U. S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                              FORM 10-QSB / A NO. 1



(MARK ONE)

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996

                                       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 0-24388


                          MANHATTAN BAGEL COMPANY, INC.
        (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)



       NEW JERSEY                                      22-2981539
       (STATE OR OTHER JURISDICTION OF                 (I.R.S. EMPLOYER
       INCORPORATION OR ORGANIZATION)                  IDENTIFICATION NO.)



              246 INDUSTRIAL WAY WEST, EATONTOWN, NEW JERSEY 07724
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                 (908) 544-0155
                           (ISSUER'S TELEPHONE NUMBER)

CHECK  WHETHER  THE ISSUER  (1) HAS FILED ALL  REPORTS  REQUIRED  TO BE FILED BY
SECTION 13 OR 15(D) OF THE  EXCHANGE  ACT OF 1934  DURING THE LAST 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.
YES [X]  NO [ ]

NUMBER OF SHARES OF COMMON STOCK,  NO PAR VALUE,  OUTSTANDING AT MARCH 31, 1996:
7,098,531.


<PAGE>


                 MANHATTAN BAGEL COMPANY, INC. AND SUBSIDIARIES

                                      INDEX

                                                                        PAGE NO.

Part I                     FINANCIAL INFORMATION

         Item 1.  Financial Statements

                           Condensed combined balance sheet -                  1
                           March 31, 1996

                           Condensed combined statements of income -           3
                           Three months ended March 31, 1996 and 1995

                           Condensed combined statements of cash flows -       4
                           Three months ended March 31, 1996 and 1995

                           Notes to condensed combined financial statements    5

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


Part II                    OTHER INFORMATION



         Item 6.  Exhibits and Reports on Form 8-K                            11

                           Signatures                                         12

<PAGE>


Part 1 - Financial Information
         Item 1 Financial Statements

                          MANHATTAN BAGEL COMPANY, INC.
                                AND SUBSIDIARIES
                        CONDENSED COMBINED BALANCE SHEET


                                                                   MARCH 31,1996
                                                                   -------------
                                                            (RESTATED UNAUDITED)

          ASSETS

Current Assets
     Cash and cash equivalents                                        $1,204,278
     Marketable securities                                            25,715,290
     Accounts receivable, net of allowance for
          doubtful accounts of $14,564                                 6,119,907
     Inventories                                                         962,376
     Current maturities of notes receivable                               71,860
     Due from officer/stockholder                                              -
     Prepaid expenses and other current assets                           498,802
                                                                     -----------

          Total current assets                                        34,572,513

Property and equipment, net of accumulated
     depreciation of $1,439,914                                       10,908,570
                                                                     -----------

Other assets
     Notes receivable, net of current maturities                         267,072
     Notes receivable-related parties                                    159,827
     Goodwill, net of accumulated amortization  of $51,304             3,531,567
     Security deposits                                                   633,864
     Other assets                                                      1,799,292
                                                                     -----------

          Total Assets                                               $51,872,705
                                                                     ===========

        SEE ACCOMPANYING NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS

                                      -1-

<PAGE>



                          MANHATTAN BAGEL COMPANY, INC.
                                AND SUBSIDIARIES
                        CONDENSED COMBINED BALANCE SHEET


                                                                   MARCH 31,1996
                                                                   -------------
                                                            (RESTATED UNAUDITED)

          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
     Current maturities of long-term debt                             $1,587,149
     Current maturities of capital lease obligations                     151,238
     Accounts payable and accrued expenses                             3,739,767
     Unearned franchise fee income                                       290,000
     Franchise deposits                                                  185,833
     Loans payable officer/stockholder                                         -
     Income taxes payable                                                103,861
     Deferred income taxes                                                 7,700
     Other current liabilities                                            52,649
                                                                     -----------

          Total current liabilities                                    6,118,197
                                                                     -----------

     Other liabilities
     Long-term debt, net of current maturities                         4,033,885
     Capital lease obligations, net of current maturities                526,814
     Security deposits                                                   361,167
     Deferred income taxes and other liabilities                         241,000
                                                                     -----------

                                                                       5,162,866
                                                                     -----------
Stockholders' equity
     Preferred stock, 2,000,000 shares authorized,
          no shares issued or outstanding                                      -
     Common stock, no par value, 10,000,000 shares
          authorized, 7,098,531 issued
          and outstanding                                             37,141,872
     Retained earnings                                                 3,449,770
                                                                     -----------

          Total stockholders' equity                                  40,591,642
                                                                     -----------
          Total liabilities and stockholders' equity                 $51,872,705
                                                                     ===========


        SEE ACCOMPANYING NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS

                                      -2-

<PAGE>


                 MANHATTAN BAGEL COMPANY, INC. AND SUBSIDIARIES
                     CONDENSED COMBINED STATEMENTS OF INCOME




                                                 FOR THE THREE MONTHS ENDED
                                                          MARCH 31,
                                            -----------------------------------
                                                    1996                1995
                                                    ----                ----
                                            (RESTATED UNAUDITED)     (UNAUDITED)

Revenues

     Product sales                               $5,923,594          $2,300,904
     Franchise & license related revenue          2,111,192             865,895
     Other income                                    70,118                   -
                                                 ----------          ----------

                Total revenue                     8,104,904           3,166,799
                                                 ----------          ----------

Operating expenses
     Cost of goods sold                           3,162,695           1,398,755
     Selling, general & administrative expenses   4,230,582           1,476,030
     Interest expense (income), net                (220,705)              3,481
                                                 ----------          ----------

                Total operating expenses          7,172,572           2,878,266
                                                 ----------          ----------

Earnings before provision for income taxes          932,332             288,533

Provision for income taxes                          286,917             115,758
                                                 ----------          ----------

Net income                                         $645,415            $172,775
                                                 ==========          ==========

Net income per share                                  $0.09               $0.03
                                                 ==========          ==========

Weighted average number of common &
     common equivalent shares outstanding         7,430,916           5,219,475
                                                 ==========          ==========


       SEE ACCOMPANYING NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS

                                      -3-

<PAGE>


                 MANHATTAN BAGEL COMPANY, INC. AND SUBSIDIARIES
                   CONDENSED COMBINED STATEMENTS OF CASH FLOWS


                                                 FOR THE THREE MONTHS ENDED
                                                          MARCH 31,
                                             -----------------------------------
                                                     1996                1995
                                                     ----                ----
                                             (RESTATED UNAUDITED)     UNAUDITED)


Net cash used by operating activities             ($390,894)          ($669,719)
                                                -----------         -----------


Cash flows from investing activities
     Purchase of marketable securities           (3,090,290)                  -
     Acquisition and construction of property    (1,679,129)         (1,164,521)
     Investment  in subsidiary                    1,187,188                   -
     Purchase of goodwill                        (3,084,739)                  -
     Other net cash provided by
         investing activities                    (1,101,118)            319,971
                                                -----------         -----------

Net cash used by investing activities            (7,768,088)           (844,550)
                                                -----------         -----------


Cash flows from financing activities
     Proceeds from issuance of common stock         956,175                   -
     Other financing activities                     414,927               6,495
                                                -----------         -----------
Net cash provided by financing activities         1,371,102               6,495
                                                -----------         -----------

Net decrease in cash and cash equivalents        (6,787,880)         (1,507,774)

Cash and cash equivalents - beginning             7,992,158           2,016,852
                                                -----------         -----------

Cash and cash equivalents - ending               $1,204,278            $509,078
                                                ===========         ===========

        SEE ACCOMPANYING NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS

                                      -4-

<PAGE>

                 MANHATTAN BAGEL COMPANY, INC. AND SUBSIDIARIES

                NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION
         ---------------------

         The financial  information in this report should be read in conjunction
with the Financial  Statements  included in the Company's  Annual Report on Form
10-KSB for the year ended December 31, 1995.

         In the opinion of management,  the  accompanying  financial  statements
include all adjustments necessary for a fair presentation.  All such adjustments
are of a normal recurring nature. The results of operations for the three months
ended  March  31,  1996 are not  necessarily  indicative  of the  results  to be
expected for the full year.

NOTE 2 - RESTATEMENT OF THE THREE MONTHS ENDING MARCH 31,1996
         ----------------------------------------------------

Following the  installation  of new management at its I&J West Coast  subsidiary
and subsequent to the Company's filing of its first quarter 10-QSB,  the Company
uncovered  certain  improper  bookkeeping  and  accounting  practices at the Los
Angeles  subsidiary.  As a result,  the  Board of  Directors  authorized  a full
investigation  into the  accounting  practices  at the  subsidiary  and retained
special counsel to assist in the investigation.  Based on the conclusion of that
investigation,  the Company has  restated its first  quarter  1996  Statement of
Operations  to  reduce  revenues  $90,000  and  record  additional  expenses  of
$290,000.  Such  adjustments  are reflected in the Financial  Statements for the
three month period ended March 31,1996.

NOTE 3 - INVENTORIES
         -----------

                                            MARCH 31, 1996
                                            --------------

Raw materials                               $ 261,160
Finished Goods                                701,216
                                            ---------
                                            $ 962,376
                                            =========

NOTE 4 - ACQUISITIONS
         ------------

         On January 9, 1996, the Company  completed the  acquisition of Bay Area
Bagels, Inc., a private company which owned eight bagel bakery stores in the San
Francisco  Area.  The  purchase  price was 65,500  shares of Common stock of the
Company and $85,000.  The  transaction  was treated as a purchase for accounting
purposes.


                                    -5-

<PAGE>

         On January 17, 1996,  the Company  completed the  acquisition  of three
stores in the Los Angeles market,  which were licensed  locations of I&J Bagels,
Inc. Such stores will be operated as company owned locations. The purchase price
was  $1,500,000.  The  transaction  was  treated  as a purchase  for  accounting
purchases.

                                      -6-

<PAGE>


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

         On June 29, 1995, the Company acquired I&J Bagels Inc. ("I&J"). I&J was
a private  company which owned and licensed a total of 17 bagel bakery stores in
the Los Angeles  area  operating  under the name of I & Joy Bagels.  The Company
completed the acquisition  through the merging of a newly created,  wholly-owned
subsidiary of the Company with DAB Industries Inc.,  ("DAB") whose sole asset is
all of the stock of I&J, in exchange  for 1.5 million  shares of Common Stock of
the Company.  Accordingly,  the  consolidated  financial  statements for periods
prior to June 29, 1995 have been restated to include the accounts and results of
operations of I&J for all the periods presented.

         On January 9, 1996, the Company  completed the  acquisition of Bay Area
Bagels, Inc., a private company which owned eight bagel bakery stores in the San
Francisco  Area.  The  purchase  price was 65,500  shares of Common stock of the
Company and $85,000.  The  transaction  was treated as a purchase for accounting
purposes.

         On January 17, 1996,  the Company  completed the  acquisition  of three
stores in the Los Angeles market,  which were licensed  locations of I&J Bagels,
Inc. Such stores will be operated as company owned locations. The purchase price
was $1,500,000 and will be treated as a purchase for accounting purchases.

RESULTS OF OPERATIONS

         The total  number of  operating  Manhattan  Bagel  Company  stores  has
increased from four at December 31, 1990 to 177 at March 31, 1996.

         The  following  total  number of stores were open and  operating on the
following dates:

                  December 31, 1990...........................          4
                  December 31, 1991...........................         11
                  December 31, 1992...........................         27
                  December 31, 1993...........................         41
                  December 31, 1994...........................         73
                  December 31, 1995...........................        152
                  March 31, 1996..............................        177

         In  addition,  at March 31,  1996,  the Company had an  additional  132
stores in various stages of development.

                                      -7-

<PAGE>


         The rapid expansion  significantly affects the comparability of results
of operations in several ways.  Total royalty  income and frozen raw bagel dough
sales rise  significantly  as new franchised and licensed stores open. New store
revenues are not usually as high in the first periods  following opening as they
are in later  periods as evidenced by the same store sales  increases  discussed
below. Total expenses have also risen  significantly as the Company expanded its
corporate infrastructure.  The number of employees as of March 31, 1996 was 423,
while the number of employees as of March 31, 1995 was 193.

         The Company has also granted several master franchises. Under the terms
of the master franchise  agreement,  a master  franchisee is required to pay the
Company an initial fee based on the population of the territory  covered by such
master  franchise.  The granting of new master franchises and the payment of the
initial fees also affects the comparability of results to prior periods.

         The Company also grants area development rights. Under the terms of the
area development  agreements,  the area developer is required to pay the Company
an initial fee based on the number of stores to be developed  within a specified
time  period.  The  granting of new area  development  rights and the payment of
initial fees also affects the comparability of results to prior periods.

         The  Company's  revenues  are  primarily  derived  from (i) the sale of
frozen raw bagel dough and cream cheese  spreads to  franchisees  and licensees,
(ii) retail and  wholesale  sale of products by the  Company-owned  stores,  and
(iii)  royalties,  franchise and license fees,  including master franchise fees,
and area development fees. The percentage of revenues derived from product sales
to total sales for the first three months of 1996 was 72.3% compared to 72.7% in
1995.

         For the comparative three month periods ending March 31, 1996 and March
31, 1995, same store retail sales as reported by the Company's bagel franchisees
(which are unaudited),  increased from $5.3 million to $5.5 million, an increase
of $.2 million or 2.9%, and total sales rose from $6.3 million to $14.6 million,
an increase of $8.3 million or 130.5%.  The amounts so reported are exclusive of
three original  stores that are on a fixed royalty basis and are not required to
report  sales to the Company.  The amounts so reported  also exclude the I & Joy
stores which were previously operated by I&J and acquired on June 29, 1995.

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995

         REVENUES.  Total  revenues of the Company  for the three  months  ended
March 31, 1996 were  $8,104,904 as compared to total  revenues of $3,166,799 for
the three months ended March 31, 1995, a $4,938,105 or 155.9%  increase over the
three months of the prior year.  The increase is primarily  attributable  to the
increased  product sales resulting from the increase in the number of franchised
stores  opened as well as an  increase  in  retail  and  wholesale  sales by the
company  stores.  For the three months ended March 31, 1996,  franchise and area
development fees were $535,000 and $140,000  respectively.  For the three months
ended March 31, 1995 master franchise fees were $102,000.  Ongoing royalties and
continuing  license fees increased  from $274,344 in the quarter to $734,881,  a
$460,537 or 167.9% increase.

                                       -8-

<PAGE>


         COSTS OF GOODS  SOLD.  Cost of goods  sold for the three  months  ended
March 31, 1996 increased  126.1% to $3,162,695 as compared to $1,398,755 for the
three months ended March 31, 1995. This increase is directly attributable to the
increase in product  sales.  Costs of goods sold  decreased  to 53.4% of product
sales for the three  months  ended March 31,  1996  compared to 60.8% of product
sales for the three  months  ended  March 31,  1995.  This  decrease is due to a
combination of increased  purchasing  and  manufacturing  efficiencies  from the
automation of the original  Eatontown facility and the addition of company owned
stores which have a positive impact on gross profit margins.

         SELLING,    GENERAL   AND   ADMINISTRATIVE.    Selling,   general   and
administrative  expenses  increased  186.6% to  $4,230,582  for the three months
ended March 31, 1996,  compared with $1,476,030 for the three months ended March
31,  1995.  As  a  percentage  of  total   revenues,   selling,   general,   and
administrative  expenses increased to 52.2% for the three months ended March 31,
1996 from 46.6% for the three months ended March 31, 1995.  The increase in both
absolute dollars and percentage of revenues is attributable to the growth of the
company,  addition of senior and middle level personnel to manage the growth and
the addition of company  owned  stores  which have a negative  impact on S.G.&A.
margins.

         EARNINGS BEFORE  PROVISION FOR INCOME TAXES.  Earnings before provision
for income taxes for the three months ended March 31, 1996  increased  223.1% to
$932,332, compared with $288,533 for the three months ended March 31, 1995. This
increase was directly attributable to an increase in the Company's product sales
to the franchisees, retail sales and on-going royalty revenue.

         INCOME TAX.  Income Taxes provided for the three months ended March 31,
1996  increased  147.9% to $286,917  compared to $115,758  for the three  months
ended March 31, 1995.  The  effective  tax rate for the three months ended March
31, 1996 was 30.8%  compared to 40.1% for the three months ended March 31, 1995.
This decline in the tax rate is due to the majority of marketable securities are
invested in tax free securities.

         NET INCOME.  The  Company  generated  net income of $645,415  ($.09 per
share) for the three months  ended March 31, 1996,  as compared to net income of
$172,775  ($.03 per share) an  increase of 273.6%  over the three  months  ended
March 31, 1995 as a result of the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES
         On November 20, 1995,  completed a public offering of 1,500,000  shares
of Common Stock at a public offering price of $19.625 per share. The proceeds of
such  offering,  net of discounts and offering  expenses were  $27,084,440.  The
Company also  received  additional  proceeds of  $2,176,509 on December 14, 1995
from the sale of 118,000  shares of Common  Stock to the public  pursuant to the
underwriters' over-allotment option. The proceeds of the offering are being used
to finance the expansion of the Company's  business through  remodeling  stores,
constructing and equipping manufacturing facilities and acquiring existing bagel
businesses  as well as  providing  financing  for  future  franchisees,  and for
general corporate and working capital purposes.

         On April 9, 1996 the Company  received net proceeds of $1,911,150  from
the sale of  90,000  shares of  common  stock  pursuant  to the  exercise  of an
over-allotment  option in connection  with an  underwritten  public  offering of
shares owned by a shareholder  of the Company.  These  proceeds will be utilized
for general corporate and working capital purposes.

                                      -9-

<PAGE>


         In order to accommodate  the growth in the Company's  operations and to
increase efficiency,  the Company decided to move its headquarters and construct
an additional  manufacturing  facility.  The Company executed a lease in January
1995 and moved its  headquarters  into the new space on April 1,  1995.  The new
premises include  approximately  13,100 square feet of office and administrative
space (as  compared  to 2,500  square feet in the old  space),  including  Bagel
University,  a fully  operational  Manhattan Bagel Company  training store;  and
approximately  24,200  square  feet for the new  manufacturing  facility,  which
became operational on April 1, 1996.

         In October  1995,  the Company  received  $3,500,000  constituting  the
proceeds  of  Economic  Development  Bonds  issued  by the New  Jersey  Economic
Development Authority. The bonds are supported by a $3,575,000 direct pay letter
of credit  issued by First  Fidelity  Bank,  N.A.  The proceeds of the bonds are
being used to finance the completion of the new Eatontown facility, the purchase
of equipment and  machinery for the factory,  and to refinance the equipment and
machinery recently purchased for use at the existing factory.

         The Company's cash flow used by operating  activities  during the first
three months of 1996 was $336,894 compared to a cash used of $669,719 during the
first three months of 1995.  During the three months ended March 31, 1996,  cash
flow from net  income  and  depreciation  was offset by  increases  in  accounts
receivable.

         The Company had working capital of $28,454,316 at March 31, 1996, which
represents a decrease of  $2,381,207  from  December 31, 1995.  This decrease in
working  capital is a result of the Company  using its  working  capital to fund
expansion.  The Company  believes  there are no long-term  trends or events that
would have a material negative impact on working capital.  Moreover,  except for
equipment purchases for the new bagel  manufacturing  facilities financed by the
Economic  Development Bonds, the Company has no material commitments for capital
expenditures.  The Company also has two short-term credit facilities aggregating
$2,300,000 for use in funding construction of Manhattan Bagel stores.

         Management   believes  that  the  Company's  working  capital,   credit
facilities and anticipated  funds  generated  internally from operations will be
sufficient to finance the Company's  anticipated growth through acquisitions and
expansion and to meet the Company's  liquidity  requirements for the foreseeable
future.

                                      -10-

<PAGE>


                           PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
        ---------------------------------

(b)      The following reports on Forms 8-K were filed for the quarter for which
         this report is filed.

         Form 8-K  reporting  the  acquisition  of Bay Area Bagels on January 9,
         1996 was filed on January  23, 1996 and a Form 8-KA was filed March 21,
         1996.

         Form 8-K reporting the  acquisition  of the "Refold"  stores on January
         17,  1996 was filed on January 31, 1996 and a Form 8-KA was filed March
         21, 1996.

                                      -11-


<PAGE>


                                   SIGNATURES

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

                                                MANHATTAN BAGEL COMPANY, INC.
                                                (Small Business Issuer)



Dated:    January 7,1997                        By: S/N JACK GRUMET
                                                    ---------------
                                                Jack Grumet,
                                                Chairman of the Board and
                                                Chief Executive Officer
                                                Chief Financial Officer

                                      -12-