-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 PgsBKCQMAxuLDcBjAN9kyVE/coMFyohIWqA4SADO4aP2ajGaay8LeRpmmCB+IDTg
 YwbZtTlHkPnD0eeXCis5/w==

<SEC-DOCUMENT>0001005477-01-000567.txt : 20010205
<SEC-HEADER>0001005477-01-000567.hdr.sgml : 20010205
ACCESSION NUMBER:		0001005477-01-000567
CONFORMED SUBMISSION TYPE:	S-2
PUBLIC DOCUMENT COUNT:		7
FILED AS OF DATE:		20010131

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MILESTONE SCIENTIFIC INC/NJ
		CENTRAL INDEX KEY:			0000855683
		STANDARD INDUSTRIAL CLASSIFICATION:	ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842]
		IRS NUMBER:				133545623
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		S-2
		SEC ACT:		
		SEC FILE NUMBER:	333-54732
		FILM NUMBER:		1520840

	BUSINESS ADDRESS:	
		STREET 1:		220 S ORANGE AVE
		STREET 2:		LIVINGSTON CORPORATE PARK
		CITY:			LIVINGSTON
		STATE:			NJ
		ZIP:			07039
		BUSINESS PHONE:		2013793171

	MAIL ADDRESS:	
		STREET 1:		44 KEAN ROAD
		STREET 2:		220 SOUTH ORANGE AVE
		CITY:			LIVINGSTON
		STATE:			NJ
		ZIP:			07039

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	U S OPPORTUNITY SEARCH INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-2
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM S-2
<TEXT>


As filed with the Securities and Exchange Commission on January ____ 2001
Registration No.

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-2
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

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

           DELAWARE                                             13-3545623
(State or other jurisdiction of                              (I.R.S Employer
incorporation or organization)                            Identification Number)

                             220 South Orange Avenue
                            Livingston Corporate Park
                          Livingston, New Jersey 07034
                                 (973) 535-2717
    (Address, including zip code, and telephone number, including area code,
                       of registrant's executive offices)

                                   ----------

                                  Leonard Osser
                      Chairman and Chief Executive Officer
                           Milestone Scientific, Inc.
                            Livingston Corporate Park
                             220 South Orange Avenue
                          Livingston, New Jersey 07039
                                 (973) 535-2717

    (Address, including zip code, and telephone number, including area code,
                              of agent for service)

                                   ----------

                                   Copies to:

     Stephen A. Zelnick, Esq.                           Sidney Todres, Esq.
Morse, Zelnick, Rose & Lander, LLP                 Epstein, Becker & Green, P.C.
    450 Park Avenue, Suite 902                            250 Park Avenue
        New York, NY 10022                              New York, NY 10177

                                   ----------

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.

                                   ----------

      If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act"), check the following box. |X|

      If this Form is filed to register additional securities for an offering
pursuant to Rule 462 (b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|

      If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|

      If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. |_|

      If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. |_|
<PAGE>

                         CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=======================================================================================================================
                                                               Proposed
                                                               Maximum
                                                               Offering
Title of Each class of              Amount To Be               Price Per   Proposed Maximum Aggregate     Amount of
Securities to be Registered          Registered                Security         Offering Price(1)      Registration Fee
- -----------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                      <C>                 <C>                      <C>
Common Stock, $.01 par value          2,100,000(2)             $  1.55(3)          $3,276,000               $813.75
- -----------------------------------------------------------------------------------------------------------------------
Placement Agent's Warrants               75,000                    -0-                    -0-                   -0-
- -----------------------------------------------------------------------------------------------------------------------
Investor's Warrants                     100,000                    -0-                    -0-                   -0-
- -----------------------------------------------------------------------------------------------------------------------
Common Stock issuable on the
exercise of the Placement
Agent's Warrants                         75,000(4)(7)             1.86                139,500(6)              34.88
- -----------------------------------------------------------------------------------------------------------------------
Common Stock issuable on the
exercise of the Investor's
Warrants                                100,000(5)(7)             1.86                186,000(6)              46.50
- -----------------------------------------------------------------------------------------------------------------------
Total Registration Fee                                                                                      $895.13
=======================================================================================================================
</TABLE>

(1)   Estimated solely for purposes of calculating the registration fee pursuant
      to Rule 457 under the Securities Act.

(2)   Represents the maximum number of shares which the Registrant can put to an
      investor, who may be regarded as a statutory underwriter, under an equity
      line of credit.

(3)   Pursuant to Rule 457(c) of the Securities Act of 1933, the proposed
      maximum offering price is based upon a price of 1.55 per share, which was
      the average of the high and low reported sales prices of the registrant's
      common stock on the American Stock Exchange on January 29, 2001.

(4)   Represents the maximum number of shares issuable upon the exercise of
      warrants granted to Jesup & Lamont Securities Corporation as a placement
      fee.

(5)   Represents the maximum number of shares issuable upon the exercise of
      warrants granted to the investor in connection with the equity line.

(6)   Pursuant to Rule 457(g) of the Securities Act of 1933, the proposed
      maximum offering price is based upon the higher of the price at which the
      warrants may be exercised ($1.86) and the price of shares of common stock
      as determined in accordance with Rule 457(c) ($1.55).

(7)   Pursuant to Rule 416 under the Securities Act there are also being
      registered hereby such additional indeterminate number of shares as may
      become issuable pursuant to the anti-dilution provisions of the warrants.

                                   ----------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.

<PAGE>

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

                 SUBJECT TO COMPLETION, DATED JANUARY ___, 2001

                                   PROSPECTUS

                                     [LOGO]

                                2,275,000 Shares
                                  Common Stock

      This prospectus may be used only in connection with resales of our common
stock by Hillgreen Investments Limited ("Hillgreen") and Jesup & Lamont
Securities Corporation ("Jesup & Lamont") (collectively, the "selling
stockholders"). Hillgreen will purchase up to 2,100,000 shares of our common
stock upon our exercise of a series of put options under the equity line of
credit agreement described in this prospectus and up to 100,000 shares upon the
exercise by Hillgreen of warrants granted under that agreement. Jesup & Lamont
will purchase up to 75,000 shares of our common stock upon its exercise of
warrants granted to it as a placement fee in connection with the equity line.
The shares of common stock, which may be sold to Hillgreen at our option, will
constitute 19.5% of our issued and outstanding shares as of January 29, 2001.

      We will not receive any proceeds from the sale of shares by the selling
stockholders. However, we will receive the sale price of any common stock that
we sell to Hillgreen under the equity line of credit agreement and the exercise
price payable upon the exercise for cash of the warrants held by Hillgreen and
Jesup & Lamont.

      The selling stockholders may sell shares of our common stock from time to
time on the American Stock Exchange at the prevailing market price or in
private, negotiated transactions. The shares will be sold at prices determined
by the selling stockholders. The selling stockholders may sell the shares
through broker-dealers who may receive compensation from the selling
stockholders in the form of discounts or commissions. Hillgreen is an
"underwriter" within the meaning of the Securities Act of 1933 in connection
with its sales of our shares. We will pay the costs of registering the shares
under this prospectus, including legal fees.

      Our common stock is quoted on the American Stock Exchange under the symbol
"MS." The last reported sale price of our common stock on the American Stock
Exchange on January 29, 2001 was $1.57 per share.

      Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 5.

      Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

                    Prospectus dated _________________, 2001

<PAGE>

                                TABLE OF CONTENTS

PROSPECTUS SUMMARY ........................................................    3
THE OFFERING ..............................................................    4
RISK FACTORS ..............................................................    5
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS .........................    9
USE OF PROCEEDS ...........................................................    9
PRICE RANGE OF COMMON STOCK ...............................................   10
DIVIDEND POLICY ...........................................................   10
CAPITALIZATION ............................................................   11
EQUITY LINE OF CREDIT AGREEMENT ...........................................   12
SELLING STOCKHOLDERS ......................................................   18
PLAN OF DISTRIBUTION ......................................................   18
DESCRIPTION OF CAPITAL STOCK ..............................................   23
WHERE YOU CAN FIND MORE INFORMATION .......................................   24
INCORPORATION OF INFORMATION BY REFERENCE .................................   25
MATERIAL CHANGES ..........................................................   25
LEGAL MATTERS .............................................................   25
EXPERTS ...................................................................   26

                                   ----------

      You should rely only on the information contained in this prospectus or
incorporated by reference in this prospectus. We have not authorized anyone to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information provided by this prospectus is accurate as of any date
other than the date on the front of this prospectus.

      All references in this prospectus and in documents incorporated by
reference in this prospectus, to "we," "us," "our," "Milestone" or "the Company"
refer to Milestone Scientific Inc. and its 86.95% owned subsidiary, Spintech,
Inc. ("Spintech"), unless the context otherwise indicates.

      We maintain a web site at www.milesci.com. Information contained on our
website is not part of this prospectus.

      The Wand(R), The Wand(R)Plus and Splattrfree are trademarks of Milestone.


                                       2
<PAGE>

                               PROSPECTUS SUMMARY

      This summary highlights information contained or incorporated by reference
in this prospectus. For a more complete understanding of this offering, you
should read the entire prospectus carefully, especially the "Risk Factors"
section, and our financial statements and notes to those statements incorporated
by reference in this prospectus, before making your investment decision.

                            Milestone Scientific Inc.

      We have developed and, since January 1998, have manufactured, marketed and
sold The Wand(R), a "painless" injection system enabling the dental practitioner
to more quickly and effectively anesthetize patients. The Wand(R) consists of a
computer controlled pump and a disposable handpiece. Through December 31, 2000,
we marketed The Wand(R) only for use in dentistry. In 2000, we received approval
from the Food and Drug Administration to also market The Wand(R) for use in
medicine and we are currently exploring medical applications for The Wand(R),
both for the administration of anesthesia and for the infusion and removal of
other fluids. The Wand(R) was originally sold in the U.S. and Canada through
major distributors of dental products. In September 1999 we began selling The
Wand(R) and its disposable handpieces directly to dentists in the United States.

      We were organized in August 1989 under the laws of Delaware. Our principal
executive office is located at 220 South Orange Avenue, Livingston Corporate
Park, Livingston, New Jersey 07039. Our telephone number is (973) 716-0087.


                                       3
<PAGE>

                                  THE OFFERING

Common Stock
Offered by the Selling
Stockholders                  2,275,000 shares

Offering Price                To be determined at the time of sale by the
                              selling stockholders

Common Stock Outstanding

Before the Offering           10,772,847 shares (1)

After the Offering            13,047,847 shares (2) (3)

Use of Proceeds               We will not receive any proceeds from sales by the
                              selling stockholders. However, we will receive the
                              proceeds from any sale of common stock to
                              Hillgreen under the equity line of credit
                              agreement and upon the exercise of warrants held
                              by Hillgreen and Jesup & Lamont when, and if, they
                              pay the exercise price in cash. We expect to use
                              substantially all the net proceeds for general
                              corporate purposes, such as working capital,
                              expansion of sales and marketing activities, debt
                              repayment and the launching of our medical
                              operation including clinical trials.

Risk Factors                  Investing in our common stock involves a high
                              degree of risk and immediate dilution. You should
                              not purchase our common stock unless you can
                              afford the complete loss of your investment.
                              Before purchasing our common stock, you should
                              review carefully and consider all information
                              contained in this prospectus, particularly the
                              items under the section entitled "Risk Factors."

American Stock
Exchange symbol               MS

- ----------

(1)   As of January 29, 2001.
(2)   This figure excludes:

      o     932,110 shares subject to outstanding stock options previously
            granted under our stock option plan as of January 30, 2001;
      o     67,890 shares available for future grant under our stock option
            plan; and
      o     1,741,801 shares subject to other outstanding stock options and
            warrants.

(3)   Assumes 2,100,000 shares of common stock are issued under the equity line
      of credit agreement and all 175,000 warrants granted to Hillgreen and
      Jesup & Lamont are exercised.


                                       4
<PAGE>

                                  RISK FACTORS

A purchase of our common stock is speculative and involves a high degree of
risk. You should carefully consider the risks described below together with all
of the other information included or incorporated by reference in this
prospectus before making an investment decision. The risks and uncertainties
described below are not the only ones facing our company. If any of the
following risks actually occur, our business, financial condition or operating
results could be harmed. In that case, the trading price of our common stock
could decline, and you could lose all or part of your investment.

      The following factors may affect the growth and profitability of Milestone
and should be considered by any prospective purchaser of Milestone's securities:

      Continuing losses may exhaust our capital resources and force us to
terminate operations. We are currently losing money and, based on our history,
there is significant risk that losses will continue. Since our operations
commenced in November 1995, we have had losses for each year, including a loss
of approximately $7.0 million for 1999. At September 30, 2000, we had an
accumulated deficit of approximately $31,146,221. If we continue to incur losses
we may exhaust our capital resources. In that case, unless we raise additional
capital we may be forced to terminate or curtail operations.

      We cannot become successful unless we gain greater market acceptance for
The Wand(R). We cannot become successful unless dentists in larger numbers buy
The Wand(R) and use it to administer oral anesthesia. This depends, in large
part, upon our ability to educate dentists and other health care providers of
the distinctive characteristics and benefits of The Wand(R) and will require
substantial marketing efforts and expense. Even though a total of approximately
10,500 equipment units have been sold in the domestic market during 1998 and
1999 less than 950,000 and 1,450,000 disposable handpieces were sold, reflecting
a low level of usage of The Wand(R). We cannot assure you that The Wand(R) will
be accepted by the market.

      We need additional capital to expand marketing efforts and develop a
medical product. Our capital requirements continue to be significant and, unless
we borrow funds or sell equity securities, we will be forced to curtail or
further reduce our activities. We have no agreement for future additional
financing. We cannot assure you that any sources of additional financing will be
available on acceptable terms, or at all. To the extent that any future
financing involves the sale of our equity securities, the ownership interest of
our stockholders could be substantially diluted.

      We depend on Hillgreen to provide us with capital under the equity line of
credit agreement. Our immediate financing needs depend on our ability to sell
shares of our common stock to Hillgreen under the equity line of credit
agreement. Factors that could adversely affect our ability to sell shares of our
common stock to Hillgreen under the equity line of credit agreement include:

      o     Hillgreen's ability or willingness to perform its obligations under
            the agreement; and

      o     The trading price and volume of our stock. If the market price is
            low or the volume is thin, we may not be able to sell a sufficient
            number of shares to meet our capital requirements.

      We may require additional financing in the future, which may not be
available on acceptable terms. Depending on the amount of money we raise under
the equity line of credit


                                       5
<PAGE>

agreement with Hillgreen and our ability to generate additional revenues, we may
require additional funds for working capital, debt repayment, expanding our
operations, or for general corporate purposes. At this time, we do not believe
that sales of The Wand(R) will reach the level required to sustain our
operations and growth plans in the near term. Therefore, we are actively
pursuing additional financing alternatives. However, other than the equity line
of credit with Hillgreen, we do not have any commitments for additional
financing and we cannot assure you that any additional financing will be
available or, if available, will be offered on acceptable terms. The equity line
of credit agreement limits our ability to sell our securities to third parties
at a discount to the market price during its term. Accordingly, if we need
additional capital but are unable to draw down under the equity line of credit
agreement for any reason, our access to capital may be limited. In addition, any
additional equity financing may be dilutive to stockholders, and debt
financings, if available, may involve restrictive covenants that further limit
our ability to make decisions that we believe will be in our best interests. In
the event we cannot obtain additional financing on terms acceptable to us when
required, our operations will be materially and adversely affected and we will
have to cease or substantially reduce operations.

      Our limited domestic distribution channel must be expanded for us to
become successful. Revenue growth depends on our ability to expand marketing
efforts for The Wand(R). Until September 1999 we relied, primarily, on
independent dental distributors to sell The Wand(R) domestically and
internationally. Since then we have sought to build a domestic sales force, but
its efforts in marketing The Wand(R) remain quite limited. To increase marketing
of The Wand(R) with our own sales force, the sales force will require
substantial expansion and we will incur significant up-front expense. We cannot
assure you that we will be able to hire and retain our own adequate sales force
or that our sales force will be able to successfully market and sell The
Wand(R).

      We may be unable to protect our patents and intellectual property because
of our limited capital resources. We hold U.S. patents applicable to The
Wand(R). We rely on a combination of patents, trademarks and nondisclosure
agreements to protect our intellectual property rights. Unauthorized parties may
attempt to reverse engineer, copy, or obtain and use our products and other
information we regard as proprietary. We may have to initiate lawsuits to
protect our intellectual property rights. These lawsuits are costly and divert
management's time and effort away from our business with no guarantee of
success. Our failure to protect our proprietary rights or the expense of doing
so could have a materially adverse effect on our operating results and financial
condition. Also, although we are not involved in any litigation involving our
intellectual property and we have not received any claims of infringement, it is
possible that our products may infringe on patent or proprietary rights of
others. If that happens we may have to modify our products or obtain a license.
We cannot assure you that we will be able to do so in a timely manner, upon
acceptable terms and conditions, or at all.

      Our terminable relationships with key manufacturers could disrupt critical
supplies. We have informal terminable arrangements with the manufacturers of The
Wand(R) equipment units, Tricor Systems, Inc., and handpieces, NYPRO, Inc.
Termination of the manufacturing relationship with either of these manufacturers
could significantly and adversely affect our ability to produce and sell our
products. Though alternate sources of supply exist and new manufacturing
relationships could be established, we would need to recover our existing tools
or have new tools produced. Establishing new manufacturing relationships could
involve significant expense and delay. Any curtailment or interruptions of the
supply, whether or not as a result of termination of the relationship, would
increase our losses or, if we have become profitable, reduce our profits.


                                       6
<PAGE>

      Possible product liability claims could impair our resources and
jeopardize our viability. We could be subject to claims for personal injury from
the use of our dental and medical products, although we have never been sued for
personal injury claims. We have liability insurance in the aggregate amount of
$2,000,000 with a per-occurrence limit of $1,000,000 which we believe is
adequate, although we cannot assure you that the insurance coverage will be
sufficient to pay such claims should they be made. A partially or completely
uninsured claim, if successful and of significant magnitude, could jeopardize
our viability.

      Limitation of director liability may prevent our recovery of damages from
our directors. Our Certificate of Incorporation provides that our directors are
not personally liable to us or any of our stockholders for monetary damages for
breach of the fiduciary duty of care as a director, including breaches which
constitute gross negligence, subject to the limitations imposed by the Delaware
General Corporation Law. Thus, in some instances, neither we nor our
stockholders can recover damages even if directors take actions which harm us.

      We need FDA clearance to introduce new variants of The Wand(R) for use in
medicine. New variants of The Wand(R) for medical use will require rigorous and
expensive pre-clinical and clinical testing and FDA approval before they can be
marketed. These processes can take a number of years. The time required for
completing testing and obtaining approval may be lengthy, and FDA approval may
never be obtained. Similar delays may also be encountered in other countries.
Later discovery of previously unknown problems with a product, manufacturer, or
facility may result in restrictions on the product or manufacturer, including
fines, delays or suspensions of regulatory clearances, seizures or recalls of
products, operating restrictions and criminal prosecution and could have a
materially adverse effect on us.

      Our presence in a highly competitive industry reduces our chances of
success. We face intense competition from many companies in the medical and
dental device industry, including well-established academic institutions
possessing substantially greater financial, marketing, personnel, and other
resources. Most of our competitors have established reputations, stemming from
their success in the development, sale, and service of competing dental
products. Further, our ability to compete successfully, requires that we
establish an effective distribution network. We cannot assure you that we can
compete successfully.

      Technological changes and new products may make our product obsolete. New
or enhanced products may contain features that render our products less
marketable, or even obsolete. Therefore, we must devote substantial efforts and
financial resources to enhance our existing products, to bring our products to
market quickly, and to develop new products for related markets. Our industry is
characterized by rapid technological change and research. We cannot assure you
that we can successfully enhance our existing products or develop new products
to compete with new products introduced into our market.

      The price of our common stock may be adversely affected by the issuance of
shares of our common stock under the equity line of credit agreement. We will
sell up to 2,100,000 shares of our common stock to Hillgreen under the equity
line of credit agreement. The price of our common stock may decrease as a result
of the actual or potential sale of these shares into the market. In that event,
not only would you lose a portion of your investment, but we would probably find
it more difficult to obtain additional financing.

      Our stockholders may experience significant dilution as a result of stock
issuances under the equity line of credit agreement. We will sell shares of our
common stock to Hillgreen under the equity line of credit agreement at a price
that is below the market price of our stock at


                                       7
<PAGE>

the time of the sale. These sales will dilute the interests of our existing
stockholders. In addition, as the price of our common stock decreases, we will
be required to issue more shares of our common stock for any given dollar amount
invested by Hillgreen. The more shares that are issued under the equity line of
credit, the more our shares will be diluted and the more our stock price may
decrease. This may encourage short sales, which could place further downward
pressure on the price of our common stock. Furthermore, for the life of any
outstanding options and warrants, the holders will have the opportunity to
profit from a rise in the price of the underlying common stock. When the holders
of these options and warrants exercise their rights to acquire shares of our
common stock, the interests of the other stockholders will be diluted. In
addition, the holders of options and warrants can be expected to exercise their
options and warrants at a time when we would, in all likelihood, be able to
obtain additional capital by an offering of our unissued common stock on terms
more favorable to us than those provided by the options or warrants.


                                       8
<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

      We have made forward-looking statements in this prospectus and in the
documents that are incorporated by reference in this prospectus, all of which
are subject to risks and uncertainties. Forward-looking statements include
information concerning our possible or assumed future results of operations.
Also, when we use words such as "believe," "expect," "anticipate" or similar
expressions, we are making forward-looking statements. You should note that an
investment in our common stock involves certain risks and uncertainties that
could affect our future financial results. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth in "Risk Factors" and
elsewhere in this prospectus.

      We believe it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
predict accurately or over which we have no control. The risk factors described
in the preceding pages, as well as any cautionary language in this prospectus,
provide examples of risks, uncertainties and events that may cause our actual
results to differ materially from the expectations we describe in our
forward-looking statements. Before you invest in our common stock, you should be
aware that the occurrence of the events described in these risk factors and
elsewhere in this prospectus could materially and adversely affect our business,
operating results and financial condition.

                                 USE OF PROCEEDS

      We will not receive any proceeds from the sale of shares by the selling
stockholders. However, we will receive the proceeds from any sale of common
stock to Hillgreen under the equity line of credit agreement described in this
prospectus and upon the exercise of warrants held by Hillgreen and Jesup &
Lamont when, and if, they exercise such warrants. We would realize proceeds of
approximately $3,338,567.57, based on the following expenses and assumptions:

      o     Effect is given to the discount to market price that will be paid by
            Hillgreen;

      o     Our expenses in connection with this offering, which we estimate to
            be $170,895.13, including the legal fees we paid to Hillgreen's
            counsel, Epstein Becker & Green P.C., to cover its legal and
            administrative expenses, and assuming:

      o     Brokerage fees payable to Jesup & Lamont;

      o     An average volume weighted average price of $1.81918 (based on
            recent daily closing bid prices of the common stock on American
            Stock Exchange during from January 21, 2001 through January 26,
            2001);

      o     We use the entire line of credit; and

      o     All of the warrants are exercised at $1.86.

      In addition, a portion of the proceeds from the initial drawdown under the
equity line of credit, if and when made, may be used to pay the expenses of this
offering. Since we do not know the number of drawdowns which will be made,
expenses do not cover the closing costs associated with each drawdown.


                                       9
<PAGE>

      We expect to use substantially all the net proceeds for general corporate
purposes, including working capital, debt repayment and the launching of our
medical operation including clinical trials.

                           PRICE RANGE OF COMMON STOCK

      Our common stock is quoted on the American Stock Exchange under the symbol
"MS". The following table sets forth the range of high and low sales prices per
share of our common stock as reported on the American Stock Exchange for the
last two years and the interim period this year.

                                                            Low         High
                                                            ---         ----
2001
First Quarter (through January 29)                          $ 1.5625    $   2.00

2000

First Quarter                                               $    .75    $   6.00
Second Quarter                                                1.0625      4.1875
Third Quarter                                                   1.75        3.25
Fourth Quarter                                                  .875      2.1875

1999

First Quarter                                               $ .09375    $   3.00
Second Quarter                                                  1.00       1.875
Third Quarter                                                  .6875        2.75
Fourth Quarter                                                   .75      1.4375

      Based on information supplied by our transfer agent, as of December 11,
2000, we believe that there were approximately 139 record holders of our common
stock. On January 29, 2001, the closing price of our common stock was $1.57.

      The shares sold by the selling stockholders will be sold on the American
Stock Exchange or otherwise at prices related to the then current market price,
or in negotiated private transactions, or in a combination of these methods. The
selling stockholders will act independently of us in making decisions with
respect to the form, timing, manner and size of each sale.

                                 DIVIDEND POLICY

      We have never declared or paid any dividends to the holders of our common
stock and we do not expect to pay cash dividends in the foreseeable future. We
currently intend to retain all earnings for use in connection with the expansion
of our business and for general corporate purposes. Our board of directors has
sole discretion in determining whether to declare and pay dividends in the
future. The declaration of dividends will depend on our profitability, financial
condition, cash requirements, future prospects and other factors deemed relevant
by our board of directors. Our ability to pay cash dividends in the future could
be limited or prohibited by financing agreements that we may enter into or by
the terms of any preferred stock that we may authorize and issue.


                                       10
<PAGE>

                                 CAPITALIZATION

      The following table sets forth our capitalization as of September 20, 2000
on an actual basis. The table does not give effect to our sale and issuance of
shares of common stock under the equity line of credit or upon the exercise of
any stock purchase warrants held by Hillgreen and Jesup & Lamont. This table
should be read in conjunction with financial statements and the notes thereto
included or incorporated by reference in this prospectus.

                                                        As of September 30, 2000
                                                               (unaudited)

Long Term Debt                                                $  1,324,094
                                                              ------------

Stockholders' equity:

         Common Stock, par value $.001 per share;
           authorized 25,000,000 shares; 10,652,898
           issued as of September 30, 2000                    $     10,753

         Additional paid-in capital                             33,578,366

         Accumulated earnings (deficit)                        (31,146,221)

         Treasury stock, at cost, 100,000 shares                  (911,516)
                                                              ------------

         Total stockholder's equity                           $  1,531,382
                                                              ------------
         Total capitalization                                 $  2,855,476
                                                              ============


                                       11
<PAGE>

                         EQUITY LINE OF CREDIT AGREEMENT

Overview

      On January 19, 2001, we entered into an equity line of credit agreement
with Hillgreen Investments Limited, a British Virgin Islands corporation, in
order to establish a source of funding for working capital, launching our
medical operation, including clinical trials, and debt repayment. The equity
line of credit agreement establishes what is sometimes also referred to as an
equity drawdown facility.

      Under the equity line of credit agreement, Hillgreen has agreed to
purchase up to 2,100,000 shares of our common stock during the 36 month period
following the effective date of the registration statement to which this
prospectus relates. During this 36 month period, we may request a drawdown under
the equity line of credit by selling ("putting") shares of our common stock to
Hillgreen, and Hillgreen will be obligated to purchase the shares we put to it.
During the 20 business days following a drawdown notice, we will calculate the
number of shares we will sell to Hillgreen and the price per share.

      Upon the exercise of each drawdown, we will receive the amount of the
drawdown less a fee payable to legal counsel for Hillgreen and less a brokerage
fee payable to Jesup & Lamont.

The Drawdown Procedure and the Stock Purchases

      We may request a drawdown no more than once every 25 business days,
although we are under no obligation to do so, by faxing or otherwise delivering
a drawdown notice to Hillgreen, stating the amount of the drawdown we wish to
exercise.

      Amount of the Drawdown

      The minimum amount we can draw down at any one time is $50,000 worth of
common stock. The maximum amount we can draw down at any one time will be
determined at the time of the drawdown notice according to the following
formula:

      the lesser of

            (a)   $5,000,000, or
            (b)   fifteen percent (15%) of the volume weighted average price of
                  our common stock during the twenty (20) business days
                  immediately prior to the sale date, multiplied by the total
                  trading volume of the common stock during the twenty (20)
                  business days immediately prior to the sale date.

      Calculation of Purchase Price

      We may set a minimum threshold price for our common stock in each drawdown
notice that we deliver to Hillgreen. On the day following the delivery of the
drawdown notice, a valuation period of 20 business days will start. The price
per share ("Purchase Price") of common stock sold to Hillgreen will be
determined on each of the 20 business days following the delivery of the
drawdown notice as follows:

      o     On each business day during the valuation period where the daily
            volume weighted average price ("VWAP") of our common stock on the
            American Stock Exchange


                                       12
<PAGE>

            equals or exceeds the threshold price, if any, set forth in the
            drawdown notice, the Purchase Price will equal 87.5% of the VWAP on
            such day.

      o     If the VWAP on a given day is less than the threshold price, or if
            trading of our common stock is suspended for more than three (3)
            hours, in the aggregate, on any day during the valuation period,
            then that day will be withdrawn from the valuation period and the
            amount of the drawdown will be reduced by 1/20.

      Number of Shares Issued

      The number of shares to be issued to Hillgreen will be determined on a
daily basis during each valuation period by dividing 1/20th of the drawdown
amount by 87.5% of the VWAP for that business day during the valuation period,
subject to the adjustments described elsewhere in this prospectus. The sum of
the quotients for the first through the tenth business days will be the number
of shares issued to Hillgreen on or prior to the twelfth day and the sum of the
quotients for each of the eleventh through the twentieth business days will be
issued to Hillgreen on the twenty-second day.

      If we set a threshold price too high and our stock price does not meet
that level during the 20 business days after our drawdown request, the amount we
can draw and the number of shares we sell to Hillgreen will be reduced. On the
other hand, if we set a threshold price too low and our stock price falls
significantly but stays above the threshold price, we will have to issue a
greater number of shares to Hillgreen at the reduced price.

      Payment for Shares Issued

      The shares purchased on the first 10 business days will be issued and paid
for on or prior to the twelfth business day following the drawdown request. The
shares purchased on the eleventh through the twentieth business days will be
issued and paid for on the twenty-second business day following the drawdown
request. We will receive the purchase price less a legal fee payable to counsel
for Hillgreen, and less a brokerage fee payable to Jesup & Lamont.

Investor Warrants

      At the closing of the equity line agreement, we issued to Hillgreen
100,000 warrants to purchase one share of our common stock. The warrants are
exercisable at any time, in whole or in part, during the three year period
commencing on January 22, 2001 at an exercise price of $1.86.


                                       13
<PAGE>

Sample drawdown calculation

      The following is an example of the number of shares we would issue to
Hillgreen if we had given a drawdown notice on December 12, 2000, indicating a
drawdown amount of $80,000 and a minimum threshold price of $1.00 per share:

<TABLE>
<CAPTION>
===================================================================================================
Trading Date      VWAP          Threshold   Greater of     Purchase Price   Principal    No. of
                                Price (TP)  VWAP or TP     (after discount)              Shares
                                            (0 if VWAP is                                Purchased
                                            less than TP)
- ---------------------------------------------------------------------------------------------------
<S>  <C>          <C>           <C>         <C>            <C>              <C>          <C>
1.   12/13/00     $ 1.3589      $ 1.00      $ 1.3589       $ 1.1890         $ 4,500       3,785
2.   12/14/00     $ 1.3696      $ 1.00      $ 1.3696       $ 1.1984         $ 4,500       3,755
3.   12/15/00     $ 1.3332      $ 1.00      $ 1.3332       $ 1.1666         $ 4,500       3,857
4.   12/18/00     $ 1.3125      $ 1.00      $ 1.3125       $ 1.1484         $ 4,500       3,918
5.   12/19/00     $ 1.2406      $ 1.00      $ 1.2406       $ 1.0855         $ 4,500       4,146
6.   12/20/00     $ 1.1470      $ 1.00      $ 1.1470       $ 1.0036         $ 4,500       4,484
7.   12/ 21/00    $ 1.0171      $ 1.00      $ 1.0171       $ 0.8900         $ 4,500       5,056
8.   12/22/00     $ 1.0270      $ 1.00      $ 1.0270       $ 0.8986         $ 4,500       5,008
9.   12/26/00     $ 0.9959      $ 1.00      $      0            N/A         $     0           0
10.  12/27/00     $ 1.0547      $ 1.00      $ 1.0547       $ 0.9229         $ 4,500       4,876

===================================================================================================
Settlement on Day 12                                                        $40,500      38,885
===================================================================================================

11.  12/28/00     $ 1.1158      $ 1.00      $ 1.1158       $ 0.9763         $ 4,500       4,609
12.  12/29/00     $ 1.1952      $ 1.00      $ 1.1952       $ 1.0458         $ 4,500       4,303
13.  01/02/01     $ 1.5018      $ 1.00      $ 1.5018       $ 1.3141         $ 4,500       3,424
14.  01/03/01     $ 1.6834      $ 1.00      $ 1.6834       $ 1.4730         $ 4,500       3,055
15.  01/04/01     $ 2.0638      $ 1.00      $ 2.0638       $ 1.8058         $ 4,500       2,492
16.  01/05/01     $ 1.8295      $ 1.00      $ 1.8295       $ 1.6008         $ 4,500       2,811
17.  01/08/01     $ 1.5759      $ 1.00      $ 1.5759       $ 1.3789         $ 4,500       3,263
18.  01/09/01     $ 1.7139      $ 1.00      $ 1.7139       $ 1.4997         $ 4,500       3,001
19.  01/10/01     $ 1.6845      $ 1.00      $ 1.6845       $ 1.4739         $ 4,500       3,053
20.  01/11/01     $ 1.8285      $ 1.00      $ 1.8285       $ 1.5999         $ 4,500       2,813
===================================================================================================
Settlement on Day 22                                                        $45,000      32,824

Totals                                                                      $85,500      71,709

Less broker's (Jesup & Lamont) commission of 4.75%                            4,061.25

Less $500 fee to Hillgreen's counsel
   (Epstein, Becker & Green, P.C.)                                              500.00
                                                                            ----------

Net proceeds to Milestone                                                   $80,938.75
                                                                            ==========
</TABLE>

Initial Closing Costs, Grant of Warrants and Costs of Closing Each Drawdown

      At the closing of the equity line of credit agreement, we paid $15,000 to
Hillgreen's legal counsel, Epstein Becker & Green P.C., to cover its legal and
administrative expenses.

      As consideration for the opening of the equity line of credit, we granted
to Hillgreen warrants to purchase 100,000 shares of common stock. In addition,
as consideration for the services rendered by Jesup & Lamont as placement agent
in connection with this offering, we granted to Jesup & Lamont warrants to
purchase 75,000 shares of common stock. These warrants will be exercisable at
any time prior to January 23, 2004, at a price of $1.86 per share of common
stock. Neither Hillgreen nor Jesup & Lamont will be obligated to exercise the
warrants and to purchase any shares of common stock under the warrants.


                                       14
<PAGE>

      Lastly, upon the receipt of each drawdown amount from Hillgreen, we will
pay to Epstein, Becker & Green, legal counsel to Hillgreen, a fee of $500, and
to Jesup & Lamont Securities Corporation a brokerage fee equal to 4.75% of the
aggregate purchase price for each drawdown for the initial $4,000,000 received,
4.50% of the aggregate purchase price for each drawdown for the following
$4,000,000 received, and 4.25% of the aggregate purchase price for each drawdown
thereafter. Jesup & Lamont is the placement agent which introduced Hillgreen to
us and is a registered broker-dealer.

Necessary Conditions Before Hillgreen is Obligated to Purchase Our Shares

      The following conditions must be satisfied before Hillgreen is obligated
to purchase the common stock under a drawdown notice:

      o     A registration statement for the shares must be effective and
            available on each drawdown settlement date so that Hillgreen may
            freely sell the shares of common stock it purchases;

      o     All our representations and warranties to Hillgreen set forth in the
            equity line of credit agreement must be true and correct in all
            material respects;

      o     We will have made reasonable efforts to obtain all permits and
            qualifications required by any state blue sky laws in the states
            reasonably requested by Hillgreen;

      o     We have delivered into escrow or to the Depository Trust Company
            ("DTC") the shares of common stock being purchased;

      o     We have delivered to our transfer agent instructions reasonably
            satisfactory to Hillgreen;

      o     We have satisfied all laws and regulations pertaining to the sale
            and issuance of the shares of common stock to Hillgreen;

      o     We have performed, satisfied and complied in all material respects
            with all covenants, agreements and conditions required by the
            private equity line of credit agreement, registration rights
            agreement and escrow agreement, to be performed, satisfied or
            complied with by us;

      o     No statute, rule, regulation, executive order, decree, ruling or
            injunction may be in effect which prohibits consummation of the
            transactions contemplated by the equity line of credit agreement;

      o     No litigation or proceeding nor any investigation by any
            governmental authority can be pending which prohibits or adversely
            affects the consummation of the transactions contemplated by the
            equity line of credit agreement;

      o     There have not been any material adverse changes in our business,
            operations, properties, or financial condition, except as disclosed
            in our filings with the SEC;


                                       15
<PAGE>

      o     Trading in our common stock must not have been suspended by the SEC
            or the American Stock Exchange, and our common stock continues to be
            listed on the American Stock Exchange;

      o     We will have delivered an opinion of our counsel described in the
            equity line of credit agreement regarding the validity of shares and
            the matters listed above;

      o     Five (5) business days have elapsed since the last valuation period;
            and

      o     Hillgreen has received and is reasonably satisfied with other
            standard closing documents as they may reasonably request to confirm
            the Company's compliance with foregoing conditions.

      In addition, we may not issue any shares of common stock under the equity
line of credit if the issuance results in Hillgreen beneficially owning more
than 9.9% of our then outstanding common stock. Since any resales of shares by
Hillgreen would reduce the number of shares beneficially owned by Hillgreen,
resales would enable us to issue additional shares to Hillgreen without
violating this condition.

      The listing requirements of the American Stock Exchange also prohibit us
from issuing 20% or more of our issued and outstanding shares of common stock at
a price less than the greater of market value or book value, unless we obtain
stockholder approval.

Restrictions on Future Financings

      The equity line of credit agreement limits our ability to raise money by
selling our securities to third parties at a discount to the market price during
the term of the equity line of credit agreement. There are exceptions to this
limitation for securities sold in the following situations:

      o     under any presently existing or future employee benefit plan, which
            plan has been or may be approved by our stockholders;

      o     under any compensatory plan for a full-time employee or key
            consultant;

      o     under an underwritten registered public offering;

      o     in connection with a strategic partnership or other business
            transaction, the principal purpose of which is not to raise money;

      o     under any option, warrant or agreement outstanding on the date of
            the agreement,

      o     to any of our officers, directors, or existing holders of 5% or more
            of our common stock or their affiliates, of up to $5,000,000 of
            securities in the aggregate, in any financing or series of related
            financings; or

      o     under a transaction to which Hillgreen gives its written approval,
            provided that Hillgreen is given a right of first refusal to elect
            to participate in such subsequent transaction.


                                       16
<PAGE>

Termination of the Equity Line of Credit Agreement

The equity line of credit shall terminate if any stop order or suspension of the
effectiveness of the registration statement issues for an aggregate of thirty
(30) business days during the 36 month term of the equity line of credit
agreement, with some exceptions.

      We may terminate the equity line of credit agreement if Hillgreen ever
fails to honor one drawdown notice within ten (10) business days or more than
one drawdown notice within two (2) business days of the closing date scheduled
for such drawdown, and we notify Hillgreen of such termination. Upon
termination, we must maintain the registration statement in effect for such
reasonable period, not to exceed forty-five (45) days, as Hillgreen may request
to enable Hillgreen to dispose of any remaining drawndown shares.

Indemnification of Hillgreen

      Hillgreen is entitled to customary indemnification from us for any losses
or liabilities suffered by it based upon material misstatements or omissions
from the registration statement and this prospectus, except as they relate to
information supplied by Hillgreen to us for inclusion in the registration
statement and prospectus.


                                       17
<PAGE>

                              SELLING STOCKHOLDERS

Overview

      The 2,275,000 shares of common stock registered for resale under this
prospectus includes 2,100,000 shares issuable under the equity line of credit
agreement, 100,000 shares issuable upon the exercise of warrants granted to
Hillgreen and 75,000 shares issuable upon the exercise of warrants granted to
Jesup & Lamont. Because we do not know for certain how or when the selling
stockholders will choose to sell their shares of common stock, we cannot
estimate the amount of securities that will actually be offered for sale by the
selling stockholders. There can be no assurance that they will sell any or all
of the securities covered by this prospectus.

Hillgreen Investments Limited

      Hillgreen Investments Limited is a British Virgin Islands corporation
engaged in the business of investing in publicly traded equity securities for
its own account. Hillgreen's office is located at c/o Mishon deReya Solicitors,
21 Southampton Row, London WC1B 5HS England Attention: Kevin Gold. Investment
decisions for Hillgreen are made by its board of directors. Other than the
100,000 warrants we granted to Hillgreen in connection with closing the equity
line of credit agreement, Hillgreen does not currently own any of our
securities. Other than its obligation to purchase shares of common stock under
the equity line of credit agreement, it has no other commitments or arrangements
to purchase or sell any of our securities. There are no business relationships
between Hillgreen and us other than the equity line of credit agreement.

Jesup & Lamont Securities Corporation

      Jesup & Lamont Securities Corporation has acted as placement agent in
connection with the equity line of credit agreement. Jesup & Lamont introduced
us to Hillgreen and assisted us in structuring the equity line of credit with
Hillgreen. Jesup & Lamont's duties as placement agent were undertaken on a
reasonable best efforts basis only. It made no commitment to purchase shares
from us and did not ensure us of the successful placement of any securities.

      Other than the warrants granted to Jesup & Lamont as a placement fee,
Jesup & Lamont does not currently own any of our securities. The decision to
exercise any warrants granted to Jesup & Lamont, and the decision to sell the
common stock issued upon the exercise of the warrants, will be made by Jesup &
Lamont's officers and board of directors.

      The selling stockholders have not held any positions or offices or had
material relationships with us or with any of our affiliates within the past
three years other than as a result of the ownership of our common stock. If, in
the future, the selling stockholders' relationship with us changes, we will
amend or supplement this prospectus to update this disclosure.

                              PLAN OF DISTRIBUTION

General

      Hillgreen and Jesup & Lamont may offer for sale up to 2,275,000 shares of
our common stock, which they will originally acquire under the terms of the
equity line of credit agreement and the warrants that we issued to them.
Hillgreen and Jesup & Lamont will be offering such shares for their own account.
We do not know for certain how or when the selling stockholders


                                       18
<PAGE>

will choose to sell their shares of common stock. We will not receive any
proceeds from the sale of shares of common stock by the selling stockholders.

      To permit Hillgreen and Jesup & Lamont to resell the shares of common
stock issued to them, we agreed to file with the SEC a registration statement
and all necessary amendments and supplements thereto for the purpose of
registering and maintaining the registration of the shares. We will bear all
costs relating to the registration of the common stock offered by the
prospectus. We will keep the registration statement effective until the earliest
of any of the following dates:

      o     the date after which none of the shares of common stock held by
            Hillgreen that are covered by the registration statement are or may
            become issued and outstanding;

      o     the date after which all of the shares of common stock held by
            Hillgreen have been transferred to persons who may trade such shares
            without restriction under the Securities Act of 1933 and we have
            delivered new certificates or other evidences of ownership of such
            shares without any restrictive legend;

      o     the date after which all of the shares of common stock held by
            Hillgreen that are covered by the registration statement have been
            sold by Hillgreen under the registration statement;

      o     the date that Hillgreen or its transferees receive an opinion of our
            counsel that their shares of common stock may be sold under the
            provisions of Rule 144 promulgated under the Securities Act without
            any applicable volume limitations;

      o     the date after which all of the shares of common stock held by
            Hillgreen may be sold, in the opinion of our counsel, without any
            time, volume or manner limitations under Rule 144(k) promulgated
            under the Securities Act of 1933; or

      o     if Hillgreen ever fails to honor one drawdown notice within ten (10)
            business days or more than one drawdown notice within two (2)
            business days of the closing date scheduled for such drawdown, and
            we elect to terminate the equity line of credit agreement, we must
            maintain the registration statement in effect for a reasonable
            period of time, not to exceed forty-five (45) days, as Hillgreen may
            request in order to dispose of any remaining drawndown shares.

      The selling stockholders will offer our common stock into the public
market using this prospectus or under Rule 144 instead of under this prospectus,
if they qualify. Shares of common stock offered through this prospectus or under
Rule 144 may be sold from time to time by Hillgreen and Jesup & Lamont, although
there can be no assurance that they will in fact sell any or all of the
securities covered by this prospectus. These sales may be made on the American
Stock Exchange, or otherwise, at prices related to the then current market
price, or in negotiated private transactions, or in a combination of these
methods. The selling stockholders will act independently of us in making
decisions with respect to the form, timing, manner and size of each sale. We
have been informed by the selling stockholders that there are no existing
arrangements between them and any other stockholder, broker, dealer, underwriter
or agent relating to the sale or distribution of shares of common stock which
may be sold by them through this prospectus.

      The shares of common stock may be sold in one or more of the following
manners:


                                       19
<PAGE>

      o     block trades in which the broker or dealer so engaged will attempt
            to sell the shares as agent, but may position and resell a portion
            of the block as principal to facilitate the transaction;

      o     purchases by a broker or dealer for its account under this
            prospectus; or

      o     ordinary brokerage transactions and transactions in which the broker
            solicits purchases.

      The selling stockholders will pay all commissions and their own expenses,
if any, associated with the sale of the shares of common stock. Sales by the
selling stockholders will be without the payment of any underwriting discounts
or commissions, except for usual and customary selling commissions paid to
brokers or dealers. However, in effecting sales, brokers or dealers engaged by
the selling stockholders may arrange for other brokers or dealers to
participate. Except as disclosed in a supplement to this prospectus, no
broker-dealer will be paid more than a customary brokerage commission in
connection with any sale of the shares of common stock by the selling
stockholders. Brokers or dealers may receive commissions, discounts or other
concessions from the selling stockholders in amounts to be negotiated
immediately prior to the sale. The compensation to a particular broker-dealer
may be in excess of customary commissions. Profits on any resale of the shares
of common stock as a principal by such broker-dealers and any commissions
received by such broker-dealers may be deemed to be underwriting discounts and
commissions under the Securities Act of 1933. Any broker-dealer participating in
the transactions as agent may receive commissions from the selling stockholders
(and, if they act as agent for the purchaser of such shares of common stock,
from such purchaser).

      Broker-dealers may agree with the selling stockholders to sell a specified
number of shares of common stock at a stipulated price per share and, to the
extent a broker-dealer is unable to do so acting as agent for the selling
stockholders, to purchase as principal any unsold shares of common stock at a
price required to fulfill the broker-dealer commitment to the selling
stockholders. Broker-dealers who acquire shares of common stock as principal may
thereafter resell those shares of common stock from time to time in transactions
(which may involve crosses and block transactions and which may involve sales to
and through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with the resales may pay to or receive from the purchasers of the
shares of common stock commissions computed as described above. Brokers or
dealers who acquire shares of common stock as principal and any other
participating brokers or dealers may be deemed to be underwriters in connection
with resales of the shares of common stock.

      Hillgreen is deemed a statutory underwriter within the meaning of Section
2(11) of the Securities Act of 1933 with respect to any shares sold by it.
Hillgreen has agreed to be named as a statutory underwriter and will be acting
as an underwriter in its resales of the shares of common stock under this
prospectus. Because Hillgreen is deemed a statutory underwriter, the discounts
and concessions it receives upon purchases of our common stock, and any profits
it receives on the resale of the shares, will be deemed to be underwriting
discounts and commissions under the Securities Act. Each time Hillgreen
purchases shares of our common stock under the equity line of credit agreement,
it will receive a 12.5% discount to the daily volume weighted average prices of
our common stock on the American Stock Exchange during the twenty (20) business
days following a drawdown notice. Assuming an average volume weighted average
price of $1.81918 (based on recent daily closing bid prices of the common stock
on American Stock Exchange from


                                       20
<PAGE>

January 21, 2001 through January 26, 2001), and assuming we use the entire line
of credit and issue all 2,100,000 shares registered for issuance under the
equity line of credit agreement, Hillgreen will receive "underwriting
compensation" in the form of its discounted purchase price equal to $477,534.75,
or approximately $0.23 per share. In connection with the equity line of credit,
we granted 100,000 warrants to Hillgreen, which are exercisable for $1.86 per
share of common stock at any time prior to January 23, 2004. The warrants
granted to Hillgreen will also be deemed to be underwriting commission under the
Securities Act. Lastly, at the closing of the equity line of credit agreement,
we paid legal fees to Hillgreen's counsel, Epstein Becker & Green P.C., to cover
Hillgreen's legal and administrative expenses.

      Hillgreen and Jesup & Lamont are also subject to applicable state and
federal securities laws, rules and regulations, including Rule 10b-5 and
Regulation M under the Exchange Act of 1934, and the rules and regulations of
the American Stock Exchange. These rules prohibit each selling stockholders
from:

      (1)   engaging in market making activities at the same time as it is
            engaged in a distribution of the shares of common stock for a period
            beginning when it becomes a distribution participant and ending upon
            its completion of participation in a distribution;

      (2)   engaging in any stabilization activity in connection with our
            securities;

      (3)   imposing penalty bids or effecting passive market making bids; and

      (4)   bidding for or purchasing any of our common stock or attempting to
            induce any person to purchase any of our common stock other than as
            permitted under the Exchange Act.

      In addition, any selling stockholders who may be "affiliated purchasers"
of us as defined in Regulation M, must coordinate their sales under this
prospectus with each other and with us for purposes of Regulation M as required
by Securities Exchange Act Release 34-38067 (December 20, 1996). None of the
selling stockholders has been an officer, director or otherwise an affiliate of
our company during the last three years. In addition to the rules and
regulations applicable to it, Hillgreen also has agreed not to engage in any
short sales of our common stock as long as the equity line of credit is active.
These restrictions, and the other rules and regulations applicable to the
selling stockholders, may affect the marketability of the shares of common
stock.

Limited Grant of Registration Rights

      We granted registration rights to Hillgreen to enable it to sell the
common stock it purchases under the equity line of credit agreement. In
connection with any such registration, we will have no obligation:

      o     to assist or cooperate with Hillgreen in the offering or disposition
            of the shares;

      o     to indemnify or hold harmless the holders of any of the shares
            (other than Hillgreen) or any underwriter designated by the holders;

      o     to obtain a commitment from an underwriter relative to the sale of
            any of the shares; or

      o     to include the shares within any underwritten offering that we do.


                                       21
<PAGE>

      We will assume no obligation or responsibility whatsoever to determine a
method of disposition for the shares or to otherwise include the shares within
the confines of any registered offering other than the registration statement of
which this prospectus is a part.

      We will file one or more post-effective amendments to the registration
statement, of which this prospectus is a part, to describe any material change
to the information in this prospectus (including with respect to the plan of
distribution) for as long as Hillgreen holds shares of our stock or until the
shares can be sold under an appropriate exemption from registration. This
obligation may include, to the extent required under the Securities Act of 1933,
that a supplemental prospectus be filed, disclosing:

      o     the name of any broker-dealers;

      o     the number of shares of common stock involved;

      o     the price at which the shares of common stock are to be sold;

      o     the commissions paid or discounts or concessions allowed to
            broker-dealers, where applicable;

      o     that broker-dealers did not conduct any investigation to verify the
            information set out or incorporated by reference in this prospectus,
            as supplemented; and

      o     any other facts material to the transaction.

      Our registration rights agreement with Hillgreen permits us to restrict
the resale of the shares that Hillgreen has purchased from us under the equity
line of credit agreement for a period of time sufficient to permit us to amend
or supplement this prospectus to include material information. If we restrict
Hillgreen at any time within five business days of the closing of any drawdown
and our stock price declines during the restriction period, then, we must issue
additional shares to Hillgreen to compensate it for the net decline in the value
of the shares it held during the restriction period or the shares that it
committed to purchase and purchased during the period. The number of shares that
we will issue to Hillgreen as compensation in these circumstances will equal the
product of:

            o     the number of shares sold by Hillgreen during the five (5)
                  business days immediately following the end of the applicable
                  restriction period, multiplied by

            o     the difference between the highest daily VWAP during the
                  applicable restriction period and the daily VWAP on the day
                  immediately following the end of that restriction period.

      If any such issuance would result in the issuance of a number of shares
which exceeds the number permitted under the equity line of credit agreement
(see "Equity Line of Credit Agreement--Necessary Conditions Before Hillgreen is
Obligated to Purchase Our Shares"), then in lieu of such issuance, we will pay
Hillgreen an amount in cash equal to the closing ask price of the shares that
would have been issuable under the formula contained in the previous sentence.


                                       22
<PAGE>

                          DESCRIPTION OF CAPITAL STOCK

      The following summary describes the material provisions of our capital
stock and is subject to, and qualified in its entirety by, our Certificate of
Incorporation, and amendments thereto, and our By-laws, all of which are
incorporated by reference as exhibits to the registration statement of which
this prospectus is a part and by provisions of applicable law.

      We are authorized to issue up to 25,000,000 shares of common stock, par
value $.001. As of December 25, 2001, 10,772,847 shares of common stock were
issued and outstanding. On December 11, 2000, there were approximately 139
record holders of our common stock, including several brokerage firms holding
shares in street name for beneficial owners.

Common Stock

      All of our issued and outstanding shares of common stock are validly
issued, fully paid and non-assessable. All shares of our common stock to be
outstanding after this offering, when paid for and issued, will be validly
issued, fully paid and non-assessable.

      Voting Rights. Holders of our common stock are entitled to one vote per
share on all matters requiring a vote of the stockholders. Common stockholders
have no right to cumulative voting in the election of directors. Accordingly,
all of our directors can be elected by a plurality of votes cast at a meeting.

      Liquidation Rights. In the event of liquidation of our company, all
holders of our common stock will participate on an equal basis in the net assets
available for distribution after payment of our liabilities and payment of any
liquidation preferences in favor of outstanding shares of preferred stock, if
there are any.

      Dividend Rights. Holders of our common stock are entitled to receive
dividends in cash or property on an equal basis, if and when dividends are
declared by the board of directors on the common stock. It is our present
intention to retain our earnings, if any, for use in our business. Dividends
are, therefore, unlikely in the foreseeable future.

      Preemptive Rights and Redemption. The holders of our common stock have no
preemptive rights to maintain their respective percentage ownership interest in
our other securities. Our common stock is not redeemable or subject to further
calls or assessments.

Options and Warrants

      In 1997, our Board of Directors approved the adoption of our 1997 Stock
Option Plan. Under this plan, we are authorized to grant options to purchase a
maximum of 1,000,000 shares of common stock to our employees, including officers
and directors, at a price not less than the fair market value of the common
stock on the date of the grant. In general, options become exercisable over a
three-year period from the grant date and expire five years after the date of
grant.

      As of January 30, 2001, we have granted 932,110 compensation options under
our stock option plan, and 67,890 options are available under the plan for
future grant. We have granted 431,500 options outside of the plan as
compensation to our non-employee directors and consultants at a weighted average
price of $4.10. All options have been granted at exercise prices


                                       23
<PAGE>

equal to or greater than fair market value at the time of grant. In addition,
there are 396,191 warrants outstanding in connection with financing transactions
at prices ranging from $1.25 to $3.125.

      Holders of options and warrants do not have any of the rights or
privileges of our stockholders, including voting rights, prior to exercise of
the options and warrants. We have reserved sufficient shares of authorized
common stock to cover the issuance of common stock subject to the options and
warrants.

Section 203 of the Delaware General Corporation Law

      Section 203 of the Delaware General Corporation Law prohibits us from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the transaction is approved in a
prescribed manner. As a result, potential acquirers may be discouraged from
attempting to effect acquisition transactions with us thereby possibly depriving
our stockholders of opportunities to sell or otherwise dispose of their
securities at above-market prices in these transactions.

      Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons under our
Certificate of Incorporation, Bylaws and the Delaware General Corporation Law,
we have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy and is, therefore,
unenforceable.

Transfer Agent

      The transfer agent and registrar for our common stock is Continental Stock
Transfer & Trust Company, 2 Broadway, New York, New York 10004.

                       WHERE YOU CAN FIND MORE INFORMATION

      This prospectus is part of a registration statement on Form S-2 that we
have filed with the SEC. Parts of the registration statement have been omitted
from this prospectus as permitted by the rules and regulations of the SEC, and
this prospectus does not contain all of the information contained or
incorporated by reference in the registration statement. In particular,
statements in this prospectus concerning the terms of certain agreements and
other documents are necessarily summaries of those documents, and in each case
we refer you to the copy of the applicable document to the extent we have filed
it as an exhibit to the registration statement. For further information on us
and the information in this prospectus, we refer you to the registration
statement and its exhibits. You may obtain copies of the registration statement
and its exhibits by paying a prescribed fee, or you may examine them without
charge, at the public reference facilities maintained by the SEC at its office
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the
Regional Offices of the SEC at Seven World Trade Center, New York, New York
10048 and Citicorp Center, 300 West Madison Street, Chicago, Illinois 60661. You
may obtain information on the operation of the public reference facilities by
calling the SEC at 1-800-SEC-0330. In addition, you may obtain copies of the
registration statement and its exhibits at the SEC's website located at
http://www.sec.gov.

      We are a reporting company and file our annual, quarterly and current
reports, proxy material and other information with the Securities and Exchange
Commission. You may read and


                                       24
<PAGE>

copy any materials that we file with the SEC at the SEC's public reference
facilities listed above, as well as on the SEC's website.

                    INCORPORATION OF INFORMATION BY REFERENCE

      The SEC allows us to "incorporate by reference" information that we file
with it, which means that we can disclose important information to you by
referring you to the documents filed with the SEC. The information incorporated
by reference is an important part of this prospectus. We incorporate by
reference the following documents which we have previously filed with the SEC:

      (1)   Our Annual Report on Form 10-KSB/A, as amended and restated, for the
            fiscal year ended December 31, 1999, as filed on December 19, 2000
            and, as marked to show changes, on December 21, 2000;

      (2)   Our Quarterly Report on Form 10-QSB/A, as amended and restated, for
            the quarter ended September 30, 2000, as filed on December 19, 2000.

      (3)   Our Quarterly Report on Form 10-QSB/A, as amended and restated, for
            the quarter ended June 30, 2000, as filed on December 19, 2000; and

      (4)   Our Quarterly Report on Form 10-QSB/A, as amended and restated, for
            the quarter ended March 31, 2000, as filed on December 19, 2000.

      Copies of our above mentioned Form 10-KSB/A and our Form 10-QSB/A for the
quarter ended September 30, 2000 are included with this prospectus. If you need
another copy of these documents, or a copy of the other Forms 10-QSB/A mentioned
above, we will provide you with a free copy upon oral or written request.
Requests should be directed to Thomas M. Stuckey, Vice President and Chief
Financial Officer, Milestone Scientific Inc., 220 South Orange Avenue,
Livingston, New Jersey 07039, telephone (973) 535-2717.

      In making a decision to buy our common stock, you should rely only on the
information incorporated by reference or contained in the prospectus. We have
not authorized anyone to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it.

      You should assume that the information appearing in this prospectus is
accurate only as of the date on the front cover of this prospectus. Our
business, financial condition, results of operations and prospectus may have
changed since that date.

                                MATERIAL CHANGES

      In December 2000, we borrowed $400,000 from K. Tucker Andersen, a major
existing investor, under a purchase and line of credit agreement dated as of
July 31, 2000. The loan bears interest at 8% per annum and is due on December
31, 2003. In addition, the investor received warrants to purchase 80,000 shares
of our common stock, exercisable at $1.25 per share, which was the fair market
value of a share on the date of grant. On January 26, 2001, we borrowed the
remaining $100,000 available to us under our purchase and line of credit
agreement with Mr. Andersen. On that date, the investor also received warrants
to purchase 20,000 shares of our common stock, exercisable at $1.6875 per share,
which was the fair market value of a share on the date of grant.

                                  LEGAL MATTERS

      Morse, Zelnick, Rose & Lander, LLP, 450 Park Avenue, New York, New York
10022 will deliver an opinion that the issuance of the shares covered by this
prospectus has been approved


                                       25
<PAGE>

by our Board of Directors and that the shares, when issued, will be fully paid
and non-assessable under Delaware law. Members of and counsel to Morse, Zelnick,
Rose & Lander, LLP own, in the aggregate, the following securities: 168,083
shares of our common stock; options or warrants to purchase 147,286 shares of
our common stock, all of which are currently exercisable; and warrants to
purchase 83,333 units, each unit consisting of one share of our common stock and
a warrant to purchase one share of our common stock.

                                     EXPERTS

      The consolidated financial statements incorporated in this prospectus by
reference, from the Milestone Scientific Inc. Annual Report on Form 10-KSB/A for
the year ended December 31, 1999, filed December 19, 2000, have been audited by
Grant Thornton LLP, independent auditors, as stated in their report which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.


                                       26
<PAGE>

                                2,275,000 Shares

                                     [LOGO]

                                  Common Stock

                                   PROSPECTUS

                               _____________, 2001


                                       27
<PAGE>

                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The fees and expenses we incurred in connection with the offering are payable by
us and, other than registration, filing and listing fees, are estimated as
follows:

Securities and Exchange Commission Registration Fee                  $    895.13
American Stock Exchange Fee
  for Listing of Additional Shares                                     17,500.00
Legal Fees and Expenses                                               115,000.00
Accounting Fees                                                         7,500.00
Miscellaneous Fees and Expenses                                        30,000.00
                                                                     -----------

Total                                                                $170,895.13
                                                                     ===========

ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

      Our Certificate of Incorporation provides that the indemnification
provisions of Sections 102(b)(7) and 145 of the Delaware General Corporation Law
shall be utilized to the fullest extent possible. Further, our Certificate of
Incorporation contains provisions to eliminate the liability of our directors to
Milestone or its stockholders to the fullest extent permitted by Section
102(b)(7) of the Delaware General Corporation Law, as amended from time to time.

      Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent of the corporation. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

      Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. Our Certificate of Incorporation provides for such
limitation of liability.

      Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, is permitted for our directors, officers or controlling
persons, under the above mentioned statutes or otherwise, we understand that the
Securities and Exchange Commission is


                                       28
<PAGE>

of the opinion that such indemnification may contravene federal public policy,
as expressed in said Act, and therefore, may be unenforceable. Accordingly, in
the event that a claim for such indemnification is asserted by any of our
directors, officers or controlling persons, and the Commission is still of the
same opinion, we (except insofar as such claim seeks reimbursement from us of
expenses paid or incurred by a director, officer of controlling person in
successful defense of any action, suit or proceeding) will, unless the matter
has theretofore been adjudicated by precedent deemed by our counsel to be
controlling, submit to a court of appropriate jurisdiction the question whether
or not indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

      At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees as to which indemnification is sought, nor
are we aware of any threatened litigation or proceeding that may result in
claims for indemnification.

ITEM 16. EXHIBITS.

      The following exhibits are filed with this Registration Statement:

Exhibit
Number        Description
- -------       -----------

2.1           Equity Line of Credit Agreement dated January 19, 2001, between
              Registrant and Hillgreen Investments Limited

2.2           Registration Rights Agreement dated January 19, 2001, between
              Registrant and Hillgreen Investments Limited

2.3           Escrow Agreement dated as of January 19, 2001, among Registrant,
              Hillgreen Investments Limited and Epstein Becker & Green, P.C.

4.1           Specimen Stock Certificate(1)

4.2           Form of Purchase Agreement dated March 2, 1999(2)

4.3           Form of 3% Senior Convertible Note dated March 2, 1999(2)

4.4           Form of Registration Rights Agreement dated March 2, 1999(2)

4.5           Form of Purchase Agreement dated January 31, 2000(2)

4.6           Form of Registration Rights Agreement dated January 31, 2000(2)

4.7           Form of Security Agreement dated January 31, 2000(2)

4.8           Form of Agreement to convert 3% Senior convertible notes dated
              January 31, 2000(2)

4.9           Form of Warrant dated January 31, 2000(2)

4.10          Form of 10% Senior Promissory Note dated January 31, 2000(2)


                                       29
<PAGE>

4.11          $200,000 8% Secured Promissory Note dated July 31, 2000(2)

4.12          $300,000 8% Secured Promissory Note dated July 31, 2000(2)

4.13          Warrant dated July 31, 2000(2)

4.14          20% Secured Promissory Notes to LongView Partners A, L.P. and
              Cumberland Benchmarked Partners, L.P. each dated August 28,
              2000(2)

4.15          Registration Rights Agreement dated January 22, 2001, between
              Registrant and Hillgreen Investments Limited (filed as Exhibit
              2.2)

4.16          Form of Warrant issued to Hillgreen Investments Limited and Jesup
              & Lamont Securities Corporation

5.1           Opinion and consent of Morse, Zelnick, Rose & Lander, LLP

10.1          Purchase and Line of Credit Agreement dated July 31, 2000(3)

10.2          Purchase Agreement dated August 25, 2000(3)

10.3          Escrow Agreement dated as of January 19, 2001 by and between
              Registrant, Hillgreen Investments Limited and Epstein, Becker &
              Green, P.C. (filed as Exhibit 2.3)

13.1          Amended and restated annual report on Form 10-KSB/A dated December
              31, 1999 (filed on December 19, 2000 (Commission File No.
              0-26284), and incorporated herein by reference)

13.2          Amended and restated quarterly report to security holders on Form
              10-QSB/A for the quarter ended September 30, 2000 (filed on
              December 19, 2000 (Commission File No. 0-26284), and incorporated
              herein by reference)

13.3          Amended and restated quarterly report to security holders on Form
              10-QSB/A for the quarter ended June 30, 2000 (filed on December
              19, 2000 (Commission File No. 0-26284), and incorporated herein by
              reference)

13.4          Amended quarterly report to security holders on Form 10-QSB for
              the quarter ended March 31, 2000 (filed on December 19, 2000
              (Commission File No. 0-26284), and incorporated herein by
              reference)

23.1          Consent of Grant Thornton LLP

23.2          Consent of Morse, Zelnick, Rose & Lander, LLP (included in Exhibit
              5.1)

- ----------
(1)   Incorporated by reference to Milestone's registration statement on Form
      SB-2 No. 333-92324.
(2)   Incorporated by reference to Milestone's registration statement on Form
      S-3 No. 333-39784.


                                       30
<PAGE>

ITEM 17. UNDERTAKINGS.

      The undersigned registrant hereby undertakes:

      (1)   to file, during any period in which offers or sales are being made,
            a post-effective amendment to this registration statement:

            (a)   to include any prospectus required by Section 10(a)(3) of the
                  Securities Act of 1933;

            (b)   to reflect in the prospectus any facts or events arising after
                  the effective date of the registration statement (or the most
                  recent post-effective amendment thereof) which, individually
                  or in the aggregate, represent a fundamental change in the
                  information set forth in the registration statement.
                  Notwithstanding the foregoing, any increase or decrease in
                  volume of securities offered (if the total dollar value of
                  securities offered would not exceed that which was registered)
                  and any deviation from the low or high end of the estimated
                  maximum offering range may be reflected in the form of
                  prospectus frilled with the Commission under Rule 424(b) if,
                  in the aggregate, the changes in volume and price represent no
                  more than 20% change in the maximum aggregate offering price
                  set forth in the "Calculation of Registration Fee" table in
                  the effective registration statement; and

            (c)   to include any material information with respect to the plan
                  of distribution not previously disclosed in the registration
                  statement or any material change to such information in the
                  registration statement;

      (2)   that, for the purpose of determining any liability under the
            Securities Act of 1933, each such post-effective amendment shall be
            deemed to be a new registration statement relating to the securities
            offered therein, and the offering of such securities at that time
            shall be deemed to be the initial bona fide offering thereof; and

      (3)   to remove from registration by means of a post-effective amendment
            any of the securities being registered which remain unsold at the
            termination of this offering.

      The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, its latest annual report on Form 10-KSB/A that is incorporated by
reference in the prospectus and furnished under and meeting the requirements of
Rule 14-a or Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulations S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.


                                       31
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-2 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Livingston, State of New Jersey on this 30th day
of January, 2001.

                                        MILESTONE SCIENTIFIC INC.


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

      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Leonard Osser, Stephen A. Zelnick, or either one
of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all pre- or post-effective amendments to
this registration statement, and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on January 30, 2001.

Signatures                                  Title
- ----------                                  -----


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


/s/  Thomas Stuckey                         Chief Financial Officer
- -----------------------------------
Thomas Stuckey


/s/  Mitchell Kuhn                          Director
- -----------------------------------
Mitchell Kuhn


/s/  Stephen A. Zelnick                     Director
- -----------------------------------
Stephen A. Zelnick


/s/  Paul Gregory                           Director
- -----------------------------------
Paul Gregory


/s/  Louis I. Margolis                      Director
- -----------------------------------
Louis I. Margolis


                                       32
<PAGE>


/s/  Leonard M. Schiller                    Director
- -----------------------------------
Leonard M. Schiller


/s/  Daniel R. Martin                       Director
- -----------------------------------
Daniel R. Martin


                                       33
<PAGE>

                                  EXHIBIT INDEX

Exhibit
Number        Description
- -------       -----------

2.1           Equity Line of Credit Agreement dated January 19, 2001, between
              Registrant and Hillgreen Investments Limited

2.2           Registration Rights Agreement dated January 19, 2001, between
              Registrant and Hillgreen Investments Limited

2.3           Escrow Agreement dated as of January 19, 2001, among Registrant,
              Hillgreen Investments Limited and Epstein Becker & Green, P.C.

4.1           Specimen Stock Certificate(1)

4.2           Form of Purchase Agreement dated March 2, 1999(2)

4.3           Form of 3% Senior Convertible Note dated March 2, 1999(2)

4.4           Form of Registration Rights Agreement dated March 2, 1999(2)

4.5           Form of Purchase Agreement dated January 31, 2000(2)

4.6           Form of Registration Rights Agreement dated January 31, 2000(2)

4.7           Form of Security Agreement dated January 31, 2000(2)

4.8           Form of Agreement to convert 3% Senior convertible notes dated
              January 31, 2000(2)

4.9           Form of Warrant dated January 31, 2000(2)

4.10          Form of 10% Senior Promissory Note dated January 31, 2000(2)

4.11          $200,000 8% Secured Promissory Note dated July 31, 2000(2)

4.12          $300,000 8% Secured Promissory Note dated July 31, 2000(2)

4.13          Warrant dated July 31, 2000(2)

4.14          20% Secured Promissory Notes to LongView Partners A, L.P. and
              Cumberland Benchmarked Partners, L.P. each dated August 28,
              2000(2)

4.15          Registration Rights Agreement dated January 22, 2001, between
              Registrant and Hillgreen Investments Limited (filed as Exhibit
              2.2)

4.16          Form of Warrant issued to Hillgreen Investments Limited and Jesup
              & Lamont Securities Corporation

5.1           Opinion and consent of Morse, Zelnick, Rose & Lander, LLP


                                       34
<PAGE>

10.1          Purchase and Line of Credit Agreement dated July 31, 2000(3)

10.2          Purchase Agreement dated August 25, 2000(3)

10.3          Escrow Agreement dated as of January 19, 2001 by and between
              Registrant, Hillgreen Investments Limited and Epstein, Becker &
              Green, P.C. (filed as Exhibit 2.3)

13.1          Amended and restated annual report on Form 10-KSB/A dated December
              31, 1999 (filed on December 19, 2000 (Commission File No.
              0-26284), and incorporated herein by reference)

13.2          Amended and restated quarterly report to security holders on Form
              10-QSB/A for the quarter ended September 30, 2000 (filed on
              December 19, 2000 (Commission File No. 0-26284), and incorporated
              herein by reference)

13.3          Amended and restated quarterly report to security holders on Form
              10-QSB/A for the quarter ended June 30, 2000 (filed on December
              19, 2000 (Commission File No. 0-26284), and incorporated herein by
              reference)

13.4          Amended quarterly report to security holders on Form 10-QSB for
              the quarter ended March 31, 2000 (filed on December 19, 2000
              (Commission File No. 0-26284), and incorporated herein by
              reference)

23.1          Consent of Grant Thornton LLP

23.2          Consent of Morse, Zelnick, Rose & Lander, LLP (included in Exhibit
              5.1)

- ----------
(1)   Incorporated by reference to Milestone's registration statement on Form
      SB-2 No. 333-92324.
(2)   Incorporated by reference to Milestone's registration statement on Form
      S-3 No. 333-39784.


                                       35

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>PRIVATE EQUITY LINE OF CREDIT AGREEMENT
<TEXT>


                                   Exhibit 2.1

                     PRIVATE EQUITY LINE OF CREDIT AGREEMENT

                                     Between

                          Hillgreen Investments Limited

                                       And

                            Milestone Scientific Inc.

      PRIVATE EQUITY LINE OF CREDIT AGREEMENT dated as of January 19, 2001 (the
"Agreement"), between Hillgreen Investments Limited, a British Virgin Islands
corporation (the "Investor") and Milestone Scientific Inc., a corporation
organized and existing under the laws of the State of Delaware (the "Company").

      WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to Investor from
time to time as provided herein, and Investor shall purchase, up to the
Commitment Amount (as defined below) of Common Stock (as defined below); and

      WHEREAS, such investments will be made by the Investor as statutory
underwriter of a registered indirect primary offering of such Common Stock by
the Company.

      NOW, THEREFORE, in consideration of the foregoing premises, and the
promises and covenants herein contained, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, the parties, intending to be
legally bound, hereby agree as follows:

                                   ARTICLE I

                               Certain Definitions

      Section 1.1 "Capital Shares" shall mean the Common Stock and any shares of
any other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of earnings and assets of the Company.

      Section 1.2 "Capital Shares Equivalents" shall mean any securities,
rights, or obligations that are convertible into or exchangeable for or give any
right to subscribe for any Capital Shares of the Company or any warrants,
options or other rights to subscribe for or purchase Capital Shares or any such
convertible or exchangeable securities.

      Section 1.3 "Closing" shall mean one of the closings of a purchase and
sale of the Common Stock pursuant to Section 2.1(e).

      Section 1.4 "Closing Date" shall have the meaning set forth in Section
2.1(b).


                                       1
<PAGE>

      Section 1.5 "Commitment Amount" shall mean the dollar amount necessary
which the Investor has agreed to provide to the Company in order to purchase up
to 2,100,000 Put Shares, pursuant to the terms and conditions of this Agreement.

      Section 1.6 "Commitment Period" shall mean the period commencing on the
Effective Date and expiring on the earliest to occur of (x) the date on which
the Investor shall have purchased the Commitment Amount of Put Shares pursuant
to this Agreement, (y) the date this Agreement is terminated pursuant to Section
2.2, or (z) the date occurring thirty-six (36) months from the date of
commencement of the Commitment Period.

      Section 1.7 "Common Stock" shall mean the Company's common stock, par
value $0.001 per share.

      Section 1.8 "Condition Satisfaction Date" shall have the meaning set forth
in Section 7.2.

      Section 1.9 "Effective Date" shall mean the date on which the SEC first
declares effective a Registration Statement registering the sale by the Company
and resale by the Investor of the Registrable Securities as set forth in Section
7.2(e).

      Section 1.10 "Escrow Agent" shall mean the escrow agent designated in the
Escrow Agreement.

      Section 1.11 "Escrow Agreement" shall mean the escrow agreement in the
form attached hereto as Exhibit A.

      Section 1.12 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

      Section 1.13 "Initial Closing" shall have the meaning set forth in Section
2.1(f).

      Section 1.14 "Investment Amount" shall mean the dollar amount to be
invested by the Investor to purchase Put Shares with respect to any Put Date as
notified by the Company to the Investor, all in accordance with Section 2.1(a)
hereof.

      Section 1.15 "Material Adverse Effect" shall mean any effect on the
business, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise interfere with the ability of the Company to
enter into and perform any of its obligations under this Agreement, the
Registration Rights Agreement or the Escrow Agreement in any material respect;
provided, however, continued losses from operations consistent with prior
quarters shall not, in and of themselves, constitute a Material Adverse Effect.

      Section 1.16 "Maximum Put Amount" shall mean, as of any Put Date, the
lesser of (a) $5,000,000, or (b) fifteen percent (15%) of the volume weighted
average price of the Common Stock during the 20 Trading Days immediately prior
to the Put Date multiplied by the total


                                       2
<PAGE>

trading volume of the Common Stock during the 20 Trading Days immediately prior
to the Put Date.

      Section 1.17 "NASD" shall mean the National Association of Securities
Dealers, Inc.

      Section 1.18 "Outstanding" when used with reference to shares of Common
Stock or Capital Shares (collectively the "Shares"), shall mean, at any date as
of which the number of such Shares is to be determined, all issued and
outstanding Shares, and shall include all such Shares issuable in respect of
outstanding scrip or any certificates representing fractional interests in such
Shares; provided, however, that "Outstanding" shall not mean any such Shares
then directly or indirectly owned or held by or for the account of the Company.

      Section 1.19 "Person" shall mean an individual, a corporation, a
partnership, a limited liability company, an association, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.

      Section 1.20 "Principal Market" shall mean initially the American Stock
Exchange, and shall include the NASDAQ National Market, NASDAQ SmallCap Market,
the OTC Bulletin Board and the New York Stock Exchange, whichever is at the time
the principal trading exchange or market for the Common Stock.

      Section 1.21 "Purchase Price" shall mean with respect to the Put Shares,
87.5% (the "Purchase Price Percentage") of the daily volume weighted average
price ("VWAP") (as reported by Bloomberg L.P.) of the Common Stock on each
Trading Day during the Valuation Period related to a Put (or such other date on
which the Purchase Price is calculated in accordance with the terms and
conditions of this Agreement); provided, however, if the Principal Market is the
OTC Bulletin Board, the Purchase Price Percentage shall be eighty-four percent
(84%).

      Section 1.22 "Put" shall mean each occasion the Company elects to exercise
its right to tender a Put Notice requiring the Investor to purchase shares of
the Company's Common Stock, subject to the terms of this Agreement.

      Section 1.23 "Put Date" shall mean the Trading Day during the Commitment
Period that a Put Notice to sell Common Stock to the Investor is deemed
delivered pursuant to Section 2.1(a) hereof.

      Section 1.24 "Put Notice" shall mean a written notice to the Investor
setting forth the Investment Amount that the Company intends to sell to the
Investor in the form attached hereto as Exhibit B.

      Section 1.25 "Put Shares" shall mean all shares of Common Stock or other
securities issued or issuable pursuant to a Put that has occurred or may occur
in accordance with the terms and conditions of this Agreement.

      Section 1.26 "Registrable Securities" shall mean the Put Shares and the
Warrant Shares until the earliest of (i) all Put Shares and Warrant Shares have
been disposed of pursuant to the Registration Statement, (ii) all Put Shares and
Warrant Shares may be sold pursuant to Rule 144


                                       3
<PAGE>

(or any similar provision then in force) under the Securities Act ("Rule 144");
provided, however, that all of the circumstances under which all of the
applicable conditions of Rule 144, except for the Investor's obligation to file
such shares on Form 144, are met and that the Company has provided to the
Investor or its transfer agent any documentation reasonably requested by the
Investor or transfer agent to sell such shares pursuant to Rule 144 (including
an opinion of counsel that such Put Shares and Warrant Shares may be sole
pursuant to Rule 144), or (iii) such time as, in the opinion of counsel to the
Company, all Put Shares and Warrant Shares may be sold without any time, volume
or manner limitations pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act.

      Section 1.27 "Registration Rights Agreement" shall mean the agreement
regarding the filing of the Registration Statement for the sale and resale of
the Registrable Securities annexed hereto as Exhibit C.

      Section 1.28 "Registration Statement" shall mean collectively one or more
registration statements on Form S-3 (if use of such form is then available to
the Company pursuant to the rules of the SEC and, if not, on such other form
promulgated by the SEC, such as Form S-1, S-2 or SB-2, for which the Company
then qualifies and which counsel for the Company shall deem appropriate, and
which form shall be available for the resale by the Investor of the Registrable
Securities to be registered thereunder in accordance with the provisions of this
Agreement, the Registration Rights Agreement, and in accordance with the
intended method of distribution of such securities), for the registration of the
resale by the Investor of the Registrable Securities under the Securities Act.

      Section 1.29 "SEC" shall mean the Securities and Exchange Commission.

      Section 1.30 "Securities Act" shall mean the Securities Act of 1933, as
amended.

      Section 1.31 "SEC Documents" shall mean the Company's latest Form 10-K or
10-KSB as of the time in question, all Forms 10-Q or 10-QSB and 8-K filed
thereafter, and the Proxy Statement for its latest fiscal year as of the time in
question until such time as the Company no longer has an obligation to maintain
the effectiveness of a Registration Statement as set forth in the Registration
Rights Agreement.

      Section 1.32 "Trading Cushion" shall mean the mandatory five (5) Trading
Days between Valuation Periods.

      Section 1.33 "Trading Day" shall mean any day during which the Principal
Market shall be open for business.

      Section 1.34 "Valuation Period" shall mean the period of twenty (20)
Trading Days beginning on the Trading Day immediately following the Put Date.

      Section 1.35 "Warrant" shall mean the warrant to purchase up to 100,000
shares of Common Stock, in the form of Exhibit D attached hereto, to be issued
to the Investor at the Initial Closing. The Warrant shall have an exercise price
equal to 120% of the average of the closing bid prices (as reported by Bloomberg
L.P.) of the Common Stock for the five (5) Trading Days immediately prior to the
Initial Closing Date. The Warrant shall have a term of three (3)


                                       4
<PAGE>

years from its date of issuance. The Common Stock underlying the Warrant shall
be registered in the Registration Statement. "Warrant Shares" shall mean the
shares of Common Stock issuable upon exercise of the Warrants.

                                   ARTICLE II

                        Purchase and Sale of Common Stock

      Section 2.1 Investments. Subject to the satisfaction of the conditions set
forth herein (including, without limitation, the provisions of Article VII
hereof), the parties agree as follows:

                  (a) Put Right. At any time during the Commitment Period,
      subject to the conditions set forth in Section 7.2, the Company, may, in
      its sole discretion, issue and exercise a Put, which Put the Investor will
      be obligated to accept; provided, however, that the Investment Amount for
      each Put as designated by the Company in the applicable Put Notice shall
      be neither less than $50,000 per Put nor more than the Maximum Put Amount.
      Only one Put shall be allowed in each Valuation Period. A Put Notice shall
      be deemed delivered on (i) the Trading Day it is received by facsimile or
      otherwise by the Investor if such notice is received prior to 12:00 noon
      Eastern Time, or (ii) the immediately succeeding Trading Day if it is
      received by facsimile or otherwise after 12:00 noon Eastern Time on a
      Trading Day or at any time on a day which is not a Trading Day. No Put
      Notice may be deemed delivered on a day that is not a Trading Day.

                  (b) Closing Date. The price per share paid by the Investor
      shall be the Purchase Price on each separate Trading Day during the
      Valuation Period. The number of shares of Common Stock purchased by the
      Investor with respect to each Put shall be determined on a daily basis
      during each Valuation Period and settled on, (i) as to the 1st to the 10th
      Trading Days after a Valuation Period commences, on or before the 12th
      Trading Day after a Valuation Period commences, and (ii) as to the 11th to
      the 20th Trading Days after a Valuation Period commences, on or before the
      22nd Trading Day after a Valuation Period. (each, a "Closing Date"). In
      connection with each Valuation Period, the Company may set a Threshold
      Price, if any, in the Put Notice.

                  (c) Calculation of Shares. The number of Put Shares to be
      issued in connection with each Put shall be equal to the sum of the
      quotients (for each Trading Day within the Valuation Period) of (x) 1/20th
      of the Investment Amount and (y) the Purchase Price on each Trading Day
      within the Valuation Period, subject to the following adjustments:

                        (i)   If the VWAP on a given Trading Day during a
                              Valuation period is less than the Threshold Price,
                              then the Put will be reduced by 1/20th and that
                              day shall be withdrawn from the Valuation Period;
                              and

                        (ii)  If trading of the Common Stock on the Principal
                              Market is suspended for more than three (3) hours,
                              in the aggregate,


                                       5
<PAGE>

                              on any Trading Day during the Valuation Period,
                              then the Put shall be reduced by 1/20th and that
                              day shall be withdrawn from the Valuation Period.

                  (d) Maximum Aggregate Amount of Puts. Anything in this
      Agreement to the contrary notwithstanding, (i) at no time will the Company
      request a Put which would result in the issuance of an aggregate number of
      shares of Common Stock pursuant to this Agreement which exceeds 19.9% of
      the number of shares of Common Stock issued and outstanding on any Closing
      Date without obtaining stockholder approval of such excess issuance, and
      (ii) the Company may not make a Put to the extent that, after such
      purchase by the Investor, the sum of the number of shares of Common Stock
      and Warrants beneficially owned by the Investor and its affiliates would
      result in beneficial ownership by the Investor and its affiliates of more
      than 9.9% of the then outstanding shares of Common Stock. For purposes of
      the immediately preceding sentence, beneficial ownership shall be
      determined in accordance with Section 13(d) of the Exchange Act.

                  (e) Closings. On or before each Closing Date for a Put the
      Investor shall deliver one half of the Investment Amount specified in the
      Put Notice subject to adjustment herein by wire transfer of immediately
      available funds to the Escrow Agent. In addition, on or prior to the
      Closing Date, each of the Company and the Investor shall deliver to the
      Escrow Agent all documents, instruments and writings required to be
      delivered or reasonably requested by either of them pursuant to this
      Agreement and the Escrow Agreement in order to implement and effect the
      transactions contemplated herein. Upon receipt of notice from the Escrow
      Agent that the Escrow Agent has possession of the Investment Amount, the
      Company shall electronically transmit the Put Shares to the Depository
      Trust Company ("DTC") through DTC's Deposit Withdrawal Agent Commission
      ("DWAC") system, per written account instructions delivered by the
      Investor to the Company, registered in the name of such account or
      accounts as may be designated by the Investor. Payment of funds to the
      Company shall occur out of escrow in accordance with the Escrow Agreement;
      provided, however, that to the extent the Company has not paid the fees,
      expenses, and disbursements of the Investor's counsel in accordance with
      Section 12.7, the amount of such fees, expenses, and disbursements shall
      be paid in immediately available funds, at the direction of the Investor,
      to Investor's counsel with no reduction in the number of Put Shares
      issuable to the Investor on such Closing Date.

                  (f) Initial Closing. The delivery of executed documents under
      this Agreement and the other agreements referred to herein and the payment
      of the fees set forth in Article I of the Escrow Agreement, (the "Initial
      Closing") shall take place (i) at the offices of Epstein Becker & Green,
      P.C., 250 Park Avenue, New York, New York 10177 within fifteen (15) days
      from the date hereof, or (ii) such other time and place or on such date as
      the Investor and the Company may agree upon (the "Initial Closing Date").
      Each party shall deliver all documents, instruments and writings required
      to be delivered by such party pursuant to this Agreement at or prior to
      the Initial Closing.

      Section 2.2 Termination of Investment Obligation.


                                       6
<PAGE>

                  (a) The obligation of the Investor to purchase shares of
      Common Stock shall terminate permanently (including with respect to a
      Closing Date that has not yet occurred) in the event that (i) there shall
      occur any stop order or suspension of the effectiveness of the
      Registration Statement for an aggregate of thirty (30) Trading Days during
      the Commitment Period, for any reason other than deferrals or suspensions
      in accordance with the Registration Rights Agreement as a result of
      corporate developments subsequent to the Effective Date that would require
      such Registration Statement to be amended to reflect such event in order
      to maintain its compliance with the disclosure requirements of the
      Securities Act or (ii) the Company shall at any time fail to comply with
      the requirements of Article VI.

                  (b) Without limitation to the Company's other remedies,
      including damages, the obligation of the Company to sell Put Shares to the
      Investor shall terminate if the Investor fails to honor one Put Notice
      within 10 Trading Days or more than one Put Notice within two (2) Trading
      Days of the Closing Date scheduled for such Put, and the Company notifies
      Investor of such termination. Upon such termination, the Company shall
      maintain the Registration Statement in effect for such reasonable period,
      not to exceed forty-five (45) days, as the Investor may request in order
      to dispose of any remaining Put Shares.

      Section 2.3 Additional Shares. In the event that during any periods
commencing on any Put Date and ending five (5) Trading Days after the Closing
Date applicable to such Put Date, a Suspension Period occurs (as defined in
Section 3(f) of the Registration Right Agreement), the Company must compensate
the Investor for any net decline in the value of the Securities held by the
Investor during any such Suspension Periods or committed to be purchased and
purchased by the Investor during such period. Net decline shall be the
difference between the highest daily VWAP during the applicable Suspension
Period and the daily VWAP at the end of such Suspension Period multiplied by the
number of Put Shares and/or Warrant Shares sold by the Investor within five (5)
Trading Days from the end of the applicable Suspension; provided, however, if
the price at which the Investor sells any such Put Shares and/or Warrant Shares
within such five (5) Trading Day period is more than the highest daily VWAP
during such Suspension Period, the Investor shall not be entitled to such
compensation as to the Put Shares and/or Warrant Shares sold at such higher
price. At the election of the Investor, the Company may issue, in lieu of such
amounts, a number of shares of Common Stock based on the daily VWAP of the
Common Stock on the Trading Day immediately prior to the Trading Day such shares
are to be issued to the Investor ("Blackout Shares").

      Section 2.4 Liquidated Damages. The parties hereto acknowledge and agree
that the obligation to issue Blackout Shares under Section 2.5 above shall
constitute liquidated damages and not penalties. The parties further acknowledge
that (a) the amount of loss or damages likely to be incurred is incapable or is
difficult to precisely estimate, (b) the amounts specified in Section 2.5 bear a
reasonable proportion and are not plainly or grossly disproportionate to the
probable loss likely to be incurred by the Investor in connection with the
failure by the Company to timely cause the registration of the Blackout Shares
or in connection with a "blackout period" under the Registration Rights
Agreement, and (c) the parties are sophisticated business parties and have been
represented by legal and financial counsel and negotiated this Agreement at
arm's length.


                                       7
<PAGE>

                                  ARTICLE III

                   Representations and Warranties of Investor

Investor represents and warrants to the Company that:

      Section 3.1 Intent. The Investor is entering into this Agreement for its
own account and the Investor has no present arrangement (whether or not legally
binding) at any time to sell the Common Stock to or through any person or
entity; provided, however, that by making the representations herein, the
Investor does not agree to hold the Common Stock for any minimum or other
specific term and reserves the right to dispose of the Common Stock at any time
in accordance with federal and state securities laws applicable to such
disposition.

      Section 3.2 Sophisticated Investor. The Investor is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
investor (as defined in Rule 501 of Regulation D), and Investor has such
experience in business and financial matters that it has the capacity to protect
its own interests in connection with this transaction and is capable of
evaluating the merits and risks of an investment in Common Stock. The Investor
acknowledges that an investment in the Common Stock is speculative and involves
a high degree of risk.

      Section 3.3 Authority. This Agreement has been duly authorized and validly
executed and delivered by the Investor and is a valid and binding agreement of
the Investor enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by other
equitable principles of general application.

      Section 3.4 Not an Affiliate. Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.

      Section 3.5 Organization and Standing. Investor is a corporation duly
organized, validly existing, and in good standing under the laws of the British
Virgin Islands.

      Section 3.6 Absence of Conflicts. The execution and delivery of this
Agreement and any other document or instrument executed in connection herewith,
and the consummation of the transactions contemplated thereby, and compliance
with the requirements thereof, will not violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on Investor, or, to
the Investor's knowledge, (a) violate any provision of any indenture, instrument
or agreement to which Investor is a party or is subject, or by which Investor or
any of its assets is bound; (b) conflict with or constitute a material default
thereunder; (c) result in the creation or imposition of any lien pursuant to the
terms of any such indenture, instrument or agreement, or constitute a breach of
any fiduciary duty owed by Investor to any third party; or (d) require the
approval of any third-party (which has not been obtained) pursuant to any
material contract, agreement, instrument, relationship or legal obligation to
which Investor is subject or to which any of its assets, operations or
management may be subject.

      Section 3.7 Disclosure; Access to Information. Investor has received and
reviewed all documents, records, books and other publicly available information
pertaining to Investor's investment in the Company that have been requested by
Investor. The Company is subject to the


                                       8
<PAGE>

periodic reporting requirements of the Exchange Act, and Investor has reviewed
copies of any such reports that have been requested by it.

      Section 3.8 Manner of Sale. At no time was Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.

      Section 3.9 Financial Capacity. Investor currently has the financial
capacity to meet its obligations to the Company hereunder, and the Investor has
no present knowledge of any circumstances which could cause it to become unable
to meet such obligations in the future.

      Section 3.10 Underwriter Liability. Investor understands that it is the
position of the SEC that the Investor is an underwriter within the meaning of
Section 2(11) of the Securities Act and that the Investor will be identified as
an underwriter of the Put Shares in the Registration Statement.

                                   ARTICLE IV

                  Representations and Warranties of the Company

The Company represents and warrants to the Investor that, except as set forth on
the Disclosure Schedule prepared by the Company and attached hereto:

      Section 4.1 Organization of the Company. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted. The Company does not have any
subsidiaries and does not own more that fifty percent (50%) of or control any
other business entity except as set forth in the SEC Documents. The Company is
duly qualified and is in good standing as a foreign corporation to do business
in every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, other than those in which the
failure so to qualify would not have a Material Adverse Effect.

      Section 4.2 Authority. (i) The Company has the requisite corporate power
and corporate authority to enter into and perform its obligations under this
Agreement, the Registration Rights Agreement, the Escrow Agreement, and the
Warrants and to issue the Put Shares, the Warrants and the Warrant Shares
pursuant to their respective terms, (ii) the execution, issuance and delivery of
this Agreement, the Registration Rights Agreement, the Escrow Agreement and the
Warrants by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action and no further consent or authorization of the Company or its
Board of Directors or stockholders is required, and (iii) this Agreement, the
Registration Rights Agreement, the Escrow Agreement and the Warrants have been
duly executed and delivered by the Company and at the Initial Closing shall
constitute valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable


                                       9
<PAGE>

principles of general application. The Company has duly and validly authorized
and reserved for issuance shares of Common Stock sufficient in number for the
issuance of the Put Shares and for the exercise of the Warrants

      Section 4.3 Capitalization. The authorized capital stock of the Company
consists of 25,000,000 shares of Common Stock, $0.001 par value per share, of
which 10,652,898 shares are issued and outstanding and no preferred stock.
Except for (i) outstanding options and warrants as set forth in the SEC
Documents and (ii) as set forth in the Disclosure Schedule, there are no
outstanding Capital Share Equivalents nor any agreements or understandings
pursuant to which any Capital Shares Equivalents may become outstanding. The
Company is not a party to any agreement granting registration or anti-dilution
rights to any person with respect to any of its equity or debt securities. All
of the outstanding shares of Common Stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable.

      Section 4.4 Common Stock. The Company has registered its Common Stock
pursuant to Section 12(b) or (g) of the Exchange Act and is in full compliance
with all reporting requirements of the Exchange Act, and the Company is in
compliance with all requirements for the continued listing or quotation of its
Common Stock, and such Common Stock is currently listed or quoted on, the
Principal Market. The Company has not received any notice regarding, and to its
knowledge there is no threat, of the termination or discontinuance of the
eligibility of the Common Stock for listing on the Principal Market.

      Section 4.5 SEC Documents. The Company has made available to the Investor
true and complete copies of the SEC Documents. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Exchange Act, and rules and regulations of the SEC promulgated thereunder and
the SEC Documents did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto at the time of such
inclusion. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial position
of the Company as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments). Neither the Company nor any
of its subsidiaries has any material indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and whether due or
to become due) that would have been required to be reflected in, reserved
against or otherwise described in the financial statements or in the notes
thereto in accordance with GAAP, which was not fully reflected in, reserved
against or otherwise described in the financial statements or the notes thereto
included in the SEC Documents or was not incurred in the ordinary course of
business consistent with the Company's past practices since the last date of
such financial statements.


                                       10
<PAGE>

      Section 4.6 Valid Issuances. When issued and paid for in accordance with
the terms hereof or of the Warrants, the Put Shares and the Warrant Shares will
be duly and validly issued, fully paid, and non-assessable. Neither the sales of
the Put Shares, the Warrants or the Warrant Shares pursuant to, nor the
Company's performance of its obligations under, this Agreement, the Registration
Rights Agreement, the Escrow Agreement or the Warrants will (i) result in the
creation or imposition by the Company of any liens, charges, claims or other
encumbrances upon the Put Shares, the Warrants or the Warrant Shares or, except
as contemplated herein, any of the assets of the Company, or (ii) entitle the
holders of Outstanding Capital Shares to preemptive or other rights to subscribe
for or acquire the Capital Shares or other securities of the Company. The Put
Shares, the Warrants and the Warrant Shares shall not subject the Investor to
personal liability to the Company or its creditors by reason of the possession
thereof.

      Section 4.7 No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including without limitation the issuance of the Put
Shares, the Warrants and the Warrant Shares, do not and will not (i) result in a
violation of the Company's Certificate of Incorporation or By-Laws or (ii)
conflict with, or constitute a material default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any material
agreement, indenture or instrument, or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party, or (iii)
result in a violation of any federal, state or local law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any material property or
asset of the Company is bound or affected, nor is the Company otherwise in
violation of, conflict with or default under any of the foregoing (except in
each case for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not have, individually or in the
aggregate, a Material Adverse Effect). The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
entity, except for possible violations that either singly or in the aggregate
would not have a Material Adverse Effect. The Company is not required under any
Federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Put Shares or the
Warrants in accordance with the terms hereof (other than any SEC, Principal
Market or state securities filings that may be required to be made by the
Company subsequent to the Initial Closing, any registration statement that may
be filed pursuant hereto, and any shareholder approval required by the rules
applicable to companies whose common stock trades on the Principal Market);
provided that, for purposes of the representation made in this sentence, the
Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Investor herein.

      Section 4.8 No Material Adverse Change. Since the date of the financial
statement contained in the Company's most recently filed Form 10-Q or Form 10-K,
whichever is most current, no Material Adverse Effect has occurred or exists
with respect to the Company, except as disclosed in the SEC Documents.

      Section 4.9 No Undisclosed Events or Circumstances. Since the date of the
financial statement contained in the Company's most recently filed Form 10-Q or
Form 10-K, whichever


                                       11
<PAGE>

is most current, no event or circumstance has occurred or exists with respect to
the Company or its businesses, properties, prospects, operations or financial
condition, that, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed in the SEC Documents.

      Section 4.10 Litigation and Other Proceedings. Except as disclosed in the
SEC Documents, there are no lawsuits or proceedings pending or, to the knowledge
of the Company, threatened, against the Company or any subsidiary, nor has the
Company received any written or oral notice of any such action, suit, proceeding
or investigation, which could reasonably be expected to have a Material Adverse
Effect. Except as set forth in the SEC Documents, no judgment, order, writ,
injunction or decree or award has been issued by or, to the knowledge of the
Company, requested of any court, arbitrator or governmental agency which could
result in a Material Adverse Effect.

      Section 4.11 No Misleading or Untrue Communication. The Company and, to
the knowledge of the Company, any person representing the Company, or any other
person selling or offering to sell the Put Shares or the Warrants in connection
with the transaction contemplated by this Agreement, have not made, at any time,
any oral communication in connection with the offer or sale of the same which
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.

      Section 4.12 Insurance. The Company and each subsidiary maintains property
and casualty, general liability, workers' compensation, environmental hazard,
personal injury and other similar types of insurance with financially sound and
reputable insurers that is adequate, consistent with industry standards and the
Company's historical claims experience. The Company has not received notice
from, and has no knowledge of any threat by, any insurer (that has issued any
insurance policy to the Company) that such insurer intends to deny coverage
under or cancel, discontinue or not renew any insurance policy presently in
force.

      Section 4.13 Tax Matters.

                  The Company and each subsidiary has filed all Tax Returns
which it is required to file under applicable laws; all such Tax Returns are
true and accurate and have been prepared in compliance with all applicable laws;
the Company has paid all Taxes due and owing by it or any subsidiary (whether or
not such Taxes are required to be shown on a Tax Return) and have withheld and
paid over to the appropriate taxing authorities all Taxes which it is required
to withhold from amounts paid or owing to any employee, stockholder, creditor or
other third parties; and since December 31, 1998, the charges, accruals and
reserves for Taxes with respect to the Company (including any provisions for
deferred income taxes) reflected on the books of the Company are adequate to
cover any Tax liabilities of the Company if its current tax year were treated as
ending on the date hereof.

                  No claim has been made by a taxing authority in a jurisdiction
where the Company does not file tax returns that the Company or any subsidiary
is or may be subject to taxation by that jurisdiction. There are no foreign,
federal, state or local tax audits or administrative or judicial proceedings
pending or being conducted with respect to the Company


                                       12
<PAGE>

or any subsidiary; no information related to Tax matters has been requested by
any foreign, federal, state or local taxing authority; and, except as disclosed
above, no written notice indicating an intent to open an audit or other review
has been received by the Company or any subsidiary from any foreign, federal,
state or local taxing authority. There are no material unresolved questions or
claims concerning the Company's Tax liability. The Company (A) has not executed
or entered into a closing agreement pursuant to ss. 7121 of the Internal Revenue
Code or any predecessor provision thereof or any similar provision of state,
local or foreign law; or (B) has not agreed to or is required to make any
adjustments pursuant to ss. 481 (a) of the Internal Revenue Code or any similar
provision of state, local or foreign law by reason of a change in accounting
method initiated by the Company or any of its subsidiaries or has any knowledge
that the IRS has proposed any such adjustment or change in accounting method, or
has any application pending with any taxing authority requesting permission for
any changes in accounting methods that relate to the business or operations of
the Company. The Company has not been a United States real property holding
corporation within the meaning of ss. 897(c)(2) of the Internal Revenue Code
during the applicable period specified in ss. 897(c)(1)(A)(ii) of the Internal
Revenue Code.

                  The Company has not made an election under ss. 341(f) of the
Internal Revenue Code. The Company is not liable for the Taxes of another person
that is not a subsidiary of the Company under (A) Treas. Reg. ss. 1.1502-6 (or
comparable provisions of state, local or foreign law), (B) as a transferee or
successor, (C) by contract or indemnity or (D) otherwise. The Company is not a
party to any tax sharing agreement. The Company has not made any payments, is
obligated to make payments or is a party to an agreement that could obligate it
to make any payments that would not be deductible under ss. 280G of the Internal
Revenue Code.

                  For purposes of this Section 4.14:

                  "IRS" means the United States Internal Revenue Service.

                  Tax" or "Taxes" means federal, state, county, local, foreign,
            or other income, gross receipts, ad valorem, franchise, profits,
            sales or use, transfer, registration, excise, utility,
            environmental, communications, real or personal property, capital
            stock, license, payroll, wage or other withholding, employment,
            social security, severance, stamp, occupation, alternative or add-on
            minimum, estimated and other taxes of any kind whatsoever
            (including, without limitation, deficiencies, penalties, additions
            to tax, and interest attributable thereto) whether disputed or not.

                  "Tax Return" means any return, information report or filing
            with respect to Taxes, including any schedules attached thereto and
            including any amendment thereof.

      Section 4.14 Property. Neither the Company nor any of its subsidiaries
owns any real property. Each of the Company and its subsidiaries has good and
marketable title to all personal property owned by it, free and clear of all
liens, encumbrances and defects except such as do not materially affect the
value of such property and do not materially interfere with the use made and


                                       13
<PAGE>

proposed to be made of such property by the Company; and to the Company's
knowledge any real property and buildings held under lease by the Company as
tenant are held by it under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and
intended to be made of such property and buildings by the Company.

      Section 4.15 Licensing and Permits. The Company holds all necessary
licenses and permits for the conduct of its business. All of such licenses and
permits are in good standing and the Company is not in material default of any
of the conditions thereof.

      Section 4.16 Intellectual Property. Each of the Company and its
subsidiaries owns or possesses adequate and enforceable rights to use all
patents, patent applications, trademarks, trademark applications, trade names,
service marks, copyrights, copyright applications, licenses, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) and other similar rights and
proprietary knowledge (collectively, "Intangibles") necessary for the conduct of
its business as now being conducted. To the Company's knowledge, except as
disclosed in the SEC Documents neither the Company nor any of its subsidiaries
is infringing upon or in conflict with any right of any other person with
respect to any Intangibles. Except as disclosed in the SEC Documents, no adverse
claims have been asserted by any person to the ownership or use of any
Intangibles and the Company has no knowledge of any basis for such claim.

      Section 4.17 Internal Controls and Procedures. The Company maintains books
and records and internal accounting controls which provide reasonable assurance
that (i) all transactions to which the Company or any subsidiary is a party or
by which its properties are bound are executed with management's authorization;
(ii) the recorded accounting of the Company's consolidated assets is compared
with existing assets at regular intervals; (iii) access to the Company's
consolidated assets is permitted only in accordance with management's
authorization; and (iv) all transactions to which the Company or any subsidiary
is a party or by which its properties are bound are recorded as necessary to
permit preparation of the financial statements of the Company in accordance with
U.S. generally accepted accounting principles.

      Section 4.18 Payments and Contributions. Neither the Company, any
subsidiary, nor any of its directors, officers or, to its knowledge, other
employees has (i) used any Company funds for any unlawful contribution,
endorsement, gift, entertainment or other unlawful expense relating to political
activity; (ii) made any direct or indirect unlawful payment of Company funds to
any foreign or domestic government official or employee; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any bribe, rebate, payoff, influence payment, kickback or
other similar payment to any person with respect to Company matters.

      Section 4.19 No Misrepresentation. The representations and warranties of
the Company contained in this Agreement, any schedule, annex or exhibit hereto
and any agreement, instrument or certificate furnished by the Company to the
Investor pursuant to this Agreement, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.


                                       14
<PAGE>

                                   ARTICLE V

                            Covenants of the Investor

      Investor covenants with the Company that:

      Section 5.1 Compliance with Law. The Investor's trading activities with
respect to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and rules
and regulations of the Principal Market on which the Company's Common Stock is
listed. Without limiting the generality of the foregoing, the Investor agrees
that it will, whenever required by federal securities laws, deliver the
prospectus included in the Registration Statement to any purchaser of Put Shares
from the Investor.

      Section 5.2 No Short Sales. The Investor and its affiliates shall not
engage in short sales of the Company's Common Stock (as defined in applicable
SEC and NASD rules) during the term of this Agreement.

                                   ARTICLE VI

                            Covenants of the Company

      Section 6.1 Registration Rights. The Company shall cause the Registration
Rights Agreement to remain in full force and effect and the Company shall comply
in all material respects with the terms thereof.

      Section 6.2 Listing of Common Stock. The Company hereby agrees to maintain
the listing of the Common Stock on a Principal Market, and as soon as
practicable (but in any event prior to the commencement of the Commitment
Period) to list the Put Shares and the Warrant Shares. The Company further
agrees, if the Company applies to have the Common Stock traded on any other
Principal Market, it will include in such application the Put Shares and the
Warrant Shares and will take such other action as is necessary or desirable in
the opinion of the Investor to cause the Common Stock to be listed on such other
Principal Market as promptly as possible. The Company will take all action to
continue the listing and trading of its Common Stock on the Principal Market
(including, without limitation, maintaining sufficient net tangible assets) and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market and shall provide
the Investor with copies of any correspondence to or from such Principal Market
which threatens delisting of the Common Stock, within one Trading Day of the
Company's receipt thereof.

      Section 6.3 Exchange Act Registration. The Company will cause its Common
Stock to continue to be registered under Section 12(g) or 12(b) of the Exchange
Act, will use its best efforts to comply in all respects with its reporting and
filing obligations under the Exchange Act, and will not take any action or file
any document (whether or not permitted by Exchange Act or the rules thereunder)
to terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under said Act.


                                       15
<PAGE>

      Section 6.4 Accuracy of Registration Statement. On each Closing Date, the
Registration Statement and the prospectus therein shall not contain any untrue
statement of a material fact or omit to state any material fact to be required
to be stated therein or necessary in order to make the statements therein not
misleading in light of the circumstances under which they were made; and on such
Closing Date or date of filing of the Registration Statement and the prospectus
therein will not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, the Company makes no representations or warranties as to the
information contained in or omitted from the Registration Statement and the
prospectus therein in reliance upon and in conformity with the information
furnished in writing to the Company by the Investor specifically for inclusion
in the Registration Statement and the prospectus therein.

      Section 6.5 Legends. The certificates evidencing the Common Stock to be
sold to the Investor shall be free of restrictive legends.

      Section 6.6 Corporate Existence. The Company will take all steps necessary
to preserve and continue the corporate existence of the Company.

      Section 6.7 Additional SEC Documents. During the Commitment Period, the
Company will deliver to the Investor, within three Trading Days after they are
submitted to the SEC for filing, copies of all SEC Documents so furnished or
submitted to the SEC, or else notify the Investor that such documents are
available on the EDGAR system.

      Section 6.8 Notice of Certain Events Affecting Registration; Suspension of
Right to Make a Put. The Company will immediately notify the Investor upon the
occurrence of any of the following events in respect of a registration statement
or related prospectus in respect of an offering of Registrable Securities: (i)
receipt of any request for additional information from the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement the response to which would require any amendments or
supplements to the Registration Statement or related prospectus; (ii) the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in the
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate; and the Company
will promptly make available to the Investor any such supplement or amendment to
the related prospectus. The


                                       16
<PAGE>

Company shall not deliver to the Investor any Put Notice during the continuation
of any of the foregoing events.

      Section 6.9 Consolidation; Merger. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity (a "Consolidation Event") unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument or by
operation of law the obligation to deliver to the Investor such shares of stock
and/or securities as the Investor is entitled to receive pursuant to this
Agreement.

      Section 6.10 Limitation on Future Financing. The Company agrees that it
will not enter into any sale of its securities for cash at a discount to its
then-current closing bid price during the Commitment Period except for any sales
(i) pursuant to any presently existing stock incentive plan which plan has been
approved by the Company's stockholders, (ii) pursuant to any compensatory plan
for a full-time employee, director or key consultant, (iii) pursuant to any
underwritten public offering with an established investment bank (not including
an equity line of credit type financing), (iv) in connection with a strategic
partnership or other business transaction, the principal purpose of which is not
simply to raise money, (v) pursuant to any option, warrant or agreement
outstanding on the date of this Agreement, (vi) pursuant to a private placement
without registration rights, (vii) to any of the Company's officers, directors
or existing holders of 5% or more of the Common Stock or any of their
affiliates, of up to $5,000,000 of securities, in the aggregate, in any
financing or series of related financings, or (viii) with the prior approval of
the Investor, which will not be unreasonably withheld or delayed. Further, the
Investor shall have a right of first refusal, to elect to participate, in such
subsequent transaction in the case of (vi), (vii) or (viii) above. Such right of
first refusal must be exercised in writing within seven (7) Trading Days of the
Investor's receipt of notice of the proposed terms of such financing.

                                  ARTICLE VII

                         Conditions to Delivery of Puts
                            and Conditions to Closing

      Section 7.1 Conditions Precedent to the Obligation of the Company to Issue
and Sell Common Stock. The obligation hereunder of the Company to issue and sell
the Put Shares to the Investor incident to each Closing is subject to the
satisfaction, at or before each such Closing, of each of the conditions set
forth below.

                  (a) Accuracy of the Investor's Representation and Warranties.
      The representations and warranties of the Investor shall be true and
      correct in all material respects as of the date of this Agreement and as
      of the date of each such Closing as though made at each such time.

                  (b) Performance by the Investor. The Investor shall have
      performed, satisfied and complied in all material respects with all
      covenants, agreements and


                                       17
<PAGE>

conditions required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to such Closing.

      Section 7.2 Conditions Precedent to the Right of the Company to Deliver a
Put Notice and the Obligation of the Investor to Purchase Put Shares. The right
of the Company to deliver a Put Notice and the obligation of Investor hereunder
to acquire and pay for the Put Shares incident to a Closing is subject to the
satisfaction, on both (i) the date of delivery of such Put Notice and (ii) the
applicable Closing Date (each a "Condition Satisfaction Date"), of each of the
following conditions:

                  (a) Closing Certificate. All representations and warranties of
      the Company contained herein shall remain true and correct as of the
      Closing Date as though made as of such date and the Company shall have
      delivered into escrow an Officer's Certificate signed by its Chief
      Executive Officer certifying that all of the Company's representations and
      warranties herein remain true and correct as of the Closing Date and that
      the Company has performed all covenants and satisfied all conditions to be
      performed or satisfied by the Company prior to such Closing;

                  (b) Blue Sky. The Company shall have obtained all permits and
      qualifications required by any state for the offer and sale of the Common
      Stock to the Investor and by the Investor as set forth in the Registration
      Rights Agreement or shall have the availability of exemptions therefrom;

                  (c) Delivery of Put Shares. Delivery of the Put Shares to the
      Investor's DTC account through DTC's DWAC system;

                  (d) Opinion of Counsel, etc. Receipt by the Investor of an
      opinion of counsel to the Company, in the form of Exhibit E hereto and any
      other items as further set forth in the Escrow Agreement;

                  (e) Registration of the Common Stock with the SEC. The
      Registration Statement shall have previously become effective and shall
      remain effective and available for making resales of the Put Shares and
      Warrant Shares by the Investor on each Condition Satisfaction Date and (i)
      neither the Company nor the Investor shall have received notice that the
      SEC has issued or intends to issue a stop order with respect to the
      Registration Statement or that the SEC otherwise has suspended or
      withdrawn the effectiveness of the Registration Statement, either
      temporarily or permanently, or intends or has threatened to do so (unless
      the SEC's concerns have been addressed and the Investor is reasonably
      satisfied that the SEC no longer is considering or intends to take such
      action), (ii) no other suspension of the use or withdrawal of the
      effectiveness of the Registration Statement or related prospectus shall
      exist, and (iii) the Company shall deliver to the Investor a prospectus
      supplement on Form 424(b) regarding the sale of the Put Shares prior to
      funding;

                  (f) Legal Compliance. The Company will satisfy all laws and
      regulations pertaining to the sale and issuance of the Put Shares;


                                       18
<PAGE>

                  (g) Performance by the Company. The Company shall have
      performed, satisfied and complied in all material respects with all
      covenants, agreements and conditions required by this Agreement, the
      Registration Rights Agreement and the Escrow Agreement to be performed,
      satisfied or complied with by the Company at or prior to each Condition
      Satisfaction Date;

                  (h) No Injunction. No statute, rule, regulation, executive
      order, decree, ruling or injunction shall have been enacted, entered,
      promulgated or endorsed by any court or governmental authority of
      competent jurisdiction that prohibits or directly and adversely affects
      any of the transactions contemplated by this Agreement, and no proceeding
      shall have been commenced that may have the effect of prohibiting or
      adversely affecting any of the transactions contemplated by this
      Agreement;

                  (i) Adverse Changes. Since the date of filing of the Company's
      most recent SEC Document, no event that had or is reasonably likely to
      have a Material Adverse Effect has occurred;

                  (j) No Suspension of Trading In or Delisting of Common Stock.
      The trading of the Common Stock (including, without limitation, the Put
      Shares) is not suspended by the SEC or the Principal Market, and the
      Common Stock (including, without limitation, the Put Shares) shall have
      been approved for listing or quotation on and shall not have been delisted
      from the Principal Market. The issuance of shares of Common Stock with
      respect to the applicable Closing, if any, shall not violate the
      shareholder approval requirements of the Principal Market. The Company
      shall not have received any notice threatening to delist the Common Stock
      from the Principal Market;

                  (k) No Knowledge. The Company has no knowledge of any event
      more likely than not to have the effect of causing such Registration
      Statement to be suspended or otherwise ineffective (which event is
      reasonably likely to occur within the thirty (30) Trading Days following
      the Trading Day on which such Notice is deemed delivered);

                  (l) Trading Cushion. The Trading Cushion shall have elapsed
      since the next preceding Put Date;

                  (m) Future Financing. The Company shall have not completed any
      financing prohibited by Section 6.10 unless, prior to the Company
      delivering a Put Notice after any such financing, the Company pays the
      Investor as a condition to the Investor's obligation to purchase the Put
      Shares and not as liquidated damages, the sum of $100,000; and

                  (n) Other. On each Condition Satisfaction Date, the Investor
      shall have received and been reasonably satisfied with such other
      certificates and documents as shall have been reasonably requested by the
      Investor in order for the Investor to confirm the Company's satisfaction
      of the conditions set forth in this Section 7.2.


                                       19
<PAGE>

                                  ARTICLE VIII

         Due Diligence Review; Non-Disclosure of Non-Public Information.

      Section 8.1 Due Diligence Review. The Company shall make available for
inspection and review by the Investor, advisors to and representatives of the
Investor (who may or may not be affiliated with the Investor and who are
reasonably acceptable to the Company), any underwriter participating in any
disposition of the Registrable Securities on behalf of the Investor pursuant to
the Registration Statement, any such registration statement or amendment or
supplement thereto or any blue sky, NASD or other filing, all SEC Documents and
other filings with the SEC, and all other publicly available corporate documents
and properties of the Company as may be reasonably necessary for the purpose of
such review, and cause the Company's officers, directors and employees to supply
all such publicly available information reasonably requested by the Investor or
any such representative, advisor or underwriter in connection with such
Registration Statement (including, without limitation, in response to all
questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investor and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.

      Section 8.2 Non-Disclosure of Non-Public Information.

                  (a) The Company shall not disclose non-public information to
      the Investor, advisors to or representatives of the Investor except as set
      forth in the Registration Rights Agreement.

                  (b) The Company represents that it does not disseminate
      non-public information to any investors who purchase stock in the Company
      in a public offering, to money managers or to securities analysts,
      provided, however, that notwithstanding anything herein to the contrary,
      the Company will, as hereinabove provided, immediately notify the advisors
      and representatives of the Investor and, if any, underwriters, of any
      event or the existence of any circumstance (without any obligation to
      disclose the specific event or circumstance) of which it becomes aware,
      constituting non-public information (whether or not requested of the
      Company specifically or generally during the course of due diligence by
      such persons or entities), which, if not disclosed in the prospectus
      included in the Registration Statement would cause such prospectus to
      include a material misstatement or to omit a material fact required to be
      stated therein in order to make the statements, therein in light of the
      circumstances in which they were made, not misleading. Nothing contained
      in this Section 8.2 shall be construed to mean that such persons or
      entities other than the Investor (without the written consent of the
      Investor prior to disclosure of such information) may not obtain
      non-public information in the course of conducting due diligence in
      accordance with the terms of this Agreement and nothing herein shall
      prevent any such persons or entities from notifying the Company of their
      opinion that based on such due diligence by such persons or entities, that
      the Registration Statement contains an untrue statement of a material fact
      or omits a material fact required to be stated in the Registration
      Statement or necessary to make the


                                       20
<PAGE>

statements contained therein, in light of the circumstances in which they were
made, not misleading.

                                   ARTICLE IX

                                  Choice of Law

      Section 9.1 Governing Law/Arbitration. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws. The Company and the Investor
agree to submit themselves to the in personam jurisdiction of the state and
federal courts situated within the Southern District of the State of New York
with regard to any controversy arising out of or relating to this Agreement. Any
dispute under this Agreement or any Exhibit attached hereto shall be submitted
to arbitration under the American Arbitration Association (the "AAA") in New
York City, New York, and shall be finally and conclusively determined by the
decision of a board of arbitration consisting of three (3) members (hereinafter
referred to as the "Board of Arbitration") selected as according to the rules
governing the AAA. The Board of Arbitration shall meet on consecutive business
days in New York City, New York, and shall reach and render a decision in
writing (concurred in by a majority of the members of the Board of Arbitration)
with respect to the amount, if any, which the losing party is required to pay to
the other party in respect of a claim filed. In connection with rendering its
decisions, the Board of Arbitration shall adopt and follow the laws of the State
of New York. To the extent practical, decisions of the Board of Arbitration
shall be rendered no more than thirty (30) calendar days following commencement
of proceedings with respect thereto. The Board of Arbitration shall cause its
written decision to be delivered to all parties involved in the dispute. The
Board of Arbitration shall be authorized and is directed to enter a default
judgment against any party refusing to participate in the arbitration proceeding
within thirty days of any deadline for such participation. Any decision made by
the Board of Arbitration (either prior to or after the expiration of such thirty
(30) calendar day period) shall be final, binding and conclusive on the parties
to the dispute, and entitled to be enforced to the fullest extent permitted by
law and entered in any court of competent jurisdiction. The prevailing party
shall be awarded its costs, including reasonable attorneys' fees, from the
non-prevailing party as part of the arbitration award. Any party shall have the
right to seek injunctive relief from any court of competent jurisdiction in any
case where such relief is available. The prevailing party in such injunctive
action shall be awarded its costs, including reasonable attorney's fees, from
the non-prevailing party.

                                   ARTICLE X

                                   Assignment

      Section 10.1 Assignment. Neither this Agreement nor any rights of the
Investor or the Company hereunder may be assigned by either party to any other
person except by operation of law. Notwithstanding the foregoing, upon the prior
written consent of the Company, which consent shall not unreasonably be withheld
or delayed in the case of an assignment to an affiliate of the Investor, the
Investor's interest in this Agreement may be assigned at any time, in whole or
in part, to any other person or entity (including any affiliate of the Investor)
who agrees to


                                       21
<PAGE>

make the representations and warranties contained in Article III and who agrees
to be bound hereby.

                                   ARTICLE XI

                                     Notices

      Section 11.1 Notices. All notices, demands, requests, consents, approvals,
and other communications required 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 specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

If to the Company:                  220 South Orange Ave.
                                    Livingston Corp. Park
                                    Livingston, New Jersey 07039
                                    Attn: Leonard Osser
                                    Tel: (973) 535-2717
                                    Fax: (973) 535-2829

with a copy to:                     Morse, Zelnick, Rose & Lander LLP
(shall not constitute notice)       450 Park Avenue
                                    New York, New York 10022
                                    Attention: Stephen A. Zelnick, Esq.
                                    Telephone: (212) 838-1177
                                    Facsimile: (212) 838-9190

if to the Investor:                 c/o Mischon deReya Solicitors
                                    21 Southhampton Row
                                    London WC1B 5HS England
                                    Facsimile: 011-44-171-404-5982
                                    Attention: Kevin Gold


                                       22
<PAGE>

with a copy to:                     Epstein Becker & Green, P.C.
(shall not constitute notice)       250 Park Avenue
                                    New York, New York 10177
                                    Attn: Robert F. Charron, Esq.
                                    Tel: (212) 351-3771
                                    Fax: (212) 661-0989

Either party hereto may from time to time change its address or facsimile number
for notices under this Section 11.1 by giving at least ten (10) days' prior
written notice of such changed address or facsimile number to the other party
hereto.

                                  ARTICLE XII

                                  Miscellaneous

      Section 12.1 Counterparts/Facsimile/Amendments. This Agreement may be
executed in multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one and the same instrument. Except as
otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by all parties.

      Section 12.2 Entire Agreement. This Agreement, the Exhibits hereto, which
include, but are not limited to the Escrow Agreement, the Registration Rights
Agreement and the Warrants, set forth the entire agreement and understanding of
the parties relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and written relating to the subject matter hereof. The terms and
conditions of all Exhibits to this Agreement are incorporated herein by this
reference and shall constitute part of this Agreement as is fully set forth
herein.

      Section 12.3 Survival; Severability. The representations, warranties,
covenants and agreements of the parties hereto shall survive each Closing
hereunder. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that such severability shall be ineffective if it materially
changes the economic benefit of this Agreement to any party.

      Section 12.4 Title and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

      Section 12.5 Reporting Entity for the Common Stock. The reporting entity
relied upon for the determination of the trading price or trading volume of the
Common Stock on any given Trading Day for the purposes of this Agreement shall
be Bloomberg, L.P. or any successor thereto. The written mutual consent of the
Investor and the Company shall be required to employ any other reporting entity.


                                       23
<PAGE>

      Section 12.6 Replacement of Certificates. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a certificate representing the Put Shares and (ii) in the case of
any such loss, theft or destruction of such certificate, upon delivery of an
indemnity agreement or security reasonably satisfactory in form and amount to
the Company (which shall not exceed that required by the Company's transfer
agent in the ordinary course) or (iii) in the case of any such mutilation, on
surrender and cancellation of such certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new certificate of like tenor.

      Section 12.7 Fees and Expenses. Each of the Company and the Investors
agrees to pay its own expenses incident to the performance of its obligations
hereunder, except that the Company shall pay the fees, expenses and
disbursements of Investors' counsel in the amount of $15,000 plus $1,000 per
Closing of a Put.

      Section 12.8 Brokerage. Each of the parties hereto represents that it has
had no dealings in connection with this transaction with any finder or broker
who will demand payment of any fee or commission from the other party except
Jesup & Lamont Securities Corporation whose fee shall be paid by the Company.
The Company on the one hand, and the Investor, on the other hand, agree to
indemnify the other against and hold the other harmless from any and all
liabilities to any person claiming brokerage commissions or finder's fees on
account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby.

      Section 12.9 Publicity. The Company agrees that it will not issue any
press release or other public announcement of the transactions contemplated by
this Agreement without the prior consent of the Investor, which shall not be
unreasonably withheld nor delayed by more than two (2) Trading Days from its
receipt of such proposed release; provided, however, that if the Company is
advised by its outside counsel that it is required by law or the applicable
rules of any Principal Market to issue any such press release or public
announcement, then, it may do so without the prior consent of the Investor,
although it shall be required to provide prior notice (which may be by
telephone) to the Investor that it intends to issue such press release or public
announcement. No release shall name the Investor without its express consent,
except as required by law.

      Section 12.10 Effectiveness of Agreement. This Agreement shall become
effective only upon satisfaction of the conditions precedent to the Initial
Closing set forth in Article I of the Escrow Agreement.


                                       24
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Private Equity
Line of Credit Agreement to be executed by the undersigned, thereunto duly
authorized, as of this 19th day of January, 2001

                                    MILESTONE SCIENTIFIC INC.

                                    By: /s/ Leonard Osser
                                        ----------------------------------------
                                        Leonard Osser, Chairman & CEO


                                    HILLGREEN INVESTMENTS LIMITED

                                    By: /s/ H.U. Bachofen
                                        ----------------------------------------
                                        Name: H. U. Bachofen
                                        Title: Director


                                       25

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Private Equity
Line of Credit Agreement to be executed by the undersigned, thereunto duly
authorized, as of this 19th day of January, 2001

                                    MILESTONE SCIENTIFIC INC.

                                    By: /s/ Leonard Osser
                                        ----------------------------------------
                                        Leonard Osser, Chairman & CEO


                                    HILLGREEN INVESTMENTS LIMITED

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                       25

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.2
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>REGISTRATION RIGHTS AGREEMENT
<TEXT>


                                   Exhibit 2.2

                                                                       EXHIBIT C

                          REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT, dated as of this 19th day of January, 2001,
between Hillgreen Investments Limited ("Investor") and Milestone Scientific
Inc., a corporation incorporated under the laws of the State of Delaware (the
"Company").

            WHEREAS, simultaneously with the execution and delivery of this
Agreement, pursuant to a Private Equity Line of Credit Agreement dated the date
hereof (the "Purchase Agreement") the Investor has committed to purchase up to
2,100,000 shares of the Company's Common Stock (terms not defined herein shall
have the meanings ascribed to them in the Purchase Agreement); and

            WHEREAS, the Company desires to grant to the Investor the
registration rights set forth herein with respect to the Put Shares and the
Blackout Shares issuable upon exercise of the Company's Put rights from time to
time and the Warrant Shares (collectively, the "Securities").

            NOW, THEREFORE, the parties hereto mutually agree as follows:

            Section 1. Registrable Securities. As used herein the term
"Registrable Security" means the Securities until (i) all Put Shares and Warrant
Shares have been disposed of pursuant to the Registration Statement, (ii) all
Put Shares and Warrant Shares may be sold pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act ("Rule 144"); provided,
however, that all of the circumstances under which all of the applicable
conditions of Rule 144, except for the Investor's obligation to file such shares
on Form 144, are met and that the Company has provided to the Investor or its
transfer agent any documentation reasonably requested by the Investor or
transfer agent to sell such shares pursuant to Rule 144, or (iii) such time as,
in the opinion of counsel to the Company, all Put Shares and Warrant Shares may
be sold without any time, volume or manner limitations pursuant to Rule 144(k)
(or any similar provision then in effect) under the Securities Act. The term
"Registrable Securities" means any and/or all of the securities falling within
the foregoing definition of a "Registrable Security." In the event of any
merger, reorganization, consolidation, recapitalization or other change in
corporate structure affecting the Common Stock, such adjustment shall be deemed
to be made in the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant to
this Agreement.

            Section 2. Restrictions on Transfer. The Investor acknowledges and
understands that in the absence of an effective Registration Statement
authorizing the resale of the Securities as provided herein, the Securities are
"restricted securities" as defined in Rule 144 promulgated under the Act. The
Investor understands that no disposition or transfer of the Securities may be
made by Investor in the absence of (i) an opinion of counsel to the Investor, in
form and substance reasonably satisfactory to the Company, that such transfer
may be made without registration under the Securities Act or (ii) such
registration.
<PAGE>

            With a view to making available to the Investor the benefits of Rule
144 under the Securities Act or any other similar rule or regulation of the
Commission that may at any time permit the Investor to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:

            (a) comply with the provisions of paragraph (c)(1) of Rule 144; and

            (b) file with the Commission in a timely manner all reports and
other documents required to be filed by the Company pursuant to Section 13 or
15(d) under the Exchange Act; and, if at any time it is not required to file
such reports but in the past had been required to or did file such reports, it
will, upon the request of any Investor, make available other information as
required by, and so long as necessary to permit sales of, its Registrable
Securities pursuant to Rule 144.

            Section 3. Registration Rights With Respect to the Securities.

            (a) The Company agrees that it will prepare and file with the
Securities and Exchange Commission ("Commission"), within forty-five (45) days
after the date hereof, a registration statement (on Form S-1, S-2, S-3, SB-2 or
other appropriate form of registration statement) under the Securities Act (the
"Registration Statement"), at the sole expense of the Company (except as
provided in Section 3(c) hereof), so as to permit a public offering and resale
of the Securities under the Act by Investor.

            The Company shall use its best efforts to cause the Registration
Statement to become effective within one hundred twenty (120) days from the date
hereof, or, if earlier, within five (5) days of SEC clearance to request
acceleration of effectiveness. The number of shares designated in the
Registration Statement to be registered shall be a number of shares of Common
Stock that the Company reasonably estimates it will issue pursuant to the
Purchase Agreement, including the Warrant Shares and Blackout Shares and shall
include appropriate language regarding reliance upon Rule 416 to the extent
permitted by the Commission. The Company will notify Investor of the
effectiveness of the Registration Statement within one Trading Day of such
event.

            (b) The Company will maintain the Registration Statement or
post-effective amendment filed under this Section 3 hereof (including for
purposes of this section any substitute registration statement) effective under
the Securities Act until the earlier of (i) the date that none of the Securities
are or may become issued and outstanding, (ii) the date that all of the
Securities have been sold pursuant to the Registration Statement, (iii) the date
the holders thereof receive an opinion of counsel to the Company, which counsel
shall be reasonably acceptable to the Investor, that the Securities may be sold
under the provisions of Rule 144 without limitation as to volume, or (iv) all
Securities may be sold without any time, volume or manner limitations pursuant
to Rule 144(k) or any similar provision then in effect under the Securities Act
in the opinion of counsel to the Company, which counsel shall be reasonably
acceptable to the Investor (the "Effectiveness Period").

            (c) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of the
Registration Statement under
<PAGE>

subparagraph 3(a) and in complying with applicable securities and Blue Sky laws
in New Jersey and New York (including, without limitation, all attorneys' fees
of the Company) shall be borne by the Company. The Investor shall bear the cost
of underwriting and/or brokerage discounts, fees and commissions, if any,
applicable to the Securities being registered and the fees and expenses of its
counsel. The Investor and its counsel shall have a reasonable period, not to
exceed five (5) Trading Days, to review the proposed Registration Statement or
any amendment thereto, prior to filing with the Commission, and the Company
shall provide each Investor with copies of any comments received from the
Commission with respect thereto relating to this transaction or to the Investor
within two (2) Trading Days of receipt thereof. The Company shall make
reasonably available for inspection by Investor, any underwriter participating
in any disposition pursuant to the Registration Statement, and any attorney,
accountant or other agent retained by such Investor or any such underwriter all
relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by such Investor or any such underwriter, attorney, accountant or agent in
connection with the Registration Statement, in each case, as is customary for
similar due diligence examinations; provided, however, that all records,
information and documents that are designated in writing by the Company, in good
faith, as confidential, proprietary or containing any material non-public
information shall be kept confidential by such Investor and any such
underwriter, attorney, accountant or agent (pursuant to an appropriate
confidentiality agreement in the case of any such Investor or agent), unless
such disclosure is made pursuant to judicial process in a court proceeding
(after first giving the Company an opportunity promptly to seek a protective
order or otherwise limit the scope of the information sought to be disclosed) or
is required by law, or such records, information or documents become available
to the public generally or through a third party not in violation of an
accompanying obligation of confidentiality; and provided further that, if the
foregoing inspection and information gathering would otherwise disrupt the
Company's conduct of its business, such inspection and information gathering
shall, to the maximum extent possible, be coordinated on behalf of the Investor
and the other parties entitled thereto by one firm of counsel designed by and on
behalf of the majority in interest of Investor and other parties. The Company
shall qualify any of the securities for sale in such states as such Investor
reasonably designates and shall furnish indemnification in the manner provided
in Section 6 hereof. However, the Company shall not be required to qualify in
any state which will require an escrow or other restriction relating to the
Company and/or the sellers, or which will require the Company to qualify to do
business in such state or require the Company to file therein any general
consent to service of process. The Company at its expense will supply the
Investor with copies of the Registration Statement and the prospectus included
therein and other related documents in such quantities as may be reasonably
requested by the Investor.

            (d) The Company shall not be required by this Section 3 to include a
Investor's Securities in any Registration Statement which is to be filed if, in
the opinion of counsel for both the Investor and the Company (or, should they
not agree, in the opinion of another counsel experienced in securities law
matters acceptable to counsel for the Investor and the Company) the proposed
offering or other transfer as to which such registration is requested is exempt
from applicable federal and state securities laws and would result in all
Investors or transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the Securities Act.
<PAGE>

            (e) No provision contained herein shall preclude the Company from
selling securities pursuant to any Registration Statement in which it is
required to include Securities pursuant to this Section 3.

            (f) If at any time or from time to time after the effective date of
the Registration Statement, the Company notifies the Investor in writing of the
existence of a Potential Material Event (as defined in Section 3(g) below), the
Investor shall not offer or sell any Securities or engage in any other
transaction involving or relating to Securities, from the time of the giving of
notice with respect to a Potential Material Event until the Investor receives
written notice from the Company that such Potential Material Event either has
been disclosed to the public or no longer constitutes a Potential Material Event
(the "Suspension Period"); provided, however, at the end of any such Suspension
Period, the Investor shall receive a cash payment or, at the election of the
Investor, Blackout Shares pursuant to Section 2.5 of the Purchase Agreement. If
a Potential Material Event shall occur prior to the date the Registration
Statement is filed, then the Company's obligation to file the Registration
Statement shall be delayed without penalty for not more than thirty (30)
calendar days. The Company must give Investor notice in writing at least two (2)
Trading Days prior to the first day of the blackout period, if lawful to do so.

            (g) "Potential Material Event" means any of the following: (a) the
possession by the Company of material information that is not ripe for
disclosure in a registration statement, as determined in good faith by the Chief
Executive Officer or the Board of Directors of the Company or that disclosure of
such information in the Registration Statement would be detrimental to the
business and affairs of the Company; or (b) any material engagement or activity
by the Company which would, in the good faith determination of the Chief
Executive Officer or the Board of Directors of the Company, be adversely
affected by disclosure in a registration statement at such time, which
determination shall be accompanied by a good faith determination by the Chief
Executive Officer or the Board of Directors of the Company that the Registration
Statement would be materially misleading absent the inclusion of such
information.

            Section 4. Cooperation with Company. Investor will cooperate with
the Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company (which shall
include all information regarding the Investor and proposed manner of sale of
the Registrable Securities required to be disclosed in the Registration
Statement) and executing and returning all documents reasonably requested in
connection with the registration and sale of the Registrable Securities and
entering into and performing its obligations under any underwriting agreement,
if the offering is an underwritten offering, in usual and customary form, with
the managing underwriter or underwriters of such underwritten offering. The
Investor consents to be named as a statutory underwriter in the Registration
Statement.

            Section 5. Registration Procedures. If and whenever the Company is
required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Act, the Company shall (except as
otherwise provided in this Agreement), as expeditiously as possible, subject to
the Investor's assistance and cooperation as reasonably required:
<PAGE>

            (a) (i) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Act with respect to the sale or other
disposition of all securities covered by such registration statement whenever
the Investor of such Registrable Securities shall desire to sell or otherwise
dispose of the same (including prospectus supplements with respect to the sales
of securities from time to time in connection with a registration statement
pursuant to Rule 415 promulgated under the Act) and (ii) take all lawful action
such that each of (A) the Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, not misleading and (B) the Prospectus forming part
of the Registration Statement, and any amendment or supplement thereto, does not
at any time during the Registration Period include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

            (b) (i) prior to the filing with the Commission of any Registration
Statement (including any amendments thereto) and the distribution or delivery of
any prospectus (including any supplements thereto), provide draft copies thereof
to the Investors and reflect in such documents all such comments as the
Investors (and their counsel) reasonably may propose and (ii) furnish to each
Investor such numbers of copies of a prospectus including a preliminary
prospectus or any amendment or supplement to any prospectus, as applicable, in
conformity with the requirements of the Act, and such other documents, as such
Investor may reasonably request in order to facilitate the public sale or other
disposition of the securities owned by such Investor;

            (c) register and qualify the Registrable Securities covered by the
Registration Statement under such other securities or blue sky laws of such
jurisdictions as the Investor reasonably requests and do any and all other acts
and things which may be necessary or advisable to enable each Investor to
consummate the public sale or other disposition in such jurisdiction of the
securities owned by such Investor, except that the Company shall not for any
such purpose be required to qualify to do business as a foreign corporation in
any jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;

            (d) list such Registrable Securities on the Primary Market, and any
other exchange on which the Common Stock of the Company is then listed, if the
listing of such Registrable Securities is then permitted under the rules of such
exchange;

            (e) notify each Investor at any time when a prospectus relating
thereto covered by the Registration Statement is required to be delivered under
the Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, and the Company
shall prepare and file a curative amendment under Section 5(a) as quickly as
commercially possible;

            (f) as promptly as practicable after becoming aware of such event,
notify Investor (or, in the event of an underwritten offering, the managing
underwriters) of the issuance
<PAGE>

by the Commission or any state authority of any stop order or other suspension
of the effectiveness of the Registration Statement at the earliest possible time
and take all lawful action to effect the withdrawal, recession or removal of
such stop order or other suspension;

            (g) cooperate with the Investor to facilitate the timely preparation
and delivery of certificates for the Registrable Securities to be offered
pursuant to the Registration Statement and enable such certificates for the
Registrable Securities to be in such denominations or amounts, as the case may
be, as the Investor reasonably may request and registered in such names as the
Investor may request; and, within three Trading Days after a Registration
Statement which includes Registrable Securities is declared effective by the
Commission, deliver and cause legal counsel selected by the Company to deliver
to the transfer agent for the Registrable Securities (with copies to the
Investor) an appropriate instruction and, to the extent necessary, an opinion of
such counsel;

            (h) take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Investor of its Registrable
Securities in accordance with the intended methods therefor provided in the
prospectus which are customary for issuers to perform under the circumstances;

            (i) in the event of an underwritten offering, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the managers reasonably agree should
be included therein and to which the Company does not reasonably object and make
all required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after it is notified of the matters to be included or
incorporated in such Prospectus supplement or post-effective amendment; and

            (j) maintain a transfer agent and registrar for its Common Stock.

            Section 6. Indemnification.

            (a) The Company agrees to indemnify and hold harmless the Investor
and each person, if any, who controls the Investor within the meaning of the
Securities Act ("Distributing Investor") against any losses, claims, damages or
liabilities, joint or several (which shall, for all purposes of this Agreement,
include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees), to which the Distributing
Investor may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, or any related
preliminary prospectus, final prospectus or amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
preliminary prospectus, final prospectus or amendment or supplement thereto in
reliance upon, and in conformity with, written information furnished to the
Company by the Distributing Investor, specifically for use in the preparation
thereof. This Section 6(a) shall not inure to the
<PAGE>

benefit of any Distributing Investor with respect to any person asserting such
loss, claim, damage or liability who purchased the Registrable Securities which
are the subject thereof if the Distributing Investor failed to send or give (in
violation of the Securities Act or the rules and regulations promulgated
thereunder) a copy of the prospectus contained in such Registration Statement to
such person at or prior to the written confirmation to such person of the sale
of such Registrable Securities, where the Distributing Investor was obligated to
do so under the Securities Act or the rules and regulations promulgated
thereunder. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.

            (b) Each Distributing Investor agrees that it will indemnify and
hold harmless the Company, and each officer, director of the Company or person,
if any, who controls the Company within the meaning of the Securities Act,
against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable costs
of defense and investigation and all reasonable attorneys' fees) to which the
Company or any such officer, director or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, or any related preliminary prospectus, final
prospectus or amendment or supplement thereto, or arise out of or are based upon
the omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, preliminary prospectus, final prospectus or amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company by such Distributing Investor, specifically for use in the
preparation thereof. This indemnity agreement will be in addition to any
liability which the Distributing Investor may otherwise have.

            Notwithstanding anything to the contrary herein, the Distributing
Investor shall not be liable under this Section 6(b) for any amount in excess of
the net proceeds to such Distributing Investor as a result of the sale of
Registrable Securities pursuant to the Registration Statement.

            (c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified party
except to the extent of actual prejudice demonstrated by the indemnifying party.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, assume the defense
thereof, subject to the provisions herein stated and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless the
<PAGE>

indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
the Distributing Investor, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Distributing Investor and the indemnifying party and the Distributing Investor
shall have been advised by such counsel that there may be one or more legal
defenses available to the indemnifying party different from or in conflict with
any legal defenses which may be available to the Distributing Investor (in which
case the indemnifying party shall not have the right to assume the defense of
such action on behalf of the Distributing Investor, it being understood,
however, that the indemnifying party shall, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable only for the reasonable fees and expenses of one separate firm of
attorneys for the Distributing Investor, which firm shall be designated in
writing by the Distributing Investor). No settlement of any action against an
indemnified party shall be made without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld.

            All fees and expenses of the indemnified party (including reasonable
costs of defense and investigation in a manner not inconsistent with this
Section and all reasonable attorneys' fees and expenses) shall be paid to the
indemnified party, as incurred, within ten (10) Trading Days of written notice
thereof to the indemnifying party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder; provided, that the indemnifying party may require such indemnified
party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such indemnified party is not entitled to
indemnification hereunder).

            Section 7. Contribution. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 6 hereof but is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 6 hereof provide
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any indemnified party, then the Company and the
applicable Distributing Investor shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees), in
either such case (after contribution from others) on the basis of relative fault
as well as any other relevant equitable considerations. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the applicable Distributing Investor on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or
<PAGE>

omission. The Company and the Distributing Investor agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 7. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this Section 7 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

Notwithstanding any other provision of this Section 7, in no event shall any (i)
Investor be required to undertake liability to any person under this Section 7
for any amounts in excess of the dollar amount of the net proceeds to be
received by such Investor from the sale of such Investor's Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) pursuant to any Registration Statement under which such Registrable
Securities are to be registered under the Securities Act and (ii) underwriter be
required to undertake liability to any person hereunder for any amounts in
excess of the aggregate discount, commission or other compensation payable to
such underwriter with respect to the Registrable Securities underwritten by it
and distributed pursuant to the Registration Statement.

            Section 8. Notices. All notices, demands, requests, consents,
approvals, and other communications required 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 specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be as set forth in the Purchase Agreement.

            Either party hereto may from time to time change its address or
facsimile number for notices under this Section 8 by giving at least ten (10)
days' prior written notice of such changed address or facsimile number to the
other party hereto.

            Section 9. Assignment. Neither this Agreement nor any rights of the
Investor or the Company hereunder may be assigned by either party to any other
person. Notwithstanding the foregoing, (a) the provisions of this Agreement
shall inure to the benefit of, and be enforceable by, any transferee of any of
the Common Stock purchased by the Investor pursuant to the Purchase Agreement,
and (b) upon the prior written consent of the Company, which consent shall not
be unreasonably withheld or delayed in the case of an assignment to an affiliate
<PAGE>

of the Investor, the Investor's interest in this Agreement may be assigned at
any time, in whole or in part, to any other person or entity (including any
affiliate of the Investor) who agrees to be bound hereby.

            Section 10. Additional Covenants of the Company. The Company agrees
that at such time as it meets all the requirements for the use of Securities Act
Registration Statement on Form S-3 it shall file all reports and information
required to be filed by it with the Commission in a timely manner and take all
such other action so as to maintain such eligibility for the use of such form.

            Section 11. Counterparts/Facsimile. This Agreement may be executed
in two or more counterparts, each of which shall constitute an original, but all
of which, when together shall constitute but one and the same instrument, and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other party. In lieu of the original, a
facsimile transmission or copy of the original shall be as effective and
enforceable as the original.

            Section 12. Remedies. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.

            Section 13. Conflicting Agreements. The Company shall not enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to the holders of Registrable Securities in this Agreement or
otherwise prevents the Company from complying with all of its obligations
hereunder. In the event of a conflict between the terms of this Agreement and
the Purchase Agreement, the Purchase Agreement shall control.

            Section 14. Headings. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

            Section 15. Governing Law, Arbitration. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made in New York by persons domiciled in New York City
and without regard to its principles of conflicts of laws. Any dispute under
this Agreement shall be submitted to arbitration under the American Arbitration
Association (the "AAA") in New York City, New York, and shall be finally and
conclusively determined by the decision of a board of arbitration consisting of
three (3) members (hereinafter referred to as the "Board of Arbitration")
selected as according to the rules governing the AAA. The Board of Arbitration
shall meet on consecutive business days in New York City, New York, and shall
reach and render a decision in writing (concurred in by a majority
<PAGE>

of the members of the Board of Arbitration) with respect to the amount, if any,
which the losing party is required to pay to the other party in respect of a
claim filed. In connection with rendering its decisions, the Board of
Arbitration shall adopt and follow the laws of the State of New York. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) calendar days following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision to be
delivered to all parties involved in the dispute. The Board of Arbitration shall
be authorized and is directed to enter a default judgment against any party
refusing to participate in the arbitration proceeding with thirty days of any
deadline for such participation. Any decision made by the Board of Arbitration
(either prior to or after the expiration of such thirty (30) calendar day
period) shall be final, binding and conclusive on the parties to the dispute,
and entitled to be enforced to the fullest extent permitted by law and entered
in any court of competent jurisdiction. The prevailing party shall be awarded
its costs, including attorneys' fees, from the non-prevailing party as part of
the arbitration award. Any party shall have the right to seek injunctive relief
from any court of competent jurisdiction in any case where such relief is
available. The prevailing party in such injunctive action shall be awarded its
costs, including attorney's fees, from the non-prevailing party.

            Section 16. Severability. If any provision of this Agreement shall
for any reason be held invalid or unenforceable, such invalidity or
unenforceablity shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed, on this 19th day of January, 2001.

                                    MILESTONE SCIENTIFIC INC.


                                    By: /s/  Leonard Osser
                                       -----------------------------------------
                                       Leonard Osser, Chairman & CEO

                                    HILLGREEN INVESTMENTS LIMITED


                                    By:
                                       -----------------------------------------
                                       Name:
                                       Title:

<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed, on this 19th day of January, 2001.

                                    MILESTONE SCIENTIFIC INC.


                                    By:
                                       -----------------------------------------
                                       Leonard Osser, Chairman & CEO

                                    HILLGREEN INVESTMENTS LIMITED


                                    By: /s/ H.U. Bachofen
                                       -----------------------------------------
                                       Name:   Bachofen H.U.
                                       Title:  Director

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.3
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>ESCROW AGREEMENT
<TEXT>


                                       Exhibit 2.3

                                                                       EXHIBIT A

                                ESCROW AGREEMENT

            THIS ESCROW AGREEMENT (this "Agreement") is made as of January 19,
2001, by and among Milestone Scientific Inc., a corporation incorporated under
the laws of the State of Delaware, (the "Company"), Hillgreen Investments
Limited, a British Virgin Islands corporation ("Investor"), and Epstein Becker &
Green, P.C., (the "Escrow Agent"). Capitalized terms used but not defined herein
shall have the meanings set forth in the Private Equity Line of Credit Agreement
referred to in the first recital.

                              W I T N E S S E T H:

            WHEREAS, the Investor will from time to time as requested by the
Company, purchase shares of the Company's Common Stock from the Company as set
forth in that certain Private Equity Line of Credit Agreement (the "Purchase
Agreement") dated the date hereof between the Investor and the Company, which
will be issued as per the terms and conditions contained herein and in the
Purchase Agreement; and

            WHEREAS, the Company and the Investor have requested that the Escrow
Agent hold in escrow and then distribute the initial documents and certain funds
which are conditions precedent to the effectiveness of the Purchase Agreement,
and have further requested that upon each exercise of a Put, the Escrow Agent
hold the relevant documents and the applicable purchase price pending receipt by
the Investor of certificates representing the securities issuable upon such Put;

            NOW, THEREFORE, in consideration of the covenants and mutual
promises contained herein and other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged and intending to be
legally bound hereby, the parties agree as follows:

                                   ARTICLE 1

                   TERMS OF THE ESCROW FOR THE INITIAL CLOSING

            1.1. The parties hereby agree to establish an escrow account with
the Escrow Agent whereby the Escrow Agent shall hold the funds and documents set
forth below.

            1.2. At the Initial Closing, the Company shall deliver to the Escrow
Agent:

                        (i)   the original Warrant certificate in the form of
                              Exhibit D to the Purchase Agreement;

                        (ii)  the original executed Registration Rights
                              Agreement in the form of Exhibit C to the Purchase
                              Agreement;
<PAGE>

                        (iii) the original executed opinion of Morse, Zelnick,
                              Rose & Lander, LLP, counsel of the Company, in the
                              form of Exhibit E to the Purchase Agreement;

                        (iv)  the sum of $15,000;

                        (v)   a warrant certificate to purchase up to 75,000
                              shares of Common Stock issued to Jesup and Lamont
                              Securities Corporation otherwise identical in form
                              to that of the Warrant (the "J&L Warrant");

                        (vi)  the original executed Company counterpart of this
                              Escrow Agreement; and

                        (vii) the original executed Company counterpart of the
                              Purchase Agreement.

            1.3. Upon receipt of the foregoing, and receipt of executed
counterparts from Investor of the Purchase Agreement, the Registration Rights
Agreement and this Escrow Agreement, the Escrow Agent shall calculate the
exercise price of the Warrant and the J&L Warrant and enter the exercise price,
the commencement date and termination date of such warrants on the faces thereof
and immediately transfer the sum of fifteen thousand dollars ($15,000) to
Epstein Becker & Green, P.C. ("EB&G"), 250 Park Avenue, New York, New York 10177
for the Investor's legal and administrative costs and the Escrow Agent shall
then arrange to have the Initial Warrant certificate, the Purchase Agreement,
this Escrow Agreement, the Registration Rights Agreement and the opinion of
counsel delivered to the Investor and the J&L Warrant certificate delivered to
Jesup & Lamont Securities Corporation.

                                   ARTICLE 2

                        TERMS OF THE ESCROW FOR EACH PUT

            2.1. (a) Each time the Company shall send a Put Notice to the
Investor as provided in the Purchase Agreement, it shall send a copy, by
facsimile, to the Escrow Agent.

                  (b) Each time the Investor shall purchase shares pursuant to a
Put, the Investor shall send the applicable portion of the Investment Amount of
the Put Shares to the Escrow Agent on or before the Closing Date for such Put.
The Company shall promptly, but no later than two (2) Trading Days after receipt
of notice from the Escrow Agent that it has the funds for such Put:

                        (i)   cause its Transfer Agent to deliver the Put Shares
                              to Investor's DTC account through DTC's DWAC
                              system;

                        (ii)  deliver an opinion of Morse, Zelnick, Rose &
                              Lander, LLP in the form of Exhibit E to the
                              Purchase Agreement; and
<PAGE>

                        (iii) deliver a supplemental prospectus pursuant to Rule
                              424(b)(3) of the Securities Act relating to the
                              Put.

                  (c) The Escrow Agent shall, within one (1) Trading Day of
receipt of the foregoing, wire the Investment Amount per the written
instructions of the Company net of:

                        (i)   a brokerage fee equal to (i), as to the first
                              $4,000,000 of Put Shares purchased, 4.75% of the
                              Investment Amount of each Put, (ii) as to the
                              subsequent $4,000,000 of Put Shares purchased,
                              4.50% of the Investment Amount of each Put, and
                              (iii) as to any purchases of Put Shares
                              thereafter, 4.25%, to Jesup & Lamont Securities
                              Corporation, less, as to each Put, five hundred
                              dollars ($500) as escrow expenses to the Escrow
                              Agent, payable out of Jesup & Lamont Securities
                              Corporation's brokerage fee; and

                        (ii)  as to each Put, five hundred dollars ($500) as
                              escrow expenses to the Escrow Agent.

                  (d) The Escrow Agent shall remit Jesup & Lamont Securities
Corporation's fee in accordance with wire instructions that it will send to
Escrow Agent. The Escrow Agent shall then deliver the Put Shares to the
Investor.

                  (e) In the event that the Put Shares are not in the Investor's
DTC account and the opinion and supplemental prospectus are not delivered to the
Escrow Agent within two (2) Trading Days of the date of the Escrow Agent's
notice, then Investor shall have the right to demand, by notice, the return of
the Investment Amount, and the Put Notice shall be deemed cancelled.

                                    ARTICLE 3

                                  MISCELLANEOUS

            3.1. No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.

            3.2. All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by fax, overnight courier,
registered or certified mail, postage prepaid, return receipt requested, and
shall be deemed received upon receipt thereof, as set forth in the Purchase
Agreement.

            3.3. This Escrow Agreement shall be binding upon and shall inure to
the benefit of the permitted successors and permitted assigns of the parties
hereto.

            3.4. This Escrow Agreement is the final expression of, and contains
the entire agreement between, the parties with respect to the subject matter
hereof and supersedes all prior
<PAGE>

understandings with respect thereto. This Escrow Agreement may not be modified,
changed, supplemented or terminated, nor may any obligations hereunder be
waived, except by written instrument signed by the parties to be charged or by
their respective agents duly authorized in writing or as otherwise expressly
permitted herein.

            3.5. Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Escrow Agreement.

            3.6. The parties hereto expressly agree that this Escrow Agreement
shall be governed by, interpreted under and construed and enforced in accordance
with the laws of the State of New York. Except as expressly set forth herein,
any action to enforce, arising out of, or relating in any way to, any provisions
of this Escrow Agreement shall be brought through the American Arbitration
Association at the designated locale of New York, New York as is more fully set
forth in the Purchase Agreement.

            3.7. The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, each Investor and
the Escrow Agent.

            3.8. The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be personally liable
for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent
while acting in good faith, excepting only its own gross negligence or willful
misconduct, and any act done or omitted by the Escrow Agent pursuant to the
advice of the Escrow Agent's attorneys-at-law (other than Escrow Agent itself)
shall be conclusive evidence of such good faith.

            3.9. The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any other person
or corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.

            3.10. The Escrow Agent shall not be liable in any respect on account
of the identity, authorization or rights of the parties executing or delivering
or purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder or hereunder.

            3.11. The Escrow Agent shall be entitled to employ such legal
counsel and other experts as the Escrow Agent may deem necessary properly to
advise the Escrow Agent in connection with the Escrow Agent's duties hereunder,
may rely upon the advice of such counsel,
<PAGE>

and may pay such counsel reasonable compensation therefor. The Escrow Agent has
acted as legal counsel for the Investor, and may continue to act as legal
counsel for the Investor, from time to time, notwithstanding its duties as the
Escrow Agent hereunder. The Company consents to the Escrow Agent in such
capacity as legal counsel for the Investors and waives any claim that such
representation represents a conflict of interest on the part of the Escrow
Agent. The Company understands that the Investor and the Escrow Agent are
relying explicitly on the foregoing provision in entering into this Escrow
Agreement.

            3.12. The Escrow Agent's responsibilities as escrow agent hereunder
shall terminate if the Escrow Agent shall resign by written notice to the
Company and the Investor. In the event of any such resignation, the Investors
and the Company shall appoint a successor Escrow Agent.

            3.13. If the Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

            3.14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the documents
or the escrow funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed in the Escrow Agent's sole discretion (1) to retain in
the Escrow Agent's possession without liability to anyone all or any part of
said documents or the escrow funds until such disputes shall have been settled
either by mutual written agreement of the parties concerned by a final order,
decree or judgment or a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected, but the Escrow Agent shall
be under no duty whatsoever to institute or defend any such proceedings or (2)
to deliver the escrow funds and any other property and documents held by the
Escrow Agent hereunder to a state or federal court having competent subject
matter jurisdiction and located in the State and City of New York in accordance
with the applicable procedure therefor.

            3.15. The Company and the Investor agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties or performance of the Escrow
Agent hereunder or the transactions contemplated hereby or by the Purchase
Agreement other than any such claim, liability, cost or expense to the extent
the same shall have been determined by final, unappealable judgment of a court
of competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Escrow Agent.
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of this 19th day of January, 2001.

                                    MILESTONE SCIENTIFIC INC.


                                    By:
                                          -------------------------------------
                                          Leonard Osser, Chairman & CEO

                                    INVESTOR:

                                    HILLGREEN INVESTMENTS LIMITED


                                    By:    /s/  H. U. Bachofen
                                           ------------------------------------
                                           Name:  Bachofen H. U.
                                           Title: Director

                                    ESCROW AGENT

                                    EPSTEIN BECKER & GREEN, P.C.


                                    By:    /s/ Robert F. Charron
                                           ------------------------------------
                                           Robert F. Charron
                                           Authorized Signatory
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of this 19th day of January, 2001.

                                    MILESTONE SCIENTIFIC INC.


                                    By:   /s/ Leonard Osser
                                          -------------------------------------
                                          Leonard Osser, Chairman & CEO

                                    INVESTOR:

                                    HILLGREEN INVESTMENTS LIMITED


                                    By:
                                           ------------------------------------
                                           Name:
                                           Title:  Director

                                    ESCROW AGENT

                                    EPSTEIN BECKER & GREEN, P.C.


                                    By:
                                           ------------------------------------
                                           Robert F. Charron
                                           Authorized Signatory

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.16
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>STOCK PURCHASE WARRANT
<TEXT>


                                  Exhibit 4.16

                                                                       EXHIBIT D

NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT.

                             STOCK PURCHASE WARRANT

                  To Purchase 100,000 Shares of Common Stock of

                            Milestone Scientific Inc.

            THIS CERTIFIES that, for value received, Hillgreen Investments
Limited (the "Holder"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, at any time on or after January 22, 2001 (the
"Initial Exercise Date") and on or prior to the close of business on January 22,
2004 (the "Termination Date") but not thereafter, to subscribe for and purchase
from Milestone Scientific Inc., a Delaware corporation (the "Company"), up to
100,000 shares (the "Warrant Shares") of Common Stock, $.001 par value, of the
Company (the "Common Stock"). The purchase price of one share of Common Stock
(the "Exercise Price") under this Warrant shall be $1.86. The Exercise Price and
the number of shares for which the Warrant is exercisable shall be subject to
adjustment as provided herein. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth for such terms in that certain Private
Equity Line of Credit Agreement, dated January 19, 2001, between the Company and
Hillgreen Investments Limited (the "Purchase Agreement).
<PAGE>

            1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.

            2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).

            3. Exercise of Warrant. Except as provided in Section 4 herein,
exercise of the purchase rights represented by this Warrant may be made at any
time or times on or after the Initial Exercise Date and before the close of
business on the Termination Date. Exercise of this Warrant or any part hereof
shall be effected by the surrender of this Warrant and the Notice of Exercise
Form annexed hereto duly executed, at the office of the Company (or such other
office or agency of the Company as it may designate by notice in writing to the
registered holder hereof at the address of such holder appearing on the books of
the Company) and upon payment of the Exercise Price of the shares thereby
purchased by wire transfer or cashier's check drawn on a United States bank, the
holder of this Warrant shall be entitled to receive a certificate for the number
of shares of Common Stock so purchased. Certificates for shares purchased
hereunder shall be delivered to the holder hereof within three (3) Trading Days
after the date on which this Warrant shall have been exercised as aforesaid.
This Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other person
so designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price and all taxes required
to be paid by Holder, if any, pursuant to Section 5 prior to the issuance of
such shares, have been paid. If this Warrant shall have been exercised in part,
the Company shall, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased shares of Common Stock called for
by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant. If, within one year of the date of this Warrant, the Company does
not have an effective Registration Statement to permit the public offering and
resale of the Company's securities which have been issued to Holder under the
Purchase Agreement, then this Warrant may also be exercised by means of a
"cashless exercise" in which the holder shall be entitled to receive a
certificate for the number of shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:

            (A) = the average of the high and low trading prices per share of
            Common Stock on the Trading Day preceding the date of such election;

            (B) =  the Exercise Price of the Warrants; and

            (X) = the number of shares issuable upon exercise of the Warrants in
            accordance with the terms of this Warrant.
<PAGE>

      Notwithstanding anything herein to the contrary, in no event shall the
holder be permitted to exercise this Warrant for shares of Common Stock to the
extent that (x) the number of shares of Common Stock owned by such Holder (other
than shares of Common Stock issuable upon exercise of this Warrant) plus (y) the
number of shares of Common Stock issuable upon exercise of this Warrant, would
be equal to or exceed 9.9% of the number of shares of Common Stock then issued
and outstanding, including shares issuable upon exercise of this Warrant held by
such holder after application of this Section 3(d). As used herein, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act. To the extent that the limitation contained in this Section 3(d) applies,
the determination of whether this Warrant is exercisable (in relation to other
securities owned by the holder) and of which a portion of this Warrant is
exercisable shall be in the sole discretion of such holder, and the submission
of a Notice of Exercise shall be deemed to be such holder's determination of
whether this Warrant is exercisable (in relation to other securities owned by
such holder) and of which portion of this Warrant is exercisable, in each case
subject to such aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination. Nothing
contained herein shall be deemed to restrict the right of a holder to exercise
this Warrant into shares of Common Stock at such time as such exercise will not
violate the provisions of this Section 3(d). The provisions of this Section 3(d)
may be waived by the Holder of this Warrant upon, at the election of the Holder,
with 61 days' prior notice to the Company, and the provisions of this Section
3(d) shall continue to apply until such 61st day (or such later date as may be
specified in such notice of waiver). No exercise of this Warrant in violation of
this Section 3(d) but otherwise in accordance with this Warrant shall affect the
status of the Common Stock issued upon such exercise as validly issued,
fully-paid and nonassessable.

            4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the such fraction
multiplied by the difference between the closing bid price on the exercise date
Exercise Price.

            5. Charges, Taxes and Expenses. Issuance of certificates for shares
of Common Stock upon the exercise of this Warrant shall be made without charge
to the holder hereof for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.

            6. Closing of Books. The Company will not close its shareholder
books or records in any manner which prevents the timely exercise of this
Warrant.

            7. Transfer, Division and Combination. (a) Subject to compliance
with any applicable securities laws, transfer of this Warrant and all rights
hereunder, in whole or in part,
<PAGE>

shall be registered on the books of the Company to be maintained for such
purpose, upon surrender of this Warrant at the principal office of the Company,
together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
In the event that the Holder wishes to transfer a portion of this Warrant, the
Holder shall transfer at least 25,000 Warrant Shares to any such transferee.
Upon such surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned, may be exercised by a new holder for the purchase
of shares of Common Stock without having a new Warrant issued.

                  (b) This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by Holder or its agent or attorney.
Subject to compliance with Section 7(a), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.

                  (c) The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 7.

                  (d) The Company agrees to maintain, at its aforesaid office,
books for the registration and the registration of transfer of the Warrants.

            8. No Rights as Shareholder until Exercise. This Warrant does not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company prior to the exercise hereof. Upon the surrender of this Warrant
and the payment of the aggregate Exercise Price, the Warrant Shares so purchased
shall be and be deemed to be issued to such holder as the record owner of such
shares as of the close of business on the later of the date of such surrender or
payment.

            9. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant certificate
or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it
(which shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.

            10. Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
<PAGE>

            11. Adjustments of Exercise Price and Number of Warrant Shares. (a)
Stock Splits, etc. The number and kind of securities purchasable upon the
exercise of this Warrant and the Exercise Price shall be subject to adjustment
from time to time upon the happening of any of the following. In case the
Company shall (i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to holders of its outstanding Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) issue any shares
of its capital stock in a reclassification of the Common Stock, then the number
of Warrant Shares purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the holder of this Warrant shall be entitled
to receive the kind and number of Warrant Shares or other securities of the
Company which he would have owned or have been entitled to receive had such
Warrant been exercised in advance thereof. Upon each such adjustment of the kind
and number of Warrant Shares or other securities of the Company which are
purchasable hereunder, the holder of this Warrant shall thereafter be entitled
to purchase the number of Warrant Shares or other securities resulting from such
adjustment at an Exercise Price per Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares or other securities
of the Company resulting from such adjustment. An adjustment made pursuant to
this paragraph shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.

                  (b) Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of shares of
Common Stock for which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 11.
For purposes of this Section 11, "common stock of the successor or acquiring
corporation" shall include stock of such
<PAGE>

corporation of any class which is not preferred as to dividends or assets over
any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section 11 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.

            12. Voluntary Adjustment by the Company. The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

            13. Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares (and other securities or property) after such adjustment, setting
forth a brief statement of the facts requiring such adjustment and setting forth
the computation by which such adjustment was made. Such notice, in the absence
of manifest error, shall be conclusive evidence of the correctness of such
adjustment.

            14. Notice of Corporate Action. If at any time:

                  (a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or

                  (b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,

                  (c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at
least 15 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 15
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled
<PAGE>

to any such dividend, distribution or right, and the amount and character
thereof, and (ii) the date on which any such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, dissolution, liquidation or
winding up is to take place and the time, if any such time is to be fixed, as of
which the holders of Common Stock shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with Section
16(d).

                  15. Authorized Shares. The Company covenants that during the
period the Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this Warrant.
The Company will take all such reasonable action as may be necessary to assure
that such Warrant Shares may be issued as provided herein without violation of
any applicable law or regulation, or of any requirements of the Principal Market
upon which the Common Stock may be listed.

                  The Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in par
value, (b) take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (c) use all commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.

                  Upon the request of Holder, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
reasonably satisfactory to Holder, the continuing validity of this Warrant and
the obligations of the Company hereunder.

                  Before taking any action which would cause an adjustment
reducing the current Exercise Price below the then par value, if any, of the
shares of Common Stock issuable upon exercise of the Warrants, the Company shall
take any corporate action which may be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of such Common
Stock at such adjusted Exercise Price.

                  Before taking any action which would result in an adjustment
in the number of shares of Common Stock for which this Warrant is exercisable or
in the Exercise
<PAGE>

Price, the Company shall obtain all such authorizations or exemptions thereof,
or consents thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof.

                  16. Miscellaneous.

                  (a) Jurisdiction. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of New York without regard to its conflict of law principles or
rules, and be subject to arbitration pursuant to the terms set forth in the
Purchase Agreement.

                  (b) Restrictions. The holder hereof acknowledges that the
Warrant Shares acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and federal securities laws.

                  (c) Nonwaiver and Expenses. No course of dealing or any delay
or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies, notwithstanding all rights hereunder terminate on the Termination
Date. If the Company willfully fails to comply with any material provision of
this Warrant, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys' fees, including those of appellate proceedings, incurred
by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.

                  (d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the holder hereof by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.

                  (e) Limitation of Liability. No provision hereof, in the
absence of affirmative action by Holder to purchase shares of Common Stock, and
no enumeration herein of the rights or privileges of Holder hereof, shall give
rise to any liability of Holder for the purchase price of any Common Stock or as
a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.

                  (f) Remedies. Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.

(g) Successors and Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder. The provisions of this Warrant are intended to be
for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.
<PAGE>

                  (h) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.

                  (i) Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

                  (j) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.


Dated January 19, 2001

                                 Milestone Scientific Inc.


                                 By: /s/ Leonard Osser
                                     ----------------------------------------
                                     Leonard Osser, Chairman & CEO

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>CONSENT OF MORSE, ZELNICK, ROSE & LANDER, LLP
<TEXT>


                                   Exhibit 5.1

                          MORSE, ZELNICK, ROSE & LANDER
                         A LIMITED LIABILITY PARTNERSHIP

                                 450 PARK AVENUE
                          NEW YORK, NEW YORK 10022-2605
                       TEL: 212 838 1177 FAX: 212 838 9190

                                January 31, 2001
Milestone Scientific Inc.
220 South Orange Avenue
Livingston Corporate Park
Livingston, New Jersey 07039

                  Re: Registration Statement on Form S-2

Dear Sirs:

      We have acted as counsel to Milestone Scientific Inc., a Delaware
corporation (the "Company"), in connection with the preparation of a
registration statement on Form S-2 (the "registration statement") filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), (a) to register the sale by the selling stockholders of (i)
2,100,000 shares of common stock, par value $.001 per share of Milestone (the
"common stock"), (ii) 75,000 shares of common stock issuable upon the exercise
of the placement agent's warrant, and (iii) 100,000 shares of common stock
issuable upon the exercise of the investor's warrant, and (b) to register the
issuance by the Company of (i) placement agent warrants to purchase 75,000
shares of common stock, and (ii) investor's warrants to purchase 100,000 shares
of common stock.

      In this regard, we have reviewed the Certificate of Incorporation of
Milestone, as amended, resolutions adopted by Milestone's Board of Directors,
the registration statement, and such other records, documents, statutes and
decisions as we have deemed relevant in rendering this opinion. Based upon the
foregoing we are of the opinion that:

      Each share of common stock included in the registration statement and each
stock purchase warrant has been duly authorized for issuance and is now, or when
issued upon exercise of or pursuant to the terms of the instruments which they
underlie will be duly and validly issued, fully paid and non-assessable.

      Members of and counsel to Morse, Zelnick, Rose & Lander, LLP own, in the
aggregate, the following securities: 168,083 shares of Milestone's common stock;
options or warrants to purchase 147,286 shares of Milestone's common stock, all
of which are currently exercisable; and warrants to purchase 83,333 units, each
unit consisting of one share of Milestone's common stock and a warrant to
purchase one share of Milestone's common stock.

      We hereby consent to the use of this opinion as Exhibit 5.1 to the
registration statement and to the reference to our Firm in the related
prospectus under the heading "Legal Matters." In giving this opinion, we do not
hereby admit that we are acting within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the SEC
thereunder.

                                     Very truly yours,


                                     /s/ Morse, Zelnick, Rose & Lander, LLP
                                     -------------------------------------------
                                     Morse, Zelnick, Rose & Lander, LLP

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<TEXT>


               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated March 27, 2000 (except for Note A, as to which
the date is April 5, 2000) accompanying the consolidated financial statements of
Milestone Scientific Inc. and Subsidiaries appearing in the Annual Report on
Form 10-KSB/A as amended and restated for the year ended December 31, 1999, as
filed on December 21, 2000, which are incorporated by reference in this
Registration Statement. We consent to the incorporation by reference in the
Registration Statement of the aforementioned reports and to the use of our name
as it appears under the caption "Experts."

GRANT THORNTON LLP

New York, New York
January 30, 2001

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
