<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                 For the quarterly period ended October 31, 1999

                                       or

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

            For the transition period from __________ to ____________

                         COMMISSION FILE NUMBER 0-21695

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

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

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

                                 (516) 435-1199
              (Registrant's telephone number, including area code)


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

                                                            [X] Yes [ ] No

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
stock, as of the latest practicable date.

There were 8,041,800 outstanding shares of COMMON STOCK at December 7, 1999.






<PAGE>



                 MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES

                                Table of Contents

PART I.       FINANCIAL INFORMATION                                        Page

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

              Condensed Consolidated Statements of Income
                 Three months ended October 31, 1999 and 1998 (unaudited)     4

              Condensed Consolidated Statements of Cash Flows
                 Three months ended October 31, 1999 and 1998 (unaudited)     5

              Notes to Condensed Consolidated Financial Statements            6

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


PART II.      OTHER INFORMATION


Item 6.       Exhibits and Reports                                           14


<PAGE>


Part I - FINANCIAL INFORMATION

ITEM 1.            Financial Statements

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

                                                   October 31,  1999  July 31, 1999
                                                         (Unaudited)
                                                         ------------    -----------
<S>                                                      <C>             <C>

Assets:
  Cash and cash equivalents                              $13,408         $5,749
  Accounts receivable, net                                32,082         34,747
  Inventory                                                7,115          8,245
  Deferred income taxes                                      538            538
  Prepaid expenses and other current assets                  237            340
                                                             ---            ---
         Total current assets                             53,380         49,619

  Property and equipment, net                              5,882          6,248
  Goodwill, net                                            5,002          5,070
  Deferred income taxes                                      560            560
  Other assets                                               262            281
                                                             ---            ---

                                                         $65,086        $61,778
                                                          ======         ======

Liabilities:
  Current maturities under capital lease obligation           54       $     85
  Accounts payable and accrued expenses                   23,003         20,824
  Deferred service revenue                                   615            581
  Income taxes payable                                       834            668
                                                             ---            ---
         Total current liabilities                        24,506         22,158

Deferred compensation payable                                 34             34
                                                              --             --
         Total liabilities                                24,540         22,192
                                                          ------         ------

Shareholders' equity:
  Preferred stock, $.01 par value; 5,000,000 shares
     authorized,  none issued                                  -              -
  Common stock, $.01 par value; 25,000,000 shares
     authorized, 8,041,800 and 8,084,800 issued
     and outstanding                                          80             81
  Additional paid-in capital                              18,667         18,799
  Deferred compensation                                      (31)           (38)
  Retained earnings                                       21,830         20,744
                                                          ------         ------

         Total shareholders' equity                       40,546         39,586
                                                          ------         ------

                                                         $65,086        $61,778
                                                          ======        =======
See notes to condensed consolidated financial statements.

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

                                                 Three months ended October 31,
                                                    1999                1998
                                                          Unaudited
                                                  -----------------------------

Revenue
       Products                                  $63,448               $55,675
       Services                                    1,912                 1,824
                                                   -----                 -----
                                                  65,360                57,499
                                                  ------                ------
Cost of revenue
       Products                                   54,287                48,382
       Services                                    1,330                 1,104
                                                   -----                 -----
                                                  55,617                49,486
                                                  ------                ------

       Gross profit                                9,743                 8,013

Selling, general and
    administrative expenses                        8,019                 7,185
                                                 -------                 -----

       Income from operations                      1,724                   828

Interest expense                                      (1)                   (2)
Interest and investment income                       118                   115
                                                     ---               -------

       Income before income taxes                  1,841                   941

Provision for income taxes                           755                   373
                                                     ---                   ---

       Net income                                 $1,086                $  568
                                                   =====                ======

Net Income per share
       Basic                                      $0.13                 $0.07
                                                   ====                 =====
       Diluted                                    $0.13                 $0.07
                                                   ====                 =====

Weighted average shares outstanding
        Basic                                  8,074,161             8,096,600
                                               =========             =========
        Diluted                                8,075,828             8,096,600
                                               =========             =========

</TABLE>


See notes to condensed consolidated financial statements.



<PAGE>



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

                                                              For the three months ended October 31,
                                                                        1999          1998
                                                                           (Unaudited)
                                                                   --------------------------
<S>                                                                    <C>         <C>

Cash flows from operating activities:
         Net income                                                    $1,086       $  568

  Adjustments to reconcile net income to net
   cash from operating activities:
         Depreciation and amortization                                    474          424
         Allowance for doubtful accounts                                  (51)          87
         Non cash compensation and commission expense                       7           24
  Change in assets and liabilities:
         Decrease (increase) in accounts receivable                     2,716       (3,453)
         Decrease (increase) in inventory                               1,130         (575)
         Decrease in prepaid expenses and
             other current assets                                         103          176
         Decrease (increase) in other assets                               19          (15)
         Increase (decrease) in accounts payable and
             accrued expenses                                           2,179        5,274
         Increase (decrease) in deferred service
            contract revenue                                               34          (77)
         Increase  in income taxes  payable                               166          114
Sale of investments                                                         -            1
                                                                           --          ---

         Net cash provided by operating activities                      7,863        2,548
                                                                        -----        -----

Cash flows from investing activities:
         Capital expenditures                                             (40)        (533)
                                                                          ----        -----

              Net cash used by investing activities                       (40)        (533)
                                                                          ----         ---

Cash flows from financing activities:
         Payments on capital lease obligations                            (31)         (29)
         Purchase and retirement of common stock                         (133)           -
                                                                         -----          --
              Net cash used in financing activities                     (1,64)         (29)
Net increase in cash and cash equivalents                               7,659        1,986
         Cash and cash equivalents at beginning of period               5,749        7,816
                                                                        -----        -----
Cash and cash equivalents at end of period                            $13,408       $9,802
                                                                       ======       ======
</TABLE>

See notes to condensed consolidated financial statements.


<PAGE>



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

   1. Organization and Basis of Presentation

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

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

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

   2. Net Income Per Share

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

                                       6
<PAGE>




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

          The  following  discussion  and  analysis of financial  condition  and
     results of operations of the Company should be read in conjunction with the
     condensed  consolidated  financial  statements  and notes thereto  included
     elsewhere  in this  Quarterly  Report on Form  10-Q and with the  Company's
     Annual Report on Form 10-K. This discussion and analysis  contains  certain
     forward-looking  statements  within the  meaning of the  Securities  Act of
     1933, as amended,  and Section 21E of the Securities  Exchange Act of 1934,
     as  amended,  which  are  not  historical  facts,  and  involve  risks  and
     uncertainties that could cause actual results to differ materially from the
     results anticipated in those  forward-looking  statements.  These risks and
     uncertainties include, but are not limited to, those set forth below, those
     set forth in the  Company's  Annual  Report on Form 10-K for the year ended
     July 31, 1999, and those set forth in the Company's other filings from time
     to time with the Securities and Exchange Commission.

           General

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

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

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

          The Company's  business is dependent upon its relationships with major
     manufacturers  and distributors in the computer  industry.  There can be no
     assurance that the pricing and related terms offered by major manufacturers
     and distributors  will not adversely  change in the future.  The failure to
                                       7
<PAGE>

     obtain an adequate supply of products,  the loss of a major manufacturer or
     distributor,  the deterioration of the Company's  relationship with a major
     manufacturer  or distributor,  or the Company's  inability in the future to
     develop new relationships  with other  manufacturers and distributors could
     have a  material  adverse  effect on the  Company's  business,  results  of
     operations and financial condition.

          The Company's  largest customer  accounted for approximately 5% and 7%
     (or $3,522,000, and $3,939,000,  respectively) of the Company's revenue for
     the  three   months  ended   October  31,  1999  and  1998,   respectively,
     substantially  all of which  revenue was derived  from the sale of hardware
     products.  This  customer  accounted  for 7% of revenue for the fiscal year
     ended  July 31,  1999.  There can be no  assurance  that the  Company  will
     continue to derive substantial revenue from this customer.

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

          The markets for the Company's  products and services are characterized
     by rapidly changing  technology and frequent  introductions of new hardware
     and software  products and services,  which render many  existing  products
     noncompetitive,  less profitable or obsolete. The Company believes that its
     inventory  controls have contributed to its ability to respond  effectively
     to these  technological  changes. As of October 31, 1999 and July 31, 1999,
     inventories represented 11% and 13%, respectively, of total assets. For the
     three months ended October 31, 1999 and 1998, annualized inventory turnover
     was 28 and 20 times, respectively.  Inventory turned 22 times in the fiscal
     year  ended  July 31,  1999.  The  failure  of the  Company  to  anticipate
     technology trends or to continue to effectively  manage its inventory could
     have a  material  adverse  effect on the  Company's  business,  results  of
     operations and financial condition.

           The  Company  believes  its  controls  on  accounts  receivable  have
      contributed  to  its   profitability.   The  Company's  bad  debt  expense
      represented  less than 0.2% of total  revenues  in each of the three month
      periods  ended  October 31, 1999 and 1998.  For the fiscal year ended July
      31, 1999, bad debt expense represented 0.1% of total revenues.

           The Company's  quarterly  revenue and  operating  results have varied
      significantly  in the past and are  expected  to  continue to do so in the
      future.  Quarterly revenue and operating results generally  fluctuate as a
      result  of the  demand  for  the  Company's  products  and  services,  the
      introduction  of new  hardware  and software  technologies  with  improved
      features,  the  introduction  of new  services  by  the  Company  and  its
      competitors, changes in the level of the Company's operating expenses, the
      timely availability of product supply, competitive conditions and economic
      conditions. In particular,  the Company currently is increasing certain of
      its  fixed  operating  expenses,   including  a  significant  increase  in
      personnel  when  compared to the first  quarter of fiscal 1999, as part of
      its strategy to increase its focus on providing higher margin, value-added
      services.   Accordingly,   the  Company  believes  that   period-to-period
      comparisons  of its  operating  results  should  not be relied  upon as an
      indication  of  future  performance.  In  addition,  the  results  of  any
      quarterly  period are not  indicative of results to be expected for a full
      fiscal year.

           As a result of rapid  changes  which are taking place in computer and
      networking technologies,  product life cycles are short. Accordingly,  the
      Company's product offerings change  constantly.  Prices of products change
      with  generally  higher  prices early in the life cycle of the product and
      lower  prices  near the end of the  product's  life  cycle.  The  computer
      industry  continues to experience rapid declines in average selling prices
      of personal  computers.  In some  instances,  the Company has been able to
                                       8
<PAGE>
     offset these price declines with  increases in units shipped.  There can be
     no assurance  that average  selling  prices will not continue to decline or
     that the Company will be able to offset  declines in average selling prices
     with increases in units shipped.

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

     Year 2000 Issue

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

          The Company has  undertaken a complete  and thorough  review of all of
     its  operations  to determine  those aspects which involve or are dependent
     upon a computer  application.  The Company is  reviewing  the  software and
     operating  systems  for  each  such  application  to  determine  if  it  is
     Year-2000-Compliant.   Any  such  system  or  application  which  has  been
     identified  as not  Year-2000-Compliant  has been  modified  or upgraded to
     assure our continued ability to operate without interruption.  Manchester's
     Year  2000  project  has  been  underway  for  over a year  and is aimed at
     ensuring  that,  when the  year  2000  arrives,  all  applications  used on
     Manchester's AS/400 computer system are Year-2000-Compliant. As of November
     30, 1999 the following tasks have been completed:

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

     o    All of these programs have been modified to be Year-2000-Compliant.

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

          Manchester's  communications,  local, and wide area networks have been
     tested or represented  (by the  manufacturers)  to be  Year-2000-Compliant,
     with a few minor exceptions that should be resolved shortly.  Our status as
     of November 30, 1999 is as follows:

     o    The local area network  operations systems have been represented to be
          Year-2000-Compliant by their manufacturers/publishers.

     o    The network servers have been  represented to be Year-  2000-Compliant
          by their manufacturers.

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

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

    The  Company  continues  to audit  software  applications  on our local area
    network.  Products  that are  identified as  non-compliant  are either being
    upgraded or removed.
                                       9
<PAGE>
     o    The telephone  system has been  represented by its  manufacturer to be
          Year-2000-Compliant.

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

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

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

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

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

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

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

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

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

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

         The Company  believes its plans for  addressing  the Year 2000 Issue as
     outlined above are adequate to handle the most reasonably likely worst-case
     scenario.  The Company does not believe it will incur a material  financial
     impact for the risk of failure, or from the costs associated with assessing
     the risks of failure, arising from the Year 2000 Issue.  Consequently,  the
     Company  does not  intend to create a  contingency  plan  other than as set
     forth above. In addition,  if the Company's assessment of its vendors, when
     completed, indicates that certain product shortages can be anticipated, the
     Company may adjust its plans accordingly, although the Company does believe
     that it has the capacity to maintain significant levels of inventory.
                                       10
<PAGE>
          The statements above describing the Company's plans and objectives for
     handling the Year 2000 Issue and the expected impact of the Year 2000 Issue
     on the Company are  forward-looking  statements.  Those statements  involve
     risks  and  uncertainties   that  could  cause  actual  results  to  differ
     materially from the results discussed above.  Factors that might cause such
     a difference include,  but are not limited to, delays in executing the plan
     outlined  above and  increased  or  unforeseen  costs  associated  with the
     implementation  of the  plan and any  necessary  changes  to the  Company's
     systems.  Any  inability on the part of the Company to implement  necessary
     changes in a timely  fashion could have an adverse effect on future results
     of operations.  Moreover,  even if the Company successfully  implements the
     changes necessary to address the Year 2000 Issue, there can be no assurance
     that the Company will not be adversely affected by the failure of others to
     become Year-2000-Compliant.

          E-Commerce

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

          On June 25, 1999,  the Company  announced the launch of a new consumer
     products  on-line  super  store,  Marketplace4U.com  ("MP4U").  MP4U offers
     products   in   categories   such  as  consumer   electronics,   automotive
     accessories, outdoor and camping equipment from its main and outlet stores.
     The main store offers top name brand  products at competitive  prices;  the
     Outlet store offers top name brand factory refurbished, warranteed products
     at even greater savings. To date revenue from MP4U is immaterial. There can
     be no assurance that MP4U will generate  significant revenue or that any of
     the Company's on-line stores will operate profitably.

                                       11
<PAGE>



          Results of Operations

           The  following   table  sets  forth,   for  the  periods   indicated,
      information derived from the Company's Condensed  Consolidated  Statements
      of Income expressed as a percentage of related revenue or total revenue.
                                                    Percentage of Revenues
                                                      Three Months Ended
                                                         October 31,
                                                     1999             1998
                                                     ----             ----
           Product Sales                             97.1%            96.8%
           Services                                   2.9              3.2
                                                      ---              ---
                Total revenue                       100.0            100.0
                                                    -----            -----

           Cost of Product Sales                     85.6             86.9
           Cost of Services                          69.6             60.5
                                                     ----             ----
                Cost of revenue                      85.1             86.1
                                                     ----             ----

           Product Gross Profit                      14.4             13.1
           Services Gross Profits                    30.4             39.5
                                                     ----             ----
                Gross Profit                         14.9             13.9
                                                     ----             ----

           Selling, general and
              administrative expenses                12.3             12.5
                                                     ----             ----
           Income from operations                     2.6              1.4
           Interest and other income, net             0.2              0.2
                                                      ---              ---
           Income before income taxes                 2.8              1.6
           Provision for income taxes                 1.1              0.6
                                                      ---              ---
           Net income                                 1.7%             1.0%
                                                      ===              ===

     Three Months Ended  October 31, 1999 Compared to Three Months Ended October
     31, 1998

          Revenue.  The Company's  revenue  increased $7.9 million or 13.7% from
     $57.5  million for the three months ended October 31, 1998 to $65.4 million
     for the three months ended October 31, 1999.  Product revenue  increased by
     $7.8 million  (14.0%) due  primarily to increases in shipments of monitors,
     as well as higher average selling prices for personal computers,  partially
     offset by lower shipments to the Company's major customer.  Service revenue
     increased $88,000 (4.8%).

           Gross Profit.  Cost of revenue  includes the direct costs of products
      sold, freight and the personnel costs associated with providing  technical
      services,  offset in part by certain market  development funds provided by
      manufacturers.  All other operating costs are included in selling, general
      and administrative  expenses. Gross profit increased $1.7 million or 21.6%
      from $8.0 million for the first quarter of fiscal 1999 to $9.7 million for
      the most recent  fiscal  quarter.  Gross profits from the sale of products
      increased  by $1.9  million  while gross  profit from the sale of services
      decreased by $138,000.  The changes in gross profits primarily result from
      the changes in revenue discussed above. As a percentage of revenue,  gross
      profit  increased to 14.9% in the first quarter of fiscal 2000 as compared
      to  13.9%  in  fiscal  1999.  Competitive  pressures  changes  in types of
      products  or services  sold,  volume  incentives  from  manufacturers  and
      product  availability result in fluctuation in gross profit from period to
      period.

          Selling,  General and Administrative  Expenses.  Selling,  general and
     administrative  expenses  increased  $834,000 or 11.6% from $7.2 million in
     the first  quarter of fiscal 1999 to $8.0  million in the first  quarter of
     fiscal 2000.  This increase is principally a result of higher  salaries and
                                       12
<PAGE>
     personnel   costs   primarily   associated  with  enhancing  the  Company's
     e-commerce   capabilities  and  building  the   infrastructure  to  provide
     Internet-based solutions to our customers.

          Interest and Investment  Income.  Interest and  investment  income was
     relatively  constant  with the first  quarter of last year with the Company
     maintaining its investment of excess cash in short term instruments.

              Provision  for  Income  Taxes.   The  effective  income  tax  rate
      increased  to 41.0% of pretax  income in the  current  period  compared to
      39.6%  of  pretax  income  in the  prior  year's  period  due  to  certain
      nondeductible expenses and higher state taxes.

      Liquidity and Capital Resources

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

           For the three  months  ended  October  31,  1999,  cash  provided  by
      operating  activities was $7.9 million consisting primarily of net income,
      decreases  in  accounts  receivable  and  inventory  and,  an  increase in
      accounts payable and accrued expenses.  The Company's accounts  receivable
      and  accounts  payable  and  accrued  expenses,  balances  as  well as its
      investment in inventory can fluctuate significantly from one period to the
      next due to the receipt of large customer orders or payments or variations
      in product  availability  and vendor  shipping  patterns at any particular
      date.  Generally,  the Company's  experience is that increases in accounts
      receivable,  inventory  and  accounts  payable and accrued  expenses  will
      coincide  with  growth in  revenue  and  increased  operating  levels.  In
      addition,  during the three months ended October 31, 1999 the Company used
      approximately  $40,000  for capital  expenditures,  $31,000 in payments or
      capital lease obligations and $133,000 to repurchase and retire its common
      stock.

           The   Company  has   available  a  line  of  credit  with   financial
      institutions  in the aggregate  amount of $15.0  million.  No amounts were
      outstanding under this line as of October 31, 1999.

           The  Company  believes  that its  current  balances  in cash and cash
      equivalents,  expected cash flows from operations and available borrowings
      under the line of credit  will be adequate  to support  current  operating
      levels for the foreseeable future,  specifically  through at least the end
      of fiscal 2000.  The Company  currently  has no material  commitments  for
      capital  expenditures.  Future capital requirements of the Company include
      those for the growth of working capital items such as accounts  receivable
      and inventory and the purchase of equipment and expansion of facilities as
      well as the possible opening of new offices and potential acquisitions.


                                       13

<PAGE>




      PART II - OTHER INFORMATION


      Item 6.     Exhibits and Reports

      (a)     Exhibits

       Exhibit No.           Description

         27                  Financial Data Schedule


      (b)     Reports on Form 8-K

      None



                                       14

<PAGE>




                         MANCHESTER EQUIPMENT CO., INC.

                                   Signatures

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



                                        MANCHESTER EQUIPMENT CO., INC.
                                        (Registrant)



DATE:  December 7, 1999                   ss/ Barry Steinberg
                                        -------------------------------------
                                        Barry Steinberg
                                        President and Chief Executive Officer



DATE:  December 7, 1999                  ss/ Joseph Looney
                                        ------------------------------------
                                        Joseph Looney
                                        Chief Financial Officer



                                       15