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 June 30, 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 August 15, 2002, the Registrant had a total of 12,433,370 shares of Common
Stock, $.001 par value, outstanding.


                                       1
<PAGE>


                           FORWARD LOOKING STATEMENTS

When used in this Quarterly Report on Form 10-QSB, 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>                                                                            <C>
PART I.   FINANCIAL INFORMATION

          ITEM 1.   Condensed Consolidated Financial Statements

                    Condensed Consolidated Balance Sheets
                         June 30, 2002 (Unaudited) and December 31, 2001                    4

                    Condensed Consolidated Statements of Operations
                         Three and Six Months Ended June 30, 2002 and 2001 (Unaudited)      5

                    Condensed Consolidated Statements of Cash Flows
                         Six Months Ended June 30, 2002 and 2001 (Unaudited)              6-7

                    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                                       22


SIGNATURES                                                                                 23

EXHIBITS                                                                                   24
</TABLE>


                                       3
<PAGE>


                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                    June 30,       December 31,
                                                                                      2002            2001
                                                                                  ------------    ------------
                                                                                   (Unaudited)      (Audited)
<S>                                                                               <C>             <C>
                                     ASSETS

Current assets:
     Cash                                                                         $     22,592    $     15,742
     Accounts receivable, net of allowance for doubtful accounts
         of $41,501 and $54,865 in 2002 and 2001, respectively                         402,478         363,743
     Inventories                                                                       115,988         162,640
     Advances to contract manufacturer                                                 251,781         315,000
     Prepaid expenses                                                                   40,972          30,985
                                                                                  ------------    ------------
              Total current assets                                                     833,811         888,110

Property and equipment, net                                                            200,844         207,823
Advances to contract manufacturer - long-term                                          324,258         374,529
Deferred debt financing costs                                                          321,501          32,915
Other assets                                                                            32,333          12,362
                                                                                  ------------    ------------

              Totals                                                              $  1,712,747    $  1,515,739
                                                                                  ============    ============

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
     Accounts payable, including $70,866 and $43,000
        to a related party in 2002 and 2001, respectively                         $  1,170,382    $  1,063,363
     Accrued expenses                                                                   97,377         105,410
                                                                                  ------------    ------------
              Total current liabilities                                              1,267,759       1,168,773

Accrued interest                                                                       252,984         221,982
Accounts payable, including $250,000 and $272,866 to
   a related party in 2002 and 2001, respectively                                      358,899         338,940
Deferred compensation payable to officer/stockholder                                   160,000         491,346
Notes payable                                                                        4,418,460       3,553,665
Notes payable-officer/stockholder                                                      200,000         200,000
                                                                                  ------------    ------------
              Total liabilities                                                      6,658,102       5,974,706
                                                                                  ------------    ------------

Commitments and contingencies

Stockholders' deficiency:
     Common stock, par value $.001; authorized, 25,000,000 shares;
         12,345,870 issued as of June 30, 2002 and
         11,372,847 issued as of December 31, 2001                                      12,346          11,373
     Additional paid-in capital                                                     36,608,010      36,090,566
     Accumulated deficit                                                           (40,368,991)    (39,346,570)
     Unearned advertising                                                             (285,204)       (302,820)
     Treasury stock, at cost, 100,000 shares                                          (911,516)       (911,516)
                                                                                  ------------    ------------
              Total stockholders' deficiency                                        (4,945,355)     (4,458,967)
                                                                                  ------------    ------------

              Totals                                                              $  1,712,747    $  1,515,739
                                                                                  ============    ============
</TABLE>


See Notes to Condensed Consolidated Financial Statements.


                                       4
<PAGE>


                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                      Three Months Ended              Six Months Ended
                                                      June 30,        June 30,        June 30,        June 30,
                                                      2002            2001            2002            2001
                                                      ----            ----            ----            ----

<S>                                              <C>             <C>             <C>             <C>
Net sales                                        $  1,160,129    $    918,441    $  2,181,717    $  2,180,812
Cost of sales                                         515,756         484,720         981,771       1,056,557
                                                 ------------    ------------    ------------    ------------

Gross Profit                                          644,373         433,721       1,199,946       1,124,255
                                                 ------------    ------------    ------------    ------------

Selling, general and administrative expenses          937,932       1,358,577       1,835,208       3,172,125
Research and development expenses                      15,084           9,363          45,379          28,081
                                                 ------------    ------------    ------------    ------------

                 Totals                               953,016       1,367,940       1,880,587       3,200,206
                                                 ------------    ------------    ------------    ------------

Loss from operations                                 (308,643)       (934,219)       (680,641)     (2,075,951)

Other income                                           24,000              --          48,000              --
Interest, net                                        (217,567)       (174,981)       (389,780)       (368,572)
                                                 ------------    ------------    ------------    ------------

Net loss                                         $   (502,210)   $ (1,109,200)   $ (1,022,421)   $ (2,444,523)
                                                 ============    ============    ============    ============

Loss per share - basic                           $       (.04)   $       (.10)   $       (.08)   $       (.22)
                                                 ============    ============    ============    ============

Weighted average shares outstanding                12,245,870      11,272,847      12,171,450      11,014,765
                                                 ============    ============    ============    ============
</TABLE>


See Notes to Condensed Consolidated Financial Statements.


                                       5
<PAGE>


                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                      2002             2001
                                                                                   -----------     -----------

<S>                                                                                <C>             <C>
Operating activities:
     Net loss                                                                      $(1,022,421)    $(2,444,523)
     Adjustments to reconcile net loss to net cash used in operating activities:
         Amortization of advertising costs                                              17,616           6,484
         Amortization of debt discount and deferred financing costs                    129,999         145,972
         Depreciation                                                                   28,419          41,009
         Common stock issued for services                                                 --           150,000
         Changes in operating assets and liabilities:
              (Increase) decrease in accounts receivable                               (38,735)        129,416
              (Increase) decrease in inventories                                        46,652        (240,759)
              Decrease in advances to contract manufacturer                            113,490         304,530
              (Increase) decrease in prepaid expenses                                   (9,987)         99,203
              Increase in other assets                                                 (19,971)         (2,044)
              Increase in accounts payable                                             126,978         376,399
              Increase in accrued interest                                             259,781         225,206
              Decrease in accrued expenses                                              (8,033)        (14,991)
              Increase in deferred compensation                                        160,000         175,000
                                                                                   -----------     -----------
                  Net cash used in operating activities                               (216,212)     (1,049,098)
                                                                                   -----------     -----------

Investing activities - capital expenditures                                            (21,440)         (9,012)
                                                                                   -----------     -----------

Financing activities:
     Payments on line of credit                                                       (114,960)           --
     Proceeds from sale of common stock                                                   --           500,000
     Proceeds from issuance of notes and lines of credit, net                          400,000         409,779
     Payments for deferred financing costs                                             (40,538)           --
                                                                                   -----------     -----------

Net cash provided by financing activities                                              244,502         909,779
                                                                                   -----------     -----------

Net increase (decrease) in cash                                                          6,850        (148,331)

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

Cash, end of period                                                                $    22,592     $    24,536
                                                                                   ===========     ===========
</TABLE>


See Notes to Condensed Consolidated Financial Statements.


                                       6
<PAGE>


                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (Unaudited)

Supplemental schedule of noncash financing activities:

      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.

      In April 2002, pursuant to the 20% promissory note agreements, the Company
      converted $65,168 of accrued interest into additional principal.

      In April 2002, pursuant to the debt restructuring, the Company recorded a
      deferred financing charge of $329,572. This resulted in an increase to
      notes payable of $140,203 and accrued interest of $189,369.

      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 April 2001, pursuant to the 20% promissory note agreements, the Company
      converted $53,472 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 June 30, 2002 and the results of operations for the three
      and six months ended June 30, 2002 and 2001 and cash flows for the six
      months ended June 30, 2002 and 2001.

      The results reported for the three and six months ended June 30, 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 June 30, 2002, Milestone had $22,592 in cash and a working capital
      deficiency of $433,948. As listed below and further described in Note 4,
      to date, several additional steps have been taken in addition to cost
      containment policies to improve liquidity and meet Milestone's working
      capital needs until it is able to achieve and sustain profitability. In
      order for the Company to sustain its operation in its present state
      through July 1, 2003, it is currently dependent on the equity line (See
      Note 5). Amounts available under this equity line are dependent on the
      Company's stock price and the trading volume since it could impact
      management's ability to fund the Company's operations. If the Company is
      unable to obtain the required funding under the equity line, management
      will have to obtain such financing from alternative sources. However,
      management cannot assure that the Company will be able to obtain any
      alternative funding.

      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, 2007 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 expense 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
      June 30, 2002, the outstanding payable to the vendor was $108,899 and it
      was recorded as long term. The common stock was issued in July 2002.

      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.

      All of the agreements with the exception of the line of credit were
      amended on August 13, 2002 to provide the following:

            o     Extending the maturity date of its 9% $200,000 obligation and
                  accrued interest of $35,650 until July 2, 2003.

            o     At the option of the Company's Board of Directors, $250,000 on
                  the accounts payable to the related party can be paid through
                  the issuance of the Company's common stock.

            o     Deferring payment on $160,000 at June 30, 2002 of the CEO
                  salary until July 2, 2003.

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

                  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 (all of the noteholders gave their
                  consent) 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 these holders, the Company will issue
                  shares of the Company's common stock with a value of $120 for
                  each $1,000 face amount outstanding at maturity. As a result,
                  the Company recorded deferred financing charges of $329,572
                  which are being 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.

      On May 28, 2002, the Company received from an existing investor $250,000,
      which provides for interest at 8% if paid in cash and 10% if paid in stock
      and contain an equity conversion feature. (See Note 4)

      In addition, as described in Note 5, Milestone has an equity line
      commitment through January 1, 2004 to sell up to 2,100,000 shares of its
      common stock. Milestone's right to draw upon this facility and the amount
      of each draw is subjected to certain limitations. The most restrictive of
      which is the investor or any of its affiliates can not directly own more
      than 9.9% of the Company's then outstanding number of shares of common
      stock unless the Company either issues (i) additional shares of common
      stock, (ii) converts any of its debt and or (iii) the investor is unable
      to sell to third parties any of the shares previously purchased, the
      Company only has the ability to sell approximately 1,250,000 shares from
      which it will derive proceeds of approximately $570,000. At August 13,
      2002, without any restrictions and based on the closing stock price, the
      maximum proceeds that the Company could receive would be approximately
      $919,000.

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 June 30, 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


                                       10
<PAGE>


                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 4 - Notes payable (continued):

            notes in cash or in shares of common stock, provided that the shares
            have been 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 and deferred financing
            costs were 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 additionally
            agreed to extend the maturity date to July 1, 2003. In connection
            with the extension, the Company recorded $16,215 in deferred
            financing charges relating to professional fees and $140,203 of
            deferred financing costs relating to consideration issued to the
            note holders valued at $120 per share of the Company's common stock
            for each $1,000 face amount outstanding at maturity which increased
            the aggregate carry value of the notes by $140,203. These deferred
            financing costs are being amortized through July 1, 2003.
            Accordingly, these zero coupon notes including accrued interest have
            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 June 30, 2002, the Company has
            drawn down the $385,040 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 Company incurred $4,054 of deferred financing
            charges. Accordingly, the deferred financing charges and the
            unamortized debt discount are being amortized through 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 (continued):

      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
            through July 1, 2003. In connection with the extension, the Company
            recorded $16,215 of deferred financing charges relating to
            professional fees and $189,369 relating to consideration issued to
            the note holders valued at $120 per share of the Company's common
            stock for each $1,000 face amount outstanding at maturity. The
            $189,369 has been recorded as interest payable as a long term
            liability in the consolidated financial statements. Accordingly, the
            deferred financing costs and the unamortized financing charges are
            being amortized through July 1, 2003. Accordingly, these loans have
            been recorded as long-term debt in the accompanying consolidated
            financial statements.

            As of June 30, 2002, if the 20% promissory notes were converted into
            common stock, the Company would have to issue approximately
            3,136,000 shares of its common stock.

      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 Company incurred $4,054 of
            deferred financing charges relating to professional fees.
            Accordingly, the deferred financing costs and the unamortized debt
            discount are being amortized through August 1, 2003. Accordingly,


                                       12
<PAGE>


                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 4 - Notes payable (concluded):

            these loans have been recorded as long-term debt in the accompanying
            consolidated financial statements.

         $250,000 promissory note:

            On May 28, 2002, the Company received $250,000 from an existing
            investor which provides for interest at 8% if paid in cash and 10%
            if paid in stock. The note will convert into the Company's common
            stock if the Company issues 1,000,000 shares or raises at least
            $1,000,000 from the sale of equities prior to August 1, 2003, at the
            price in that transaction but not less than $.50 per common share,
            or more than $2.00 per share.

         $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, 2003. For the
            six months ended June 30, 2002, interest was accrued at 10%.

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.


                                       13
<PAGE>


                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 6 - Contingencies (concluded):

            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.

            In March 2001, the Company initially 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 are being amortized as publications are received by the
            Company over the minimum placements. As of June 30, 2002, unearned
            advertising costs was $285,204 and during the six months ended June
            30, 2002, the Company recorded $17,616 in advertising expenses
            relating to placements during the period. 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.

Note 7 - Subsequent Event:

            On August 13, 2002, the Company received an $85,000 commitment from
            an existing investor. The Company will receive the $85,000 during
            the third quarter in exchange for a promissory note. Interest per
            annum is 8% if paid in cash and 10% if paid in stock. The note will
            convert into the Company's common stock if the Company issues
            1,000,000 shares or raises at least $1,000,000 from the sale of
            equities prior to August 1, 2003, at the price in that transaction
            but not less than $.50 per common share, or more than $2.00 per
            share.


                                       14
<PAGE>


ITEM 2. Management's Discussion and or Analysis 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.

Overview

      The results from operations for the three and six months ended June 30,
      2002, reflect Milestone's concentrated effort to drastically reduce its
      overhead while slowly growing its user base in the dental market and
      introducing the Wand(R) technology in a variety of medical disciplines.
      The year to date loss of approximately $1 million represents a 58%
      reduction from the same period in 2001.

      During the six months ended June 30, 2002, Milestone reduced its average
      monthly cash used from operations to approximately $36,000, completed a
      $4.1 million debt restructuring program, and obtained $400,000 in
      additional financing. The program included equity conversions; deferring
      payment on certain payables until January 2, 2003 and July 2, 2003; a
      restructuring of all debt originally maturing in 2002.

      Furthermore, Milestone signed an agreement for the distribution of
      CompuDent(TM) in the Eastern U.S., 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.

Statement of Operations

Three months ended June 30, 2002 compared to Three months ended June 30, 2001

      Net sales for the three months ended June 30, 2002 and 2001 were
      $1,160,129 and $918,441 respectively. The $241,688 or 26% increase is
      attributable primarily related to a 32% or $160,000 increase in domestic
      sales of The Wand(R) handpiece, CompuMed(TM) sales of approximately
      $82,000 and a $28,000 increase in sales of CompuDent(TM).

      Cost of sales for the three months ended June 30, 2002 and 2001 were
      $515,756 and $484,720, respectively. The $31,036 increase is attributable
      primarily to higher foreign and domestic sales volume.

      For the three months ended June 30, 2002, the Company generated a gross
      profit of $644,373 or 56% as compared to a gross profit of $433,721 or 47%
      for the three months ended June 30, 2001. The increase in gross profit is
      mainly attributable to an increase in domestic sales of The Wand(R)
      handpiece and CompuMed(TM) sales.


                                       15
<PAGE>


      Selling, general and administrative expenses for the three months ended
      June 30, 2002 and 2001 were $937,932 and $1,358,577, respectively. The
      $420,645 decrease is attributable primarily to an approximate $399,000
      decrease in expenses associated with the sale and marketing of The Wand(R)
      technology due to the transitioning of its sales force to independent
      representatives and an approximate $61,000 decrease in legal fees. The
      Company had incurred additional legal expenses in 2001 as it entered and
      advertising agreements and completed registrations for medical patents;
      and additional patents on The Wand(R) and CompuFlo(TM) technologies.

      Research and development expenses for the three months ended June 30, 2002
      and 2001 were $15,084 and $9,363, respectively. The $5,721 increase is the
      result of higher costs incurred during the second quarter of 2002, which
      were associated with the development of the Company's safety needle.

      The loss from operations for the three months ended June 30, 2002 and 2001
      were $308,643 and $934,219, respectively. The $625,576 decrease in loss
      from operations is explained above.

      The Company incurred interest expense of $217,567 for the three months
      ended June 30, 2002 as compared to $176,165 for the three months ended
      June 30, 2002. The increase is attributable to higher average borrowing in
      2002.

      The net loss for the three months ended June 30, 2002 was $502,210 as
      compared to a net loss of $1,109,200 for the three months ended June 30,
      2001. The $606,990 decrease in net loss is attributable to lower selling
      and administrative expenses and a higher gross margin on a higher level of
      sales as explained above.

Six months ended June 30, 2002 compared to Six months ended June 30, 2001

      Net sales for the six months ended June 30, 2002 and 2001 were $2,181,717
      and $2,180,812, respectively. The $905 increase is attributable primarily
      to 6.6% or $60,000 increase in domestic sales of The Wand(R) handpiece, a
      $153,000 increase in The Wand(R) handpiece sales to foreign distributors
      and the CompuMed(TM) sales of approximately $115,000. The increase is
      partially offset by an approximately $275,000 decrease in sales of
      CompuDent(TM). Lower CompuDent(TM) sales in the U.S. are the direct result
      of the downsizing of the Company's sales and marketing effort.

      Cost of sales for the six months ended June 30, 2002 and 2001 were
      $981,771 and $1,056,557 respectively. The $74,786 decrease is attributable
      primarily to lower foreign and domestic unit sales volume.

      For the six months ended June 30, 2002, the Company generated a gross
      profit of $1,199,946 or 55% as compared to a gross profit of $1,124,255 or
      52% for the six months ended June 30, 2001.

      Selling, general and administrative expenses for the six months ended June
      30, 2002 and 2001 were $1,835,208 and $3,172,125 respectively. The
      $1,336,917 decrease is attributable primarily to an approximate $262,000
      decrease in expenses associated with the sale and marketing of The Wand(R)
      technology due to the transitioning of its sales force to independent
      representatives and an approximate $262,000 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 or consulting services. The Company had incurred additional
      legal expenses in 2001 due to advertising agreements; medical patent
      registrations; and additional patents on The Wand(R) and CompuFlo(TM)
      technologies.


                                       16
<PAGE>


      Research and development expenses for the six months ended June 30, 2002
      and 2001 were $45,379 and $28,081, respectively. The $17,298 increase is
      the result of higher costs incurred during the second quarter of 2002,
      which were associated with the development of the Company's safety needle.

      The loss from operations for the six months ended June 30, 2002 and 2001
      were $1,880,587 and $3,200,206, respectively. The $1,319,619 decrease in
      loss from operations is explained above.

      The Company incurred interest expense of $389,780 for the six months ended
      June 30, 2002 as compared to $371,180 for the six months ended June 30,
      2001. The increase of $18,600 is attributable to higher average borrowing
      in 2002.

      The net loss for the six months ended June 30, 2002 was $1,022,421 as
      compared to a net loss of $2,444,523 for the six months ended June 30,
      2001. The $1,422,102 decrease in net loss is attributable to lower selling
      and administrative expenses and a higher gross margin on the same level of
      sales.

Liquidity and Capital Resources

      At June 30, 2002, Milestone had $22,592 in cash, a working capital
      deficiency of $433,948. For the six months ended June 30, 2002, the
      Company increased cash by $6,850.

      For the six months ended June 30, 2002, the Company's net cash used in
      operating activities was $216,212. This was attributable primarily to a
      net loss of $1,022,421 adjusted for noncash items of $17,616 for
      amortization of advertising costs, $129,999 for amortization of debt
      discount and deferred financing costs and $28,419 for depreciation; a
      $38,735 increase in accounts receivable; a $46,652 decrease in
      inventories; a $113,490 decrease in advances to contract manufacturer; a
      $9,987 increase in prepaid expenses; an increase in other assets of
      $19,971 a decrease in accrued expenses of $8,033 a $259,781 increase in
      accrued interest; a $126,978 increase in accounts payable; and an $160,000
      increase in deferred compensation.

      For the six months ended June 30, 2002, the Company used $21,440 in
      investing activities for capital expenditures.

      For the six months ended June 30, 2002, the Company generated $244,502
      from financing activities as it issued promissory notes to an existing
      investor totaling $400,000 which was offset by the Company paying down
      $114,960 of its $500,000 line of credit and paying $40,538 of financing
      costs relating to its debt restructuring .

      As of June 30, 2002, Milestone had $22,592 in cash and a working capital
      deficiency of $433,948.

      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, 2003.


                                       17
<PAGE>


            On May 28, 2002, the Company received $250,000 from an existing
            investor which provides for interest at 8% if paid in cash and 10%
            if paid in stock. The existing investor is entitled to convert the
            note into the Company's common stock only upon the Company issuing
            1,000,000 shares or raising at least $1,000,000 prior to August 1,
            2003, at a price greater than $.50 per common share, but not
            exceeding $2.00 per share.

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.

All of the agreements with the exception of the line of credit were amended on
August 13, 2002 to provide the following:

            o     Extending the maturity date of its 9% $200,000 obligation and
                  accrued interest of $35,650 until July 2, 2003.

            o     At the option of the Company's Board of Directors, $250,000 on
                  the accounts payable to the related party can be paid through
                  the issuance of the Company's common stock.

            o     Deferring payment on $160,000 at June 30, 2002 of the CEO
                  salary until July 2, 2003.

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 all of the noteholders gave their
                  consent 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 these holders, the Company will issue
                  shares of the Company's common stock with a value of $120 for
                  each $1,000 face amount outstanding at maturity. As a result,
                  the Company recorded deferred financing charges of $329,572
                  which are being amortized to interest expense over the
                  remaining life of these notes.

            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.

On August 13, 2002, the Company received an $85,000 commitment from an existing
investor. The Company will receive the $85,000 during the third quarter in
exchange for a promissory note. Interest per annum is 8% if paid in cash and 10%
if paid in stock. The note will convert into the Company's common stock if the
Company issues 1,000,000 shares or raises at least $1,000,000 from the sale of
equities prior to August 1, 2003, at the price in that transaction but not less
than $.50 per common shares or more than $2.00 per common share.


                                       18
<PAGE>

In addition, Milestone has an equity line commitment through January 1, 2004 to
sell up to 2,100,000 shares of its common stock. Milestone's right to draw upon
this facility and the amount of each draw is subjected to certain limitations.
The most restrictive of which is the investor or any of its affiliates can not
directly own more than 9.9% of the Company's then outstanding number of shares
of common stock unless the Company either issues (i) additional shares of common
stock, (ii) converts any of its debt and or (iii) the investor is unable to sell
to third parties any of the shares previously purchased, the Company only has
the ability to sell approximately 1,250,000 shares which will derive proceeds of
approximately $570,000. At August 13, 2002, without any restrictions and based
on the closing stock price, the maximum proceeds that the Company could receive
would be approximately $919,000.

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 these 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).

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 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


                                       19
<PAGE>


"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. 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 using pre-production prototypes of our CompuFlo(TM) system, since it
allowed him to measure flow rate and tissue pressure and 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.

In May 2002, Milestone signed a dental distribution 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. Milestone is providing the initial sales and product training
to the entire Benco sales organization through September 2002. Following these
initial training sessions, Milestone will support this effort through "Dealer
Managers and Technical Support Specialists."

Other Matters - American Stock Exchange

On May 2, 2002, Milestone received a letter from the American Stock Exchange
advising us that it had fallen below certain listing criteria and requesting
that a recovery plan detailing any actions taken, or planned to be taken within
the next 18 months to bring the Company into compliance with the continued
listing standards. According to the letter, the Listing Qualifications
Department management will then evaluate the plan, including any supporting
documentation, and make a determination as to whether the Company has made a
reasonable demonstration of an ability to regain compliance with the continued
listing standards, in which case the plan will be accepted. On June 10, 2002 the
Company submitted a detailed recovery plan to the American Stock Exchange
showing how Milestone expects to achieve stockholder equity of $4,000,000 by
December 31, 2003. In response, the Company have received informal advice from
the American Stock Exchange that in view of the expected loss in 2002, we need
to demonstrate how we will achieve $6,000,000 in stockholders' equity within the
next 18 months. The company is now in the process of revising the plan in order
to meet these requirements. If the revised plan is not accepted, the American
Stock Exchange may initiate delisting proceedings. In the event that our
securities are delisted from the American Stock Exchange, trading, if any, in
the common stock and warrants would be conducted in the over the counter market
in the so-called "pink sheets" or the NASD's "OTC Bulletin Board." Consequently
the liquidity of the Company securities could be impaired, not only in the
number of securities which could be bought and sold, but also through delays in
the timing of transactions, reduction in security analysts and new media
coverage of Milestone, and lower prices for our securities than might otherwise
be obtained.

If Milestone shares of common stock are removed or delisted from the American
Stock Exchange the ability of stockholders to sell our common stock and warrants
in the secondary market could be restricted. The Securities and Exchange
Commission has adopted regulations which generally define "penny stock" to be an
equity security that has a market price, as defined, of less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions, including an exception of an equity security that is quoted on the
American Stock Exchange. If our shares of common stock are removed or delisted
from the American Stock Exchange, the security may become subject to rules that
impose additional sales practice requirements on broker-dealers who sell these
securities. For transactions covered by these rules, the broker-dealer must make
a special suitability determination for the purchaser of such securities and
have received the purchaser's written consent to the transactions prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prepared by the Securities and


                                       20
<PAGE>


Exchange Commission relating to the penny stock market. The broker-dealer also
must disclose the commissions payable to both the broker-dealer and the
registered underwriter, current quotations for the securities and, if the
broker-dealer is the sole market maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. Finally, among
other requirements, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. As such, the "penny stock" rules, in the event
our securities are delisted from the American Stock Exchange, may restrict the
ability of stockholders to sell our common stock and warrants in the secondary
market.


                                       21
<PAGE>


ITEM 6. Exhibits and Reports on Form 8-K

        (a)    Exhibits:

               99.1 Certification by Chief Executive Officer
               99.2 Certification by Chief Financial Officer

        (b)    Reports on Form 8-K:

               None


                                       22
<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: August 15, 2002



                                       23