---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB

| | [x] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | --- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2002

| | [  ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                  EXCHANGE ACT OF 1934
| | ---- | ----------------------------------------------------------------------------------------------------

For the transition period from __________ to __________.

Commission file number: 0-21853

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MEDIA SCIENCES INTERNATIONAL, INC.(Exact name of registrant as specified in its charter)

---

| | DELAWARE
(State or other jurisdiction of incorporation or organization) |  | 87-0475073
(I.R.S. Employer Identification No.) | 
| | ----------------------------------------------------------------------- |  | ----------------------------------------------- | 

40 Boroline Road, Allendale, New Jersey 07401
(Address of principal executive offices)

(201) 236-1100
(Issuer's telephone number)

Cadapult
Graphic Systems, Inc.
(Former name, if changed since last report)

---

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the past 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 90 past days.  YES [X] NO [  ]

As of May 13, 2002, the
issuer had 3,485,516 shares of common stock outstanding.

Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]

---

---

MEDIA
SCIENCES INTERNATIONAL, INC.AND
SUBSIDIARIES

FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 2002

TABLE OF CONTENTS

|        |  |                                                                                                           | Page
|------- |  | --------------------------------------------------------------------------------------------------------- | ----
|PART I. |  | FINANCIAL INFORMATION                                                                                     |     
|Item 1. |  | Financial Statements                                                                                      | 3   
|        |  | Consolidated Balance Sheets as of March 31, 2002 and June 30, 2001                                        | 3   
|        |  | Consolidated  Statements of Operations For the Three Months and Nine Months Ended March 31, 2002 and 2001 | 4   
|        |  | Consolidated  Statement  of Changes in  Shareholder's Equity for the Nine Months Ended March 31, 2002     | 5   
|        |  | Consolidated Statements of Cash Flows For the Nine Months Ended March 31, 2002 and 2001                   | 6   
|        |  | Notes to Consolidated Financial Statements                                                                | 7   
|Item 2. |  | Management's Discussion and Analysis of Financial Condition and
         Results of Operations            | 10  

|         |  |                                                     |   
|-------- |  | --------------------------------------------------- | --
|PART II. |  | OTHER INFORMATION                                   |   
|Item 4.  |  | Submission of Matters to a Vote of Security Holders | 13
|Item 5.  |  | Other Information                                   | 13
|Item 6.  |  | Exhibits and Reports on Form 8-K                    | 13

---

# PART I.  
FINANCIAL INFORMATION

## ITEM 1.  
FINANCIAL STATEMENTS

# MEDIA SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

`March 31,        June 30,
                              ASSETS                            2002             2001
                                                              (Unaudited)
                                                             ------------    ------------
CURRENT ASSETS :
    Cash and equivalents                                     $     68,468    $    132,144
    Accounts receivable, less allowance for doubtful
       accounts of $35,000                                      1,605,278       1,805,272
    Inventories                                                 1,314,838       1,214,358
    Deferred tax asset                                          1,043,829         982,000
    Prepaid expenses and other current assets                     101,830          83,586
                                                             ------------    ------------
        Total Current Assets                                    4,134,243       4,217,360

PROPERTY AND EQUIPMENT, NET                                     1,710,322       1,870,227

OTHER ASSETS:
    Goodwill and other intangible assets, net                   4,376,768       4,328,517
    Deferred income taxes                                         366,000         366,000
    Other                                                         156,036          65,258
                                                             ------------    ------------
                                                                4,898,804       4,759,775

TOTAL ASSETS                                                 $ 10,743,369    $ 10,847,362
                                                             ============    ============

               LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
    Short-term debt                                          $  2,879,479    $  2,732,582
    Accounts payable                                            1,608,499       1,391,965
    Accrued expenses and other current liabilities                281,181         241,194
    Accrued product warranty                                      888,936         400,000
    Accrued expense - supplier                                    353,361         225,000
    Dividends payable                                              81,113         170,598
    Deferred revenue                                              180,105         277,833
                                                             ------------    ------------
                                                                6,272,674       5,439,172

OTHER LIABILITIES
    Long-term debt, less current maturities                       631,114         782,271
    Accrued expense - supplier                                    429,418         659,000
                                                             ------------    ------------
                                                                1,060,532       1,441,271

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY :
    Common Stock, .001 par value,
       Authorized 20,000,000 shares; issued 3,485,516
       in March and 3,477,805 in June                               3,486           3,478
    Series A Convertible Preferred stock, $.001 par value,
       Authorized 1,000,000 shares; issued 547,500 shares             547             547
    Additional paid-in capital                                  5,136,246       5,599,991
    Cost of 10,564 shares of common stock in treasury             (20,832)        (20,832)
    Retained earnings (deficit)                                (1,709,284)     (1,616,265)
                                                             ------------    ------------
        Total Shareholders' equity                              3,410,163       3,966,919

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $ 10,743,369    $ 10,847,362
                                                             ============    ============`

See accompanying notes to consolidated financial statements.

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

`Three Months Ended              Nine Months Ended
                                                   March 31,                        March 31,
                                              2002            2001            2002            2001
                                          ------------    ------------    ------------    ------------

NET SALES                                 $  3,302,840    $  3,032,626    $ 10,926,716    $  9,357,616
                                          ------------    ------------    ------------    ------------

COSTS AND EXPENSES :
    Cost of goods sold, excluding
        depreciation                         1,505,741       1,679,947       4,994,943       5,401,617
    Depreciation                                62,491          24,749         184,747          29,188
                                          ------------    ------------    ------------    ------------
        Total costs of goods sold            1,568,232       1,704,696       5,179,690       5,430,805


    Selling, general and administrative
         expenses                            2,891,790       1,480,268       5,220,909       3,876,830
    Depreciation and amortization              122,163         162,746         369,613         498,641
                                          ------------    ------------    ------------    ------------
         Total costs and expenses            4,582,185       3,347,710      10,770,212       9,806,276
                                          ------------    ------------    ------------    ------------

INCOME (LOSS) FROM OPERATIONS               (1,279,345)       (315,084)        156,504        (448,660)

INTEREST EXPENSE, NET                           89,876          61,978         311,077         189,132
                                          ------------    ------------    ------------    ------------

LOSS BEFORE INCOME TAXES (CREDITS)          (1,369,221)       (377,062)       (154,573)       (637,792)

INCOME TAXES (CREDITS) :
    Current                                        275           6,377             275           6,377
    Deferred                                  (547,688)       (150,825)        (61,829)       (255,117)
                                          ------------    ------------    ------------    ------------
                                              (547,413)       (144,448)        (61,554)       (248,740)
                                          ------------    ------------    ------------    ------------

NET LOSS                                  $   (821,808)   $   (232,614)   $    (93,019)   $   (389,052)
                                          ============    ============    ============    ============


PREFERRED STOCK DIVIDENDS                 $    157,406    $    158,125    $    472,219    $    476,975
                                          ============    ============    ============    ============

LOSS APPLICABLE TO COMMON SHAREHOLDERS    $   (979,214)   $   (390,739)   $   (565,238)   $   (866,027)
                                          ============    ============    ============    ============

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING :

    BASIC                                    3,485,516       3,307,284       3,483,599       3,277,417
                                          ============    ============    ============    ============
    DILUTED                                        --              --              --              --
                                          ============    ============    ============    ============

NET LOSS PER COMMON SHARE :
    BASIC                                 $      (0.28)   $      (0.12)   $      (0.16)   $      (0.26)
                                          ============    ============    ============    ============
    DILUTED                               $        --              --     $        --     $        --
                                          ============    ============    ============    ============`

See accompanying notes to consolidated financial statements.

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
                    FOR THE NINE MONTHS
ENDED MARCH 31, 2002
(UNAUDITED)

`Common Stock       Preferred Stock              Additional                       Total
                                ------------------   ----------------   Treasury     Paid-in      Retained      Shareholders'
                                  Shares    Amount    Shares   Amount    Stock       Capital      Earnings         Equity
                                ---------   ------   -------   ------   --------   -----------   -----------    -------------

BALANCES, JUNE 30, 2001         3,477,805   $3,478   547,500   $ 547    $(20,832)  $ 5,599,991   $(1,616,265)   $ 3,966,919

PERIOD ENDED MARCH 31, 2002

    Issuance of stock for
       dividend payment             7,711        8        --      --          --         8,474            --          8,482

    Preferred stock dividend,
       11.5%                           --       --        --      --          --      (472,219)           --       (472,219)

    Net income                         --       --        --      --          --            --       (93,019)       (93,019)

BALANCES, MARCH 31, 2002        3,485,516   $3,486   547,500   $ 547    $(20,832)  $ 5,136,246   $(1,709,284)   $ 3,410,163
                                =========   ======   =======   ======   ========   ===========   ===========    ===========`

See accompanying notes to consolidated financial statements.

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

`Nine Months Ended
                                                                      March 31,
                                                                 2002           2001
                                                              -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES :
    Net loss                                                  $   (93,019)   $  (389,052)
    Adjustments to reconcile net loss to net cash
      flows from operating activities :
         Depreciation and amortization                            554,360        498,641
         Deferred income taxes                                    (61,829)      (255,117)
         Changes in operating assets and liabilities :
             Accounts receivable                                  199,994        304,108
             Inventories                                         (220,897)      (142,849)

             Prepaid expenses and other current assets            (18,244)        30,874
             Other assets                                         (90,778)        31,036
             Accounts payable                                     216,534        514,509
             Dividends payable                                    (81,003)       158,125
             Accrued expenses and other current liabilities        39,987       (254,973)
             Accrued product warranty                             488,936           --
             Accrued expense supplier                            (101,221)          --
             Deferred revenue                                     (97,728)      (183,279)
                                                              -----------    -----------
                 Net cash flows from operating activities         735,092        312,023
                                                              -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES :
    Purchases of property and equipment                          (267,137)      (846,392)
    Purchase of intangible assets                                 (55,152)      (171,824)
    Deferred acquisition costs                                       --            8,903
                                                              -----------    -----------
                 Net cash flows from investing activities        (322,289)    (1,009,313)
                                                              -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES :
    Proceeds from short term debt                                 530,813        481,924
    Payments on long term debt                                   (230,681)       197,944
    Payments (to) from officer                                    (70,000)       325,000
    Due to seller                                                    --           86,848
    Preferred stock dividend                                     (472,219)      (476,974)
    Payment of Ultrahue note                                     (234,392)      (760,000)
    Sale of common stock                                             --           17,125
                                                              -----------    -----------
                 Net cash flows from financing activities        (476,479)      (128,133)
                                                              -----------    -----------

NET CHANGE IN CASH AND EQUIVALENTS                                (63,676)      (825,423)

CASH AND EQUIVALENTS, BEGINNING OF PERIOD                         132,144        868,842
                                                              -----------    -----------

CASH AND EQUIVALENTS, END OF PERIOD                           $    68,468    $    43,419
                                                              ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION :
    Interest paid                                             $   322,315    $   164,045
                                                              ===========    ===========
    Income taxes paid                                         $     6,405    $    39,913
                                                              ===========    ===========
    Issuance of Common Stock upon partial
      satisfaction of acquisition contingencies               $      --      $   134,379
                                                              ===========    ===========

    Issuance of common stock as dividend payment              $     8,482    $       --
                                                              ===========    ===========

    Inventories transferred to equipment                      $   120,417    $       --
                                                              ===========    ===========`

See accompanying notes to consolidated financial statements.

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES

# NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION :

| | Our
accounting and reporting policies conform to generally accepted accounting
principles. Except for the June 30, 2001 consolidated balance sheet, the
financial statements presented herein are unaudited but reflect all adjustments
which, in our opinion, are necessary for the fair presentation of the
consolidated financial position, results of operations and cash flows for the
interim periods presented. All adjustments reflected in the interim financial
statements are of a normal recurring nature. You should read these financial
statements in conjunction with the financial statements and notes thereto and
the report of independent accountants included in our Annual Report on Form
10-KSB for the year ended June 30, 2001. The year end balance sheet data was
derived from audited financial statements, but does not include all disclosures
required by generally accepted accounting principles. The results of operations
for the three and nine months ended March 31, 2002, are not necessarily
indicative of the results to be expected for the full year.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 2 - NATURE OF BUSINESS :

| | We
are engaged in the business of manufacturing and distributing supplies for
workgroup color printers. Our products include solid ink sticks, color toner
cartridges and transparency media. We distribute our products through an
international network of dealers and distributors. We also sell directly to end
users through programs designed to foster our supplies business.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 3 - NAME CHANGE :

| | On April 19, 2002, our shareholders approved an amendment to our Certificate of Incorporation changing
           our corporate name from Cadapult Graphic Systems, Inc. to Media Sciences International, Inc.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 4 - CHANGE OF ORGANIZATIONAL STRUCTURE :

| | On
April 19, 2002 our shareholders voted to approve a structural change by
agreement between Media Sciences International, Inc. and a newly formed wholly
owned New Jersey corporation named Cadapult Graphic Systems, Inc. (the
Subsidiary).

As a result of the change in corporate structure, Media Sciences International,
Inc. is now organized with two operating subsidiaries: Media Sciences, Inc. and
Cadapult Graphic Systems, Inc. Media Sciences International, Inc., as a
parent corporation, does not have a present intent to engage in substantive
independent business operations. We intend to conduct substantially all of our
operations in the future through subsidiaries.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 5 - LOAN FROM OFFICER :

| | Between
August 17, 2000 and September 14, 2000, we borrowed an aggregate of $325,000
from our President, Michael W. Levin. We used the funds as bridge financing for
printers acquired for our No-Cap Color printer program, until larger quantities
of printers are accumulated and financed through lease or other debt financing.
In September 2001 through March 2002, we repaid $70,000 of these loans. In April
2002, we borrowed an additional $100,000 from Mr. Levin. These loans are
unsecured, payable on demand, and carry a 10% interest rate. These short-term
loans mature in May 2003. There is no representation or assurance made that Mr.
Levin will make any further loans to us.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES

# NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - RECALL AND WARRANTY EXPENSES :

| | In
January 2002, we recalled all solid ink products manufactured between May of
2001 and January 2002. It was discovered that, due to a now resolved change in
raw materials, the use of our solid ink sticks manufactured during that time
period could cause printer reliability issues. Our warranty stipulates that we
will pay reasonable and customary charges for the repair of a printer needing
service as a result of using our products. In connection with this issue, for
the nine months ended March 31, 2002, we incurred selling, general and
administrative expenses associated with the recall and warranty claims for
printer repairs in the amount of $2.6 million, net of a $1 million settlement
from our product liability carrier.

Warranty
claims have dropped sharply over the last 90 days and we have seen no
reoccurrence of these issues. In addition, two independent test laboratories
have tested the reliability of our solid ink and have found no reliability
issues associated with the use of our solid ink products. However, even though
the recall is complete, we will continue to receive warranty claims associated
with the recalled ink. Therefore, as of March 31, 2002 we reserved $888,936 for
future warranty claims. While we believe this reserve is adequate to resolve the
remaining claims, it is possible that the warranty claims may exceed the
accrual, and therefore be expensed in future periods.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 7 - PREFERRED STOCK :

| | On
December 13, 2001, the rate of conversion of our class A preferred stock changed
from 3.07 shares of common for each share of preferred to five (5) shares of
common for each share of preferred.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
board of directors voted to defer the payment of the preferred stock dividend
for the periods ending March 31, 2001 and June 30, 2001 in order to conserve
cash for the now settled litigation with Tektronix and Xerox. During the nine
month period ended March 31, 2002, eight shareholders elected to receive payment
in kind, and the company issued 7,711 shares of common stock with a fair market
value of $8,482 for payment of accrued dividends totaling $8,482. As of March
31, 2002, $81,113 remains outstanding accrued and unpaid for the above periods.
All other dividends have been paid.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 8 - ACCOUNTING CHANGES :

| | Effective
July 1, 2001, we adopted SFAS 141 and SFAS 142. SFAS 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting. It also specifies the types of acquired
intangible assets that are required to be recognized and reported separate from
goodwill. SFAS 142 requires that goodwill and certain intangibles no longer be
amortized, but instead tested for impairment at least annually. There was no
impairment of goodwill upon adoption of SFAS 142.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES

# NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

| | Net loss applicable to common shareholders and basic loss per
share for the three months and nine months ended March 31, 2001 adjusted to
exclude amortization expense (net of taxes) is as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`Three Months   Nine Months
                                                              Ended        Ended
                                                                March 31, 2001
                                                          --------------------------

        Net loss :
            Reported net loss                              $(390,739)      $(866,027)
            Goodwill amortization, net of taxes               49,201         145,522
                                                           ---------       ---------
                Adjusted net loss                          $(341,538)      $(720,505)

        Basic loss per share :
            Reported basic loss per share                  $   (0.12)      $   (0.26)
            Goodwill amortization                               0.01            0.04
                                                           ---------       ---------
                Adjusted basic loss per share              $   (0.11)      $   (0.22)`

| | During
the nine months ended March 31, 2002, $55,152 of goodwill related to the
ultraHue acquisition was recorded, and no goodwill was impaired, or written off.
As of March 31, 2002, goodwill was $4,873,125 and accumulated amortization was
$539,855.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | All
of our acquired intangible assets are subject to amortization. During the first
three quarters of fiscal 2002, we acquired no other intangible assets.
Intangible assets amortization expense for the third quarter of fiscal 2002 was
$2,267. The components of intangible assets include a covenant not to compete
associated with an acquisition, and two acquired URLs. The value of our other
intangible assets is $97,000, less accumulated amortization of $53,502.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

## ITEM 2.  
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                  RESULTS OF OPERATIONS

You should read the
following discussion and analysis in conjunction with the information set forth
in the unaudited financial statements and notes thereto, included elsewhere
herein, and the audited financial statements and the notes thereto, included in
our Form 10-KSB filed September 28, 2001.

## Results of
Operations

## For the Three Months and Nine Months Ended March 31, 2002 and 2001

Sales. Our consolidated
sales for the three months ended March 31, 2002 compared to the same period in
2001, increased approximately 9% to $3,302,840 from $3,032,626. Our consolidated
sales for the nine months ended March 31, 2002 compared to the same period in
2001, increased approximately 17% to $10,926,716 from $9,357,616. The increase
in sales can be attributed to the continued growth of our Media Sciences
supplies business offset somewhat by the contraction of Cadapults reseller
business.

Cost of Sales. Our cost of
sales for the three months ended March 31, 2002 were $1,568,232, or
approximately 47% of sales, as compared to $1,704,696, or approximately 56% of
sales for the comparable period in 2001. Our Cost of sales for the nine months
ended March 31, 2002 were $5,179,690, or approximately 47% of sales, as compared
to $5,430,805, or approximately 58% of sales for the comparable period in 2001.
The changes in our cost of sales can be attributed to the continued transition
of our sales to the high margin business generated by our Media Sciences
subsidiary.

Selling, General and
Administrative. For the three months ended March 31, 2002, our selling, general
and administrative expenses increased to $2,891,790 from $1,480,268, which
represents an increase to 88% of sales from 48% of sales. For the nine months
ended March 31, 2002, our selling, general and administrative expenses increased
to $5,220,909 from $3,876,830, which represents an increase to 48% of sales from
42% of sales. The increase in our selling, general and administrative expenses
was directly attributable to the recall of our solid ink products in January of
2002 and the associated warranty claims resulting from a now resolved raw
material issue. For the nine months ended March 31, 2002 the cost of the recall
and warranty expenses, net of a $1 million payment from our product liability
insurance was approximately $2.6 million. Included in these costs is an increase
in our accrued product warranty liability of approximately $500,000. We believe
that the accrual as of March 31, 2002 in the amount of $888,936 is sufficient to
resolve any remaining claims resulting from the defective product. For the nine
months ended March 31, 2002, we received a favorable settlement in connection
with litigation and recorded the net proceeds of $600,000 as a reduction in our
selling, general and administrative expenses.

Depreciation and
Amortization. For the three months ended March 31, 2002 compared to the same
period in 2001, our depreciation expense decreased to $184,654 from $187,495.
Amortization of intangibles was $2,267 for both periods. Amortization of
goodwill decreased from $82,002 to zero as the result of our adoption of FASB
issued SFAS No. 142 as discussed in the above Note 8. For the nine months ended
March 31, 2002 compared to the same period in 2001, our depreciation expense
increased to $554,360 from $527,829. Amortization of intangibles was $6,901 for
both periods. For the nine months ended March 31, 2002, amortization of goodwill
decreased from $242,537 to zero as the result of our adoption of FASB issued
SFAS No. 142 as discussed in the above Note 8.

Interest Expense. For the
three months ended March 31, 2002, our interest expense increased to $89,876
from $61,978. For the nine months ended March 31, 2002, our interest expense
increased to $311,077 from $189,132.

Income Taxes. For the three
months ended March 31, 2002, we recorded a deferred income tax benefit of
approximately $548,000. For the nine months ended March 31, 2002 we recorded a
deferred income tax benefit of approximately $62,000. For the three months ended
March 31, 2001 we recorded a deferred income tax benefit of $150,825 and for the
nine months ended March 31, 2001, we recorded a deferred income tax benefit of
$255,117.

---

Dividends. For the three
months ending March 31, 2002, we paid $157,406 of stock dividends to our
preferred shareholders of record. For the nine months ending March 31, 2002, we
paid $472,219 of stock dividends to our preferred shareholders of record.

Net Loss. For the three
month period ended March 31, 2002, we incurred a net loss applicable to common
shareholders of $979,214 or $(0.28) per share as compared to a net loss of
$390,739 or $(0.12) per share for the corresponding three month period ended
March 31, 2001. For the nine month period ended March 31, 2002, we incurred a
net loss applicable to common shareholders of $565,238 or $(0.16) per share as
compared to a net loss of $866,027 or $(0.26) per share for the corresponding nine
month period ended March 31, 2001.

## Liquidity and
Capital Resources

We experienced negative
cash flow of $63,676 for the nine months ended March 31, 2002. Cash used in
operations resulted in positive cash flows of $735,092 resulting from a net loss
of $93,019, offset primarily by a non cash charge of $554,360 for depreciation
and amortization and an increase in accrued product warranty of $488,936.

The cash we used in
investing activities included the purchase of equipment in the amount of
$267,137 and the purchase of goodwill generated by the ultraHue earn-out in the
amount of $55,152.

Cash used in financing
activities included the payment of $472,219 of preferred stock dividends.

We have an agreement with a
lender under which we can borrow up to $4,000,000 under a revolving line of
credit, subject to availability of collateral. Borrowings bear interest at 0.5%
over the lenders base rate, are payable on demand and are collateralized
by all of our assets. As of March 31, 2002, $2,234,554 was outstanding
under this line.

Between August 17, 2000 and
September 14, 2000, we borrowed an aggregate of $325,000 from our President,
Michael W. Levin. We used the funds as bridge financing for printers acquired
for our No-Cap Color printer program, until larger quantities of printers are
accumulated and financed through lease or other debt financing. These loans are
unsecured, payable on demand, and carry a 10% interest rate. Through March 2002,
we repaid $70,000 of these loans. In April of 2002, Mr. Levin advanced the
company an additional $100,000. These short-term loans mature in May 2003. There
is no representation or assurance made that Mr. Levin will make any further
loans to us.

In December 2000, the note
payable to ultraHue came due and was satisfied with a cash payment of $760,000
and a demand note in the amount of $400,000 bearing an interest rate of 13% per
annum. Through March 2002, we repaid $150,000 of this note.

## Inflation

We have historically offset
any inflation in operating costs by a combination of increased productivity and
price increases, where appropriate. We do not expect inflation to have a
significant impact on its business in the future.

## Seasonality

We anticipate that our cash
flow from operations will be significantly greater in the fall and winter months
than in the spring and summer months due to the purchasing cycles associated
with our products. In the event that we are unable to generate sufficient cash
flows from operations during the seasons of peak operations, we may be required
to utilize other cash reserves, if any, or seek additional equity or debt
financing to meet operating expenses, and there can be no assurance that there
will be any other cash reserves or that additional financing will be available
or, if available, on reasonable terms.

---

## Forward
Looking Statements

The foregoing management
discussion and analysis contains forward-looking statements and information that
are based on our managements beliefs, as well as assumptions made by, and
information currently available to our management. These forward-looking
statements are based on many assumptions and factors, and are subject to many
conditions, including our continuing ability to obtain additional financing,
dependence on contracts with suppliers, competitive pricing for our products,
demand for our products which depends upon the condition of the computer
industry, and the effects of increased indebtedness as a result of our business
acquisitions. Except for the historical information contained in this report,
all forward-looking information are estimates by our management and are subject
to various risks, uncertainties and other factors that may be beyond the our
control and may cause results to differ from our managements current
expectations, which may cause our actual results, performance or achievements to
be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements.

---

# PART II.  
OTHER INFORMATION

## ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We held a special meeting of stockholders on April 19, 2002.  The matters voted upon at the meeting were the
following two proposals:

| | o | to approve a change in the corporate structure of the company, whereby we could
may bring greater focus to the operations of our Media Sciences division, by
moving the business of Cadapult Graphic Systems to a newly-formed, wholly-owned
subsidiary; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | to approve an amendment to our certificate of incorporation to change our
corporate name to Media Sciences International, Inc.
| | - | ------------------------------------------------------------------------------------------------------------------------------

Our shareholders
representing 2,182,702 shares voted for the first proposal with 500 votes cast
against, and 2,600 votes abstaining. Our shareholders representing 2,185,302
shares voted for the second proposal with 500 votes cast against, and no
abstention.

## ITEM 5.  
OTHER
INFORMATION

On April 19, 2002, we amended our certificate of incorporation to change our corporate name to Media Sciences
International, Inc.

On April 30, 2002, we effected the structural change approved by our shareholders on April 19, 2002 by agreement
between Media Sciences International, Inc. and a newly formed, wholly owned New Jersey corporation named Cadapult
Graphic Systems, Inc.  As a result of the change in corporate structure, we are now organized with two operating
subsidiaries:  Media Sciences, Inc. and Cadapult Graphic Systems, Inc.  Media Sciences International, Inc.,
as a parent corporation, does not have a present intent to engage in substantive independent business
operations.  We intend to conduct substantially all of our operations in the future through subsidiaries.

## ITEM 6.  
EXHIBITS AND REPORTS ON FORM 8-K

(a)        Exhibits.

The following exhibits are filed with this report:

|Exhibit Number | Description of Exhibit
|-------------- | ----------------------

|Exhibit 2 | Agreement of Change in Corporate Structure
|--------- | ------------------------------------------

|Exhibit 3(i)(1) | Certificate of Amendment of Certificate of Incorporation of Cadapult Graphic
                           Systems, Inc.
|--------------- | ---------------------------------------------------------------------------------------------------------------------

|Exhibit 3(i)(2) | Certificate of Incorporation of Cadapult Graphic Systems, Inc. (a New Jersey
                           corporation)
|--------------- | --------------------------------------------------------------------------------------------------------------------

|Exhibit 3(ii) | Bylaws of Cadapult Graphic Systems, Inc. (a New Jersey corporation)
|------------- | -------------------------------------------------------------------

|Exhibit 11 | Statement Concerning Computation of Per Share Earnings is hereby incorporated
by reference to Financial Statements of Part I - Financial
Information, Item 1  Financial Statements, contained in this Form 10-QSB.
|---------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)        Reports on Form 8-K.

Not applicable.

---

# 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.

| | MEDIA SCIENCES INTERNATIONAL, INC.
| | ----------------------------------

|Dated:  May 14, 2002 | By:      /s/ Michael W. Levin
      Michael W. Levin
      Chief Executive Officer, President
      and Chief Financial Officer
|-------------------- | -------------------------------------------------------------------------------------------------------------------------------

|Dated:  May 14, 2002 | By:      /s/ Frances Blanco
      Frances Blanco
       Vice President and Treasurer
|-------------------- | ------------------------------------------------------------------------------------

---