EXHIBIT 10.32
                            Debt Settlement Agreement

      AGREEMENT, dated as of October 9, 2003 among Milestone Scientific Inc.
(the "Company"), a Delaware corporation with its principal place of business at
Livingston Corporate Park, 220 South Orange Avenue, Livingston, New Jersey, on
the one hand and Leonard Osser ("Osser"), an individual having an address at 101
John Dietz Road, Callicoon Center, New York 12724 and K. Tucker Andersen
("Andersen" and together with Osser, the "Creditors"), an individual with an
address at c/o Cumberland Partners, 1114 Avenue of the Americas, New York, New
York 10036.

                              W I T N E S S E T H:

      WHEREAS, Osser is the chief executive officer as well as a principal
shareholder of the Company; and

      WHEREAS, Schedule A-1 annexed hereto sets forth in detail the amounts owed
by the Company to Osser as deferred compensation and for money borrowed (the
"Osser Indebtedness"); and

      WHEREAS, Andersen is a principal shareholder of the Company; and

      WHEREAS, Schedule A-2 annexed hereto sets forth in detail the amounts owed
by the Company to Andersen for money borrowed (the "Andersen Indebtedness"): and

      WHEREAS, the Company has entered into a Letter of Intent, dated September
23, 2003, with Paulson Investment Company, Inc. ("Paulson"), pursuant to which
Paulson has agreed to act as underwriter in connection with a registered public
offering to be undertaken by the Company (the "Public Offering"); and

      WHEREAS, the Company has reached an agreement in principal with certain
investors (the "Investors") who will lend $400,000 to the Company before it
files a registration statement with the United States Securities and Exchange
Commission (the "SEC") covering the securities to be sold in the Public
Offering.

      NOW, THEREFORE, in consideration of the premises set forth above and the
agreements, covenants, representations and warranties set forth below and for
other good and valuable consideration, the sufficiency of which is hereby
acknowledge, the parties hereto hereby agree as follows:

      1.    Satisfaction of Debt.

            (a) On the Satisfaction Date (as defined below), the Company shall
transfer to Andersen the following:

                  (i) cash in an amount equal to 40% of the accrued interest
(through the Satisfaction Date) on the Andersen Indebtedness; and

                  (ii) securities (as more particularly described below in
paragraph (c) of this Section 1) of the Company having a value equal to the
equal to the sum of (x) the principal amount of the Andersen Indebtedness and
(y) 60% of the accrued interest (through the Satisfaction Date) on the Andersen
Indebtedness.

            (b) On the Satisfaction Date, the Company shall transfer to Osser
the following:


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                  (i) cash in an amount equal to 40% of the sum of the (x)
deferred compensation portion of the Osser Indebtedness (as set forth on
Schedule A-1) and (y) accrued interest (through the Satisfaction Date) on the
Osser Indebtedness; and

                  (ii) securities (as more particularly described below in
paragraph (c) of this Section 1) of the Company having a value equal to the
equal to the sum of (x) the principal amount of the Osser Indebtedness and (y)
60% of the accrued interest (through the Satisfaction Date) on the Osser
Indebtedness and (z) 60% of the deferred compensation portion of the Osser
Indebtedness.

            (c) The securities of the Company to be issued to Andersen and Osser
pursuant to paragraphs (a)(ii) and (b)(ii), respectively, of this Section 1
shall be identical in all material respects to the securities sold by the
Company in the Public Offering. For purposes of calculating the value of such
securities, they shall be deemed to have a value equal to the public offering
price as set forth in the final prospectus, filed under Rule 424(b) promulgated
by the SEC under the Securities Act of 1933, as amended (the "Act") in
connection with the Public Offering (the "Final Prospectus").

            (d) The Satisfaction Date shall be the date that is the later of (i)
the effective date of the Public Offering (i.e., the date of the Final
Prospectus) and (ii) January 2, 2004.

      2. REPRESENTATIONS AND WARRANTIES OF THE CREDITORS. Each Creditor, solely
for himself and not with respect to the other Creditor, represents and warrants
to the Company that:

            (a) Investment Purpose. He is acquiring the securities described in
Section 1 hereof and any and all other securities of the Company underlying or
covered by such securities and any securities issuable upon exercise of any
rights to purchase or to convert such securities or any securities underlying
such securities (collectively, the "Securities") for his own account and not
with a present view towards the public sale or distribution thereof, except
pursuant to sales registered or exempted from registration under the Act;
provided, however, that by making the representations herein, subject to any
agreement to the contrary contemplated hereby, he does not agree to hold any of
the Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the Act.

            (b) Accredited Investor Status. He is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D (an "Accredited Investor").

            (c) Reliance on Exemptions. He understands that the Securities are
being issued to him in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and his compliance with, the
representations, warranties, agreements, acknowledgments and understandings set
forth herein in order to determine the availability of such exemptions and his
eligibility to acquire the Securities.

            (d) Information. He, or his advisors, if any, has been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities that he
has or they have requested. He, or his advisors, if any, has been afforded the
opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigation conducted by him or any of his advisors shall
modify, amend or affect his right to rely on the Company's representations and
warranties contained in Section 3 below. He understands that his investment in
the Securities involves a significant degree of risk.


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            (e) Governmental Review. He understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.

            (f) Transfer or Re-sale. He understands that (i) except as set forth
in Section 4(b) below, the sale or re-sale of the Securities has not been is not
and will not being registered under the Act or any applicable state securities
laws, and the Securities may not be transferred unless (a) the Securities are
sold pursuant to an effective registration statement under the Act, (b) he has
delivered to the Company an opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration, (c) the
Securities are sold or transferred to an "affiliate" (as defined in Rule 144
promulgated under the Act (or a successor rule) ("Rule 144")) who agrees to sell
or otherwise transfer the Securities only in accordance with this Section 2(f)
and who is an Accredited Investor, or (d) the Securities are sold pursuant to
Rule 144; (ii) any sale of Securities made in reliance on Rule 144 may be made
only in accordance with the terms of said Rule and further, if said Rule is not
applicable, any re-sale of such Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Act) may require compliance with
some other exemption under the Act or the rules and regulations of the SEC
thereunder; and (iii) other than as set forth in Section 4(b) below), neither
the Company nor any other person is under any obligation to register such
Securities under the Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder.

            (g) Legends. He understands that, until such time as the Securities
have been registered under the Act or otherwise may be sold pursuant to Rule 144
without any restriction as to the number of securities as of a particular date
that can then be immediately sold, the certificates evidencing the Securities
shall bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for such
Securities):

             "The securities represented by this certificate have not
             been registered under the Securities Act of 1933, as
             amended. The securities may not be sold, transferred or
             assigned in the absence of an effective registration
             statement for the securities under said Act, or an
             opinion of counsel, in form, substance and scope
             customary for opinions of counsel in comparable
             transactions, that registration is not required under
             said Act or unless sold pursuant to Rule 144 under said
             Act."

      The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the Act or otherwise may be sold pursuant to Rule 144 without any
restriction as to the number of securities as of a particular date that can then
be immediately sold, or (b) such holder provides the Company with an opinion of
counsel, in form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale or transfer of such
Security may be made without registration under the Act, including pursuant to
the provisions of Rule 144 and such sale or transfer is effected. The Creditor
agrees to sell all Securities, including those represented by a certificate(s)
from which the legend has been removed, in compliance with applicable prospectus
delivery requirements, if any. This paragraph (g) shall apply separately with
respect to each security included in the definition of Securities.


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<PAGE>

            (h) Authorization; Enforcement. This Agreement has been duly
executed and delivered by or on behalf of the Creditor, and constitutes, and
upon execution and delivery by the Creditor will constitute, a valid and binding
agreement of the Creditor enforceable in accordance with its terms.

            (i) Residency. He is a resident of New York State.

      3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Creditors that:

            (a) Organization and Qualification. The Company and each of its
Subsidiaries (as defined below), if any, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full power and authority (corporate and other) to
own, lease, use and operate its properties and to carry on its business as and
where now owned, leased, used, operated and conducted. The Company and each of
its Subsidiaries is duly qualified as a foreign corporation to do business and
is in good standing in every jurisdiction in which its ownership or use of
property or the nature of the business conducted by it makes such qualification
necessary except where the failure to be so qualified or in good standing would
not have a Material Adverse Effect. "Material Adverse Effect" means any material
adverse effect on the business, operations, assets, financial condition or
prospects of the Company or its Subsidiaries, if any, taken as a whole, or on
the transactions contemplated hereby or by the agreements or instruments to be
entered into in connection herewith. "Subsidiaries" means any corporation or
other organization, whether incorporated or unincorporated, in which the Company
owns, directly or indirectly, any equity or other ownership interest.

            (b) Authorization; Enforcement. (i) The Company has all requisite
corporate power and authority to enter into and perform and to consummate the
transactions contemplated hereby and to issue the Securities, in accordance with
the terms hereof, (ii) the execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby
(including without limitation, the issuance of the Securities) have been duly
authorized by the Company's board of directors (the "Board") and no further
consent or authorization of the Company, the Board, or its stockholders is
required, (iii) this Agreement has been duly executed and delivered by the
Company, and (iv) this Agreement constitutes, and upon its execution and
delivery by the Company, will constitute a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms.

            (c) Issuance of Shares. Any shares of the Company's common stock,
par value $ .001 per share (the "Common Stock") issuable upon the exercise of
any rights set forth in any of the Securities are (or shall be as of the
Satisfaction Date) duly authorized and reserved for issuance and, upon issuance
in accordance with the terms of the Securities to which they relate will be
validly issued, fully paid and non-assessable, and free from all taxes, liens,
claims and encumbrances with respect to the issue thereof and shall not be
subject to preemptive rights or other similar rights of stockholders of the
Company and will not impose personal liability upon the holder thereof.

            (d) No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) conflict with or result in a violation of any
provision of the Certificate of Incorporation or Bylaws of the Company or (ii)
violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent,
patent license or instrument to which the Company or any of its Subsidiaries is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or its
securities are subject) applicable


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to the Company or any of its Subsidiaries or by which any property or asset of
the Company or any of its Subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation, Bylaws or other organizational documents
and neither the Company nor any of its Subsidiaries is in default (and no event
has occurred which with notice or lapse of time or both could put the Company or
any of its Subsidiaries in default) under, and neither the Company nor any of
its Subsidiaries has taken any action or failed to take any action that would
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except for possible
defaults as would not, individually or in the aggregate, have a Material Adverse
Effect. The businesses of the Company and its Subsidiaries, if any, are not
being conducted, and shall not be conducted so long as the Creditors owns any of
the Securities, in violation of any law, ordinance or regulation of any
governmental entity where such violation would have a Material Adverse Effect.
Except as specifically contemplated by this Agreement and as required under the
Act and any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory agency, self
regulatory organization or stock market or any third party in order for it to
execute, deliver or perform any of its obligations under this Agreement. Except
as disclosed in Schedule 3(f), all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. The
Company is not in violation of the listing requirements of the American Stock
Exchange.

            (e) Acknowledgment Regarding Securities. The Company acknowledges
and agrees that each Creditor is acting solely in the capacity of an arm's
length purchaser with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that neither Creditor is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by a Creditor or any of its respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to his acquisition of the Securities. The Company further represents to the
Creditors that its decision to enter into this Agreement has been based solely
on the independent evaluation by the Company and its representatives.

      4. COVENANTS.

            (a) Form D; Blue Sky Laws. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to the Creditors promptly after such filing. The Company shall, on or
before the Satisfaction Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the Creditors
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to the Creditor on or
prior to the Satisfaction Date.

            (b) Registration Rights. The Company will use its commercially
reasonable best efforts to file with the SEC a registration statement covering
the resale of the Common Stock included in the Securities within 30 days of the
effective date (as described in Section 1(d)) of the Public Offering and to
cause such registration statement to be effective as promptly as possible
thereafter. The Creditors hereby covenant and agree to provide the Company with
such information as the Company shall need about the Creditors and their
proposed plan of distribution in order to file such resale registration
statement.


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            (c) Reservation of Shares. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion or exercise of the
outstanding Securities. The Company will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of stockholders to authorize
additional shares to meet the Company's obligations under this Section 4(c), in
the case of an insufficient number of authorized shares, and using its best
efforts to obtain stockholder approval of an increase in such authorized number
of shares.

            (d) Lock-Up Agreement. Each Creditor agrees that he will execute a
lock-up agreement with Paulson (the "Paulson Lock-Up Agreement") for a period
not to exceed one hundred and eighty (180) days from the effective date (as
described in Section 1(d)) of the Public Offering; provided, however, in no
event shall the Paulson Lock-Up Agreement be more restrictive than that offered
to any of the Company's officers, directors or holders of five percent (5%) or
more of the outstanding shares of the Company's Common Stock. In addition, if
Paulson consents to any less restrictive modification or waiver of the terms of
any such agreement with one or more of the Company's officers, directors or
holders of five percent (5%) or more of the outstanding shares of the Company's
Common Stock, then the Paulson Lock-Up Agreement shall be similarly modified or
waived.

            (e) Intercreditor Agreement. Each Creditor agrees that, upon
request, he shall execute and deliver an agreement with the Investors, pursuant
to which the Creditors shall agree that (a) notwithstanding the order in which
any UCC financing statements would have filed, the lien to be given to the
Investors to secure their loan to the Company shall be senior and superior to
the lien granted to the Creditors to secure their respective indebtedness, (b)
so long as the loan from the Investors remains outstanding, the Creditors will
not accept any payments from the Company with respect to the Osser Indebtedness
or the Andersen Indebtedness, (c) the Creditors will not commence any action to
collect their debt or enforce their security interest until the Investors have
been in full and (d) such other terms and conditions as may be customary in
agreements of this type among creditors.

      5. GOVERNING LAW; MISCELLANEOUS.

            (a) Governing Law. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK,
NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. THE PARTIES HERETO IRREVOCABLY WAIVE THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. THEY FURTHER
AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH
SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT A PARTY'S RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW. THE PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER. THE PARTY THAT DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS
AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING ATTORNEYS'
FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.


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            (b) Counterparts; Signatures by Facsimile. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. This Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission of a copy of this Agreement bearing
the signature of the party so delivering this Agreement.

            (c) Headings. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of, this
Agreement.

            (d) Severability. In the event that any provision of this Agreement
is invalid or enforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.

            (e) Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

            (f) Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:

      If to the Company:

                  Milestone Scientific Inc.
                  Livingston Corporate Park
                  220 South Orange Avenue
                  Livingston, New Jersey 07039
                  Attention: Chief Financial Officer
                  Telephone: 973-535-2717
                  Facsimile: 973-535-2829

      With copy to:

                  Morse, Zelnick, Rose & Lander, LLP
                  405 Park Avenue, Suite 1401
                  New York, New York 10022
                  Attention: Stephen A. Zelnick, Esq.
                  Telephone: 212-838-8040
                  Facsimile: 212-838-9190


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      If to the Creditors:

                  Mr. K. Tucker Andersen
                  c/o Cumberland Partners
                  1114 Avenue of the Americas
                  New York, New York 10036
                  Telephone: 212-536-9703
                  Facsimile: 212-575-2007

                  Mr. Leonard Osser
                  101 John Dietz Road
                  Callicoon Center, New York 12724
                  Telephone: 845-482-3792
                  Facsimile: 212-717-5684

Each party shall provide notice to the other party of any change in address.

            (g) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Except as
may otherwise be permitted by Section 2(f) hereof, no party hereto may assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the other parties.

            (h) Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any other person enforce any
provision hereof.

            (i) Survival. The representations and warranties of the Company and
the agreements and covenants set forth herein shall survive until the
Satisfaction Date.

            (j) Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

            (k) No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.


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      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                             MILESTONE SCIENTIFIC INC.


                                             By: ______________________________
                                                 Thomas M. Stuckey
                                                 Chief Financial Officer


                                             ___________________________________
                                                              K. TUCKER ANDERSEN


                                             ___________________________________
                                                                   LEONARD OSSER


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