27


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

                                    FORM 10-Q

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

                  For the quarterly period ended April 30, 2003

                                       or

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

            For the transition period from __________ to ____________

                         COMMISSION FILE NUMBER 0-21695

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

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

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

                                 (631) 435-1199
              (Registrant's telephone number, including area code)

Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                 [X] Yes [ ] No

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



<PAGE>


                 MANCHESTER TECHNOLOGIES, INC. AND SUBSIDIARIES



                                Table of Contents

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

Item 1.       Condensed Consolidated Balance Sheets as of
                 April 30, 2003  (unaudited) and July 31, 2002                3

              Condensed Consolidated Statements of Operations for the
                 Three Months and Nine Months Ended
                 April 30, 2003 and 2002 (unaudited)                          4

              Condensed Consolidated Statements of Cash Flows for the
                  Nine Months Ended April 30, 2003 and 2002 (unaudited)       5

              Notes to Unaudited Condensed Consolidated Financial Statements  6

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

Item 3.       Quantitative and Qualitative Disclosures About Market Risk     21

Item 4.       Controls and Procedures                                        21


PART II.      OTHER INFORMATION



Item 6.       Exhibits and Reports                                           22

















<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, 2003      July 31, 2002
                                                                                      (Unaudited)
                                                                 -----------          -----------
<S>                                                              <C>                   <C>
Assets
Current Assets:
  Cash and cash equivalents                                      $10,850               $ 8,963
  Accounts receivable, net                                        29,314                32,561
  Inventory                                                       14,795                11,165
  Deferred income taxes                                              403                   403
  Prepaid income taxes                                               720                   426
  Prepaid expenses and other current assets                          851                   526
                                                                  ------              --------

       Total current assets                                       56,933                54,044

Property and equipment, net                                       14,528                 7,012
Goodwill, net                                                      8,311                 8,311
Deferred income taxes                                                803                   803
Other assets                                                         144                   491
                                                                  ------               -------

       Total assets                                              $80,719               $70,661
                                                                  ======                ======

Liabilities and shareholders' equity
Current liabilities:
  Accounts payable and accrued expenses                          $25,156               $23,078
  Deferred service contract revenue                                  605                   868
  Current portion of capital lease obligations                       204                     -
                                                                  ------                 -----

         Total current liabilities                                25,965                23,946

Deferred compensation payable                                        203                   203
Capital lease obligations, net of current portion                  7,980                     -
                                                                --------                 -----

         Total liabilities                                        34,148                24,149
                                                                  ------                ------

Shareholders' equity:
  Preferred stock, $.01 par value; 5,000  shares authorized,
   none issued                                                         -                     -
  Common stock, $.01 par value; 25,000  shares authorized,
     7,990 and 7,990  issued and outstanding                          80                    80
  Additional paid-in capital                                      18,942                18,942
  Deferred compensation                                              (23)                  (23)
  Retained earnings                                               27,572                27,513
                                                                  ------                ------

         Total shareholders' equity                               46,571                46,512
                                                                  ------                ------

         Total liabilities and shareholders' equity              $80,719               $70,661
                                                                  ======                ======

</TABLE>

See notes to unaudited condensed consolidated financial statements.

                                       3
<PAGE>



                 Manchester Technologies, Inc. and Subsidiaries
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                             Three months ended April 30,                   Nine months ended April 30,
                                                2003             2002                        2003               2002
                                                ----             ----                        ----               ----

<S>                                                <C>            <C>                      <C>                 <C>
Revenue
       Products                                    $60,083        $61,678                  $199,081            $185,837
       Services                                      3,861          3,453                    13,690               8,959
                                                     -----          -----                    ------               -----
                                                    63,944         65,131                   212,771             194,796
                                                    ------         ------                   -------             -------

Cost of revenue
       Products                                     53,703         53,391                   177,600             160,470
       Services                                      2,968          2,699                    10,459               6,724
                                                     -----          -----                    ------               -----

                                                    56,671         56,090                   188,059             167,194
                                                    ------         ------                   -------             -------

       Gross profit                                  7,273          9,041                    24,712              27,602


Selling, general and
    administrative expenses                          7,208          8,480                    24,759              26,269
                                                     -----          -----                    ------              ------
       Income  (loss) from operations                   65            561                       (47)              1,333

Interest and other income (expense), net               (22)            40                       146                 162
                                                       ---             --                       ---                 ---

       Income before income taxes                       43            601                        99               1,495

Income tax provision                                    17            237                        40                 594
                                                        --            ---                        --                 ---
Net income                                             $26           $364                       $59                $901
                                                        ==            ===                        ==                 ===

Net income per share
   Basic                                             $0.00          $0.05                     $0.01               $0.11
                                                      ====           ====                      ====                ====

   Diluted                                           $0.00          $0.05                     $0.01               $0.11
                                                      ====           ====                      ====                 ====

Weighted average
  shares outstanding

  Basic                                              7,990          7,990                     7,990               7,990
                                                     =====          =====                     =====               =====
  Diluted                                            7,990          7,992                     7,990               7,991
                                                     =====          =====                     =====               =====

</TABLE>



See notes to unaudited condensed consolidated financial statements.
                                       4
<PAGE>



                 Manchester Technologies, Inc. and Subsidiaries
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                    Nine months ended
                                                                                           April 30,              April 30,
                                                                                             2003                   2002
                                                                                             ----                   ----



<S>                                                                                         <C>                   <C>

Cash flows from operating activities:
    Net cash from operations after adjustment for non-cash items                            $ 1,367               $ 2,450
      Changes in assets and liabilities (net of effects of acquisitions):
        Accounts receivable                                                                   3,341                (6,704)
        Inventory                                                                            (3,630)               (5,546)
        Prepaid income taxes                                                                   (294)                 (358)
        Prepaid expenses and other current assets                                              (325)                 (230)
        Other assets                                                                            347                  (163)
        Accounts payable and accrued expenses                                                 2,078                 8,355
        Deferred service contract revenue                                                      (263)                 (274)
                                                                                              ------              --------
           Net cash provided by (used in) operating activities                                2,621                (2,470)
                                                                                             ------               --------
Cash flows from investing activities:
      Capital expenditures                                                                     (718)               (1,779)
      Payment for acquisitions, net of cash acquired                                              -                (1,613)
                                                                                           --------                 ------

           Net cash used in investing activities                                               (718)               (3,392)
                                                                                               -----                ------
Cash flows from financing activities:
      Payments on notes payable - bank                                                            -                  (515)
      Payments on notes payable - other                                                           -                   (43)
      Payments on capital lease obligations                                                     (16)                    -
                                                                                            --------             --------

           Net cash used in financing activities                                                (16)                 (558)
                                                                                            --------              --------
Net increase (decrease) in cash and cash equivalents                                          1,887                (6,420)
Cash and cash equivalents at beginning of period                                              8,963                14,493
                                                                                            --------               ------

Cash and cash equivalents at end of period                                                  $10,850               $ 8,073
                                                                                             =======              =======




</TABLE>

See notes to unaudited condensed consolidated financial statements.
                                       5

<PAGE>


                 Manchester Technologies, Inc. and Subsidiaries
         Notes to Unaudited Condensed Consolidated Financial Statements


 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, display technology and enterprise and
Internet  solutions.  The Company offers its customers  single-source  solutions
customized  to their  information  systems  needs by  integrating  its analysis,
design and implementation services with hardware, software,  networking products
and peripherals from leading vendors. The Company operates in a single segment.

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

     The accompanying  financial  information should be read in conjunction with
the  consolidated  financial  statements,  including the notes thereto,  for the
annual period ended July 31, 2002. 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.  The results
of operations  for the three and nine month periods ended April 30, 2003 are not
necessarily  indicative of the results to be expected for future interim periods
or the entire year.

2.        Net Income Per Share

     Basic net income per share has been  computed by dividing net income by the
weighted  average  number of common shares  outstanding.  Diluted net income per
share has been computed by dividing net income by the weighted average number of
common shares outstanding,  plus the assumed exercise of dilutive stock options,
less the number of treasury  shares assumed to be purchased from the proceeds of
such  exercises  using the average  market price of the  Company's  common stock
during each respective period.  Stock options  representing  843,000 and 908,000
shares for the three  months  ended April 30, 2003 and 2002,  respectively,  and
843,000  and 919,000  shares for the nine months  ended April 30, 2003 and 2002,
respectively,  have been excluded from the calculation of diluted net income per
share as they are antidilutive.  The following table reconciles the denominators
of the basic and diluted per share computations.  For each period, the numerator
is the net income as reported.
<TABLE>
<CAPTION>

                             Three months ended April 30,                    Nine months ended April 30,
                           2003                   2002                      2003                      2002
                           ----                   ----                      ----                      ----
                                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           7,990        $0.00      7,990      $0.05            7,990        $0.01        7,990    $0.11
                                  ====                  ====                          ====                  ====


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

    Diluted         7,990        $0.00      7,992      $0.05            7,990        $0.01        7,991    $0.11
                    =====         ====      =====       ====            =====         ====        =====     ====

</TABLE>



                                       6

<PAGE>



                 Manchester Technologies, Inc. and Subsidiaries
         Notes to Unaudited Condensed Consolidated Financial Statements

3.       Related Party Transactions

     The Company  leases its  warehouse and  distribution  center as well as its
corporate offices and certain sales facilities from entities owned or controlled
by shareholders, officers or directors of the Company. In March 2003, the owners
sold the  properties  leased  by the  Company  to an  unaffiliated  company.  In
connection  with the sale, the Company entered into three  fifteen-year  leases,
each expiring on March 31, 2018, with the new owner. Lease terms include a lower
base rent in the first  year,  annual  rent  increases  of two  percent and four
five-year renewal options.

     The  Company  recorded  the new leases as capital  leases and  accordingly,
recorded an asset of approximately $8.2 million.  The asset is classified in the
balance  sheet as  Property  and  equipment,  net,  and is  amortized  using the
straight-line  method  over the lease  terms  and the  related  obligations  are
recorded as liabilities.

     The following  represents the Company's commitment under capital leases for
the period May 1, 2003 through July 31, 2003,  each of the next five years ended
July 31, and thereafter:
<TABLE>
<CAPTION>

                                                                 (in thousands)
           <S>                                                         <C>

            May 1 - July 31, 2003                                       $205
            2004                                                         825
            2005                                                         842
            2006                                                         859
            2007                                                         876
            2008                                                         894
            2009 and thereafter                                        9,612
                                                                    --------

         Total payments                                               14,113
         Amount representing interest                                 (5,929)
                                                                    ---------

         Obligations under capital leases                              8,184
         Obligations due within one year                                (204)
                                                                     -------

         Long-term obligations under capital leases                   $7,980
                                                                     =======
</TABLE>

4.       Employee Stock Options

     In 1995,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  ("SFAS") No. 123,  "Accounting for Stock-Based
Compensation"   ("SFAS  123")  which   requires   companies  to  measure   stock
compensation  plans based on the fair value method of  accounting or to continue
to apply APB No. 25,  "Accounting for Stock Issued to Employees" ("APB 25"), and
to  provide  pro forma  footnote  disclosure  under the fair value  method.  The
Company  has  adopted  the pro  forma  disclosure  provision  of SFAS  No.  123.
Accordingly,  the Company  does not record  compensation  cost in the  financial
statements for its stock options that have an exercise price equal to or greater
than the fair market value of the underlying stock on the date of grant.

     In  December  2002,  the  FASB  issued  SFAS  No.  148,   "Accounting   for
Compensation-Transition  and  Disclosure-an  amendment of FAS 123" ("SFAS 148").
This statement amends SFAS 123 to provide  alternative methods of transition for
a voluntary change to the fair value based method of accounting for stock-

                                       7
<PAGE>


                 Manchester Technologies, Inc. and Subsidiaries
         Notes to Unaudited Condensed Consolidated Financial Statements

     based employee compensation and amends the disclosure  requirements to SFAS
123 to  require  prominent  disclosures  in both  annual and  interim  financial
statements about the method of accounting for stock-based employee  compensation
and the effect of the method used on reported results.

     Had compensation cost for the Company's stock option grants been determined
based on the fair  value at the grant date under  SFAS 123,  the  Company's  net
income per share for the three  months and nine months  ended April 30, 2003 and
2002 would approximate the pro forma amounts below:
<TABLE>
<CAPTION>

                                    Three Months Ended                 Nine Months Ended
                                    ------------------                 -----------------
                                    April 30,        April 30,         April 30,        April 30,
                                       2003             2002              2003             2002
                                    --------         ----------        -------          -------
                                                              (in thousands)
<S>                                 <C>              <C>               <C>              <C>
Net income:
         As reported                $ 26             $364              $   59           $901
         Compensation expense,
           net of taxes             (123)            (155)               (369)          (464)
                                     ---              ---                 ---            ---
         Pro Forma                  $(97)            $209               $(310)          $437
                                    ====             ====               =====           ====

Basic net income per share:
         As reported                $ 0.00           $0.05             $  0.01          $0.11
         Pro Forma                  $(0.01)          $0.03             $ (0.04)         $0.05

Diluted net income per share:
         As reported                $ 0.00           $0.05             $  0.01          $0.11
         Pro Forma                  $(0.01)          $0.03             $ (0.04)         $0.05
</TABLE>


5.    Acquisitions

 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  $1,500,000  plus
potential future contingent  payments.  Contingent  payments of up to $1,000,000
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.
No  contingent  payment  was made on November 2, 2002.  In  connection  with the
acquisition, the Company assumed approximately $435,000 of bank debt and $43,000
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
statements of operations from the acquisition  date. The estimated fair value of
tangible   assets  and   liabilities   acquired  was   $497,000  and   $869,000,
respectively. The excess of the aggregate purchase price over the estimated fair
value of the tangible  net assets  acquired was  approximately  $1,872,000.  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 $1,872,000 has not been
                                       8
<PAGE>

                 Manchester Technologies, Inc. and Subsidiaries
         Notes to Unaudited Condensed Consolidated Financial Statements

amortized;  however,  it is subject to impairment testing in accordance with No.
142, "Goodwill and Other Intangible Assets " ("SFAS 142").

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

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 $290,000  (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 operations from the acquisition  date. The estimated fair value of
tangible assets and liabilities acquired was $116,000 and $192,000 respectively.
The excess of  aggregate  purchase  price over the  estimated  fair value of the
tangible net assets acquired was $291,000.  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  $291,000  has  not  been
amortized;  however, it is subject to impairment testing in accordance with SFAS
142.

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

6.       Recently Issued Accounting Standards

     In July 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 143,  "Accounting for
Asset Retirement  Obligations"  ("SFAS 143"). SFAS 143 establishes an accounting
standard  requiring  the recording of the fair value of  liabilities  associated
with the  retirement  of  long-lived  assets  in the  period  in which  they are
incurred. The Company has adopted the provisions of SFAS 143 effective August 1,
2002.  The  adoption  of SFAS  143  did not  have a  significant  effect  on the
Company's results of operations or its financial position.

     In  October  2001,  the FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment  of  Long-Lived  Assets"  ("SFAS  144"),  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
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 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 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 144 is effective for all fiscal  quarters of fiscal years beginning
after  December 15, 2001.  The Company has adopted the provisions of SFAS 144 as
of August 1, 2002.  The  adoption of SFAS 144 did not have a material  impact on
the Company's condensed consolidated financial statements.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Statements
No. 4, 44, and 64,  Amendment of SFAS No. 13 and Technical  Corrections"  ("SFAS
145").  SFAS  145  updates,   clarifies  and  simplifies   existing   accounting
pronouncements by rescinding Statement 4, which required all gains and losses
                                       9
<PAGE>

                 Manchester Technologies, Inc. and Subsidiaries
         Notes to Unaudited Condensed Consolidated Financial Statements

from extinguishments of debt to be aggregated and, if material, classified as an
extraordinary  item, net of related income tax effect. As a result, the criteria
in Opinion 30 will now be used to classify those gains and losses. Additionally,
the  Statement  requires  that certain  lease  modifications  that have economic
effects  similar to  sale-leaseback  transactions  be accounted  for in the same
manner as sale-leaseback transactions. The Company has adopted the provisions of
SFAS 145 as of August 1, 2002.  The adoption of SFAS 145 did not have a material
impact on the Company's condensed consolidated financial statements.

     In July  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated with Exit or Disposal  Activities" ("SFAS 146"). SFAS 146 will spread
out the reporting of expenses  related to  restructurings  initiated after 2002,
because commitment to a plan to exit an activity or dispose of long-lived assets
will no  longer  be enough to  record a  liability  for the  anticipated  costs.
Instead,  companies will record exit and disposal costs when they are "incurred"
and can be  measured  at fair  value,  and they  will  subsequently  adjust  the
recorded  liability for changes in estimated cash flows. The Company has adopted
the  provisions of SFAS 146 as of January 1, 2003.  The adoption of SFAS 146 did
not have a material  impact on the Company's  condensed  consolidated  financial
statements.

     In November 2002, the FASB issued FASB  interpretation No. 45, "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of Others"  ("FIN 45").  FIN 45 requires that upon
issuance of a guarantee,  a guarantor  must  recognize a liability  for the fair
value  of an  obligation  assumed  under  a  guarantee.  FIN  45  also  requires
additional  disclosures  by a  guarantor  in its  interim  and annual  financial
statements  about  the  obligations   associated  with  guarantees  issued.  The
recognition  provisions of FIN 45 will be effective for any guarantees  that are
issued or modified  after December 31, 2002. The adoption of FIN 45 did not have
a material impact on the Company's condensed consolidated financial statements.

     In  December  2002,  the  FASB  issued  SFAS  No.  148,   "Accounting   for
Compensation-Transition   and  Disclosure"   ("SFAS  148").  SFAS  148  provides
alternative  methods  of  transition  for a  voluntary  change to the fair value
method  of  accounting  for  stock-based  employee  compensation  as  originally
provided   by  SFAS  No.  123   "Accounting   for   Stock-Based   Compensation".
Additionally, SFAS 148 amends the disclosure requirements of SFAS 123 to require
prominent  disclosure in both the annual and interim financial  statements about
the method of  accounting  for  stock-based  compensation  and the effect of the
method used on reported results.  The transitional  requirements of SFAS 148 are
effective for all financial  statements  for fiscal years ending after  December
15, 2002. The Company  adopted the disclosure  portion of this statement for the
current fiscal  quarter ended April 30, 2003. The  application of the disclosure
portion  of this  standard  will have no  material  impact  on our  consolidated
financial  position or results of operations.  The FASB recently  indicated that
they will require stock-based  employee  compensation to be recorded as a charge
to earnings pursuant to a standard they are currently  deliberating,  which they
believe will become  effective on January 1, 2004.  The Company will continue to
monitor their  progress on the issuance of this standard as well as evaluate the
Company's position with respect to current guidance.
                                       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, 2002. 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
Annual Report on Form 10-K for the year ended July 31, 2002, and those set forth
in the  Company's  other  filings  from  time to time  with the  Securities  and
Exchange  Commission.  Readers are cautioned not to place undue  reliance on any
forward-looking  statements,  which reflect management's opinions only as of the
date  hereof.  We  undertake  no  obligation  to revise or publicly  release the
results of any revision to any forward-looking statements.

General

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

Certain Trends and Uncertainties

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

     Geographic Considerations. On September 11, 2001, the World Trade Center in
New York  City and the  Pentagon  in  Washington,  D.C.  were  the  subjects  of
terrorist  attacks. A significant part of our business is generated from our New
York City and  Baltimore/Washington,  D.C. offices. We cannot predict the impact
                                       11
<PAGE>

that potential  future  attacks may have on our business,  results of operations
and financial condition. In addition, given the concentration of our business in
these geographic  areas,  our business could be materially  affected by economic
conditions   and   other   significant   events   in  the  New  York   City  and
Baltimore/Washington, D.C. areas.

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

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

     Competition. The 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,  certain  suppliers  and  manufacturers  have been,  and
additional  suppliers and  manufacturers may choose, to market products directly
to end users through a direct sales force and/or the Internet  rather than or in
addition  to  channel  distribution,  and may also  choose  to  market  services
directly  to end  users.  Some  of our  competitors  have or may  have,  greater
financial,  marketing  and other  resources,  and may  offer a broader  range of
products and  services,  than us. As a result,  they may be able to respond more
quickly to new or emerging  technologies  or changes in  customer  requirements,
benefit from greater purchasing  economies,  offer more aggressive  hardware and
service  pricing or devote greater  resources to the promotion of their products
and  services.  We may not be able to compete  successfully  in the future  with
these or other current or potential competitors.

     Vendor  Relationships and Product  Availability.  Our business is dependent
upon our relationships with major manufacturers and distributors in the 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  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.   On  May  3,  2002,   the
Hewlett-Packard Company and Compaq Computer Corporation merged.  Manchester sold
the products of both  companies and we believe that we had strong  relationships
with both companies and continue to have a strong  relationship  with the merged
company. 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.
                                       12
<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.

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

     Rapid  product  improvement  and  technological   change  characterize  the
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  condition and
results of operations.

     As a result  of the  rapid  changes  that  are  taking  place in  computer,
networking and display technologies, product life cycles are short. Accordingly,
our  product  offerings  change  constantly.  Prices of  products  change,  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 and peripherals.
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.
                                       13
<PAGE>

     Acquisitions.  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.

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

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

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

     Stock Repurchase  Program.  The Company's Board of Directors has authorized
the  Company  to  repurchase  up  to $1  million  of  its  common  stock,  which
authorization is effective until the first Board of Directors  meeting following
the close of our 2003 fiscal year,  unless earlier  terminated by the Board. The
extent  to which  the  Company  repurchases  its  stock  and the  timing of such
purchases will depend upon market conditions and other corporate  considerations
to be evaluated by the Executive  Committee of the Board. The repurchase program
does not obligate the Company to repurchase any specific  number of shares,  and
repurchases  pursuant to the program may be  suspended or resumed at any time or
from  time to time  without  further  notice  or  announcement.  There can be no
assurance as to the effect, if any, that the adoption of the repurchase  program
or the making of  repurchases  thereunder  will have on the market  price of our
common stock.


E-Commerce

     We utilize a website and electronic  commerce system.  The site, located at
www.e-manchester.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.
                                       14

<PAGE>



Acquisitions

         Donovan Consulting Group, Inc.

     On August 29, 2001, the Company  acquired all of the  outstanding  stock of
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  $1,500,000  plus  potential  future  contingent
payments.  Contingent  payments  of up to  $1,000,000  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. No contingent payment was
made on  November  2, 2002.  In  connection  with the  acquisition,  the Company
assumed  approximately  $435,000 of bank debt and  $43,000 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
statements of operations from the acquisition  date. The estimated fair value of
tangible   assets  and   liabilities   acquired  was   $497,000  and   $869,000,
respectively. The excess of the aggregate purchase price over the estimated fair
value of the tangible  net assets  acquired was  approximately  $1,872,000.  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 $1,872,000 has not been amortized;  however,
it is subject to impairment  testing in accordance with SFAS No. 142,  "Goodwill
and Other Intangible Assets."

         e.Track Solutions, Inc.

     On November 9, 2001, the Company  acquired all of the outstanding  stock of
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 $290,000
(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 operations from the acquisition  date. The estimated fair value of
tangible   assets  and   liabilities   acquired  was   $116,000  and   $192,000,
respectively.  The excess of aggregate  purchase  price over the estimated  fair
value of the  tangible  net assets  acquired  was  $291,000.  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
$291,000 has not been amortized; however, it is subject to impairment testing in
accordance with SFAS No. 142, "Goodwill and Other Intangible Assets."

Critical Accounting Policies

     Financial  Reporting  Release No. 60, which was released by the  Securities
and Exchange Commission,  encourages all registrants,  including the Company, to
include a discussion  of "critical"  accounting  policies or methods used in the
preparation of financial statements. The preparation of financial statements and
related disclosures in conformity with accounting  principles generally accepted
in  the  United  States  of  America  requires  management  to  make  judgments,
assumptions and estimates that affect the amounts  reported in the  consolidated
financial  statements  and  accompanying  notes.  Note  1  to  the  consolidated
financial statements in the Annual Report on Form 10-K for the fiscal year ended
                                       15
<PAGE>

July 31, 2002 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 condensed 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 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.

                                       16

<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,
                                                                     2003             2002          2003         2002
                                                                     ----             -----         ----         -----
<S>                                                                  <C>              <C>         <C>            <C>
           Revenue
               Product sales                                        94.0%            94.7%       93.6%          95.4%
               Services                                               6.0              5.3         6.4            4.6
                                                                   ------            -----       ------         -----
           Total revenue                                            100.0            100.0       100.0          100.0
                                                                    -----            -----       -----          -----


           Cost of revenue
               Products                                              89.4             86.6        89.2           86.3
               Services                                              76.9             78.2        76.4           75.1
                                                                     ----             ----        ----           ----

           Total cost of revenue                                     88.6             86.1        88.4           85.8
                                                                     ----             ----        ----           ----
           Gross profit
               Products                                              10.6             13.4        10.8           13.7
               Services                                              23.1             21.8        23.6           24.9
                                                                     ----             ----        ----           ----

           Total gross profit                                        11.4             13.9        11.6           14.2

           Selling, general and
              administrative expenses                                11.3             13.0        11.6           13.5
                                                                     ----             ----        ----           ----

           Income (loss) from operations                              0.1              0.9         0.0            0.7

           Interest and other income (expense), net                   0.0              0.1         0.1            0.1
                                                                      ---             ----         ---           ----

           Income   before income taxes                               0.1              1.0         0.0            0.8

           Income tax provision                                       0.0              0.4         0.0            0.3
                                                                      ---             ----        ----           ----

           Net income                                                 0.0%             0.6%        0.0%           0.5%
                                                                      ===              ===         ===            ===

</TABLE>


Three  Months  Ended April 30, 2003  Compared  with Three Months Ended April 30,
2002

     Revenue.  Revenue  decreased by $1.2 million or 2% to $63.9 million for the
three months ended April 30, 2003 from $65.1  million for the three months ended
April 30, 2002.  Revenue from the sale of products  decreased by $1.6 million or
3% while  revenue  from  service  offerings  increased  by $400,000 or 12%.  The
decrease in product revenue is primarily a result of decreased sales of computer
and networking  products and peripherals as a result of the current economic and
market  forces  affecting  the computer  industry.  This  decrease was partially
offset by increased sales of display monitors, primarily large screen flat panel
displays,  by our  Electrograph  subsidiary.  The increase in service revenue is
primarily  attributable to the Company's continued focus on growing its sales of
services and solutions to its existing customer base and to new customers.
                                       17
<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 related to volume purchases
provided by  manufacturers.  All other  operating costs are included in selling,
general  and  administrative   expenses,   offset  in  part  by  certain  market
development  funds  provided by  manufacturers.  Gross profit  decreased by $1.8
million or 20%,  from $9.0  million for the three months ended April 30, 2002 to
$7.3 million for the three  months  ended April 30, 2003 and as a percentage  of
revenue,  gross profit decreased from 13.9% for the three months ended April 30,
2002 to 11.4% for the three  months  ended  April 30,  2003.  Gross  profit from
product  sales  decreased by $1.9 million or 23% while gross profit from service
offerings increased by $139,000 or 18%. As a percentage of revenue, gross profit
from the sale of products  decreased from 13.4% for the three months ended April
30, 2002 to 10.6% for the three  months  ended April 30, 2003  primarily  due to
increased  competition,  pricing  pressure as well as a decline in demand due to
the current economic and market forces  affecting our industry.  As a percentage
of revenue,  gross profit from the sale of services increased from 21.8% for the
three  months ended April 30, 2002 to 23.1% for the three months ended April 30,
2003 as a result of increased sales of higher margin services.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses decreased by $1.3 million, or 15% from $8.5 million for
the three months ended April 30, 2002 to $7.2 million for the three months ended
April 30, 2003.  The decrease is  principally  due to a decrease in salaries and
personnel  costs in the amount of  approximately  $430,000  reflecting  the cost
reduction  measures  instituted by the Company,  decreased sales  commissions of
approximately  $360,000  due to the lower gross  margins  earned on revenues and
lower  depreciation and amortization  expenses of approximately  $120,000.  As a
percentage of revenue,  selling,  general and administrative  expenses decreased
from  13.0% for the three  months  ended  April 30,  2002 to 11.3% for the three
months ended April 30, 2003.

     Interest  and Other  Income  (Expense),  net.  Interest  and  other  income
(expense),  net,  decreased by $62,000 from  interest  income of $40,000 for the
three months  ended April 30, 2002 to interest  expense of $22,000 for the three
months ended April 30, 2003. 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  $52,000  offset  partially  by interest
income of approximately $30,000.

     Income Tax  Provision.  Our  effective tax rate was 39.5% and 39.4% for the
three months ended April 30, 2003 and April 30, 2002, respectively.

Nine Months Ended April 30, 2003 Compared to Nine Months Ended April 30, 2002

     Revenue. Revenue increased by $18.0 million or 9% to $212.8 million for the
nine months  ended April 30, 2003 from $194.8  million for the nine months ended
April 30, 2002.  Revenue from the sale of products increased by $13.2 million or
7% while  revenue from service  offerings  increased by $4.7 million or 53%. The
increase in product  revenue is primarily a result of increased sales of display
monitors,  primarily  large  screen  flat panel  displays,  by our  Electrograph
subsidiary as well as increased shipments of computers and peripherals offset by
lower per unit prices. The increase in service revenue is primarily attributable
to the Company's  continued focus on growing its sales of services and solutions
to its existing customer base and to new customers.

     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 related to volume purchases
provided by  manufacturers.  All other  operating costs are included in selling,
general  and  administrative   expenses,   offset  in  part  by  certain  market
development  funds  provided by  manufacturers.  Gross profit  decreased by $2.9
million or 10%,  from $27.6  million for the nine months ended April 30, 2002 to
$24.7  million for the nine months ended April 30, 2003 and as a  percentage  of
revenue,  gross profit  decreased from 14.2% for the nine months ended April 30,
2002 to 11.6% for the nine  months  ended  April 30,  2003.  Gross  profit  from
product  sales  decreased by $3.9 million or 15% while gross profit from service
offerings  increased by $1.0 million or 45%. As a percentage  of revenue,  gross
                                       18
<PAGE>
profit from the sale of products  decreased from 13.7% for the nine months ended
April 30, 2002 to 10.8% for the nine months ended April 30, 2003  primarily  due
to increased competition, pricing pressure as well as a decline in demand due to
the current economic and market forces  affecting our industry.  As a percentage
of revenue,  gross profit from the sale of services  declined from 24.9% for the
nine months  ended  April 30, 2002 to 23.6% for the nine months  ended April 30,
2003 as a result of increased sales of lower margin services.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses decreased by $1.5 million, or 6% from $26.3 million for
the nine months ended April 30, 2002 to $24.8  million for the nine months ended
April 30, 2003.  The decrease is  principally  due to a decrease in salaries and
personnel  costs in the amount of  approximately  $840,000  reflecting  the cost
reduction  measures  instituted by the Company,  decreased sales  commissions of
approximately  $710,000 due to the lower gross margins  earned on revenues,  and
lower promotional expenses and contracted work costs of approximately  $230,000.
These  decreases  were  partially  offset by  increased  telephone  expenses  of
approximately $180,000 and increased advertising costs of approximately $120,000
primarily  as a result of  decreased  market  development  funds  received  from
manufacturers   for  activities,   such  as  training,   advertising  and  other
pre-approved market development programs.  As a percentage of revenue,  selling,
general and  administrative  expenses  decreased  from 13.5% for the nine months
ended April 30, 2002 to 11.6% for the nine months ended April 30, 2003.

     Interest  and Other  Income  (Expense),  net.  Interest  and  other  income
(expense),  net,  decreased by $16,000  from  $162,000 for the nine months ended
April 30,  2002 to  $146,000  for the nine  months  ended  April 30,  2003.  The
decrease is primarily as a result of the Company's receipt of insurance proceeds
in the amount of  $113,000 in the nine  months  ended  April 30, 2003  partially
offset by lower  interest  rates  available  in the  marketplace  and  increased
interest expense of approximately $52,000 related to the interest portion of the
capital leases entered into by the Company in March 2003.

     Income Tax  Provision.  Our  effective tax rate was 40.4% and 39.7% for the
nine months ended April 30, 2003 and April 30, 2002, respectively.

      Liquidity and Capital Resources

     Our  primary  sources  of cash and cash  equivalents  have been  internally
generated  working capital from  profitable  operations.  The Company's  working
capital at April 30, 2003 and July 31, 2002 was approximately  $31.0 million and
$30.1 million, respectively.

     Operations for the nine months ended April 30, 2003 and 2002,  after adding
back  non-cash  items,  provided  cash of  approximately  $1.4  million and $2.5
million,  respectively.  During such periods,  other changes in working  capital
provided  (used)  cash  of  approximately   $1.3  million  and  $(4.9)  million,
respectively, resulting in cash being provided by (used in) operating activities
of  approximately  $2.6 million and $(2.5) million,  respectively.  Our accounts
receivable  and  accounts  payable  balances,  as  well  as  our  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.

     Investing activities for the nine months ended April 30, 2003 and 2002 used
cash of  approximately  $718,000 and $3.4  million,  respectively.  For the nine
months  ended  April 30,  2003 this  amount  consisted  solely of  additions  to
property and  equipment.  For the nine months ended April 30, 2002 these amounts
included  additions to property and equipment of approximately  $1.8 million and
the  payment for  acquisitions,  net of cash  acquired,  of  approximately  $1.6
million.

     Financing activities for the nine months ended April 30, 2003 and 2002 used
cash of approximately  $16,000 and $558,000,  respectively.  For the nine months
ended  April 30,  2003 this  amount  consisted  of  payments  on  capital  lease
obligations  related to the capital  leases entered into by the Company in March
                                       19
<PAGE>
2003. For the nine months ended April 30, 2002 this amount  consisted  solely of
net repayments of bank loans and other debt in connection with the  acquisitions
in fiscal 2002.

     We have  available  a line of credit with a  financial  institution  in the
aggregate  amount  of  $15.0  million.  At  April  30,  2003,  no  amounts  were
outstanding under this line.

     The Company  leases its  warehouse and  distribution  center as well as its
corporate offices and certain sales facilities from entities owned or controlled
by shareholders, officers or directors of the Company. In March 2003, the owners
sold the  properties  leased  by the  Company  to an  unaffiliated  company.  In
connection  with the sale, the Company entered into three  fifteen-year  leases,
each expiring on March 31, 2018, with the new owner. Lease terms include a lower
base rent in the first  year,  annual  rent  increases  of two  percent and four
five-year renewal options.

     The  Company  recorded  the new  leases as capital  leases and  accordingly
recorded an asset of approximately $8.2 million.  The asset is classified in the
balance  sheet as  Property  and  equipment,  net,  and is  amortized  using the
straight-line  method  over the lease  terms  and the  related  obligations  are
recorded as liabilities.

     The following  represents the Company's commitment under capital leases for
the period May 1, 2003 through July 31, 2003,  each of the next five years ended
July 31, and thereafter:
<TABLE>
<CAPTION>

                                                                (in thousands)

         <S>                                                      <C>
         May 1 - July 31, 2003                                        $205
         2004                                                          825
         2005                                                          842
         2006                                                          859
         2007                                                          876
         2008                                                          894
         2009 and thereafter                                         9,612
                                                                  --------

         Total payments                                             14,113
         Amount representing interest                               (5,929)
                                                                   ---------

         Obligations under capital leases                            8,184
         Obligations due within one year                              (204)
                                                                      ----


         Long-term obligations under capital leases                 $7,980
                                                                    ======
</TABLE>


     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  2003  which  ends on July 31,
2003. We currently have no material commitments for capital expenditures,  other
than  operating  and capital  leases that the Company has  committed  to for its
facilities and certain  tangible  property.  Future capital  requirements of the
Company  include those for the growth of working  capital items such as accounts
receivable and inventory, the purchase of equipment, expansion of facilities, as
well  as  the  possible  opening  of new  offices,  potential  acquisitions  and
expansion of the Company's  service and  e-commerce  capabilities.  In addition,
there  are  no   transactions,   arrangements  and  other   relationships   with
unconsolidated  entities or other persons that are  reasonably  likely to affect
liquidity or the availability of, or requirements for, capital resources.

     The Company regularly examines  opportunities for strategic acquisitions of
other  companies  or lines of business  and  anticipates  that it may issue debt
                                       20
<PAGE>

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  risk.  The  Company
primarily  invests its cash in mutual funds  consisting of U.S.  Government  and
Government  Agency  Securities,  Municipal  Bonds  and  Corporate  Fixed  Income
securities.  Neither  a 100 basis  point  increase  nor  decrease  from  current
interest rates would have a material effect on the Company's financial position,
results of operations or cash flows.

ITEM 4. CONTROLS AND PROCEDURES

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

     There were 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.

                                       21
<PAGE>















PART II - OTHER INFORMATION



      Item 6.     Exhibits and Reports

(a)      Exhibits

          10.5.r - Lease  dated March 14, 2003  between  Registrant  and General
               Electric Capital Business Asset Funding Corporation.

          10.5.s - Lease  dated March 14, 2003  between  Registrant  and General
               Electric Capital Business Asset Funding Corporation.

          10.5.t - Lease dated March 14, 2003 between Electrograph Systems, Inc.
               and General Electric Capital Business Asset Funding Corporation.

          10.5.u - Lease dated May 1, 2003  between  Registrant  and FSP Gateway
               Crossing Limited Partnership.

          99.1 - Certification  of Principal  Executive  Officer  Pursuant to 18
               U.S.C.  Section 1350,  as Adopted  Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.

          99.2 - Certification  of Principal  Financial  Officer  Pursuant to 18
               U.S.C.  Section 1350,  as Adopted  Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.



      (b)     Reports on Form 8-K

1.   Form 8-K filed March 7, 2003  disclosing  Press Release dated March 7, 2003
     reporting earnings for the second quarter ended January 31, 2003.

2.   Form 8-K filed April 9, 2003  disclosing  Press Release dated April 9, 2003
     announcing  the  appointment  of  Robert  Sbarra  to the  position  of Vice
     President of Sales and Marketing.

                                       22
<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 16, 2003                  /S/ Barry R. Steinberg
                                       ----------------------------------------
                                      Barry R. Steinberg
                                      President and Chief Executive Officer



DATE:   June 16, 2003                 /S/ Elan Yaish
                                      -----------------------------------------

                                      Elan Yaish
                                      Vice President Finance, Chief Financial
                                      Officer and Assistant Secretary

                                       23
<PAGE>

                                  CERTIFICATION

I, Barry R.  Steinberg,  President  and Chief  Executive  Officer of  Manchester
Technologies, Inc, certify that:

1.   I  have  reviewed  the   quarterly   report  on  Form  10-Q  of  Manchester
     Technologies, Inc.;
2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;
4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange  Act Rules 13a-14 and 15d-14) for the  registrant  and we have:
     (a)  Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;
     (b)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and
     (c)  Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;
5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):
     (a)  All  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and
6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: June 16, 2003

/S/      Barry R. Steinberg
Barry Steinberg
Chief Executive Officer

                                       24
<PAGE>


                                  CERTIFICATION

I,   Elan  Yaish,  Chief  Financial  Officer of  Manchester  Technologies,  Inc,
     certify that:
1.   I  have  reviewed  the   quarterly   report  on  Form  10-Q  of  Manchester
     Technologies, Inc.;
2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;
4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange  Act Rules 13a-14 and 15d-14) for the  registrant  and we have:
     (a)  Designed  such  disclosure  controls  and  procedures  to ensure  that
     material information relating to the registrant, including its consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the period in which  this  quarterly  report is being
     prepared;
     (b)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and
     (c)  Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;
5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):
     (a)  All  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and 6. The registrant's other certifying officers and I have
          indicated in this  quarterly  report  whether  there were  significant
          changes  in  internal   controls  or  in  other   factors  that  could
          significantly  affect internal controls  subsequent to the date of our
          most recent  evaluation,  including any corrective actions with regard
          to significant  deficiencies and material  weaknesses.

 Date: June 16, 2003

/S/      Elan Yaish
Elan Yaish
Chief Financial Officer


                                       25