---

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 December 31, 2003

| | o | 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

---

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) 236-9311
(Issuer's telephone number)

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 February 12, 2004, the issuer had 8,602,210 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 DECEMBER 31, 2003

TABLE OF CONTENTS

|           |  |                                                                                                       | Page
|---------- |  | ----------------------------------------------------------------------------------------------------- | ----
|PART I.    |  | FINANCIAL INFORMATION                                                                                 |     
|Item 1.    |  | Financial Statements                                                                                  | 3   
|           |  | Consolidated Balance Sheets as of December 31, 2003 and June 30, 2003                                 | 3   
|           |  | Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2003 and 2002   | 4   
|           |  | Consolidated Statement of Changes in Shareholder's Equity Ffor the Six Months Ended December 31, 2003 | 5   
|           |  | Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2003 and 2002             | 6   
|           |  | Notes to Consolidated Financial Statements                                                            | 7   
|Item 2.    |  | Management's Discussion and Analysis of Financial Condition and
             Results of Operations    | 12  
|Item 3.    |  | Controls and Procedures                                                                               | 14  
|           |  |                                                                                                       |     
|           |  |                                                                                                       |     
|PART II.   |  | OTHER INFORMATION                                                                                     |     
|Item 2.    |  | Changes in Securities                                                                                 | 15  
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                   | 15  
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                      | 16  
|           |  |                                                                                                       |     
|           |  |                                                                                                       |     
|Signatures |  |                                                                                                       | 17  

---

# PART I.  
FINANCIAL INFORMATION

## ITEM 1.  
FINANCIAL STATEMENTS

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

`December 31,      June 30,
                                ASSETS                              2003           2003
                                ------                          (Unaudited)
                                                                ------------    ------------

CURRENT ASSETS :
    Cash and equivalents                                        $     66,099    $     66,467
    Accounts receivable, less allowance for
        doubtful accounts of $35,000                               2,248,953       1,841,060
    Inventories                                                    1,493,054       1,089,809
    Deferred income taxes                                            649,881       1,000,000
    Prepaid expenses and other current assets                        120,764         173,050
                                                                ------------    ------------
        Total Current Assets                                       4,578,751       4,170,386

PROPERTY AND EQUIPMENT, NET                                        1,056,014       1,362,734

OTHER ASSETS:
    Goodwill and other intangible assets, net                      4,473,117       4,478,190
    Deferred income taxes                                               --            47,315
    Other assets                                                     141,722          58,102
                                                                ------------    ------------
                                                                   4,614,839       4,583,607

TOTAL ASSETS                                                    $ 10,249,604    $ 10,116,727
                                                                ============    ============

                 LIABILITIES AND SHAREHOLDERS' EQUITY
                 ------------------------------------

CURRENT LIABILITIES:
    Short-term debt                                             $  2,381,630    $  2,185,118
    Accounts payable                                               1,471,314       1,340,257
    Accrued expenses and other current liabilities                   136,023         258,512
     Income tax payable                                               77,796         131,425
    Accrued product warranty                                         250,000         250,000
    Accrued expense - supplier                                       214,663         448,952
    Dividends payable                                                152,375         699,919
    Loan from investors                                                 --           200,000
    Loan from officer                                                255,000         280,000
    Deferred revenues                                                141,803         196,234
                                                                ------------    ------------
        Total Current Liabilities                                  5,080,604       5,990,417

OTHER LIABILITIES :
    Long-term debt, less current maturities                           17,625          39,081
    Loan from investors                                              400,000         400,000
    Loan from officer                                                195,000         195,000
                                                                ------------    ------------
                                                                     612,625         634,081

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY :
    Series A Convertible Preferred stock, $.001 par value,
       Authorized 1,000,000 shares; issued none in December;            --               547
       547,500 in June
    Common Stock, .001 par value,
       Authorized 20,000,000 shares; issued  8,602,210 shares          8,603           3,578
       in December, 3,577,210 shares in June
    Additional paid-in capital                                     6,169,011       5,109,343
    Cost of 10,564 shares of common stock in treasury                (20,832)        (20,832)
    Retained earnings (deficit)                                   (1,600,407)     (1,600,407)
                                                                ------------    ------------
        Total Shareholders' equity                                 4,556,375       3,492,229

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                      $ 10,249,604    $ 10,116,727
                                                                ============    ============`

See accompanying notes to consolidated financial statements.

---

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

`Three Months Ended            Six Months Ended
                                                          December 31,                 December 31,
                                                      2003            2002         2003            2002
                                                   -----------    -----------   -----------    -----------

NET SALES                                          $ 4,417,483    $ 4,023,556   $ 8,033,001    $ 7,512,706
                                                   -----------    -----------   -----------    -----------
COST OF GOODS:

    Cost of sales, excluding depreciation            2,132,869      1,938,155   $ 3,747,506      3,526,649

    Depreciation                                       139,662        131,979       284,817        256,195
                                                   -----------    -----------   -----------    -----------
        Total cost of goods                          2,272,531      2,070,134     4,032,324      3,782,844

GROSS PROFIT                                         2,144,952      1,953,422     4,000,677      3,729,862
OTHER COSTS AND EXPENSES:
    Selling, general and administrative              1,478,072      1,328,370     2,788,823      2,533,851
    Depreciation and amortization                       67,139         68,076       129,586        137,325
                                                   -----------    -----------   -----------    -----------
        Total other costs and expenses               1,545,211      1,396,446     2,918,409      2,671,176
                                                   -----------    -----------   -----------    -----------

INCOME FROM OPERATIONS                                 599,741        556,976     1,082,268      1,058,686

INTEREST EXPENSE, NET                                   93,900        127,349       201,208        240,693
                                                   -----------    -----------   -----------    -----------

INCOME BEFORE INCOME TAXES                             505,841        429,627       881,060        817,993

INCOME TAXES :
    Current                                             45,653         38,947        79,289         73,867
     Deferred                                          156,818        133,152       273,136        253,578
                                                   -----------    -----------   -----------    -----------
                                                       202,471        172,099       352,425        327,445
                                                   -----------    -----------   -----------    -----------

NET INCOME                                         $   303,370    $   257,528   $   528,635    $   490,548
                                                   ===========    ===========   ===========    ===========

PREFERRED STOCK DIVIDENDS                          $ 1,913,824    $   157,407   $ 2,071,230    $   314,813
                                                   ===========    ===========   ===========    ===========

INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS    $(1,610,454)   $   100,121   $(1,542,595)   $   175,735
                                                   ===========    ===========   ===========    ===========

BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING     3,577,210      3,577,210     3,577,210      3,554,287
                                                   ===========    ===========   ===========    ===========

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING        --        3,577,437          --        3,555,358
                                                   ===========    ===========   ===========    ===========
BASIC NET INCOME (LOSS) APPLICABLE TO
COMMON SHAREHOLDERS                                $     (0.45)   $      0.03   $     (0.43)   $      0.05
                                                   ===========    ===========   ===========    ===========

DILUTED NET INCOME PER COMMON SHARE                $      --      $      0.03   $      --      $      0.05
                                                   ===========    ===========   ===========    ===========`

See accompanying notes to consolidated financial statements.

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
SIX MONTHS
ENDED DECEMBER 31, 2003

`Additional     Retained        Total
                                         Common Stock      Preferred Stock   Treasury     Paid-in      Earnings     Shareholders'
                                      Shares     Amount    Shares   Amount     Stock      Capital      (Deficit)       Equity
                                     ---------   ------   --------  ------   --------   -----------   -----------   -------------
BALANCES, JUNE 30, 2003              3,577,210   $3,578    547,500  $  547   $(20,832)  $ 5,109,343   $(1,600,407)  $   3,492,229

SIX MONTHS ENDED
DECEMBER 31, 2003 (UNAUDITED)
    Issuance of common stock for
         Preferred Conversion        5,025,000    5,025   (547,500)   (547)       --      2,602,263          --         2,606,741
    Preferred  stock dividend, 11.5%      --       --         --      --          --     (1,542,595)     (528,635)     (2,071,230)
    Net Income                            --       --         --      --          --           --         528,635         528,635
                                     ---------   ------   --------  ------   --------   -----------   -----------   -------------

BALANCES,
DECEMBER 31, 2003 (UNAUDITED)        8,602,210   $8,603       --    $ --     $(20,832)  $ 6,169,011   $(1,600,407)  $   4,556,375
                                     =========   ======   ========  ======   ========   ===========   ===========   =============`

See accompanying notes to consolidated financial statements.

---

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

`Six Months Ended
                                                                      December 31,
                                                                   2003         2002
                                                                 ---------    ---------
CASH FLOWS FROM OPERATING ACTIVITIES :
    Net income                                                   $ 528,635    $ 490,548
    Adjustments to reconcile net Income to net cash
      flows from operating activities :
         Depreciation and amortization                             414,403      393,520
         Deferred income taxes                                     273,136      327,197
         Provision for bad debts                                    23,989        9,174
         Changes in operating assets and liabilities :
             Accounts receivable                                  (431,882)    (666,501)
             Inventories                                          (403,245)     213,461
             Prepaid expenses and other current assets              52,286       25,940
             Other assets                                          (83,620)      (2,369)
             Accounts payable                                      131,057     (414,703)
             Accrued expenses and other current liabilities        (63,851)    (220,972)
             Accrued expense - supplier                           (234,289)    (128,755)
             Deferred revenues                                     (54,432)    (106,356)
                                                                 ---------    ---------
                 Net cash flows from operating activities          152,187      (79,816)
                                                                 ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES :
    Purchases of property and equipment                           (102,610)    (112,895)
    Purchase of intangible assets                                     --        (94,609)
                                                                 ---------    ---------
                 Net cash flows from investing activities         (102,610)    (207,504)
                                                                 ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES :
    Note payable to bank, net                                      278,927      149,984
    Payments/Proceeds on short term debt, net                      (82,416)     146,276
    Payments on long term debt                                     (21,456)    (103,870)
    Net advances from officer                                      (25,000)     120,000
    Payments, loans from investors                                (200,000)        --
                                                                 ---------    ---------
                 Net cash flows from financing activities          (49,945)     312,390
                                                                 ---------    ---------

NET CHANGE IN CASH AND EQUIVALENTS                                    (368)      25,070

CASH AND EQUIVALENTS, BEGINNING OF YEAR                             66,467       42,180
                                                                 ---------    ---------

CASH AND EQUIVALENTS, END OF YEAR                                $  66,099    $  67,250
                                                                 =========    =========

SUPPLEMENTAL CASH FLOW INFORMATION :
    Interest paid                                                $ 217,589    $ 176,195
                                                                 =========    =========
    Issuance of common stock as dividend payment                 $ 704,950    $  43,556
                                                                 =========    =========
    Income taxes paid                                            $   8,626    $     248
                                                                 =========    =========
    Issuance of common stock for accrued interest on dividends   $  11,851    $    --
                                                                 =========    =========`

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, 2003 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, 2003. 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 six months ended December 31, 2003 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, or business, color printers. Our products include solid ink sticks,
color toner cartridges and other consumable items. 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  STOCK
BASED COMPENSATION PROFORMA DISCLOSURE :

| | The
Company follows the intrinsic method of Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB 25) and related
interpretations in accounting for its employee stock options because, as
discussed below, Financial Accounting Standards Board Statement No. 123,
Accounting for Stock-Based Compensation (FAS 123) requires use of
option valuation models that were not developed for use in valuing employee
stock options. FAS 123 permits a company to elect to follow the intrinsic method
of APB 25 rather than the alternative fair value accounting provided under FAS
123, but requires pro forma net income and earnings per share disclosures as
well as various other disclosures not required under FAS 123 for companies
following APB 25. The Company has adopted the disclosure provisions required
under Financial Accounting Standards Board Statement No. 148, Accounting
for Stock-Based Compensation  Transition and Disclosure (FAS 148).
Under APB 25, because the exercise price of the Companys stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense was recognized.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Pro
forma information regarding net income and earnings per share is required by FAS
123 and FAS 148, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
fair value of options granted in 2003 and 2002 were estimated at the date of
grant using a Black-Scholes option pricing model with the following
weighted-average assumptions, respectively: risk-free interest rates of 6.0%,
dividend yield of 0.0%, volatility factors of the expected market price of the
Companys common stock of 74% in 2003 and 72% in 2002, and a
weighted-average expected life of the options of five years.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES

# NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

| | The
Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective input assumptions including the expected stock price volatility.
Because the Companys employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
managements opinion, the existing models do not necessarily provide a
reliable measure of the fair value of its employee stock options.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | For
purposes of pro forma disclosures, the estimated fair value of options is
amortized to expense over the options vesting period. The Companys
pro forma information follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`Three Months Ended             Six Months Ended
                                                        December 31,                  December 31,
                                                    2003           2002           2003           2002
                                                 -----------    -----------    -----------    -----------
Net income as reported                           $   303,370    $   257,528    $   528,635    $   490,548
   Less Preferred Stock Dividends                  1,913,824        157,407      2,071,230        314,813
                                                 -----------    -----------    -----------    -----------
Income(loss) applicable to common shareholders   $(1,610,454)   $   100,121    $(1,542,595)   $   175,735

Stock-based employee compensation expense        $   (19,006)   $      (533)   $   (27,937)   $    (8,112)
                                                 -----------    -----------    -----------    -----------
    under fair value method, net of related
    tax effects
Pro forma net income (loss)                      $(1,629,460)   $    99,588    $(1,570,532)   $   167,623
                                                 ===========    ===========    ===========    ===========

Income (loss) per share:
        Basic, as reported                       $     (0.45)   $      0.03    $     (0.43)   $      0.05
                                                 ===========    ===========    ===========    ===========
        Basic, pro forma                         $     (0.46)   $      0.03    $     (0.44)   $      0.05
                                                 ===========    ===========    ===========    ===========
             Diluted per share, as reported      $      --      $      0.03    $      --      $      0.05
                                                 ===========    ===========    ===========    ===========
             Diluted per share, pro forma        $      --      $      0.03    $      --      $      0.05
                                                 ===========    ===========    ===========    ===========`

## NOTE 4  NOTE PAYABLE TO BANK :

| | We
have an agreement with a lender under which we can borrow up to $3,000,000 under
a revolving line of credit, subject to availability of collateral. Borrowings
bear interest at 1.75% over the lenders base rate, are payable on demand
and are collateralized by all assets of the company. As of December 31, 2003,
$2,176,943 was outstanding under this line and the interest rate was 5.75%. The
line of credit expires on October 31, 2006.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

## NOTE 5 
PREFERRED STOCK CONVERSION :

| | In
November 2003, we initiated a voluntary Offer of Conversion, whereby preferred
shareholders who accepted the offer waived their rights to unpaid dividends and
interest on their preferred stock and they received ten shares of common stock for
each preferred share tendered. 86% of the preferred shareholders tendered a
total of 457,500 or 84% of the outstanding Series A preferred shares. The
balance of the Series A preferred shares (90,000) were automatically converted
to common stock at a rate of five shares of common stock for each preferred
share, pursuant to the terms of the amended Certificate of Designation, which
amendment was approved by a majority of the preferred shareholders. Those
preferred shareholders whose preferred shares were converted at a rate of five
to one will be paid their accrued and unpaid dividends.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES

# NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

| | The
conversion of the preferred stock was accounted for according to EITF Topic No.
D-42 as an Induced Conversion of Preferred Stock. Consequently, the fair value
of the securities (ten shares of common stock) issued over the fair value of the
securities issuable pursuant to the original conversion terms (five shares of
common stock) less the accrued dividends and interest given up by the
shareholders was subtracted from net earnings to arrive at net earnings
available to common shareholders. The non-cash dividend for the three months
ended December 31, 2003 was calculated as follows :
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`Fair value of securities issued (5,025,000 x $1.15)              $ 5,778,750
Less :
    Fair value of securities issuable pursuant to the original    (3,148,125)
        conversion terms (547,000 x 5 x $1.15)
    Value of accrued dividends waived                               (704,950)
    Value of accrued interest waived                                 (11,851)
                                                                 -----------

Non-cash preferred stock dividend                                $ 1,913,824
                                                                 ===========`

## NOTE 6 
EARNINGS PER SHARE

| | Basic
earnings per share is computed using the weighted average number of shares
outstanding. Diluted earnings per common share is computed using the weighted
average number of shares outstanding adjusted for the incremental shares
attributed to outstanding options and warrants to purchase common stock, and
other potentially dilutive securities.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The following table sets forth the computation of basic and diluted earnings per share :
| | ----------------------------------------------------------------------------------------

`Three Months Ended             Six Months Ended
                                                        December 31,                   December 31,
                                                     2003          2002           2003           2002
                                                 ------------   ----------   --------------   ----------



Numerator :
    Income (loss) applicable to
         common shareholders - basic             $ (1,610,454)  $  100,121   $   (1,542,595)  $  175,735
                                                 ============   ==========   ==============   ==========
    Income applicable to
         common shareholders - diluted           $       --     $  100,121   $         --     $  175,735
                                                 ============   ==========   ==============   ==========


Denominator :
    Denominator for basic earnings per share :
        Weighted average shares                     3,577,210    3,577,210        3,577,210    3,554,287
                                                 ------------   ----------   --------------   ----------

    Effect of dilutive securities
        Conversion of preferred stock
              to common                                  --           --               --           --
        Stock options and warrants                       --            227             --          1,071
                                                 ------------   ----------   --------------   ----------

    Denominator for diluted earnings
         per share                                  3,577,210    3,577,437        3,577,210    3,555,358
                                                 ============   ==========   ==============   ==========


    Earnings (loss) per share :
        Basic                                    $      (0.45)  $     0.03   $        (0.43)  $     0.05
                                                 ============   ==========   ==============   ==========

        Diluted                                  $       --     $     0.03   $         --     $     0.05
                                                 ============   ==========   ==============   ==========`

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES

# NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

| | The
following warrants to purchase common stock were excluded from the computation
of diluted earnings per share for the three and six months ended December 31,
2003 because the warrants exercise price was greater than the average
market price of the common stock for those periods:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`Three Months Ended        Six Months Ended
                                                            December 31,             December 31,
                                                         2003          2002        2003         2002
                                                      -----------   ---------   -----------   ---------

            Anti-dilutive warrants and options             --       3,382,979        --       3,382,979
                                                      ===========   =========   ===========   =========`

| | The
conversion of the Class A convertible preferred stock has been excluded from the
computation of diluted earnings per share for the three and six months ended
December 31, 2003 and 2002. Such conversion when taking into account the
additional net income generated by the elimination of the dividend would be
anti-dilutive.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

## NOTE 7 
RECALL AND WARRANTY EXPENSES:

| | Media
Sciences provides a warranty for all of its consumable supply products. The
Companys warranty stipulates that the Company will pay reasonable and
customary charges for the repair of a printer needing service as a result of
using the Companys products. The Company estimates the costs that may be
incurred and records a liability in the amount of such costs at the time product
revenue is recognized. Factors that may affect the warranty include the number
of units shipped to customers, historical and anticipated rates of warranty
claims and cost per claim. The Company periodically assesses the adequacy of its
recorded warranty liability and adjusts the amount as necessary. These expenses
are classified as Selling, General and Administrative costs.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
January 2002, the Company recalled all solid ink products manufactured between
May 2001 and January 2002. It was discovered that the use of the Companys
solid ink sticks manufactured during that time period could cause printer
reliability issues. Management believes that it has resolved the problem. In
addition, two independent test laboratories have tested the reliability of the
Companys solid ink and have found no reliability issues associated with
the use of the Companys solid ink products.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Changes
in accrued product warranty for the three and six months ended December 31, 2003
and 2002 are as follows:
| | -----------------------------------------------------------------------------------------------------------------

`Three Months Ended            Six Months Ended
                                                          December 31,                 December 31,
                                                      2003           2002           2003           2002
                                                  -----------    -----------    -----------    -----------
Warranty reserve at the beginning of the period   $   250,000    $   300,000    $   250,000    $   500,000

       Warranties accrued during the period           280,000        420,000        580,000        775,000
       Warranties settled during the period          (280,000)      (470,000)      (580,000)    (1,025,000)
                                                  -----------    -----------    -----------    -----------
Net change in warranty reserve                    $      --      $   (50,000)   $      --      $  (250,000)
                                                  -----------    -----------    -----------    -----------

Warranty reserve at December 31,                  $   250,000    $   250,000    $   250,000    $   250,000
                                                  ===========    ===========    ===========    ===========`

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES

# NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

| | The
Company has filed a claim under its umbrella liability policy for the
unreimbursed portion of the warranty expenses. The insurance carrier has denied
coverage under the policy. We are evaluating all options available to us to
appeal this decision.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Even
though management believes that the recall is complete, the Company will
continue to receive warranty claims associated with the recalled ink and other
warranty expenses for products not sold under the recall. While the Company
believes that the reserve should be adequate to resolve the remaining claims, it
is possible that the warranty claims may exceed the accrual, and therefore
differences, if any, will be expensed in future periods.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

## 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 15, 2003.

## Results of
Operations

## For the Three
and Six Months Ended December 31, 2003 and 2002

Sales.  Our consolidated sales for the three months ended December 31, 2003, as compared to the same period in
2002, increased approximately 10% to $4,417,483 from $4,023,556.  The net increase in sales resulted from an
increase in Media Sciences supply sales of approximately 19%, offset by a decrease in Cadapult sales of
approximately 13%.  Our consolidated sales for the six months ended December 31, 2003, as compared to the same
period in 2002, increased approximately 7% to $8,033,001 from $7,512,706.  The net increase in sales resulted
from an increase in Media Sciences supply sales of approximately 24%, offset by a decrease in Cadapult sales of
approximately 28%. The shift in sales from Cadapult to Media Sciences is to be expected as we focus on the higher
margin growth opportunity in Media Sciences supplies.

Cost of Sales.  Our cost
of sales for the three months ended December 31, 2003 were $2,132,869, as
compared to $1,938,155 for the same period in 2002, both approximately 48% of
sales. Our cost of sales for the six months ended December 31, 2003 were
$3,747,506, as compared to $3,526,649 for the same period in 2002, again both
approximately 47% of sales.

Selling, General and
Administrative.  For the three months ended December 31, 2003 as compared to
the same period in 2002, our selling, general and administrative expenses
increased to $1,478,072 from $1,328,370, thus remaining at 33% of sales. For the
six months ended December 31, 2003 as compared to the same period in 2002, our
selling, general and administrative expenses increased to $2,788,823 from
$2,533,851, or slightly up to 35% of sales from 34% of sales.

Depreciation and
Amortization.  For the three months ended December 31, 2003 as compared to
the same period in 2002, our depreciation expense increased slightly to $204,484
from $195,139. Amortization expense was $2,317 and $4,916 for the two periods
respectively. For the six months ended December 31, 2003 as compared to the same
period in 2002, our depreciation expense increased slightly to $409,770 from
$383,688. Amortization of intangibles for the six months ending December 31,
2003 and 2002 was $4,633 and $9,832, respectively.

Interest Expense.  For the three months ended December 31, 2003 as compared to the same period in
2002, our interest expense decreased to $93,900 from $127,349. For the six
months ended December 31, 2003 as compared to the same period in 2002, our
interest expense decreased to $201,208 from $240,693. The decrease in interest
expense can be attributed to the repayment of certain notes and the expiration
of certain capital leases.

Income Taxes.  For
the three months ended December 31, 2003, we recorded a current income tax
expense of $45,653 and a deferred income tax expense of $156,818, as compared to
a current income tax expense of $38,947 and a deferred income tax expense of
$133,152 in 2002. For the six months ended December 31, 2003, we recorded a
current income tax expense of $79,289 and a deferred income tax expense of
$273,136, as compared to a current income tax expense of $73,867 and a deferred
income tax expense of $253,578 in 2002. For all periods, we recorded the current
income tax expense because of New Jerseys two-year suspension of the use
of net operating loss carry forwards.

Dividends.  For the three months ending December 31, 2003, we incurred a non-cash preferred stock dividend charge
of $1,913,824 associated with the induced conversion of our preferred stock as described in Note 5 to
the Financial Statements.  For the six months ended December 31, 2003, we incurred a preferred stock dividend
charge of $2,071,230.

---

Net Income (loss).  For the three month period ended December 31, 2003, we incurred a loss of
$1,610,454, or $(0.45) per share, as compared to earning $100,121, or $0.03 per
share basic and diluted, for the corresponding three month period ended December
31, 2002. For the six month period ended December 31, 2003, we incurred a loss
of $1,542,595, or $(0.43) per share, as compared to earning $175,735, or $0.05
per share basic and diluted, for the corresponding six month period ended
December 31, 2002. The losses for the three and six months ended December 31,
2003 are due to the non-cash dividend as described more fully in Note 5 to the Financial Statements.

## Liquidity and
Capital Resources

We experienced neutral cash
flow for the six months ended December 31, 2003. Cash flows from operating
activities resulted in positive cash flows of $152,187, primarily due to net
income of $528,635, a non-cash charge of $414,403 for depreciation and
amortization, $273,136 for deferred income taxes and an increase in accounts
payable of $131,057, offset by an increase in accounts receivables of $431,882
and in inventories of $403,245 and a decrease in accrued supplier, deferred
revenues and other accrued expenses and current liabilities of $352,572.

The cash we used in
investing activities included the purchase of equipment in the amount of
$102,610.

Cash used by financing
activities included net debt payments of $49,945. We have an agreement with a
lender under which we can borrow up to $3,000,000 under a revolving line of
credit, subject to availability of collateral. Borrowings bear interest at 1.75%
over the lenders base rate, are payable on demand and are collateralized
by all assets of the Company. As of December 31, 2003, $2,176,943 was
outstanding under this line. In December 2003, we repaid an aggregate of
$225,000 to several individuals upon the maturation of one year notes carrying
interest rates of 20-23%.

## 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 slightly better in the fall and winter months than
in the spring and summer months due to the sales cycles associated with our
Cadapult Graphic Systems subsidiary business. In the event that we are unable to
generate sufficient cash flows from 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 new
release, all forward-looking information are estimates by our management and are
subject to various risks, uncertainties and other factors that may be beyond our
control and may cause results to differ from 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.

---

## ITEM 3.
CONTROLS AND PROCEDURES

## Disclosure
Controls and Procedures

The Companys
management, with the participation of the Companys Chief Executive Officer
and Principal Financial Officer, has evaluated the effectiveness of the
Companys disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the
period covered by this report. Based on such evaluation, the Companys
Chief Executive Officer and Principal Financial Officer have concluded that, as
of the end of such period, the Companys disclosure controls and procedures
are effective in recording, processing, summarizing and reporting, on a timely
basis, information required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act.

## Internal
Control Over Financial Reporting

There have not been any
changes in the Companys internal control over financial reporting (as such
term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during
the fiscal quarter to which this report relates that have materially affected,
or are reasonably likely to materially affect, the Companys internal
control over financial reporting.

---

# PART II.  
OTHER INFORMATION

## ITEM 2.
CHANGES IN SECURITIES

In March 2000, we completed
a private placement of 550,000 units of our securities, which included shares of
preferred stock, to accredited investors in transactions deemed to be exempt
under Section 4(2) of the Securities Act and under Rule 506 of Regulation D
promulgated under the Securities Act. On December 31, 2003, we concluded an
exchange offer with our preferred stockholders through which they had an
opportunity to exchange each of their preferred shares for 10 shares of our
common stock. Preferred shareholders who accepted the offer waived their rights
to unpaid dividends and interest on their preferred stock. Preferred
shareholders tendered a total of 457,500 preferred shares, representing 84% of
the outstanding preferred shares, in exchange for a total of 4,575,000 shares of
common stock. Pursuant to the terms of the certificate of designation for our
preferred stock, the other 90,000 preferred shares outstanding were converted
into 450,000 shares of common stock.

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

We held our annual meeting
of stockholders on December 11, 2003. Stockholders of record of our common stock
as of the close of business on October 24, 2003 were entitled to vote. On the
record date, there were 3,577,210 shares of common stock outstanding. The
matters voted upon at the meeting and the voting results were:

| | o | Proposal 1  the election of seven members to the Board of Directors, Michael W. Levin, Frances Blanco,
              Paul C. Baker, Edwin Ruzinsky, Donald Gunn, Henry Royer, and Sagiv Shiv, to serve until the next
              annual meeting:  2,878,072 votes were cast for the proposal, with no votes against and 5,500 votes
              withheld.  5,650 eligible votes did not cast a vote on the proposal.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Proposal 2  the ratification of the selection of Wiss & Company, LLP
as our independent certified public accountants for the fiscal year ending June
30, 2004 until new accountants are selected: 2,887,222 votes were cast for the
proposal, with no votes against and 2,000 votes abstained.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Proposal 3  the ratification of the issuance of up to an additional
4,022,522 shares of common stock underlying series A preferred stock, for AMEX
additional share listing purposes: 2,190,742 votes were cast for the
proposal, with 60,463 votes against and 2,100 votes abstained. 635,719 eligible
votes did not cast a vote on the proposal.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Proposal 4  the ratification of the issuances of employment-issued stock
options for 925,000 shares of common stock, for AMEX additional share listing
purposes: 2,167,351 votes were cast for the proposal, with 62,913 votes against
and 23,041 votes abstained. 635,719 eligible votes did not cast a vote on the
proposal.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In December 2003, we filed
a certificate of amendment to our preferred share certificate of designation,
approved by a majority of our preferred shareholders, which provides for
automatic conversion of preferred shares into common shares if less than a
majority of the originally issued preferred shares becomes outstanding.

---

## 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 3(i) | Certificate of Amendment of Certificate of Designation of Series A Preferred
Stock
|------------ | ----------------------------------------------------------------------------------

|Exhibit 11* | Statement re: 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.
|----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Exhibit 31.1* | Certification of Chief Executive Officer pursuant to Securities Exchange Act
                           Rule 13a-14(a)/15d-14(a)
|------------- | --------------------------------------------------------------------------------------------------------------------------------

|Exhibit 31.2* | Certification of Principal Financial Officer pursuant to Securities Exchange
                           Act Rule 13a-14(a)/15d-14(a)
|------------- | ------------------------------------------------------------------------------------------------------------------------------------

|Exhibit 32* | Certifications Pursuant to Securities Exchange Act Rule 13a-14(b) and 18
                           U.S.C. Section 1350
|----------- | -----------------------------------------------------------------------------------------------------------------------

|_____ | 
|----- | 

|* Filed herewith. | 
|----------------- | 

(b)        Reports on Form 8-K.

On November 4, 2003, Media
Sciences filed a Current Report on Form 8-K, dated November 4, 2003, regarding
an issuer tender offer for the exchange of outstanding Series A preferred stock
for shares of common stock and a consent solicitation to amend the certificate
of designation for the series A preferred stock.

---

# 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:  February 12, 2004 | By:/s/ Michael W. Levin
        Michael W. Levin
        Chief Executive Officer and President
|------------------------- | ----------------------------------------------------------------------------------------------

|Dated:  February 12, 2004 | By:/s/ Denise Hawkins
        Denise Hawkins
        Vice President and Controller
        (Principal Financial Officer)
|------------------------- | ------------------------------------------------------------------------------------------------------------------------

---