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, 1999
---------------------------------------------

                                       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
  of 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) 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 |_|

As of May 14, 1999 the Registrant had a total of 8,717,882 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>

                                      INDEX

PART I.      FINANCIAL INFORMATION                                         Page

     ITEM 1. Condensed Consolidated Financial Statements (unaudited)

             Condensed Consolidated Balance Sheets at March 31,
             1999 and December 31, 1998                                      4

             Condensed Consolidated Statements of Operations
             for the three months ended March 31, 1999 and 1998              5

             Condensed Consolidated Statements of Cash Flows
             for the three months ended March 31, 1999 and 1998              6

             Notes to Condensed Consolidated Financial Statements            7

     ITEM 2. Management's Discussion and Analysis of Financial
             Condition and Results of Operations                            13

PART II. OTHER INFORMATION

     ITEM 6. Exhibits and Reports on Form 8-K                               16

SIGNATURES                                                                  17


                                       3
<PAGE>

                          Part 1. Financial Information

ITEM 1. Condensed Consolidated Financial Statements

                   Milestone Scientific Inc. and Subsidiaries
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                       March 31          December 31
                                                                                         1999                1998
                                                                                    -------------        ------------
<S>                                                                                  <C>                 <C>       
                 ASSETS
CURRENT ASSETS
   Cash and cash equivalents                                                          $2,442,234            $316,706
   Investments - treasury bills                                                        1,750,000           3,267,940
   Accounts receivable                                                                   540,769             430,907
   Inventories                                                                         1,630,124           1,255,262
   Prepaid expenses                                                                      178,144             127,263
                                                                                     -----------          ----------
               Total current assets                                                    6,541,271           5,398,078

PROPERTY AND EQUIPMENT, NET                                                            1,972,181           2,031,870
PATENTS                                                                                1,675,136           1,736,275
OTHER ASSETS                                                                              29,391              29,997
                                                                                     -----------          ----------
                                                                                     $10,217,979          $9,196,220
                                                                                     ===========          ==========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Line of credit - bank                                                                 $200,000            $150,000
  Accounts payable                                                                       855,641             544,705
  Accrued expenses                                                                       144,947             165,302
                                                                                     -----------          ----------
               Total current liabilities                                               1,200,588             860,007
                                                                                     -----------          ----------
SENIOR CONVERTIBLE NOTES

STOCKHOLDERS' EQUITY                                                                   2,250,000
                                                                                     -----------          ----------
Common stock, par value $.001; authorized,
  25,000,000 shares; 8,817,822 issued as of March 31,
  1999 and December 31, 1998                                                               8,818               8,818
Additional paid-in capital                                                            30,111,734          30,111,734
Accumulated deficit                                                                  (22,441,645)        (20,872,823)
Treasury stock, at cost, 100,000 shares                                                 (911,516)           (911,516)
                                                                                     -----------          ----------
                Total stockholders' equity                                             6,767,391           8,336,213
                                                                                     -----------          ----------
                Total liabilities and stockholders' equity                           $10,217,979          $9,196,220
                                                                                     ===========          ==========
</TABLE>

The accompanying notes are an integral part of these statements


                                       4
<PAGE>

                   Milestone Scientific Inc. and Subsidiaries

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      For the three months ended March 31,
                                   (unaudited)

                                                          1999           1998
                                                      -----------    -----------

        Revenues                                         $668,170     $5,260,149
        Cost of sales                                     499,314      2,681,891
                                                      -----------    -----------
        Gross profit                                      168,856      2,578,258
                                                      -----------    -----------
        Selling, general and                            1,688,464      2,259,491
            administrative expenses                        68,846        130,167
                                                      -----------    -----------
        Research and development expenses               1,757,310      2,389,658
                                                      -----------    -----------
              Income (loss) from operations            (1,588,454)       188,600

        Interest income (net)                              19,632        169,479
                                                      -----------    -----------
                NET INCOME (LOSS)                     $(1,568,822)      $358,079
                                                      ===========    ===========

        Income (loss) per share - basic and diluted         $(.18)          $.04
                                                      ===========    ===========
        Weighted average shares outstanding             8,717,882      8,733,373
                                                      ===========    ===========

See notes to consolidated financial statements.


                                       5
<PAGE>

                   Milestone Scientific Inc. and Subsidiaries
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                      For the three months ended March 31,
                                   (unaudited)

<TABLE>
<CAPTION>
                                                            1999           1998
                                                        -----------    -----------
<S>                                                     <C>            <C>        
Cash flows from operating activities                    
  Net income (loss)                                     $(1,568,822)   $   358,079
  Adjustments to reconcile net loss to
  net cash used in operating activities
     Amortization                                            61,139         61,138
     depreciation                                           118,314         49,122
     Compensation expense                                                   94,805
     Changes in assets and liabilities
          Other assets                                          606            326
          Accounts receivable                              (109,862)    (3,432,126)
          Inventories                                      (374,862)       417,922
          Prepaid expenses                                  (50,881)      (138,077)
          Accounts payable                                  310,936        733,964
          Accrued expenses                                  (20,355)       421,305
                                                        -----------    -----------
   Net cash used in operating activities                 (1,633,787)    (1,433,542)
                                                        -----------    -----------
Cash flows from investing activities                     
   Capital expenditures                                     (58,625)    (1,658,099)
   Sale and (purchase) of treasury bills, net             1,517,940     (2,055,722)
                                                        -----------    -----------
  Net cash provided by (used in) investing activities     1,459,315     (3,713,821)
                                                        -----------    -----------
Cash flows from financing activities
  Net proceeds from issuance of senior notes              2,250,000
  Net proceeds from issuance of common stock                             1,042,284
  Borrowing (repayment) under line of credit                 50,000        (25,000)
                                                        -----------    -----------
  Net cash provided by financing activities               2,300,000      1,017,284
                                                        -----------    -----------
NET (DECREASE) INCREASE IN CASH
  AND CASH EQUIVALENTS                                    2,125,528     (4,130,079)

Cash and cash equivalents at beginning of period            316,706      9,775,019 
                                                        -----------    ----------- 
Cash and cash equivalents at end of period              $ 2,442,234    $ 5,644,940
                                                        ===========    ===========
Supplemental disclosures of cash flow information:
  Cash paid during the period for interest              $     3,931    $     4,841
                                                        -----------    -----------
</TABLE>

See notes to consolidated financial statements.


                                       6
<PAGE>

                   Milestone Scientific Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1999

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

      The unaudited interim financial statements of Milestone Scientific Inc.
      and Subsidiaries (the "Company") have been prepared in accordance with
      generally accepted accounting principles for interim financial
      information. Accordingly, they do not include all of the information and
      footnotes required by generally accepted accounting principles 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,
      1998 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, 1998 financial statements.

      In the opinion of the Company, the accompanying unaudited financial
      statements contain all adjustments (consisting of normal recurring
      entries) necessary to present fairly the financial position as of March
      31, 1999 and the results of operations for the three month period ended
      March 31, 1999 and March 31, 1998 and cash flows for the three month
      period ended March 31, 1999 and 1998, respectively.

      The results reported for the three month period ended March 31, 1999 are
      not necessarily indicative of the results of operations, which may be
      expected for a full year.

NOTE 2 - REALIZATION OF ASSETS

      The accompanying financial statements have been prepared in conformity
      with generally accepted accounting principles, which contemplate
      continuation of the company as a going concern. However, the Company has
      sustained substantial losses from operations after the introduction of its
      Wand(TM) product, and has experienced significant returns of this product
      subsequent to its first fiscal quarter in 1998. In addition, the Company
      has used, rather than provided, cash in its operations during the
      three-month period ended March 31, 1999.

      In view of the matters described in the preceding paragraph,
      recoverability of a major portion of the recorded asset amounts shown in
      the accompanying balance sheet is dependent upon continued operations of
      the Company, which in turn is dependent upon the success of the Company's
      Wand(TM) product. The financial statements do not include any adjustments
      relating to the recoverability and classification of recorded asset
      amounts or amounts and classification of liabilities that might be
      necessary should the Company be unable to continue in existence.

      Based on management's belief that The Wand(TM), is a major advance in
      dentistry and may ultimately become the accepted method for delivering
      local dental anesthesia, the Company is taking steps that are aimed at
      growing and strengthening the end user base thereby gaining greater
      acceptance of The Wand(TM) and translating to increased revenue through
      higher disposable handpiece usage. These steps include a) expanding the
      market oversees, 


                                       7
<PAGE>

      b) obtaining feedback and providing further support to current Wand users,
      c) increasing the number of dental schools which include The Wand(TM) in
      their curriculum, d) distributing new The Wand(TM) technique video and
      technical bulletins to its current users, e) conducting direct to patient
      advertising with specialized sales effort in test markets and f)
      maintaining a well trained service staff.

      As of March 31, 1999, the Company had approximately $4.2 million in
      aggregate cash, cash equivalents and treasury bills. Management believes
      that through the proper utilization of these existing funds and the
      expense reductions achieved through cost containment programs, it will
      have sufficient cash to meet its needs over the next twelve months.

NOTE 3 - LOSS PER SHARE

      Basic loss per common share is computed using the weighted average number
      of common shares outstanding. Diluted loss per common share is computed
      using the weighted average common shares outstanding after giving effect
      to potential common stock from stock options based on the treasury stock
      method, plus any other potentially dilutive securities outstanding, unless
      the effect is anti-dilutive.

      For the three months ended March 31, 1999 and 1998, the assumed exercise
      of certain dilutive options and warrants were anti-dilutive. Accordingly,
      basic and diluted loss per share is based on the weighted average common
      shares outstanding.

      Options and warrants, in aggregate, to purchase 83,000 shares of common
      stock at $3 per share were issued in aggregate to one officer and certain
      key personnel during the three month ended March 31, 1999 but were not
      included in the computation of diluted loss per share because effect would
      have been anti-dilutive.

      Options and warrants, in aggregate, to purchase 157,000 shares of common
      stock at prices ranging from $21.25 to $23 per share were issued during
      the quarter ended March 31, 1998 but were not included in the computation
      of diluted earnings per share because their exercise price was greater
      than the average market price of the common shares.

      During the three months ended March 31, 1998 options and warrants to
      purchase 131,722 shares of common stock were exercised at prices ranging
      from $4.72 to $9 for which the company realized proceeds of $1,042,277

NOTE 4 - STOCK BASED COMPENSATION

      On January 15, 1999 the Company issued 83,000 options to certain of its
      employees having an exercise price of $3.00 which expire on January 15,
      2004. In accordance with the proforma disclosure requirements of Statement
      of Financial Accounting Standards No. 123, Accounting for Stock Based
      Compensation, the total estimated fair value of the options (using the
      Black-Scholes Option Pricing Model) was $154,000, which is amortized over
      the related 3 year vesting period of these options. Accordingly, for the
      quarter ended March 31, 1999, the issuance of these options would have
      increased the net loss by $38,818 and have no effect on the loss per
      common share.


                                       8
<PAGE>

NOTE 5 - LITIGATION

      Spinello Lawsuits

      On March 26, 1997, Milestone and Spintech commenced legal action in the
      United States District Court of New Jersey against Ronald Spinello, DDS,
      former Chairman and Director of Research of Spintech. In the complaint,
      plaintiffs seek recovery of compensatory and punitive damages for
      extortion and tortuous interference with existing and prospective contract
      and business relationships, a declaratory judgment that Dr. Spinello has
      no personal rights to certain technology developed while he was employed
      as Director of Research of Spintech relating to the design and production
      of ancillary components of its computer controlled local anesthetic
      delivery system, a declaratory judgment that plaintiffs have not breached
      Dr. Spinello's employment agreement or the agreement for the initial
      purchase by Milestone of a 65% equity interest in Spintech and injunctive
      relief. On May 21, 1997, Dr. Spinello filed an answer and counterclaim
      which denies the material allegations of the complaint and seeks recovery
      for breach of the defendant's employment agreement, initiates a derivative
      action against Milestone with respect to various expenditures and actions
      for which Defendant, on behalf of Spintech, seeks an amount in excess of
      $75,000, alleges civil conspiracy against Milestone with respect to
      certain of those matters and the entry into the employment agreement with
      Defendant and seeks indemnification for expenses, including attorneys
      fees, in the pending action. On May 25, 1997, the Company filed a reply to
      counterclaims which denied all of the material allegations of the
      counterclaims. On December 30, 1997, Dr. Spinello made a motion for leave
      to join as an additional Defendant on Counterclaim the Company's Chairman,
      Leonard Osser, and to file an amended Answer and Counterclaim against the
      Company. Both the Company and Mr. Osser opposed the motion and in
      addition, the Company made a Cross-Motion to dismiss certain claims
      asserted in the initial Answer and Counterclaim. The additional claims
      which Dr. Spinello sought to assert against the Company include a fraud in
      the inducement claim based upon the alleged failure of the Plaintiffs to
      advise Dr. Spinello of the legal effects of his employment agreement; and
      a civil conspiracy claim. Dr. Spinello also sought to add a jury demand
      through his amended pleading. The Company's Cross-Motion sought to dismiss
      all of Dr. Spinello's claims, except his claim for unpaid salary, on the
      basis that his derivative claim is fatally defective because he did not
      make any demand upon Spintech, the entity on whose behalf he purports to
      bring suit, and his indemnification claim is fatally defective because the
      claims against him do not arise by reason of the fact that Dr. Spinello
      was an officer or director of Spintech.

      On May 5, 1998, the United States Magistrate Judge issued a Report
      recommending that the Court grant Milestone's motions to dismiss the
      counterclaims brought by defendant Spinello for a shareholder's derivative
      action and civil conspiracy, finding that defendant Spinello had failed
      "to state a claim upon which relief may be granted." The Report also
      recommended that the Court dismiss defendant Spinello's counterclaim for
      indemnification against Milestone and a portion of the indemnification
      claim against Spintech. In a second decision, the Magistrate Judge denied
      defendant Spinello's motion to join Milestone's Chairman as an additional
      party and to file an amended answer asserting revised and additional
      counterclaims against Milestone and Spintech. The Magistrate Judge
      determined that defendant Spinello's proposed amended counterclaims "are
      futile and could not withstand a motion to dismiss under federal rule of
      civil procedure 12(b)(6)". Defendant Spinello timely filed an appeal 


                                       9
<PAGE>

      from the May 5, 1998 Order and objections to the Report. On August 24,
      1998, a United States District Judge for the District of New Jersey issued
      a memorandum opinion and signed an Order denying Dr. Spinello's appeal of
      the May 5, 1998 Order and affirming the May 5, 1998 Order in its entirety.
      The Judge further denied in its entirety Dr. Spinello's objections to the
      Report and granted the Company's motion to dismiss counts one, two, three
      and four of Dr. Spinello's initial Counterclaim.

      As a result of the affirmance of the May 1998 Order and the adoption of
      the Report granting the Company's motion to dismiss, the only claims
      remaining in the litigation with Dr. Spinello are Milestone's claims
      against Dr. Spinello and Dr. Spinello's counterclaim for unpaid salary for
      the period subsequent to his alleged wrongful termination, and a portion
      of his indemnification claim against Spintech.

      In October 1998, the Company received a settlement demand from Counsel for
      Dr. Spinello and Glenn Spinello which stated that, notwithstanding the
      United States District Judge's decision, substantial claims remain to be
      litigated and that there are substantial risks to Milestone from this
      litigation. The settlement demand letter, which was not accepted by the
      Company, does not describe the nature of any claims that Dr. Spinello
      could assert against the Company, but it does allude to potential
      litigation in other forums and the possibility of future litigation
      brought by minority stockholders of the Company. If Dr. Spinello does seek
      to assert additional claims, or if minority stockholders should assert
      claims, against the Company, the Company intends to vigorously defend such
      claims and believes that it has meritorious defenses thereto.

      On March 5, 1999, the parties completed discovery. On April 15, 1999, the
      parties made various dispositive motions for summary judgment on almost
      all of the issues remaining in the case. The motions are scheduled to be
      heard by the Court on June 14, 1999. If the motions for summary judgment
      are not granted, the Court will hold a trial on any remaining issues in
      late 1999. The Company believes that it has meritorious defenses to Dr.
      Spinello's claims and meritorious claims against Dr. Spinello. Moreover,
      Milestone has been advised by its patent counsel that all technology
      developed by Dr. Spinello while employed by Spintech is owned by Spintech.
      The Company believes that ownership of the technology relating to these
      ancillary components which are the subject of this litigation in no way
      prevents the manufacture and sale of its anesthetic delivery system at
      economically viable prices.

      On May 20, 1997, Glenn R. Spinello filed a Complaint in the Court of
      Common Pleas, York County, Pennsylvania seeking damages as a result of the
      alleged breach of his Employment Agreement. On June 20, 1997, the Company
      and Spintech filed a notice of Removal which transferred venue of Glenn
      Spinello's lawsuit to the United States District Court for the Middle
      District of Pennsylvania. On June 27, 1997, the Company and Spintech filed
      an Answer to Glenn Spinello's Complaint which denied the material
      allegations of the Complaint and asserted counterclaims based upon Glenn
      Spinello's breach of his Employment Agreement. On July 27, 1997, Glenn
      Spinello filed a reply to the counterclaims by the Company and Spintech,
      denying the material allegations of the counterclaims. On March 16, 1999,
      the parties completed discovery. On April 16, 1999, Glenn Spinello made a
      motion for summary judgment on his claims against the Company, and on May
      3, 1999 the Company filed its opposition thereto. If the motion is denied,
      the case should be scheduled 


                                       10
<PAGE>

      for trial in late 1999. The Company believes it has meritorious defenses
      to Glenn Spinello's claims and meritorious counterclaims against Glenn
      Spinello.

      Class Action Lawsuit

      In 1998, several class action lawsuits were commenced against the Company,
      certain present and former executive officers, one outside director and
      consultants in the United States District Court for the District of New
      Jersey. The District Judge before whom the cases are pending has entered
      an order consolidating all of the class actions into one consolidated
      action. The Complaints contain generally overlapping and similar
      allegations of violations of the Securities Exchange Act of 1934,
      including allegations that the Company and certain of the other defendants
      violated the Act by issuing false and misleading financial statements and
      disseminating misleading statements about, among other things, the demand
      for the Company's principal product, its expected sales growth, the
      acceptance of that product by dental professionals, shipments during
      certain time periods and misrepresentations as to third-party evaluations
      of the efficacy of the product through failure to disclose the issuance of
      stock options to certain consultants. On October 22, 1998, the District
      Judge entered an order appointing lead plaintiff to represent the
      interests of all class members. On March 28, 1999, the District Judge
      appointed lead counsel to represent the class. On April 28, 1999, the
      class filed a consolidate and amended class action complaint, naming as
      defendants the Company and three present and former executive officer and
      director. The Consolidated Complaint alleges that the Company issued false
      and misleading statements concerning, among other things, certain studies
      and reports on the Company's products, the Company's backlog and the
      amount of reserve taken for returns. Milestone believes that the material
      allegations of the Consolidated Complaint does not state a cause of action
      under the Federal Securities Law and intends to move to dismiss the
      complaint for failure to state a claim. To the extent that the Court does
      not dismiss the complaint at this early stage, Milestone intends to
      vigorously defend against the Class Action. Specifically, Milestone
      believes that its financial statements presents fairly its results of
      operations, that the information which it has publicly disclosed does not
      contain any material misstatements or misrepresentations and that stock
      options issued to persons who published research reports were issued for
      other services for the Company, principally service as spokespersons and
      demonstrators of the Company's product. Further, the Company continues to
      believe that The Wand(TM) embodies superior technology, is a major advance
      in dentistry and may ultimately become the accepted method for delivering
      local dental anesthesia.

      Derivative Action Lawsuit

      In February 1999, a purported owner of Milestone stock, had commenced a
      derivative action on behalf of the Company, in the Court of Chancery of
      the State of Delaware in Newcastle County, against certain present and
      former executive officers and directors. In the action, plaintiff alleges
      that, based on the same facts as the class actions described above, the
      defendants engaged in violations of the securities laws, committed fraud
      and securities fraud, wasted corporate assets and damaged the Company's
      reputation. As a derivative action, even if the plaintiff is successful,
      any award, after deduction of plaintiff's costs and disbursements, would
      be payable to the Company. Nevertheless, Milestone believes that the
      material allegations of the complaint lack merit and intends to provide a
      legal defense for its present 


                                       11
<PAGE>

      and former officers and directors in accordance with the indemnification
      provisions of its Certificate of Incorporation.

      Insurance Broker and Carrier

      In January 1999, the Company filed a complaint against its insurance
      broker (Frank Crystal Financial Services) and the two excess insurers
      [American Alliance and St. Paul] in the United States District Court for
      the District of New Jersey. American Alliance and St. Paul were in dispute
      with the Company because they claim that the Company did not timely submit
      the appropriate application. As a result, American Alliance refused to
      issue a policy and St. Paul, which issued a policy, has refused to cover
      the class actions described above. In April 1999, the Company reached a
      settlement of this action, as a result of which American Alliance issued
      the Excess Director's and Officer's Insurance Policy; the Company agreed
      that claims arising prior to the date of the policy were not covered by
      the policy and the parties reserved all of their arguments and positions
      with respect to any other coverage issues including those that resulted
      from the Consolidated and Amended Class Action Complaint referred to
      above.

NOTE 6 - EMPLOYEE BENEFIT PLANS

      In January 1999, the Company offered to all full-time employees, a Board
      approved 401K plan. The plan allows eligible employees to contribute into
      specified investments vehicle 2% to 15% of their before tax salaries, (up
      to the IRS limit). Although the plan does not contain any mandatory
      matching provision, it allows the Company to contribute a discretionary
      contribution on a matching and/or profit sharing basis. The Company's
      contributions, if any, vest in increments of 20%, beginning upon the
      completion of 2 years of service. An employee will become fully vested
      after completing 6 years of service.

NOTE 7 - PRIVATE PLACEMENT

      In March 1999, the Company concluded a $2 million institutional private
      placement with Cumberland Partners, other investment funds managed by or
      affiliated with Cumberland Associates and certain principals of Cumberland
      Associates. An additional $250,000 was raised from the Chairman and Chief
      Executive Officer of Milestone, on the same terms and conditions. The
      investors purchased, at face value, 3% Senior Convertible Notes Due 2003,
      convertible into Milestone Common Stock at prices increasing from $2.50
      per share in the first year to $6.00 per share in the fourth year, subject
      to antidilution protection in the event of stock dividends and certain
      capital changes. Purchasers of the Notes were granted rights to
      participate in certain future security offerings by Milestone.

NOTE 8 - WISDOM

      In April 1999, the Company discontinued its selling effort with regards to
      the Wisdom product line excluding Splatr Free(TM) prophy angles. The
      discontinued products generated net sales of $147,317 and an operating
      loss of $22,428 for the three months ended March 31, 1999. For the three
      months ended March 31, 1998, these products generated $455,147 in net
      sales and $55,159 of operating income.


                                       12
<PAGE>

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation

      The Company launched The Wand(TM) (a computer controlled system that
      enables virtually "painless" injections) during the first quarter of 1998.
      The products early success was then tempered by significant returns and
      declining sales during the last seven and a half months of 1998. Based on
      further research and development and user feedback, several product
      improvements were made. This has resulted in a significant decline in
      returns. During the last week of the first quarter of 1999, the Company
      began shipping The Wand to its international partners.

      Three month ended March 31, 1999 compared to three month ended March 31,
      1998

Statement of Operations

      The results of operations for the three months ended March 31, 1999 as
      compared to the three months ended March 31, 1998, reflect a severe
      decline in the sales volume for The Wand(TM). As a result of a $4.3
      million decline in net sales for The Wand(TM), including disposable
      handpieces, Company net sales for the three month ended March 31, 1999
      were $668,170. This represents a $4,591,979 or 87% decrease when compared
      to net sales of $5,260,149 for the three months ended March 31, 1998.
      Also, cost of sales for the three months ended March 31, 1999 as compared
      to the three months ended March 31, 1998 declined from $2,681,891 to
      $499,314, a $2,182,577 reduction. For the three month March 31, 1999, the
      Company generated a gross profit of $168,856 as compared to a gross profit
      of $2,578,258 for the three month March 31, 1998.

      Selling, general and administrative expenses for the three month ended
      March 31, 1999 and March 31, 1998 were $1,688,464 and $2,259,492
      respectively. The $571,028 or 25% decrease is primarily attributable to
      approximately $247,000 aggregate decrease in selling and marketing
      expenses associated with The Wand(TM) and a $285,000 reduction in general
      and administrative expenses. The latter reduction includes a decrease in
      corporate salaries of approximately $54,000 and a $94,805 decrease in
      compensation expense related to option grants.

      Research and development costs for the three months ended March 31, 1999
      and March 31, 1998 were $68,846 and $130,167, respectively. The $61,321
      decrease is primarily attributable to the cost incurred in developing "The
      Wand(TM)" during 1998.

      Net interest income for the three month ended March 31, 1999 and March 31,
      1998 were $19,632 ad $169,479 respectively. The $149,847 decrease is
      primarily attributable to lower aggregate investing and higher aggregate
      borrowings under the Company's line of credit.

      The net loss for the three month ended March 31, 1999 was $1,568,822 and
      as compared to net income of $358,079 for the three months ended March 31,
      1999. The decrease reflects a sharp decline in Wand(TM) sales volume.


                                       13
<PAGE>

      Liquidity and Capital Resources

      At March 31, 1999, the Company's working capital was $5,340,683 It
      consisted primarily of cash generated from private placements in March
      1999 and from inventories.

      For the three month ended March 31, 1999, the Company increased cash and
      cash equivalents by $2,125,528, providing $1,459,315 from investing
      activities and $2,300,000 from financing activities.

      For the three month ended March 31, 1999, the Company's net cash used in
      operating activities was $1,633,787 This was primarily attributable to a
      net loss of $1,568,822, adjusted for non cash items of $61,139 for patent
      amortization, $118,314 for depreciation, a $109,862 increase in accounts
      receivable, a $374,862 increase in inventory, a $50,881 increase in
      prepaid expenses, a decrease in accrued expenses of $20,355 and a $310,936
      increase in accounts payable

      The $1,459,315 provided by investing activities for the three month ended
      March 31, 1999 was attributable to the maturing of $1,517,940 in treasury
      bills, offset by $58,625 in capital expenditures. These expenditures
      covered retooling cost for product modifications.

      Financing activities provided $2,300,000 for the period. The Company, as
      described below, raised $2,000,000 in the institutional private placement
      and $250,000 from the sale of similar securities to its Chairman and CEO.

      As of March 31, 1999, the Company had approximately $4.2 million in
      aggregate cash, cash equivalents and treasury bills. This includes
      2,250,000 raised through a private placement in March 1999 as detailed
      below. Management believes that through the proper utilization of these
      existing funds, the expense reductions achieved through cost containment
      programs, the Company will have sufficient cash to meet its needs for the
      next twelve months.

      Also, the Company has taken steps that are aimed at growing and
      strengthening the end user base thereby gaining greater acceptance of The
      Wand(TM) and translating to increased revenue through higher disposable
      handpiece usage. These steps include a) expanding its market overseas, b)
      obtaining feedback and providing further support to current Wand users, c)
      increasing the number of dental schools which include The Wand(TM) in
      their curriculum, d) distributing Wand(TM) technique videos and technical
      bulletins to its current users, e) conducting direct to patient
      advertising with specialized sales effort in test markets and f)
      maintaining a well trained service staff.

      During the first quarter of 1999, the Company achieved two major
      objectives in its international marketing effort. In January 1999, "The
      Wand(TM)" was approved under the Medical Device Directive 93/42/EEC, a
      requirement for all dental and medical devices distributed throughout the
      European Union. This authorizes the Company to apply the CE mark to the
      product. In February 1999, the Company entered into an agreement for the
      international distribution of "The Wand(TM)" by the Dent-X dental division
      of AFP Imaging Corporation ("AFP"), through the international distribution
      network previously established by AFP for its dental and medical products.
      Under the agreement, Milestone continues to be responsible for
      distribution of "The Wand(TM)" in the United States, Canada, China, Hong


                                       14
<PAGE>

      Kong and Taiwan. AFP assumed certain existing international distribution
      arrangements previously established by Milestone in South Africa, Israel
      and certain other countries. AFP has an extensive network of foreign
      distributors and representatives. Its foreign sales, or domestic sales for
      export, constituted more than one-third of its total sales in fiscal 1998.
      AFP is a medical and dental imaging equipment supplier whose products are
      widely applied in medical and dental diagnostics.

      The Company intends to submit a new application to the FDA for a
      technologically similar device to The Wand(TM), specifically designed to
      address the need to deliver widely varying volumes of anesthetic and other
      medicaments for various medical disciplines. A working prototype device
      for delivery of multi-volume anesthetic and other medicaments has been
      developed. Also, the Company will continue to develop product enhancements
      and improvements. The raising of additional capital to fund these efforts
      will continually be evaluated by management.

      Private Placement

      In March 1999, the Company received $2 million from an institutional
      private placement with Cumberland Partners, other investment funds managed
      by or affiliated with Cumberland Associates and certain principals of
      Cumberland Associates. An additional $250,000 was raised from Leonard
      Osser, Chairman and Chief Executive Officer of Milestone, under the same
      terms and conditions. The investors purchased, at face value, 3% Senior
      Convertible Notes Due 2003, convertible into Milestone Common Stock at
      prices increasing from $2.50 per share in the first year to $6.00 per
      share in the fourth year, subject to anti-dilution protection in the event
      of stock dividends and certain capital changes. The shares underlying the
      Notes have been registered by Milestone and the purchasers of the Notes
      have been granted rights to participate in certain future security
      offerings by Milestone.

      Year 2000 Compliance

      The Company has developed a plan to insure its operating systems are
      compliant with the requirements to process transactions in the year 2000.
      This plan includes the upgrade of its internal information systems which
      the Company believes will not entail significant costs related to these
      upgrades. Also, the Company has reviewed its own equipment and determined
      that the equipment is either Year 2000 compliant or not affected by the
      Year 2000 issues.

      The Company is in the process of contacting its vendors, on whom it
      relies, to assure that their systems are or will be Year 2000 compliant.
      Responses are evaluated so as to ensure that critical vendors are Year
      2000 compliant. Also, the Company is developing contingency plans to
      address the most likely worst case scenarios from potential Year 2000
      disruptions.

      The Year 2000 compliance effort is ongoing and will continue to develop as
      new information becomes available.


                                       15
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits:
      NONE

(b)   Reports on Form 8-K:
      NONE


                                       16
<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/ Thomas M. Stuckey
                                           -------------------------------------
                                           Thomas M. Stuckey, Vice President and
                                           Chief Financial Officer
Dated: May 14, 1999


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