UNITED STATES

                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                    Form 10-Q

                Quarterly Report Pursuant to Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934

For Quarterly Period Ended September 30, 2003

Commission File Number 0-10832
                       -------

                             AFP Imaging Corporation
                             -----------------------
             (Exact name of registrant as specified in its charter)

           New York                                        13-2956272
           --------                                        ----------
(State or other jurisdiction of                  (I.R.S. Employer Identification
 incorporation or organization)                              No.)

     250 Clearbrook Road, Elmsford, New York                    10523
     ---------------------------------------                    -----
     (Address of principal executive offices)                (Zip Code)

                                  914-592-6100
                                  ------------
              (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     Yes    X         No
                                                ----------      -----

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).  Yes              No X
                                                ----------      ----


The registrant had 9,271,054 shares of Common Stock outstanding as of November
1, 2003.




                                       1
<PAGE>





This Quarterly Report on Form 10-Q contains certain forward-looking statements
within the meaning of the Private Securities Reform Act of 1995. Forward-looking
statements involve known and unknown risks and uncertainties and other factors
that could cause actual results of AFP Imaging Corporation (collectively with
its subsidiaries, the "Company") or achievements expressed or implied by such
forward-looking statements to not occur, not be realized or differ materially
from that stated in such forward-looking statements. Forward-looking statements
may be identified by terminology such as "may," "will," "could," "would,"
"project," "expect," "believe," "estimate," "anticipate," "intend," "continue,"
"potential," "opportunity" or similar terms, variations of such terms, or the
negative of such terms or variations. Potential risks, uncertainties and factors
include, but are not limited to:

o    adverse changes in general economic conditions,

o    the Company's ability to repay its debts when due,

o    changes in the markets for the Company's products and services,

o    the ability of the Company to successfully design, develop, manufacture and
     sell new products,

o    the Company's ability to successfully market its existing and new products,

o    adverse business conditions,

o    changing industry and competitive conditions,

o    obtaining and maintaining anticipated operating efficiencies,

o    pricing pressures,

o    risks associated with foreign operations,

o    the Company's ability to attract and retain key personnel,

o    difficulties in maintaining adequate long-term financing to meet the
     Company's obligations,

o    changes in the nature or enforcement of laws and regulations concerning the
     Company's products, services, suppliers, or the Company's customers,

o    determinations in various outstanding legal matters,

o    changes in currency exchange rates and regulations, and

o    other factors set forth in this Quarterly Report on Form 10-Q, and the
     Company's Annual Report on Form 10-K for the year ended June 30, 2003, and
     from time to time in the Company's other filings with the Securities and
     Exchange Commission.

 Readers are urged to carefully review and consider the various disclosures made
 by the Company in this Form 10-Q, the Company's Annual Report on Form 10-K for
 the year ended June 30, 2003, and the Company's other filings with the SEC.
 These reports attempt to advise interested parties of the risks and factors
 that may affect the Company's business, financial condition and results of
 operations and prospects. The forward-looking statements made in the Form 10-Q
 speak only as of the date hereof and we disclaim any obligation to provide
 updates, revisions or amendments to any forward-looking statements to reflect
 changes in the Company's expectations or future events.



PART I.  Financial Information


The consolidated financial statements included herein have been prepared by the
Company without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. While certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles in the United States have been condensed or
omitted pursuant to such rules and regulations, the Company believes that the
disclosures made herein are adequate to make the information presented not
misleading. It is recommended that these consolidated financial statements be
read in conjunction with the Company's consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2003.

In the opinion of the Company, all adjustments necessary to present fairly the
Company's consolidated financial position as of September 30, 2003, and the
results of its operations for the three month periods ended September 30, 2003
and 2002, and its cash flows for the three months periods then ended, have been
included.



                                       2
<PAGE>


Item 1:  FINANCIAL STATEMENTS

                    AFP Imaging Corporation and Subsidiaries
       Consolidated Balance Sheets - September 30, 2003 and June 30, 2003
       -------------------------------------------------------------------

<TABLE>
<CAPTION>

Assets                               September      June 30,       Liabilities and Shareholders'       September       June 30,
                                       30, 2003       2003          Equity                               30, 2003        2003
                                    -------------  -----------                                        ------------- --------------
                                     (Unaudited)                                                       (Unaudited)
CURRENT ASSETS:                                                    CURRENT LIABILITIES:
<S>                                     <C>          <C>                                                <C>            <C>
 Cash and cash equivalents              $404,176     $658,138      Current portion of long-term debt    $1,432,046     $2,141,931
 Accounts receivable, less allowance                               Accounts payable                        569,051        998,710
  for doubtful accounts of $86,000                                 Accrued expenses                        886,378        952,729
  and $95,200, respectively                                                                           ------------- --------------
                                       1,595,391    2,249,481      Total current liabilities             2,887,475      4,093,370
                                                                                                      ------------- --------------
 Inventories                           2,177,196    2,482,004
 Prepaid expenses and other current                                LONG TERM DEBT
  assets                                 139,742       99,092                                              493,056        630,556
                                    -------------  -----------                                        ------------- --------------

   Total current assets                4,316,505    5,488,715      SHAREHOLDERS' EQUITY
                                    -------------  -----------
                                                                    Common stock, $.01 par value,
                                                                     30,000,000 shares authorized,
PROPERTY, PLANT AND EQUIPMENT,                                       9,271,054 shares issued and
 At cost                               2,042,540    2,034,964        outstanding at September 30,
 Less accumulated depreciation                                       2003, and June 30, 2003,
                                      (1,624,399)  (1,582,697)       respectively                           92,710         92,710
                                    -------------  -----------
                                         418,141      452,267       Common stock warrants                   19,800         19,800
                                                                    Paid-in capital in excess of par    11,545,883     11,545,883
                                                                    Accumulated deficit                (10,223,404) (10,338,464)7)
                                                                                                      ------------- --------------
OTHER ASSETS                              80,874      102,873       Total shareholders' equity           1,434,989      1,319,929
                                    -------------  -----------                                        ------------- --------------


                                      $4,815,520   $6,043,855                                           $4,815,520     $6,043,855
                                    =============  ===========                                        ============= ==============


The accompanying notes to financial statements are an integral part of these statements.
</TABLE>


                                       3
<PAGE>


                    AFP Imaging Corporation and Subsidiaries
                     Consolidated Statements of Operations
                      ------------------------------------
                                  (Unaudited)


<TABLE>
<CAPTION>


                                                                                                   Three Months Ended
                                                                                                      September 30,

                                                                                                       2003        2002
                                                                                                 -----------------------

<S>                                                                                              <C>         <C>
NET SALES                                                                                        $4,034,879  $4,064,794

COST OF SALES                                                                                     2,476,337   2,713,549
                                                                                                 -----------------------

   Gross profit                                                                                   1,558,542   1,351,245

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                                      1,276,576   1,414,950
RESEARCH AND DEVELOPMENT EXPENSES                                                                   108,593     117,884
                                                                                                 -----------------------
                                                                                                  1,385,169   1,532,834

   Operating income (loss)                                                                          173,373    (181,589)

INTEREST EXPENSE, net                                                                                44,113      55,752

    Income (loss) before income taxes                                                               129,260    (237,341)

PROVISION FOR INCOME TAXES                                                                           14,200       4,000

INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                            115,060    (241,341)

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                                                    ----  (1,297,069)
                                                                                                 -----------------------

NET INCOME (LOSS)                                                                                  $115,060 $(1,538,410)
                                                                                                 =======================

INCOME (LOSS) PER SHARE BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
         Basic                                                                                         $.01       $(.03)
                                                                                                 =======================
         Diluted                                                                                       $.01       $(.03)
                                                                                                 =======================

NET INCOME (LOSS) PER SHARE
         Basic                                                                                         $.01       $(.17)
                                                                                                 =======================
         Diluted                                                                                       $.01       $(.17)
                                                                                                 =======================

WEIGHTED AVERAGE OUTSTANDING COMMON STOCK
         Basic                                                                                    9,271,054   9,271,054
                                                                                                 =======================
         Diluted                                                                                  9,281,721   9,271,054
                                                                                                 =======================

The accompanying notes to consolidated financial statements are an integral part of these statements.

</TABLE>



                                       4
<PAGE>
<TABLE>
<CAPTION>


                                        AFP Imaging Corporation and Subsidiaries
                    Consolidated Statements of Shareholders' Equity and Comprehensive Income (Loss)
                                For the Three Months Ended September  30, 2003 and 2002
------------------------------------------------------------------------------------------------------------------------
                                                      (Unaudited)

                                                                                            Foreign
                                Comprehensive              Common   Paid-in                 Currency
                                    Income         Common Stock   Capital In  Accumulated Translation
                                   (Loss)          Stock  Warrants Excess of     Deficit   Adjustment    Total
                                                                     Par
                                ----------------------------------------------------------------------------------------

<S>          <C> <C>                    <C>        <C>     <C>     <C>          <C>           <C>      <C>
Balance June 30, 2002                   $---       $92,710 $19,800 $11,545,883  $(8,823,057)  $(12,619)$2,822,717

     Foreign currency
      translation
        adjustment                       700           ---     ---         ---          ---        700        700

       Net loss for three months
          ended September 30,
           2002                   (1,538,410)          ---     ---         ---   (1,538,410)       --- (1,538,410)
                                -------------
Comprehensive Loss               $(1,537,710)          ---     ---         ---          ---        ---        ---
                                =============---------------------------------------------------------------------
Balance September 30, 2002                         $92,710 $19,800 $11,545,883 $(10,361,467)  $(11,919)$1,285,007
                                             ===========================================================================


Balance June 30, 2003                   $---       $92,710 $19,800 $11,545,883 $(10,338,464)      $--- $1,319,929

     Net income for three
      months
       ended September 30, 2003     115,060,           ---     ---         ---      115,060        ---    115,060
                                =============
Comprehensive Income                $115,060           ---     ---         ---          ---        ---        ---
                                =============---------------------------------------------------------------------------
Balance September 30, 2003                          $92,710 $19,800 $11,545,883 $(10,223,404)      $--- $1,434,989
                                             ===========================================================================




The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>


                                       5
<PAGE>

                    AFP Imaging Corporation and Subsidiaries
                     Consolidated Statements of Cash Flows
             For the Three Months Ended September 30, 2003 and 2002
             ------------------------------------------------------
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                                                       2003        2002
                                                                                                   ---------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                                <C>      <C>
  Net Income (loss)                                                                                $115,060 $(1,538,410)
  Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
   activities-
    Depreciation and amortization                                                                    58,100      69,646
    Cumulative effect of change in accounting principle                                                 ---   1,297,069
    Change in assets and liabilities:
       Decrease in accounts receivable                                                              654,090     690,631
       Decrease in inventories                                                                      304,808      55,664
       (Increase)/decrease in prepaid expenses and other assets                                     (35,049)     38,606
       Decrease in accounts payable                                                                (429,659)   (804,830)
       Decrease in accrued expenses                                                                 (66,351)   (157,251)
                                                                                                   ---------------------

       Total adjustments                                                                            485,939   1,189,535
                                                                                                   ---------------------

       Net cash provided by (used in) operating activities                                          600,999    (348,875)
                                                                                                   ---------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Capital expenditures                                                                          (7,576)    (42,207)
                                                                                                   ---------------------

       Net cash used in investing activities                                                         (7,576)    (42,207)
                                                                                                   ---------------------

CASH FLOW FROM FINANCING ACTIVITIES:
       Borrowing of debt                                                                                ---     230,771
       Repayment of debt                                                                           (847,385)    (70,833)
                                                                                                   ---------------------

       Net cash (used in) provided by financing activities                                         (847,385)    159,938
                                                                                                   ---------------------

EXCHANGE RATE EFFECTS ON CASH AND CASH EQUIVALENTS                                                      ---         700
                                                                                                   ---------------------

       Net decrease in cash and cash equivalents                                                   (253,962)   (230,444)

CASH AND CASH EQUIVALENTS, at beginning of period                                                   658,138     516,494
                                                                                                   ---------------------

CASH AND CASH EQUIVALENTS, at end of period                                                        $404,176    $286,050
                                                                                                   =====================

SUPPLEMENTAL CASH FLOW DISCLOSURES:
    Cash paid during the year for-
              Interest                                                                              $46,865     $56,790
              Income taxes net of refunds                                                            $6,500      $4,000

The accompanying notes to consolidated financial statements are an integral part of these consolidated statements.

</TABLE>



                                       6
<PAGE>

AFP Imaging Corporation and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2003
(Unaudited)

(1) General:

AFP Imaging Corporation (together with its subsidiaries, the "Company") was
organized on September 20, 1978, under the laws of the State of New York. Since
its inception, the Company has been engaged in the business of designing,
developing, manufacturing and distributing equipment for producing medical and
dental x-ray images through digital technology, as well as for the chemical
processing of photosensitive materials. Medical, dental and veterinary
professionals use these products.

The accounting policies followed during the interim periods reported on herein
are in conformity with accounting principles generally accepted in the United
States and are consistent with those applied for annual periods, as described in
the Company's financial statements included in the Company's Annual Report on
Form 10-K for the year ended June 30, 2003.

In September 2003, the Company completely dissolved two of its wholly-owned
subsidiaries: LogEtronics Corporation and Regam Medical Systems AB. The Company
sold selected assets of its graphic arts business in July 2001, which had been
distributed through LogEtronics Corporation. The Company transferred the
manufacturing operations of its Swedish subsidiary (Regam Medical Systems AB) to
the United States, and then, in accordance with Swedish Law, dissolved the
corporation.

The Company has two employee incentive stock option plans, under which
approximately 1,600,000 shares of Common Stock are authorized and available for
issuance. Under the terms of the plans, options to purchase common stock of the
Company may be granted at not less than 100% of the fair market value of the
stock on the date of grant, or 110% of the fair market value if granted to
persons owning more than 10% of the outstanding stock of the Company.

The Company accounts for these plans pursuant to Accounting Principles Board
Opinion No. 25 "Accounting for Stock Issued to Employees," under which no
compensation cost has been recognized. Had compensation cost for these plans
been determined based on the fair value at the grant dates consistent with SFAS
No. 123, "Accounting for Stock-Based Compensation" and SFAS No. 148, "Accounting
for Stock-Based Compensation-Transition and Disclosure-an Amendment of FASB
Statement No. 123", the Company's net income and earnings per share would have
been reduced by an insignificant amount.

(2) Adoption of New Accounting Standards:

 In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
141, "Business Combinations" ("SFAS 141") and SFAS No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"). These standards change the accounting for
business combinations by, among other things, prohibiting the prospective use of
pooling-of-interests accounting and requiring companies to stop amortizing
goodwill and certain intangible assets with an indefinite useful life. Instead,
goodwill and intangible assets deemed to have an indefinite useful life will be
subject to an annual review for impairment. The new standards generally were
effective for the Company as of July 1, 2002 and for purchase business
combinations consummated after June 30, 2001. SFAS 142 requires that goodwill
and intangible assets deemed to have an indefinite useful life be reviewed for
impairment upon adoption of SFAS 142 (July 1, 2002) and at least annually
thereafter.

Under SFAS 142, goodwill impairment is deemed to exist if the net book value of
a reporting unit exceeds its estimated fair value. The Company has one reporting
unit, which comprises its entire operating segment. This methodology differs
from the Company's previous policy, as permitted under accounting standards
existing at that time, of using undiscounted cash flows to determine if goodwill
is recoverable.

Upon adoption of SFAS 142 in the first quarter of Fiscal 2003, the Company
recorded a one-time, non-cash charge of approximately $1,297,069 ($.14 basic and
diluted loss per share), to reduce the carrying value of its goodwill. Such
charge is non-operational in nature and is reflected as a cumulative effect of
an accounting change in the accompanying consolidated statement of operations.
In calculating the impairment charge, the fair value of its reporting unit was
estimated by comparison to the Company's quoted market capitalization at July 1,
2002 since the reporting unit represents all of the Company's operations.


                                       7
<PAGE>

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity" ("SFAS No.
150"). SFAS No. 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. SFAS No. 150 was effective July 1, 2003 for the Company. The Company
determined that the provisions of SFAS No. 150 did not have a material effect on
the Company's results of operations or financial position.

 (3) Basic and Diluted Income (Loss) Per Common Share:

  The computation of net income (loss) per common share is based upon the
  weighted average number of common shares outstanding during the period, plus,
  in periods in which they have a dilutive effect, the effect of shares
  contingently issuable. The diluted weighted average number of shares
  outstanding includes 10,667 shares of common stock issuable upon exercise of
  outstanding stock options in the first three months of Fiscal 2004; but does
  not include 1,200 shares of common stock issuable upon exercise of outstanding
  stock options in the first three months of Fiscal 2003 as such amount would
  have been antidilutive. The diluted weighted average number of shares
  outstanding does not include 100,000 shares of common stock issuable upon the
  exercise of outstanding warrants in each of the first three months of Fiscal
  2004 and Fiscal 2003, as the strike price of the warrants is above the average
  stock price for each three month period.

 (4) Long and Short Term Debt:

On September 21, 2001, the Company established a new three-year senior secured
credit facility (the "Revolving Credit Loan"), consisting of a $3.5 million
revolving line of credit, which replaced its then existing senior secured credit
facility. The Revolving Credit Loan is secured by all of the Company's
inventory, accounts receivable, equipment, officer life insurance policies and
proceeds thereof, trademarks, licenses, patents and general intangibles. The
Revolving Credit Loan requires that certain financial ratios and net worth
amounts be maintained. As of September 30, 2003, the Company was in compliance
with all the terms and conditions of the Revolving Credit Loan, as amended. The
Revolving Credit Loan has an interest rate of 1 3/4% over the prime rate,
currently at 5 3/4%, has a specific formula to calculate available funds based
on eligible accounts receivable and inventory, and has certain reporting
requirements to the senior secured lender. In connection with the Revolving
Credit Loan, the Company issued a 5-year warrant to the lender for the purchase
of 100,000 shares of the Company's common stock at $.32 per share, subject to an
adjustment for all issuances of stock. The Black-Scholes method was used to
account for these warrants, and the stock price was based on the stock price the
day prior to closing, plus 10%, as stipulated in the Loan and Security Agreement
for the Revolving Credit Loan.

The Revolving Credit Loan is classified as a current liability in accordance
with EITF 95-22 (Balance Sheet Classification of Borrowings Outstanding under
Revolving Credit Agreements That Include Both a Subjective Acceleration Clause
and a Lock-Box Arrangement) since the Loan and Security Agreement contains a
subjective acceleration clause and contractual provisions that require the cash
receipts of the Company be used to repay amounts outstanding under the revolving
credit facility.

Included in debt are two subordinated promissory notes related to prior dental
acquisitions. These notes total $1,043,056 at September 30, 2003, of which
approximately $550,000 has been classified as a current liability.

The Company is dependent upon the Revolving Credit Loan to finance its overall
operations. It is believed that the Revolving Credit Loan is sufficient to
finance the Company's ongoing working capital requirements for the foreseeable
future. At November 3, 2003, the Company had available $763,100 of unused credit
under the Revolving Credit Loan.

(5) Inventory:

Inventories, which include material, labor and manufacturing overhead, are
stated at the lower of cost (first-in, first-out) or market (net realizable
value). The Company uses a standard cost accounting system in conjunction with
an actual perpetual inventory system to properly account for, control, and
maintain the movement of all inventory components. All standard costs are
reviewed periodically and updated accordingly, to verify that the standard costs
approximate the actual costs. At September 30, 2003 and June 30, 2003,
inventories consist of the following:
<TABLE>
<CAPTION>


                                                                      September 30, 2003      June 30, 2003
                                                                      ------------------      -------------

<S>                                                                     <C>                       <C>
             Raw materials and sub-component parts                      $1,498,908                $1,455,164
             Work-in-process and finished goods                            678,288                 1,026,840
                                                                        ----------                ----------
                                                                        $2,177,196                $2,482,004
                                                                        ==========                ==========
</TABLE>


                                       8
<PAGE>

(6) Income Taxes:

Income taxes are accounted for under the asset and liability method. The
Company's income tax provisions for the Fiscal 2004 and Fiscal 2003 three-month
periods relate to state or foreign income and capital taxes, net of any refunds
received. No income tax benefits related to the losses reported in prior years
have been recorded, in accordance with SFAS No. 109.

(7) Segment Information:

As of September 30, 2003, the Company had only one business segment,
Medical/Dental, as the Company sold its graphic arts business to a third party
in July 2001. All costs associated with the disposition of this product line
were recorded in fiscal 2001. Medical/dental segment operations are conducted
under the Dent-X and AFP trade names and consist of the design, development,
manufacturing and marketing of medical and dental film processors, imaging
systems and all related accessories.





                                       9
<PAGE>






Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operation

Capital Resources and Liquidity

The Company's working capital at September 30, 2003 increased by approximately
$33,700 from June 30, 2003. The Company significantly reduced its accounts
payable, revolver debt and subordinated debt through reductions in accounts
receivable and inventory. Furthermore, as sales are normally lower in the first
fiscal quarter, accounts receivable is significantly lower than the prior
period.

On September 21, 2001, the Company established a new three-year senior secured
credit facility (the "Revolving Credit Loan"), consisting of a $3.5 million
revolving line of credit, which replaced its then existing senior secured credit
facility. The Revolving Credit Loan is secured by all of the Company's
inventory, accounts receivable, equipment, officer life insurance policies and
proceeds thereof, trademarks, licenses, patents and general intangibles. The
Revolving Credit Loan requires that certain financial ratios and net worth
amounts be maintained. As of September 30, 2003, the Company was in compliance
with all the terms and conditions of the Revolving Credit Loan, as amended. The
Revolving Credit Loan has an interest rate of 1-3/4% over the prime rate,
currently at 5 3/4 %, has a specific formula to calculate available funds based
on eligible accounts receivable and inventory, and has certain reporting
requirements to the senior secured lender. In connection with the Revolving
Credit Facility, the Company issued a 5-year warrant to the lender for the
purchase of 100,000 shares of the Company's common stock at $.32 per share,
subject to an adjustment for all issuances of stock. The Black-Scholes method
was used to account for these warrants, and the stock price was based on the
stock price the day prior to closing, plus 10%, as stipulated in the Loan and
Security Agreement for the Revolving Credit Loan.

Included in debt are two subordinated promissory notes related to prior dental
company acquisitions. These notes total $1,043,056 in principal amount at
September 30, 2003, of which approximately $550,000 has been classified as a
current liability. The Company is current on all principal and interest payments
due the note holders.

The Company's historical operating cash flows have been positive; however, the
Company is dependent upon the Revolving Credit Facility to finance its ongoing
operations. It is believed that the Revolving Credit Loan is sufficient to
finance the Company's ongoing working capital requirements for the foreseeable
future. The Company expects its working capital requirements will continue to be
financed by operations and from borrowings. The Company currently believes that
there are no significant trends, demands, commitments or contingencies, other
than a general decline in sales and/or the ongoing litigation cases, which are
reasonably likely to result in a material increase or decrease in its liquidity
or capital resources in the foreseeable future. At November 3, 2003, the Company
had available $763,100 of unused credit under the Revolving Credit Loan.

The Company's Revolving Credit Loan expires on September 21, 2004, at which time
the company expects to refinance it with the existing lender or a comparable
lender with equivalent terms and conditions.

Capital expenditures for the first three months of Fiscal 2004 were $7,576
consisting of minor tooling and foundry expenditures related to the design,
development and production of the new imaging products. Where practical, the
Company continues to conserve its cash. The Company expects to continue to
finance any future capital requirements principally from internally generated
funds. Capital expenditures are limited under the terms of the Revolving Credit
Loan, and the Company currently is in compliance with this requirement.

Results of Operations - Three Months Fiscal 2004 Versus Three Months Fiscal 2003

In June 2003, management developed a significant cost reduction program, which
was implemented effective July 2003. These reductions included elimination of
non-productive product lines, a 7% decrease in the work force, and numerous cost
cutbacks throughout the Company. The Company expects to significantly reduce
both direct and non-direct overhead costs as a result of this program.

The Company began shipments of its new digital dental sensor, "EVA" (R) during
November 2002, mainly to international dealers and distributors, and will
increase production of this new product as sales develop. The Company received
FDA approval for the EVA sensor in March 2003, which permits the Company to
market and distribute the product domestically. This digital sensor is also used
in various veterinary dental applications. The Company is continuing to develop
its sensors, accessories and related software, and anticipates both domestic and
international growth in this product line.


                                       10
<PAGE>

Sales decreased approximately $30,000 or 0.7% between the Fiscal 2004 and Fiscal
2003 three-month periods. The Company's dental product sales increased
approximately $39,000 net, due to incremental sales from the new digital dental
sensor, which was offset by a slight decrease in the dental analog product
sales. The Company's medical product sales showed a decrease of approximately
$69,000 net; $125,000 of the decline being due to the discontinuance of the
medical ultrasound and film recording cameras, caused by technological changes
in the marketplace, offset by an increase in the veterinary and analog product
sales. International sales declined approximately $150,000 in the current
three-month period, mainly in medical equipment sales. The Company believes this
decline can be attributed to uncertainty in the global markets and fluctuating
currencies.

Gross profit as a percent of sales increased 5.4 percentage points between the
Fiscal 2004 and Fiscal 2003 three-month periods. Both the medical and dental
product lines showed slight improvement in their margins, due to increased
operating efficiencies. The product mix between manufactured and distributor
goods were relatively constant between the two three-month periods. Labor and
overhead costs, which are included in cost of sales, were approximately $135,000
lower in the current three-month period, due to the above-mentioned cost
reductions.

Selling, general, and administrative costs decreased approximately $138,400 or
9.8%, between the Fiscal 2004 and Fiscal 2003 three-month periods. Most of this
decrease is attributable to the cost reduction plan implemented as of July 2003.
Management reviewed all significant cost centers and eliminated or reduced many
major expenses, including payroll and related benefit costs, communication,
travel and entertainment, trade show costs and technology purchases. Management
will continue to monitor and control the level of discretionary spending.

Research and development costs decreased, approximately $9,300 or 8%, between
the Fiscal 2004 and Fiscal 2003 three-month periods. This decrease is mainly
attributable to the timing of expenditures relating to the Company's continued
investment in the design, development and refinement of its new imaging
products. The Company continues to invest in sustaining engineering and related
costs for its existing products.

Interest expense, net, decreased, approximately $11,600 or 21%, between the
Fiscal 2004 and Fiscal 2003 three-month periods, primarily due to several
factors. There was approximately $400,000 less in average monthly revolving
credit borrowings for the current three-month period ended September 30, 2003,
the prime rate of borrowing, upon which all senior debt is based, was slightly
lower in the current three-month period, and the LIBOR rate of borrowing, upon
which a subordinated note is based was significantly lower in the current
three-month period.

The income tax provisions for Fiscal 2004 and Fiscal 2003, respectively,
primarily reflect the nominal state taxes due. No tax benefit has been
recognized for the losses incurred in prior years.

In Fiscal 2003, in compliance with the FASB Statement No. 142, "Goodwill and
Other Intangible Assets", the Company reviewed its remaining goodwill, which
related to the Swedish dental acquisition in April 1997, and determined that
under the revised accounting valuation rules such goodwill had significantly
diminished in value. Therefore, in compliance with FASB Statement No. 142, the
Company took a one-time charge of $1,297,069 to completely write-off the
goodwill associated with this acquisition. As the Company no longer has any
goodwill, management does not expect that future compliance with this Statement
will have a material effect on the Company's financial position or results of
operation.


Item 3:   Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable.

Item 4:  Controls and Procedures.

a) Evaluation of disclosure controls and procedures.

Our co-chief executive officers and chief financial officer have reviewed and
evaluated the effectiveness of the Company's disclosure controls and procedures
(as defined in Rules 13a - 15 (e) and 15d -15 (e) of the Securities Exchange Act
of 1934 (the "Act"). Based on their review and evaluation, the co-chief
executive officers and chief financial officer have concluded as of September
30, 2003, that the Company's disclosure controls and procedures were adequate
and effective to ensure that information required to be disclosed by the Company
in the reports that it files or submits under the Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and
forms of the Securities and Exchange Commission.



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<PAGE>


(b) Changes in internal controls.

During the quarter ended September 30, 2003, there were no significant changes
in the Company's internal controls or in other factors that could significantly
affect these internal controls, nor were there any significant deficiencies or
material weaknesses in these internal controls requiring corrective actions. As
a result no corrective actions were taken.

Part II Other Information

Item 1:    Legal Proceedings

Reference is made to Item 3 in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2003, and to the references therein, for a discussion
of all material pending legal proceedings to which the Company and its
subsidiaries are parties. As of September 30, 2003, there have been no
significant changes to the status of the product liability insurance action nor
the two environmental matters relating to property in New Jersey owned by the
Company between August 1984 and June 1985.

Item 2:   Changes in Securities and Use of Proceeds.

None

Item 3:    Defaults Upon Senior Securities.

None

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

None

Item 5:    Other Information.

None

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

(a) Exhibits:

               31.1, 31.2, 31.3 - Certifications pursuant to Exchange Act Rule
                                  13a - 15 (e).

               32.1, 32.2, 32.3 - Certifications pursuant to 18 U.S.C. Section
                                  1350 of the Sarbanes - Oxley Act of 2002.

(b) Reports on Form 8-K:

           A Current Report on Form 8-K was filed on October 3, 2003 to report
           that the Company had replaced Ernst & Young LLP as independent
           auditors and engaged Goldstein Golub Kessler LLP to serve as
           independent auditors for the year ended June 30, 2004.



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<PAGE>




                                   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.



                          AFP IMAGING CORPORATION



                          _________/s________________
                          David Vozick
                          Chairman of the Board
                          Secretary, Treasurer
                          Date:  November 13, 2003



                          _________/s/________________
                          Donald Rabinovitch
                          President
                          (Principal Executive Officer)
                          Date:  November 13, 2003


                          __________/s/_______________
                          Elise Nissen
                          Chief Financial Officer
                          (Principal Financial and Accounting Officer)
                          Date:  November 13, 2003





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