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, 2003

                                       OR

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

For the transition period from _________ to _________

Commission File Number 0-26284

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

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

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

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

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

Yes |X| No |_|

As of May 20, 2003, the Registrant had a total of 12,633,370 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 the Company's future plans of operations, business strategy, results
of operations and financial condition. The Company wishes to ensure that such
statements are accompanied by meaningful cautionary statements pursuant to the
safe harbor established in the Private Securities Litigation Reform Act of 1995.
Prospective investors are cautioned that any forward-looking statements are not
guarantees of future performance and are subject to risks and uncertainties and
that actual results may differ materially from those included within the
forward-looking statements as a result of various factors. Such forward-looking
statements should, therefore, be considered in light of various important
factors, including those set forth herein and others set forth from time to time
in the Company's reports and registration statements files with the Securities
and Exchange Commission (the "Commission"). The Company disclaims any intent or
obligation to update such forward-looking statements.


                                       2
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                                      INDEX

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

         ITEM 1. Condensed Consolidated Financial Statements

                 Condensed Consolidated Balance Sheets
                    March 31, 2003 (Unaudited) and December 31, 2002             4

                 Condensed Consolidated Statements of Operations
                    Three Months Ended March 31, 2003 and 2002 (Unaudited)       5

                 Condensed Consolidated Statements of Cash Flows
                    Three Months Ended March 31, 2003 and 2002 (Unaudited)     6-7

                 Notes to Condensed Consolidated Financial Statements         8-12

         ITEM 2. Management's Discussion and Analysis or Plan of Operations  13-17

         ITEM 3  Controls and Procedures                                        18

PART II. OTHER INFORMATION

         ITEM 6. Exhibits and Reports on Form 8-K                               19

SIGNATURES                                                                      20

CERTIFICATIONS                                                               21-22

EXHIBITS
</TABLE>


                                       3
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                      March 31, 2003 and December 31, 2002

<TABLE>
<CAPTION>
                                                                                      March 31, 2003          December 31, 2002
                                                                                       (Unaudited)                (Audited)
<S>                                                                                    <C>                      <C>
ASSETS
CURRENT ASSETS:
   Cash                                                                                $        534             $      9,683
   Accounts receivable, net of allowance for doubtful accounts at March 31,                 614,415                  239,435
      2003 and December 31, 2002 of $49,120 and $46,152, respectively
   Inventories                                                                              107,497                  119,291
   Advances to contract manufacturer                                                        300,000                  300,000
   Deferred debt financing costs, net                                                        80,527                  159,877
   Prepaid expenses                                                                          38,522                   64,952
                                                                                       ------------             ------------
         Total current assets                                                             1,141,495                  893,238
EQUIPMENT, net                                                                              213,128                  227,207
ADVANCES TO CONTRACT MANUFACTURER-- Long term                                                61,854                   87,935
OTHER ASSETS                                                                                 32,333                   32,333
                                                                                       ------------             ------------
         Total                                                                         $  1,448,810             $  1,240,713
                                                                                       ============             ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
   Account payable, including $35,150 and $32,000 to related parties at
      March 31, 2003 and December 31, 2002, respectively                               $  1,451,813             $  1,269,523
   Accrued expenses                                                                         145,498                   86,492
   Accrued interest                                                                         207,579                  169,519
   Note payable                                                                           4,877,561                4,581,708
   Notes payable-officer/stockholder                                                          1,215                       --
                                                                                       ------------             ------------
         Total current liabilities                                                        6,683,666                6,107,242
Accrued interest                                                                            162,264                  139,323
Deferred compensation payable to officer/stockholder                                        400,000                  320,000
Notes payable                                                                               485,068                  480,091
Notes payable -- officer/stockholder                                                        332,000                  300,000
                                                                                       ------------             ------------
         Total liabilities                                                                8,062,998                7,346,656
                                                                                       ------------             ------------

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY:
   Common stock, par value $.001; authorized,
      25,000,000 shares; 12,733,370 shares issued                                            12,733                   12,733
   Additional paid-in capital                                                            36,599,607               36,599,607
   Accumulated deficit                                                                  (42,295,012)             (41,786,767)
   Unearned compensation                                                                    (20,000)                 (20,000)
   Treasury stock, at cost, 100,000 shares                                                 (911,516)                (911,516)
                                                                                       ------------             ------------
        Total stockholders' deficiency                                                   (6,614,188)              (6,105,943)
                                                                                       ------------             ------------
         Total                                                                         $  1,448,810             $  1,240,713
                                                                                       ============             ============
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                       4
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                   THREE MONTHS ENDED MARCH 31, 2003 AND 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                                            March 31, 2003       March 31, 2002
<S>                                                          <C>                  <C>
Net sales                                                    $  1,125,725         $  1,021,588
Cost of sales                                                     549,084              466,015
                                                             ------------         ------------

Gross profit                                                      576,641              555,573
                                                             ------------         ------------

Selling, general and administrative expenses                      758,981              897,276
Charge in connection with the closing of
   Deerfield, IL facility                                          52,723                   --
Research and development expenses                                  32,001               30,295
                                                             ------------         ------------

         Totals                                                   843,705              927,571
                                                             ------------         ------------

Loss from operations                                             (267,064)            (371,998)

Other income                                                           --               24,000
Interest, net                                                    (241,181)            (172,213)
                                                             ------------         ------------

Net loss                                                     $   (508,245)        $   (520,211)
                                                             ============         ============

Loss per share - basic and diluted                           $       (.04)        $       (.04)
                                                             ============         ============

Weighted average shares outstanding-basic and diluted          12,633,370           12,096,204
                                                             ============         ============
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                       5
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 2003 AND 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                        2003           2002
                                                                                     ---------      ---------
<S>                                                                                  <C>            <C>
Cash flows from operating activities:
     Net loss                                                                        $(508,245)     $(520,211)
     Adjustments to reconcile net loss to net cash used in operating activities:
         Depreciation                                                                    9,331         12,203
         Amortization of debt discount and deferred financing costs                    101,701         26,614
         Loss on disposal of fixed assets                                               11,248             --
         Changes in operating assets and liabilities:
              Increase in accounts receivable                                         (374,980)        (5,963)
              Decrease in inventories                                                   11,794         39,195
              Decrease in advances to contract manufacturer                             26,081         52,308
              (Increase) decrease in prepaid expenses                                   26,430        (18,980)
              Decrease in other assets                                                      --           (596)
              Increase (decrease) in accounts payable                                  182,290         (9,690)
              Increase in accrued interest                                             139,480        145,599
              Increase in accrued expenses                                              59,006         63,467
              Increase in deferred compensation                                         80,000         80,000
                                                                                     ---------      ---------
                  Net cash used in operating activities                               (235,864)      (136,054)
                                                                                     ---------      ---------

Cash flows from investing activities-payment for capital expenditures                   (6,500)        (1,184)
                                                                                     ---------      ---------

Cash flows from financing activities:
     Proceeds from note payable - officer/stockholder                                   95,537             --
     Payments to note payable - officer/stockholder                                    (62,322)            --
     Proceeds from line of credit                                                           --        150,000
     Proceeds from issuance of notes payable                                           200,000             --
                                                                                     ---------      ---------

                  Net cash provided by financing activities                            233,215        150,000
                                                                                     ---------      ---------

     NET INCREASE (DECREASE) IN CASH                                                    (9,149)        12,762
Cash, beginning of period                                                                9,683         15,742
                                                                                     ---------      ---------
Cash, end of period                                                                  $     534      $  28,504
                                                                                     =========      =========
</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, 2003 AND 2002
                                   (Unaudited)

Supplemental schedule of noncash financing activities:

In March 2003, pursuant to the 6%/12% promissory note agreements, the Company
converted $78,479 of accrued interest into additional principal.

In January 2002, the Company issued 33,840 units consisting of one share of
common stock and one warrant to purchase an additional share of common stock in
exchange for payment of accrued interest totaling $27,072.

In January 2002, in consideration for payment of $491,346 in deferred
compensation, the Company issued 614,183 units (consisting of one share of
common stock and one warrant to purchase an additional share of common
stock).The warrants are exercisable at $.80 per share through January 31, 2003;
at $1.00 per share through January 31, 2004 and thereafter at $2.00 per share
through January 31, 2007.

In January 2002, pursuant to the 20% promissory note agreements, the Company
converted $63,377 of accrued interest into additional principal.


                                       7
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1 - Summary of accounting policies:

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

            These unaudited condensed consolidated financial statements should
            be read in conjunction with the consolidated financial statements
            and notes thereto for the year ended December 31, 2002 included in
            the Company'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, 2002
            consolidated financial statements.

            In the opinion of the Company, the accompanying unaudited condensed
            consolidated financial statements contain all adjustments
            (consisting of normal recurring entries) necessary to present fairly
            the financial position as of March 31, 2003 and the results of
            operations for the three months ended March 31, 2003 and 2002.

            The results reported for the three months ended March 31, 2003 and
            2002 are not necessarily indicative of the results of operations
            which may be expected for a full year.

Note 2 - Basis of presentation:

            The accompanying condensed consolidated financial statements have
            been prepared assuming the Company will continue as a going concern.
            However, as shown in the accompanying condensed consolidated
            financial statements, the Company incurred net losses of
            approximately $508,000 and $520,000 and negative cash flows from
            operating activities of approximately $236,000 and $136,000 during
            the three months ended March 31, 2003 and 2002, respectively. As a
            result, the Company had a cash balance of approximately $500, a
            working capital deficiency of approximately $5,542,000 and a
            stockholders' deficiency of approximately $6,614,000 as of March 31,
            2003. These matters initially raised substantial doubt about the
            Company's ability to continue as a going concern. Management
            believes that its initial concerns about the Company's ability to
            continue as a going concern have been alleviated by recent actions
            taken by the Company as well as management's plans which are
            discussed below.

            Further, management believes that, in the absence of a substantial
            increase in revenue, it is probable that the Company will continue
            to incur losses and negative cash flows from operating activities
            through at least March 31, 2004 and that the Company will need to
            obtain additional equity or debt financing, as well as to continue
            its ability to defer its obligations, to sustain its operations
            until it can expand its customer base and achieve profitability, if
            ever.

            The Company has taken certain steps in order to reduce its operating
            expenses and utilization of cash. These steps include, amongst
            others, the following:

            o     Commencing in 2001 and continuing through 2003, the Company
                  reconfigured its sales force. The Company went from
                  maintaining a large internal sales force to utilizing
                  independent sales representatives and distributors.

            o     The Company reduced administrative personnel and telemarketers
                  by approximately ten people.

            o     On January 31, 2003, the Company completed the closing of the
                  Deerfield, IL facility. The customer support, service and
                  other back-office functions previously conducted, in whole or
                  in part, at this location were consolidated into the Company's
                  New Jersey location. The receiving,


                                       8
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                  shipping and storage functions, which were also previously
                  done at this location, are now outsourced to an independent
                  warehouse located in Pennsylvania.

            o     Obtained an agreement from its Chief Executive
                  Officer/Stockholder to defer 2002 and 2003 compensation,
                  aggregating $640,000 until January 2005.

            o     Restructured and extended the maturity dates of its debt
                  obligations. Further, as part of the debt restructuring, the
                  Company obtained agreements from certain of its noteholders
                  enabling it to convert debt and related interest aggregating
                  $5,008,994 at March 31, 2003 into shares of common stock. It
                  is the Company's intention to have this conversion completed
                  sometime during the third quarter of 2003.

            o     Obtained an agreement from one of its attorneys to convert an
                  additional $160,000 of the amount owed into shares of common
                  stock.

            o     During February 2003, the Company received a $200,000 note
                  payable from an existing investor. The note is convertible
                  into shares of common stock, at the Company's option, which it
                  plans to do during the third quarter of 2003.

            In addition, in April 2003, the Company received an additional
            $900,000 line of credit from the same investor, which is scheduled
            to mature on January 1, 2005, unless extended. $200,000 was drawn
            down from the line during April 2003.

            The accompanying condensed consolidated financial statements do not
            include any adjustments relating to the recoverability and
            classification of recorded asset amounts or the amounts and
            classifications of liabilities that might be necessary should the
            Company be unable to continue as a going concern.

Note 3 - Loss per share:

            Basic loss per common share is computed using the weighted average
            number of common shares outstanding.

            Options and warrants to purchase 3,145,458 and 4,415,855 shares of
            common stock were outstanding as of March 31, 2003 and 2002,
            respectively, but were not included in the computation of diluted
            loss per share because the effect would have been anti-dilutive.

Note 4 - Notes payable to officer/stockholder:

            Notes payable to officer/stockholder represent three obligations
            payable to the Company's Chief Executive Officer ("CEO"), consisting
            of (i) $200,000 note payable, with interest payable at 9% per annum
            and having an original due date of January 2, 2003, (ii) a $100,000
            line of credit with interest payable at 6% per annum having an
            original due date of April 2, 2003, and (iii) a $33,215 note payable
            on demand with interest payable at 6% per annum. On April 1, 2003,
            the $200,000 and $100,000 notes were extended to April 1, 2004. On
            April 15, 2003, $32,000 of the $33,215 notes payable was extended to
            January 2, 2005.


                                       9
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

            On January 17, 2003, the Company's CEO provided the Company with a
            $57,322 short term loan for the express purpose of purchasing
            Wand(R) handpieces from the Company's supplier. The Company repaid
            the loan in full by February 7, 2003. On February 12, 2003, the CEO
            provided the Company with a $38,215 loan for the same purposes as
            above. $33,215 remains outstanding as of March 15, 2003.

Note 5 - Notes payable:

      6%/12% Promissory Notes

      (A) The 6%/12% Promissory Notes consist of the following issuances:

            (i)   On March 16, 2001, the Company restructured its obligations to
                  the holders of its 10% Senior Secured Promissory Notes. Under
                  the terms of the agreement, each of the noteholders agreed to
                  exchange their 10% Notes for a new, zero coupon note (the
                  "Zero Coupon Note").

                  As a result of the Company initially restructuring its
                  obligations, the unamortized portion of the debt discount and
                  deferred financing costs were amortized through March 31,
                  2002. The significant terms of the Restructuring Debt were (i)
                  modification of the interest rate (ii) granting the company
                  the option to pay the debt with shares of common stock and
                  (iii) repricing the warrants which were previously issued to
                  the shareholders back to the initial exercise price of $1.75
                  per share.

                  Subsequently, on April 15, 2002, the holders additionally
                  agreed to extend the promissory notes to July 1, 2003 and to
                  lower the interest rate to 6% if paid in cash or to 12% if
                  paid in common stock. In connection with the extension, the
                  Company recorded $16,215 in deferred financing charges
                  relating to professional fees and $140,203 of deferred
                  financing costs relating to consideration to the noteholders
                  valued at $120 per share of the Company's common stock for
                  each $1,000 face amount outstanding at maturity which
                  increased the aggregate carry value of the notes by $140,203.
                  The Company is accruing interest expense at 12%. These
                  deferred financing costs are being amortized through July 1,
                  2003.

            (ii)  In August 2000, the Company borrowed $1,000,000 which consists
                  of two loans from two funds managed by Cumberland Associates
                  LLC, and bear interest at 20% per year and payable in cash or
                  through the issuance of additional 20% notes on which both
                  interest and principal are payable. The loans are secured by
                  substantially all assets of the Company and are subordinated
                  to the 6%/12% senior secured promissory notes that were
                  amended April 15, 2002. The Company can prepay the loans in
                  cash at any time. The Company can prepay the notes and accrued
                  interest with common stock at its option. Stock issued in lieu
                  of payment of the debt will be valued at 85% of the then
                  market price. For the year ended December 31, 2002, the
                  Company converted $257,865 of accrued interest into principal.
                  During 2001, the Company had previously converted $222,417 of
                  accrued interest into principal. On April 12, 2002, Cumberland
                  Associates LLC agreed to extend the maturity date of these
                  loans through July 1, 2003 and to lower the interest rate from
                  20% to 6%, if paid in cash, or 12% if paid in common stock.
                  The Company recorded $16,215 of deferred financing charges
                  relating to professional fees and $189,369 relating to
                  consideration issued to the noteholders valued at $120 per
                  share of the Company's common stock for each $1,000 face
                  amount outstanding at maturity. The Company is currently
                  accruing interest expense at 12%. Accordingly, the deferred
                  financing costs and the unamortized financing charges are
                  being amortized through July 1, 2003.

                  It is currently the Company's intention to satisfy these
                  obligations with shares of common stock upon their maturity.


                                       10
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

      (B) 8% Promissory Notes

      The 8% promissory notes consist of the following:

            On July 31, 2000, the Company established a $1,000,000 credit
            facility with a major existing investor. Initially, $500,000 was
            borrowed under the line, which was due on June 30, 2003. In December
            2000, and January 2001, the Company borrowed under the credit
            facility an additional $400,000 and $100,000, respectively, due on
            December 31, 2003. In connection with the initial $500,000, the
            investor received five-year warrants to purchase 70,000 shares of
            the Company's common stock, exercisable at $3.00 per share. In
            connection with the $400,000, the investor received five-year
            warrants to purchase 80,000 shares of the Company's common stock
            exercisable at $1.25 per share. In connection with the $100,000, the
            investor received five-year warrants to purchase 20,000 shares of
            the Company's common stock at $1.25 per share. On April 12, 2002,
            the investor agreed to extend the maturity date of the $500,000 to
            August 1, 2003. At the option of the Company, this $500,000 can be
            convertible into common stock. Accordingly, in connection with the
            extension, the unamortized debt discount is being amortized to
            August 1, 2003. On April 15, 2003, the investor agreed to extend the
            maturity date of the $500,000 and interest originally due December
            31, 2003 to January 2, 2005. Accordingly, only $500,000 of loans
            have been recorded as long term debt in the accompanying
            consolidated financial statements.

            During 2002, the Company issued a total of $1,185,000 promissory
            notes to an existing investor. The notes bear interest at 8% if paid
            in cash and 10% if paid in stock and mature on August 1, 2003. At
            the option of the Company, the principal and interest are payable on
            the maturity date in common stock. Additionally, the note will
            automatically convert into the Company's common stock if the Company
            issues 1,000,000 shares or raises at least $1,000,000 from the sale
            of equities prior to August 1, 2003, at the market price in that
            transaction but not less than $.50 per common share, or more than
            $2.00 per share. The Company is accruing interest at 10%.

Note 6 - Legal proceedings

            On June 10, 2002, a former distributor, Henry Schein, Inc., sued
            Milestone in the Supreme Court of the State of New York for $110,851
            claimed to be due them for returned merchandise. Milestone denies
            any liability. The parties are currently engaged in discovery.
            Milestone believes it has meritorious defense to this complaint
            based, in part, on its position that the plaintiff had no right to
            return the goods.

            On May 9, 2003, Milestone was served with a Breach of Contract
            Complaint. In the complaint, the plaintiff, Korman/Lender Management
            (landlord of the facility in Deerfield, IL) seeks damages of $17,755
            plus costs, including attorney's fees, interest and continuing
            rental obligation. The Company is in the process of preparing a
            response.

Note 7 - Employee Stock Option Plan

            As of March 31, 2003, there were 698,344 outstanding options granted
            under the Milestone 1997 Stock Option Plan. The Company 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 those plans
            had an exercise price equal to the market value of the underlying
            common stock on the date of grant. The following table illustrates
            the effect on net loss and loss per share if the Company had applied
            the fair value recognition provisions of FASB Statement No. 123,
            Accounting for Stock-Based Compensation, to stock-based employee
            compensation.


                                       11
<PAGE>

                   MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                    Three Months Ended March
                                                                      2003             2002
                                                                  -----------      -----------
<S>                                                               <C>              <C>
            Net loss, as reported                                 $  (508,245)     $  (520,211)
            Deduct: Total stock-based employee compensation
            expenses determined under fair value based method
            for all awards                                             56,154          123,121
                                                                  -----------      -----------

            Net loss, pro forma                                   $  (564,399)     $  (643,332)
                                                                  ===========      ===========

            Loss per share:
                 Basic-as reported                                $      (.04)     $      (.04)
                                                                  ===========      ===========
                 Basic-pro forma                                  $      (.04)     $      (.04)
                                                                  ===========      ===========

                 Diluted-as reported                              $      (.04)     $      (.04)
                                                                  ===========      ===========
                 Diluted-pro forma                                $      (.04)     $      (.04)
                                                                  ===========      ===========
</TABLE>

Note 8 - Closing of Deerfield, IL Facility

            In December 2002, Milestone initiated the transition of its customer
            service office to its corporate headquarters in Livingston, New
            Jersey and its distribution and logistics center to a third party,
            Design Centre of York, Pennsylvania. The resulting closing of the
            Deerfield location was completed during January 2003. The net book
            value of the facility's fixed assets transferred or disposed during
            January 2003 was $41,425 and $11,248, respectively.


                                       12
<PAGE>

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

Summary of Significant Accounting Policies

      Our discussion and analysis of our financial condition and results of
      operations are based upon our condensed consolidated financial statements,
      which have been prepared in accordance with accounting principles
      generally accepted in the United States of America. The preparation of
      these consolidated financial statements requires us to make estimates and
      judgments that affect the reported amounts of assets, liabilities,
      revenues and expenses, and related disclosure of contingent assets and
      liabilities. On an on-going basis, we evaluate our estimates, including
      those related to accounts receivables, inventories, advances to our
      contract manufacturer, stock based compensation and contingencies. We base
      our estimates on historical experience and on various other assumptions
      that are believed to be reasonable under the circumstances, the results of
      which form the basis for making judgments about the carrying values of
      assets and liabilities that are not readily apparent from other sources.
      Actual results may differ from those estimates under different assumptions
      or conditions.

Overview

      Milestone achieved a 28% reduction in its loss from operations for the
      three months ended March 31, 2003 when compared to the same period in
      2003. The results include approximately $50,000 in expenses relating to
      the Company's shutdown of its facility and reflect Milestone's
      concentrated effort to drastically reduce its overhead while slowly
      growing its user base in the dental market and introducing the Wand(R)
      technology in a variety of medical disciplines.

      The net loss for the three months ended March 31, 2003 was relatively
      equivalent to the loss reported for the three months ended March 31, 2002
      as the strides achieved in operations were primarily offset by higher
      interest expenses, the majority payable in stock.

Statement of Operations

 Three months ended March 31, 2003 compared to Three months ended March 31, 2002

      Net sales for the three months ended March 31, 2003 and 2002 were
      $1,125,725 and $1,021,588, respectively. The $104,137 or 10.2% increase is
      primarily related to a $76,900 increase in domestic revenue and a $27,200
      increase in sales to foreign distribution. The increase in domestic
      revenue include a 28% or $49,000 increase in CompuDent(TM) sales and a 13%
      or $54,000 increase in domestic sales of the Wand(R) handpieces. The
      domestic sales increase was partially offset by an approximate $19,300
      decrease in CompuMed(TM) sales.

      Cost of sales for the three months ended March 31, 2003 and 2002 were
      $549,084 and $466,015, respectively. The $83,069 increase is attributable
      primarily to higher sales volume.

      For the three months ended March 31, 2003, the Company generated a gross
      profit of $576,641 or 51.2% as compared to a gross profit of $555,573 or
      54.4% for the three months ended March 31, 2002. The decrease in gross
      profit percentage is primarily attributable to increased sales to foreign
      distributors. Sales to foreign distributors are of higher volume but at a
      reduced margin.

      Selling, general and administrative expenses for the three months ended
      March 31, 2003 and 2002 were $758,981 and $897,276, respectively. The
      $138,295 decrease is attributable primarily to an approximate $116,000
      decrease in expenses associated with the sale and marketing of the Wand(R)
      technology and a $25,400 decrease in professional and consulting fees.


                                       13
<PAGE>

      The Company incurred costs totaling $52,723 relating to the closure of its
      Deerfield, IL facility and the transporting of its fixed assets to the
      Company's corporate office and its logistic company. The loss from the
      disposal of fixed assets at this location and included in the shutdown
      cost was $11,248.

      Research and development expenses for the three months ended March 31,
      2003 and 2002 were $32,001 and $30,295, respectively. These cost are
      associated with the development of the Company's safety needle.

      The loss from operations for the three months ended March 31, 2003 and
      2002 were $267,064 and $371,998, respectively. The $104,934 decrease in
      loss from operations is explained above. The Company generated $24,000 in
      other income for the three months ended March 31, 2002 as a result of a
      consulting contract which expired in October 2002.

      The Company incurred interest expense of $241,181 for the three months
      ended March 31, 2003 as compared to $172,213 for the three months ended
      March 31, 2002. The increase is attributable to higher average borrowings
      in 2003.

      The net loss for the three months ended March 31, 2003 was $508,245 as
      compared to a net loss of $520,211 for the three months ended March 31,
      2002. The $11,966 decrease in net loss is explained above.

Liquidity and Capital Resources

      The accompanying condensed consolidated financial statements have been
      prepared assuming the Company will continue as a going concern. However,
      as shown in the accompanying condensed consolidated financial statements,
      the Company incurred net losses of approximately $508,000 and $520,000 and
      negative cash flows from operating activities of approximately $236,000
      and $136,000 during the three months ended March 31, 2003 and 2002,
      respectively. As a result, the Company had a cash balance of approximately
      $500, a working capital deficiency of approximately $5,542,000 and a
      stockholders' deficiency of approximately $6,614,000 as of March 31, 2003.
      These matters initially raised substantial doubt about the Company's
      ability to continue as a going concern. Management believes that its
      initial concerns about the Company's ability to continue as a going
      concern have been alleviated by recent actions taken by the Company as
      well as management's plans which are discussed below.

      Further, management believes that, in the absence of a substantial
      increase in revenue, it is probable that the Company will continue to
      incur losses and negative cash flows from operating activities through at
      least March 31, 2004 and that the Company will need to obtain additional
      equity or debt financing, as well as to continue its ability to defer its
      obligations, to sustain its operations until it can expand its customer
      base and achieve profitability, if ever.

      To date, the Company has taken certain steps in order to reduce its
      operating expenses and utilization of cash. These steps include, amongst
      others, the following:

      o     Commencing in 2001 and continuing through 2003, the Company
            reconfigured its sales force. The Company went from maintaining a
            large internal sales force to utilizing independent sales
            representatives and distributors.

      o     The Company reduced administrative personnel and telemarketers by
            approximately ten people.

      o     On January 31, 2003, the Company completed the closing of the
            Deerfield, IL facility. The customer support, service and other
            back-office functions previously conducted, in whole or in part, at
            this location were consolidated into the Company's New Jersey
            location. The receiving, shipping and storage functions, which were
            also previously done at this location, will be outsourced at an
            independent warehouse located in Pennsylvania. The closure of the
            Illinois facility will result in reductions in overhead and other
            costs, while improving operational efficiencies.

      o     Obtained an agreement from its Chief Executive Officer/Stockholder
            to defer 2002 and 2003 compensation, aggregating $640,000 until
            January 2005.

      o     Restructured and extended the maturity dates of its debt
            obligations. Further, as part of the debt restructuring, the Company
            obtained agreements from certain of its noteholders enabling it to
            convert debt and related interest aggregating $5,008,994 at March
            31, 2003 into shares of


                                       14
<PAGE>

            common stock. It is the Company's intention to have this conversion
            completed sometime during the third quarter 2003.

      o     Obtained an agreement from one of its attorneys to convert an
            additional $160,000 of the amount owed into shares of common stock.

      o     During February 2003, the Company received a $200,000 note payable
            from an existing investor. The note is convertible into shares of
            common stock, at the Company's option, which it plans to do during
            the third quarter of 2003.

      In addition, April 2003, the Company received an additional $900,000 line
      of credit from the same investor, which is scheduled to mature on January
      1, 2005, unless extended. $200,000 was drawn down from the line during
      April 2003.

      For the three months ended March 31, 2003, the Company's net cash used in
      operating activities was $235,864. This was attributable primarily to a
      net loss of $508,245 adjusted for noncash items of $122,280 (of which
      $101,701 was for amortization of debt discount and deferred financing
      costs); a $374,980 increase in accounts receivable; an $11,794 decrease in
      inventories; a $26,081 decrease in advances to contract manufacturer; a
      $26,430 decrease in prepaid expenses; an increase in accrued expenses of
      $59,006; a $139,480 increase in accrued interest; a $182,290 increase in
      accounts payable; and an $80,000 increase in deferred compensation.

      For the three months ended March 31, 2003, the Company used $6,500 in
      investing activities for capital expenditures.

      For the three months ended March 31, 2003, the Company generated $233,215
      from financing activities as it issued promissory notes to an existing
      investor totaling $200,000, and incurred $33,215 of net borrowings from
      its Chief Executive Officer.

OPERATIONS

      The Company believes that CompuDent(TM), CompuMed(TM) and The Wand(R)
      technology represents a major advance in the delivery of local anesthesia
      and that the potential applications of this technology extends beyond
      dentistry. Based on scientific and anecdotal support, the Company contends
      that CompuMed(TM) could enhance the practices of the estimated 90,000 U.S.
      based physicians included in such non-dental disciplines as Podiatry, Hair
      Restoration Surgery, Plastic Surgery, Dermatology, colorectal surgery and
      procedures in Orthopedics, OB-GYN and Ophthalmology.

      Despite limited resources, the Company has continued its efforts to
      realize the market potential of The Wand(R) and become profitable. These
      steps include (i) relaunching of The Wand Plus(TM) drive unit
      domestically, under the name CompuDent(TM), (ii) distribution of
      CompuDent(TM) through a host of channels (i.e. independent sales
      representatives, an inside sales group and a major dental distributor),
      (iii) launching The Wand Plus(TM) drive unit for medical purposes and
      marketing it as CompuMed(TM), (iv) increasing presence at medical trade
      shows, (v) advertising to increase the awareness of the product, (vi)
      implementing cost reduction programs, and (vii) restructuring certain
      outstanding obligations. Management believes that these steps are critical
      to the realization of Milestone's long-term business strategy.

      In March 2002, Milestone announced an agreement whereby Medical Hair
      Restoration ("MHR") will equip each of its 21 Surgery centers in the U.S.
      with CompuMed(TM).

      In April 2002, Milestone announced acceptance of an independent clinical
      study concluding that use of Milestone's computer controlled local
      anesthetic delivery technology in nasal and sinus surgery produced a
      "safe, acceptable, tolerable, and cost effective method of sedating
      patients creates a sense of security and


                                       15
<PAGE>

      adds to the ultimate satisfaction associated with nasal surgery." The
      study also concluded "Recovery room and expensive hospital costs are
      avoided, making nasal surgery more affordable and within reach of a
      greater range of potential nose surgery patients." One of the study's
      authors, Dr. Pieter Swanepoel, a world-renowned surgeon, presented his
      study at the 8th International Symposium of the Academy in New York City
      in May 2002. The new technique is an adaptation of similar regional nerve
      blocking techniques used by dental surgeons and replaces the need for
      costly and invasive general anesthesia. Dr. Swanepoel in conducting his
      research using pre-production prototypes of our CompuFlo(TM) system, since
      it allowed him to measure flow rate and tissue pressure and determine
      parameters for optimal results. The core technology embodied in the
      CompuMed(TM) unit may be used to deliver local anesthesia within the
      parameters ascertained by Dr. Swanepoel to produce optimal results and
      then achieve conscious sedation in nasal surgery.

      In May 2002, Milestone signed a dental distribution agreement with Benco
      Dental under which Benco Dental will distribute CompuDent(TM) through
      their direct sales organization. Benco has the right to become the
      exclusive dental distributor in selected states within the United States
      if it achieves certain sales objectives. Milestone is providing the
      initial sales and product training to the entire Benco sales organization
      through September 2002. Following these initial training sessions,
      Milestone will support this effort through "Dealer Managers and Technical
      Support Specialists."

      In August 2002, the United States Patent Office issued a patent on
      Milestone's safety engineered needle technology to be issued to Milestone.
      When commercialized, this new technology will be used with a plethora of
      infusion devices, including the Company's CompuDent(TM) and CompuMed(TM)
      computer controlled local anesthetic delivery systems as well as the
      CompuFlo(TM), an enabling technology for computer controlled infusion,
      perfusion, suffusion and aspiration of fluids. It provides features
      previously unavailable to medical and dental practitioners; fully
      automated true single-handed activation with needle anti-deflection and
      force-reduction capability. In addition, practitioners can re-use this
      safety engineered device repeatedly during a single patient session making
      it highly functional in a wide variety of medical and dental applications.

LEGAL PROCEEDINGS

      On June 10, 2002, a former distributor, Henry Schein, Inc., sued Milestone
      in the Supreme Court of the State of New York for $110,851 claimed to be
      due them for returned merchandise. Milestone denies any liability. The
      parties are currently engaged in discovery. Milestone believes it has
      meritorious defense to this complaint based, in part, on its position that
      the plaintiff had no right to return the goods.

      On May 9, 2003, Milestone was served with a Breach of Contract Complaint.
      In the complaint, the plaintiff, Korman/Lender Management (landlord of the
      facility in Deerfield, IL) sued for $17,755 plus costs, including
      attorney's fees, interest and continuing rental obligation. The Company is
      in the process of preparing a response.

OTHER MATTERS - AMERICAN STOCK EXCHANGE

      On May 2, 2002, Milestone received a letter from the American Stock
      Exchange advising that the Company have fallen below the stockholders'
      equity criterion and requesting the submission of a recovery plan
      detailing any actions taken, or planned to be taken within the next 18
      months to bring the Company into compliance. On June 10, 2002, the Company
      submitted a detailed recovery plan to the American Stock Exchange showing
      how Milestone expects to achieve stockholder equity of $4,000,000 by
      December 31, 2003. In response, the Company received informal advice from
      the American Stock Exchange that in view of the expected loss in 2002,
      Milestone needed to demonstrate how the Company will achieve $6,000,000 in
      stockholders' equity by the end of 2003. On August 14, 2002, a
      supplemental plan demonstrating how Milestone expects to meet these
      requirements was submitted. On August 23, 2002, the American Stock
      Exchange advised the Company that they had determined that the plan makes
      a reasonable demonstration


                                       16
<PAGE>

      of Milestone's ability to regain compliance with the continued listing
      standards by the conclusion of the plan period at the end of 2003. The
      continued listing of Milestone's securities on the American Stock Exchange
      during this period will be subject to periodic reviews by the Exchange.
      Failure to show progress consistent with the plan or to regain compliance
      by the end of the plan period could still result in the Milestone being
      delisted. In the event that Milestone's securities are delisted from the
      American Stock Exchange, trading, if any, in the common stock and warrants
      would be conducted in the over the counter market in the so-called "pink
      sheets" or on the NASD's "OTC Bulletin Board." Consequently the liquidity
      of the Company's securities could be impaired, not only in the number of
      securities which could be bought and sold, but also through delays in the
      timing of transactions, reduction in security analysts and new media
      coverage of Milestone, and lower prices for Milestone's securities than
      might otherwise be obtained.


                                       17
<PAGE>

ITEM 3. CONTROLS AND PROCEDURES

      (a)   Evaluation of disclosures. The Company maintains disclosure controls
            and procedures designed to provide reasonable assurance that
            information required to be disclosed in the reports filed with the
            SEC is recorded, processed, summarized and reported within the time
            periods specified in the rules of the SEC. Within 90 days prior to
            the filing of this Quarterly Report on Form 10-QSB, an evaluation,
            was completed under the supervision and participation of management,
            including the Chief Executive Officer and Chief Financial Officer,
            of the design and operation of this disclosure controls and
            procedures pursuant to Exchange Act Rule 13a-14. Based upon that
            evaluation, the Chief Executive Officer and Chief Financial Officer
            concluded that our disclosure controls and procedures are effective
            in timely alerting them to material information relating to the
            company (including the Company's consolidated subsidiaries) required
            to be included in the periodic SEC filings.

      (b)   Changes in internal controls. There were no significant changes in
            internal controls or other factors that could significantly affect
            the Company's internal controls subsequent to the date of our
            evaluation.


                                       18
<PAGE>

ITEM 6. Exhibits and Reports on Form 8-K

      (a)   Exhibits:

            10.26 - Letter from Leonard Osser, dated April 15, 2003 deferring
                    payment.

            10.27 - Letter from Morse, Zelnick, Rose & Lander LLP deferring
                    payment.

            10.28 - Line of Credit for 900,000 and extension of 500,000 line of
                    credit, dated April 15, 2003.

            99.1 - Certification of Chief Executive Officer, pursuant to 18
                   W.S.C. Section 1350

            99.2 - Certification of Chief Financial Officer, pursuant to 18
                   W.S.C. Section 1350

      (b)   Reports on Form 8-K:

            On April 16, 2003, the Registrant filed a report on Form 8-K
            regarding its issuance of a press release announcing financial
            results for the fiscal year ended December 31, 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

                                        MILESTONE SCIENTIFIC INC.
                                        Registrant


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


                                        /s/ Thomas M. Stuckey
                                        ----------------------------------------
                                        Thomas M. Stuckey, Vice President and
                                        Chief Financial Officer

Dated: May 20, 2003


                                       20
<PAGE>

                                  CERTIFICATION

I, Leonard Osser, certify that:

      1.    I have reviewed this quarterly report on Form 10-QSB of Milestone
            Scientific Inc. ("the registrant").

      2.    Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this quarterly report;

      4.    The registrant's other certifying officers and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
            and have:

            a)    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

            b)    evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

            c)    presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date:

      5.    The registrant's other certifying officers and I have disclosed,
            based on our most recent evaluation, to the registrant's auditors
            and the audit committee of registrant's board of directors (or
            persons performing the equivalent functions):

            a)    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            b)    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

      6.    The registrant's other certifying officers and I have indicated in
            this quarterly report whether or not there were significant changes
            in internal controls or in other factors that could significantly
            affect internal controls subsequent to the date of our most recent
            evaluation, including any corrective actions with regard to
            significant deficiencies and material weaknesses.

      Date: May 20, 2003


/s/ Leonard Osser
    --------------------------

Leonard Osser
Chief Executive Officer


                                       21
<PAGE>

                                  CERTIFICATION

I, Thomas M. Stuckey, certify that:

      1.    I have reviewed this quarterly report on Form 10-QSB of Milestone
            Scientific Inc. ("the registrant").

      2.    Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this quarterly report;

      4.    The registrant's other certifying officers and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
            and have:

            a)    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

            b)    evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

            c)    presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date:

      5.    The registrant's other certifying officers and I have disclosed,
            based on our most recent evaluation, to the registrant's auditors
            and the audit committee of registrant's board of directors (or
            persons performing the equivalent functions):

            a)    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            b)    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

      6.    The registrant's other certifying officers and I have indicated in
            this quarterly report whether or not there were significant changes
            in internal controls or in other factors that could significantly
            affect internal controls subsequent to the date of our most recent
            evaluation, including any corrective actions with regard to
            significant deficiencies and material weaknesses.

      Date: May 20, 2003


/s/ Thomas M. Stuckey
    --------------------------

Thomas M. Stuckey
Chief Financial Officer


                                       22