SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

Mark One

|X|  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the Quarterly Period Ended March 31, 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 Number 001-14053

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

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

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

                                 (973) 535-2717
              (Registrant's telephone number, including area code)

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) or the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes |X| No |_|

As of May 13, 2005, the  Registrant  had a total of 10,928,850  shares of Common
Stock, $.001 par value, outstanding.


<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 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

<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                                      INDEX

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

           ITEM 1.   Condensed Consolidated Financial Statements (unaudited)

                     Condensed Consolidated Balance Sheets
                        March 31, 2005 (Unaudited) and December 31, 2004               4

                     Condensed Consolidated Statements of Operations
                        Three Months Ended March 31, 2005 and 2004 (Unaudited)         5

                     Condensed Consolidated Statement of Changes in Stockholders'
                        Equity (Deficiency) Three Months Ended March 31, 2005          6

                     Condensed Consolidated Statements of Cash Flows
                        Three Months Ended March 31, 2005 and 2004 (Unaudited)         7

                     Notes to Condensed Consolidated Financial Statements              9

           ITEM 2.   Management's Discussion and Analysis or Plan of Operation        12

           ITEM 3.   Controls and Procedures                                          17

PART II.   OTHER INFORMATION

           ITEM 2.   Unregistered Sales of Equity Securities and Use of Proceeds      18

           ITEM 5.   Other Information                                                18

           ITEM 6.   Exhibits                                                         18

SIGNATURES                                                                            20

CERTIFICATIONS                                                                        21
</TABLE>


                                       3

<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                   March 31,    December 31,
                                                                                     2005          2004*
                                                                                 (Unaudited)
                                                                                 ------------   ------------
<S>                                                                              <C>            <C>
                                     ASSETS
Current Assets:
   Cash and cash equivalents                                                     $  3,895,902   $  3,041,306
   Accounts receivable, net of allowance for doubtful accounts of $28,305
      in 2005 and $24,903 in 2004                                                     522,989        421,339
   Stock subscriptions receivable                                                   1,133,041
   Inventories                                                                        935,607        936,221
   Advances to contract manufacturer                                                   62,034         62,034
   Prepaid expenses                                                                   107,239        104,562
                                                                                 ------------   ------------
      Total current assets                                                          6,656,812      4,565,462
Investment in distributor, at cost                                                     69,956         69,956
Equipment, net                                                                        588,937        612,263
Patents, net                                                                          313,711        101,242
Other assets                                                                           18,839         20,408
                                                                                 ------------   ------------
         Total assets                                                            $  7,648,255   $  5,369,331
                                                                                 ============   ============
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable                                                              $    495,831   $    474,075
   Accrued expenses                                                                   352,593        224,549
                                                                                 ------------   ------------
      Total current liabilities                                                       848,424        698,624
Deferred compensation payable to officer                                              187,500        150,000
                                                                                 ------------   ------------
      Total liabilities                                                             1,035,924        848,624
                                                                                 ------------   ------------
Stockholders' Equity
   Preferred stock, par value $.001; authorized 5,000,000 shares 8% Cumulative
      convertible preferred stock, par value $.001; authorized, issued and
      outstanding, 25,365 shares                                                           25             25
   Common stock, par value $.001; authorized 50,000,000 shares; 10,961,598
      shares issued and 10,928,265 shares outstanding in 2005, and 9,824,287
      shares issued and 9,790,954 shares outstanding in 2004                           10,962          9,824
   Additional paid-in capital                                                      55,588,342     52,618,913
   Accumulated deficit                                                            (48,075,482)   (47,196,539)
   Treasury stock, at cost, 33,333 shares                                            (911,516)      (911,516)
                                                                                 ------------   ------------
      Total stockholders' equity                                                    6,612,331      4,520,707
                                                                                 ------------   ------------
         Total liabilities and stockholders' equity                              $  7,648,255   $  5,369,331
                                                                                 ============   ============
</TABLE>

See Notes to Condensed Consolidated Financial Statements

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


                                       4

<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                   THREE MONTHS ENDED MARCH 31, 2005 AND 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                       March 31, 2005   March 31, 2004
                                                                       --------------   --------------
<S>                                                                      <C>              <C>
Net sales                                                                $1,457,903       $1,094,223
Cost of sales                                                               714,706          546,300
                                                                         ----------       ----------
Gross profit                                                                743,197          547,923

Selling, general and administrative expenses                              1,601,693          984,868
Research and development expenses                                            31,545           41,211
                                                                         ----------       ----------
                                                                          1,633,238        1,026,079
                                                                         ----------       ----------
Loss from operations                                                       (890,041)        (478,156)
Other income (expense)
   Interest income                                                           11,098           12,134
   Interest expense                                                              --          (52,771)
                                                                         ----------       ----------
   Other income (expense), net                                               11,098          (40,637)
                                                                         ----------       ----------
Net loss                                                                   (878,943)        (518,793)
Dividends applicable to preferred stock                                        (507)              --
                                                                         ----------       ----------
Net loss applicable to common stockholders                               $ (879,450)      $ (518,793)
                                                                         ==========       ==========
Loss per share applicable to common stockholders - basic and diluted     $    (0.09)      $    (0.07)
                                                                         ==========       ==========
Weighted average shares outstanding - basic
   and diluted                                                            9,882,041        7,566,255
                                                                         ==========       ==========
</TABLE>

See Notes to Condensed Consolidated Financial Statements


                                       5

<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
                               EQUITY (DEFICIENCY)
                        THREE MONTHS ENDED MARCH 31, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                     Preferred Stock      Common Stock        Additional
                                    ----------------  ---------------------    Paid-in    Accumulated   Treasury
                                     Shares  Amount     Shares      Amount     Capital       Deficit      Stock       Total
                                     ------  ------   ----------  ---------  -----------  ------------  ---------  ----------
<S>                                  <C>       <C>    <C>          <C>       <C>          <C>           <C>        <C>
Balance, January 1, 2005             25,365    $25     9,824,287   $ 9,824   $52,618,913  $(47,196,539) $(911,516) $4,520,707
Common stock issued for payment of
   patent rights acquired                                 43,424        44        69,956                               70,000
Common stock issued for payment of
   vendor services                                        38,730        39        99,961                              100,000
Common stock issued for payment of
   consulting services                                    28,691        29        36,971                               37,000
Common stock issued for payment of
    employee compensation                                 16,026        16        33,317                               33,333
Proceeds from equity financing, net                     1,010,440     1,010     2,729,224                            2,730,234
Net loss                                                                                      (878,943)              (878,943)
                                     ------    ---    ----------   -------   -----------  ------------  ---------  ----------
Balance, March 31, 2005              25,365    $25    10,961,598   $10,962   $55,588,342  $(48,075,482) $(911,516) $6,612,331
                                     ======    ===    ==========   =======   ===========  ============  =========  ==========
</TABLE>

See Notes to Condensed Consolidated Financial Statements


                                        6

<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 2005 AND 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                 2005          2004
                                                                              ----------   -----------
<S>                                                                           <C>          <C>
Cash flows from operating activities:
Net loss                                                                      $ (878,943)  $  (518,793)
Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation expense                                                           24,876         9,192
   Amortization of debt discount and deferred financing costs                         --        36,660
   Amortization of patents                                                         2,531
   Stock issued for compensation and consulting services                         170,333            --
   Bad debt expense                                                                3,402
   Changes in operating assets and liabilities:
      (Increase) in accounts receivable                                         (105,052)      (94,172)
      Decrease (increase) in inventories                                             614        (4,006)
      (Increase) in advances to contract manufacturer                                 --       (18,186)
      (Increase) decrease in prepaid expenses                                     (2,677)       40,704
      Decrease in other assets                                                     1,569         1,568
      Increase (decrease) in accounts payable                                     21,756      (578,544)
      (Decrease) in accrued interest                                                  --       (81,215)
      (Decrease) increase in accrued expenses                                    (56,956)       28,556
      Increase (decrease) in deferred compensation                                37,500      (218,500)
                                                                              ----------   -----------
         Net cash used in operating activities                                  (781,047)   (1,396,736)
                                                                              ----------   -----------

Cash flows from investing activities:
   Payment for capital expenditures                                               (1,550)      (93,189)
                                                                              ----------   -----------
         Net cash used in investing activities                                    (1,550)      (93,189)
                                                                              ----------   -----------

Cash flows from financing activities:
   Proceeds from equity financing, net                                         1,637,193     7,820,104
                                                                              ----------   -----------
      Net cash provided by financing activities                                1,637,193     7,820,104
                                                                              ----------   -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                        854,596     6,330,179
Cash and cash equivalents at beginning of period                               3,041,306         3,277
                                                                              ----------   -----------
Cash and cash equivalents at end of period                                    $3,895,902   $ 6,333,456
                                                                              ==========   ===========

Supplemental disclosure of cash flow information:
   Cash paid during the year for interest                                     $       --   $    97,326
                                                                              ==========   ===========
</TABLE>

See Notes to Condensed Consolidated Financial Statements


                                       7

<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 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 $1,667
was expensed in the three  months  ended March 31,  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. We also issued 1,852 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 $3,333 was expensed in the three months ended March 31,  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 to a consultant  for  professional
services rendered during March valued at $20,000.

In March 2005,  Milestone  entered into binding  Subscription  Agreements  for a
$2,999,996  private  placement of 101,044 units. Each unit consists of 10 shares
of common stock and two  warrants.  At March 31, 2005,  Milestone  had remaining
subscriptions  receivable of  $1,133,041.  Proceeds from the private  placements
were  recorded  net of a 7% Placement  Agent Fee of $209,978 and other  offering
expenses totaling $59,784 of which $40,000 was accrued at March 31, 2005.

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  common shares of at an exercise  price of $3.26 per share and
warrants  to purchase  80,000  common  shares of stock at an  exercise  price of
$4.89.


                                       8

<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 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 March 31, 2005 and the  results of its  operations  for the
     three months ended March 31, 2005 and 2004.

     The  results  reported  for the three  months  ended March 31, 2005 are not
     necessarily  indicative of the results of operations  which may be expected
     for a full year.

Note 2 - 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 $2,730,234 net of commissions and fees.

     Net proceeds from the offering 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 - Public Offering:

     On February 17, 2004,  Milestone  completed a $9.4 million Public  Offering
     (proceeds of $7.6 million after underwriters'  discount,  underwriters' non
     accountable  expense  allowance and other  expenses).  The Public  Offering
     consisted of the sale of 1,440,000 units at a price of $6.52 per unit. Each
     unit  consisted of two shares of common stock  (2,880,000  shares of common
     stock) and one warrant.  The warrants included in the units are exercisable
     at any time after they  became  separately  tradable  on March 19, 2004 and
     until their  expiration on February 20, 2009,  five years after the date of
     the closing of the Public  Offering,  at an  exercise  price equal to $4.89
     (150% of the closing  market  price of our common stock on the pricing date
     of the  Offering).  Some or all of the  warrants may be redeemed by us at a
     price of $0.25 per  warrant,  by giving not less than 30 days notice to the
     holders of the warrants,  which  Milestone may do at any time,  beginning 6
     months after the effective  date of the Offering and once the closing price
     for Milestone's  common stock on the principal  exchange on which it trades
     (AMEX) has equaled or exceeded 200% of the price of


                                       9

<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

     Milestone's common stock on the effective date of the Offering for any five
     consecutive  trading days.  The common stock  included in the units and the
     warrants  traded only as a unit until March 18, 2004, 30 days following the
     closing date of the Public Offering.

     A portion of the net proceeds of  approximately  $7.6 million of the Public
     Offering  were  used  to pay  down  promissory  notes,  credit  facilities,
     interest and deferred compensation. The remainder of the approximately $7.6
     million net proceeds will be used primarily to expand and support sales and
     marketing  efforts  for  CompuDent  in the  United  States,  including  the
     development  of a domestic  sales  force.  New  marketing  and  advertising
     campaigns  will  support the launch of the  recently  announced  SafetyWand
     product line,  expand  international  sales efforts and develop  commercial
     models of products using other new subcutaneous injection technology.

     Upon the  closing of the Public  Offering  (February  23,  2004)  Milestone
     satisfied  $2,341,000 of  obligations  due to  Milestone's  CEO and a major
     investor  as  required  by an October  2003  agreement.  These  obligations
     consisted of promissory notes, accrued interest and deferred  compensation.
     Milestone  satisfied these obligations by issuing to the major investor and
     Milestone's CEO 304,939 units including 609,878 shares of common stock at a
     price of $6.52 per unit and  approximately  $353,000  in cash.  These units
     were issued with the same terms and price as those in the Public Offering.

     In February 2004,  Milestone  issued to its outside  general counsel 30,675
     units at a price of $6.52 per unit for  payment  of  accounts  payable  for
     legal fees of $200,000.  Furthermore 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 May of 2004  Milestone  awarded to Dr.  Mark  Hochman,  its  Director of
     Clinical  Affairs,  a one-time  bonus of  $200,000  in  recognition  of his
     contributions to the February 2004 public offering.

Note 4 - Stock Subscriptions Receivable:

     Stock subscriptions  receivable  represents the unpaid balance by March 31,
     2005 of the stock  subscriptions  executed in March that were not funded at
     the end of the quarter. The full balance was received on April 4, 2005.

Note 5 - Inventories:

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

Note 6 - 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


                                       10

<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

     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  months ended March 31, 2005
     and 2004,  the assumed  effects of the exercise of 3,595,475  and 1,309,920
     outstanding stock options and warrants, and the conversion of notes payable
     and preferred  stock into common stock at March 31, 2005 and 2004, were not
     included as their effect would have been anti-dilutive.

Note 7 - Significant Customer:

     Milestone had one foreign  customer who accounted for  approximately  21.9%
     and 20.9% of its net sales for the three  months  ended  March 31, 2005 and
     2004, respectively.  At March 31, 2005, receivables from this customer were
     approximately 73.3% of Milestone's total accounts receivable.

Note 8 - Employee Stock Option Plan

      As of March 31, 2005, there were 317,116 outstanding options granted under
      the Milestone 1997 Stock Option Plan and no option grants were made out of
      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.

<TABLE>
<CAPTION>
                                                          Three Months Ended March 31,
                                                          ----------------------------
                                                               2005         2004
                                                            -----------   ---------
<S>                                                         <C>           <C>
Net loss applicable to common stockholders, as reported     $  (879,450)  $(518,793)
Deduct total stock-based employee compensation
   expenses determined under the fair value
   based method for all awards                                  201,172       5,531
                                                            -----------   ---------
Net loss applicable to common stockholders, pro forma       $(1,080,622)  $(524,324)
                                                            ===========   =========

Loss per share applicable to common stock holders:

Basic and diluted

   As reported                                              $     (0.09)  $   (0.07)
                                                            ===========   =========
   Pro forma                                                $     (0.11)  $   (0.07)
                                                            ===========   =========
</TABLE>

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  March 31,  2005 and 2004,  respectively:
dividend  yield of 0%;  expected  volatility  of  119.42 % and 135 %;  risk free
interest rate of 3.87 % and 2.5 %; and expected lives of 5 years.

During the three months ended March,  31, 2005,  Milestone  issued  80,000 stock
options at an exercise price of $3.27.


                                       11

<PAGE>

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 10-KSB 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  in the first
quarter 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 we are growing  our  revenues  throughout  the world,
domestic  CompuDent and handpiece  sales have provided a growing  portion of our
revenues  relative to  international  sales.  This is an important  metric as it
validates the investment made in our domestic sales distribution. Also, we enjoy
significantly  higher  margins on domestic  sales compared to the lower per unit
revenues 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 believe that our ownership
of the SafetyWand technology in the 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 mid  to  late  March  we
launched,  through widely broadcast  infomercials,  our consumer tooth whitening
product.  The  consumer  tooth  whitening  market is one of the fastest  growing
dental market places.  Our consumer tooth whitening product and the professional
tooth  whitening  product  which we expect to  launch  within  the next 90 days,
complement  our existing  product  line.  We believe  they  provide  significant
additional revenue opportunities. Revenues for the first quarter did not reflect
sales of our consumer  tooth  whitening  product since we are still building our
productive  capacity and have not yet begun  shipping  product to meet  expected
demand. We are also  aggressively  pursuing entrance into the medical arena with
our  epidural  product.  During the first  quarter we have  invested in business
development  efforts to further our  progress in the  medical  equipment  market
space.

     Selling,  general and administrative expenses for the first quarter sharply
increased,  reflecting the continued planned  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(TM)
epidural injection device.

     The  following  table shows a breakdown of our revenues,  domestically  and
internationally,  by product  category,  and the  percentage of total revenue by
each product category:


                                       12

<PAGE>

                                               Three Months Ended March 31,
                                       ----------------------------------------
                                               2005                 2004 (1)
                                       ------------------    ------------------
DOMESTIC
   CompuDent                           $  327,688    32.5%   $  133,620    18.1%
   Handpieces                             664,391    65.8%      549,169    74.2%
   Other                                   17,096     1.7%       56,689     7.7%
                                       ----------   -----    ----------   -----
Total Domestic                         $1,009,175   100.0%   $  739,478   100.0%
                                       ----------   -----    ----------   -----

INTERNATIONAL
   CompuDent                           $  173,067    38.6%   $  164,340    46.3%
   Handpieces                             268,581    59.8%      176,310    49.7%
   Other                                    7,080     1.6%       14,095     4.0%
                                       ----------   -----    ----------   -----
Total International                    $  448,728   100.0%   $  354,745   100.0%
                                       ----------   -----    ----------   -----

DOMESTIC/INTERNATIONAL ANALYSIS
   Domestic                            $1,009,175    69.2%   $  739,478    67.6%
   International                          448,728    30.8%      354,745    32.4%
                                       ----------   -----    ----------   -----
Totals                                 $1,457,903   100.0%   $1,094,223   100.0%
                                       ==========   =====    ==========   =====

(1)  - Note: A portion ($85,560) of sales of CompuDent units previously reported
     for the three  months  ended  March 31,  2004 have been  reclassified  from
     domestic to international


                                       13

<PAGE>

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 three months ended March 31,
2005  reflect  growth of our user base and the initial  additional  expenditures
necessary to further expand our customer base both domestically and abroad.  The
net  loss  for the  three  months  ended  March  31,  2005,  represents  a 69.6%
additional loss from the same period in 2004.

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.

<TABLE>
<CAPTION>
                                                      Three Months Ended March 31,
                                               ----------------------------------------
                                                       2005                 2004
                                               ------------------    ------------------
<S>                                            <C>          <C>      <C>          <C>
Net sales                                      $1,457,903   100.0%   $1,094,223   100.0%
Cost of Sales                                     714,706    49.0%      546,300    49.9%
Gross Profit                                      743,197    51.0%      547,923    50.1%
Selling, general and administration expenses    1,601,693   109.9%      984,868    90.0%
Research & development                             31,545     2.2%       41,211     3.8%
Loss from operations                             (890,041)  -61.1%     (478,156)  -43.7%
</TABLE>


                                       14

<PAGE>

Three Months ended March 31, 2005 compared to three months ended March 31, 2004

     Net  sales  for the  three  months  ended  March  31,  2005 and  2004  were
$1,457,903  and  $1,094,223,  respectively.  The  $363,680 or 33.2%  increase is
primarily  related to a 145.2% or $194,068  increase  in  domestic  CompuDent(R)
sales  combined  with a 5.3%  or  $8,727  increase  in  international  sales  of
CompuDent  units.  This  increase  shows  the  effect of our  investment  in our
domestic  sales  force and  marketing  initiatives  while  maintaining  a strong
presence  internationally.  Worldwide hand piece sales  increased by $207,493 or
28.6%.  This growth is generated from our expanding  base of CompuDent  units in
service and  represents a continuing  revenue stream since orders for disposable
hand pieces are renewed on a monthly basis.

     Cost of sales  for the three  months  ended  March  31,  2005 and 2004 were
$714,706  and  $546,300,  respectively.  The $168,406  increase is  attributable
primarily  to the  additional  cost  of  goods  sold  for  the  higher  revenues
previously discussed.

     For the three  months  ended March 31,  2005,  Milestone  generated a gross
profit of $743,197  or 51.0% as compared to a gross  profit of $547,923 or 50.1%
for the three months ended March 31,  2004.  Improvement  in gross profit due to
higher  domestic  sales in 2005  was in part  offset  by  discounts  related  to
promotional programs during the quarter.

     Selling,  general and  administrative  expenses  for the three months ended
March 31, 2005 and 2004 were $1,601,693 and $984,868, respectively. The $616,825
or 62.6% 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 March 31, 2004 to 3 sales managers,  22 inside sales
representatives  and 8 independent  contractors at March 31, 2005.  Accordingly,
hiring and related employee expenses  including sales  commissions  increased by
$382,294 or 114.7%.  Selling,  marketing  and  advertising  expenses  including,
related  travel and  tradeshows,  increased by $100,824 or 222.6%.  Professional
services and  consulting  expense  increased by $46,978 or 50.7%,  related to an
investor  relations  contract  commenced in the second quarter 2004 and business
development  services during the first quarter 2005 relating to the marketing of
our medical  product line.  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 March 31, 2005
and 2004 were $31,545 and $41,211, respectively. These costs are associated with
the  development of Milestone's  SafetyWand(TM),  CoolBlue(TM)  Tooth  Whitening
System and CompuFlo(TM) products.

     The loss from operations for the three months ended March 31, 2005 and 2004
was  $890,041 and  $478,156,  respectively.  The $411,885  increase in loss from
operations is the result of planned  increases in operating  expenses  explained
above.

      Interest  income of $11,098 was earned in the three months ended March 31,
2005 compared to $12,134 earned for the same period of the prior year.

     There was no  interest  expense for the three  months  ended March 31, 2005
compared to interest  expense of $52,771  for the three  months  ended March 31,
2004. The difference is  attributable to the  extinguishment  of debt related to
the February 2004 equity placement.

     The net loss for the three  months  ended  March 31,  2005 was  $878,943 as
compared  to a net loss of  $518,793  for the year  ended  March 31,  2004.  The
$360,150 increase in net loss is explained above.


                                       15

<PAGE>

Liquidity and Capital Resources

          As  shown  in  the  accompanying   condensed   consolidated  financial
statements, Milestone incurred net losses of approximately $879,000 and $519,000
and negative cash flows from operating activities of approximately  $781,000 and
$1,397,000 during the three months ended March 31, 2005 and 2004,  respectively.
Milestone  improved its liquidity  position with the private  placement of Units
completed in April,  2005, as discussed  below.  However,  although at March 31,
2005 our total  stockholders'  equity was $6.61 million,  we need a net worth of
$6,000,000  at June 30,  2005 to remain in  compliance  with  continued  listing
requirements of the American Stock Exchange.  We continue to seek new sources of
equity  funding,  but can  give no  assurance  that we will be able to find  new
sources of funding on  acceptable  terms.  The  issuance  of  additional  equity
securities may impair the value of our stock. Further, if we fail to satisfy the
American  Stock  Exchange's  listing  requirements  with respect to  stockholder
equity, we could be delisted from the Exchange after June 30, 2005 or earlier if
we fail to make progress  consistent with the plan of recovery that we submitted
to the Exchange.  Any delisting would, in turn, make it more difficult for us to
raise  capital in the public  markets.  As of May 10, 2005,  the American  Stock
Exchange has  informed us that it has placed us on a "watch list" for  companies
that fail to reach listing  standards of $6 million of stockholder's  equity for
two consecutive quarters.

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.

Cash flow results

     As of March 31, 2005, Milestone had cash and cash equivalents of $3,895,902
and working capital of $5,808,388.

     For the three  months ended March 31,  2005,  Milestone's  net cash used in
operating activities was $781,047. This was attributable primarily to a net loss
of  $878,943  adjusted  for  noncash  items of  $201,142  (of which  $24,876 was
depreciation  expense and $170,333 was stock and options issued for compensation
and  consulting);  a $105,052  increase  in accounts  receivable;  a net $35,200
decrease in accounts  payable and accrued  expenses;  and a $37,500  increase in
deferred compensation.

     For the  three  months  ended  March 31,  2005,  Milestone  used  $1,550 in
investing activities for capital expenditures.

     For the three months ended March 31, 2005,  Milestone generated  $1,637,193
from financing activities.

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


                                       16

<PAGE>

ITEM 3. CONTROLS AND PROCEDURES

     a)   Evaluation  of  Disclosure   Controls  and   Procedures.   Milestone's
          management,  with the participation of the chief executive officer and
          the  chief  financial  officer,  carried  out  an  evaluation  of  the
          effectiveness of Milestone's  "disclosure controls and procedures" (as
          defined in the Securities  Exchange Act, Rule 13a-15(e) and 15d-15(e).
          Based upon that  evaluation,  the Chief  Executive  Officer  and Chief
          Financial Officer concluded that Milestone's  disclosure  controls and
          procedures were  effective,  as of the date of their  evaluation,  for
          purposes of recording,  processing,  summarizing and timely  reporting
          material  information  required to be  disclosed  in reports  filed by
          Milestone under the Securities Exchange Act of 1934.

     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 fiscal reporting.


                                       17

<PAGE>

                                     PART II

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

Recent Sales of Unregistered Securities

     On  January  27,  2005 we issued  43,424  shares  valued at  $70,000 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 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  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.  We also issued  1,852
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. 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  to  warehousing  and
fulfillment services rendered.

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

     On April 4, 2005 we completed a private placement of $2,999,996 of Units to
accredited investors. 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.

ITEM 5. OTHER INFORMATION

     On March 14, 2005  Milestone  announced  the March 12th launch of new Ionic
White enhanced technology tooth whitening system.

      On March 21, 2005 Milestone announced the receipt of its initial order for
500,000 units of its Ionic White tooth whitening system.

ITEM 6. EXHIBITS

     The following exhibits are filed herewith:

     4.1  Form of  Subscription  Agreement  used in connection  with the private
          placement of Units, March 2005.

     4.2  Form of warrant  issued in  connection  with the private  placement of
          Units, March 2005.


                                       18

<PAGE>

     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.


                                       19

<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, thereunto duly
authorized.

                                        MILESTONE SCIENTIFIC INC.
                                        -------------------------
                                                Registrant


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


                                        /s/ Kevin T. Lusardi
                                        ----------------------------------------
                                        Kevin T. Lusardi, Vice President and
                                        Chief Financial Officer

Dated: May 17, 2005


                                       20