value, outstanding. filemilestone scientific inc. and subsidiaries condensed consolidated balance...

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB

Mark One

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

For the Quarterly Period Ended June 30, 2005

OR

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

For the transition period from _________ to _________

Commission File Number 001-14053

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

Delaware State or other jurisdictionor organization)

13-3545623 (I.R.S. Employer

Identification No.)

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

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

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

Yes |X| No |_|

As of August 15, 2005, the Registrant had a total of 11,352,704 shares of Common Stock, $.001 parvalue, outstanding.

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FORWARD LOOKING STATEMENTS

When used in this Quarterly Report on Form 10-QSB, the words “may”, “will”, “should”, “expect”,“believe”, “anticipate”, “continue”, “estimate”, “project”, “intend” and similar expressions are intended toidentify forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E ofthe Exchange Act regarding events, conditions and financial trends that may affect Milestone’s future plans ofoperations, business strategy, results of operations and financial condition. Milestone wishes to ensure thatsuch statements are accompanied by meaningful cautionary statements pursuant to the safe harbor establishedin the Private Securities Litigation Reform Act of 1995. Prospective investors are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties andthat actual results may differ materially from those included within the forward-looking statements as a resultof various factors. Such forward-looking statements should, therefore, be considered in light of variousimportant factors, including those set forth herein and others set forth from time to time in Milestone’s reportsand registration statements filed with the Securities and Exchange Commission (the “Commission”).Milestone disclaims any intent or obligation to update such forward-looking statements.

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MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

I N D E X

PAGE PART I FINANCIAL INFORMATION ITEM 1 Condensed Consolidated Financial Statements (unaudited) Condensed Consolidated Balance Sheets June 30, 2005 (Unaudited) and December 31, 2004 4 Condensed Consolidated Statements of Operations Three and Six Months Ended June 30, 2005 and 2004 (Unaudited) 5 Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficiency) - Six Months Ended June 30, 2005 6 Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 2005 and 2004 (Unaudited) 7 Notes to Condensed Consolidated Financial Statements 10 ITEM 2 Management’s Discussion and Analysis or Plan of Operation 13 ITEM 3 Controls and Procedures 19 PART II OTHER INFORMATION ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds 20 ITEM 6 Exhibits 21 SIGNATURES 23 CERTIFICATIONS 24

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MILESTONE SCIENTIFIC INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2005

(Unaudited)December 31,

2004*

ASSETS Current Assets: Cash and cash equivalents $ 4,513,114 $ 3,041,306 Accounts receivable, net of allowance for doubtful accounts of $36,672 in 2005 and $24,903 in 2004 557,947 421,339 Royalty receivable 219,210 — Inventories 1,050,247 936,221 Advances to contract manufacturer 320,216 62,034 Prepaid expenses 96,586 104,562

Total current assets 6,757,320 4,565,462 Investment in distributor, at cost 69,956 69,956 Equipment, net 582,025 612,263 Patents, net 326,522 101,242 Other assets 17,270 20,408

Totals $ 7,753,093 $ 5,369,331

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities: Accounts payable $ 356,896 $ 474,075 Accrued expenses 440,224 224,549

Total current liabilities 797,120 698,624 Deferred compensation payable to officer 225,000 150,000

Total liabilities 1,022,120 848,624

Stockholders’ Equity: Preferred stock, par value $.001; authorized 5,000,000 shares 8% cumulative convertible preferred stock, par value $.001; authorized, issued and outstanding, 25,365 shares 25 25 Common stock, par value $.001; authorized 50,000,000 shares; 11,386,037 shares issued and 11,352,704 shares outstanding in 2005, and 9,824,287 shares issued and 9,790,954 shares outstanding in 2004 11,386 9,824 Additional paid-in capital 56,496,350 52,618,913 Accumulated deficit (48,865,272) (47,196,539) Treasury stock, at cost, 33,333 shares (911,516) (911,516)

Total stockholders’ equity (deficiency) 6,730,973 4,520,707

Totals $ 7,753,093 $ 5,369,331

See notes to Condensed Consolidated Financial Statements

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

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MILESTONE SCIENTIFIC INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004(Unaudited)

Three Months Ended

Six Months Ended

June 30,2005 June 30,

2004June 30,

2005 June 30,2004

Products sales, net $ 1,456,731 $1,188,022 $ 2,914,634 $ 2,282,245 Royalty income 219,210 — 219,210 —

Total revenue 1,675,941 1,188,022 3,133,844 2,282,245

Cost of products sold 538,604 769,383 1,253,310 1,315,683 Royalty expense 26,305 — 26,305 —

Total costs 564,909 769,383 1,279,615 1,315,683

Gross profit 1,111,032 418,639 1,854,229 966,562 Selling, general and administrative expenses 1,854,562 1,211,917 3,456,255 2,196,785 Research and development expenses 69,844 52,409 101,389 93,621

1,924,406 1,264,326 3,557,644 2,290,406

Loss from operations (813,374) (845,687) (1,703,415) (1,323,844) Other income (expense) Interest income 23,584 28,876 34,682 41,010 Interest expense — (10,867) — (63,638)

Other income (expense) net 23,584 18,009 34,682 (22,628)

Net loss (789,790) (827,678) (1,668,733) (1,346,472) Dividends applicable to preferred stock (507) — (1,014) —

Net loss applicable to common stockholders $ (790,297) $ (827,678) $ (1,669,747) $(1,346,472)

Loss per share applicable to common stockholders - basic and diluted $ (0.07) $ (0.09) $ (0.16) $ (0.16)

Weighted average shares outstanding - basic and diluted 10,931,052 9,690,365 10,410,451 8,591,279

See Notes to Condensed Consolidated Financial Statements

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MILESTONE SCIENTIFIC, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(DEFICIENCY)SIX MONTHS ENDED JUNE 30, 2005

(Unaudited)

Preferred Stock Common Stock AdditionalPaid-in Capital

AccumulatedDeficit

TreasuryStock TotalShares Amount Shares Amount

Balance, January 1, 2005 25,365 $ 25 9,824,287 $ 9,824 $52,618,913 $ (47,196,539) $(911,516) $ 4,520,707 Common stock issued for payment of patent rights acquired 43,424 44 87,289 87,333 Common stock issued for payment of vendor services 38,730 39 99,961 100,000 Common stock issued for payment of consulting services 99,362 100 128,529 128,629 Common stock issued for payment of employee compensation 23,461 23 34,977 35,000 Common stock issued for exercised option 333 0 749 749 Proceeds from equity financings, net 1,356,440 1,356 3,525,932 3,527,288 Net loss (1,668,733) (1,668,733)

Balance, June 30, 2005 25,365 $ 25 11,386,037 $ 11,386 $56,496,350 $ (48,865,272) $(911,516) $ 6,730,973


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MILESTONE SCIENTIFIC INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2005 AND 2004(Unaudited)

2005 2004

Cash flows from operating activities: Net loss $(1,668,733) $(1,346,472)Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 49,700 17,140 Amortization of debt discount and deferred financing costs — 46,294 Amortization of patents 7,053 — Stock issued for compensation and consulting services 263,629 1,548 Bad debt expense 11,769 — Changes in operating assets and liabilities: (Increase) in accounts receivable (148,377) (119,619) (Increase) in royalty receivable (219,210) — (Increase) in inventories (114,026) (109,637) (Increase) decrease in advances to contract manufacturer (258,182) 112,997 Decrease (increase )in prepaid expenses 7,976 (3,295) Decrease (increase) in other assets 3,138 (142) (Decrease) in accounts payable (117,179) (604,858) (Decrease) in accrued interest — (82,015) Increase in accrued expenses 215,675 255,084 Increase (decrease) in deferred compensation 75,000 (181,000)

Net cash used in operating activities (1,891,767) (2,013,975)

Cash flows from investing activities: Payment for capital expenditures (19,462) (324,767) Payment for patent rights (145,000) —

Net cash used in investing activities: (164,462) (324,767)

Cash flows from financing activities: Proceeds from equity financings, net 3,528,037 7,620,104 Payments of note payable - officer/stockholder — (50,000)

Net cash provided by financing activities 3,528,037 7,570,104

NET INCREASE IN CASH AND CASH EQUIVALENTS 1,471,808 5,231,362 Cash and cash equivalents beginning of period 3,041,306 3,277

Cash and cash equivalents end of period $ 4,513,114 $ 5,234,639

Supplemental disclosure of cash flow information: Cash paid during the period for interest $ — $ 99,359


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MILESTONE SCIENTIFIC INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2005 AND 2004(Unaudited)

Supplemental schedule of noncash investing and financing activities:

On January 27, 2005 we issued 43,424 shares valued at $70,000 and recorded a $145,000 liabilitypayable to our outside director of clinical affairs in satisfaction of a technology agreement to provide Milestonewith patent rights.

On February 11, 2005 we issued 3,084 shares valued at $7,000 to ValueRich Inc. in satisfaction of anagreement to provide Milestone with exhibition facilities.

On March 8, 2005 we issued 7,408 shares valued at $20,000 (of which $6,667 was expensed in the sixmonths ended June 30, 2005) to Dynamic Decisions, S.r.l. in satisfaction of consulting services to be providedunder contract for a 12 month period ending in March, 2006.

On March 8, 2005 we issued 2,204 shares valued at $5,000 to Investment Connections in satisfaction ofprofessional services rendered.

On March 8, 2005 we issued 9,965 shares valued at $23,333 to a former employee as part of a severanceagreement.

On March 22, 2005 we issued 8,811 shares to a consultant for professional business developmentservices valued at $20,000 to be provided over the next 18 months (of which $6,666 was expensed in the sixmonths ended June 30, 2005). We also issued 6,061 shares valued at $10,000 to an employee for payment ofbonus.

On March 23, 2005 we issued 38,730 shares to Design Center Inc, in satisfaction of $100,000 of payablesowed in connection with warehousing and fulfillment services rendered.

On March 31, 2005 we issued 7,536 shares valued at $20,000 to a consultant for professional servicesrendered during March. On June 6, 2005, we issued another 7,536 shares valued at $20,000 to the sameconsultant for professional services rendered during April.

On April 4, 2005, Milestone completed a $2,999,996 private placement of 101,044 units to accreditedinvestors. Each unit consists of 10 shares of common stock and two warrants. Proceeds from the privateplacements were recorded net of a 7% placement agent fee of $209,978 and other offering expenses totaling$44,257.

On June 27, 2005 we issued 7,435 shares valued at $20,000 to an employee as part of annualcompensation.

On June 30, 2005 we issued 62,783 shares valued at $180,000 to a consultant for advertising andmarketing services to be rendered in a twelve-month period from April 2005.

On June 30, 2005, Milestone completed an $847,960 private placement of 34,000 units to accreditedinvestors. Each unit consists of 10 shares of common stock and two warrants. Proceeds from this privateplacement were recorded net of a fee of $50,878 and 600 identical units to the investment adviser. DynamicDecisions acted as investment adviser to Milestone in this transaction and received a fee of $50,878 and 600Units, which are substantially the same form as those issued to the investors. Total proceeds from this privateplacement, after commissions and other expenses, were $797,054.

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In February 2004, Milestone issued 335,614 units in consideration for notes payable and accrued interestdue to an officer and a shareholder of $1,604,204, accounts payable due to outside legal counsel of $200,000and deferred compensation to an officer of $384,000. Each unit consisted of 2 shares of Milestone’s commonstock (671,228 shares of common stock) and a warrant.

As part of its payment for services in connection with the February 2004 public offering, Milestoneissued to its outside general counsel 5-year options to purchase 160,000 shares of common stock at an exerciseprice of $3.26 per share and warrants to purchase 80,000 shares of common stock at an exercise price of $4.89.

In April 2004, pursuant to an agreement to purchase media placement services, the Company issued1,106 shares of common stock valued at $2,500.

In May 2004, the Company issued 43,335 options to various consultants for current and future servicesvalued at $106,078 of which $1,548 was recognized as expense during the period.

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MILESTONE SCIENTIFIC INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Summary of accounting policies:

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

These unaudited condensed consolidated financial statements should be read in conjunction with theconsolidated financial statements and notes thereto for the year ended December 31, 2004 included inMilestone’s Annual Report on Form 10-KSB. The accounting policies used in preparing these unauditedcondensed consolidated financial statements are the same as those described in the December 31, 2004consolidated financial statements.

In the opinion of Milestone, the accompanying unaudited condensed consolidated financial statementscontain all adjustments (consisting of normal recurring entries) necessary to present fairly Milestone’sfinancial position as of June 30, 2005 and the results of its operations for the three and six months endedJune 30, 2005 and 2004.

The results reported for the three and six months ended June 30, 2005 are not necessarily indicative ofthe results of operations which may be expected for a full year.

Note 2 – Private Placement:

On June 30, 2005 Milestone completed an $847,960 private placement of 34,000 Units to accreditedinvestors. Each Unit consists of 10 shares of Common Stock and two Warrants. Each Warrant entitles theholder to purchase a share of Common Stock at $4.89 per share through the close of business onFebruary 16, 2009. Dynamic Decisions acted as investment adviser to Milestone in this transaction andreceived a fee of $50,878 and 600 Units, which are substantially the same form as those issued to theinvestors. Total proceeds from this private placement, after commissions and other expenses, were$797,054.

On April 4, 2005 Milestone completed a $2,999,996 private placement of 101,044 Units to accreditedinvestors. Each Unit consisted of 10 shares of Common Stock and two Warrants. Each Warrant entitlesthe holder to purchase a share of Common Stock at $4.89 per share through the close of business onFebruary 16, 2009. I-Bankers Securities, Inc. acted as placement agent for Milestone in this transactionand received a fee of $209,978 and 101,044 Warrants identical in terms to those issued to the investors.Total proceeds to Milestone after commissions and other expenses were $2,730,234.

Net proceeds from these offerings will be used to fund Milestone’s operations including ongoing salesand marketing programs, along with the development and bringing to market of new products.

Note 3 – Royalty Receivable:

Royalty receivable represents the royalty due from United Systems, Inc, the licensee of our proprietaryconsumer dental whitening product, which is sold under our distributor’s trademark, Ionic White™. Thisreceivable was collected on July 29, 2005.

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Note 4 – Inventories:

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

Note 5 – Basic and diluted net loss per common share:

Milestone presents basic earnings (loss) per common share and, if applicable, diluted earnings percommon share pursuant to the provisions of Statement of Financial Accounting Standards No. 128,“Earnings per Share” (“SFAS 128”). Basic earnings (loss) per common shares is calculated by dividingnet income or loss applicable to common stock by the weighted average number of common sharesoutstanding during each period. The calculation of diluted earnings per common share is similar to that ofbasic earnings per common share, except that the denominator is increased to include the number ofadditional common shares that would have been outstanding if all potentially dilutive common shares,such as those issuable upon the exercise of stock options, warrants, and the conversion of notes payablewere issued during the period. Milestone has not included the common shares issuable upon conversionof the outstanding 25,365 preferred shares in the weighted average number of shares outstanding in thecomputation of basic loss per share because their effect would have been anti-dilutive. This treatment isin accordance with the “two class” method of computing earnings (loss) per share set forth in SFAS 128.

Since Milestone had net losses for the three and six months ended June 30, 2005 and 2004, the assumedeffects of the exercise of 3,589,256 and 3,249,692 outstanding stock options and warrants, and theconversion of notes payable and preferred stock into common stock at June 30, 2005 and 2004, were notincluded as their effect would have been anti-dilutive.

Note 6 – Significant Customer:

Milestone had one foreign customer who accounted for approximately 16% and 19% of its net sales forthe three and six months ended June 30, 2005, respectively and approximately 23% and 21% for the threeand six months ended June 30, 2004, respectively. At June 30, 2005, receivables from this customer wereapproximately 83% of Milestone’s total accounts receivable.

Note 7 –Employee Stock Option Plan

As of June 30, 2005, there were 286,783 outstanding options granted under the Milestone 1997 StockOption Plan and no option grants had been made under the Milestone 2004 Stock Option Plan. Milestoneaccounts for these plans under the recognition and measurement principles of APB Opinion No. 25,Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employeecompensation cost is reflected in net loss, as all options granted under these plans had an exercise priceequal to the market value of the underlying common stock on the dates of grant. The following tableillustrates net loss and loss per share if Milestone had applied the fair value recognition provisions ofFASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employeecompensation.

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Three Months EndedJune 30,

Six Months EndedJune 30,

2005 2004 2005 2004

Net loss applicable to common stockholders, asreported $(790,297) $(827,678) $(1,669,747) $(1,346,472)Deduct total stock-based employee compensation expenses determined under the fair value based method for all awards 27,016 19,842 228,188 25,373

Net loss applicable to common stockholders, proforma $(817,313) $(847,520) $(1,897,935) $(1,371,845)

Loss per share applicable to common stockholders: Basic and diluted As reported ($0.07) ($0.09) ($0.16) ($0.16)

Pro forma ($0.07) ($0.09) ($0.18) ($0.16)

The fair value of each option granted is estimated on the date of the grant using the Black-Scholes optionpricing model with the following assumptions used for the grants in the quarters ended June 30, 2005 and2004, respectively: dividend yield of 0%; expected volatility of 123.18 % and 90%; risk free interest rateof 3.87% and 2.5%; and expected lives of 5 years.

During the six months ended June 30, 2005, Milestone issued 80,000 stock options at an exercise price of$3.27.

Note 8 –Agreements to Issue Common Stock and Stock Option

On May 18, 2005, Milestone issued to Ionic White, Inc., its marketing partner for a consumer toothwhitening product, 3-year options to purchase 100,000 shares of Milestone common stock at $4.89 pershare. The options are not exercisable unless the marketing partner purchases at least 2,000,000 starterkits for the registrant’s consumer tooth whitening system during the twelve month period beginning July1, 2005. If 2,000,000 starter kits are purchased during that period, options to purchase 10,000 sharesbecome exercisable. If 2,500,000 starter kits are purchased during that period, options to purchase anaggregate of 50,000 shares become exercisable. If 3,000,000 starter kits are purchased during that period,options to purchase all 100,000 shares become exercisable.

Under a previous agreement, Ionic White, Inc., agreed to purchase 500,000 shares of Milestonecommon stock in quarterly installments of 125,000 shares within 10 days after the end of each of the fourfiscal quarters commencing July 1, 2005. Milestone is not required to sell these shares unless Ionic Whitehas purchased at least 625,000 starter kits in the first quarter, at least 1,250,000 starter kits in the first twoquarters and at least 1,875,000 starter kits in the first three quarters. Further, at Milestone’s option, allshares previously purchased must be returned to Milestone and all monies paid to Milestone returned toIonic White if it has not purchased an aggregate of at least 3,000,000 starter kits for the twelve-monthperiod ending June 30, 2006.

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

OVERVIEW

You should read the following discussions of our financial condition and results of operations inconjunction with the financial statements and the notes to those statements included elsewhere in this Form 10-QSB. This discussion may contain forward-looking statements that involve risks and uncertainties. Our actualresults may differ materially from those anticipated in these forward-looking statements as a result of certainfactors, such as those set forth in our Form 10K-SB for the year ended December 31, 2004.

Milestone has succeeded in improving its liquidity by acquiring the capital necessary to grow ourbusiness and seize the market opportunity that our proprietary products have created. During 2004 andcontinuing through the first two quarters of 2005, we have grown our revenue base both with our existingproduct line and the introduction of new products.

Most of our revenues continue to be generated through sales of our CompuDent system and The Wanddisposable handpiece used with that system. Revenues have been earned domestically and internationallythrough sales in more than 25 countries. While worldwide revenues are growing, domestic CompuDent andhandpiece sales have provided an increasingly large portion of our revenues. This is an important metric as itvalidates the investment made in our domestic sales distribution organization. Additionally, we enjoysignificantly higher margins on domestic sales compared to the lower per unit and handpiece margins wereceive from our wholesale based international distribution network. We anticipate that this growing base ofnew customers will generate increased future sales of our disposable handpiece products. We also believe thatour ownership of the SafetyWand technology in light of OSHA regulations issued pursuant to recent federaland state government legislation mandating needle stick safety standards positions us to become a leadingprovider for dentists and other health care professionals in the administration of local anesthesia, therebyproviding further revenue growth opportunities.

In late March we launched, through widely broadcast infomercials, our consumer tooth whiteningproduct sold under our distributor’s trademark, Ionic White™. Our consumer tooth whitening product and theCoolBlue™ Professional Tooth Whitening System, complement our existing product line. The tooth whiteningmarket is a fast growing dental segment. We believe that it will provide significant additional revenueopportunities. Revenues for the second quarter reflect sales of Ionic White™. During the quarter a competitorlaunched a confusingly similar tooth whitening product through infomercials and retail distribution. Milestonehas commenced an infringement action and the defendant has counterclaimed against Milestone for adeclaratory judgment of non-infringement. The introduction of this competitive product may cause ourdistributor to focus its near-term marketing efforts on retail sales. We are also aggressively pursuing entranceinto the medical arena with our syringe pump technology. We continue to invest in business developmentefforts to further our progress in the medical equipment market space.

Selling, general and administrative expenses for the second quarter increased substantially from last year,reflecting our continuing enhancement of our domestic dental sales capability and increased marketing andpromotional efforts, including trade show appearances, for our dental products. The increase also reflects ourcontinuing efforts to complete development of, and find marketing partners for, medical devices using ouradvanced technology, particularly our Compuflo™ syringe pump technology.

The following table shows a breakdown of our sales in each product category, domestically andinternationally, and the percentage of sales to total product sales:

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Three Months Ended

Six Months Ended

June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004

DOMESTIC CompuDent $ 377,076 33.6% $ 142,132 17.8% $ 704,764 33.1% $ 275,753 17.9% Handpieces $ 639,104 57.0% 607,600 76.0% 1,303,495 61.1% 1,156,769 75.2% Other $ 105,713 9.4% 49,790 6.2% 122,809 5.8% 106,478 6.9%

Total Domestic $ 1,121,893 100.0% $ 799,522 100.0% $2,131,068 100.0% $1,539,000 100.0%

INTERNATIONAL CompuDent $ 119,141 35.6% $ 160,909 41.4% $ 292,208 37.3% $ 325,249 43.8% Handpieces $ 164,585 49.1% 216,336 55.7% 433,166 55.3% 392,646 52.8% Other $ 51,112 15.3% 11,255 2.9% 58,192 7.4% 25,350 3.4%

Total International $ 334,838 100.0% $ 388,500 100.0% $ 783,566 100.0% $ 743,245 100.0%

DOMESTIC/INTERNATIONAL ANALYSIS Domestic $ 1,121,893 77.0% $ 799,522 67.3% $2,131,068 73.1% $1,539,000 67.4% International 334,838 23.0% 388,500 32.7% 783,566 26.9% 743,245 32.6%

Total Product Sales $ 1,456,731 100.0% $1,188,022 100.0% $2,914,634 100.0% $2,282,245 100.0%

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Summary of Significant Accounting Policies

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

Inventory

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

Impairment of Long-Lived Assets

We review long-lived assets for impairment whenever circumstances and situations change such thatthere is an indication that the carrying amounts may not be recovered.

Revenue Recognition

Revenue is recognized when title passes at the time of shipment and collectibility based on a salesarrangement and the agreed upon price is reasonably assured.

Results of Operations

The consolidated results of operations for the six months ended June 30, 2005 reflect growth of our userbase and the initial additional expenditures necessary to further expand our customer base both domesticallyand abroad.

The following table sets forth, for the periods presented, statement of operations data as a percentage ofrevenues. The trends suggested by this table may not be indicative of future operating results.

Three Months Ended

Six Months Ended

June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004

Products sales, net 1,456,731 87% 1,188,022 100% 2,914,634 93% 2,282,245 100%Royalty income 219,210 13% — 0% 219,210 7% — —

Total revenue 1,675,941 100% 1,188,022 100% 3,133,844 100% 2,282,245 100%

Cost of products sold 538,604 32% 769,383 65% 1,253,310 40% 1,315,683 58%Royalty expense 26,305 2% — — 26,305 — — —

Total costs 564,909 34% 769,383 65% 1,279,615 40% 1,315,683 58%

Gross Profit 1,111,032 66% 418,639 35% 1,854,229 60% 966,562 42%Selling, general and admin expenses 1,854,562 111% 1,211,917 102% 3,456,255 110% 2,196,785 96%Research & development 69,844 4% 52,409 4% 101,389 3% 93,621 4%

Loss from operations (813,374) -49% (845,687) -71% (1,703,415) -53% (1,323,844) -58%

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Three Months ended June 30, 2005 compared to three months ended June 30, 2004

Total revenues for the three months ended June 30, 2005 and 2004 were $1,675,941 (product sales of$1,456,731 and royalty income of $219,210) and $1,188,022, respectively. The amount of $219,210 or 13% oftotal revenues is royalty income from granting United Systems Inc. a license to manufacture, market, andsublicense the Ionic White™ to the consumer market. The $268,709 or 23% increase in net product sales isprimarily related to a 165% or $234,944 increase in domestic CompuDent® sales. This increase shows theeffect of our investment in our domestic sales force and marketing initiatives while maintaining a strongpresence internationally. Domestic handpiece sales increased $31,504 or 5%, while worldwide handpiece salesdecreased by $51,751 or 24%. This is the result of innovative domestic sales programs where handpieces arebundled with CompuDent® units at the point of sale. We believe that this will ultimately result in a growingmonthly order book for handpieces as the initial supply runs out.

For the three months ended June 30, 2005, Milestone generated a gross profit of $1,111,032 or 66% ascompared to a gross profit of $418,639 or 35% for the three months ended June 30, 2004. Excluding the netroyalty income of $192,905, improvement in gross profit was due to higher domestic sales in 2005, which hashigher profit margins than international sales, and the effect of a $101,608 inventory valuation write down in2004 which did not recur in the 2005 period.

Selling, general and administrative expenses for the three months ended June 30, 2005 and 2004 were$1,854,562 and $1,211,917, respectively. The $642,645 or 53% increase is attributable primarily toMilestone’s continued execution of its strategy to develop our domestic sales force and distribution capacity.Sales headcount increased from 1 manager, 3 sales representatives, and 8 independent contractors at June 30,2004 to 3 sales managers, 18 inside sales representatives, 2 sales support representatives, and 8 independentcontractors at June 30, 2005. Accordingly, hiring and related employee expenses including sales commissionsincreased by $218,691 or 54%. Selling, marketing and advertising expenses including related travel andtradeshows increased by $113,921 or 101%. Legal fees increased by $71,207 or 46% primarily because ofpatent filings associated with new product development. Professional fees for consulting services increased$140,941 or 309% primarily related to vested portion of stock options granted to outside consultants. Theseincreases reflect both increased spending in 2005 and the effects of cash constraints Milestone operated underprior to the February 2004 Public Offering.

Research and development expenses for the three months ended June 30, 2005 and 2004 were $69,844and $52,409, respectively. These costs are associated with the continued development of our CoolBlue™Tooth Whitening Systems and CompuFlo™ products, and our consumer tooth whitening product sold underour distributor’s Ionic White™ trademark.

Interest income of $23,584 was earned in the three months ended June 30, 2005 compared to $28,876earned for the same period of the prior year due to lower average cash balances.

There was no interest expense for the three months ended June 30, 2005 compared to interest expense of$10,867 for the three months ended June 30, 2004. The difference is attributable to the extinguishment of debtrelated to the February 2004 equity placement.

For the reasons explained above, net loss for the three months ended June 30, 2005 was $37,888 or 5%less than the net loss for the three months ended June 30, 2004.

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Six months ended June 30, 2005 compared to the six months ended June 30, 2004

Total revenues for the six months ended June 30, 2005 and 2004 were $3,133,844 and $2,282,245,respectively. The 2005 total revenues include product sales of $2,914,634 and royalty income of $219,210.Total revenues increased by $851,599 or 37%. Contributing to this increase was primarily a $429,011 or 156%increase in domestic sales of CompuDent® units.

Gross profit for the six months ended June 30, 2005 and 2004 was $1,854,229 or 60% and $966,562 or42%, respectively. The $887,667 or 92% increase in gross profit was due principally to an increase in sales ofdomestic CompuDent® units which has higher profit margins than international sales, as well as the netroyalty income generated by sales of Ionic White™ consumer whitening products and the effect of a $101,608inventory valuation write down in 2004 which did not recur in the 2005 period.

Selling, general and administrative expenses for the six months ended June 30, 2005 and 2004 were$3,456,255 and $2,196,785 respectively. The increase of $1,259,470 or 57% in these expenses was anticipatedand is consistent with management’s stated strategy of investing in revenue generating areas of the business.Contributing to the increase was hiring and employee related expenses related to the development ofMilestone’s national sales force which will benefit Milestone with additional revenues. Legal fees increased by$80,814 or 34% primarily because of patent filings associated with new product development. Professionalfees related to consulting services and investor relations increased by $146,135 or 79% primarily related to thevested portion of stock options granted to outside consultants.

Research and development expenses for the six months ended June 30, 2005 and 2004 were $101,389and $93,621, respectively. These costs are associated with the continued development of our CoolBlue™Tooth Whitening Systems and CompuFlo™ products, and our consumer tooth whitening product sold underour distributor’s Ionic White™ trademark.

Interest income of $34,682 was earned for the six months ended June 30, 2005 compared to $41,010interest income for the same period of the prior year. This difference was due to the lower average cashbalances.

There was no interest expense for the six months ended June 30, 2005 compared to interest expense of$63,638 for the six months ended June 30, 2004. The difference is attributable to the extinguishment of debtrelated to the February 2004 equity placement.

For the reasons explained above, net loss for the six months ended June 30, 2005 increased by $322,261or 24% over the net loss for the six month period ended June 30, 2004.

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Liquidity and Capital Resources

Milestone incurred net losses of approximately $1,669,000 and $1,346,000 and negative cash flows fromoperating activities of approximately $1,892,000 and $2,014,000 during the six months ended June 30, 2005and 2004, respectively. Milestone improved its liquidity position with the private placement of Unitscompleted in April, and June, 2005, as discussed below. We have maintained our net worth at $6,000,000 forthe two consecutive quarters ended June 30, 2005, which is the target outlined in the plan that we submitted tothe American Stock Exchange on January 14, 2005, in order to regain compliance with the Exchange’sstockholder equity continued listing requirement by the end of the plan period on June 30, 2005. Once we fileour Quarterly Report on Form 10-QSB for the period ended June 30, 2005, we expect the American StockExchange to remove the special symbol indicating that we are below continued listing standards, although theExchange has discretion in this regard. We will continue to seek new sources of equity funding.

Private Placement

On April 4, 2005 Milestone completed a $2,999,996 private placement of 101,044 Units to accreditedinvestors. Each Unit consisted of 10 shares of Common Stock and two Warrants. Each Warrant entitles theholder to purchase a share of Common Stock at $4.89 per share through the close of business on February 16,2009. I-Bankers Securities, Inc. acted as Placement Agent for Milestone in this transaction and received a feeof $209,978 and 101,044 Warrants identical in terms to those issued to the investors. The Units, which arerestricted securities and bear a restrictive legend, are subject to stop transfer restrictions. Total proceeds toMilestone after commissions and other expenses were $2,730,734.

On June 30, 2005 Milestone completed an $847,960 private placement of 34,000 Units. Each Unitconsists of 10 shares of Common Stock and two Warrants. Each Warrant entitles the holder to purchase a shareof Common Stock at $4.89 per share through the close of business on February 16, 2009. Dynamic Decisionsacted as Placement Agent for Milestone in this transaction and received a fee of $50,878 and 600 Units, whichare substantially the same form as those issued to the investors. Total proceeds from this private placement,after commissions and other expenses, were $797,054.

Cash flow results

As of June 30, 2005, Milestone had cash and cash equivalents of $4,513,114 and working capital of$5,960,200.

For the six months ended June 30, 2005, Milestone’s net cash used in operating activities was$1,891,767. This was attributable primarily to a net loss of $1,668,733 adjusted for noncash items totaling$322,151 (of which $49,700 was depreciation expense, $7,053 was amortization of patents, and $263,629 wasstock and options issued for compensation and consulting); a $148,377 increase in accounts receivable, a$219,210 increase in royalty receivable, a $114,026 increase in inventory, a $258,182 increase in advances tocontract manufacturer, a net $98,496 increase in accounts payable and accrued expenses, and a $75,000increase in deferred compensation.

For the six months ended June 30, 2005, Milestone used $164,462 in investing activities for capitalexpenditures. One major investing activity was a purchase of patent right for $145,000. An expenditure of$19,462 was primarily for the purchases of molds and tooling for new products.

For the six months ended June 30, 2005, Milestone generated $3,528,037 from financing activitiesrelating to the private placements discussed above and an employee option exercise.

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

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ITEM 3. CONTROLS AND PROCEDURES

a) Evaluation of Disclosure Controls and Procedures. Milestone’s management, with the participation ofour chief executive officer and the acting chief financial officer, carried out an evaluation of theeffectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of1934 (the “Exchange Act”) Rules 13a-15(e) as of the end of the period covered by this report (the“Evaluation Date”). Based upon that evaluation, the chief executive officer and acting chief financialofficer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective toensure that information required to be disclosed by us in the reports that we file or submit under theExchange Act is recorded, processed, summarized and reported, within the time periods specified in theSEC’s rules and forms. Information required to be disclosed by us in the reports we file or submit underthe Exchange Act is accumulated and communicated to our management, including our principalexecutive and principal financial officers, as appropriate to allow timely decisions regarding requireddisclosure.

b) Changes in Internal Control over Financial Reporting. There were no changes in our internal controlsover financial reporting that occurred during the period covered by this report that have materiallyaffected, or are reasonably likely to materially affect, Milestone’s internal control over financialreporting.

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PART II

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

Recent Sales of Unregistered Securities

On March 31, 2005 we issued 7,536 shares valued at $20,000 to a consultant for professional servicesrendered during March. On June 6, 2005, we issued another 7,536 shares valued at $20,000 to the sameconsultant for professional services rendered during April.

On April 4, 2005 we completed a private placement of $2,999,996 of 101,044 Units to accreditedinvestors. The Units, which are restricted securities and bear a restrictive legend, are subject to stop transferrestrictions. The offering, which was previously reported in Milestone’s annual report of Form 10-KSB filedwith the Securities and Exchange Commission on April 4, 2005, is described in Note 2 to the financialstatements above, and that information is incorporated here by reference.

On April 4, 2005 an optionee exercised a stock option to purchase 333 shares valued at $749.

On April 30, 2005 we issued 352 shares to Investment Connections as part of the compensation ofprofessional services rendered.

On May 18, 2005, we issued to Ionic White, Inc., 3-year options to purchase 100,000 shares of commonstock at $4.89 per share. The issuance was previously reported in our report on Form 8-K dated May 20, 2005,and that information is incorporated here by reference.

On June 27, 2005 we issued 7,435 shares valued at $20,000 to an employee as part of annualcompensation.

On June 30, 2005 we issued 62,783 shares valued at $180,000 to a consultant for advertising andmarketing services to be rendered in a twelve-month period from April 2005.

On June 30, 2005, Milestone completed an $847,960 private placement of 34,000 units to accreditedinvestors. The Units, which are restricted securities and bear a restrictive legend, are subject to stop transferrestrictions. This offering, which was previously reported in our report on Form 8-K dated June 30, 2005, isdescribed in Note 2 to the financial statements above, and that information is incorporated here by reference.

All the above issuances were acquired for investment by accredited investors and were issued withoutregistration under the Securities Act of 1933, as amended, pursuant to the exemptions provided under sections4(6), 4(2). In addition, the two private placements of units completed respectively on April 4 and June 30,2005, relied on the exemption from registration provided by Regulation D.

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ITEM 6. EXHIBITS

EXHIBITNO.

DESCRIPTION

3.1 Certificate of Incorporation of Milestone (1)

3.2 Certificate of Amendment filed July 13, 1995 (2)

3.3 Certificate of Amendment filed December 6, 1996 (3)

3.4 Certificate of Amendment filed December 17, 1997 (4)

3.5 Certificate of Amendment filed July 23, 2003 (6)

3.6 Certificate of Amendment filed January 8, 2004. (6)

3.7 Certificate of Designation filed January 15, 2004 (6)

3.8 By-laws of Milestone (1)

4.1 Specimen stock certificate (2)

4.2 Intentionally Left Blank

4.3 Form of warrant agreement, including form of warrant (8)

10.1 Lease dated November 25, 1996 between Livingston Corporate Park Associates, L.L.C. andMilestone. (3)

4.4 Form of Subscription Agreement used in connection with the private placement of Units, March2005. (10)

4.5 Form of warrant issued in connection with the private placement of Units, March 2005. (10)

4.6 Form of Subscription Agreement used in connection with the private placement of Units, June2005.*

4.7 Form of warrant issued in connection with the private placement of Units, June 2005.*

10.2 to10.25

Intentionally Left Blank

10.26 Letter from Leonard Osser, dated April 15, 2003 deferring payment. (5)

10.27 Letter from Morse, Zelnick, Rose & Lander LLP, dated April 2003 deferring payment. (6)

10.28 Line of Credit for $900,000 and extension of $500,000 line of credit, dated April 15, 2003. (6)

10.29 Agreement with DaVinci Systems dated July 30, 2003. (6)

10.30 Agreement with Mark Hochman and amendments thereto dated April 9, 1998, December 16, 1999,November 28, 2001, October 10, 2002 and December 19, 2003. (6)

10.31 Agreement with Strider dated September 3, 2003. (6)

10.32 Agreement with Len Osser and K. Tucker Andersen, dated October 9, 2003. (6)

10.33 Agreement with Morse, Zelnick, Rose & Lander dated December 22, 2003. (6)

10.34 Employment Agreement with Leonard Osser dated December 20, 2003. (6)

10.35 Agreement with United Systems dated October 20, 2004. (9)

10.36 Agreement with Mark Hochman dated as of January 1, 2005. (9)

10.37 Lease amendment dated April 28, 2004 between Livingston Corporate Park Associates, L.L.C. andMilestone. (9)

31.1 Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.*

31.2 Chief Financial Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.*

32.1 Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.*

32.2 Chief Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.*

* Filed herewith.

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(1) Incorporated by reference to Milestone’s Registration Statement on Form SB-2 No. 33-92324.

(2) Incorporated by reference to Amendment No. 1 to Milestone’s Registration Statement on Form SB-2 No. 333-92324.

(3) Incorporated by reference to Milestone’s Form 10-KSB for the year ended December 31, 1996.


(5) Incorporated by reference to Milestone’s Registration Statement on Form S-2 No. 333-110376,Amendment No. 1.





(10) Incorporated by reference to Milestone’s Form 10-QSB for the quarter ended March 31, 2005.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signedon its behalf by the undersigned, thereunto duly authorized.

MILESTONE SCIENTIFIC INC.————————————— Registrant

/s/ Leonard Osser——————————————Leonard Osser Chairman andChief Executive Officer

/s/ Rosaline Shau——————————————Rosaline ShauActing Chief Financial Officer

Dated: August 15, 2005

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Exhibit 4.6

SUBSCRIPTION AGREEMENT

THIS SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of June 17, 2005, by and amongMILESTONE SCIENTIFIC INC., a Delaware corporation (the “Company”), and the subscriber identified onthe signature page hereto (the “Subscriber”).

WHEREAS, the Company and the Subscriber are executing and delivering this Agreement in relianceupon an exemption from securities registration afforded by the provisions of Section 4(2) and Rule 506 ofRegulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission(the “Commission”) under the Securities Act of 1933, as amended (the “1933 Act”); and

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, theCompany shall issue and sell to the Subscriber, as provided herein, and the Subscriber shall purchase, 20,000Units, each Unit consisting of (i) ten (10) shares of the Company’s common stock, $.001 par value (the“Common Stock”), and (ii) two warrants each to purchase one share of Common Stock (the “Warrants”), inthe form attached hereto as Exhibit A (the “Warrants”). The shares underlying the Warrants are referred to asthe Warrant Shares. The per Unit Purchase Price shall be $24.94, which is equal to the average closing price ofthe Common Stock on the American Stock Exchange during the ten trading days ending on June 16, 2005,multiplied by 10. The aggregate Purchase Price shall be payable to the Company on the Closing Date, asdefined in Section 10 hereof. The shares of Common Stock issuable to the Subscriber are referred to herein asthe “Shares,” and the Shares, the Warrants and the Warrant Shares are collectively referred to herein as the“Securities”.

NOW, THEREFORE, in consideration of the mutual covenants and other agreements contained in thisAgreement the Company and the Subscriber hereby agree as follows:

1. Purchase and Sale of Shares and Warrants. Subject to the satisfaction (or waiver) of theconditions to Closing set forth in this Agreement, the Subscriber shall purchase the Shares and Warrants for thePurchase Price indicated on the signature page hereto, and the Company shall sell the Shares and Warrantscalled for by the above price to the Subscriber. The Purchase Price for the Shares and Warrants shall be paid incash. The Company shall (i) instruct its transfer agent to issue stock certificates for the number of Sharesincluded in the Units to be purchased hereunder and to deliver such Shares to the Subscriber within 15 businessdays of the Closing Date, such Shares to be registered in the name of the Subscriber and (ii) deliver Warrantsfor the number of Warrants purchased hereunder to the Subscriber within said 15 business days. The Companywill not issue fractional Units but will refund amounts in excess of the price of the nearest full number of Unitswhich can be purchased with the purchase price tendered hereunder.

2. Warrants. Promptly after the Closing Date the Company will issue two Warrants to theSubscriber for each ten (10) shares issued to such Subscriber on the Closing Date. The per Warrant exerciseprice shall be $4.89 per share. The Warrants shall be exercisable

until February 16, 2009.

3. Subscriber’s Representations and Warranties. The Subscriber hereby represents and warrants toand agrees with the Company that:

(a) Information on Company. The Subscriber has been furnished with or has had access atthe EDGAR Website of the Commission to the Company’s Form 10-KSB for the year ended December 31,2004 and the Company’s Form 10-KSB for the year ended December 31, 2003 as filed with the Commission,together with all subsequently filed Forms 10-QSB, 8-K, and filings made with the Commission available atthe EDGAR website (hereinafter referred to collectively as the “Reports”). The Subscriber has considered allfactors the Subscriber deems material in deciding on the advisability of investing in the Securities.

(b) Information on Subscriber. At the time the Subscriber was offered the Securities it was,and as of the date hereof it is an “accredited investor”, as such term is defined in Regulation D promulgated bythe Commission under the 1933 Act, is experienced in investments and business matters, has made investmentsof a speculative nature and has purchased securities of United States publicly-owned companies in privateplacements in the past and, with its representatives, has such knowledge and experience in financial, tax andother business matters as to enable the Subscriber to utilize the information made available by the Company toevaluate the merits and risks of and to make an informed investment decision with respect to the proposedpurchase, which represents a speculative investment. The Subscriber has the authority to purchase and own theSecurities. The Subscriber is able to bear the economic risk of such investment and at the present time, is ableto afford a complete loss thereof. The information set forth on the signature page hereto regarding theSubscriber is accurate.

(c) Purchase of Common Stock and Warrants. The Subscriber is purchasing the CommonStock and Warrants as principal for its own account and not with a view to any distribution thereof (thisrepresentation and warranty not limiting such Subscriber’s right to sell the Shares and Warrant Shares pursuantto the Registration Statement (as defined below hereof) or otherwise in compliance with applicable federal andstate securities laws).

(d) Compliance with 1933 Act. The Subscriber understands and agrees that the Securitieshave not been registered under the 1933 Act or any applicable state securities laws, by reason of their issuancein a transaction that does not require registration under the 1933 Act (based in part on the accuracy of therepresentations and warranties of Subscriber contained herein), and that such Securities must be heldindefinitely unless a subsequent disposition is registered under the 1933 Act or any applicable state securitieslaws or is exempt from such registration.

(e) Current Holdings. The Subscriber is currently a holder of [ ] shares of theCompany’s Common Stock.

(f) Correctness of Representations. The Subscriber represents that the foregoingrepresentations and warranties are true and correct as of the date hereof in all material

respects and, unless the Subscriber otherwise notifies the Company prior to the Closing Date (as hereinafterdefined), shall be true and correct in all material respects as of the Closing Date.

4. Company Representations and Warranties. The Company represents and warrants to and agreeswith the Subscriber that (i) the Company is duly organized, validly existing and in good standing on the datehereof, (ii) has full power and authority to issue the Securities, (iii) is eligible to register the resale of itsCommon Stock by the Subscriber under Form S-3 promulgated under the 1933 Act, (iv) upon receipt andacceptance of consideration from the Subscriber the Securities will be legally and validly issued, (v) theCompany’s Form 10-KSB for the year ended December 31, 2004, fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and the information contained inthe Form 10-KSB fairly presents, in all material respects, the financial condition and results of operations ofthe Company and does not contain any untrue statement of a material fact or omit to state a material factrequired to be stated therein or necessary to make the statements therein not misleading and (vi) the Companyhas taken all action required by its Articles of Incorporation and Bylaws and the rules and regulations of theAmerican Stock Exchange to approve the offer and sale of the securities, except that it has not applied foradditional listing of such securities with the American Stock Exchange but undertakes to do so promptly uponclosing hereunder.

5. Regulation D Offering. The offer and issuance of the Securities to the Subscriber is being madepursuant to the exemption from the registration provisions of the 1933 Act afforded by Section 4(2) of the1933 Act and Rule 506 of Regulation D promulgated thereunder.

6. Registration and Listing.

(a) The Company covenants and agrees with the Subscriber that on or before the 70 th dayafter the Closing Date, prior to the Filing Date the Company shall prepare and file with the Commission aRegistration Statement covering the shares of common stock issuable under this Agreement and issuable uponexercise of the Warrants (the “Registrable Securities”) for an offering to be made on a continuous basispursuant to Rule 415. The Registration Statement shall be on Form S-3. The Company shall cause theRegistration Statement to become effective and remain effective as provided herein. The Company shall use itsbest efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly aspossible after the filing thereof. The Company shall use its best efforts to keep the Registration Statementcontinuously effective under the Securities Act until the date which is the earlier date of when (i) allRegistrable Securities have been sold or (ii) all Registrable Securities may be sold immediately withoutregistration under the Securities Act and without volume restrictions pursuant to Rule 144(k), as determined bythe counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to theCompany’s transfer agent and the affected Holders .

(b) Transfers. The Securities may only be disposed of in compliance with state and federalsecurities laws. In connection with any transfer of Securities other than pursuant to an effective registrationstatement, to the Company, to an Affiliate of a Subscriber or

in connection with a pledge as contemplated in this Section 10, the Company may require the transferorthereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance ofwhich opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not requireregistration of such transferred Securities under the 1933 Act. As a condition of transfer, any such transfereeshall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Subscriberunder this Agreement and the Registration Rights Agreement.

(c) Shares Legend. The Subscriber agrees to the imprinting, so long as is required by thisSection 7(b), of a legend on the Shares and the Warrant Shares, in substantially the following form:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTEREDUNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BESOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF ANEFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR ANYAPPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLYSATISFACTORY TO COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED,EXCEPT THAT THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONAFIDE MARGIN ACCOUNT OF THE HOLDER WITH A REGISTERED BROKER-DEALER OROTHER LOAN OF THE HOLDER WITH A FINANCIAL INSTITUTION THAT IS AN“ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.”

(d) Warrant Legend. The Subscriber agrees to the imprinting, so long as is required by thisSection 6, of a legend on the Warrants, in substantially the following form:

“THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISEOF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF1933, AS AMENDED. THIS WARRANT AND THE SHARES OF COMMON STOCKISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FORSALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVEREGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR ANYAPPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLYSATISFACTORY TO COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED,EXCEPT THAT THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONAFIDE MARGIN ACCOUNT OF THE HOLDER

WITH A REGISTERED BROKER-DEALER OR OTHER LOAN OF THE HOLDER WITH AFINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE501(a) UNDER THE SECURITIES ACT”

(e) Certificates. Certificates evidencing the Shares and Warrant Shares shall not contain anylegend (including the legend set forth in Sections 7(b) and (c)), (i) while a registration statement (including theRegistration Statement) covering the resale of such security is effective under the 1933 Act, or (ii) followingany sale of such Shares or Warrant Shares pursuant to Rule 144, or (iii) if such Shares or Warrant Shares areeligible for sale under Rule 144(k), or (iv) if such legend is not required under applicable requirements of the1933 Act (including judicial interpretations and pronouncements issued by the Staff of the Commission). TheCompany shall cause its counsel to issue a legal opinion to the Company’s transfer agent promptly after theeffective date of the Registration Statement if required by the Company’s transfer agent to effect the removalof the legend hereunder as and when any Subscriber so requests. If all or any portion of a Warrant is exercisedat a time when there is an effective registration statement to cover the resale of the Warrant Shares, suchWarrant Shares shall be issued free of all legends

(f) Acknowledgement. The Subscriber agrees that the removal of the restrictive legend fromcertificates representing Securities as set forth in this Section 7 is predicated upon the Company’s reliance thatthe Subscriber will sell any Securities pursuant to either the registration requirements of the 1933 Act,including any applicable prospectus delivery requirements, or an exemption therefrom.

(g) The Company covenants and agrees with the Subscriber that on or before the 40th dayafter the Closing Date it will file an application with the American Stock Exchange to list the shares of theCompany’s Common Stock underlying the Units, including the shares of Common Stock underlying theWarrants and will use its best efforts to prosecute such application to effectiveness.

7. Conditions Precedent to Obligations of the Company. The obligations of the Company aresubject to the fulfillment prior to or on the Closing Date of the following conditions any of which may bewaived by the Company in writing:

(a) all representations and warranties of the Subscriber contained in this Agreement shall be trueand correct in all respects as of the Closing Date with the same effect as though such representations andwarranties had been made on or as of such date; and

(b) all agreements and covenants of the Subscriber to be performed or complied with on or prior tothe Closing Date have in all material respects been so performed or complied with.

8. Conditions Precedent to Obligations of the Subscriber. The obligations of the Subscriber aresubject to the fulfillment prior to or on the Closing Date of the following conditions any of which may bewaived by the Subscriber in writing:

(a) all representations and warranties of the Company contained in this Agreement shall betrue and correct in all respects as of the Closing Date with the same effect as though such representations andwarranties had been made on or as of such date; and

(b) all obligations, agreements and covenants of the Company to be performed or compliedwith on or prior to the Closing Date shall have, in all respects been so performed or complied with.

9. Miscellaneous.

(a) Notices. All notices, demands, requests, consents, approvals, and other communicationsrequired or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i)personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid,(iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery,telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specifiedmost recently by written notice. Any notice or other communication required or permitted to be givenhereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurateconfirmation generated by the transmitting facsimile machine, at the address or number designated below (ifdelivered on a business day during normal business hours where such notice is to be received), or the firstbusiness day following such delivery (if delivered other than on a business day during normal business hourswhere such notice is to be received) or (b) on the second business day following the date of mailing by expresscourier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichevershall first occur. The addresses for such communications shall be: (i) if to the Company, to: MilestoneScientific Inc., 230 South Orange Avenue, Livingston, NJ 07039Attention: Leonard Osser, Chairman, fax:(973) 535-2829, with a copy to: Morse, Zelnick, Rose & Lander, LLP, 405 Park Avenue, Suite 1401, NewYork, New York 10022, Attention: Stephen Zelnick, telecopier: (212) 838-9190, (ii) if to the Subscriber to:the address and telecopier number indicated on the signature pages hereto.

(b) Closing. The consummation of the transactions contemplated herein (the “ClosingDate”) shall take place at the offices of Morse, Zelnick, Rose & Lander, LLP, upon receipt of good funds at itsescrow account ,

The Chase Manhattan Bank,1211 Avenue of the Americas, New York, New York 10036, Account Name: Morse, Zelnick, Rose & Lander, LLP Attorney Trust Account Account Number: 967086639 ABA Number: 021000021

and upon the satisfaction of all conditions to Closing set forth in this Agreement.

(c) Entire Agreement; Assignment. This Agreement and the other Transaction Documentsrepresent the entire agreement between the parties hereto with respect to the subject matter hereof and may beamended only by a writing executed by the Company and the Subscriber. Neither the Company nor theSubscriber has relied on any representations not contained or referred to in this Agreement and the documentsdelivered herewith. No right or obligation of the Company shall be assigned without prior notice to and thewritten consent of the Subscriber. The Subscriber may assign any or all of its rights hereunder to any person inconnection with a transfer of any Security to such person, provided such transferee agrees in writing to bebound, with respect to the transferred Securities, by the provisions hereof that apply to the Subscriber.

(d) Counterparts/Execution. This Agreement may be executed in any number of counterpartsand by the different signatories hereto on separate counterparts, each of which, when so executed, shall bedeemed an original, but all such counterparts shall constitute but one and the same instrument. This Agreementmay be executed by facsimile signature and delivered by facsimile transmission.

(e) Law Governing this Agreement. This Agreement shall be governed by and construed inaccordance with the laws of the State of New York without regard to principles of conflicts of laws. Anyaction brought by either party against the other concerning the transactions contemplated by this Agreementshall be brought only in the state courts of New York or in the federal courts located in the state of New York.The parties and the individuals executing this Agreement and other agreements referred to herein ordelivered in connection herewith on behalf of the Company agree to submit to the jurisdiction of suchcourts and waive trial by jury. The prevailing party shall be entitled to recover from the other party itsreasonable attorney’s fees and costs. In the event that any provision of this Agreement or any other agreementdelivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, thensuch provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemedmodified to conform with such statute or rule of law. Any such provision which may prove invalid orunenforceable under any law shall not affect the validity or enforceability of any other provision of anyagreement.

(f) Equitable Adjustment. The Securities and the purchase prices of Securities beingpurchased hereunder shall be equitably adjusted to offset the effect of stock splits, stock dividends, anddistributions of property or equity interests of the Company to its shareholders occurring between the date ofthis Agreement and the Closing Date.

[THIS SPACE INTENTIONALLY LEFT BLANK]

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

Please acknowledge your acceptance of the foregoing Subscription Agreement by signing and returning acopy to the undersigned whereupon it shall become a binding agreement between us.

Dated: June _____, 2005

Dated: June _______ 2005

The Company MILESTONE SCIENTIFIC INC a Delaware corporation

By:_________________________________ Name: Title:

Subscriber

[ ]

by:_________________________________ Name: Title:

SUBSCRIBER’S NAME ANDADDRESS

PER UNITPURCHASEPRICE

NO. OFUNITS

TOTAL AGGREGATEPURCHASE PRICE

$ 24.94

Telephone number:

Facsimile number:

EXHIBIT A

[Form of Warrant]

Exhibit 4.7

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THISWARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, ASAMENDED. THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPONEXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED ORHYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THISWARRANT UNDER SAID ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN OPINIONOF COUNSEL REASONABLY SATISFACTORY TO COMPANY THAT SUCH REGISTRATION IS NOTREQUIRED, EXCEPT THAT THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH ABONA FIDE MARGIN ACCOUNT OF THE HOLDER WITH A REGISTERED BROKER-DEALER OROTHER LOAN OF THE HOLDER WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITEDINVESTOR” AS DEFINED IN RULE501(a) UNDER THE SECURITIES ACT

VOID AFTER 5 P.M. PACIFIC TIME ON FEBRUARY 16, 2009

WARRANTS TO PURCHASE COMMON STOCK

No. MSW-[ ] Warrants

Milestone Scientific Inc.

THIS CERTIFIES THAT:

[name]

or registered assigns, is the registered holder of the number of Warrants (“Warrants”) set forth above. EachWarrant, unless and until redeemed by the Company as provided in the Warrant Agreement, hereinafter morefully described (the “Warrant Agreement”) entitles the holder thereof to purchase from Milestone ScientificInc., a corporation incorporated under the laws of the State of Delaware (the “Company”), subject to the termsand conditions set forth hereinafter and in the Warrant Agreement, at any time before the close of business onFebruary 16, 2009 (“Expiration Date”), one fully paid and non-assessable share of Common Stock, par value$0.001 per share, of the Company (“Common Stock”) upon presentation and surrender of this WarrantCertificate, with the instructions for the registration and delivery of Common Stock filled in, at the offices ofthe Company, 230 South Orange Avenue, Livingston, New Jersey 07039, and upon payment of the ExercisePrice (as defined in the Warrant Agreement) and any applicable taxes paid either in cash, or by certified orofficial bank check, payable in lawful money of the United States of America to the order of the Company.Each Warrant initially entitles the holder to purchase one share of Common Stock for $4.89. The number andkind of securities or other property for which the Warrants are exercisable are subject to adjustment in certainevents, such

as mergers, splits, stock dividends, splits and the like, to prevent dilution. The Company may redeem any or alloutstanding and unexercised warrants by giving not less than 30 days prior notice at any time after the closingprice of the Common Stock on the principal exchange on which it is traded has equaled or exceeded $6.52 pershare for any five consecutive trading days; provided that the shares of Common Stock underlying theWarrants are saleable pursuant to an effective registration statement under the Securities Act of 1933 at alltimes from the commencement of the five trading day period through the date of redemption. The RedemptionPrice is $0.25 per Warrant (subject to adjustment in the event of a stock split, dividend or the like). AllWarrants not theretofore exercised will expire on the Expiration Date.

This Warrant, although not issued pursuant to the Warrant Agreement, is, nevertheless, subject to all ofthe terms, provisions and conditions of the Warrant Agreement, dated as of February 17, 2004, between theCompany and the Warrant Agent, to all of which terms, provisions and conditions the registered holder of thisWarrant Certificate consents by acceptance hereof. The Warrant Agreement is incorporated herein byreference and made a part hereof and reference is made to the Warrant Agreement for a full description of therights, limitations of rights, obligations, duties and immunities of the Warrant Agent, the Company and theholders of the Warrant Certificates. Copies of the Warrant Agreement are available upon written requestaddressed to the Company at Milestone Scientific Inc., 220 South Orange Ave., Livingston, New Jersey07039, Attention: Chairman.

The Company shall not be required upon the exercise of the Warrants evidenced by this WarrantCertificate to issue fractions of Warrants, Common Stock or other securities, but shall make adjustmenttherefor in cash on the basis of the current market value of any fractional interest as provided in the WarrantAgreement.

In certain cases, the sale of securities by the Company upon exercise of Warrants may violate thesecurities laws of the United States, certain states thereof or other jurisdictions. The Company has agreed touse all commercially reasonable efforts to cause a registration statement to continue to be effective during theterm of the Warrants with respect to such sales under the Securities Act of 1933, and to take such action underthe laws of various states as may be required to cause the sale of securities upon exercise to be lawful.However, the Company will not be required to honor the exercise of Warrants if, in the opinion of the Board ofDirectors, upon advice of counsel, the sale of securities upon such exercise would be unlawful. In certaincases, the Company may, but is not required to, purchase Warrants submitted for exercise for a cash priceequal to the difference between the market price of the securities obtainable upon such exercise and theexercise price of such Warrants.

This Warrant Certificate, with or without other Certificates, upon surrender to the Warrant Agent, anysuccessor warrant agent or, in the absence of any successor warrant agent, at the corporate offices of theCompany, may be exchanged for another Warrant Certificate or Certificates evidencing in the aggregate thesame number of Warrants as the Warrant Certificate or Certificates so surrendered. If the Warrants evidencedby this Warrant Certificate shall be exercised in part, the holder hereof shall be entitled to receive uponsurrender hereof another Warrant Certificate or Certificates evidencing the number of Warrants not soexercised.

No holder of this Warrant Certificate, as such, shall be entitled to vote, receive dividends

or be deemed the holder of Common Stock or any other securities of the Company which may at any time beissuable on the exercise hereof for any purpose whatsoever, nor shall anything contained in the WarrantAgreement or herein be construed to confer upon the holder of this Warrant Certificate, as such, any of therights of a stockholder of the Company or any right to vote for the election of directors or upon any mattersubmitted to stockholders at any meeting thereof or give or withhold consent to any corporate action (whetherupon any matter submitted to stockholders at any meeting thereof, or give or withhold consent to any merger,recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no parvalue, consolidation, conveyance or otherwise) or to receive notice of meetings or other actions affectingstockholders (except as provided in the Warrant Agreement) or to receive dividends or subscription rights orotherwise until the Warrants evidenced by this Warrant Certificate shall have been exercised and the CommonStock purchasable upon the exercise thereof shall have become deliverable as provided in the WarrantAgreement.

If this Warrant Certificate shall be surrendered for exercise within any period during which the transferbooks for the Company’s Common Stock or other class of stock purchasable upon the exercise of the Warrantsevidenced by this Warrant Certificate are closed for any purpose, the Company shall not be required to makedelivery of certificates for shares purchasable upon such transfer until the date of the reopening of said transferbooks.

Every holder of this Warrant Certificate by accepting the same consents and agrees with the Company,the Warrant Agent, and with every other holder of a Warrant Certificate that:

(a) this Warrant Certificate is transferable on the registry books of the Warrant Agent only upon theterms and conditions set forth in the Warrant Agreement, and

(b) the Company and the Warrant Agent may deem and treat the person in whose name this WarrantCertificate is registered as the absolute owner hereof (notwithstanding any notation of ownership or otherwriting thereon made by anyone other than the Company or the Warrant Agent) for all purposes whatsoeverand neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. The Companyshall not be required to issue or deliver any certificate for shares of Common Stock or other securities upon theexercise of Warrants evidenced by this Warrant Certificate until any tax which may be payable in respectthereof by the holder of this Warrant Certificate pursuant to the Warrant Agreement shall have been paid, suchtax being payable by the holder of this Warrant Certificate at the time of surrender.

This Warrant Certificate shall not be valid or obligatory for any purpose until it shall have beencountersigned by the Warrant Agent.

(Remainder of page intentionally left blank; signature page follows)

WITNESS the facsimile signatures of the proper officers of the Company and its corporate seal.

Dated: _______________

MILESTONE SCIENTIFIC INC.

By: ______________________________________ Name: Leonard Osser Title: Chairman and Chief Executive Officer

Attest: ___________________________________ Assistant Secretary

Exhibit 31.1

CERTIFICATION

I, Leonard Osser, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Milestone Scientific, Inc. (“theregistrant”).

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

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

4. The registrant’s other certifying officer and I are responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) forthe registrant and have:

a) Designed such disclosure controls and procedures to ensure that material information relatingto the registrant, is made known to us by others, particularly during the period in which thisquarterly report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a datewithin 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

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

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

a) All significant deficiencies and material weaknesses in the design or operation of internalcontrols which are reasonably likely to adversely affect the registrant’s ability to record,process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or notthere were significant changes in internal controls or in other factors that could significantly affectinternal controls subsequent to the date of our most recent evaluation, including any correctiveactions with regard to significant deficiencies and material weaknesses.

Date: August 15, 2005/s/ Leonard Osser—————————————— Leonard Osser Chairman and Chief Executive Officer

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Exhibit 31.2

CERTIFICATION

I, Rosaline Shau, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Milestone Scientific, Inc. (“theregistrant”).

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

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

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

a. Designed such disclosure controls and procedures to ensure that material information relatingto the registrant, is made known to us by others, particularly during the period in which thisquarterly report is being prepared;

b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a datewithin 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c. Presented in this quarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date:

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

a. All significant deficiencies and material weaknesses in the design or operation of internalcontrols which are reasonably likely to adversely affect the registrant’s ability to record,process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or notthere were significant changes in internal controls or in other factors that could significantly affectinternal controls subsequent to the date of our most recent evaluation, including any correctiveactions with regard to significant deficiencies and material weaknesses.

Date: August 15, 2005/s/ Rosaline Shau—————————————— Rosaline Shau Acting Chief Financial Officer

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Exhibit 32.1CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Milestone Scientific, Inc. on Form 10-QSB for the six monthsending June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”),I, Leonard Osser, Chief Executive Officer of Milestone, certify pursuant to 18 U.S.C. ss. 1350, as adoptedpursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with therequirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The informationcontained in the Report fairly presents, in all material respects, the financial condition and result of operationsof Milestone.

/s/ Leonard Osser——————————————Leonard Osser Chief Executive OfficerAugust 15, 2005

26

Exhibit 32.2CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Milestone Scientific, Inc. on Form 10-QSB for the six monthsending June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”),I, Rosaline Shau, Acting Chief Financial Officer of Milestone, certify pursuant to 18 U.S.C. ss. 1350, asadopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with therequirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The informationcontained in the Report fairly presents, in all material respects, the financial condition and result of operationsof Milestone.

/s/ Rosaline Shau——————————————Rosaline ShauActing Chief Financial OfficerAugust 15, 2005

27