<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 January 31, 2000

                                       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  8,095,966  outstanding  shares of COMMON  STOCK at March 8,
2000.


<PAGE>



                 MANCHESTER EQUIPMENT CO., INC. AND SUBSIDIARIES

                                Table of Contents

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

Item 1.  Condensed Consolidated Balance Sheets
         January 31, 2000  (unaudited) and July 31, 1999                    3

         Condensed Consolidated Statements of Income
           Three months and six months  ended
           January 31, 2000 and 1999 (unaudited)                            4

         Condensed Consolidated Statements of Cash Flows
           Six months ended January 31, 2000 and 1999 (unaudited)           5

         Notes to Condensed Consolidated Financial Statements               6

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results  of Operations                             7


PART II.  OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders               13

Item 6.  Exhibits and Reports                                              13


                                       2

<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>

                                                January 31, 2000  July 31, 1999
                                                   Unaudited)
<S>                                             <C>                   <C>
                                                 ------------       ----------
Assets:
  Cash and cash equivalents                      $ 10,743              $  5,749
  Accounts receivable, net                         33,188                34,747
  Inventory                                        10,023                 8,245
  Deferred income taxes                               538                   538
  Prepaid expenses and other current assets           487                   340
                                                      ---                   ---
         Total current assets                      54,979                49,619

  Property and equipment, net                       6,240                 6,248
  Goodwill, net                                     5,735                 5,070
  Deferred income taxes                               560                   560
  Other assets                                        200                   281
                                                    -----                ------

                                                  $67,714               $61,778
                                                   ======                ======

Liabilities:
  Current maturities under capital
   lease obligation                               $    27               $    85
  Accounts payable and accrued expenses            25,169                20,824
  Deferred service revenue                            595                   581
  Income taxes payable                                511                   668
                                                      ---                   ---
         Total current liabilities                 26,302                22,158

    Deferred compensation payable                      34                    34
                                                       --                    --

         Total liabilities                         26,336                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                               (24)                  (38)
  Retained earnings                                22,655                20,744
                                                   ------                ------

         Total shareholders' equity                41,378                39,586
                                                   ------                ------

                                                  $67,714               $61,778
                                                   ======                ======
</TABLE>

See notes to condensed consolidated financial statements.

                                       3
<PAGE>

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

                                     Three months ended January 31,   Six months ended  January 31,
                                      2000             1999             2000             1999
                                      ----             ----             ----             ----
<S>                                 <C>              <C>               <C>              <C>

Revenue

  Products                           $68,916         $51,778           $132,364         $107,453
  Services                             1,931           1,611              3,843            3,435
                                       -----           -----            -------            -----
                                      70,847          53,389            136,207          110,888
                                      ------          ------            -------          -------
Cost of revenue

       Products                       60,691          45,066            114,978           93,448
       Services                        1,186           1,061              2,516            2,165
                                       -----           -----              -----            -----
                                      61,877          46,127            117,494           95,613
                                      ------          ------            -------           ------

       Gross profit                    8,970           7,262             18,713           15,275

Selling, general and
    administrative expenses            7,727           7,224             15,746           14,409
                                       -----           -----             ------           ------

       Income  from operations         1,243              38              2,967              866

Interest expense                          (1)             (3)                (2)              (5)
Interest income                          153             105                271              220
                                         ---            ----                ---             ----

       Income before income taxes      1,395             140              3,236            1,081

Provision for income taxes               570              67              1,325              440
                                         ---              --              -----              ---

       Net income                       $825             $73             $1,911             $641
                                         ===             ===              =====              ===

Net Income per share
   Basic                               $0.10           $0.01              $0.24            $0.08
                                       =====           =====               ====             ====
   Diluted                             $0.10           $0.01              $0.24            $0.08
                                       =====           =====               ====             ====

Weighted average
  shares outstanding

     Basic                         8,041,800       8,096,600          8,057,981         8,096,600
                                   =========       =========          =========         =========
      Diluted                      8,069,169       8,096,600          8,072,499         8,096,600
                                   =========       =========          =========         =========
</TABLE>


See notes to condensed consolidated financial statements.
                                       4

<PAGE>



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

                                                      For the six months ended
                                                             January 31,
                                                        2000               1999
                                                              (Unaudited)
                                                        -----------------------
<S>                                                        <C>          <C>

Cash flows from operating activities:
     Net income                                             $1,911       $  641

  Adjustments to reconcile net income
    to net cash from operating activities:
       Depreciation and amortization                          939           877
       Allowance for doubtful accounts                        (99)           74
       Non cash compensation and commission expense            14            49
  Change in assets and liabilities:
      (Increase) decrease in accounts receivable            1,658          (166)
      (Increase) decrease in inventory                     (1,778)          260
       Increase in prepaid income taxes                         -          (245)
      (Increase) decrease in prepaid expenses and
         other current assets                                (147)            7
       Decrease in other assets                                81            26
       Increase (decrease) in accounts payable and
         accrued expenses                                   3,545        (2,110)
       Increase(decrease)in deferred service
         contract revenue                                      14          (176)
       Decrease  in income taxes  payable                    (157)         (225)
       Sale of investments                                      -         1,501
                                                           ------         -----

         Net cash provided by operating activities          5,981           513
                                                            -----           ---

Cash flows from investing activities:
      Capital expenditures                                  (796)          (842)
                                                             ---            ---

          Net cash used in investing activities             (796)          (842)
                                                             ---            ---
Cash flows from financing activities:
       Payments on capital lease obligation                  (58)           (56)
       Purchase and retirement of Treasury stock            (133)             -
                                                             ---            ---
            Net cash used in financing activities           (191)           (56)
                                                             ---             --
Net increase (decrease) in cash and cash equivalents       4,994           (385)

      Cash and cash equivalents at beginning of period     5,749          7,816
                                                           -----          -----
Cash and cash equivalents at end of period               $10,743         $7,431
                                                          ======          =====
</TABLE>

      See notes to condensed consolidated financial statements.
                                       5

<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 a network 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
     combining value-added services 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  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 January 31, 2000 and the results
      of operations for the three and six months ended January 31, 2000 and 1999
      and cash  flows  for the six  months  ended  January  31,  2000 and  1999.
      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.

    3.    Acquisition of Coastal Office Products, Inc.

         On January 2, 1998, the Company acquired all of the outstanding  shares
      of Coastal Office Products,  Inc. ("Coastal"),  a reseller and provider of
      microcomputer  services  and  peripherals  to  companies  in  the  greater
      Baltimore, Maryland area. The acquisition, which has been accounted for as
      a purchase,  had an aggregate purchase price of $4.8 million consisting of
      a cash payment of $3.1 million plus performance based payments of $871,000
      (paid on March 15, 1999) and $800,000 (to be paid on March 15, 2000).  The
      cash payments were made from the Company's cash  balances.  At January 31,
      2000, the contingent  payment due on March 15, 2000,  which may be paid in
      cash or under certain  circumstances  in Company stock,  has been included
      with  accounts  payable and  accrued  expenses.  The selling  shareholders
      received  employment  agreements  that also  provided  for the issuance of
      20,000  shares  of  common  stock.  The fair  value of the  common  stock,
      amounting to $80,000,  was recorded as deferred  compensation and is being
      expensed over the three-year vesting period.

         Operating results of Coastal are included in the Condensed Consolidated
      Statements  of  Income  from  the  date of  acquisition.  The  acquisition
      resulted  in  goodwill  of  $4,776,000,  which is being  amortized  on the
      straight-line basis over 20 years.
                                       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

           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 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  pre-packaged  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  and/or the  Internet.  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  and/or the  Internet  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 in the computer industry. There can be no assurance that the
      pricing  and  related  terms  offered  by  major  manufacturers  will  not
      adversely  change in the future.  The failure to obtain an adequate supply
      of products,  the loss of a major  manufacturer,  the deterioration of the
      Company's   relationship  with  a  major  manufacturer  or  the  Company's
      inability  in  the  future  to  develop  new   relationships   with  other
      manufacturers  could  have a  material  adverse  effect  on the  Company's
      business, results of operations and financial condition.
                                       7
<PAGE>
           The Company's largest customer  accounted for approximately 5% and 8%
      (or $6,305,000 and $8,376,000,  respectively) of the Company's revenue for
      the  six  months   ended   January  31,   2000  and  1999,   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 January 31, 2000 and July 31, 1999,
      inventories  represented 15% and 13%,  respectively,  of total assets. For
      the six months  ended  January  31,  2000 and 1999,  annualized  inventory
      turnover was 25 and 21 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 six month
      periods  ended  January 31, 2000 and 1999.  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,  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.  Recently  the
      computer industry has experienced rapid declines in average selling prices
      of personal  computers.  In some  instances,  the Company has 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 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.
                                       8
<PAGE>
      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  reviewed  its  operations  relating to the Year 2000
      Issue.  The  Company  upgraded  its  systems  during  1998 and 1999  using
      primarily  internal  information  technology  and  other  personnel,   and
      remediation  and  testing are  complete  for both  information  technology
      ("IT") and non-IT  systems that  required  attention  and  resources to be
      Year-2000-Compliant.  The costs  associated  with the Year 2000 Issue have
      not been  material  to the  Company's  financial  position  or  results of
      operations.  Although  nothing has come to the Company's  attention  which
      would cause it to believe that its effort to be Year-2000-Compliant effort
      was not successful, it is not possible to conclude that all aspects of the
      Year 2000 Issue that may affect the Company,  including  those relating to
      third  parties with whom the Company has material  business  relationships
      (such as customers, licensees,  transportation carriers, utility and other
      general service providers),  have been resolved.  To date, the Company has
      not experienced  any material impact relating to the Year 2000 Issue,  and
      is not aware of any major  customers  or  third-party  suppliers  who have
      experienced such an impact.

      E-Commerce

         On February 16,  2000,  the Company  launched its enhanced  website and
      electronic commerce system. The new 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. 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 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.
                                       9

<PAGE>



     Results of Operations

          The following table sets forth, for the periods indicated, information
     derived from the  Company's  Condensed  Consolidated  Statements  of Income
     expressed as a percentage of related revenue or total revenue.
<TABLE>
<CAPTION>

                                                          Percentage of Revenue
                                             Three Months Ended             Six Months Ended
                                                   January 31,                 January 31,
                                             ---------------------------    -----------------
          <S>                                <C>              <C>            <C>          <C>

                                               2000             1999        2000       1999
                                               ----             ----        ----       ----
           Product sales                       97.3%            97.0%       97.2%      96.9%
           Services                             2.7              3.0         2.8        3.1
                                                ---              ---         ---        ---
                Total revenue                 100.0            100.0       100.0      100.0
                                              -----            -----       -----      -----

           Cost of product sales               88.1             87.0        86.9       87.0
            Cost of services                   61.4             65.9        65.5       63.0
                                               ----             ----        ----       ----
                Cost of revenue                87.3             86.4        86.3       86.2
                                              -----             ----        ----       ----

           Product gross profit                11.9             13.0        13.1       13.0
           Services gross profit               38.6             34.1        34.5       37.1
                                               ----             ----        ----       ----
                Gross profit                   12.7             13.6        13.7       13.8
                                               ----             ----        ----       ----

           Selling, general and

              administrative expenses          10.9             13.5        11.5       13.0
                                               ----             ----        ----       ----
           Income from operations               1.8              0.1         2.2        0.8
           Interest and other income, net       0.2              0.2         0.2        0.2
                                                ---              ---         ---        ---
           Income before income taxes           2.0              0.3         2.4        1.0
           Provision for income taxes           0.8              0.1         1.0        0.4
                                                ---             ----         ---        ---
           Net income                           1.2%             0.2%        1.4%       0.6%
                                               ====              ===         ===        ===

</TABLE>

     Three Months Ended  January 31, 2000 Compared to Three Months Ended January
     31, 1999

           Revenue.  The Company's revenue increased $17.5 million or 32.7% from
      $53.4 million for the three months ended January 31, 1999 to $70.8 million
      for the three months ended January 31, 2000.  Product revenue increased by
      $17.1 million (33.1%) due primarily to increases in shipments of displays,
      as well as higher per unit prices for personal computers.  Service revenue
      increased $320,000 (19.9%) as a result of the Company's continued emphasis
      on providing value-added services.

           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 23.5%
      from $7.3  million for the second  quarter of fiscal 1999 to $9.0  million
      for the most recent fiscal quarter. Gross profit from the sale of products
      increased  by $1.5  million  while gross  profit from the sale of services
      increased by $195,000.  The changes in gross profit  primarily result from
      the changes in revenue discussed above,  partially offset by lower margins
      on products sold due to the very competitive marketplace.  As a percentage
      of  revenue,  gross  profit  decreased  to 12.7% in the second  quarter of
      fiscal 2000 as compared to 13.6% in fiscal  1999.  Competitive  pressures,
      changes in types of  products or  services  sold and product  availability
      result in fluctuations in gross profit.

              Selling, General and Administrative Expenses. Selling, general and
      administrative  expenses  increased  $503,000 or 7.0% from $7.2 million in
                                       10
<PAGE>

     the second  quarter of fiscal 1999 to $7.7 million in the second quarter of
     fiscal 2000.  This increase is  principally a result of higher  advertising
     and marketing costs, primarily related to the Company's new retail consumer
     on-line store, Marketplace4U.

              Interest  Income.  Interest income  increased from $105,000 in the
      second  quarter of 1999 to $153,000  in the second  quarter of 2000 due to
      higher cash balances  available for investment as well as higher  interest
      rates received on investments.

              Provision  for  Income  Taxes.   The  effective  income  tax  rate
      decreased to 41% in the current  period  compared to 48% of pre-tax income
      in the prior year period  principally as a result of the impact of certain
      non deductible expenses.

     Six Months Ended  January 31, 2000 Compared to Six Months Ended January 31,
     1999

              Revenue. The Company's revenue increased by $25.3 million or 22.8%
      from $110.9  million for the six months  ended  January 31, 1999 to $136.2
      million for the six months ended  January 31, 2000.  Revenue from the sale
      of products  increased by $24.9 million (23.2%) while revenue from service
      offerings  increased by $408,000  (11.9%).  The  increases in revenue were
      largely attributable to growth in shipments of displays and peripherals as
      well as higher average selling prices for personal computers.

              Gross  Profit.Gross  profit  increased by $3.4 million  (22.5%) to
      $18.7  million for the first six months of fiscal 2000 from $15.3  million
      in the  comparable  period a year ago.  Gross  profit from  product  sales
      increased  by 24.1%  ($3.4  million)  from $14.0  million in the first six
      months  of  fiscal  1999 to $17.4  million  in the most  recent  six month
      period.  Service  offerings  generated $1.3 million of gross profit in the
      first six months of both fiscal 2000 and 1999.  The growth in gross profit
      dollars is  principally  due to the increase in revenue  discussed  above.
      Gross margin  percentages  declined in the recent  period due to generally
      lower  vendor  incentives  and  the  highly  competitive  marketplace  for
      computer products.

              Selling, General and Administrative Expenses.  Selling general and
      administrative  expenses  increased  by $1.3  million  or 9.3% from  $14.4
      million for the first six months of fiscal  1999 to $15.7  million for the
      first six months of fiscal 2000. The increase is principally due to higher
      salaries  and  personnel  costs,  as  well  as  higher  advertising  costs
      primarily  relating to the Company's new retail  consumer  on-line  store,
      Marketplace4U.  These  increases were partially  offset by lower insurance
      and bad debt expenses.

          Interest Income. Interest income increased due to higher cash balances
     available for investment as well as higher interest rates.

              Provision  for  Income  Taxes.   The  effective  income  tax  rate
      increased  slightly  from 40.7% for the first six months of fiscal 1999 to
      40.9% in the most recent fiscal period.

      Liquidity and Capital Resources

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

           For the six months ended January 31, 2000, cash provided by operating
      activities  was  $6.0  million  consisting  primarily  of net  income  and
      depreciation  and  amortization,  decreases in accounts  receivable and an
      increase in accounts payable and accrued expenses,  partially offset by an
      increase in inventory.  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
                                       11
<PAGE>
     addition,  during the six months  ended  January 31, 2000 the Company  used
     approximately  $796,000 for capital expenditures 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 January 31, 2000.

           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. The Company has a contingent purchase payment due to
      the former owners of its Coastal  subsidiary  amounting to $800,000.  This
      payment  is due on March  15,  2000 and is  expected  to be paid  from the
      Company's  available  cash  balances or through the issuance of stock.  In
      addition,  the Company  has signed a letter of intent for the  purchase of
      two  companies.  The  purchase  is expected to close in March 2000 and may
      require  $1.0  million in cash,  consisting  of an initial  payment of the
      purchase price of $400,000 and approximately $600,000 to repay liabilities
      that are  assumed.  These  payments  are  also  expected  to be made  from
      available  cash  balances.  Future  capital  requirements  of the  Company
      include  those for the growth of working  capital  items such as  accounts
      receivable  and  inventory  and the purchase of equipment and expansion of
      facilities,  the possible opening of new offices,  potential acquisitions,
      and expansion of the Company's e-commerce capabilities.
                                       12

<PAGE>




      PART II - OTHER INFORMATION

      Item 4.     Submission of Matters to a Vote of Security Holders

         On January 19, 2000 the Company held its Annual Meeting of Shareholders
      to (1) elect six  Directors  to serve  until the 2001  Annual  Meeting  of
      Shareholders;  and (2) ratify the reappointment of KPMG LLP as independent
      auditors of the Company for the year ending July 31, 2000.

          The  results of the  voting  for the  election  of  Directors  were as
     follows:

                                                                         Broker
       Nominee                        For         Withheld    Abstain  Non-votes
       --------------                 ---         --------    -------  ---------
      Barry R. Steinberg           7,340,474       29,500         0        0
      Joel G. Stemple              7,340,474       29,500         0        0
      Joel Rothlein                7,340,474       29,500         0        0
      Bert Rudofsky                7,340,474       29,500         0        0
      Michael E. Russell           7,340,474       29,500         0        0
      Julian Sandler               7,340,474       29,500         0        0

          Each of six nominees received a plurality of the total votes that were
     cast and were accordingly elected.

          The results of the voting on the  ratification  of the  appointment of
      KPMG LLP as the Company's independent auditors were as follows:

                                                                       Broker
             For              Against            Abstain              Non-votes
             ---              -------            -------              ---------
            7,363,724          3,150              3,100                  0


         The number of shares voted for the  ratification  of the appointment of
      KPMG LLP  constituted  a  majority  of the  shares  present  in  person or
      represented by proxy, and such ratification was accordingly approved.

         No other items were voted on at the annual meeting of  shareholders  or
during the quarter ended January 31, 2000.

      Item 6.     Exhibits and Reports

      (a)     Exhibits

       Exhibit No.           Description

            27               Financial Data Schedule

      (b)     Reports on Form 8-K

      None
                                       13
<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:   March    10, 2000                  s/s/ Barry Steinberg
                                           President and Chief Executive Officer



DATE:   March   10, 2000                   s/s/ Joseph Looney
                                           ------------------
                                           Joseph Looney
                                           Vice President of Finance and
                                           Chief Financial Officer

                                       14