SECURITIES AND EXCHANGE
COMMISSIONWashington, 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, 2005 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 Number001-14053 MILESTONE SCIENTIFIC,
INC.(Exact name of Registrant as specified
in its charter) Delaware
      State or other jurisdiction
      or organization)
    13-3545623
      (I.R.S. Employer 
      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, 2005, the
Registrant had a total of 11,352,704 shares of Common Stock, $.001 par value, outstanding. 1   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 Milestones future plans of operations, business
strategy, results of operations and financial condition. Milestone 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 Milestones reports and registration statements filed with the
Securities and Exchange Commission (the Commission). Milestone disclaims any
intent or obligation to update such forward-looking statements.


2
MILESTONE SCIENTIFIC
INC. AND SUBSIDIARIES


I N D E X



PAGEPART I   FINANCIAL
      INFORMATIONITEM
      1   Condensed Consolidated Financial Statements (unaudited)Condensed
      Consolidated Balance SheetsJune
      30, 2005 (Unaudited) and December 31, 2004
    4Condensed
      Consolidated Statements of OperationsThree
      and Six Months Ended June 30, 2005 and 2004 (Unaudited)
    5Condensed
      Consolidated Statement of Changes in StockholdersEquity
      (Deficiency) - Six Months Ended June 30, 2005
    6Condensed
      Consolidated Statements of Cash FlowsSix
      Months Ended June 30, 2005 and 2004 (Unaudited)
    7Notes
      to Condensed Consolidated Financial Statements
    10ITEM
      2   Managements Discussion and Analysis or Plan of Operation
    13ITEM
      3   Controls and Procedures
    19PART II  OTHER
      INFORMATIONITEM
      2   Unregistered Sales of Equity Securities and Use of Proceeds
    20ITEM
      6   Exhibits
    21SIGNATURES
    23CERTIFICATIONS
    243
MILESTONE SCIENTIFIC
INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATED BALANCE SHEETS




June 30, 
      2005 
      (Unaudited)
    
    December
      31,
      2004*ASSETSCurrent
      Assets:Cash
      and cash equivalents
    $
    4,513,114
    
    $
    3,041,306Accounts
      receivable, net of allowance for doubtful accounts of $36,672in
      2005 and $24,903 in 2004
    
    557,947
    
    
    421,339Royalty
      receivable
    
    219,210
    
    
    Inventories
    
    1,050,247
    
    
    936,221Advances
      to contract manufacturer
    
    320,216
    
    
    62,034Prepaid
      expenses
    
    96,586
    
    
    104,562Total
      current assets
    
    6,757,320
    
    
    4,565,462Investment
      in distributor, at cost
    
    69,956
    
    
    69,956Equipment,
      net
    
    582,025
    
    
    612,263Patents,
      net
    
    326,522
    
    
    101,242Other
      assets
    
    17,270
    
    
    20,408Totals
    $
    7,753,093
    
    $
    5,369,331LIABILITIES
      AND STOCKHOLDERS EQUITYCurrent
      Liabilities:Accounts
      payable
    $
    356,896
    
    $
    474,075Accrued
      expenses
    
    440,224
    
    
    224,549Total
      current liabilities
    
    797,120
    
    
    698,624Deferred
      compensation payable to officer
    
    225,000
    
    
    150,000Total
      liabilities
    
    1,022,120
    
    
    848,624Stockholders
      Equity:Preferred
      stock, par value $.001; authorized 5,000,000 shares8%
      cumulative convertible preferred stock, par value $.001; authorized,issued
      and outstanding, 25,365 shares
    
    25
    
    
    25Common
      stock, par value $.001; authorized 50,000,000 shares; 11,386,037shares
      issued and 11,352,704 shares outstanding in 2005, and 9,824,287shares
      issued and 9,790,954 shares outstanding in 2004
    
    11,386
    
    
    9,824Additional
      paid-in capital
    
    56,496,350
    
    
    52,618,913Accumulated
      deficit
    
    (48,865,272
    )
    
    (47,196,539
    )Treasury
      stock, at cost, 33,333 shares
    
    (911,516
    )
    
    (911,516
    )Total
      stockholders equity (deficiency)
    
    6,730,973
    
    
    4,520,707Totals
    $
    7,753,093
    
    $
    5,369,331See notes to Condensed Consolidated
Financial Statements


*Derived from the audited financial
statements as of December 31, 2004.


4
MILESTONE SCIENTIFIC
INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONSTHREE AND SIX MONTHS
ENDED JUNE 30, 2005 AND 2004(Unaudited)



Three
      Months Ended
    
    Six
      Months EndedJune
      30,
      2005
    
    June
      30,
      2004
    June
      30,
      2005
    
    June
      30,
      2004Products
      sales, net
    $
    1,456,731
    
    $
    1,188,022
    
    $
    2,914,634
    
    $
    2,282,245Royalty
      income
    
    219,210
    
    
    
    
    
    219,210
    
    
    Total revenue
    
    1,675,941
    
    
    1,188,022
    
    
    3,133,844
    
    
    2,282,245Cost
      of products sold
    
    538,604
    
    
    769,383
    
    
    1,253,310
    
    
    1,315,683Royalty
      expense
    
    26,305
    
    
    
    
    
    26,305
    
    
    Total costs
    
    564,909
    
    
    769,383
    
    
    1,279,615
    
    
    1,315,683Gross profit
    
    1,111,032
    
    
    418,639
    
    
    1,854,229
    
    
    966,562Selling,
      general and administrative expenses
    
    1,854,562
    
    
    1,211,917
    
    
    3,456,255
    
    
    2,196,785Research
      and development expenses
    
    69,844
    
    
    52,409
    
    
    101,389
    
    
    93,6211,924,406
    
    
    1,264,326
    
    
    3,557,644
    
    
    2,290,406Loss from
      operations
    
    (813,374
    )
    
    (845,687
    )
    
    (1,703,415
    )
    
    (1,323,844
    )Other income
      (expense)Interest
      income
    
    23,584
    
    
    28,876
    
    
    34,682
    
    
    41,010Interest
      expense
    
    
    
    
    (10,867
    )
    
    
    
    
    (63,638
    )Other
      income (expense) net
    
    23,584
    
    
    18,009
    
    
    34,682
    
    
    (22,628
    )Net loss
    
    (789,790
    )
    
    (827,678
    )
    
    (1,668,733
    )
    
    (1,346,472
    )Dividends
      applicable to preferred stock
    
    (507
    )
    
    
    
    
    (1,014
    )
    
    Net loss
      applicable to common stockholders
    $
    (790,297
    )
    $
    (827,678
    )
    $
    (1,669,747
    )
    $
    (1,346,472
    )Loss per
      share applicable to commonstockholders
      - basic and diluted
    $
    (0.07
    )
    $
    (0.09
    )
    $
    (0.16
    )
    $
    (0.16
    )Weighted
      average shares outstanding - basicand
      diluted
    
    10,931,052
    
    
    9,690,365
    
    
    10,410,451
    
    
    8,591,279See Notes to Condensed Consolidated
Financial Statements


5
MILESTONE
SCIENTIFIC, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS EQUITY (DEFICIENCY)SIX MONTHS ENDED JUNE 30, 2005
(Unaudited)


Preferred
      Stock
    
    Common
      Stock
    
    Additional
      Paid-in 
      Capital
    
    Accumulated
      Deficit
    
    Treasury
      Stock
    
    TotalShares
    
    Amount
    Shares
    
    AmountBalance,
      January 1, 2005
    
    25,365
    
    $
    25
    
    
    9,824,287
    
    $
    9,824
    
    $
    52,618,913
    
    $
    (47,196,539
    )
    $
    (911,516
    )
    $
    4,520,707Common
      stock issued for payment ofpatent
      rights acquired
    
    
    
    
    
    
    
    43,424
    
    
    44
    
    
    87,289
    
    
    
    
    
    
    
    
    87,333Common
      stock issued for payment ofvendor
      services
    
    
    
    
    
    
    
    38,730
    
    
    39
    
    
    99,961
    
    
    
    
    
    
    
    
    100,000Common
      stock issued for payment ofconsulting
      services
    
    
    
    
    
    
    
    99,362
    
    
    100
    
    
    128,529
    
    
    
    
    
    
    
    
    128,629Common
      stock issued for payment ofemployee
      compensation
    
    
    
    
    
    
    
    23,461
    
    
    23
    
    
    34,977
    
    
    
    
    
    
    
    
    35,000Common
      stock issued for exercised option
    
    
    
    
    
    
    
    333
    
    
    0
    
    
    749
    
    
    
    
    
    
    
    
    749Proceeds
      from equity financings, net
    
    
    
    
    
    
    
    1,356,440
    
    
    1,356
    
    
    3,525,932
    
    
    
    
    
    
    
    
    3,527,288Net
      loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,668,733
    )
    
    
    
    
    (1,668,733
    )Balance,
      June 30, 2005
    
    25,365
    
    $
    25
    
    
    11,386,037
    
    $
    11,386
    
    $
    56,496,350
    
    $
    (48,865,272
    )
    $
    (911,516
    )
    $
    6,730,973See Notes to Condensed Consolidated
Financial Statements


6
MILESTONE SCIENTIFIC
INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWSSIX MONTHS ENDED JUNE
30, 2005 AND 2004(Unaudited)

2005
    
    2004Cash flows
      from operating activities:Net loss
    $
    (1,668,733
    )
    $
    (1,346,472
    )Adjustments
      to reconcile net loss to net cash used in operating activities:Depreciation
    
    49,700
    
    
    17,140Amortization
      of debt discount and deferred financing costs
    
    
    
    
    46,294Amortization
      of patents
    
    7,053
    
    
    Stock
      issued for compensation and consulting services
    
    263,629
    
    
    1,548Bad
      debt expense
    
    11,769
    
    
    Changes
      in operating assets and liabilities:(Increase)
      in accounts receivable
    
    (148,377
    )
    
    (119,619
    )(Increase)
      in royalty receivable
    
    (219,210
    )
    
    (Increase)
      in inventories
    
    (114,026
    )
    
    (109,637
    )(Increase)
      decrease in advances to contract manufacturer
    
    (258,182
    )
    
    112,997Decrease
      (increase )in prepaid expenses
    
    7,976
    
    
    (3,295
    )Decrease
      (increase) in other assets
    
    3,138
    
    
    (142
    )(Decrease)
      in accounts payable
    
    (117,179
    )
    
    (604,858
    )(Decrease)
      in accrued interest
    
    
    
    
    (82,015
    )Increase
      in accrued expenses
    
    215,675
    
    
    255,084Increase
      (decrease) in deferred compensation
    
    75,000
    
    
    (181,000
    )Net
      cash used in operating activities
    
    (1,891,767
    )
    
    (2,013,975
    )Cash flows
      from investing activities:Payment
      for capital expenditures
    
    (19,462
    )
    
    (324,767
    )Payment
      for patent rights
    
    (145,000
    )
    
    Net
      cash used in investing activities:
    
    (164,462
    )
    
    (324,767
    )Cash flows
      from financing activities:Proceeds
      from equity financings, net
    
    3,528,037
    
    
    7,620,104Payments
      of note payable - officer/stockholder
    
    
    
    
    (50,000
    )Net
      cash provided by financing activities
    
    3,528,037
    
    
    7,570,104NET INCREASE
      IN CASH AND CASH EQUIVALENTS
    
    1,471,808
    
    
    5,231,362Cash and
      cash equivalents beginning of period
    
    3,041,306
    
    
    3,277Cash
      and cash equivalents end of period
    $
    4,513,114
    
    $
    5,234,639Supplemental
      disclosure of cash flow information:Cash paid
      during the period for interest
    $
    
    
    $
    99,359See Notes to Condensed Consolidated
Financial Statements


7
MILESTONE
SCIENTIFIC INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSSIX
MONTHS ENDED JUNE 30, 2005 AND 2004(Unaudited)


Supplemental schedule of noncash
investing and financing activities:


On
January 27, 2005 we issued 43,424 shares valued at $70,000 and recorded a $145,000
liability payable to our outside director of clinical affairs in satisfaction of a
technology agreement to provide Milestone with patent rights.


On
February 11, 2005 we issued 3,084 shares valued at $7,000 to ValueRich Inc. in
satisfaction of an agreement to provide Milestone with exhibition facilities.


On
March 8, 2005 we issued 7,408 shares valued at $20,000 (of which $6,667 was expensed in
the six months ended June 30, 2005) to Dynamic Decisions, S.r.l. in satisfaction of
consulting services to be provided under contract for a 12 month period ending in March,
2006.


On
March 8, 2005 we issued 2,204 shares valued at $5,000 to Investment Connections in
satisfaction of professional services rendered.


On
March 8, 2005 we issued 9,965 shares valued at $23,333 to a former employee as part of a
severance agreement.


On
March 22, 2005 we issued 8,811 shares to a consultant for professional business
development services valued at $20,000 to be provided over the next 18 months (of which
$6,666 was expensed in the six months ended June 30, 2005). We also issued 6,061 shares
valued at $10,000 to an employee for payment of bonus.


On
March 23, 2005 we issued 38,730 shares to Design Center Inc, in satisfaction of $100,000
of payables owed in connection with warehousing and fulfillment services rendered.


On
March 31, 2005 we issued 7,536 shares valued at $20,000 to a consultant for professional
services rendered during March. On June 6, 2005, we issued another 7,536 shares valued at
$20,000 to the same consultant for professional services rendered during April.


On
April 4, 2005, Milestone completed a $2,999,996 private placement of 101,044 units to
accredited investors. Each unit consists of 10 shares of common stock and two warrants.
Proceeds from the private placements were recorded net of a 7% placement agent fee of
$209,978 and other offering expenses totaling $44,257.


On
June 27, 2005 we issued 7,435 shares valued at $20,000 to an employee as part of annual
compensation.


On
June 30, 2005 we issued 62,783 shares valued at $180,000 to a consultant for advertising
and marketing services to be rendered in a twelve-month period from April 2005.


On
June 30, 2005, Milestone completed an $847,960 private placement of 34,000 units to
accredited investors. Each unit consists of 10 shares of common stock and two warrants.
Proceeds from this private placement were recorded net of a fee of $50,878 and 600
identical units to the investment adviser. Dynamic Decisions acted as investment adviser
to Milestone in this transaction and received a fee of $50,878 and 600 Units, which are
substantially the same form as those issued to the investors. Total proceeds from this
private placement, after commissions and other expenses, were $797,054.


8
In
February 2004, Milestone issued 335,614 units in consideration for notes payable and
accrued interest due to an officer and a shareholder of $1,604,204, accounts payable due
to outside legal counsel of $200,000 and deferred compensation to an officer of $384,000.
Each unit consisted of 2 shares of Milestones common stock (671,228 shares of common
stock) and a warrant.


As
part of its payment for services in connection with the February 2004 public offering,
Milestone issued to its outside general counsel 5-year options to purchase 160,000 shares
of common stock at an exercise price of $3.26 per share and warrants to purchase 80,000
shares of common stock at an exercise price of $4.89.


In
April 2004, pursuant to an agreement to purchase media placement services, the Company
issued 1,106 shares of common stock valued at $2,500.


In
May 2004, the Company issued 43,335 options to various consultants for current and future
services valued at $106,078 of which $1,548 was recognized as expense during the period.


9
MILESTONE SCIENTIFIC
INC. AND SUBSIDIARIESNOTES 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
unaudited condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto for the year ended December 31,
2004 included in Milestones Annual Report on Form 10-KSB. The accounting policies
used in preparing these unaudited condensed consolidated financial statements are the
same as those described in the December 31, 2004 consolidated financial statements.In
the opinion of Milestone, the accompanying unaudited condensed consolidated financial
statements contain all adjustments (consisting of normal recurring entries) necessary to
present fairly Milestones financial position as of June 30, 2005 and the results of
its operations for the three and six months ended June 30, 2005 and 2004.The
results reported for the three and six months ended June 30, 2005 are not necessarily
indicative of the results of operations which may be expected for a full year.Note 2  Private Placement:


On
June 30, 2005 Milestone completed an $847,960 private placement of 34,000 Units to
accredited investors. Each Unit consists of 10 shares of Common Stock and two Warrants.
Each Warrant entitles the holder to purchase a share of Common Stock at $4.89 per share
through the close of business on February 16, 2009. Dynamic Decisions acted as investment
adviser to Milestone in this transaction and received a fee of $50,878 and 600 Units,
which are substantially the same form as those issued to the investors. Total proceeds
from this private placement, after commissions and other expenses, were $797,054.On
April 4, 2005 Milestone completed a $2,999,996 private placement of 101,044 Units to
accredited investors. Each Unit consisted of 10 shares of Common Stock and two Warrants.
Each Warrant entitles the holder to purchase a share of Common Stock at $4.89 per share
through the close of business on February 16, 2009. I-Bankers Securities, Inc. acted as
placement agent for Milestone in this transaction and received a fee of $209,978 and
101,044 Warrants identical in terms to those issued to the investors. Total proceeds to
Milestone after commissions and other expenses were $2,730,234.Net
proceeds from these offerings will be used to fund Milestones operations including
ongoing sales and marketing programs, along with the development and bringing to market
of new products.Note 3      Royalty Receivable:


Royalty
receivable represents the royalty due from United Systems, Inc, the licensee of
our proprietary consumer dental whitening product, which is sold under
our distributors trademark,
Ionic White. This receivable was collected on July 29, 2005.10
Note 4  Inventories:


Inventories
principally consist of finished goods and component parts stated at the lower of cost
(first-in, first-out method) or market.Note 5  Basic and diluted net
loss per common share:


Milestone
presents basic earnings (loss) per common share and, if applicable, diluted earnings per
common share pursuant to the provisions of Statement of Financial Accounting Standards
No. 128, Earnings per Share (SFAS 128). Basic earnings (loss) per
common shares is calculated by dividing net income or loss applicable to common stock by
the weighted average number of common shares outstanding during each period. The
calculation of diluted earnings per common share is similar to that of basic earnings per
common share, except that the denominator is increased to include the number of
additional common shares that would have been outstanding if all potentially dilutive
common shares, such as those issuable upon the exercise of stock options, warrants, and
the conversion of notes payable were issued during the period. Milestone has not included
the common shares issuable upon conversion of the outstanding 25,365 preferred shares in
the weighted average number of shares outstanding in the computation of basic loss per
share because their effect would have been anti-dilutive. This treatment is in accordance
with the two class method of computing earnings (loss) per share set forth in
SFAS 128.Since
Milestone had net losses for the three and six months ended June 30, 2005 and 2004, the
assumed effects of the exercise of 3,589,256 and 3,249,692 outstanding stock options and
warrants, and the conversion of notes payable and preferred stock into common stock at
June 30, 2005 and 2004, were not included as their effect would have been anti-dilutive.Note 6  Significant Customer:


Milestone
had one foreign customer who accounted for approximately 16% and 19% of its net sales for
the three and six months ended June 30, 2005, respectively and approximately 23% and 21%
for the three and six months ended June 30, 2004, respectively. At June 30, 2005,
receivables from this customer were approximately 83% of Milestones total accounts
receivable.Note 7 Employee Stock Option
Plan


As
of June 30, 2005, there were 286,783 outstanding options granted under the Milestone 1997
Stock Option Plan and no option grants had been made under the Milestone 2004 Stock
Option Plan. Milestone accounts for these plans under the recognition and measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. No stock-based employee compensation cost is reflected in net
loss, as all options granted under these plans had an exercise price equal to the market
value of the underlying common stock on the dates of grant. The following table
illustrates net loss and loss per share if Milestone had applied the fair value
recognition provisions of FASB Statement No. 123, Accounting for Stock-Based
Compensation, to stock-based employee compensation.11
Three
      Months Ended
      June 30,
    
    Six
      Months Ended
      June 30,2005
    
    2004
    2005
    
    2004Net
      loss applicable to common stockholders, as reported
    $
    (790,297
    )
    $
    (827,678
    )
    $
    (1,669,747
    )
    $
    (1,346,472
    )Deduct
      total stock-based employee compensationexpenses
      determined under the fair valuebased method
      for all awards
    
    27,016
    
    
    19,842
    
    
    228,188
    
    
    25,373Net
      loss applicable to common stockholders, pro forma
    $
    (817,313
    )
    $
    (847,520
    )
    $
    (1,897,935
    )
    $
    (1,371,845
    )Loss per
      share applicable to common stockholders:Basic
      and dilutedAs
      reported
    
    ($0.07
    )
    
    ($0.09
    )
    
    ($0.16
    )
    
    ($0.16
    )Pro
      forma
    
    ($0.07
    )
    
    ($0.09
    )
    
    ($0.18
    )
    
    ($0.16
    )The
fair value of each option granted is estimated on the date of the grant using the
Black-Scholes option pricing model with the following assumptions used for the grants in
the quarters ended June 30, 2005 and 2004, respectively: dividend yield of 0%; expected
volatility of 123.18 % and 90%; risk free interest rate of 3.87% and 2.5%; and expected
lives of 5 years.During
the six months ended June 30, 2005, Milestone issued 80,000 stock options at an exercise
price of $3.27.Note 8 Agreements to Issue
Common Stock and Stock Option


On
May 18, 2005, Milestone issued to Ionic White, Inc., its marketing partner for a consumer
tooth whitening product, 3-year options to purchase 100,000 shares of Milestone common
stock at $4.89 per share. The options are not exercisable unless the marketing partner
purchases at least 2,000,000 starter kits for the registrants consumer tooth
whitening system during the twelve month period beginning July 1, 2005. If 2,000,000
starter kits are purchased during that period, options to purchase 10,000 shares become
exercisable. If 2,500,000 starter kits are purchased during that period, options to
purchase an aggregate of 50,000 shares become exercisable. If 3,000,000 starter kits are
purchased during that period, options to purchase all 100,000 shares become exercisable.Under
a previous agreement, Ionic White, Inc., agreed to purchase 500,000 shares of Milestone
common stock in quarterly installments of 125,000 shares within 10 days after the end of
each of the four fiscal quarters commencing July 1, 2005. Milestone is not required to
sell these shares unless Ionic White has purchased at least 625,000 starter kits in the
first quarter, at least 1,250,000 starter kits in the first two quarters and at least
1,875,000 starter kits in the first three quarters. Further, at Milestones option,
all shares previously purchased must be returned to Milestone and all monies paid to
Milestone returned to Ionic White if it has not purchased an aggregate of at least
3,000,000 starter kits for the twelve-month period ending June 30, 2006.12
ITEM 2.  Managements
Discussion and Analysis or Plan of Operation.


OVERVIEW


You
should read the following discussions of our financial condition and results of
operations in conjunction with the financial statements and the notes to those statements
included elsewhere in this Form 10-QSB. This discussion may contain forward-looking
statements that involve risks and uncertainties. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of certain
factors, such as those set forth in our Form 10K-SB for the year ended December 31, 2004.



Milestone
has succeeded in improving its liquidity by acquiring the capital necessary to grow our
business and seize the market opportunity that our proprietary products have created.
During 2004 and continuing through the first two quarters of 2005, we have grown our
revenue base both with our existing product line and the introduction of new products.



Most
of our revenues continue to be generated through sales of our CompuDent system and
The Wand disposable handpiece used with that system. Revenues have been earned
domestically and internationally through sales in more than 25 countries. While worldwide
revenues are growing, domestic CompuDent and handpiece sales have provided an
increasingly large portion of our revenues. This is an important metric as it validates
the investment made in our domestic sales distribution organization. Additionally, we
enjoy significantly higher margins on domestic sales compared to the lower per unit and
handpiece margins we receive from our wholesale based international distribution network.
We anticipate that this growing base of new customers will generate increased future
sales of our disposable handpiece products. We also believe that our ownership of the SafetyWand technology
in light of OSHA regulations issued pursuant to recent federal and state government
legislation mandating needle stick safety standards positions us to become a leading
provider for dentists and other health care professionals in the administration of local
anesthesia, thereby providing further revenue growth opportunities.



In
late March we launched, through widely broadcast infomercials, our consumer tooth
whitening product sold under our distributors trademark, Ionic White.
Our consumer tooth whitening product and the CoolBlue Professional Tooth
Whitening System, complement our existing product line. The tooth whitening market is a
fast growing dental segment. We believe that it will provide significant additional
revenue opportunities. Revenues for the second quarter reflect sales of Ionic White.
During the quarter a competitor launched a confusingly similar tooth whitening product
through infomercials and retail distribution. Milestone has commenced an infringement
action and the defendant has counterclaimed against Milestone for a declaratory judgment
of non-infringement. The introduction of this competitive product may cause our
distributor to focus its near-term marketing efforts on retail sales. We are also
aggressively pursuing entrance into the medical arena with our syringe pump technology.
We continue to invest in business development efforts to further our progress in the
medical equipment market space.



Selling,
general and administrative expenses for the second quarter increased substantially from
last year, reflecting our continuing enhancement of our domestic dental sales capability
and increased marketing and promotional efforts, including trade show appearances, for
our dental products. The increase also reflects our continuing efforts to complete
development of, and find marketing partners for, medical devices using our advanced
technology, particularly our Compuflo  syringe pump technology.



The
following table shows a breakdown of our sales in each product category, domestically and
internationally, and the percentage of sales to total product sales:


13
Three
      Months Ended
    
    Six
      Months EndedJune
      30, 2005
    
    June
      30, 2004
    June
      30, 2005
    
    June
      30, 2004DOMESTICCompuDent
    $
    377,076
    
    
    33.6
    %
    $
    142,132
    
    
    17.8
    %
    $
    704,764
    
    
    33.1
    %
    $
    275,753
    
    
    17.9
    %Handpieces
    $
    639,104
    
    
    57.0
    %
    
    607,600
    
    
    76.0
    %
    
    1,303,495
    
    
    61.1
    %
    
    1,156,769
    
    
    75.2
    %Other
    $
    105,713
    
    
    9.4
    %
    
    49,790
    
    
    6.2
    %
    
    122,809
    
    
    5.8
    %
    
    106,478
    
    
    6.9
    %Total
      Domestic
    $
    1,121,893
    
    
    100.0
    %
    $
    799,522
    
    
    100.0
    %
    $
    2,131,068
    
    
    100.0
    %
    $
    1,539,000
    
    
    100.0
    %INTERNATIONALCompuDent
    $
    119,141
    
    
    35.6
    %
    $
    160,909
    
    
    41.4
    %
    $
    292,208
    
    
    37.3
    %
    $
    325,249
    
    
    43.8
    %Handpieces
    $
    164,585
    
    
    49.1
    %
    
    216,336
    
    
    55.7
    %
    
    433,166
    
    
    55.3
    %
    
    392,646
    
    
    52.8
    %Other
    $
    51,112
    
    
    15.3
    %
    
    11,255
    
    
    2.9
    %
    
    58,192
    
    
    7.4
    %
    
    25,350
    
    
    3.4
    %Total
      International
    $
    334,838
    
    
    100.0
    %
    $
    388,500
    
    
    100.0
    %
    $
    783,566
    
    
    100.0
    %
    $
    743,245
    
    
    100.0
    %DOMESTIC/INTERNATIONAL
      ANALYSISDomestic
    $
    1,121,893
    
    
    77.0
    %
    $
    799,522
    
    
    67.3
    %
    $
    2,131,068
    
    
    73.1
    %
    $
    1,539,000
    
    
    67.4
    %International
    
    334,838
    
    
    23.0
    %
    
    388,500
    
    
    32.7
    %
    
    783,566
    
    
    26.9
    %
    
    743,245
    
    
    32.6
    %Total
      Product Sales
    $
    1,456,731
    
    
    100.0
    %
    $
    1,188,022
    
    
    100.0
    %
    $
    2,914,634
    
    
    100.0
    %
    $
    2,282,245
    
    
    100.0
    %14
Summary of
Significant Accounting 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 receivable, inventories,
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.Inventory


Inventories
principally consist of finished goods and component parts stated at the lower of cost
(first-in, first-out method) or market.Impairment of
Long-Lived Assets


We
review long-lived assets for impairment whenever circumstances and situations change such
that there is an indication that the carrying amounts may not be recovered.Revenue Recognition


Revenue
is recognized when title passes at the time of shipment and collectibility based on a
sales arrangement and the agreed upon price is reasonably assured.Results of Operations


The
consolidated results of operations for the six months ended June 30, 2005 reflect growth
of our user base and the initial additional expenditures necessary to further expand our
customer base both domestically and abroad.



The following table sets forth, for
the periods presented, statement of operations data as a percentage of revenues. The
trends suggested by this table may not be indicative of future operating results.


Three
      Months Ended
    
    Six
      Months EndedJune
      30, 2005
    
    June
      30, 2004
    June
      30, 2005
    
    June
      30, 2004Products
      sales, net
    
    1,456,731
    
    
    87
    %
    
    1,188,022
    
    
    100
    %
    
    2,914,634
    
    
    93
    %
    
    2,282,245
    
    
    100
    %Royalty
      income
    
    219,210
    
    
    13
    %
    
    
    
    
    0
    %
    
    219,210
    
    
    7
    %
    
    
    
    
    Total
      revenue
    
    1,675,941
    
    
    100
    %
    
    1,188,022
    
    
    100
    %
    
    3,133,844
    
    
    100
    %
    
    2,282,245
    
    
    100
    %Cost of
      products sold
    
    538,604
    
    
    32
    %
    
    769,383
    
    
    65
    %
    
    1,253,310
    
    
    40
    %
    
    1,315,683
    
    
    58
    %Royalty
      expense
    
    26,305
    
    
    2
    %
    
    
    
    
    
    
    
    26,305
    
    
    
    
    
    
    
    
    Total
      costs
    
    564,909
    
    
    34
    %
    
    769,383
    
    
    65
    %
    
    1,279,615
    
    
    40
    %
    
    1,315,683
    
    
    58
    %Gross Profit
    
    1,111,032
    
    
    66
    %
    
    418,639
    
    
    35
    %
    
    1,854,229
    
    
    60
    %
    
    966,562
    
    
    42
    %Selling,
      general andadmin
      expenses
    
    1,854,562
    
    
    111
    %
    
    1,211,917
    
    
    102
    %
    
    3,456,255
    
    
    110
    %
    
    2,196,785
    
    
    96
    %Research
      &development
    
    69,844
    
    
    4
    %
    
    52,409
    
    
    4
    %
    
    101,389
    
    
    3
    %
    
    93,621
    
    
    4
    %Loss from
      operations
    
    (813,374
    )
    
    -49
    %
    
    (845,687
    )
    
    -71
    %
    
    (1,703,415
    )
    
    -53
    %
    
    (1,323,844
    )
    
    -58
    %15
Three Months ended
June 30, 2005 compared to three months ended June 30, 2004


Total
revenues for the three months ended June 30, 2005 and 2004 were $1,675,941 (product sales
of $1,456,731 and royalty income of $219,210) and $1,188,022, respectively. The amount of
$219,210 or 13% of total revenues is royalty income from granting United Systems Inc. a
license to manufacture, market, and sublicense the Ionic White  to the
consumer market. The $268,709 or 23% increase in net product sales is primarily related
to a 165% or $234,944 increase in domestic CompuDent® sales. This increase
shows the effect of our investment in our domestic sales force and marketing initiatives
while maintaining a strong presence internationally. Domestic handpiece sales increased
$31,504 or 5%, while worldwide handpiece sales decreased by $51,751 or 24%. This is the
result of innovative domestic sales programs where handpieces are bundled with CompuDent® units
at the point of sale. We believe that this will ultimately result in a growing monthly
order book for handpieces as the initial supply runs out.



For
the three months ended June 30, 2005, Milestone generated a gross profit of $1,111,032 or
66% as compared to a gross profit of $418,639 or 35% for the three months ended June 30,
2004. Excluding the net royalty income of $192,905, improvement in gross profit was due
to higher domestic sales in 2005, which has higher profit margins than international
sales, and the effect of a $101,608 inventory valuation write down in 2004 which did not
recur in the 2005 period.



Selling,
general and administrative expenses for the three months ended June 30, 2005 and 2004
were $1,854,562 and $1,211,917, respectively. The $642,645 or 53% increase is
attributable primarily to Milestones continued execution of its strategy to develop
our domestic sales force and distribution capacity. Sales headcount increased from 1
manager, 3 sales representatives, and 8 independent contractors at June 30, 2004 to 3
sales managers, 18 inside sales representatives, 2 sales support representatives, and 8
independent contractors at June 30, 2005. Accordingly, hiring and related employee
expenses including sales commissions increased by $218,691 or 54%. Selling, marketing and
advertising expenses including related travel and tradeshows increased by $113,921 or
101%. Legal fees increased by $71,207 or 46% primarily because of patent filings
associated with new product development. Professional fees for consulting services
increased $140,941 or 309% primarily related to vested portion of stock options granted
to outside consultants. These increases reflect both increased spending in 2005 and the
effects of cash constraints Milestone operated under prior to the February 2004 Public
Offering.



Research
and development expenses for the three months ended June 30, 2005 and 2004 were $69,844
and $52,409, respectively. These costs are associated with the continued development of
our CoolBlue Tooth Whitening Systems andCompuFlo  products, and
our consumer tooth whitening product sold under our distributors Ionic White trademark.



Interest
income of $23,584 was earned in the three months ended June 30, 2005 compared to $28,876
earned for the same period of the prior year due to lower average cash balances.



There
was no interest expense for the three months ended June 30, 2005 compared to interest
expense of $10,867 for the three months ended June 30, 2004. The difference is
attributable to the extinguishment of debt related to the February 2004 equity placement.



For
the reasons explained above, net loss for the three months ended June 30, 2005 was
$37,888 or 5% less than the net loss for the three months ended June 30, 2004.


16
Six months ended June
30, 2005 compared to the six months ended June 30, 2004


Total
revenues for the six months ended June 30, 2005 and 2004 were $3,133,844 and $2,282,245,
respectively. The 2005 total revenues include product sales of $2,914,634 and royalty
income of $219,210. Total revenues increased by $851,599 or 37%. Contributing to this
increase was primarily a $429,011 or 156% increase in domestic sales of CompuDent® units.



Gross
profit for the six months ended June 30, 2005 and 2004 was $1,854,229 or 60% and $966,562
or 42%, respectively. The $887,667 or 92% increase in gross profit was due principally to
an increase in sales of domestic CompuDent® units which has higher profit margins
than international sales, as well as the net royalty income generated by sales ofIonic
White consumer whitening products and the effect of a $101,608 inventory
valuation write down in 2004 which did not recur in the 2005 period.



Selling,
general and administrative expenses for the six months ended June 30, 2005 and 2004 were
$3,456,255 and $2,196,785 respectively. The increase of $1,259,470 or 57% in these
expenses was anticipated and is consistent with managements stated strategy of
investing in revenue generating areas of the business. Contributing to the increase was
hiring and employee related expenses related to the development of Milestones
national sales force which will benefit Milestone with additional revenues. Legal fees
increased by $80,814 or 34% primarily because of patent filings associated with new
product development. Professional fees related to consulting services and investor
relations increased by $146,135 or 79% primarily related to the vested portion of stock
options granted to outside consultants.



Research
and development expenses for the six months ended June 30, 2005 and 2004 were $101,389
and $93,621, respectively. These costs are associated with the continued development of
our CoolBlueTooth Whitening Systems and CompuFloproducts,
and our consumer tooth whitening product sold under our distributors Ionic White trademark.



Interest
income of $34,682 was earned for the six months ended June 30, 2005 compared to $41,010
interest income for the same period of the prior year. This difference was due to the
lower average cash balances.



There
was no interest expense for the six months ended June 30, 2005 compared to interest
expense of $63,638 for the six months ended June 30, 2004. The difference is attributable
to the extinguishment of debt related to the February 2004 equity placement.



For
the reasons explained above, net loss for the six months ended June 30, 2005 increased by
$322,261 or 24% over the net loss for the six month period ended June 30, 2004.


17
Liquidity and
Capital Resources


Milestone
incurred net losses of approximately $1,669,000 and $1,346,000 and negative cash flows
from operating activities of approximately $1,892,000 and $2,014,000 during the six months
ended June 30, 2005 and 2004, respectively. Milestone improved its liquidity position with
the private placement of Units completed in April, and June, 2005, as discussed below. We
have maintained our net worth at $6,000,000 for the two consecutive quarters ended June
30, 2005, which is the target outlined in the plan that we submitted to the American Stock
Exchange on January 14, 2005, in order to regain compliance with the Exchanges
stockholder equity continued listing requirement by the end of the plan period on June 30,
2005. Once we file our Quarterly Report on Form 10-QSB for the period ended June 30, 2005,
we expect the American Stock Exchange to remove the special symbol indicating that we are
below continued listing standards, although the Exchange has discretion in this regard. We
will continue to seek new sources of equity funding.


Private Placement


On
April 4, 2005 Milestone completed a $2,999,996 private placement of 101,044 Units to
accredited investors. Each Unit consisted of 10 shares of Common Stock and two Warrants.
Each Warrant entitles the holder to purchase a share of Common Stock at $4.89 per share
through the close of business on February 16, 2009. I-Bankers Securities, Inc. acted as
Placement Agent for Milestone in this transaction and received a fee of $209,978 and
101,044 Warrants identical in terms to those issued to the investors. The Units, which are
restricted securities and bear a restrictive legend, are subject to stop transfer
restrictions. Total proceeds to Milestone after commissions and other expenses were
$2,730,734.


On
June 30, 2005 Milestone completed an $847,960 private placement of 34,000 Units. Each Unit
consists of 10 shares of Common Stock and two Warrants. Each Warrant entitles the holder
to purchase a share of Common Stock at $4.89 per share through the close of business on
February 16, 2009. Dynamic Decisions acted as Placement Agent for Milestone in this
transaction and received a fee of $50,878 and 600 Units, which are substantially the same
form as those issued to the investors. Total proceeds from this private placement, after
commissions and other expenses, were $797,054.


Cash flow
results


As
of June 30, 2005, Milestone had cash and cash equivalents of $4,513,114 and working
capital of $5,960,200.



For
the six months ended June 30, 2005, Milestones net cash used in operating
activities was $1,891,767. This was attributable primarily to a net loss of $1,668,733
adjusted for noncash items totaling $322,151 (of which $49,700 was depreciation expense,
$7,053 was amortization of patents, and $263,629 was stock and options issued for
compensation and consulting); a $148,377 increase in accounts receivable, a $219,210
increase in royalty receivable, a $114,026 increase in inventory, a $258,182 increase in
advances to contract manufacturer, a net $98,496 increase in accounts payable and accrued
expenses, and a $75,000 increase in deferred compensation.



For
the six months ended June 30, 2005, Milestone used $164,462 in investing activities for
capital expenditures. One major investing activity was a purchase of patent right for
$145,000. An expenditure of $19,462 was primarily for the purchases of molds and tooling
for new products.



For
the six months ended June 30, 2005, Milestone generated $3,528,037 from financing
activities relating to the private placements discussed above and an employee option
exercise.



Management
believes that it has sufficient resources to meet its obligations over the next twelve
months.


18
ITEM 3.
CONTROLS AND PROCEDURES


a)
Evaluation
of Disclosure Controls and Procedures. Milestones management, with the
participation of our chief executive officer and the acting chief financial officer,
carried out an evaluation of the effectiveness of our disclosure controls and
procedures (as defined in the Securities Exchange Act of 1934 (the Exchange
Act) Rules 13a-15(e) as of the end of the period covered by this report (the Evaluation
Date). Based upon that evaluation, the chief executive officer and acting chief
financial officer concluded that, as of the Evaluation Date, our disclosure controls and
procedures are effective to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the SECs rules and forms.
Information required to be disclosed by us in the reports we file or submit under the
Exchange Act is accumulated and communicated to our management, including our principal
executive and principal financial officers, as appropriate to allow timely decisions
regarding required disclosure.b)
Changes
in Internal Control over Financial Reporting.There were no changes in our internal
controls over financial reporting that occurred during the period covered by this report
that have materially affected, or are reasonably likely to materially affect, Milestones
internal control over financial reporting.19
PART II




ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


Recent Sales of Unregistered
Securities


On
March 31, 2005 we issued 7,536 shares valued at $20,000 to a consultant for professional
services rendered during March. On June 6, 2005, we issued another 7,536 shares valued at
$20,000 to the same consultant for professional services rendered during April.



On
April 4, 2005 we completed a private placement of $2,999,996 of 101,044 Units to
accredited investors. The Units, which are restricted securities and bear a restrictive
legend, are subject to stop transfer restrictions. The offering, which was previously
reported in Milestones annual report of Form 10-KSB filed with the Securities and
Exchange Commission on April 4, 2005, is described in Note 2 to the financial statements
above, and that information is incorporated here by reference.



On
April 4, 2005 an optionee exercised a stock option to purchase 333 shares valued at $749.



On
April 30, 2005 we issued 352 shares to Investment Connections as part of the compensation
of professional services rendered.



On
May 18, 2005, we issued to Ionic White, Inc., 3-year options to purchase 100,000 shares
of common stock at $4.89 per share. The issuance was previously reported in our report on
Form 8-K dated May 20, 2005, and that information is incorporated here by reference.



On
June 27, 2005 we issued 7,435 shares valued at $20,000 to an employee as part of annual
compensation.



On
June 30, 2005 we issued 62,783 shares valued at $180,000 to a consultant for advertising
and marketing services to be rendered in a twelve-month period from April 2005.



On
June 30, 2005, Milestone completed an $847,960 private placement of 34,000 units to
accredited investors. The Units, which are restricted securities and bear a restrictive
legend, are subject to stop transfer restrictions. This offering, which was previously
reported in our report on Form 8-K dated June 30, 2005, is described in Note 2 to the
financial statements above, and that information is incorporated here by reference.



All
the above issuances were acquired for investment by accredited investors and were issued
without registration under the Securities Act of 1933, as amended, pursuant to the
exemptions provided under sections 4(6), 4(2). In addition, the two private placements of
units completed respectively on April 4 and June 30, 2005, relied on the exemption from
registration provided by Regulation D.


20
ITEM 6.   EXHIBITS


EXHIBIT
      NO.
    
DESCRIPTION3.1

Certificate
of Incorporation of Milestone (1)3.2

Certificate
of Amendment filed July 13, 1995 (2)3.3

Certificate
of Amendment filed December 6, 1996 (3)3.4

Certificate
of Amendment filed December 17, 1997 (4)3.5

Certificate
of Amendment filed July 23, 2003 (6)3.6

Certificate
of Amendment filed January 8, 2004. (6)3.7

Certificate
of Designation filed January 15, 2004 (6)3.8

By-laws
of Milestone (1)4.1

Specimen
stock certificate (2)4.2

Intentionally
Left Blank4.3

Form
of warrant agreement, including form of warrant (8)10.1

Lease
dated November 25, 1996 between Livingston Corporate Park Associates, L.L.C. and
           Milestone. (3)4.4

Form
of Subscription Agreement used in connection with the private placement of Units, March
2005. (10)4.5

Form
of warrant issued in connection with the private placement of Units, March 2005. (10)4.6

Form
of Subscription Agreement used in connection with the private placement of Units, June
2005.*4.7

Form
of warrant issued in connection with the private placement of Units, June 2005.*10.2 to10.25

Intentionally Left Blank10.26

Letter
from Leonard Osser, dated April 15, 2003 deferring payment. (5)10.27

Letter
from Morse, Zelnick, Rose & Lander LLP, dated April 2003 deferring payment. (6)10.28

Line
of Credit for $900,000 and extension of $500,000 line of credit, dated April 15, 2003. (6)10.29

Agreement
with DaVinci Systems dated July 30, 2003. (6)10.30

Agreement
with Mark Hochman and amendments thereto dated April 9, 1998, December 16, 1999, November
28, 2001, October 10, 2002 and December 19, 2003. (6)10.31

Agreement
with Strider dated September 3, 2003. (6)10.32

Agreement
with Len Osser and K. Tucker Andersen, dated October 9, 2003. (6)10.33

Agreement
with Morse, Zelnick, Rose & Lander dated December 22, 2003. (6)10.34

Employment
Agreement with Leonard Osser dated December 20, 2003. (6)10.35

Agreement
with United Systems dated October 20, 2004. (9)10.36

Agreement
with Mark Hochman dated as of January 1, 2005. (9)10.37

Lease
amendment dated April 28, 2004 between Livingston Corporate Park Associates, L.L.C. and
           Milestone. (9)31.1

Chief
Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of
2002.*31.2

Chief
Financial Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of
2002.*32.1

Chief
Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of
2002.*32.2

Chief
Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of
2002.**  Filed herewith.


21
(1)

Incorporated
by reference to Milestones Registration Statement on Form SB-2 No. 33-92324.(2)

Incorporated
by reference to Amendment No. 1 to Milestones Registration Statement on
           Form SB-2 No. 333-92324.(3)

Incorporated
by reference to Milestones Form 10-KSB for the year ended December 31, 1996.(4)

Incorporated
by reference to Milestones Form 10-KSB for the year ended December 31, 1999.(5)

Incorporated
by reference to Milestones Registration Statement on Form S-2 No. 333-110376,
           Amendment No. 1.(6)

Incorporated
by reference to Milestones Registration Statement on Form S-2 No. 333-110376,
           Amendment No. 3.(7)

Incorporated
by reference to Milestones Form 10-KSB for the year ended December 31, 2003.(8)

Incorporated
by reference to Milestones Registration Statement on Form S-2 No. 333-110367,
           Amendment No. 5.(9)

Incorporated
by reference to Milestones Form 10-KSB for the year ended December 31, 2004.(10)

Incorporated
by reference to Milestones Form 10-QSB for the quarter ended March 31, 2005.22
SIGNATURES


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


MILESTONE
      SCIENTIFIC INC.
      
                        Registrant
      /s/ Leonard Osser
      
      Leonard Osser Chairman and
      Chief Executive Officer
      /s/ Rosaline Shau
      
      Rosaline Shau
      Acting Chief Financial OfficerDated: August 15, 2005


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