SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

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, 2002

                                       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 0-26284

                            MILESTONE SCIENTIFIC INC.
             (Exact name of Registrant as specified in its charter)

Delaware                                                              13-3545623
State or other jurisdiction                                     (I.R.S. Employer
or organization)                                             Identification No.)

              220 South Orange Avenue, Livingston, New Jersey 07039
               (Address of principal executive office) (Zip Code)

                                 (973) 535-2717
              (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) or 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 |_|

As of May 15, 2002, the Registrant had a total of 12,245,870 shares of Common
Stock, $.001 par value, outstanding.


                                       1
<PAGE>

                           FORWARD LOOKING STATEMENTS

When used in this Quarterly Report on Form 10-Q, the words "may", "will",
"should", "expect", "believe", "anticipate", "continue", "estimate", "project",
"intend" and similar expressions are intended to identify forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act regarding events, conditions and financial trends that
may affect the Company's future plans of operations, business strategy, results
of operations and financial condition. The Company wishes to ensure that such
statements are accompanied by meaningful cautionary statements pursuant to the
safe harbor established in the Private Securities Litigation Reform Act of 1995.
Prospective investors are cautioned that any forward-looking statements are not
guarantees of future performance and are subject to risks and uncertainties and
that actual results may differ materially from those included within the
forward-looking statements as a result of various factors. Such forward-looking
statements should, therefore, be considered in light of various important
factors, including those set forth herein and others set forth from time to time
in the Company's reports and registration statements files with the Securities
and Exchange Commission (the "Commission"). The Company disclaims any intent or
obligation to update such forward-looking statements.


                                       2
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                                    I N D E X

<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                  ----
<S>                                                                               <C>
PART I.  FINANCIAL INFORMATION

         ITEM 1. Condensed Consolidated Financial Statements

                 Condensed Consolidated Balance Sheets
                      March 31, 2002 (Unaudited) and December 31, 2001               4

                 Condensed Consolidated Statements of Operations
                      Three Months Ended March 31, 2002 and 2001 (Unaudited)         5

                 Condensed Consolidated Statements of Cash Flows
                      Three Months Ended March 31, 2002 and 2001 (Unaudited)         6

                 Notes to Condensed Consolidated Financial Statements             8-14

         ITEM 2. Management's Discussion and Analysis or Plan of Operations         15

PART II. OTHER INFORMATION

         ITEM 6. Exhibits and Reports on Form 8-k                                   21

SIGNATURES                                                                          22
</TABLE>


                                       3
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 2002 AND DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                        March           December
                           ASSETS                                      31, 2002          31, 2001
                                                                     ------------      ------------
                                                                      (Unaudited)       (Audited)
<S>                                                                  <C>               <C>
Current assets:
     Cash                                                            $     28,504      $     15,742
     Accounts receivable, net of allowance for doubtful accounts
         of $41,713 and $54,865 in 2002 and 2001, respectively            369,706           363,743
     Inventories                                                          123,445           162,640
     Advances to contract manufacturer                                    255,000           315,000
     Prepaid expenses                                                      49,965            30,985
                                                                     ------------      ------------
              Total current assets                                        826,620           888,110

Property and equipment, net                                               196,804           207,823
Advances to contract manufacturer - long-term                             382,221           374,529
Other assets                                                               40,776            45,277
                                                                     ------------      ------------

              Totals                                                 $  1,446,421      $  1,515,739
                                                                     ============      ============

           LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
     Accounts payable, including $320,866 and $43,000
         to related parties in 2002 and 2001, respectively           $  1,298,689      $  1,063,363
     Accrued expenses                                                     168,877           105,410
     Accrued interest due officer/stockholder                              31,100                --
     Deferred compensation                                                 80,000                --
     Notes payable-officer/stockholder                                    200,000                --
                                                                     ------------      ------------
              Total current liabilities                                 1,778,666         1,168,773

Accrued interest                                                          203,856           221,982
Accounts payable, including $272,866 to a related party in 2001            93,924           338,940
Deferred compensation payable to officer/stockholder                           --           491,346
Notes payable                                                           3,830,735         3,553,665
Notes payable-officer/stockholder                                              --           200,000
                                                                     ------------      ------------
              Total liabilities                                         5,907,181         5,974,706
                                                                     ------------      ------------

Commitments and contingencies

Stockholders' deficiency:
     Common stock, par value $.001; authorized, 25,000,000
         shares; 12,345,870 issued as of March 31, 2002 and
         11,372,847 issued as of December 31, 2001                         12,346            11,373
     Additional paid-in capital                                        36,608,011        36,090,566
     Accumulated deficit                                              (39,866,781)      (39,346,570)
     Unearned advertising                                                (302,820)         (302,820)
     Treasury stock, at cost, 100,000 shares                             (911,516)         (911,516)
                                                                     ------------      ------------
              Total stockholders' deficiency                           (4,460,760)       (4,458,967)
                                                                     ------------      ------------

              Totals                                                 $  1,446,421      $  1,515,739
                                                                     ============      ============
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                       4
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (Unaudited)

                                                     2002              2001
                                                 ------------      ------------

Revenues                                         $  1,021,588      $  1,262,371
Cost of sales                                         466,015           571,837
                                                 ------------      ------------

Gross profit                                          555,573           690,534
                                                 ------------      ------------

Selling, general and administrative expenses          897,276         1,813,548
Research and development expenses                      30,295            18,718
                                                 ------------      ------------
                                                      927,571         1,832,266
                                                 ------------      ------------

Loss from operations                                 (371,998)       (1,141,732)
Other income                                           24,000                --
Interest expense                                     (172,213)         (195,015)
Interest income                                            --             1,424
                                                 ------------      ------------

Net loss                                         $   (520,211)     $ (1,335,323)
                                                 ============      ============

Loss per share - basic                           $       (.04)     $       (.12)
                                                 ============      ============

Weighted average shares outstanding                12,096,204        10,753,816
                                                 ============      ============

See Notes to Condensed Consolidated Financial Statements.


                                       5
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     2002            2001
                                                                  ---------      -----------
<S>                                                               <C>            <C>
Operating activities:
     Net loss                                                     $(520,211)     $(1,335,323)
     Adjustments to reconcile net loss to net cash used
         in operating activities:
         Amortization of debt discount and deferred financing
              costs                                                  26,614           95,014
         Depreciation                                                12,203           23,534
         Common stock issued for services                                --          150,000
         Changes in operating assets and liabilities:
              Increase in accounts receivable                        (5,963)        (172,691)
              (Increase) decrease in inventories                     39,195         (225,136)
              Decrease in advances to contract manufacturer          52,308          228,896
              (Increase) decrease in prepaid expenses               (18,980)          70,620
              Increase in other assets                                 (596)            (836)
              Increase (decrease) in accounts payable                (9,690)         517,329
              Increase in accrued interest                          145,599          100,000
              Increase in accrued expenses                           63,467            8,268
              Increase in deferred compensation                      80,000           87,500
                                                                  ---------      -----------
                  Net cash used in operating activities            (136,054)        (452,825)
                                                                  ---------      -----------

Investing activities - capital expenditures                          (1,184)          (1,571)
                                                                  ---------      -----------

Financing activities:
     Proceeds from sale of common stock                                  --          500,000
     Proceeds from issuance of notes and lines of credit            150,000          350,000
                                                                  ---------      -----------
                  Net cash provided by financing activities         150,000          850,000
                                                                  ---------      -----------

Net increase in cash                                                 12,762          395,604

Cash, beginning of period                                            15,742          172,867
                                                                  ---------      -----------

Cash, end of period                                               $  28,504      $   568,471
                                                                  =========      ===========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                       6
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (Unaudited)

Supplemental schedule of noncash financing activities:

      In January 2001, pursuant to the 20% promissory note agreements, the
      Company converted $51,111 of accrued interest into additional principal.

      In January 2001, the Company granted warrants to purchase 20,000 shares of
      common stock (with an estimated fair value of $23,400) in connection with
      $100,000 drawn from a $1,000,000 credit facility provided by a major
      existing investor. This resulted in an initial increase to debt discount
      and to additional paid-in capital.

      In February 2001, the Company issued 27,641 shares of common stock in
      exchange for payment of accrued interest totaling $36,279.

      In February 2001, the Company issued 92,308 shares of common stock with a
      value of $150,000 for services rendered.

      In March 2001, pursuant to a $500,000 line of credit agreement, the
      Company granted warrants to purchase 100,000 shares of common stock (with
      an estimated fair value of $80,000). This resulted in an initial increase
      to debt discount and in additional paid-in capital.

      In March 2001, the Company granted warrants to purchase 390,625 shares of
      common stock with an estimated fair value of $324,418 for advertising
      services. This amount was recorded in stockholders' deficiency as an
      increase to unearned advertising and to additional paid-in capital.

      In January 2002, the Company issued 33,840 units consisting of one share
      of common stock and one warrant to purchase an additional share of common
      stock in exchange for payment of accrued interest totaling $27,072.

      In January 2002, in consideration for payment of $491,346 in deferred
      compensation, the Company issued 614,183 units (consisting of one share of
      common stock and one warrant to purchase an additional share of common
      stock)

      In January 2002, pursuant to the 20% promissory note agreements, the
      Company converted $63,377 of accrued interest into additional principal.


                                       7
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1 - Summary of accounting policies:

      The unaudited condensed consolidated financial statements of Milestone
      Scientific Inc. and Subsidiaries (the "Company") have been prepared in
      accordance with accounting principles generally accepted in the United
      States of America for interim financial information. Accordingly, they do
      not include all of the information and footnotes required by accounting
      principles generally accepted in the United States of America for complete
      financial statements.

      These financial statements should be read in conjunction with the
      financial statements and notes thereto for the year ended December 31,
      2001 included in the Company's Annual Report on Form 10-KSB. The
      accounting policies used in preparing these financial statements are the
      same as those described in the December 31, 2001 financial statements.

      In the opinion of the Company, the accompanying unaudited condensed
      consolidated financial statements contain all adjustments (consisting of
      normal recurring entries) necessary to present fairly the financial
      position as of March 31, 2002 and the results of operations and cash flows
      for the three months ended March 31, 2002 and 2001.

      The results reported for the three months ended March 31, 2002 are not
      necessarily indicative of the results of operations, which may be expected
      for a full year.

Note 2 - Basis of presentation:

      As of March 31, 2002, Milestone had $28,504 in cash and a working capital
      deficiency of $952,047. The working capital deficiency includes $583,966
      in obligations due on January 2, 2003. As listed below and further
      described in Note 4, to date, several additional steps have been taken to
      improve liquidity and meet Milestone's working capital needs over and
      above its cost containment policies.

      In January 2002, Milestone issued 33,840 units in exchange for payment of
      accrued interest totaling $27,072. In addition, the Company issued 614,183
      units to its Chief Executive Officer ("CEO") in consideration for payment
      of $491,346 in deferred compensation. Each unit consisted of one share of
      common stock and one warrant to purchase an additional share of common
      stock. The warrants are exercisable at $.80 per share through January 31,
      2003, at $1.00 per share through January 31, 2004 and thereafter at $2.00
      per share through January 31, 2007.

      On February 19, 2002, the Company issued a $150,000 promissory note to an
      existing investor. The note bears interest at 8% if paid in cash and 10%
      if paid in stock and matures on August 1, 2003.


                                       8
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 2 - Basis of presentation (continued):

      On March 28, 2002, the Company entered into an agreement with a vendor to
      issue a total of 187,500 units having an aggregate fair value of $150,000
      for payment on accounts payable of $93,924 and for future services of
      $56,076. Each unit consisted of one share of common stock and one warrant
      to purchase an additional share of common stock at an exercise price of
      $.80 per share through January 31, 2003, at $1.00 per share through
      January 31, 2004 and thereafter at $2.00 per share through January 31,
      2007. As of March 31, 2002, the common stock has yet to be issued.
      Accordingly, the $93,924 payable to the vendor has been recorded as
      long-term.

      On March 29, 2002, the Company entered into the following agreements for:

            o     Deferring payment on accounts payable to a related party
                  totaling $272,866 at December 31, 2001 until January 2, 2003.

            o     Extending the maturing date of its $200,000 obligation and
                  accrued interest of $26,600 as of December 31, 2001, to its
                  CEO until January 2, 2003.

            o     Deferring payment on $320,000 of the CEO's $350,000 salary
                  until January 2, 2003.

            o     Establishing a 6% $100,000 line of credit with its CEO through
                  January 2, 2003, payable on April 2, 2003.

      On March 31, 2002, the senior secured zero coupon 20% promissory notes
      were originally due. On March 31, 2002, the Company obtained the required
      consents from the senior secured zero coupon 20% promissory noteholders
      whose outstanding face value (principal plus accrued interest) was
      collectively greater than 80% of the total outstanding face value of the
      obligations to extend the maturity date up to 30 days.

      On April 12 and April 15, 2002, the Company entered into the following
      agreements with existing noteholders:

            o     The Company received the required consents from the senior
                  secured zero coupon 20% promissory noteholders whose
                  outstanding face value (principal plus accrued interest) was
                  collectively greater than 80% of the total outstanding face
                  value of the obligation and the following occurred: (1) the
                  notes were extended to July 1, 2003 and (2) the interest rate
                  was reduced to 6% if paid in cash or reduced to 12% if paid in
                  common stock. Additionally, at the option of the Company, the
                  face value on the maturity dates will be payable either in
                  cash or in the Company's common stock, valued at the average
                  closing price per share for the five trading dates prior to
                  July 1, 2003. Furthermore, for the holders who had given their
                  consent, the Company will issue to these holders shares of the
                  Company's common stock with a value of $120 for each $1,000
                  face amount outstanding at maturity. As a result, during April
                  2002, the Company will record a deferred financing charge of
                  approximately $224,000 which will be amortized to interest
                  expense over the remaining life of these notes.


                                       9
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 2 - Basis of presentation (concluded):

            o     Extending the 20% promissory notes to July 1, 2003 and
                  lowering the interest rate from 20% to 6% if paid in cash or
                  to 12% if paid in common stock.

            o     Extending the 8% $500,000 promissory note to August 1, 2003.

            o     Extending the 10% line of credit for $500,000 to August 1,
                  2003.

            o     Establishing a 6% $200,000 line of credit with an existing
                  investor through January 2, 2003.

            o     Allowing the Company to issue additional unsecured debt so
                  long as the maturity date is subsequent to August 1, 2003.

      In addition, as described in Note 5, Milestone has a equity line
      commitment through January 1, 2004 to sell up to 2,100,000 shares of its
      common stock. At March 31, 2002, the maximum proceeds that the Company
      would receive would be approximately $1,400,000.

Note 3 - Loss per share:

      Basic loss per common share is computed using the weighted average number
      of common shares outstanding.

      Options and warrants, to purchase 4,415,855 shares of common stock were
      outstanding, as of March 31, 2002, but were not included in the
      computation of diluted loss per share because the effect would have been
      anti-dilutive.

Note 4 - Notes payable:

      10% senior secured promissory notes:

            On March 16, 2001, the Company restructured its obligations to the
            holders of its 10% Senior Secured Promissory Notes. Under the terms
            of the agreement, each of the noteholders agreed to exchange their
            10% Notes for a new, zero coupon note (the "Zero Coupon Note") (a)
            paying interest at 20% per annum until maturity on March 31, 2002,
            (b) having a face amount equal to the outstanding principal owed to
            the noteholders plus accrued interest and interest payable until
            maturity, (c) giving the Company the option to pay the face value of
            the notes in cash or in shares of common stock, provided that the
            shares have been


                                       10
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 4 - Notes payable (continued):

            registered under the Securities Act of 1933, and (d) paying each
            noteholder 108% of the face value of his Zero Coupon Note, including
            unearned interest to maturity, if there is a change of control of
            Milestone. Moreover, the warrants previously issued to the
            noteholders were repriced back to the initial exercise price of
            $1.75 per share at the date of grant.

            As a result of the Company restructuring its obligations, the
            unamortized portion of the debt discount was being amortized through
            March 31, 2002. Additionally, the Company incurred $68,300 of
            deferred financing costs, which was being amortized through March
            31, 2002.

            On March 31, 2002, the holders agreed to extend the maturity date up
            to 30 days. Subsequently on April 15, 2002, the holders agreed to
            extend the maturity date to July 1, 2003. In connection with the
            extension, the unamortized debt discount and the deferred financing
            costs will be amortized through July 1, 2003. Accordingly, these
            zero coupon notes including accrued interest has been recorded as
            long-term in the consolidated financial statements.

      $500,000 line of credit:

            On March 9, 2001, the Company obtained from a major existing
            investor, a 10%, $500,000 line of credit, which was to mature on
            August 31, 2002. Additionally, the Company pays a 2% facility fee on
            the line outstanding balance. At the option of the Company, interest
            and the facility fee would have been payable either on (i) August
            31, 2002 in cash, or (ii) quarterly in shares of the Company's
            common stock. In connection with obtaining the line of credit, the
            lender received warrants to purchase 100,000 shares of common stock
            at an exercised price of $1.10. The estimated fair value of the
            warrants, which amounted to $40,000, was recorded as a debt discount
            and was being amortized through August 31, 2002. In addition, the
            Company incurred deferred financing fees of $28,384 which was being
            amortized to August 31, 2002. As of March 31, 2002, the Company has
            drawn down the entire $500,000 from the line of credit. Moreover,
            the line of credit agreement has been amended to allow the Company
            to use funds available under this agreement for general corporate
            purposes. On April 15, 2002, the investor agreed to extend the line
            of credit and payment for interest to August 1, 2003. In connection
            with the extension, the unamortized debt discount and the deferred
            financing costs will be amortized to August 1, 2003. Accordingly,
            the line of credit including accrued interest has been recorded as
            long-term in the consolidated financial statements.


                                       11
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 4 - Notes payable (concluded):

      20% promissory notes:

            In August 2000, the Company borrowed $1,000,000 which consists of
            two loans from two funds managed by Cumberland Associates LLC, and
            bear interest at 20% per year and payable in cash or through the
            issuance of additional 20% notes on which both interest and
            principal are payable. The loans are secured by substantially all
            assets of the Company and are subordinated to the zero coupon notes
            dated, March 16, 2001. The loans are prepayable in cash at any time,
            and are prepayable, with accrued interest, in the Company's common
            stock at the option of the Company after March 31, 2001. Stock
            issued in payment of this debt will be valued at 85% of the then
            market prices. During 2001, the Company converted $222,417 of
            accrued interest into principal. On April 12, 2002, Cumberland
            Associates LLC agreed to extend the maturity date of these loans to
            July 1, 2003. In connection with the extension, the unamortized debt
            discount will be amortized to July 1, 2003. Accordingly, these loans
            have been recorded as long-term debt in the accompanying
            consolidated financial statements.

      8% promissory notes:

            On July 31, 2000, the Company established a $1,000,000 credit
            facility with a major existing investor. Initially, $500,000 was
            borrowed under the line, which was due on June 30, 2003. In December
            2000 and January 2001, the Company borrowed under the credit
            facility an additional $400,000 and $100,000, respectively, due on
            December 31, 2003. In connection with the initial $500,000, the
            investor received five-year warrants to purchase 70,000 shares of
            the Company's common stock, exercisable at $3.00 per share.

            In connection with the $400,000, the investor received five-year
            warrants to purchase 80,000 shares of the Company's common stock
            exercisable at $1.25 per share. In connection with the $100,000, the
            investor received five-year warrants to purchase 20,000 shares of
            the Company's common stock at $1.25 per share. On April 15, 2002,
            the investor agreed to extend the maturity date of the $500,000
            originally due June 30, 2003 to August 1, 2003. Accordingly, in
            connection with the extension, the unamortized debt discount will be
            amortized to August 1, 2003. Accordingly, these loans have been
            recorded as long-term debt in the accompanying consolidated
            financial statements.

      $150,000 promissory note:

            On February 19, 2002, the Company issued a $150,000 promissory note
            to an existing investor. The note bears interest at 8% if paid in
            cash and 10% if paid in stock and matures on August 1, 2002. For the
            three months ended March 31, 2002, interest was accrued at 8%.


                                       12
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 5 - Equity line commitment:

      In January 2001, Milestone entered into a three-year private equity line
      agreement with Hillgreen Investments Limited ("Hillgreen"), a British
      Virgin Islands corporation, pursuant to which Hillgreen is obligated to
      purchase, subject to the fulfillment of specified conditions, up to
      2,100,000 shares of Milestone common stock over the next 36 months.
      Hillgreen has allocated $20,000,000 to fund its purchase obligations. The
      transaction was arranged by Jesup & Lamont Securities Corporation, a New
      York based investment banking firm. Milestone's right to draw upon this
      facility is subject to a number of limitations and conditions, including a
      limitation on the amounts sold to Hillgreen within specified periods.
      Subject to these and other conditions and limitations, Milestone will have
      full control over the timing of any financing under the equity line and is
      under no obligation to sell any shares to Hillgreen. Any shares that are
      sold will be priced at 87.5% of the volume weighted average market price
      of Milestone common stock during a fixed period prior to the sale.
      Milestone has discretion to establish a floor price below which shares
      will not be sold by Milestone to Hillgreen.

Note 6 - Contingencies:

      In March 2001, the Company entered into an advertising agreement with News
      USA, Inc. and Vested Media Partners, Inc. (the "Agreement") to increase
      the awareness of healthcare professionals and the public to the benefits
      of The Wand(R) and the CompuFlo(TM) technologies. Under the Agreement,
      News USA is required to prepare articles and advertisements for the
      Company's products and technologies and place them in newspapers and on
      radio stations. News USA has guaranteed 72,000 media placements during the
      18-month term of the Agreement. In exchange for these services the Company
      granted warrants to purchase 1,171,875 shares of common stock exercisable
      on the following dates and prices over the life of the Agreement; (1)
      $1.28 during the first 18 months, (2) $2.25 during the next nine months
      and (3) $3.00 during the next nine months.

      The Agreement provides for a termination clause in the fourth month if the
      Company's average closing stock price does not exceed $2.25 during the
      first ten days of the fourth month provided that the Company has received
      24,000 publications. Accordingly, the remaining two-thirds of the warrants
      to purchase the Company's common stock would not become exercisable.
      However, the vendor can recommence producing the publications whenever the
      Company's average closing stock price for a ten day period exceeds $2.25.
      At the end of the ninth month at the option of the vendor, if the
      Company's stock price has not averaged $2.25 for a ten day period, the
      Agreement can be terminated and, accordingly, two-thirds of the warrants
      remaining to purchase the Company's common stock will be forfeited or the
      vendor could resume fulfilling one-half of its obligation in three months
      and the remaining obligation in the next six months.


                                       13
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 6 - Contingencies (concluded):

      As of March 31, 2002, the Company recorded unearned advertising cost of
      $324,218 which represents the estimated fair value of the 390,625 of the
      warrants for one-third of the total warrants granted based on the 24,000
      minimum placements. The unearned advertising costs of $302,820 at March
      31, 2002 will be amortized as publications are received by the Company
      over the minimum placements. During the three months ended March 31, 2002
      the Company did not received any publications. The estimated fair value of
      the remaining warrants to purchase 781,250 of the Company's common stock
      have not been recorded in the Company's consolidated financial statements
      due to the likelihood that the Agreement will not be fulfilled.


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<PAGE>

ITEM 2. Management's Discussion and Analysis or Plan of Operations

Summary of Significant Account Policies

      Our discussion and analysis of our financial condition and results of
      operations are based upon our consolidated financial statements, which
      have been prepared in accordance with accounting principles generally
      accepted in the United States of America. The preparation of these
      consolidated financial statements requires us to make estimates and
      judgments that affect the reported amounts of assets, liabilities,
      revenues and expenses, and related disclosure of contingent assets and
      liabilities. On an on-going basis, we evaluate our estimates, including
      those related to accounts receivables, inventories, advances to its
      contract manufacturer, stock based compensation and contingencies. We base
      our estimates on historical experience and on various other assumptions
      that are believed to be reasonable under the circumstances, the results of
      which form the basis for making judgments about the carrying values of
      assets and liabilities that are not readily apparent from other sources.
      Actual results may differ from those estimates under different assumptions
      or conditions.

Three months ended March 31, 2002 compared to three months ended March 31, 2001

Overview

      During the three months ended March 31, 2002, Milestone reduced its net
      loss to its lowest levels since the first quarter of 1998. In addition,
      average monthly cash used from operations fell below $50,000, new
      financing of $150,000 was obtained, a national hair restoration provider
      agreed to equip its offices with the CompuMed(TM), and the U.S. Patent
      Office granted a Notice of Allowance for broad patent protection of a new
      safety engineered needle technology to be issued to the Company.
      Subsequent to March 31, 2002, Milestone signed an agreement for the
      distribution of CompuDent(TM) in the Eastern U.S. and completed a
      comprehensive debt restructuring program which totaled $4.1 million. The
      program included equity conversions and deferrals of certain payables
      until January 2, 2003 and a restructuring of all debt originally maturing
      in 2002.

Statement of Operations

      Net sales for the three months ended March 31, 2002 and March 31, 2001
      were $1,021,588 and $1,262,371, respectively. The $240,783 or 19.1%
      decrease is attributable primarily to an approximate $130,000 decrease in
      sales to foreign distributors and a $170,000 decrease in sales of
      CompuDent(TM). The decrease is partially offset by CompuMed(TM) sales of
      approximately $32,800 for the quarter ended March 31, 2002 and a 1%
      increase in domestic sales of The Wand(R) handpiece. The decrease in
      foreign revenue is due to an initial stocking order in 2001 by the
      Company's European distributor. The lower CompuDent(TM) sales in the U.S.
      ($267,000 vs. $398,000) is the direct result of the downsizing of the
      Company's sales and marketing effort. In March 2001, the Company began
      transitioning from a direct sales force to an independent sales force
      which the Company is anticipating will have a positive impact on its
      sales and help control selling expenses.


                                       15
<PAGE>

      Cost of sales for the three months ended March 31, 2002 and March 31, 2001
      were $466,015 and $571,837, respectively. The $105,822 decrease is
      attributable primarily to lower foreign and domestic unit sales volume.

      For the three months ended March 31, 2002, the Company generated a gross
      profit of $553,573 or 54.4% as compared to a gross profit of $690,534 or
      54.7% for the three months ended March 31, 2001.

      Selling, general and administrative expenses for the three months ended
      March 31, 2002 and 2001 were $897,276 and $1,813,548, respectively. The
      $916,272 decrease is attributable primarily to an approximate $567,000
      decrease in expenses associated with the sale and marketing of The Wand(R)
      technology due to the transitioning of its sales force to independent reps
      and an approximate $201,000 decrease in legal fees. In addition, during
      the first quarter of 2001, the Company issued 92,308 shares for services
      rendered with a value of $150,000 in non-cash compensation for consulting
      services. The Company had incurred additional legal expenses in 2001 due
      to equity and advertising agreements; medical patent registrations; and
      additional patents on The Wand(R) and CompuFlo(TM) technologies.

      Research and development expenses for the three months ended March 31,
      2002 and March 31, 2001 were $30,295 and $18,718, respectively. The
      $11,577 increase is the result of higher costs incurred during the first
      quarter of 2002, which were associated with the development of the
      Company's safety needle.

      The loss from operations for the three months ended March 31, 2002 and
      2001 were $371,998 and $1,141,732, respectively.

      The Company incurred interest expense of $172,213 for the three months
      ended March 31, 2002 as compared to $195,015 of interest expense for the
      same period for calendar 2001. Although the Company's average borrowings
      are higher in 2002, the decrease is attributable to a $68,400 reduction in
      the amortization of the debt discount and deferred financing costs which
      is associated with the detachable warrants from the financing described
      below.

      The net loss for the three months ended March 31, 2002 was $520,211 as
      compared to a net loss of $1,335,323 for the quarter ended March 31, 2001.
      The $815,112 decrease in net loss is attributable to lower overhead
      partially offset by a decrease in foreign sales volume and a decrease in
      domestic unit sales.

Liquidity and Capital Resources

      At March 31, 2002, Milestone had $28,504 in cash and a working capital
      deficiency of $952,047. For the three months ended March 31, 2002, the
      Company increased cash by $12,762.

      For the three months ended March 31, 2002, the Company's net cash used in
      operating activities was $136,054. This was attributable primarily to a
      net loss of $520,211, adjusted for noncash items of $26,614 for
      amortization of debt discount and deferred financing costs and $12,203 for
      depreciation; a $5,943 increase in accounts receivable; a $39,195 decrease
      in inventory; a $52,308 decrease in advances to contract manufacturer; a
      $18,980 increase in prepaid expenses; an increase in other assets of $596;
      an increase in


                                       16
<PAGE>

      accrued expenses of $63,467; a $145,599 increase in accrued interest; a
      $9,690 decrease in accounts payable; and an $80,000 increase in deferred
      compensation.

      For the three months ended March 31, 2002, the Company used $1,184 in
      investing activities for capital expenditures.

      For the three months ended March 31, 2002, the Company generated $150,000
      from financing activities as it issued a promissory note to an existing
      investor.

      As of March 31, 2002, Milestone had $28,504 in cash and a working capital
      deficiency of $952,047. The working capital deficiency includes $583,966
      in obligations due on January 3, 2003 which consists of $272,866 of
      accounts payable to a law firm where one of its partners is on the
      Company's Board of Directors; a $200,000 note payable to Milestone's CEO;
      $31,100 of accrued interest relating to the note payable; and $80,000 of
      deferred compensation to the CEO.

      As listed below, several steps have been taken to improve liquidity and
      meet Milestone's working capital needs:

                  In January 2002, Milestone issued 33,840 units in exchange for
                  payment of accrued interest totaling $27,072. In addition, the
                  Company issued 614,183 units issued to its CEO in
                  consideration for payment of $491,346 in deferred
                  compensation. Each unit consisted of one share of common stock
                  and one warrant to purchase an additional share of common
                  stock.

                  On February 19, 2002, the Company issued a $150,000 promissory
                  note to an existing investor. The note bears interest at 8% if
                  paid in cash and 10% if paid in stock and matures on August 1,
                  2002.

                  On March 28, 2002, the Company entered into an agreement with
                  a vendor to issue a total of 187,500 units for payment on
                  accounts payable of $93,924 and for future services of $56,076
                  aggregating $150,000. Each unit consisted of one share of
                  common stock and one warrant to purchase an additional share
                  of common stock. As of March 31, 2002, the common stock has
                  yet to be issued. Accordingly, the $93,924 payable to the
                  vendor has been recorded as long-term.

      On March 29, 2002, the Company entered into the following agreements for:

            o     Deferring payment on accounts payable to a related party
                  totaling $272,866 at December 31, 2001 until January 2, 2003.

            o     Extending the maturing date of its $200,000 obligation and
                  accrued interest of $26,600 as of December 31, 2001, to its
                  CEO until January 2, 2003.

            o     Deferring payment on $320,000 of the CEO's $350,000 salary
                  until January 2, 2003.

            o     Establishing a 6% $100,000 line of credit with its CEO through
                  January 2, 2003, payable on April 2, 2003.

      On March 31, 2002, the senior secured zero coupon 20% promissory notes
      were originally due. On March 31, 2002, the Company obtained the required
      consents from the senior secured zero coupon 20% promissory noteholders
      whose outstanding face value (principal plus accrued interest) was
      collectively greater than 80% of the total outstanding face value of the
      obligations to extend the maturity date up to 30 days.


                                       17
<PAGE>

      On April 12 and April 15, 2002, the Company entered into the following
      agreements with existing noteholders:

            o   The Company received the required consents from the senior
                  secured zero coupon 20% promissory noteholders whose
                  outstanding face value (principal plus accrued interest) was
                  collectively greater than 80% of the total outstanding face
                  value of the obligation and the following occurred: (1) the
                  notes were extended to July 1, 2003 and (2) the interest rate
                  was reduced to 6% if paid in cash or reduced to 12% if paid in
                  common stock. Additionally, at the option of the Company, the
                  face value on the maturity dates will be payable either in
                  cash or in the Company's common stock, valued at the average
                  closing price per share for the five trading dates prior to
                  July 1, 2003. Furthermore, for the holders who had given their
                  consent, the Company will issue to these holders shares of
                  the Company's common stock with a value of $120 for each
                  $1,000 face amount outstanding at maturity.
            o   Extending the 20% promissory notes to July 1, 2003 and
                  lowering the interest rate from 20% to 6% if paid in cash or
                  to 12% if paid in common stock.
            o   Extending the 8% $500,000 promissory note to August 1, 2003.
            o   Extending the 10% line of credit for $500,000 to August 1,
                  2003.
            o   Establishing a 6% $200,000 line of credit with an existing
                  investor through January 2, 2003.
            o   Allowing the Company to issue additional unsecured debt so
                  long as the maturity date is subsequent to August 1, 2003.

      In addition, the Company has a equity line of commitment through January
      1, 2004 to sell up to 2,100,000 shares of its common stock. At March 31,
      2002, the maximum proceeds that the Company would receive would be
      approximately $1,400,000 under the equity line.

      OPERATIONS

      The Company believes that CompuDent(TM), CompuMed(TM) and The Wand(R)
      technology represents a major advance in the delivery of local anesthesia
      and that the potential applications of this technology extends beyond
      dentistry. Based on scientific and anecdotal support, the Company contends
      that CompuMed(TM) could enhance the practices of the estimated 90,000 U.S.
      based physicians included in such non-dental disciplines as Podiatry, Hair
      Restoration Surgery, Plastic Surgery, Dermatology, colorectal surgery and
      procedures in Orthopedics, OB-GYN and Ophthalmology.

      Despite limited resources, the Company has continued its efforts to
      realize the market potential of The Wand(R) and become profitable. These
      steps include (i) relaunching of The Wand Plus(TM) drive unit
      domestically, under the name CompuDent(TM), (ii) distribution of
      CompuDent(TM) through a host of channels (i.e. independent sales
      representatives, an inside sales group and a major dental distributor),
      (iii) launching The Wand Plus(TM) drive unit for medical purposes and
      marketing it as CompuMed(TM), (iv) increasing presence at medical trade
      shows, (v) advertising to increase the awareness of the product, (vi)
      implementing cost reduction programs, and (vii) restructuring certain
      outstanding obligations.

      Management believes that the above steps are critical to the realization
      of Milestone's long-term business strategy. In March 2002, Milestone
      announced an agreement whereby Medical Hair Restoration ("MHR") will equip
      each of its 21 Surgery centers in the U.S. with CompuMed(TM).


                                       18
<PAGE>

Subsequent Events

      Notice of Allowance

      In April 2002, Milestone announced that the United States Patent Office
      has granted a Notice of Allowance for broad patent protection of a new
      safety engineered needle technology to be issued to Milestone. When
      commercialized, this new technology will be used with a plethora of
      infusion devices, including the Company's CompuDent(TM) and CompuMed(TM)
      computer controlled local anesthetic delivery systems as well as the
      CompuFlo(TM), an enabling technology for computer controlled infusion,
      perfusion, suffusion and aspiration of fluids. It provides features
      previously unavailable to medical and dental practitioners; fully
      automated true single-handed activation with needle anti-deflection and
      force-reduction capability. In addition, practitioners can re-use this
      safety engineered device repeatedly during a single patient session making
      it highly functional in a wide variety of medical and dental applications.

      In light of the recent Federal Needlestick and Safety Prevention Act,
      signed into law in November, 2000, requiring preventative measures that
      employers must make available in use of sharps "with engineered sharps
      injury protection features" this technology becomes highly relevant.
      Federal and state legislation mandate the use of these devices to reduce
      the risk to healthcare workers of occupational exposure to HIV, Hepatitis
      C and other diseases. The term "Sharps with Engineered Sharps Injury
      Protection" is defined as a needle device used for administering
      medications or other fluids, with a built-in safety feature or mechanism
      that effectively reduces the risk of an exposure incident.

      Independent Clinical Study

      In April 2002, Milestone announced acceptance of an independent clinical
      study concluding that use of Milestone's computer controlled local
      anesthetic delivery technology in nasal and sinus surgery produced a
      "safe, acceptable, tolerable, and cost effective method of sedating
      patients creates a sense of security and adds to the ultimate satisfaction
      associated with nasal surgery." The study also concluded "Recovery room
      and expensive hospital costs are avoided, making nasal surgery more
      affordable and within reach of a greater range of potential nose surgery
      patients." One of the study's authors, Dr. Pieter Swanepoel, a
      world-renowned surgeon, presented his study at the 8th International
      Symposium of the Academy in New York City in May 2002.

      According to Dr. Swanepoel, "The conscious sedation produced using
      Milestone's equipment requires an absolute minimum of drugs to simulate a
      natural sleep process. Surgery can be done as an outpatient procedure as a
      result of a substantially shorter recovery period, allowing patients to
      return home with minimal aftereffects. This permits the patient to fully
      recover at home with minimal aftereffects. The new procedure reduces
      unnecessary bleeding since, unlike general anesthesia, it does not
      stimulate the sympathetic nervous system causing an increase in pulse rate
      and blood pressure. The modified anesthesia technique using Milestone's
      technology allows us to focus on the tissue around the nose, reduces
      post-operative swelling and promotes healing."

      The new technique is an adaptation of similar regional nerve blocking
      techniques used by dental surgeons and replaces the need for costly and
      invasive general anesthesia. Dr. Swanepoel in conducting his research used
      pre-production prototypes of our CompuFlo(TM) system, since it allowed him
      to measure flow rate and tissue pressure and


                                       19
<PAGE>

      determine parameters for optimal results. The core technology embodied in
      the CompuMed(TM) unit may be used to deliver local anesthesia within the
      parameters ascertained by Dr. Swanepoel to produce optimal results and
      then achieve conscious sedation in nasal surgery.

      Dental Distribution Agreement

      In May 2002, Milestone signed an agreement with Benco Dental under which
      Benco Dental will distribute CompuDent(TM) through their direct sales
      organization. Benco has the right to become the exclusive dental
      distributor in selected states within the United States if it achieves
      certain sales objectives.

      With 21 regional showrooms, over 200 sales representatives and sales in
      excess of $200 million, Benco Dental serves over 20,000 customers in 18
      states, making them one of the leading distributors of high tech large and
      small dental equipment, including delivery systems, chairs, digital x-rays
      and air abrasion units, in the Eastern United States.

      Milestone will provide initial sales and product training to the entire
      Benco sales organization in May. Following these initial training
      sessions, Milestone will support this effort through "Dealer Managers and
      Technical Support Specialists."


                                       20
<PAGE>

ITEM 6.     Exhibits and Reports on Form 8-K

            (a)   Exhibits:                     (b)   Reports on Form 8-K:

                  None                                None


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<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned

                                         MILESTONE SCIENTIFIC INC.
                                                   Registrant


                                         /s/ Leonard Osser
                                         ---------------------------------------
                                         Leonard Osser Chairman and
                                         Chief Executive Officer


                                         /s/ Thomas M. Stuckey
                                         ---------------------------------------
                                         Thomas M. Stuckey, Vice President and
                                         Chief Financial Officer

Dated: May 17, 2002


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