12


                       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, 2001


                                       or

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

            For the transition period from __________ to ____________

                         COMMISSION FILE NUMBER 0-21695

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

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

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

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

                         Manchester Equipment Co., Inc.
          (Former name or former address, if changed since last report)


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 7,990,215 outstanding shares of COMMON STOCK at December 10,
2001.




<PAGE>


                 MANCHESTER TECHNOLOGIES, INC. AND SUBSIDIARIES

                                Table of Contents

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

Item 1.     Condensed Consolidated Balance Sheets
               October 31, 2001  (unaudited) and July 31, 2001                3


            Condensed Consolidated Statements of Income
               Three months  ended October 31, 2001 and 2000 (unaudited)      4


            Condensed Consolidated Statements of Cash Flows
               Three months ended October 31, 2001 and 2000 (unaudited)       5


            Notes to Unaudited 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                                      15























<PAGE>


Part I - FINANCIAL INFORMATION

ITEM 1.            Financial Statements

                 Manchester Technologies, Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheets
                     (in thousands except per share amounts)


                                               October 31, 2001     July 31,2001
                                                  (Unaudited)       ------------
                                                 ------------

Assets:
  Cash and cash equivalents                          $ 8,434            $14,493
  Accounts receivable, net                            27,010             25,135
  Inventory                                           17,748              7,546
  Deferred income taxes                                  459                459
  Prepaid income taxes                                   306                 43
  Prepaid expenses and other current assets              313                362
                                                         ---                ---

         Total current assets                         54,270             48,038

Property and equipment, net                            6,203              6,300
Goodwill, net                                          8,020              6,148
Deferred income taxes                                    842                842
Other assets                                             458                455
                                                         ---                ---

                                                     $69,793            $61,783
                                                      ======             ======


Liabilities:

  Accounts payable and accrued expenses              $23,385            $15,259
  Deferred service contract revenue                      582                807
                                                         ---                ---

         Total current liabilities                    23,967             16,066
Deferred compensation payable                            162                162
                                                         ---                ---

         Total liabilities                            24,129             16,228
                                                      ------             ------


Shareholders' equity:

  Preferred stock, $.01 par value; 5,000  shares
   authorized, none issued                                 -                  -
  Common stock, $.01 par value; 25,000  shares
   authorized, 7,990   issued and outstanding             80                 80
  Additional paid-in capital                          18,942             18,942
  Deferred compensation                                  (33)               (38)
  Retained earnings                                   26,675             26,571
                                                      ------             ------

         Total shareholders' equity                   45,664             45,555
                                                      ------             ------

                                                     $69,793            $61,783
                                                      ======             ======

See notes to condensed consolidated financial statements

                                       3
<PAGE>



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


                                                  Three months ended October 31,
                                                       2001            2000
                                                           (Unaudited)
                                                           -----------

Revenue
     Products                                        $58,872          $79,515
     Services                                          2,694            1,627
                                                       -----            -----

                                                      61,566           81,142
                                                      ------           ------

Cost of revenue
     Products                                         51,261           70,281
     Services                                          1,811            1,104
                                                       -----            -----

                                                      53,072           71,385
                                                      ------           ------

     Gross profit                                      8,494            9,757

Selling, general and administrative expenses           8,395            8,885
                                                       -----            -----

     Income from operations                               99              872


Interest and investment income                            75              196
                                                          --              ---

     Income before income taxes                          174            1,068

Provision for income taxes                                70              430
                                                          --              ---

     Net income                                         $104             $638
                                                        ====             ====

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

Weighted average shares outstanding
     Basic                                             7,990            8,133
                                                       =====            =====
     Diluted                                           7,990            8,222
                                                       =====            =====

See notes to condensed consolidated financial statements.

                                       4



<PAGE>


                 Manchester Technologies, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                 (in thousands)

                                                           For the three months
                                                              ended October 31,
                                                                 2001      2000
                                                                 ----      ----
                                                                 (Unaudited)
                                                                 -----------
Cash flows from operating activities:
      Net income                                                 $104      $638
  Adjustments to reconcile net income to net cash from
    operating activities:
          Depreciation and amortization                           509       543
          Allowance for doubtful accounts                         290       117
          Non cash compensation and commission expense              -        11
  Change in assets and liabilities (net of the effects
    of acquisition:
         (Increase) decrease in accounts receivable            (1,915)       46
Increase in inventory                                         (10,065)   (2,090)
         (Increase) decrease in prepaid income taxes             (263)      552
         Increase  in prepaid expenses and
             other current assets                                  49       125
         (Increase) decrease  in other assets                      (3)       20
         Increase (decrease) in accounts payable and
             accrued expenses                                   7,733    (5,751)
Increase (decrease) in deferred service contract revenue         (225)      (71)
                                                                 ----       ---

              Net cash  used in operating activities           (3,786)   (5,860)
                                                                ------   -------
Cash flows from investing activities:
         Capital expenditures                                    (343)     (207)
         Payment for acquisition, net of cash acquired         (1,454)        -
                                                               ------     -----

              Net cash used by investing activities            (1,797)     (207)
                                                               ------       ---
Cash flows from financing activities:
         Payments on notes payable - bank                        (433)        -
         Payments on notes payable - other                        (43)       (7)
         Purchase and retirement of common stock                    -      (574)
         Issuance of common stock upon exercise of options          -         6
                                                                 ----      ----

              Net cash used in financing activities              (476)     (575)
                                                                  ----      ---
Net decrease in cash and cash equivalents                      (6,059)   (6,642)
Cash and cash equivalents at beginning of period               14,493    16,156
                                                               ------    ------
Cash and cash equivalents at end of period                     $8,434    $9,514
                                                                =====     =====

See notes to condensed consolidated financial statements.
                                       5


<PAGE>


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


1. Organization and Basis of Presentation


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

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

     In the  opinion  of  the  Company,  the  accompanying  unaudited  Condensed
Consolidated  Financial  Statements contain all adjustments  (consisting of only
normal  and  recurring  accruals)  necessary  to present  fairly  the  financial
position of the Company as of October 31, 2001 and the results of operations for
the three  months  ended  October 31, 2001 and 2000 and cash flows for the three
months ended October 31, 2001 and 2000.  Although the Company  believes that the
disclosures  herein are adequate to make the information  not misleading,  these
financial  statements  should be read in conjunction with the audited  financial
statements  and the notes thereto for the year ended July 31, 2001,  included in
the  Company's  Annual  Report on Form  10-K as filed  with the  Securities  and
Exchange Commission.


2. Net Income Per Share


     Basic net income per share has been  computed by dividing net income by the
weighted  average  number of common shares  outstanding.  Diluted net income per
share has been computed by dividing net income by the weighted average number of
common shares  outstanding,  plus the assumed exercise of dilutive stock options
and warrants,  less the number of treasury  shares  assumed to be purchased from
the proceeds of such  exercises  using the average market price of the Company's
common  stock  during  each  respective  period.   Stock  options  and  warrants
representing  934,000 and 210,000  shares for the three months ended October 31,
2001 and 2000, respectively,  have been excluded from the calculation of diluted
net income per share as they are  antidilutive.  The following table  reconciles
the  denominators  of the basic and  diluted  per share  computations.  For each
period, the numerator is the net income as reported.
<TABLE>
<CAPTION>

                                                   (shares in thousands)
                                               Three months ended October 31,
                                         2001                         2000
                                         ----                         ----
                                               Per share              Per share
                                    Shares      amount      Shares    amount
                                    ------      ------      ------    ------
     <S>                             <C>       <C>         <C>        <C>
      Basic                           7,990     $0.01       8,133      $0.08
                                                 ====                  =====
      Effect of dilutive  options         -                    89
                                     ------                    --

      Diluted                         7,990     $0.01       8,222      $0.08
                                      =====      ====       =====      =====
</TABLE>


3. Acquisition of Donovan Consulting Group, Inc.

     On August 29, 2001, the Company  acquired all of the  outstanding  stock of
Donovan Consulting Group, Inc. ("Donovan") a Delaware corporation  headquartered
in Atlanta, Georgia. Donovan is a technical services firm that delivers Wireless
                                       6
<PAGE>

LAN solutions to customers nationwide. The acquisition, which has been accounted
for as a purchase,  consisted of a cash payment of $1,500 plus potential  future
contingent payments.  Contingent payments of up to $1,000 may be payable on each
of November 2, 2002 and  November 2, 2003 based upon Donovan  achieving  certain
agreed-upon  increases in revenue and pre-tax  earnings.  In connection with the
acquisition,  the  Company  assumed  approximately  $435 of bank debt and $43 of
other debt,  which were  subsequently  repaid.  Donovan was acquired in order to
strengthen the Company's position in the wireless LAN arena.  Donovan will allow
the Company to offer total solutions including state of the art products as well
as the services necessary to have those products operate optimally.

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

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

Acquisition of e.Track Solutions, Inc.

     On November 9, 2001, the Company  acquired all of the outstanding  stock of
e.Track Solutions,  Inc.  ("e.Track"),  a New York Corporation  headquartered in
Pittsford,  New York.  e.Track is a business  and  software  services  firm that
delivers business,  Internet and information  technology  solutions to customers
nationwide.  The  acquisition,  which  will  be  accounted  for  as a  purchase,
consisted of cash payments of $290,000  (including debt assumed and subsequently
repaid).  e.Track  was  acquired  in order to allow  the  Company  to offer  our
customers  customized  software,  solutions along with the products and services
that we have traditionally offered.

     Operating   results  of  e.Track  will  be  included  in  the  consolidated
statements of income from the  acquisition  date.  The  estimated  fair value of
tangible assets and liabilities  acquired was $116 and $192,  respectively.  The
excess of aggregate purchase price over the estimated fair value of the tangible
net assets acquired was $276. The factors that contributed to the  determination
of the purchase price and the resulting  goodwill  include the expectation  that
the combination of e.Track's highly skilled  technical  staff,  coupled with the
Company's financial strength and customer base will result in significant growth
at e.Track going forward.  The $276 will not be amortized;  however,  it will be
subject to impairment  testing in accordance  with Statement No. 142,  "Goodwill
and Other Intangible Assets."



4.       Statement of Cash Flow Information

      Supplemental disclosure of cash flow information:
                                                 Three months ended October 31,
                                                      2001            2000
                                                          (in thousands)
                                                          --------------
      Cash paid for income taxes                      $333              $62
                                                      ====              ===


                                       7
<PAGE>



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

     In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No.  141  "Business  Combinations,"  and  SFAS  No.  142,  "Goodwill  and  Other
Intangible  Assets." SFAS No. 141  specifies  criteria  that  intangible  assets
acquired in a business combination must meet to be recognized and reported apart
from goodwill.  SFAS No. 142 requires that goodwill and  intangible  assets with
indefinite  useful  lives no longer be  amortized,  but  instead  be tested  for
impairment at least  annually in accordance  with the provision of SFAS No. 142.
This  pronouncement  also requires that intangible  assets with estimable useful
lives be amortized over their respective estimated useful lives and reviewed for
impairment in accordance with SFAS No. 121.

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

     The Company will be required to test goodwill for  impairment in accordance
with the  provisions of SFAS No. 142 by January 31, 2002.  Any  impairment  loss
will be measured as of the date of adoption  and  recognized  as the  cumulative
effect of a change in accounting  principle as of August 1, 2001. Because of the
extensive  effort  needed  to  comply  with  adopting  SFAS No.  142,  it is not
practicable  to  reasonably  estimate  whether the  Company  will be required to
recognize  any  transitional  impairment  losses as the  cumulative  effect of a
change in accounting principle.

     Goodwill  amortization  for the three  months  ended  October  31, 2000 was
$102,000. The following table shows the results of operations as if SFAS No. 141
was applied to prior periods:

                                                            For the three months
                                                               ended October 31,
                                                           2001          2000
                                                           ----          ----
      Net income as reported                                 $104          $638
      Add back: Goodwill amortization                           -           102
                                                             ----           ---

      Adjusted net income                                    $104          $740
                                                              ===           ===

      Income per share - Basic
        Net income, as reported                             $0.01         $0.08
        Goodwill amortization                                  -           0.01
                                                            -----          ----

        Adjusted net income                                 $0.01         $0.09
                                                             ====          ====

      Income per share - Diluted
        Net income, as reported                             $0.01         $0.08
        Goodwill amortization                                 -            0.01
                                                             ---           ----

        Adjusted net income                                 $0.01         $0.09
                                                             ====          ====

                                        8



<PAGE>



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


      The following  discussion and analysis of financial  condition and results
of operations of the Company  should be read in  conjunction  with the condensed
consolidated  financial  statements and notes thereto included elsewhere in this
Quarterly Report on Form 10-Q and with the Company's Annual Report on Form 10-K.
This discussion and analysis contains certain forward-looking  statements within
the meaning of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended, 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, 2001,  and those set forth in the  Company's  other  filings from
time to time with the Securities and Exchange Commission.


General

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

         The  computer  industry  is  characterized  by a number of  potentially
adverse business conditions,  including pricing pressures, evolving distribution
channels,  market  consolidation and a decline in the rate of growth in sales of
personal   computers.   Heightened  price  competition  among  various  hardware
manufacturers  may result in reduced per unit revenue and declining gross profit
margins.  As a result of the intense price competition  within our industry,  we
have experienced  increasing  pressure on our gross profit and operating margins
with respect to our sale of products.  Our inability to compete  successfully on
the  pricing of  products  sold,  or a  continuing  decline in gross  margins on
products  sold due to adverse  industry  conditions or  competition,  may have a
material  adverse  effect on our  business,  financial  condition and results of
operations.

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

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

         To date,  our  success has been based  primarily  upon sales in the New
York  Metropolitan  area.  Our strategy,  encompassing  the expansion of service
offerings,  the  expansion  of  existing  offices and the  establishment  of new
regional  offices,  has  challenged  and will  continue to challenge  our senior
management and infrastructure. We cannot predict our ability to respond to these
challenges.  If we fail to effectively manage our planned growth, there may be a
material  adverse  effect on our business,  results of operations  and financial
condition.
                                       9
<PAGE>

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

         In addition, the success of our strategy depends in large part upon our
ability to attract  and retain  highly  skilled  technical  personnel  and sales
representatives,   including  independent  sales  representatives,   in  a  very
competitive  labor  market.  Our ability to grow our service  offerings has been
somewhat limited by a shortage of qualified personnel,  and we cannot assure you
that  we will  be  able  to  attract  and  retain  such  skilled  personnel  and
representatives.  The loss of a  significant  number of our  existing  technical
personnel or sales representatives, difficulty in hiring or retaining additional
technical personnel or sales  representatives,  or reclassification of our sales
representatives as employees may have a material adverse effect on our business,
results of operations and financial condition.

         The  computer  industry is  characterized  by intense  competition.  We
directly  compete  with  local,   regional  and  national  systems  integrators,
value-added  resellers  and  distributors  as  well  as  with  certain  computer
manufacturers  that market through direct sales forces and/or the Internet.  The
computer industry has recently experienced a significant amount of consolidation
through mergers and acquisitions,  and  manufacturers of personal  computers may
increase  competition  by  offering a range of  services  in  addition  to their
current  product  and service  offerings.  In the  future,  we may face  further
competition  from new market entrants and possible  alliances  between  existing
competitors.  Moreover,  additional  suppliers and  manufacturers  may choose to
market  products  directly to end users  through a direct sales force and/or the
Internet rather than or in addition to channel distribution, and may also choose
to market services, such as repair and configuration  services,  directly to end
users. Some of our competitors have or may have,  greater  financial,  marketing
and other  resources,  and may offer a broader  range of products and  services,
than  us.  As a  result,  they may be able to  respond  more  quickly  to new or
emerging technologies or changes in customer requirements,  benefit from greater
purchasing  economies,  offer more  aggressive  hardware and service  pricing or
devote greater resources to the promotion of their products and services. We may
not be able to compete successfully in the future with these or other current or
potential competitors.

     Our business is dependent upon our relationships  with major  manufacturers
and  distributors  in the  computer  industry.  Many aspects of our business are
affected  by our  relationships  with  major  manufacturers,  including  product
availability,  pricing and  related  terms,  and  reseller  authorizations.  The
increasing demand for personal computers and ancillary equipment has resulted in
significant product shortages from time to time, because manufacturers have been
unable to produce  sufficient  quantities of certain products to meet demand. We
cannot  predict that  manufacturers  will  maintain an adequate  supply of these
products to satisfy all the orders of our customers or that,  during  periods of
increased demand,  manufacturers will provide products to us, even if available,
or at discounts previously offered to us. In addition, we cannot assure you that
the pricing and related terms offered by major  manufacturers will not adversely
change in the future. Our failure to obtain an adequate supply of products,  the
loss of a major manufacturer, the deterioration of our relationship with a major
manufacturer  or our inability in the future to develop new  relationships  with
other  manufacturers  may  have a  material  adverse  effect  on  our  business,
financial  condition  and  results of  operations.  On  September  4, 2001,  the
Hewlett-Packard   Company  and  Compaq  Computer  Corporation   announced  their
intention  to merge.  Manchester  sells the  products of both  companies  and we
believe that we have strong  relationships with both companies.  While we do not
believe that there will be a material adverse effect on our business,  financial
condition and results of operations as a result of this merger,  there can be no
assurance that such a material adverse effect will not occur.

         Certain  manufacturers  offer  market  development  funds,  cooperative
advertising and other promotional programs to systems integrators,  distributors
and computer  resellers.  We rely on these funds for many of our advertising and
promotional  campaigns.  In recent years,  manufacturers  have generally reduced
their level of support with respect to these programs,  which has required us to
increase  spending of our own funds to obtain the same level of advertising  and
promotion.  If manufacturers continue to reduce their level of support for these
programs, or discontinue them altogether,  we would have to further increase our
advertising and promotion spending,  which may have a material adverse effect on
our business, financial condition and results of operations.
                                       10
<PAGE>

         Our  profitability  has been  affected by our ability to obtain  volume
discounts from certain  manufacturers,  which has been dependent,  in part, upon
our  ability  to sell  large  quantities  of  products  to  computer  resellers,
including value added resellers. Our sales to resellers have been made at profit
margins   generally  less  favorable  than  our  sales  directly  to  commercial
customers.  Our  inability to sell  products to computer  resellers  and thereby
obtain the desired volume discounts from manufacturers or to expand our sales to
commercial  customers  sufficiently  to  offset  our  need to rely on  sales  to
computer resellers may have a material adverse effect on our business, financial
condition and results of operations.

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

         Rapid product  improvement and  technological  change  characterize the
computer  industry.  This results in  relatively  short  product life cycles and
rapid product obsolescence,  which can place inventory at considerable valuation
risk. Certain of our suppliers provide price protection to us, which is intended
to reduce the risk of inventory  devaluation due to price  reductions on current
products.  Certain of our suppliers also provide stock  balancing to us pursuant
to which we are able to  return  unsold  inventory  to a  supplier  as a partial
credit against  payment for new products.  There are often  restrictions  on the
dollar amount of inventory that we can return at any one time.  Price protection
and stock  balancing  may not be  available  to us in the future,  and,  even if
available,  these measures may not provide complete  protection against the risk
of excess or obsolete inventories. Certain manufacturers have reduced the period
for which they provide price protection and stock balancing rights.  Although we
maintain a sophisticated  proprietary  inventory  management  system,  we cannot
assure you that we will continue to successfully  manage our existing and future
inventory.  Our failure to successfully  manage our current or future  inventory
may have a material  adverse  effect on our business,  financial  conditions and
results of operations.

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

         Our quarterly revenue and operating  results have varied  significantly
in the past and are  expected  to  continue  to do so in the  future.  Quarterly
revenue and operating results generally  fluctuate as a result of the demand for
our  products  and  services,  the  introduction  of new  hardware  and software
technologies with improved features,  the introduction of new services by us and
our  competitors,  changes in the level of our operating  expenses,  competitive
conditions and economic conditions. In particular,  over the last several years,
we  have  increased  certain  of  our  fixed  operating  expenses,  including  a
significant increase in personnel, as part of our strategy to increase our focus
on  providing  systems  integration  and other  higher  margin  and value  added
services.  As a result,  we believe  that  period-to-period  comparisons  of our
operating  results  should  not  be  relied  upon  as an  indication  of  future
performance.   In  addition,  the  results  of  any  quarterly  period  are  not
necessarily indicative of results to be expected for a full fiscal year.
                                       11
<PAGE>

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

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

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


      Results of Operations

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

<TABLE>
<CAPTION>

                                                    Percentage of Revenues
                                                      Three Months Ended
                                                          October 31,
                                                    -----------------------

                                                     2001             2000
                                                     ----             ----
<S>                                                  <C>              <C>
           Product Sales                             95.6%            98.0%
           Services                                   4.4              2.0
                                                      ---              ---
                Total revenue                       100.0            100.0
                                                    -----            -----

           Cost of Product Sales                     87.1             88.4
            Cost of Services                         67.2             67.9
                                                     ----             ----
                Cost of revenue                      86.2             88.0
                                                     ----             ----

           Product Gross Profit                      12.9             11.6
           Services Gross Profits                    32.8             32.1
                                                     ----             ----
                Gross Profit                         13.8             12.0
                                                     ----             ----

           Selling, general and
              administrative expenses                13.6             10.9
                                                     ----             ----
           Income from operations                     0.2              1.1
           Interest and other income, net             0.1              0.2
                                                      ---              ---
           Income before income taxes                 0.3              1.3
           Provision for income taxes                 0.1              0.5
                                                      ---              ---
           Net income                                 0.2%             0.8%
                                                      ===              ===
</TABLE>
                                       12
<PAGE>

Three Months Ended October 31, 2001 Compared with Three Months Ended October 31,
2000

     Revenue.  Our revenue  decreased  $19.6 million or 24.1% from $81.1 million
for the three  months  ended  October  31,  2000 to $61.6  million for the three
months ended  October 31, 2001.  Product  revenue  decreased by $20.6 million or
26.0%, due primarily to decreases in revenue from sales of monitors and displays
as well as decreases in shipments of computers  partially offset by increases in
units sold. The events of September 11, 2001 adversely  impacted revenue for the
month of September  with  declines in orders and  shipments.  We did  experience
improvements  in  revenue in October  and do not  expect  significant  long term
impact on our operations as a result of these events.  Service revenue increased
$1.1 million or 65.6% due  primarily to our continued  focus on  developing  and
selling  value-added  services to our customers  including revenues generated by
Donovan  Consulting  Group,  Inc.  which was  acquired  on August  29,  2001 and
significant  growth in the sales of services to customers  that are delivered by
manufacturers or vendors.

     Gross Profit.  Cost of revenue  includes the direct costs of products sold,
freight and the personnel costs  associated with providing  technical  services,
offset in part by certain market  development  funds provided by  manufacturers.
All other  operating costs are included in selling,  general and  administrative
expenses. Gross profit decreased $1.3 million or 12.9% from $9.8 million for the
first quarter of fiscal 2001 to $8.5 million for the most recent fiscal quarter.
Gross profit from the sale of products decreased by $1.6 million or 17.6%, while
gross  profit from the sale of  services  increased  by  $360,000 or 68.8%.  The
changes in gross profit primarily resulted from the changes in revenue discussed
above. As a percentage of revenue,  gross profit increased to 13.8% in the first
quarter of fiscal  2002 as  compared to 12.0% in fiscal  2001.  The  increase in
margins is  attributable to increased sales of higher margin products as well as
increased volume incentive rebates by vendors and manufacturers.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses  decreased  $490,000  or 5.5% from $8.9  million in the
first  quarter of fiscal  2001 to $8.4  million  in the first  quarter of fiscal
2002.  This decrease is principally a result of lower salaries,  personnel,  and
depreciation  and  amortization  costs  (due  primarily  to the  August  1, 2001
adoption of SFAS Statement No. 142 "Goodwill and Other Intangible  Assets" which
requires that goodwill no longer be  amortized)  partially  offset by higher bad
debts and insurance costs.

     Interest and Investment Income. Interest and investment income decreased by
$121,000 due to lower cash balances  available for  investments as well as lower
interest rates.

     Provision  for  Income  Taxes.  The  effective  income  tax rate  decreased
slightly to 40.2% of pretax  income in the current  period  compared to 40.3% of
pretax income in the prior year's 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 three  months  ended  October  31,  2001,  cash  used by  operating
activities  was $3.8  million  consisting  primarily  of  increases  in accounts
receivable and inventory partially offset by an increase in accounts payable and
accrued expenses. During the quarter the Company made an investment in inventory
by  purchasing  a  significant  number of large screen flat panel  displays.  We
believe that the  investment  made in this  inventory will result in benefits to
the  Company  through  the volume  incentives  and  discounts  obtained on these
products.  We expect that these  products  will be sold over the next two fiscal
quarters.  We also used $1.9 million  (including  $500,000 in repayment of debts
assumed) for the purchase of

                                       13
<PAGE>



     Donovan Consulting Group and $343,000 for capital  expenditures during this
fiscal  quarter.  The Company's  accounts  receivable  and accounts  payable and
accrued  expenses  balances as well as its investment in inventory can fluctuate
significantly  from one period to the next due to the receipt of large  customer
orders or payments or variations  in product  availability  and vendor  shipping
patterns at any particular  date.  Generally,  the Company's  experience is that
increases in accounts  receivable,  inventory  and accounts  payable and accrued
expenses will coincide with growth in revenue and increased operating levels.

     The Company has available a line of credit with financial  institutions  in
the aggregate amount of $15.0 million.  No amounts were  outstanding  under this
line as of October 31, 2001.

     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 2002. The
Company  currently  has no material  commitments  for capital  expenditures.  In
November 2001 the Company completed the acquisition of e.Track  Solutions,  Inc.
Total cash paid at closing was approximately  $300,000  (including debts assumed
and  subsequently  repaid).  Future capital  requirements of the Company include
those for the growth of working  capital items such as accounts  receivable  and
inventory  and the  purchase of  equipment  and  expansion  of  facilities,  the
possible opening of new offices,  potential  acquisitions,  and expansion of the
Company's service and e-commerce capabilities.

Impact of Recently Issued Accounting Standards

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


                                       14




<PAGE>


      PART II - OTHER INFORMATION



      Item 6.     Exhibits and Reports

      Exhibits


10.5.o  Extension  and  Amendment  Agreement  dated  November 30,  2001  between
        Registrant and Kin Properties, Inc. as agent.

10.17   Definitive Purchase Agreement dated November 1, 2001 between  Registrant
        and e.Track Solutions, Inc.


(b) Reports on Form 8-K


      Form 8-K filed  August 29,  2001  disclosing  the  acquisition  of Donovan
Consulting Group, Inc.

      Form 8-K filed  November 26, 2001  disclosing  the  acquisition of e.Track
Solutions, Inc.

                                       15





<PAGE>




                          MANCHESTER TECHNOLOGIES, INC.

                                   Signatures

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



                                           MANCHESTER TECHNOLOGIES., INC.
                                           ------------------------------
                                           (Registrant)


DATE:   December 13, 2001                  s/Barry Steinberg
                                           ------------------------------------
                                           Barry Steinberg
                                           President and Chief Executive Officer



DATE:   December 13, 2001                   s/Joseph Looney
                                           -------------------------------

                                           Joseph Looney
                                           Vice President of Finance and
                                           Chief Financial Officer

                                       16
<PAGE>