nine months ended April 30, 2001
      was $285,000.  The  following  table shows the results of operations as if
      SFAS No. 142 was applied to prior periods:
<TABLE>
<CAPTION>

                                                      For the nine months
                                                         ended April 30,
                                                     2002                2001
                                                     ----                ----
<S>                                                    <C>               <C>
      Net income as reported                           $901              $1,327
      Add back: Goodwill amortization                     -                 285
                                                       ----                 ---

      Adjusted net income                              $901              $1,612
                                                        ===              ======

      Income per share - Basic
        Net income, as reported                       $0.11              $0.16
        Goodwill amortization                          -                  0.04
                                                     -----               -----

        Adjusted net income                           $0.11              $0.20
                                                       ====               ====

      Income per share - Diluted
        Net income, as reported                       $0.11              $0.16
        Goodwill amortization                          -                  0.04
                                                       ---               -----

        Adjusted net income                           $0.11              $0.20
                                                       ====               ====
</TABLE>


                                       8



<PAGE>




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


            The  following  discussion  and analysis of financial  condition and
results of  operations  of the Company  should be read in  conjunction  with the
condensed consolidated financial statements and notes thereto included elsewhere
in this  Quarterly  Report on Form 10-Q and with the Company's  Annual Report on
Form  10-K.  This  discussion  and  analysis  contains  certain  forward-looking
statements  within the meaning of the  Securities  Act of 1933, as amended,  and
Section  21E of the  Securities  Exchange  Act of 1934,  as  amended,  including
statements  regarding  expectations,  beliefs,  intentions,  plans or strategies
regarding the future,  which are not historical  facts. The Company intends that
all forward-looking  statements be subject to the safe-harbor  provisions of the
Private  Securities   Litigation  Reform  Act  of  1995.  These  forward-looking
statements reflect the Company's views as of the date they are made with respect
to future events and financial performance,  and involve risks and uncertainties
that  could  cause  actual  results  to  differ   materially  from  the  results
anticipated in the  forward-looking  statements.  These risks and  uncertainties
include,  but are not limited to, those set forth below,  those set forth in the
Company's Annual Report on Form 10-K for the year ended July 31, 2001, and those
set forth in the Company's  other filings from time to time with the  Securities
and Exchange Commission. The Company does not undertake any obligation to update
or revise any forward-looking statement, made by it or on its behalf, whether as
a result of new information, future events, or otherwise.


General


         We are an integrator  and reseller of computer  hardware,  software and
networking products,  primarily for commercial customers. 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.

         The  computer  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  hardware
manufacturers  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.

         An  integral  part  of our  strategy  is to  increase  our  value-added
services revenue. These services generally provide higher operating 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.

         Our  strategy  also  includes  expanding  our  presence in the New York
metropolitan  area by increasing our sales and service  capabilities  in our New
York City office and enlarging our sales,  service and training  capabilities at
our Long Island headquarters,  as well as expanding  geographically into growing
business centers in the eastern half of the United States.  We cannot assure you
that the expansion of our New York  metropolitan  area  operations will increase
profits generated by such operations, that the opening of new offices will prove
profitable, or that these expansion plans will not substantially increase future
capital expenditures or other expenditures. The failure of this component of our
strategy may materially adversely affect our business, results of operations and
financial condition.


                                        9
<PAGE>


         To date,  our revenues have been based  primarily upon sales in the New
York  Metropolitan  area.  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.

         On September 11, 2001,  the World Trade Center in New York City and the
Pentagon  in  Washington,  D.C.  were  the  subject  of  terrorists  attacks.  A
significant  part of our  business  is  generated  from  our New  York  City and
Baltimore/Washington,  D.C. offices and revenues for the month of September were
adversely impacted with declines in orders and shipments.  We cannot predict the
impact that these or potential future attacks may have on our business,  results
of operations and financial condition.

         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.
Our  ability  to grow our  service  offerings  has been  somewhat  limited  by a
shortage of qualified  personnel,  and we cannot assure you that we will be able
to attract and retain such skilled personnel and representatives.  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.

         The  computer  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  computer
manufacturers  that market through direct sales forces and/or the Internet.  The
computer industry has recently experienced 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.  Moreover,  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, such as repair and configuration  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.

     Our business is dependent upon our relationships  with major  manufacturers
and  distributors  in the  computer  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 personal computers 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. On May 3,
2002,  the  Hewlett-Packard  Company  and Compaq  Computer  Corporation  merged.
Manchester  sells the  products of both  companies  and we believe  that we have
strong  relationships  with both  companies.  While we do not believe that there
will be a material  adverse  effect on our  business,  financial  condition  and
results of operations as a result of this merger, there can be no assurance that
such a material adverse effect will not occur.
                                       10


<PAGE>

         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
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.

         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
computer  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  conditions and
results of operations.

         Our strategy  envisions  that part of our future  growth will come from
acquisitions  consistent  with our strategy.  There can be no assurance  that we
will be able to identify suitable  acquisition  candidates and, once identified,
to  negotiate  successfully  their  acquisition  at a  price  or  on  terms  and
conditions  favorable to us, or to integrate  the  operations  of such  acquired
businesses  with  our  operations.  Certain  of  these  acquisitions  may  be of
significant  size  and may  include  assets  that  are  outside  our  geographic
territories or are ancillary to our core business strategy.
                                       11


<PAGE>

         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. In particular,  over the last several years,
we  have  increased  certain  of  our  fixed  operating  expenses,  including  a
significant increase in personnel, as part of our strategy to increase our focus
on  providing  systems  integration  and other  higher  margin  and value  added
services.  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.

         As a result of the rapid changes which are taking place in computer and
networking technologies, product life cycles are short. Accordingly, our product
offerings change  constantly.  Prices of products change,  with generally higher
prices  early in the life cycle of the product and lower  prices near the end of
the product's life cycle. The computer  industry has experienced  rapid declines
in average selling prices of personal computers. 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.

         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,  which could delay the
introduction   and   distribution   of   Microsoft   products.   The   potential
unavailability of Microsoft products could have a material adverse effect on our
business, results of operations and financial condition.

         We lease certain warehouses and offices from entities that are owned or
controlled by our majority shareholder.  Each of the leases with related parties
has been amended  effective with the closing of our initial  public  offering in
December 1996 to reduce the rent payable under that lease to then current market
rates.

Critical Accounting Policies

         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, 2001 describes the
significant  accounting  policies  and methods  used in the  preparation  of the
consolidated  financial statements.  Estimates are used for, but not limited to,
the accounting for the allowance for doubtful  accounts,  inventory  allowances,
and goodwill impairments.  Actual results could differ from these estimates. The
following critical accounting policies are impacted  significantly by judgments,
assumptions and estimates used in the preparation of the consolidated  financial
statements.

         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 will  perform  goodwill  impairment  tests on an  annual  basis  and
between annual tests in certain  circumstances.  In assessing the recoverability
                                       12



<PAGE>

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.

      Results of Operations

      The following  table sets forth,  for the periods  indicated,  information
derived from our  Condensed  Consolidated  Statements  of Income  expressed as a
percentage of related revenue or total revenue.

<TABLE>
<CAPTION>

                                                                   Percentage of Revenue
                                                        Three Months Ended         Nine Months Ended
                                                             April 30,                 April 30,
                                                       2002           2001           2002         2001
                                                       ----           ----           ----         ----
<S>                                                    <C>            <C>           <C>           <C>
            Product sales                              94.7%          97.0%         95.4%         97.4%

            Services                                    5.3            3.0           4.6           2.6
                                                        ---            ---           ---           ---
               Total revenue                          100.0          100.0         100.0         100.0
                                                      -----          -----                       -----


           Cost of product sales                       86.6           85.9          86.3          87.5
           Cost of  services                           78.2           81.0          75.1          70.8
                                                       ----           ----          ----          ----
                 Cost of revenue                       86.1           85.8          85.8          87.1
                                                       ----           ----          ----          ----

           Product gross profit                        13.4           14.1          13.7          12.5
           Services gross profit                       21.8           19.0          24.9          29.2
                                                       ----           ----          ----          ----
                Gross profit                           13.9           14.2          14.2          12.9

           Selling, general and
              administrative expenses                  13.0           12.7          13.5          12.1
                                                       ----           ----          ----          ----
           Income from operations                       0.9            1.5           0.7           0.8
           Interest and other income, net               0.1            0.2           0.1           0.2
                                                        ---            ---           ---           ---
           Income before income taxes                   1.0            1.7           0.8           1.0
           Provision for income taxes                   0.4            0.7           0.3           0.4
                                                        ---            ---           ---           ---

           Net income                                   0.6%           1.0%          0.5%          0.6%
                                                        ===            ===           ===           ===
</TABLE>


     Three  Months Ended April 30, 2002  Compared  with Three Months Ended April
     30, 2001

           Revenue.  The Company's  revenue  decreased $3.5 million or 5.1% from
      $68.6  million for the three months ended April 30, 2001 to $65.1  million
      for the three months ended April 30, 2002.  Product  revenue  decreased by
      $4.8  million  due   primarily  to  lower   shipments  of  computers   and
      peripherals.  This was  somewhat  offset  by  increases  in  shipments  of
      displays.  Product  revenues were  adversely  impacted by the current soft
      economic  conditions.  The Company's  primary customers are commercial end
      users  and  the  continued  slowdown  in  technology  investments  by such
      entities has  resulted in  declining  product  revenues.  Service  revenue
      increased  $1.4  million or 66.3% to $3.5 million from $2.1 million in the
      same quarter last year. Revenue from services  increased  primarily due to
      revenue generated by our two recently completed acquisitions,  Donovan and
      e.Track,  as well as revenue from sales to customers  that is delivered by
      manufacturers or vendors.
                                       13


<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 market  development funds provided by
      manufacturers.  All other operating costs are included in selling, general
      and administrative  expenses. Gross profit decreased $724,000 or 7.4% from
      $9.8 million for the third  quarter of fiscal 2001 to $9.0 million for the
      most  recent  fiscal  quarter.  Gross  profit  from the  sale of  products
      decreased  by $1.1  million or 11.6%,  while gross profit from the sale of
      services  increased  by  $360,000 or 91.4%.  The  changes in gross  profit
      primarily resulted from the changes in revenue discussed above. Margins on
      service  offerings  improved  somewhat when compared to the same quarter a
      year  ago,  but  were  negatively  impacted  by lower  utilization  of our
      technical  staff,  primarily the staff  connected with recently  completed
      acquisitions.  As a percentage of revenue, gross profit decreased to 13.9%
      in the third quarter of fiscal 2002 as compared to 14.2% in fiscal 2001.

              Selling, General and Administrative Expenses. Selling, general and
      administrative  expenses  decreased  $254,000 or 2.9% from $8.7 million in
      the third  quarter of fiscal 2001 to $8.5 million in the third  quarter of
      fiscal 2002.  This decrease is principally a result of lower  advertising,
      bad debts and  depreciation  and  amortization  costs partially  offset by
      higher  telephone  costs.  The  reduction  in  amortization  costs was due
      primarily  to the  August 1,  2001  adoption  of SFAS  Statement  No.  142
      "Goodwill and Other  Intangible  Assets"  which  requires that goodwill no
      longer be amortized.

              Interest and Investment  Income.  Interest and  investment  income
      decreased by $76,000 due to lower cash balances  available for investments
      as well as lower interest rates.

              Provision  for  Income  Taxes.   The  effective  income  tax  rate
      decreased  to 39.4% of pretax  income in the  current  period  compared to
      42.0% of  pretax  income in the  prior  year's  period  due  primarily  to
      non-deductible  goodwill  amortization  in the  prior  year  that  was not
      charged in the current year due to the adoption of SFAS Statement No. 142.

     Nine Months  Ended April 30, 2002  Compared to Nine Months  Ended April 30,
     2001

              Revenue.  The Company's revenue decreased by $25.8 million or 11.7
      % from $220.6  million for the nine months  ended April 30, 2001 to $194.8
      million for the nine months ended April 30, 2002. Revenue from the sale of
      products  decreased by $29.1  million or 13.6% while  revenue from service
      offerings  increased  by $3.3  million or 58.7%.  The  decrease in product
      revenue is due primarily to the shipment of fewer  personal  computers and
      peripherals, as well as the generally soft economic conditions experienced
      this fiscal year.  This was partially  offset by increases in shipments of
      displays,  primarily  large  screen flat panel  displays  shipped from our
      Electrograph  subsidiary.  The growth in  services  revenues is due to the
      acquisitions  of  Donovan  and  e.Track,  as well as growth in the sale of
      services to customers that are delivered by manufacturers or vendors.

              Gross  Profit.Gross  profit decreased by $837,000 or 2.9% to $27.6
      million for the first nine months of fiscal 2002 from $28.4 million in the
      comparable period a year ago. Gross profit from product sales decreased by
      $1.4 million or 5.3% from $26.8 million in the first nine months of fiscal
      2001 to $25.4  million  in the most  recent  nine  month  period.  Service
      offerings  generated $1.6 million of gross profit in the first nine months
      of fiscal 2001 and $2.2  million of gross profit for the first nine months
      of fiscal 2002. Gross margin  percentages on product sales improved in the
      first nine months of fiscal 2002 due to increased  sales of higher  margin
      products,  increased  volume  rebates by  manufacturers  and certain large
      volume  product  purchases that the Company was able to take advantage of.
      Service  margins  declined  during  the  period  due  primarily  to  lower
      utilization  of  technical  personnel as well as increases in lower margin
      sales of services that are delivered by other than Company personnel.

              Selling, General and Administrative Expenses. Selling, general and
      administrative  expenses  decreased by $323,000 or 1.2% from $26.6 million
      for the first nine  months of fiscal  2001 to $26.3  million for the first
      nine  months of fiscal  2002.  The  decrease is  principally  due to lower
      salaries and personnel costs as well as lower advertising and depreciation
      and  amortization  costs.  These decreases were partially offset by higher
      telephone expenses and costs associated with our recent acquisitions.
                                       14


<PAGE>

              Interest  Income.  Interest  income  decreased  by  $245,000  from
      $407,000  for the first nine  months of fiscal  2001 to  $162,000  for the
      first  nine  months  of this  fiscal  year,  due to  lower  cash  balances
      available for investment as well as lower interest rates  available in the
      marketplace.

              Provision  for  Income  Taxes.   The  effective  income  tax  rate
      decreased  slightly to 39.7% for the first nine months of fiscal 2002 from
      41.1% for the first nine months of fiscal 2001.


      Liquidity and Capital Resources

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


           For the nine months  ended  April 30,  2002,  cash used by  operating
      activities was $2.5 million consisting  primarily of increases in accounts
      receivable  and  inventory  partially  offset by an  increase  in accounts
      payable and  accrued  expenses.  During the first  quarter of the year the
      Company made an investment in inventory by purchasing a significant number
      of large screen flat panel displays. The investment made in this inventory
      resulted  in benefits to the  Company  through the volume  incentives  and
      discounts  obtained  on these  products.  We also  expended  $2.2  million
      (including  $558,000 in  repayment  of debts  assumed) for the purchase of
      Donovan  Consulting  Group,  Inc.  and e.Track  Solutions,  Inc.  and $1.8
      million for capital  expenditures  during the nine months  ended April 30,
      2002. The Company's  accounts  receivable and accounts payable and accrued
      expenses  balances as well as its  investment  in inventory  can fluctuate
      significantly  from one  period  to the next due to the  receipt  of large
      customer  orders or payments or  variations  in product  availability  and
      vendor shipping patterns at any particular date. Generally,  the Company's
      experience  is  that  increases  in  accounts  receivable,  inventory  and
      accounts payable and accrued expenses will coincide with growth in revenue
      and increased operating levels.

           The  Company  has  available  a  line  of  credit  with  a  financial
      institution  in the  aggregate  amount  of $15.0  million.  This  line was
      recently  renewed and extended  through  January 31, 2005. No amounts were
      outstanding under this line as of April 30, 2002.

           The  Company  believes  that its  current  balances  in cash and cash
      equivalents,  expected cash flows from operations and available borrowings
      under the line of credit  will be adequate  to support  current  operating
      levels for the foreseeable future,  specifically  through at least the end
      of fiscal 2003.  The Company  currently  has no material  commitments  for
      capital or other  expenditures,  except operating leases which the Company
      is committed under for 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 and the
      purchase of equipment and expansion of facilities, 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.

     Impact of Recently Issued Accounting Standards

          In August 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset
     Retirement  Obligations." SFAS No. 143 requires entities to record the fair
     value of a liability  for an asset  retirement  obligation in the period in
     which it is  incurred.  The Company  will adopt SFAS No. 143 in fiscal year
     2003.  The Company does not expect the  provisions  of SFAS No. 143 to have
     any significant impact on its financial condition or results of operations.
                                       15


<PAGE>

           In October 2001,  the FASB issued SFAS No. 144,  "Accounting  for the
      Impairment of Long-Lived Assets," which addresses financial accounting and
      reporting  for the  impairment  or disposal  of  long-lived  assets.  This
      statement  supersedes  SFAS No. 121,  "Accounting  for the  Impairment  of
      Long-Lived  Assets and for  Long-Lived  Assets to Be  Disposed  Of," while
      retaining the fundamental  recognition and measurement  provisions of that
      statement.  SFAS No. 144 requires that a long-lived asset to be abandoned,
      exchanged for a similar  productive  asset or  distributed  to owners in a
      spin-off to be considered  held and used until it is disposed of. However,
      SFAS No. 144 requires that  management  consider  revising the depreciable
      life of such  long-lived  asset.  With respect to long-lived  assets to be
      disposed of by sale,  SFAS No. 144 retains the  provisions of SFAS No. 121
      and,  therefore,  requires  that  discontinued  operations  no  longer  be
      measured on a net realizable  value basis and that future operating losses
      associated  with such  discontinued  operations  no  longer be  recognized
      before they occur.  SFAS No. 144 is effective  for all fiscal  quarters of
      fiscal years  beginning  after December 15, 2001, and will thus be adopted
      by the  Company on August 1, 2002.  The  Company  has not  determined  the
      effect,  if any,  that  the  adoption  of SFAS No.  144  will  have on the
      Company's consolidated financial statements.

          In April  2002,  the FASB  issued  SFAS No.  145,  "Recission  of FASB
     Statements  No. 4, 44,  and 64,  Amendment  of FASB  Statement  No. 13, and
     Technical Corrections".  Generally,  SFAS 145 is effective for transactions
     occurring after May 15, 2002. The Company does not expect the provisions of
     SFAS No. 145 to have any significant  impact on its financial  condition or
     results of operations.


      PART II - OTHER INFORMATION

      Item 6.     Exhibits and Reports

      Exhibits


     10.5.p - Lease dated June 1, 2002 between Electrograph Systems, Inc. and 40
     Marcus Realty Associates .
<


      (b)     Reports on Form 8-K


      1.      On March 8, 2002,  the Company filed a report on Form 8-K relating
              to its  financial  information  for the quarter  ended January 31,
              2002 as presented in a press release of March 7, 2002.




                                       16


<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:  June 12, 2002                    ss: Barry Steinberg
                                        -------------------

                                       Barry Steinberg
                                       President and Chief Executive Officer




DATE:  June 12, 2002                   ss: Joseph Looney
                                       -----------------------------------------

                                       Joseph Looney
                                       Vice President of Finance and
                                       Chief Financial Officer


                                       17