---

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 September 30, 2003

| | [  ] | 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 November 3, 2003, the
issuer had 3,577,210 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 SEPTEMBER 30, 2003

TABLE OF CONTENTS

|           |  |                                                                                                         | Page
|---------- |  | ------------------------------------------------------------------------------------------------------- | ----
|PART I.    |  | FINANCIAL INFORMATION                                                                                   |     
|Item 1.    |  | Financial Statements                                                                                    | 3   
|           |  | Consolidated Balance Sheets as of September 30, 2003 and June 30, 2003                                  | 3   
|           |  | Consolidated Statements of Operations For the Three Months Ended September 30, 2003 and 2002            | 4   
|           |  | Consolidated Statement of Changes in Shareholder's Equity For the Three Months Ended September 30, 2003 | 5   
|           |  | Consolidated Statements of Cash Flows For the Three Months Ended September 30, 2003 and 2002            | 6   
|           |  | Notes to Consolidated Financial Statements                                                              | 7   
|Item 2.    |  | Management's Discussion and Analysis of Financial Condition and
             Results of Operations      | 11  
|Item 3.    |  | Controls and Procedures                                                                                 | 13  
|           |  |                                                                                                         |     
|           |  |                                                                                                         |     
|PART II.   |  | OTHER INFORMATION                                                                                       |     
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                     | 14  
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                        | 14  
|           |  |                                                                                                         |     
|           |  |                                                                                                         |     
|Signatures |  |                                                                                                         | 15  

---

# PART I.  
FINANCIAL INFORMATION

## ITEM 1.  
FINANCIAL STATEMENTS

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

`September 30,     June 30,
                                 ASSETS                          2003            2003
                                                             (Unaudited)
                                                             ------------    ------------

CURRENT ASSETS :
    Cash and equivalents                                     $     53,925    $     66,467
    Accounts receivable, less allowance
        for doubtful accounts of $35,000                        1,737,577       1,841,060
    Inventories                                                 1,128,393       1,089,809
    Deferred income taxes                                         806,772       1,000,000
    Prepaid expenses and other current assets                     174,989         173,050
                                                             ------------    ------------
        Total Current Assets                                    3,901,656       4,170,386

PROPERTY AND EQUIPMENT, NET                                     1,202,942       1,362,734

OTHER ASSETS:
    Goodwill and other intangible assets, net                   4,478,190       4,478,190
    Deferred income taxes                                            --            47,315
    Other assets                                                   80,920          58,102
                                                             ------------    ------------
                                                                4,559,110       4,583,607

TOTAL ASSETS                                                 $  9,663,708    $ 10,116,727
                                                             ============    ============

                  LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
    Short-term debt                                          $  1,983,043    $  2,185,118
    Accounts payable                                            1,195,795       1,340,257
    Accrued expenses and other current liabilities                160,402         258,512
    Income tax payable                                             40,874         131,425
    Accrued product warranty                                      250,000         250,000
    Accrued expense - supplier                                    341,000         448,952
    Dividends payable                                             857,325         699,919
    Loan from investors                                           200,000         200,000
    Loan from officer                                             280,000         280,000
    Deferred revenues                                             172,512         196,234
                                                             ------------    ------------
        Total Current Liabilities                               5,480,951       5,990,417

OTHER LIABILITIES :
    Long-term debt, less current maturities                        27,669          39,081
    Loan from investors                                           400,000         400,000
    Loan from officer                                             195,000         195,000
                                                             ------------    ------------
                                                                  622,669         634,081

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY :
    Series A convertible preferred stock, $.001 par value,
       Authorized 1,000,000 shares; issued 547,500 shares             547             547
    Common stock, .001 par value,
       Authorized 20,000,000 shares; issued 3,577,210               3,578           3,578
    Additional paid-in capital                                  5,109,343       5,109,343
    Cost of 10,564 shares of common stock in treasury             (20,832)        (20,832)
    Retained earnings (deficit)                                (1,532,548)     (1,600,407)
                                                             ------------    ------------
        Total Shareholders' Equity                              3,560,088       3,492,229

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $  9,663,708    $ 10,116,727
                                                             ============    ============`

See accompanying notes to consolidated financial statements.

---

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

`Three Months Ended
                                                          September 30,
                                                        2003         2002
                                                     ----------   ----------

NET SALES                                            $3,615,518   $3,489,150
                                                     ----------   ----------

COSTS OF GOODS:
    Cost of sales, excluding depreciation             1,614,637    1,588,494
    Depreciation                                        145,156      124,216
                                                     ----------   ----------
        Total cost of goods                           1,759,793    1,712,710

GROSS PROFIT                                          1,855,725    1,776,440

OTHER COSTS AND EXPENSES:
    Selling, general and administrative               1,310,751    1,205,481
    Depreciation and amortization                        62,447       69,249
                                                     ----------   ----------
        Total other costs and expenses                1,373,198    1,274,730
                                                     ----------   ----------

INCOME FROM OPERATIONS                                  482,527      501,710

INTEREST EXPENSE, NET                                   107,308      113,344
                                                     ----------   ----------

INCOME BEFORE INCOME TAXES                              375,219      388,366

INCOME TAXES :
    Current                                              33,636         --
    Deferred                                            116,318      155,346
                                                     ----------   ----------
                                                        149,954      155,346
                                                     ----------   ----------

NET INCOME                                           $  225,265   $  233,020
                                                     ==========   ==========

PREFERRED STOCK DIVIDENDS                               157,406      157,406
                                                     ==========   ==========

INCOME  APPLICABLE TO COMMON SHAREHOLDERS            $   67,859   $   75,614
                                                     ==========   ==========


BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING      3,577,210    3,531,363
                                                     ==========   ==========

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING    3,589,880    3,531,363
                                                     ==========   ==========

BASIC NET INCOME PER COMMON SHARE                    $     0.02   $     0.02
                                                     ==========   ==========
DILUTED NET INCOME PER COMMON SHARE                  $     0.02   $     0.02
                                                     ==========   ==========`

See accompanying notes to consolidated financial statements.

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
THREE MONTHS ENDED SEPTEMBER 30, 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

THREE MONTHS ENDED
SEPTEMBER 30, 2003 (UNAUDITED)
    Issuance of common stock for          --       --        --       --           --            --            --              --
         dividend payment
    Issuance of common stock              --       --        --       --           --            --            --              --
         warrants
    Preferred  stock dividend, 11.5%      --       --        --       --           --            --        (157,406)       (157,406)
    Net Income                            --       --        --       --           --            --         225,265         225,265
                                     ---------   ------   -------   ------   ----------   -----------   -----------   -------------

BALANCES,
SEPTEMBER 30, 2003 (UNAUDITED)       3,577,210   $3,578   547,500   $  547   $  (20,832)  $ 5,109,343   $(1,532,548)  $   3,560,088
                                     =========   ======   =======   ======   ==========   ===========   ===========   =============`

See accompanying notes to consolidated financial statements.

---

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

`Three Months Ended
                                                                  September 30,
                                                                2003          2002
                                                              ---------    ---------
CASH FLOWS FROM OPERATING ACTIVITIES :
    Net Income                                                $ 225,265    $ 233,020
    Adjustments to reconcile net income to net cash
      flows from operating activities :
         Depreciation and amortization                          207,602      193,465
         Deferred income taxes                                  116,318      155,346
         Provision for bad debts                                 17,259         --
         Changes in operating assets and liabilities :
             Accounts receivable                                 86,223     (561,931)
             Inventories                                        (38,584)     286,335
             Prepaid expenses and other current assets           (1,939)       9,610
             Other assets                                       (22,818)        --
             Dividends payable                                     --        113,851
             Accounts payable                                  (144,461)    (359,241)
             Accrued expenses and other current liabilities     (64,437)    (145,637)
             Accrued expense - supplier                        (107,952)     (59,121)
             Deferred revenues                                  (23,722)     (41,040)
                                                              ---------    ---------
                 Net cash flows from operating activities       248,754     (175,343)
                                                              ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES :
    Purchases of property and equipment                         (47,809)      (7,599)
    Purchase of intangible assets                                  --        (52,348)
                                                              ---------    ---------
                 Net cash flows from investing activities       (47,809)     (59,947)
                                                              ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES :
    Note payable to bank, net                                  (148,701)        --
    Payments/Proceeds on short term debt, net                   (53,374)     339,533
    Payments on long term debt                                  (11,412)     (64,786)
    Net advances from officer                                      --         95,000
    Preferred stock dividends                                      --       (113,850)
                                                              ---------    ---------
                 Net cash flows from financing activities      (213,487)     255,897
                                                              ---------    ---------

NET CHANGE IN CASH AND EQUIVALENTS                              (12,542)      20,607

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

CASH AND EQUIVALENTS, END OF YEAR                             $  53,925    $  62,787
                                                              =========    =========

SUPPLEMENTAL CASH FLOW INFORMATION :
    Interest paid                                             $ 100,976    $  72,111
                                                              =========    =========
    Issuance of common stock as dividend payment              $    --      $  43,556
                                                              =========    =========`

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 months ended September 30, 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
                                                                         September 30,
                                                                      2003           2002
                                                                    ---------     ---------
         Net income as reported                                     $ 225,265     $ 233,020
            Less Preferred Stock Dividends                            157,406       157,406
                                                                    ---------     ---------
         Income applicable to common shareholders                   $  67,859     $  75,614

         Stock-based employee compensation expense
             under fair value method, net of related tax effects    $  (8,931)    $  (7,579)
                                                                    ---------     ---------

         Pro forma net income                                       $  58,928     $  68,035
                                                                    =========     =========

         Income per share:
                 Basic, as reported                                   $  0.02       $  0.02
                                                                      =======       =======
                 Basic, pro forma                                     $  0.02       $  0.02
                                                                      =======       =======
                      Diluted per share, as reported                  $  0.02       $  0.02
                                                                      =======       =======
                      Diluted per share, pro forma                    $  0.02       $  0.02
                                                                      =======       =======`

## 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 September 30, 2003,
$1,631,161 was outstanding under this line and the interest rate was 5.75%. The
line of credit expires on October 31, 2006.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

## NOTE 5 
DIVIDENDS :

| | In
December 2002, our Board of Directors voted to defer payment of the preferred
stock dividends through the periods ending September 30, 2003. Our Board voted
to accrue 6% simple interest on the deferred dividends, to be paid upon payment
of the deferred dividends.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES

# NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

## 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

         September 30,                                                2003         2002
                                                                   ----------   ----------

         Numerator :
             Income applicable to common shareholders -- basic     $   67,859   $   75,614
                                                                   ==========   ==========
             Income applicable to common shareholders -- diluted   $   67,859   $   75,614
                                                                   ==========   ==========

         Denominator :
             Denominator for basic earnings per share :
                 Weighted average shares                            3,577,210    3,531,363
                                                                   ----------   ----------

             Effect of dilutive securities
                 Employee stock options and warrants                   12,670         --
                                                                   ----------   ----------
             Denominator for diluted earnings per share             3,589,880    3,531,363
                                                                   ==========   ==========

             Earnings (loss) per share :
                 Basic                                             $     0.02   $     0.02
                                                                   ==========   ==========
                 Diluted                                           $     0.02   $     0.02
                                                                   ==========   ==========`

| | The
following warrants to purchase common stock were excluded from the computation
of diluted earnings per share for the three months ended September 30, 2003 and
2002 because the warrants exercise price was greater than the average
market price of the common stock for those periods:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`Three  Months
                                                                            Ended

         September 30,                                                2003         2002
                                                                   ----------   ----------

         Anti-dilutive warrants and options                         3,189,423    3,366,645
                                                                   ==========   ==========`

| | The
conversion of the Series A convertible preferred stock has been excluded from
the computation of diluted earnings per share for the three months ended
September 30, 2003 and 2002. Such conversion when taking into account the
additional net income generated by the elimination of the dividend would be
anti-dilutive.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

# MEDIA
SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES

# NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

## 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 months ended September 30, 2003 and
2002 are as follows:
| | ----------------------------------------------------------------------------------------------------------

`September 30,
                                                             2003          2002
                                                           ---------    ---------
         Warranty reserve at the beginning of the period   $ 250,000    $ 500,000

            Warranties accrued during the period             302,000      334,000
            Warranties settled during the period            (302,000)    (534,000)
                                                           ---------    ---------
         Net change in warranty reserve                    $    --      $(200,000)
                                                           ---------    ---------

         Warranty reserve at September,                    $ 250,000    $ 300,000
                                                           =========    =========`

| | The
Company has filed a claim under its umbrella liability policy for the
unreimbursed portion of the warranty expenses. The insurance carrier has not yet
taken a coverage position on this claim.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 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
OPERATIONSFOR THE THREE
MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

Sales.  Our consolidated sales for the three months ended September 30, 2003 compared to the same period in 2002,
increased approximately 4% to $3,615,518 from $3,489,150.  The net increase in sales resulted from an increase in
Media Sciences supply sales of approximately 21% offset by a decrease in Cadapult sales of approximately 43%.
This shift in sales 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 September 30, 2003 were $1,614,637, or
approximately 45% of sales, as compared to $1,588,494, or approximately 46% of
sales for the comparable period in 2002. The decrease in our cost of sales as a percentage of sales can
be attributed to the higher margin business generated by our Media Sciences
subsidiary.

Selling, General and
Administrative.  For the three months ended September 30, 2003 compared to
the same period in 2002, our selling, general and administrative expenses
increased to $1,310,751 from $1,205,481, which represents an increase to 36% of
sales from 35% of sales. The slight increase can be attributed to increased
marketing activities related to the expansion of our distribution channels.

Depreciation and
Amortization.  For the three months ended September 30, 2003 compared to the
same period in 2002, our depreciation expense increased to $205,286 from
$188,549 as a result of the additional depreciation generated by equipment
purchases during the last year. Amortization of intangibles for the three months
ending September 30, 2003 and 2002 was $2,317 and $4,916 respectively.

Interest Expense.  For the three months ended September 30, 2003 compared to the same period in
2002, our interest expense decreased slightly to $107,308 from $113,344.

Income Taxes.  For
the three months ended September 30, 2003, we recorded a current income tax
expense of $33,636 and a deferred income tax expense of $116,318 as compared to
a deferred income tax expense of $155,346 in 2002. For the three months ended
September 30, 2003, 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 September 30, 2003, we accrued $157,406 of stock dividends to our
preferred shareholders.

Net Income.  For the
three month period ended September 30, 2003, we earned $67,859 or $0.02 per
share basic and diluted as compared to $75,614 or $0.02 per share basic and
diluted for the corresponding three month period ended September 30, 2002.

---

## LIQUIDITY AND
CAPITAL RESOURCES

We experienced negative
cash flow of $12,542 for the three months ended September 30, 2003. Cash flows
from operating activities resulted in positive cash flows of $248,754 primarily
due to net income of $225,265, a non cash charge of $207,602 for depreciation
and amortization and $116,318 for deferred income taxes and a reduction in
accounts receivable of $86,223 offset by an increase in inventories and other
assets of $63,341, a decrease in accounts payable of $144,461, and a decrease of
$196,111 of accrued expenses and other liabilities.

The cash we used in
investing activities included the purchase of equipment in the amount of
$47,809.

Cash used by financing
activities included debt payments of $213,487. 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 September 30, 2003, $1,631,161 was
outstanding under this line.

## 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
legacy 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 the 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 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.

---

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

In July and August, 2003, a
majority of the holders of the Companys 547,500 shares of preferred stock
outstanding approved an amendment, by written consent, to the Certificate of
Designation of the Series A Preferred Stock to provide that no payments of
dividends or deferred dividends shall be made if the Company is in default of
its senior lending agreement or if such payment causes an event of default under
the senior lending agreement. The preferred stockholders representing 353,750
preferred shares consented to the amendment.

## 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 (Incorporated by reference to Exhibit 3(i)(6) of Annual Report on Form 10-KSB
filed on September 15, 2003)
|------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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:  November 12, 2003 | By:/s/ Michael W. Levin
        Michael W. Levin
        Chief Executive Officer and President
|------------------------- | ----------------------------------------------------------------------------------------------

|Dated:  November 12, 2003 | By:/s/ Denise Hawkins
        Denise Hawkins
        Vice President and Controller
        (Principal Financial Officer)
|------------------------- | ------------------------------------------------------------------------------------------------------------------------

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