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<SEC-DOCUMENT>0001169232-05-004142.txt : 20050815
<SEC-HEADER>0001169232-05-004142.hdr.sgml : 20050815
<ACCEPTANCE-DATETIME>20050815131858
ACCESSION NUMBER:		0001169232-05-004142
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20050630
FILED AS OF DATE:		20050815
DATE AS OF CHANGE:		20050815

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:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-14053
		FILM NUMBER:		051024990

	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>10QSB
<SEQUENCE>1
<FILENAME>d64931_10qsb.htm
<DESCRIPTION>FORM 10QSB
<TEXT>
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2 Final//EN">
<HTML>
<HEAD>
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     <!-- Project:        X:\JOBS\05-64931\d05-64931.eep                                   -->
     <!-- Control Number: 05-64931                                                         -->
     <!-- Rev Number:     1.0                                                              -->
     <!-- Client Name:    Milestone Scientific, Inc.                                       -->
     <!-- Project Name:   Form Type: 10QSB                                                 -->
     <!-- Firm Name:      Milestone Scientific, Inc.                                       -->
     <TITLE>10QSB</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Div Style" FSL="Project" -->
<DIV STYLE="WIDTH:600" ALIGN=JUSTIFY>
<BR>

<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECURITIES AND EXCHANGE
COMMISSION<BR>Washington, D.C. 20549  </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORM 10-QSB</FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Mark One</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-Bold" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>|X| </B> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B> </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor Underlined" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U>For the Quarterly
Period Ended June 30, 2005</U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>OR</FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-Bold" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>|_| </B> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B> </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>For the transition
period from _________ to _________</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Commission File Number </B>001-14053 </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><B>MILESTONE SCIENTIFIC,
INC.</B><BR>(Exact name of Registrant as specified
in its charter) </FONT> </P>

<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr valign="bottom">
    <td><font face="Times New Roman, Times, serif" size="2"><b>Delaware </b><br>
      State or other jurisdiction<br>
      or organization) <br>
      </font></td>
    <td align="right"><font face="Times New Roman, Times, serif" size="2"> <b>13-3545623
      </b><br>
      (I.R.S. Employer <br>
      Identification No.)</font></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><B>220 South Orange
Avenue, Livingston, New Jersey 07039</B><BR>(Address
of principal executive office) (Zip Code) </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><B>(973) 535-2717
</B><BR>(Registrant&#146;s telephone number, including area code) </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) or the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Yes |X|&nbsp;&nbsp;&nbsp;&nbsp;No |_|</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>As of August 15, 2005, the
Registrant had a total of 11,352,704 shares of Common Stock, $.001 par value, outstanding.</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORWARD
LOOKING STATEMENTS</FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>When used in this Quarterly Report
on Form 10-QSB, the words &#147;may&#148;, &#147;will&#148;, &#147;should&#148;,
&#147;expect&#148;, &#147;believe&#148;, &#147;anticipate&#148;, &#147;continue&#148;,
&#147;estimate&#148;, &#147;project&#148;, &#147;intend&#148; and similar expressions are
intended to identify forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act regarding events, conditions and
financial trends that may affect Milestone&#146;s future plans of operations, business
strategy, results of operations and financial condition. Milestone wishes to ensure that
such statements are accompanied by meaningful cautionary statements pursuant to the safe
harbor established in the Private Securities Litigation Reform Act of 1995. Prospective
investors are cautioned that any forward-looking statements are not guarantees of future
performance and are subject to risks and uncertainties and that actual results may differ
materially from those included within the forward-looking statements as a result of
various factors. Such forward-looking statements should, therefore, be considered in light
of various important factors, including those set forth herein and others set forth from
time to time in Milestone&#146;s reports and registration statements filed with the
Securities and Exchange Commission (the &#147;Commission&#148;). Milestone disclaims any
intent or obligation to update such forward-looking statements.</I> </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>MILESTONE SCIENTIFIC
INC. AND SUBSIDIARIES </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U>I N D E X</U> </FONT></P>



<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=center><b><font face="Times New Roman, Times, serif" size="2"><u>PAGE</u></font></b></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">PART I&nbsp;&nbsp;&nbsp;FINANCIAL
      INFORMATION</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="100%"><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ITEM
      1 &nbsp;&nbsp;Condensed Consolidated Financial Statements (unaudited)</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a01">Condensed
      Consolidated Balance Sheets</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a01">June
      30, 2005 (Unaudited) and December 31, 2004</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"><A HREF="#a01">4</A></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a02">Condensed
      Consolidated Statements of Operations</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a02">Three
      and Six Months Ended June 30, 2005 and 2004 (Unaudited)</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"><A HREF="#a02">5</A></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a03">Condensed
      Consolidated Statement of Changes in Stockholders&#146;</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a03">Equity
      (Deficiency) - Six Months Ended June 30, 2005</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"><A HREF="#a03">6</A></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a04">Condensed
      Consolidated Statements of Cash Flows</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a04">Six
      Months Ended June 30, 2005 and 2004 (Unaudited)</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"><A HREF="#a04">7</A></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a05">Notes
      to Condensed Consolidated Financial Statements</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"><A HREF="#a05">10</A></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a06">ITEM
      2</A>&nbsp;&nbsp; <A HREF="#a06">Management&#146;s Discussion and Analysis or Plan of Operation</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"><A HREF="#a06">13</A></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a07">ITEM
      3</A> &nbsp;&nbsp;<A HREF="#a07">Controls and Procedures</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"><A HREF="#a06">19</A></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">PART II&nbsp;&nbsp;OTHER
      INFORMATION</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a08">ITEM
      2</A> &nbsp;&nbsp;<A HREF="#a08">Unregistered Sales of Equity Securities and Use of Proceeds</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"><A HREF="#a08">20</A></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<A HREF="#a09">ITEM
      6</A> &nbsp;&nbsp;<A HREF="#a09">Exhibits</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"><A HREF="#a09">21</A></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"><A HREF="#a10">SIGNATURES</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"><A HREF="#a10">23</A></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"><A HREF="d64931_ex31-1.htm">CERTIFICATIONS</A></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"><A HREF="d64931_ex31-1.htm">24</A></font></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>

<A NAME="a01"></A>


<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>MILESTONE SCIENTIFIC
INC. AND SUBSIDIARIES<BR>CONDENSED
CONSOLIDATED BALANCE SHEETS </FONT></P>




<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr valign=Bottom align="center">
    <td nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b></td>
    <td colspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1">
      June 30, <br>
      2005 <br>
      (Unaudited)<br>
      </font></b></td>
    <td nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b></td>
    <td colspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1">December
      31,<br>
      2004* <br>
      </font></b></td>
    <td nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b></td>
  </tr>
  <tr>
    <td></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=center><font face="Times New Roman, Times, serif" size="2"><u>ASSETS</u></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Current
      Assets:</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Cash
      and cash equivalents</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 4,513,114</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 3,041,306</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="100%"><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Accounts
      receivable, net of allowance for doubtful accounts of $36,672</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;in
      2005 and $24,903 in 2004</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">557,947</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">421,339</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Royalty
      receivable</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">219,210</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Inventories</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,050,247</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">936,221</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Advances
      to contract manufacturer</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">320,216</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">62,034</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Prepaid
      expenses</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">96,586</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">104,562</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      current assets</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">6,757,320</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">4,565,462</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Investment
      in distributor, at cost</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">69,956</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">69,956</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Equipment,
      net</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">582,025</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">612,263</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Patents,
      net</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">326,522</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">101,242</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Other
      assets</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">17,270</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">20,408</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Totals</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 7,753,093</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 5,369,331</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=3 align="left"><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=3 align="left"><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=center><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=center><font face="Times New Roman, Times, serif" size="2"><u>LIABILITIES
      AND STOCKHOLDERS&#146; EQUITY</u></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Current
      Liabilities:</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Accounts
      payable</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 356,896</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 474,075</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Accrued
      expenses</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">440,224</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">224,549</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      current liabilities</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">797,120</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">698,624</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Deferred
      compensation payable to officer</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">225,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">150,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      liabilities</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,022,120</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">848,624</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=3 align="left"><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=3 align="left"><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=center><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Stockholders&#146;
      Equity:</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Preferred
      stock, par value $.001; authorized 5,000,000 shares</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8%
      cumulative convertible preferred stock, par value $.001; authorized,</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;issued
      and outstanding, 25,365 shares</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">25</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">25</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Common
      stock, par value $.001; authorized 50,000,000 shares; 11,386,037</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
      issued and 11,352,704 shares outstanding in 2005, and 9,824,287</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
      issued and 9,790,954 shares outstanding in 2004</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">11,386</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">9,824</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Additional
      paid-in capital</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">56,496,350</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">52,618,913</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Accumulated
      deficit</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(48,865,272</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(47,196,539</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Treasury
      stock, at cost, 33,333 shares</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(911,516</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(911,516</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      stockholders&#146; equity (deficiency)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">6,730,973</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">4,520,707</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Totals</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 7,753,093</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 5,369,331</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See notes to Condensed Consolidated
Financial Statements </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*Derived from the audited financial
statements as of December 31, 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>

<A NAME="a02"></A>


<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>MILESTONE SCIENTIFIC
INC. AND SUBSIDIARIES<BR>CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS<BR>THREE AND SIX MONTHS
ENDED JUNE 30, 2005 AND 2004<BR>(Unaudited) </FONT></P>



<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr valign=Bottom>
    <td rowspan="3" align=LEFT>&nbsp;</td>
    <td colspan="5" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Three
      Months Ended</font></b></td>
    <td rowspan="3" align=LEFT>&nbsp;</td>
    <td colspan="5" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Six
      Months Ended</font></b></td>
    <td rowspan="3" align=LEFT>&nbsp;</td>
  </tr>
  <tr>
    <td colspan=5 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td colspan=5 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
  </tr>
  <tr valign=Bottom>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">June
      30,<br>
      2005 <br>
      </font></b></td>
    <td align=LEFT>&nbsp;</td>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">June
      30,<br>
      2004<br>
      </font></b></td>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">June
      30,<br>
      2005 <br>
      </font></b></td>
    <td align=LEFT>&nbsp;</td>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">June
      30,<br>
      2004</font></b></td>
  </tr>
  <tr>
    <td></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td width=100% align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Products
      sales, net</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 1,456,731</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 1,188,022</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 2,914,634</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 2,282,245</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Royalty
      income</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">219,210</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">219,210</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Total revenue</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,675,941</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,188,022</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">3,133,844</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2,282,245</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Cost
      of products sold</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">538,604</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">769,383</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,253,310</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,315,683</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Royalty
      expense</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">26,305</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">26,305</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Total costs</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">564,909</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">769,383</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,279,615</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,315,683</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Gross profit</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,111,032</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">418,639</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,854,229</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">966,562</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Selling,
      general and administrative expenses</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,854,562</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,211,917</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">3,456,255</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2,196,785</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Research
      and development expenses</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">69,844</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">52,409</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">101,389</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">93,621</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,924,406</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,264,326</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">3,557,644</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2,290,406</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Loss from
      operations</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(813,374</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(845,687</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(1,703,415</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(1,323,844</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Other income
      (expense)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Interest
      income</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">23,584</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">28,876</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">34,682</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">41,010</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Interest
      expense</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(10,867</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(63,638</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Other
      income (expense) net</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">23,584</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">18,009</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">34,682</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(22,628</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Net loss</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(789,790</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(827,678</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(1,668,733</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(1,346,472</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Dividends
      applicable to preferred stock</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(507</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(1,014</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Net loss
      applicable to common stockholders</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> (790,297</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> (827,678</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> (1,669,747</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> (1,346,472</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Loss per
      share applicable to common</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;stockholders
      - basic and diluted</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> (0.07</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> (0.09</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> (0.16</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> (0.16</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Weighted
      average shares outstanding - basic</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;and
      diluted</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">10,931,052</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">9,690,365</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">10,410,451</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">8,591,279</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See Notes to Condensed Consolidated
Financial Statements </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>

<A NAME="a03"></A>


<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>MILESTONE
SCIENTIFIC, INC. AND SUBSIDIARIES<BR>CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS&#146; EQUITY (DEFICIENCY)<BR>SIX MONTHS ENDED JUNE 30, 2005
<BR>(Unaudited) </FONT></P>


<table cellpadding=0 cellspacing=0 border=0 width=650>
  <tr>
    <td valign="bottom" rowspan="3" nowrap></td>
    <td colspan=5 align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">Preferred
      Stock</font></b></td>
    <td valign="bottom" rowspan="3"></td>
    <td colspan=5 align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">Common
      Stock</font></b></td>
    <td valign="bottom" rowspan="3"></td>
    <td colspan=2 align=center valign="bottom" rowspan="3" nowrap><b><font face="Times New Roman, Times, serif" size="1">Additional<br>
      Paid-in <br>
      Capital </font></b></td>
    <td valign="bottom" rowspan="3"></td>
    <td colspan=2 align=center valign="bottom" rowspan="3" nowrap><b><font face="Times New Roman, Times, serif" size="1">Accumulated<br>
      Deficit </font></b></td>
    <td valign="bottom" rowspan="3"></td>
    <td colspan=2 align=center valign="bottom" rowspan="3" nowrap><b><font face="Times New Roman, Times, serif" size="1">Treasury<br>
      Stock </font></b></td>
    <td valign="bottom" rowspan="3"></td>
    <td colspan=2 align=center valign="bottom" rowspan="3" nowrap><b><font face="Times New Roman, Times, serif" size="1">Total</font></b></td>
    <td valign="bottom" rowspan="3"></td>
  </tr>
  <tr>
    <td colspan=5 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td colspan=5 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
  </tr>
  <tr>
    <td colspan=2 align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">Shares</font></b></td>
    <td valign="bottom"></td>
    <td colspan=2 align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">Amount</font></b></td>
    <td colspan=2 align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">Shares</font></b></td>
    <td valign="bottom"></td>
    <td colspan=2 align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">Amount</font></b></td>
  </tr>
  <tr>
    <td nowrap></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td valign="bottom" align=LEFT width=100% nowrap><font face="Times New Roman, Times, serif" size="1">Balance,
      January 1, 2005</font></td>
    <td valign="bottom" align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td valign="bottom" align=RIGHT><font face="Times New Roman, Times, serif" size="1">25,365</font></td>
    <td valign="bottom" align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td valign="bottom" align=left><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td valign="bottom" align=RIGHT><font face="Times New Roman, Times, serif" size="1">
      25</font></td>
    <td valign="bottom" align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td valign="bottom" align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td valign="bottom" align=RIGHT><font face="Times New Roman, Times, serif" size="1">9,824,287</font></td>
    <td valign="bottom" align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td valign="bottom" align=left><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td valign="bottom" align=RIGHT><font face="Times New Roman, Times, serif" size="1">
      9,824</font></td>
    <td valign="bottom" align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td valign="bottom" align=left><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td valign="bottom" align=RIGHT><font face="Times New Roman, Times, serif" size="1">
      52,618,913</font></td>
    <td valign="bottom" align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td valign="bottom" align=left><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td valign="bottom" align=RIGHT><font face="Times New Roman, Times, serif" size="1">
      (47,196,539</font></td>
    <td valign="bottom" align=LEFT><font face="Times New Roman, Times, serif" size="1">)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td valign="bottom" align=left><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td valign="bottom" align=RIGHT><font face="Times New Roman, Times, serif" size="1">
      (911,516</font></td>
    <td valign="bottom" align=LEFT><font face="Times New Roman, Times, serif" size="1">)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td valign="bottom" align=left><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td valign="bottom" align=RIGHT><font face="Times New Roman, Times, serif" size="1">
      4,520,707</font></td>
    <td valign="bottom" align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="1">Common
      stock issued for payment of</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;patent
      rights acquired</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">43,424</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">44</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">87,289</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">87,333</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td align=LEFT valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="1">Common
      stock issued for payment of</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td align=LEFT valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;vendor
      services</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">38,730</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">39</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">99,961</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100,000</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="1">Common
      stock issued for payment of</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;consulting
      services</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">99,362</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">128,529</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">128,629</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td align=LEFT valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="1">Common
      stock issued for payment of</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td align=LEFT valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;employee
      compensation</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">23,461</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">23</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">34,977</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">35,000</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="1">Common
      stock issued for exercised option&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">333</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">749</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">749</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td align=LEFT valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="1">Proceeds
      from equity financings, net</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">1,356,440</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">1,356</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">3,525,932</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">3,527,288</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="1">Net
      loss</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">(1,668,733</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">)</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">(1,668,733</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">)</font></td>
  </tr>
  <tr>
    <td nowrap><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=23>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td align=LEFT valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="1">Balance,
      June 30, 2005</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">25,365</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      25</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">11,386,037</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      11,386</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      56,496,350</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      (48,865,272</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">)</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      (911,516</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">)</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      6,730,973</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td nowrap><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=23>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See Notes to Condensed Consolidated
Financial Statements </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>

<A NAME="a04"></A>


<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>MILESTONE SCIENTIFIC
INC. AND SUBSIDIARIES<BR>CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS<BR>SIX MONTHS ENDED JUNE
30, 2005 AND 2004<BR>(Unaudited) </FONT></P>

<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, Serif" size=2>&nbsp;</font></td>
    <td colspan="2" align=center><b><font face="Times New Roman, Times, Serif" size="1">2005</font></b></td>
    <td align=LEFT><font face="Times New Roman, Times, Serif" size=2>&nbsp;</font></td>
    <td colspan="2" align=center><b><font face="Times New Roman, Times, Serif" size="1">2004</font></b></td>
    <td align=LEFT><font face="Times New Roman, Times, Serif" size=2>&nbsp;</font></td>
  </tr>
  <tr>
    <td></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Cash flows
      from operating activities:</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Net loss</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> (1,668,733</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> (1,346,472</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT width="100%"><font face="Times New Roman, Times, serif" size="2">Adjustments
      to reconcile net loss to net cash used in operating activities:</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Depreciation</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">49,700</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">17,140</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Amortization
      of debt discount and deferred financing costs</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">46,294</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Amortization
      of patents</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">7,053</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Stock
      issued for compensation and consulting services</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">263,629</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,548</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Bad
      debt expense</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">11,769</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Changes
      in operating assets and liabilities:</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase)
      in accounts receivable</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(148,377</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(119,619</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase)
      in royalty receivable</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(219,210</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase)
      in inventories</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(114,026</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(109,637</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase)
      decrease in advances to contract manufacturer</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(258,182</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">112,997</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease
      (increase )in prepaid expenses</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">7,976</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(3,295</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease
      (increase) in other assets</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">3,138</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(142</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease)
      in accounts payable</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(117,179</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(604,858</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease)
      in accrued interest</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(82,015</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase
      in accrued expenses</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">215,675</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">255,084</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase
      (decrease) in deferred compensation</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">75,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(181,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      cash used in operating activities</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(1,891,767</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(2,013,975</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Cash flows
      from investing activities:</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Payment
      for capital expenditures</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(19,462</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(324,767</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Payment
      for patent rights</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(145,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      cash used in investing activities:</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(164,462</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(324,767</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Cash flows
      from financing activities:</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Proceeds
      from equity financings, net</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">3,528,037</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">7,620,104</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Payments
      of note payable - officer/stockholder</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">(50,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      cash provided by financing activities</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">3,528,037</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">7,570,104</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">NET INCREASE
      IN CASH AND CASH EQUIVALENTS</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,471,808</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">5,231,362</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Cash and
      cash equivalents beginning of period</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">3,041,306</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">3,277</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Cash
      and cash equivalents end of period</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 4,513,114</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 5,234,639</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Supplemental
      disclosure of cash flow information:</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Cash paid
      during the period for interest</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> &#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 99,359</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See Notes to Condensed Consolidated
Financial Statements </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>MILESTONE
SCIENTIFIC INC. AND SUBSIDIARIES<BR>CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>SIX
MONTHS ENDED JUNE 30, 2005 AND 2004<BR>(Unaudited) </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Supplemental schedule of noncash
investing and financing activities: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
January 27, 2005 we issued 43,424 shares valued at $70,000 and recorded a $145,000
liability payable to our outside director of clinical affairs in satisfaction of a
technology agreement to provide Milestone with patent rights. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February 11, 2005 we issued 3,084 shares valued at $7,000 to ValueRich Inc. in
satisfaction of an agreement to provide Milestone with exhibition facilities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 8, 2005 we issued 7,408 shares valued at $20,000 (of which $6,667 was expensed in
the six months ended June 30, 2005) to Dynamic Decisions, S.r.l. in satisfaction of
consulting services to be provided under contract for a 12 month period ending in March,
2006. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 8, 2005 we issued 2,204 shares valued at $5,000 to Investment Connections in
satisfaction of professional services rendered. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 8, 2005 we issued 9,965 shares valued at $23,333 to a former employee as part of a
severance agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 22, 2005 we issued 8,811 shares to a consultant for professional business
development services valued at $20,000 to be provided over the next 18 months (of which
$6,666 was expensed in the six months ended June 30, 2005). We also issued 6,061 shares
valued at $10,000 to an employee for payment of bonus. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 23, 2005 we issued 38,730 shares to Design Center Inc, in satisfaction of $100,000
of payables owed in connection with warehousing and fulfillment services rendered. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 31, 2005 we issued 7,536 shares valued at $20,000 to a consultant for professional
services rendered during March. On June 6, 2005, we issued another 7,536 shares valued at
$20,000 to the same consultant for professional services rendered during April. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April 4, 2005, Milestone completed a $2,999,996 private placement of 101,044 units to
accredited investors. Each unit consists of 10 shares of common stock and two warrants.
Proceeds from the private placements were recorded net of a 7% placement agent fee of
$209,978 and other offering expenses totaling $44,257. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
June 27, 2005 we issued 7,435 shares valued at $20,000 to an employee as part of annual
compensation. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
June 30, 2005 we issued 62,783 shares valued at $180,000 to a consultant for advertising
and marketing services to be rendered in a twelve-month period from April 2005. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
June 30, 2005, Milestone completed an $847,960 private placement of 34,000 units to
accredited investors. Each unit consists of 10 shares of common stock and two warrants.
Proceeds from this private placement were recorded net of a fee of $50,878 and 600
identical units to the investment adviser. Dynamic Decisions acted as investment adviser
to Milestone in this transaction and received a fee of $50,878 and 600 Units, which are
substantially the same form as those issued to the investors. Total proceeds from this
private placement, after commissions and other expenses, were $797,054. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
February 2004, Milestone issued 335,614 units in consideration for notes payable and
accrued interest due to an officer and a shareholder of $1,604,204, accounts payable due
to outside legal counsel of $200,000 and deferred compensation to an officer of $384,000.
Each unit consisted of 2 shares of Milestone&#146;s common stock (671,228 shares of common
stock) and a warrant. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
part of its payment for services in connection with the February 2004 public offering,
Milestone issued to its outside general counsel 5-year options to purchase 160,000 shares
of common stock at an exercise price of $3.26 per share and warrants to purchase 80,000
shares of common stock at an exercise price of $4.89. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
April 2004, pursuant to an agreement to purchase media placement services, the Company
issued 1,106 shares of common stock valued at $2,500. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
May 2004, the Company issued 43,335 options to various consultants for current and future
services valued at $106,078 of which $1,548 was recognized as expense during the period. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>

<A NAME="a05"></A>


<!-- MARKER FORMAT-SHEET="Head Major 10" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>MILESTONE SCIENTIFIC
INC. AND SUBSIDIARIES<BR>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<BR>(Unaudited)</FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 1 &#150; Summary of accounting
policies: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
unaudited condensed consolidated financial statements of Milestone Scientific Inc. and
Subsidiaries (the &#147;Company&#148;) have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim financial
information. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of America for
complete financial statements.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
These
unaudited condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto for the year ended December 31,
2004 included in Milestone&#146;s Annual Report on Form 10-KSB. The accounting policies
used in preparing these unaudited condensed consolidated financial statements are the
same as those described in the December 31, 2004 consolidated financial statements.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
In
the opinion of Milestone, the accompanying unaudited condensed consolidated financial
statements contain all adjustments (consisting of normal recurring entries) necessary to
present fairly Milestone&#146;s financial position as of June 30, 2005 and the results of
its operations for the three and six months ended June 30, 2005 and 2004.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
results reported for the three and six months ended June 30, 2005 are not necessarily
indicative of the results of operations which may be expected for a full year.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 2 &#150; Private Placement: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
On
June 30, 2005 Milestone completed an $847,960 private placement of 34,000 Units to
accredited investors. Each Unit consists of 10 shares of Common Stock and two Warrants.
Each Warrant entitles the holder to purchase a share of Common Stock at $4.89 per share
through the close of business on February 16, 2009. Dynamic Decisions acted as investment
adviser to Milestone in this transaction and received a fee of $50,878 and 600 Units,
which are substantially the same form as those issued to the investors. Total proceeds
from this private placement, after commissions and other expenses, were $797,054.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
On
April 4, 2005 Milestone completed a $2,999,996 private placement of 101,044 Units to
accredited investors. Each Unit consisted of 10 shares of Common Stock and two Warrants.
Each Warrant entitles the holder to purchase a share of Common Stock at $4.89 per share
through the close of business on February 16, 2009. I-Bankers Securities, Inc. acted as
placement agent for Milestone in this transaction and received a fee of $209,978 and
101,044 Warrants identical in terms to those issued to the investors. Total proceeds to
Milestone after commissions and other expenses were $2,730,234.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Net
proceeds from these offerings will be used to fund Milestone&#146;s operations including
ongoing sales and marketing programs, along with the development and bringing to market
of new products.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 3     &#150; Royalty Receivable: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">Royalty
receivable represents the royalty due from United Systems, Inc, the licensee of
our proprietary consumer dental whitening product, which is sold under
our distributor&#146;s trademark,
<I>Ionic White</I>&#153;. This receivable was collected on July 29, 2005. </FONT> </P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 4 &#150; Inventories:  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Inventories
principally consist of finished goods and component parts stated at the lower of cost
(first-in, first-out method) or market.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 5 &#150; Basic and diluted net
loss per common share:  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Milestone
presents basic earnings (loss) per common share and, if applicable, diluted earnings per
common share pursuant to the provisions of Statement of Financial Accounting Standards
No. 128, &#147;Earnings per Share&#148; (&#147;SFAS 128&#148;). Basic earnings (loss) per
common shares is calculated by dividing net income or loss applicable to common stock by
the weighted average number of common shares outstanding during each period. The
calculation of diluted earnings per common share is similar to that of basic earnings per
common share, except that the denominator is increased to include the number of
additional common shares that would have been outstanding if all potentially dilutive
common shares, such as those issuable upon the exercise of stock options, warrants, and
the conversion of notes payable were issued during the period. Milestone has not included
the common shares issuable upon conversion of the outstanding 25,365 preferred shares in
the weighted average number of shares outstanding in the computation of basic loss per
share because their effect would have been anti-dilutive. This treatment is in accordance
with the &#147;two class&#148; method of computing earnings (loss) per share set forth in
SFAS 128.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Since
Milestone had net losses for the three and six months ended June 30, 2005 and 2004, the
assumed effects of the exercise of 3,589,256 and 3,249,692 outstanding stock options and
warrants, and the conversion of notes payable and preferred stock into common stock at
June 30, 2005 and 2004, were not included as their effect would have been anti-dilutive.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 6 &#150; Significant Customer: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Milestone
had one foreign customer who accounted for approximately 16% and 19% of its net sales for
the three and six months ended June 30, 2005, respectively and approximately 23% and 21%
for the three and six months ended June 30, 2004, respectively. At June 30, 2005,
receivables from this customer were approximately 83% of Milestone&#146;s total accounts
receivable.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 7 &#150;Employee Stock Option
Plan </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
As
of June 30, 2005, there were 286,783 outstanding options granted under the Milestone 1997
Stock Option Plan and no option grants had been made under the Milestone 2004 Stock
Option Plan. Milestone accounts for these plans under the recognition and measurement
principles of APB Opinion No. 25, <I>Accounting for Stock Issued to Employees</I>, and
related Interpretations. No stock-based employee compensation cost is reflected in net
loss, as all options granted under these plans had an exercise price equal to the market
value of the underlying common stock on the dates of grant. The following table
illustrates net loss and loss per share if Milestone had applied the fair value
recognition provisions of FASB Statement No. 123, <I>Accounting for Stock-Based
Compensation</I>, to stock-based employee compensation.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<table cellpadding=0 cellspacing=0 border=0 width=625>
  <tr valign=Bottom>
    <td rowspan="3" align=LEFT>&nbsp;</td>
    <td rowspan="3" align=LEFT>&nbsp;</td>
    <td colspan="5" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Three
      Months Ended<br>
      June 30, </font></b></td>
    <td rowspan="3" align=LEFT>&nbsp;</td>
    <td colspan="5" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Six
      Months Ended<br>
      June 30, </font></b></td>
    <td rowspan="3" align=LEFT>&nbsp;</td>
  </tr>
  <tr>
    <td colspan=5 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td colspan=5 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
  </tr>
  <tr valign=Bottom>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">2005
      <br>
      </font></b></td>
    <td align=LEFT>&nbsp;</td>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">2004<br>
      </font></b></td>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">2005
      <br>
      </font></b></td>
    <td align=LEFT>&nbsp;</td>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">2004</font></b></td>
  </tr>
  <tr>
    <td></td>
    <td></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=LEFT width="100%" bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">Net
      loss applicable to common stockholders, as reported</font></td>
    <td align=left bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      (790,297</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      (827,678</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      (1,669,747</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      (1,346,472</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Deduct
      total stock-based employee compensation</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">expenses
      determined under the fair value</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">based method
      for all awards</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">27,016</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">19,842</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">228,188</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">25,373</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">Net
      loss applicable to common stockholders, pro forma</font></td>
    <td align=left bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      (817,313</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      (847,520</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      (1,897,935</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=left bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      (1,371,845</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Loss per
      share applicable to common stockholders:</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">Basic
      and diluted</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      </font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      </font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      </font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      </font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;As
      reported</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">($0.07</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">($0.09</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">($0.16</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">($0.16</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=11><font face="Times New Roman, Times, serif" size="2"></font><font face="Times New Roman, Times, serif" size="2"></font><font face="Times New Roman, Times, serif" size="2"></font>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;Pro
      forma</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">($0.07</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">($0.09</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">($0.18</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">)</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">($0.16</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">)</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=11><font face="Times New Roman, Times, serif" size="2"></font><font face="Times New Roman, Times, serif" size="2"></font><font face="Times New Roman, Times, serif" size="2"></font>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
</table>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
fair value of each option granted is estimated on the date of the grant using the
Black-Scholes option pricing model with the following assumptions used for the grants in
the quarters ended June 30, 2005 and 2004, respectively: dividend yield of 0%; expected
volatility of 123.18 % and 90%; risk free interest rate of 3.87% and 2.5%; and expected
lives of 5 years.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
During
the six months ended June 30, 2005, Milestone issued 80,000 stock options at an exercise
price of $3.27.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 8 &#150;Agreements to Issue
Common Stock and Stock Option </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
May 18, 2005, Milestone issued to Ionic White, Inc., its marketing partner for a consumer
tooth whitening product, 3-year options to purchase 100,000 shares of Milestone common
stock at $4.89 per share. The options are not exercisable unless the marketing partner
purchases at least 2,000,000 starter kits for the registrant&#146;s consumer tooth
whitening system during the twelve month period beginning July 1, 2005. If 2,000,000
starter kits are purchased during that period, options to purchase 10,000 shares become
exercisable. If 2,500,000 starter kits are purchased during that period, options to
purchase an aggregate of 50,000 shares become exercisable. If 3,000,000 starter kits are
purchased during that period, options to purchase all 100,000 shares become exercisable.  </FONT></P>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
a previous agreement, Ionic White, Inc., agreed to purchase 500,000 shares of Milestone
common stock in quarterly installments of 125,000 shares within 10 days after the end of
each of the four fiscal quarters commencing July 1, 2005. Milestone is not required to
sell these shares unless Ionic White has purchased at least 625,000 starter kits in the
first quarter, at least 1,250,000 starter kits in the first two quarters and at least
1,875,000 starter kits in the first three quarters. Further, at Milestone&#146;s option,
all shares previously purchased must be returned to Milestone and all monies paid to
Milestone returned to Ionic White if it has not purchased an aggregate of at least
3,000,000 starter kits for the twelve-month period ending June 30, 2006.  </FONT></P>
</TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>

<A NAME="a06"></A>


<!-- MARKER FORMAT-SHEET="Head Minor" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>ITEM 2.  Management&#146;s
Discussion and Analysis or Plan of Operation.</FONT></H2>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>OVERVIEW</FONT></H2>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
should read the following discussions of our financial condition and results of
operations in conjunction with the financial statements and the notes to those statements
included elsewhere in this Form 10-QSB. This discussion may contain forward-looking
statements that involve risks and uncertainties. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of certain
factors, such as those set forth in our Form 10K-SB for the year ended December 31, 2004.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Milestone
has succeeded in improving its liquidity by acquiring the capital necessary to grow our
business and seize the market opportunity that our proprietary products have created.
During 2004 and continuing through the first two quarters of 2005, we have grown our
revenue base both with our existing product line and the introduction of new products.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Most
of our revenues continue to be generated through sales of our <I>CompuDent</I> system and
<I>The Wand</I> disposable handpiece used with that system. Revenues have been earned
domestically and internationally through sales in more than 25 countries. While worldwide
revenues are growing, domestic <I>CompuDent</I> and handpiece sales have provided an
increasingly large portion of our revenues. This is an important metric as it validates
the investment made in our domestic sales distribution organization. Additionally, we
enjoy significantly higher margins on domestic sales compared to the lower per unit and
handpiece margins we receive from our wholesale based international distribution network.
We anticipate that this growing base of new customers will generate increased future
sales of our disposable handpiece products. We also believe that our ownership of the <I>SafetyWand</I> technology
in light of OSHA regulations issued pursuant to recent federal and state government
legislation mandating needle stick safety standards positions us to become a leading
provider for dentists and other health care professionals in the administration of local
anesthesia, thereby providing further revenue growth opportunities.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
late March we launched, through widely broadcast infomercials, our consumer tooth
whitening product sold under our distributor&#146;s trademark, <I>Ionic White</I>&#153;.
Our consumer tooth whitening product and the <I>CoolBlue</I>&#153; Professional Tooth
Whitening System, complement our existing product line. The tooth whitening market is a
fast growing dental segment. We believe that it will provide significant additional
revenue opportunities. Revenues for the second quarter reflect sales of <I>Ionic White</I>&#153;.
During the quarter a competitor launched a confusingly similar tooth whitening product
through infomercials and retail distribution. Milestone has commenced an infringement
action and the defendant has counterclaimed against Milestone for a declaratory judgment
of non-infringement. The introduction of this competitive product may cause our
distributor to focus its near-term marketing efforts on retail sales. We are also
aggressively pursuing entrance into the medical arena with our syringe pump technology.
We continue to invest in business development efforts to further our progress in the
medical equipment market space. </FONT> </P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling,
general and administrative expenses for the second quarter increased substantially from
last year, reflecting our continuing enhancement of our domestic dental sales capability
and increased marketing and promotional efforts, including trade show appearances, for
our dental products. The increase also reflects our continuing efforts to complete
development of, and find marketing partners for, medical devices using our advanced
technology, particularly our <I>Compuflo&#153;</I>  syringe pump technology.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table shows a breakdown of our sales in each product category, domestically and
internationally, and the percentage of sales to total product sales:  </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>



<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr>
    <td rowspan="3" align=LEFT valign="bottom">&nbsp;</td>
    <td colspan="11" align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">Three
      Months Ended</font></b></td>
    <td rowspan="3" align=LEFT valign="bottom">&nbsp;</td>
    <td colspan="11" align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">Six
      Months Ended</font></b></td>
    <td rowspan="3" align=LEFT valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="11" align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td colspan="11" align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
  </tr>
  <tr>
    <td colspan="5" align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">June
      30, 2005</font></b></td>
    <td align=LEFT valign="bottom">&nbsp;</td>
    <td colspan="5" align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">June
      30, 2004</font></b></td>
    <td colspan="5" align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">June
      30, 2005</font></b></td>
    <td align=LEFT valign="bottom">&nbsp;</td>
    <td colspan="5" align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">June
      30, 2004</font></b></td>
  </tr>
  <tr>
    <td align=LEFT>&nbsp;</td>
    <td colspan="5" align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td colspan="5" align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td colspan="5" align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td colspan="5" align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td width=100% align=LEFT valign="bottom"><b><font face="Times New Roman, Times, serif" size="1">DOMESTIC</font></b></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom"><i><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;CompuDent</font></i></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      377,076</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">33.6</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      142,132</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">17.8</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      704,764</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">33.1</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      275,753</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">17.9</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;Handpieces</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      639,104</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">57.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">607,600</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">76.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">1,303,495</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">61.1</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">1,156,769</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">75.2</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;Other</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      105,713</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">9.4</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">49,790</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">6.2</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">122,809</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">5.8</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">106,478</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">6.9</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">Total
      Domestic</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      1,121,893</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      799,522</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      2,131,068</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      1,539,000</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom"><b><font face="Times New Roman, Times, serif" size="1">INTERNATIONAL</font></b></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td align=LEFT valign="bottom"><i><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;CompuDent</font></i></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      119,141</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">35.6</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      160,909</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">41.4</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      292,208</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">37.3</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      325,249</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">43.8</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;Handpieces</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      164,585</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">49.1</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">216,336</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">55.7</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">433,166</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">55.3</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">392,646</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">52.8</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;Other</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      51,112</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">15.3</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">11,255</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">2.9</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">58,192</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">7.4</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">25,350</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">3.4</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">Total
      International</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      334,838</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      388,500</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      783,566</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      743,245</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td align=LEFT valign="bottom" colspan="3"><b><font face="Times New Roman, Times, serif" size="1">DOMESTIC/INTERNATIONAL
      ANALYSIS</font></b><font face="Times New Roman, Times, serif" size="1">&nbsp;</font><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      </font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;Domestic</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      1,121,893</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">77.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      799,522</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">67.3</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      2,131,068</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">73.1</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      1,539,000</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">67.4</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr bgcolor="#eaf9e8">
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;International</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">334,838</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">23.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">388,500</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">32.7</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">783,566</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">26.9</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">743,245</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">32.6</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">Total
      Product Sales</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      1,456,731</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      1,188,022</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      2,914,634</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1">$</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">
      2,282,245</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1">100.0</font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Summary of
Significant Accounting Policies</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Our
discussion and analysis of our financial condition and results of operations are based
upon our consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The preparation
of these consolidated financial statements requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. On an on-going basis, we
evaluate our estimates, including those related to accounts receivable, inventories,
stock based compensation and contingencies. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from those estimates under different assumptions or
conditions.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Left - Italics" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>Inventory</I> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Inventories
principally consist of finished goods and component parts stated at the lower of cost
(first-in, first-out method) or market.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Left - Italics" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>Impairment of
Long-Lived Assets</I> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
We
review long-lived assets for impairment whenever circumstances and situations change such
that there is an indication that the carrying amounts may not be recovered.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Left - Italics" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>Revenue Recognition</I> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Revenue
is recognized when title passes at the time of shipment and collectibility based on a
sales arrangement and the agreed upon price is reasonably assured.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Results of Operations</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
consolidated results of operations for the six months ended June 30, 2005 reflect growth
of our user base and the initial additional expenditures necessary to further expand our
customer base both domestically and abroad.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table sets forth, for
the periods presented, statement of operations data as a percentage of revenues. The
trends suggested by this table may not be indicative of future operating results.  </FONT></P>


<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr>
    <td rowspan="3" align=LEFT valign="bottom">&nbsp;</td>
    <td colspan="11" align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">Three
      Months Ended</font></b></td>
    <td rowspan="3" align=LEFT valign="bottom">&nbsp;</td>
    <td colspan="11" align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">Six
      Months Ended</font></b></td>
    <td rowspan="3" align=LEFT valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="11" align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td colspan="11" align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
  </tr>
  <tr>
    <td colspan="5" align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">June
      30, 2005</font></b></td>
    <td align=LEFT valign="bottom">&nbsp;</td>
    <td colspan="5" align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">June
      30, 2004</font></b></td>
    <td colspan="5" align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">June
      30, 2005</font></b></td>
    <td align=LEFT valign="bottom">&nbsp;</td>
    <td colspan="5" align=center valign="bottom" nowrap><b><font face="Times New Roman, Times, serif" size="1">June
      30, 2004</font></b></td>
  </tr>
  <tr>
    <td align=LEFT>&nbsp;</td>
    <td colspan="5" align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td colspan="5" align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td colspan="5" align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td colspan="5" align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=RIGHT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td align=LEFT valign="bottom"><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td width=100% align=LEFT><font face="Times New Roman, Times, serif" size="1">Products
      sales, net</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">1,456,731</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">87</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">1,188,022</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">100</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">2,914,634</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">93</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">2,282,245</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">100</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">Royalty
      income</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">219,210</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">13</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">219,210</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">7</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;Total
      revenue</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">1,675,941</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">100</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">1,188,022</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">100</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">3,133,844</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">100</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">2,282,245</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">100</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">Cost of
      products sold</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">538,604</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">32</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">769,383</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">65</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">1,253,310</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">40</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">1,315,683</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">58</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">Royalty
      expense</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">26,305</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">2</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">26,305</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;Total
      costs</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">564,909</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">34</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">769,383</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">65</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">1,279,615</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">40</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">1,315,683</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">58</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">Gross Profit</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">1,111,032</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">66</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">418,639</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">35</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">1,854,229</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">60</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">966,562</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">42</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">Selling,
      general and</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;admin
      expenses</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">1,854,562</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">111</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">1,211,917</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">102</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">3,456,255</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">110</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">2,196,785</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">96</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">Research
      &amp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;&nbsp;&nbsp;development</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">69,844</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">4</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">52,409</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">4</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">101,389</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">3</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">93,621</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">4</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">Loss from
      operations</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">(813,374</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">)</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">-49</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">(845,687</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">)</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">-71</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">(1,703,415</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">)</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">-53</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">(1,323,844</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">)</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="1">-58</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="1">%</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="1"></font></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Left - Italics" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>Three Months ended
June 30, 2005 compared to three months ended June 30, 2004</I> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
revenues for the three months ended June 30, 2005 and 2004 were $1,675,941 (product sales
of $1,456,731 and royalty income of $219,210) and $1,188,022, respectively. The amount of
$219,210 or 13% of total revenues is royalty income from granting United Systems Inc. a
license to manufacture, market, and sublicense the <I>Ionic White&#153;</I>  to the
consumer market. The $268,709 or 23% increase in net product sales is primarily related
to a 165% or $234,944 increase in domestic <I>CompuDent&reg;</I> sales. This increase
shows the effect of our investment in our domestic sales force and marketing initiatives
while maintaining a strong presence internationally. Domestic handpiece sales increased
$31,504 or 5%, while worldwide handpiece sales decreased by $51,751 or 24%. This is the
result of innovative domestic sales programs where handpieces are bundled with <I>CompuDent&reg;</I> units
at the point of sale. We believe that this will ultimately result in a growing monthly
order book for handpieces as the initial supply runs out.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the three months ended June 30, 2005, Milestone generated a gross profit of $1,111,032 or
66% as compared to a gross profit of $418,639 or 35% for the three months ended June 30,
2004. Excluding the net royalty income of $192,905, improvement in gross profit was due
to higher domestic sales in 2005, which has higher profit margins than international
sales, and the effect of a $101,608 inventory valuation write down in 2004 which did not
recur in the 2005 period.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling,
general and administrative expenses for the three months ended June 30, 2005 and 2004
were $1,854,562 and $1,211,917, respectively. The $642,645 or 53% increase is
attributable primarily to Milestone&#146;s continued execution of its strategy to develop
our domestic sales force and distribution capacity. Sales headcount increased from 1
manager, 3 sales representatives, and 8 independent contractors at June 30, 2004 to 3
sales managers, 18 inside sales representatives, 2 sales support representatives, and 8
independent contractors at June 30, 2005. Accordingly, hiring and related employee
expenses including sales commissions increased by $218,691 or 54%. Selling, marketing and
advertising expenses including related travel and tradeshows increased by $113,921 or
101%. Legal fees increased by $71,207 or 46% primarily because of patent filings
associated with new product development. Professional fees for consulting services
increased $140,941 or 309% primarily related to vested portion of stock options granted
to outside consultants. These increases reflect both increased spending in 2005 and the
effects of cash constraints Milestone operated under prior to the February 2004 Public
Offering.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
and development expenses for the three months ended June 30, 2005 and 2004 were $69,844
and $52,409, respectively. These costs are associated with the continued development of
our <I>CoolBlue</I>&#153; Tooth Whitening Systems and<I> CompuFlo</I>&#153;  products, and
our consumer tooth whitening product sold under our distributor&#146;s <I> Ionic White</I>&#153; trademark.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest
income of $23,584 was earned in the three months ended June 30, 2005 compared to $28,876
earned for the same period of the prior year due to lower average cash balances.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
was no interest expense for the three months ended June 30, 2005 compared to interest
expense of $10,867 for the three months ended June 30, 2004. The difference is
attributable to the extinguishment of debt related to the February 2004 equity placement.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the reasons explained above, net loss for the three months ended June 30, 2005 was
$37,888 or 5% less than the net loss for the three months ended June 30, 2004.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Left - Italics" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>Six months ended June
30, 2005 compared to the six months ended June 30, 2004</I> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
revenues for the six months ended June 30, 2005 and 2004 were $3,133,844 and $2,282,245,
respectively. The 2005 total revenues include product sales of $2,914,634 and royalty
income of $219,210. Total revenues increased by $851,599 or 37%. Contributing to this
increase was primarily a $429,011 or 156% increase in domestic sales of <I>CompuDent&reg;</I> units.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross
profit for the six months ended June 30, 2005 and 2004 was $1,854,229 or 60% and $966,562
or 42%, respectively. The $887,667 or 92% increase in gross profit was due principally to
an increase in sales of domestic <I>CompuDent&reg;</I> units which has higher profit margins
than international sales, as well as the net royalty income generated by sales of<I> Ionic
White&#153;</I> consumer whitening products and the effect of a $101,608 inventory
valuation write down in 2004 which did not recur in the 2005 period.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling,
general and administrative expenses for the six months ended June 30, 2005 and 2004 were
$3,456,255 and $2,196,785 respectively. The increase of $1,259,470 or 57% in these
expenses was anticipated and is consistent with management&#146;s stated strategy of
investing in revenue generating areas of the business. Contributing to the increase was
hiring and employee related expenses related to the development of Milestone&#146;s
national sales force which will benefit Milestone with additional revenues. Legal fees
increased by $80,814 or 34% primarily because of patent filings associated with new
product development. Professional fees related to consulting services and investor
relations increased by $146,135 or 79% primarily related to the vested portion of stock
options granted to outside consultants.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
and development expenses for the six months ended June 30, 2005 and 2004 were $101,389
and $93,621, respectively. These costs are associated with the continued development of
our <I>CoolBlue&#153; </I>Tooth Whitening Systems and <I>CompuFlo&#153; </I>products,
and our consumer tooth whitening product sold under our distributor&#146;s <I>Ionic White</I>&#153; trademark. </FONT> </P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest
income of $34,682 was earned for the six months ended June 30, 2005 compared to $41,010
interest income for the same period of the prior year. This difference was due to the
lower average cash balances.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
was no interest expense for the six months ended June 30, 2005 compared to interest
expense of $63,638 for the six months ended June 30, 2004. The difference is attributable
to the extinguishment of debt related to the February 2004 equity placement.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the reasons explained above, net loss for the six months ended June 30, 2005 increased by
$322,261 or 24% over the net loss for the six month period ended June 30, 2004.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Liquidity and
Capital Resources</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Milestone
incurred net losses of approximately $1,669,000 and $1,346,000 and negative cash flows
from operating activities of approximately $1,892,000 and $2,014,000 during the six months
ended June 30, 2005 and 2004, respectively. Milestone improved its liquidity position with
the private placement of Units completed in April, and June, 2005, as discussed below. We
have maintained our net worth at $6,000,000 for the two consecutive quarters ended June
30, 2005, which is the target outlined in the plan that we submitted to the American Stock
Exchange on January 14, 2005, in order to regain compliance with the Exchange&#146;s
stockholder equity continued listing requirement by the end of the plan period on June 30,
2005. Once we file our Quarterly Report on Form 10-QSB for the period ended June 30, 2005,
we expect the American Stock Exchange to remove the special symbol indicating that we are
below continued listing standards, although the Exchange has discretion in this regard. We
will continue to seek new sources of equity funding. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Private Placement </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April 4, 2005 Milestone completed a $2,999,996 private placement of 101,044 Units to
accredited investors. Each Unit consisted of 10 shares of Common Stock and two Warrants.
Each Warrant entitles the holder to purchase a share of Common Stock at $4.89 per share
through the close of business on February 16, 2009. I-Bankers Securities, Inc. acted as
Placement Agent for Milestone in this transaction and received a fee of $209,978 and
101,044 Warrants identical in terms to those issued to the investors. The Units, which are
restricted securities and bear a restrictive legend, are subject to stop transfer
restrictions. Total proceeds to Milestone after commissions and other expenses were
$2,730,734. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
June 30, 2005 Milestone completed an $847,960 private placement of 34,000 Units. Each Unit
consists of 10 shares of Common Stock and two Warrants. Each Warrant entitles the holder
to purchase a share of Common Stock at $4.89 per share through the close of business on
February 16, 2009. Dynamic Decisions acted as Placement Agent for Milestone in this
transaction and received a fee of $50,878 and 600 Units, which are substantially the same
form as those issued to the investors. Total proceeds from this private placement, after
commissions and other expenses, were $797,054. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Cash flow
results</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of June 30, 2005, Milestone had cash and cash equivalents of $4,513,114 and working
capital of $5,960,200.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the six months ended June 30, 2005, Milestone&#146;s net cash used in operating
activities was $1,891,767. This was attributable primarily to a net loss of $1,668,733
adjusted for noncash items totaling $322,151 (of which $49,700 was depreciation expense,
$7,053 was amortization of patents, and $263,629 was stock and options issued for
compensation and consulting); a $148,377 increase in accounts receivable, a $219,210
increase in royalty receivable, a $114,026 increase in inventory, a $258,182 increase in
advances to contract manufacturer, a net $98,496 increase in accounts payable and accrued
expenses, and a $75,000 increase in deferred compensation.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the six months ended June 30, 2005, Milestone used $164,462 in investing activities for
capital expenditures. One major investing activity was a purchase of patent right for
$145,000. An expenditure of $19,462 was primarily for the purchases of molds and tooling
for new products.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the six months ended June 30, 2005, Milestone generated $3,528,037 from financing
activities relating to the private placements discussed above and an employee option
exercise.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
believes that it has sufficient resources to meet its obligations over the next twelve
months.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>18 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>

<A NAME="a07"></A>


<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>ITEM 3.
CONTROLS AND PROCEDURES</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a)  </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Evaluation
of Disclosure Controls and Procedures</I>. Milestone&#146;s management, with the
participation of our chief executive officer and the acting chief financial officer,
carried out an evaluation of the effectiveness of our &#147;disclosure controls and
procedures&#148; (as defined in the Securities Exchange Act of 1934 (the &#147;Exchange
Act&#148;) Rules 13a-15(e) as of the end of the period covered by this report (the &#147;Evaluation
Date&#148;). Based upon that evaluation, the chief executive officer and acting chief
financial officer concluded that, as of the Evaluation Date, our disclosure controls and
procedures are effective to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the SEC&#146;s rules and forms.
Information required to be disclosed by us in the reports we file or submit under the
Exchange Act is accumulated and communicated to our management, including our principal
executive and principal financial officers, as appropriate to allow timely decisions
regarding required disclosure.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>b) </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Changes
in Internal Control over Financial Reporting. </I>There were no changes in our internal
controls over financial reporting that occurred during the period covered by this report
that have materially affected, or are reasonably likely to materially affect, Milestone&#146;s
internal control over financial reporting.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART II</FONT></H1>

<A NAME="a08"></A>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Recent Sales of Unregistered
Securities </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 31, 2005 we issued 7,536 shares valued at $20,000 to a consultant for professional
services rendered during March. On June 6, 2005, we issued another 7,536 shares valued at
$20,000 to the same consultant for professional services rendered during April.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April 4, 2005 we completed a private placement of $2,999,996 of 101,044 Units to
accredited investors. The Units, which are restricted securities and bear a restrictive
legend, are subject to stop transfer restrictions. The offering, which was previously
reported in Milestone&#146;s annual report of Form 10-KSB filed with the Securities and
Exchange Commission on April 4, 2005, is described in Note 2 to the financial statements
above, and that information is incorporated here by reference.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April 4, 2005 an optionee exercised a stock option to purchase 333 shares valued at $749.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April 30, 2005 we issued 352 shares to Investment Connections as part of the compensation
of professional services rendered.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
May 18, 2005, we issued to Ionic White, Inc., 3-year options to purchase 100,000 shares
of common stock at $4.89 per share. The issuance was previously reported in our report on
Form 8-K dated May 20, 2005, and that information is incorporated here by reference.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
June 27, 2005 we issued 7,435 shares valued at $20,000 to an employee as part of annual
compensation.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
June 30, 2005 we issued 62,783 shares valued at $180,000 to a consultant for advertising
and marketing services to be rendered in a twelve-month period from April 2005.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
June 30, 2005, Milestone completed an $847,960 private placement of 34,000 units to
accredited investors. The Units, which are restricted securities and bear a restrictive
legend, are subject to stop transfer restrictions. This offering, which was previously
reported in our report on Form 8-K dated June 30, 2005, is described in Note 2 to the
financial statements above, and that information is incorporated here by reference.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
the above issuances were acquired for investment by accredited investors and were issued
without registration under the Securities Act of 1933, as amended, pursuant to the
exemptions provided under sections 4(6), 4(2). In addition, the two private placements of
units completed respectively on April 4 and June 30, 2005, relied on the exemption from
registration provided by Regulation D.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>

<A NAME="a09"></A>


<!-- MARKER FORMAT-SHEET="Head Minor" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>ITEM 6.   EXHIBITS</FONT></H2>

<!-- MARKER FORMAT-SHEET="DJ Para Large Hang" FSL="Project" -->
<table width=600 cellpadding=0 cellspacing=0>
  <tr>
    <td width=9% valign="top" align="center"><font face="Times New Roman, Times, Serif" size=2>
      EXHIBIT<br>
      NO. </font></td>
    <td valign="top"><font face="Times New Roman, Times, Serif" size=2>&nbsp;
      </font></td>
<td width=91% valign="bottom">
      <p align=center><font face="Times New Roman, Times, Serif" size=2>DESCRIPTION
        </font></p>
    </td>
  </tr>
  <tr>
    <td width=9%>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td>&nbsp;</td>
    <td width=91%>
      <hr NOSHADE color=#808080 size=1>
    </td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="DJ Para Large Hang" FSL="Project" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.1  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certificate
of Incorporation of Milestone (1) </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="DJ Para Large Hang" FSL="Project" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.2  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certificate
of Amendment filed July 13, 1995 (2) </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="DJ Para Large Hang" FSL="Project" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.3  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certificate
of Amendment filed December 6, 1996 (3) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.4  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certificate
of Amendment filed December 17, 1997 (4) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.5  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certificate
of Amendment filed July 23, 2003 (6) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.6  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certificate
of Amendment filed January 8, 2004. (6) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.7  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certificate
of Designation filed January 15, 2004 (6) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.8  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By-laws
of Milestone (1) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.1  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Specimen
stock certificate (2) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.2  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Intentionally
Left Blank </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.3  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Form
of warrant agreement, including form of warrant (8) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.1  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Lease
dated November 25, 1996 between Livingston Corporate Park Associates, L.L.C. and
           Milestone. (3) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.4  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Form
of Subscription Agreement used in connection with the private placement of Units, March
2005. (10) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.5  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Form
of warrant issued in connection with the private placement of Units, March 2005. (10) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="d64931_ex4-6.htm">4.6</A>  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="d64931_ex4-6.htm">Form
of Subscription Agreement used in connection with the private placement of Units, June
2005.*</A> </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="d64931_ex4-7.htm">4.7</A>  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="d64931_ex4-7.htm">Form
of warrant issued in connection with the private placement of Units, June 2005.*</A> </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.2 to<BR>10.25 </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
    &nbsp;<BR>Intentionally Left Blank </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 10.26  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Letter
from Leonard Osser, dated April 15, 2003 deferring payment. (5) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 10.27  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Letter
from Morse, Zelnick, Rose &amp; Lander LLP, dated April 2003 deferring payment. (6) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 10.28  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Line
of Credit for $900,000 and extension of $500,000 line of credit, dated April 15, 2003. (6) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 10.29  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Agreement
with DaVinci Systems dated July 30, 2003. (6) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 10.30  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Agreement
with Mark Hochman and amendments thereto dated April 9, 1998, December 16, 1999, November
28, 2001, October 10, 2002 and December 19, 2003. (6) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 10.31  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Agreement
with Strider dated September 3, 2003. (6) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 10.32  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Agreement
with Len Osser and K. Tucker Andersen, dated October 9, 2003. (6) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 10.33  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Agreement
with Morse, Zelnick, Rose &amp; Lander dated December 22, 2003. (6) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 10.34  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Employment
Agreement with Leonard Osser dated December 20, 2003. (6) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 10.35  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Agreement
with United Systems dated October 20, 2004. (9) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 10.36  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Agreement
with Mark Hochman dated as of January 1, 2005. (9) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 10.37  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Lease
amendment dated April 28, 2004 between Livingston Corporate Park Associates, L.L.C. and
           Milestone. (9) </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="d64931_ex31-1.htm">31.1</A>  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="d64931_ex31-1.htm">Chief
Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of
2002.*</A> </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="d64931_ex31-2.htm">31.2</A>  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="d64931_ex31-2.htm">Chief
Financial Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of
2002.*</A> </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="d64931_ex32-1.htm">32.1</A>  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="d64931_ex32-1.htm">Chief
Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of
2002.*</A> </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="d64931_ex32-2.htm">32.2</A>  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="d64931_ex32-2.htm">Chief
Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of
2002.*</A> </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*  Filed herewith. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Incorporated
by reference to Milestone&#146;s Registration Statement on Form SB-2 No. 33-92324. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Incorporated
by reference to Amendment No. 1 to Milestone&#146;s Registration Statement on
           Form SB-2 No. 333-92324. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Incorporated
by reference to Milestone&#146;s Form 10-KSB for the year ended December 31, 1996. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Incorporated
by reference to Milestone&#146;s Form 10-KSB for the year ended December 31, 1999. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Incorporated
by reference to Milestone&#146;s Registration Statement on Form S-2 No. 333-110376,
           Amendment No. 1. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(6)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Incorporated
by reference to Milestone&#146;s Registration Statement on Form S-2 No. 333-110376,
           Amendment No. 3. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(7)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Incorporated
by reference to Milestone&#146;s Form 10-KSB for the year ended December 31, 2003. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(8)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Incorporated
by reference to Milestone&#146;s Registration Statement on Form S-2 No. 333-110367,
           Amendment No. 5. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(9)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Incorporated
by reference to Milestone&#146;s Form 10-KSB for the year ended December 31, 2004. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(10)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Incorporated
by reference to Milestone&#146;s Form 10-QSB for the quarter ended March 31, 2005. </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<A NAME="a10"></A>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES</FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
accordance with the requirements of the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized. </FONT></P>

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<table width=600 cellspacing=0 cellpadding=0 border=0>
  <tr valign=TOP>
    <td width=40%><font face="Times New Roman, Times, Serif" size=2></font></td>
    <td width=10%><font face="Times New Roman, Times, Serif" size=2></font></td>
    <td width=50%><font face="Times New Roman, Times, Serif" size=2>MILESTONE
      SCIENTIFIC INC.<br>
      &#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Registrant<br>
      <br>
      <br>
      /s/ Leonard Osser<br>
      &#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
      Leonard Osser Chairman and<br>
      Chief Executive Officer<br>
      <br>
      <br>
      /s/ Rosaline Shau<br>
      &#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
      Rosaline Shau<br>
      Acting Chief Financial Officer</font></td>
  </tr>
</table>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: August 15, 2005 </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23 </FONT></P>
<HR SIZE=5 NOSHADE>


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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.6
<SEQUENCE>2
<FILENAME>d64931_ex4-6.htm
<DESCRIPTION>FORM OF SUBSCRIPTION AGREEMENT
<TEXT>
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2 Final//EN">
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        X:\JOBS\05-64931\d05-64931.eep                                   -->
     <!-- Control Number: 05-64931                                                         -->
     <!-- Rev Number:     1.0                                                              -->
     <!-- Client Name:    Milestone Scientific, Inc.                                       -->
     <!-- Project Name:   Form Type: 10QSB                                                 -->
     <!-- Firm Name:      Milestone Scientific, Inc.                                       -->
     <TITLE>EX-4.6</TITLE>
</HEAD>
<BODY>

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<DIV STYLE="WIDTH:600">
<BR>

<!-- MARKER FORMAT-SHEET="Para Right 10" FSL="Project" -->
<P ALIGN="RIGHT"><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Exhibit 4.6 </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>SUBSCRIPTION
AGREEMENT</U></FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>THIS
SUBSCRIPTION AGREEMENT</B> (this &#147;Agreement&#148;), dated as of June 17, 2005, by and
among MILESTONE SCIENTIFIC INC., a Delaware corporation (the &#147;Company&#148;), and the
subscriber identified on the signature page hereto (the &#147;Subscriber&#148;). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>,
the Company and the Subscriber are executing and delivering this Agreement in reliance
upon an exemption from securities registration afforded by the provisions of Section 4(2)
and Rule 506 of Regulation D (&#147;Regulation D&#148;) as promulgated by the United
States Securities and Exchange Commission (the &#147;Commission&#148;) under the
Securities Act of 1933, as amended (the &#147;1933 Act&#148;); and </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>,
the parties desire that, upon the terms and subject to the conditions contained herein,
the Company shall issue and sell to the Subscriber, as provided herein, and the Subscriber
shall purchase, 20,000 Units, each Unit consisting of (i)&nbsp;ten (10) shares of the
Company&#146;s common stock, $.001 par value (the &#147;Common Stock&#148;), and
(ii)&nbsp; two warrants each to purchase one share of Common Stock (the
&#147;Warrants&#148;), in the form attached hereto as <B>Exhibit A</B> (the
&#147;Warrants&#148;). The shares underlying the Warrants are referred to as the Warrant
Shares. The per Unit Purchase Price shall be $24.94, which is equal to the average closing
price of the Common Stock on the American Stock Exchange during the ten trading days
ending on June 16, 2005, multiplied by 10. The aggregate Purchase Price shall be payable
to the Company on the Closing Date, as defined in Section 10 hereof. The shares of Common
Stock issuable to the Subscriber are referred to herein as the &#147;Shares,&#148; and the
Shares, the Warrants and the Warrant Shares are collectively referred to herein as the
&#147;Securities&#148;. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW,
THEREFORE</B>, in consideration of the mutual covenants and other agreements contained in
this Agreement the Company and the Subscriber hereby agree as follows: </FONT></P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.
<U>Purchase and Sale of Shares and Warrants</U>. Subject to the satisfaction (or waiver)
of the conditions to Closing set forth in this Agreement, the Subscriber shall purchase
the Shares and Warrants for the Purchase Price indicated on the signature page hereto,
and the Company shall sell the Shares and Warrants called for by the above price to the
Subscriber. The Purchase Price for the Shares and Warrants shall be paid in cash. The
Company shall (i) instruct its transfer agent to issue stock certificates for the number
of Shares included in the Units to be purchased hereunder and to deliver such Shares to
the Subscriber within 15 business days of the Closing Date, such Shares to be registered
in the name of the Subscriber and (ii) deliver Warrants for the number of Warrants
purchased hereunder to the Subscriber within said 15 business days. The Company will not
issue fractional Units but will refund amounts in excess of the price of the nearest full
number of Units which can be purchased with the purchase price tendered hereunder. </FONT> </P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.
<U>Warrants</U>. Promptly after the Closing Date the Company will issue two Warrants to
the Subscriber for each ten (10) shares issued to such Subscriber on the Closing Date.
The per Warrant exercise price shall be $4.89 per share. The Warrants shall be
exercisable  </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>until February 16, 2009.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Double" FSL="Project" -->
<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.
<U>Subscriber&#146;s Representations and Warranties</U>. The Subscriber hereby
represents and warrants to and agrees with the Company that: </FONT> </P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
<U>Information on Company</U>. The Subscriber has been furnished with or has had access
at the EDGAR Website of the Commission to the Company&#146;s Form 10-KSB for the year
ended December 31, 2004 and the Company&#146;s Form 10-KSB for the year ended December
31, 2003 as filed with the Commission, together with all subsequently filed Forms 10-QSB,
8-K, and filings made with the Commission available at the EDGAR website (hereinafter
referred to collectively as the &#147;Reports&#148;). The Subscriber has considered all
factors the Subscriber deems material in deciding on the advisability of investing in the
Securities. </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Double+" FSL="Project" -->
<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
<U>Information on Subscriber</U>. At the time the Subscriber was offered the Securities
it was, and as of the date hereof it is an &#147;accredited investor&#148;, as such term
is defined in Regulation D promulgated by the Commission under the 1933 Act, is
experienced in investments and business matters, has made investments of a speculative
nature and has purchased securities of United States publicly-owned companies in private
placements in the past and, with its representatives, has such knowledge and experience
in financial, tax and other business matters as to enable the Subscriber to utilize the
information made available by the Company to evaluate the merits and risks of and to make
an informed investment decision with respect to the proposed purchase, which represents a
speculative investment. The Subscriber has the authority to purchase and own the
Securities. The Subscriber is able to bear the economic risk of such investment and at
the present time, is able to afford a complete loss thereof. The information set forth on
the signature page hereto regarding the Subscriber is accurate. </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Double+" FSL="Project" -->
<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
<U>Purchase of Common Stock and Warrants</U>. The Subscriber is purchasing the Common
Stock and Warrants as principal for its own account and not with a view to any
distribution thereof (this representation and warranty not limiting such Subscriber&#146;s
right to sell the Shares and Warrant Shares pursuant to the Registration Statement (as
defined below hereof) or otherwise in compliance with applicable federal and state
securities laws). </FONT> </P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
<U>Compliance with 1933 Act</U>. The Subscriber understands and agrees that the
Securities have not been registered under the 1933 Act or any applicable state securities
laws, by reason of their issuance in a transaction that does not require registration
under the 1933 Act (based in part on the accuracy of the representations and warranties
of Subscriber contained herein), and that such Securities must be held indefinitely
unless a subsequent disposition is registered under the 1933 Act or any applicable state
securities laws or is exempt from such registration. </FONT> </P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
<U>Current Holdings</U>. The Subscriber is currently a holder of [ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;] shares of the
Company&#146;s Common Stock. </FONT> </P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)
<U>Correctness of Representations</U>. The Subscriber represents that the foregoing
representations and warranties are true and correct as of the date hereof in all material </FONT> </P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>



<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>respects and, unless the Subscriber
otherwise notifies the Company prior to the Closing Date (as hereinafter defined), shall
be true and correct in all material respects as of the Closing Date.  </FONT></P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.
<U>Company Representations and Warranties</U>. The Company represents and warrants to
and agrees with the Subscriber that <U>(i) </U>the Company is duly organized, validly
existing and in good standing on the date hereof, (ii) has full power and authority to
issue the Securities, (iii) is eligible to register the resale of its Common Stock by the
Subscriber under Form S-3 promulgated under the 1933 Act, (iv) upon receipt and
acceptance of consideration from the Subscriber the Securities will be legally and
validly issued, (v) the Company&#146;s Form 10-KSB for the year ended December 31, 2004,
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended and the information contained in the Form 10-KSB fairly presents,
in all material respects, the financial condition and results of operations of the
Company and does 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
not misleading and (vi) the Company has taken all action required by its Articles of
Incorporation and Bylaws and the&nbsp;rules and regulations of the American Stock
Exchange to approve the offer and sale of the securities, except that it has not applied
for additional listing of&nbsp;such securities with the American Stock Exchange but
undertakes to do so promptly upon closing hereunder. </FONT> </P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.
<U>Regulation D Offering</U>. The offer and issuance of the Securities to the Subscriber
is being made pursuant to the exemption from the registration provisions of the 1933 Act
afforded by Section 4(2) of the 1933 Act and Rule 506 of Regulation D promulgated
thereunder. </FONT> </P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.
<U>Registration and Listing</U>. </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Double+" FSL="Project" -->
<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
The Company covenants and agrees with the Subscriber that on or before the 70<SUP>th</SUP>
day after the Closing Date, prior to the Filing Date the Company shall prepare and file
with the Commission a Registration Statement covering the shares of common stock issuable
under this Agreement and issuable upon exercise of the Warrants (the &#147;Registrable
Securities&#148;) for an offering to be made on a continuous basis pursuant to Rule 415.
The Registration Statement shall be on Form S-3. The Company shall cause the Registration
Statement to become effective and remain effective as provided herein. The Company shall
use its best efforts to cause the Registration Statement to be declared effective under
the Securities Act as promptly as possible after the filing thereof. The Company shall
use its best efforts to keep the Registration Statement continuously effective under the
Securities Act until the date which is the earlier date of when (i) all Registrable
Securities have been sold or (ii) all Registrable Securities may be sold immediately
without registration under the Securities Act and without volume restrictions pursuant to
Rule 144(k), as determined by the counsel to the Company pursuant to a written opinion
letter to such effect, addressed and acceptable to the Company&#146;s transfer agent and
the affected Holders . </FONT> </P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>(b)
Transfers</U>. The Securities may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement, to the Company, to an Affiliate of a
Subscriber or </FONT> </P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>in connection with a pledge as
contemplated in this Section 10, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities under the
1933 Act. As a condition of transfer, any such transferee shall agree in writing to be
bound by the terms of this Agreement and shall have the rights of the Subscriber under
this Agreement and the Registration Rights Agreement.  </FONT></P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
<U>Shares Legend</U>. The Subscriber agrees to the imprinting, so long as is required by
this Section 7(b), of a legend on the Shares and the Warrant Shares, in substantially the
following form: </FONT> </P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
&#147;THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES
ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED, EXCEPT THAT THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OF THE HOLDER WITH
A REGISTERED BROKER-DEALER OR OTHER LOAN OF THE HOLDER WITH A FINANCIAL INSTITUTION THAT
IS AN &#147;ACCREDITED INVESTOR&#148; AS DEFINED IN RULE 501(a) UNDER THE SECURITIES
ACT.&#148; </FONT></TD>
</TR>
</TABLE>
<BR>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
<U>Warrant Legend</U>. The Subscriber agrees to the imprinting, so long as is required
by this Section 6, of a legend on the Warrants, in substantially the following form: </FONT> </P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
&#147;THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND THE SHARES
OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT UNDER SAID ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED, EXCEPT THAT
THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OF THE
HOLDER </FONT></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
WITH
A REGISTERED BROKER-DEALER OR OTHER LOAN OF THE HOLDER WITH A FINANCIAL INSTITUTION THAT
IS AN &#147;ACCREDITED INVESTOR&#148; AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT&#148; </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Double+" FSL="Project" -->
<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
<U>Certificates</U>. Certificates evidencing the Shares and Warrant Shares shall
not contain any legend (including the legend set forth in Sections 7(b) and (c)), (i)
while a registration statement (including the Registration Statement) covering the resale
of such security is effective under the 1933 Act, or (ii) following any sale of such
Shares or Warrant Shares pursuant to Rule 144, or (iii) if such Shares or Warrant Shares
are eligible for sale under Rule 144(k), or (iv) if such legend is not required under
applicable requirements of the 1933 Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). The Company shall cause its
counsel to issue a legal opinion to the Company&#146;s transfer agent promptly after the
effective date of the Registration Statement if required by the Company&#146;s transfer
agent to effect the removal of the legend hereunder as and when any Subscriber so
requests. If all or any portion of a Warrant is exercised at a time when there is an
effective registration statement to cover the resale of the Warrant Shares, such Warrant
Shares shall be issued free of all legends </FONT> </P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)
<U>Acknowledgement</U>. The Subscriber agrees that the removal of the restrictive
legend from certificates representing Securities as set forth in this Section 7 is
predicated upon the Company&#146;s reliance that the Subscriber will sell any Securities
pursuant to either the registration requirements of the 1933 Act, including any
applicable prospectus delivery requirements, or an exemption therefrom. </FONT> </P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)
       The Company  covenants  and agrees with the  Subscriber  that on or before the
40th day after the Closing Date it will file an application with the American Stock
Exchange to list the shares of the Company&#146;s Common Stock underlying the Units,
including the shares of Common Stock underlying the Warrants and will use its best
efforts to prosecute such application to effectiveness.  </FONT></P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.
<U>Conditions Precedent to Obligations of the Company</U>. The obligations of the
Company are subject to the fulfillment prior to or on the Closing Date of the following
conditions any of which may be waived by the Company in writing: </FONT> </P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
all representations and warranties of the Subscriber contained in this Agreement shall be
true and correct in all respects as of the Closing Date with the same effect as though
such representations and warranties had been made on or as of such date; and  </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
all agreements and covenants of the Subscriber to be performed or complied with on or
prior to the Closing Date have in all material respects been so performed or complied
with.  </FONT></P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.
<U>Conditions Precedent to Obligations of the Subscriber</U>. The obligations of the
Subscriber are subject to the fulfillment prior to or on the Closing Date of the
following conditions any of which may be waived by the Subscriber in writing: </FONT> </P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Double+" FSL="Project" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
all representations and warranties of the Company contained in this Agreement shall be
true and correct in all respects as of the Closing Date with the same effect as though
such representations and warranties had been made on or as of such date; and </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
all obligations, agreements and covenants of the Company to be performed or complied with
on or prior to the Closing Date shall have, in all respects been so performed or complied
with.  </FONT></P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.
<U>Miscellaneous</U>. </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Double+" FSL="Project" -->
<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
<U>Notices</U>. 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 express 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: (i) if to the Company, to: Milestone Scientific Inc., 230
South Orange Avenue, Livingston, NJ 07039Attention: Leonard Osser, Chairman, fax: (973)
535-2829, with a copy to: Morse, Zelnick, Rose &amp; Lander, LLP, 405 Park Avenue, Suite
1401, New York, New York 10022, Attention: Stephen Zelnick, telecopier: (212) 838-9190,
(ii) if to the Subscriber to: the address and telecopier number indicated on the
signature pages hereto. </FONT> </P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
<U>Closing</U>. The consummation of the transactions contemplated herein (the &#147;Closing
Date&#148;) shall take place at the offices of Morse, Zelnick, Rose &amp; Lander, LLP, upon
receipt of good funds at its escrow account , </FONT> </P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%>&nbsp;</TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Chase Manhattan Bank,<BR>1211 Avenue of the Americas,
                               <BR>New York, New York 10036,
                               <BR>Account Name: Morse, Zelnick, Rose &amp; Lander, LLP
                               <BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Attorney Trust Account
                               <BR>Account Number: 967086639
                               <BR>ABA Number: 021000021 </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>and upon the satisfaction of all
conditions to Closing set forth in this Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Double+" FSL="Project" -->
<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
<U>Entire Agreement; Assignment</U>. This Agreement and the other Transaction Documents
represent the entire agreement between the parties hereto with respect to the subject
matter hereof and may be amended only by a writing executed by the Company and the
Subscriber. Neither the Company nor the Subscriber has relied on any representations not
contained or referred to in this Agreement and the documents delivered herewith. No right
or obligation of the Company shall be assigned without prior notice to and the written
consent of the Subscriber. The Subscriber may assign any or all of its rights hereunder
to any person in connection with a transfer of any Security to such person, provided such
transferee agrees in writing to be bound, with respect to the transferred Securities, by
the provisions hereof that apply to the Subscriber. </FONT> </P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
<U>Counterparts/Execution</U>. This Agreement may be executed in any number of
counterparts and by the different signatories hereto on separate counterparts, each of
which, when so executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument. This Agreement may be executed by facsimile
signature and delivered by facsimile transmission. </FONT> </P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
<U>Law Governing this Agreement</U>. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to principles of
conflicts of laws. Any action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in the state courts of
New York or in the federal courts located in the state of New York. <B>The parties and
the individuals executing this Agreement and other agreements referred to herein or
delivered in connection herewith on behalf of the Company agree to submit to the
jurisdiction of such courts and waive trial by jury. </B>The prevailing party shall be
entitled to recover from the other party its reasonable attorney&#146;s fees and costs.
In the event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of law. Any
such provision which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision of any agreement. </FONT> </P>

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<P>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)
<U>Equitable Adjustment</U>. The Securities and the purchase prices of Securities being
purchased hereunder shall be equitably adjusted to offset the effect of stock splits,
stock dividends, and distributions of property or equity interests of the Company to its
shareholders occurring between the date of this Agreement and the Closing Date. </FONT> </P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[THIS SPACE
INTENTIONALLY LEFT BLANK]</FONT></H1>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Head Major 10 Underlined" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT</U></FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing and
returning a copy to the undersigned whereupon it shall become a binding agreement between
us. </FONT></P>

<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">Dated: June _____,
      2005 <br>
      <br>
      <br>
      <br>
      <br>
      <br>
      <br>
      <br>
      <br>
      <br>
      <br>
      <br>
      Dated: June _______ 2005 <br>
      </font></td>
    <td width="50%"><font face="Times New Roman, Times, serif" size="2"><br>
      The Company <br>
      MILESTONE SCIENTIFIC INC <br>
      a Delaware corporation <br>
      <br>
      <br>
      By:_________________________________ <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: <br>
      <br>
      <br>
      Subscriber <br>
      <br>
      [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ] <br>
      <br>
      <br>
      by:_________________________________ <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: </font></td>
  </tr>
</table>
<BR>

<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr valign=top align="left">
    <td nowrap><b><font face="Times New Roman, Times, serif" size="1">SUBSCRIBER&#146;S
      NAME AND<br>
      ADDRESS </font></b></td>
    <td colspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1">PER
      UNIT<br>
      PURCHASE<br>
      PRICE <br>
      </font></b></td>
    <td nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b></td>
    <td colspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1">NO.
      OF<br>
      UNITS <br>
      </font></b></td>
    <td nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b></td>
    <td colspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1">TOTAL
      <br>
      AGGREGATE<br>
      PURCHASE <br>
      PRICE </font></b></td>
  </tr>
  <tr valign=Bottom>
    <td width=100% align=LEFT><font face="Times New Roman, Times, serif" size="2">
      </font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 24.94</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
  </tr>
</table>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Telephone number: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Facsimile number: </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Head Major 10 Underlined" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>EXHIBIT A</U></FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Form
of Warrant] </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>


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</DIV>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.7
<SEQUENCE>3
<FILENAME>d64931_ex4-7.htm
<DESCRIPTION>FORM OF WARRANT
<TEXT>
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2 Final//EN">
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        X:\JOBS\05-64931\d05-64931.eep                                   -->
     <!-- Control Number: 05-64931                                                         -->
     <!-- Rev Number:     1.0                                                              -->
     <!-- Client Name:    Milestone Scientific, Inc.                                       -->
     <!-- Project Name:   Form Type: 10QSB                                                 -->
     <!-- Firm Name:      Milestone Scientific, Inc.                                       -->
     <TITLE>EX-4.7</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Div Style" FSL="Project" -->
<DIV STYLE="WIDTH:600">

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<P ALIGN="RIGHT"><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Exhibit 4.7 </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THIS WARRANT AND THE SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT
OR ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED, EXCEPT THAT THESE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OF THE HOLDER WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN OF THE HOLDER WITH A FINANCIAL INSTITUTION THAT IS AN &#147;ACCREDITED
INVESTOR&#148; AS DEFINED IN RULE501(a) UNDER THE SECURITIES ACT  </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>VOID AFTER 5 P.M.
PACIFIC TIME ON FEBRUARY 16, 2009 </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>WARRANTS TO PURCHASE
COMMON STOCK  </FONT></P>

<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">No. MSW-</font></td>
    <td align="right"><font face="Times New Roman, Times, serif" size="2"><br>
      [&nbsp;&nbsp;&nbsp;] Warrants</font></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major 10" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Milestone Scientific
Inc. </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THIS CERTIFIES THAT: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>[name]  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>or registered assigns, is the
registered holder of the number of Warrants (&#147;<U>Warrants</U>&#148;) set forth
above. Each Warrant, unless and until redeemed by the Company as provided in the Warrant
Agreement, hereinafter more fully described (the &#147;<U>Warrant Agreement</U>&#148;)
entitles the holder thereof to purchase from Milestone Scientific Inc., a corporation
incorporated under the laws of the State of Delaware (the &#147;<U>Company</U>&#148;),
subject to the terms and conditions set forth hereinafter and in the Warrant Agreement,
at any time before the close of business on February 16, 2009 (&#147;<U>Expiration Date</U>&#148;),
one fully paid and non-assessable share of Common Stock, par value $0.001 per share, of
the Company (&#147;<U>Common Stock</U>&#148;) upon presentation and surrender of this
Warrant Certificate, with the instructions for the registration and delivery of Common
Stock filled in, at the offices of the Company, 230 South Orange Avenue, Livingston, New
Jersey 07039, and upon payment of the Exercise Price (as defined in the Warrant
Agreement) and any applicable taxes paid either in cash, or by certified or official bank
check, payable in lawful money of the United States of America to the order of the
Company. Each Warrant initially entitles the holder to purchase one share of Common Stock
for $4.89. The number and kind of securities or other property for which the Warrants are
exercisable are subject to adjustment in certain events, such  </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>as mergers, splits, stock dividends,
splits and the like, to prevent dilution. The Company may redeem any or all outstanding
and unexercised warrants by giving not less than 30 days prior notice at any time after
the closing price of the Common Stock on the principal exchange on which it is traded has
equaled or exceeded $6.52 per share for any five consecutive trading days; provided that
the shares of Common Stock underlying the Warrants are saleable pursuant to an effective
registration statement under the Securities Act of 1933 at all times from the
commencement of the five trading day period through the date of redemption. The
Redemption Price is $0.25 per Warrant (subject to adjustment in the event of a stock
split, dividend or the like). All Warrants not theretofore exercised will expire on the
Expiration Date.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Warrant, although not issued pursuant to the Warrant Agreement, is, nevertheless, subject
to all of the terms, provisions and conditions of the Warrant Agreement, dated as of
February 17, 2004, between the Company and the Warrant Agent, to all of which terms,
provisions and conditions the registered holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is incorporated herein by reference and made a
part hereof and reference is made to the Warrant Agreement for a full description of the
rights, limitations of rights, obligations, duties and immunities of the Warrant Agent,
the Company and the holders of the Warrant Certificates. Copies of the Warrant Agreement
are available upon written request addressed to the Company at Milestone Scientific Inc.,
220 South Orange Ave., Livingston, New Jersey 07039, Attention: Chairman.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company shall not be required upon the exercise of the Warrants evidenced by this Warrant
Certificate to issue fractions of Warrants, Common Stock or other securities, but shall
make adjustment therefor in cash on the basis of the current market value of any
fractional interest as provided in the Warrant Agreement.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
certain cases, the sale of securities by the Company upon exercise of Warrants may
violate the securities laws of the United States, certain states thereof or other
jurisdictions. The Company has agreed to use all commercially reasonable efforts to cause
a registration statement to continue to be effective during the term of the Warrants with
respect to such sales under the Securities Act of 1933, and to take such action under the
laws of various states as may be required to cause the sale of securities upon exercise
to be lawful. However, the Company will not be required to honor the exercise of Warrants
if, in the opinion of the Board of Directors, upon advice of counsel, the sale of
securities upon such exercise would be unlawful. In certain cases, the Company may, but
is not required to, purchase Warrants submitted for exercise for a cash price equal to
the difference between the market price of the securities obtainable upon such exercise
and the exercise price of such Warrants.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Warrant Certificate, with or without other Certificates, upon surrender to the Warrant
Agent, any successor warrant agent or, in the absence of any successor warrant agent, at
the corporate offices of the Company, may be exchanged for another Warrant Certificate or
Certificates evidencing in the aggregate the same number of Warrants as the Warrant
Certificate or Certificates so surrendered. If the Warrants evidenced by this Warrant
Certificate shall be exercised in part, the holder hereof shall be entitled to receive
upon surrender hereof another Warrant Certificate or Certificates evidencing the number
of Warrants not so exercised.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
holder of this Warrant Certificate, as such, shall be entitled to vote, receive dividends </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>or be deemed the holder of Common
Stock or any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose whatsoever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant Certificate,
as such, any of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any meeting thereof
or give or withhold consent to any corporate action (whether upon any matter submitted to
stockholders at any meeting thereof, or give or withhold consent to any merger,
recapitalization, issuance of stock, reclassification of stock, change of par value or
change of stock to no par value, consolidation, conveyance or otherwise) or to receive
notice of meetings or other actions affecting stockholders (except as provided in the
Warrant Agreement) or to receive dividends or subscription rights or otherwise until the
Warrants evidenced by this Warrant Certificate shall have been exercised and the Common
Stock purchasable upon the exercise thereof shall have become deliverable as provided in
the Warrant Agreement.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Warrant Certificate shall be surrendered for exercise within any period during which
the transfer books for the Company&#146;s Common Stock or other class of stock purchasable
upon the exercise of the Warrants evidenced by this Warrant Certificate are closed for any
purpose, the Company shall not be required to make delivery of certificates for shares
purchasable upon such transfer until the date of the reopening of said transfer books. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Every
holder of this Warrant Certificate by accepting the same consents and agrees with the
Company, the Warrant Agent, and with every other holder of a Warrant Certificate that: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
this Warrant Certificate is transferable on the registry books of the Warrant Agent only
upon the terms and conditions set forth in the Warrant Agreement, and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
the Company and the Warrant Agent may deem and treat the person in whose name this Warrant
Certificate is registered as the absolute owner hereof (notwithstanding any notation of
ownership or other writing thereon made by anyone other than the Company or the Warrant
Agent) for all purposes whatsoever and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary. The Company shall not be required to issue or
deliver any certificate for shares of Common Stock or other securities upon the exercise
of Warrants evidenced by this Warrant Certificate until any tax which may be payable in
respect thereof by the holder of this Warrant Certificate pursuant to the Warrant
Agreement shall have been paid, such tax being payable by the holder of this Warrant
Certificate at the time of surrender. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Warrant Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Warrant Agent. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2"><I>(Remainder of page
intentionally left blank; signature page follows)</I> </FONT> </P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WITNESS
the facsimile signatures of the proper officers of the Company and its corporate seal. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: _______________ </FONT></P>

<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr valign="top" align="left">
    <td><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td width="50%"><font face="Times New Roman, Times, serif" size="2">MILESTONE
      SCIENTIFIC INC. <br>
      <br>
      <br>
      By: ______________________________________ <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: Leonard Osser <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title:&nbsp;&nbsp; Chairman and
      Chief Executive Officer<br>
      <br>
      <br>
      Attest: ___________________________________ <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assistant
      Secretary <br>
      </font></td>
  </tr>
</table>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>



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</DIV>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>4
<FILENAME>d64931_ex31-1.htm
<DESCRIPTION>CEO CERTIFICATION
<TEXT>
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2 Final//EN">
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        X:\JOBS\05-64931\d05-64931.eep                                   -->
     <!-- Control Number: 05-64931                                                         -->
     <!-- Rev Number:     1.0                                                              -->
     <!-- Client Name:    Milestone Scientific, Inc.                                       -->
     <!-- Project Name:   Form Type: 10QSB                                                 -->
     <!-- Firm Name:      Milestone Scientific, Inc.                                       -->
     <TITLE>EX-31.1</TITLE>
</HEAD>
<BODY>

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<DIV STYLE="WIDTH:600" ALIGN=JUSTIFY>
<BR>

<!-- MARKER FORMAT-SHEET="Para Right 10" FSL="Project" -->
<P ALIGN="RIGHT"><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Exhibit 31.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>CERTIFICATION </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I, Leonard Osser, certify that: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>      1. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I
have reviewed this quarterly report on Form 10-QSB of Milestone Scientific, Inc. (&#147;the
registrant&#148;).</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based
on my knowledge, this quarterly report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly report; </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based
on my knowledge, the financial statements, and other financial information included in
this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report; </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
registrant&#146;s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e) for the registrant and have: </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a)</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Designed
such disclosure controls and procedures to ensure that material information relating to
the registrant, is made known to us by others, particularly during the period in which
this quarterly report is being prepared; </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>b)</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Evaluated
the effectiveness of the registrant&#146;s disclosure controls and procedures as of a
date within 90 days prior to the filing date of this quarterly report (the &#147;Evaluation
Date&#148;); and </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c)</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Presented
in this quarterly report our conclusions about the effectiveness of the disclosure
controls and procedures based on our evaluation as of the Evaluation Date: </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
registrant&#146;s other certifying officers and I have disclosed, based on our most
recent evaluation, to the registrant&#146;s auditors and the audit committee of registrant&#146;s
board of directors (or persons performing the equivalent functions): </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a)</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All
significant deficiencies and material weaknesses in the design or operation of internal
controls which are reasonably likely to adversely affect the registrant&#146;s ability to
record, process, summarize and report financial information; and </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>b)</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant&#146;s internal controls; and </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
registrant&#146;s other certifying officers and I have indicated in this quarterly report
whether or not there were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<table width=600 cellspacing=0 cellpadding=0 border=0>
  <tr valign=TOP>
    <td width=40%><font face="Times New Roman, Times, Serif" size=2>Date: August
      15, 2005</font></td>
    <td width=10%><font face="Times New Roman, Times, Serif" size=2></font></td>
    <td width=50%><font face="Times New Roman, Times, Serif" size=2><br>
      /s/ Leonard Osser<br>
      &#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Leonard Osser <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chairman and Chief Executive Officer</font></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24 </FONT></P>
<HR SIZE=5 NOSHADE>

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</DIV>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>5
<FILENAME>d64931_ex31-2.htm
<DESCRIPTION>CFO CERTIFICATION
<TEXT>
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2 Final//EN">
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        X:\JOBS\05-64931\d05-64931.eep                                   -->
     <!-- Control Number: 05-64931                                                         -->
     <!-- Rev Number:     1.0                                                              -->
     <!-- Client Name:    Milestone Scientific, Inc.                                       -->
     <!-- Project Name:   Form Type: 10QSB                                                 -->
     <!-- Firm Name:      Milestone Scientific, Inc.                                       -->
     <TITLE>EX-31.2</TITLE>
</HEAD>
<BODY>

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<DIV STYLE="WIDTH:600" ALIGN=JUSTIFY>
<BR>

<!-- MARKER FORMAT-SHEET="Para Right 10" FSL="Project" -->
<P ALIGN="RIGHT"><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Exhibit 31.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>CERTIFICATION </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I, Rosaline Shau, certify that:  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>      1. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I
have reviewed this quarterly report on Form 10-QSB of Milestone Scientific, Inc. (&#147;the
registrant&#148;).</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based
on my knowledge, this quarterly report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly report; </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based
on my knowledge, the financial statements, and other financial information included in
this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report; </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
registrant&#146;s other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for the registrant and have: </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a.</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Designed
such disclosure controls and procedures to ensure that material information relating to
the registrant, is made known to us by others, particularly during the period in which
this quarterly report is being prepared; </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>           b. </FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Evaluated
the  effectiveness  of the  registrant&#146;s  disclosure  controls and  procedures as of
a date within 90 days prior to the                 filing date of this quarterly report
(the &#147;Evaluation Date&#148;); and </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>           c. </FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Presented
in this quarterly report our conclusions  about the  effectiveness  of the disclosure
 controls and procedures based on                 our evaluation as of the Evaluation
Date: </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
registrant&#146;s other certifying officers and I have disclosed, based on our most
recent evaluation, to the registrant&#146;s auditors and the audit committee of registrant&#146;s
board of directors (or persons performing the equivalent functions): </FONT></P></TD>
</TR>
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<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a.</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All
significant deficiencies and material weaknesses in the design or operation of internal
controls which are reasonably likely to adversely affect the registrant&#146;s ability to
record, process, summarize and report financial information; and </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>           b. </FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
fraud,  whether or not material,  that involves management or other employees who have a
significant role in the registrant&#146;s                 internal controls; and </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
registrant&#146;s other certifying officers and I have indicated in this quarterly report
whether or not there were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<table width=600 cellspacing=0 cellpadding=0 border=0>
  <tr valign=TOP>
    <td width=40%><font face="Times New Roman, Times, Serif" size=2>Date: August
      15, 2005</font></td>
    <td width=10%><font face="Times New Roman, Times, Serif" size=2></font></td>
    <td width=50%><font face="Times New Roman, Times, Serif" size=2><br>
      /s/ Rosaline Shau<br>
      &#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rosaline Shau<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acting Chief Financial Officer</font></td>
  </tr>
</table>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25 </FONT></P>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>6
<FILENAME>d64931_ex32-1.htm
<DESCRIPTION>CEO CERTIFICATION
<TEXT>
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2 Final//EN">
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        X:\JOBS\05-64931\d05-64931.eep                                   -->
     <!-- Control Number: 05-64931                                                         -->
     <!-- Rev Number:     1.0                                                              -->
     <!-- Client Name:    Milestone Scientific, Inc.                                       -->
     <!-- Project Name:   Form Type: 10QSB                                                 -->
     <!-- Firm Name:      Milestone Scientific, Inc.                                       -->
     <TITLE>EX-32.1</TITLE>
</HEAD>
<BODY>

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<BR>

<!-- MARKER FORMAT-SHEET="Head Major 10" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit
32.1<BR>CERTIFICATION PURSUANT TO<BR>18 U.S.C. SECTION 1350,<BR>AS ADOPTED PURSUANT
TO</FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002 </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection with the Quarterly
Report of Milestone Scientific, Inc. on Form 10-QSB for the six months ending June 30,
2005 as filed with the Securities and Exchange Commission on the date hereof (the &#147;Report&#148;),
I, Leonard Osser, Chief Executive Officer of Milestone, certify pursuant to 18 U.S.C. ss.
1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The
Report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in
all material respects, the financial condition and result of operations of Milestone.  </FONT></P>

<table width=600 cellspacing=0 cellpadding=0 border=0>
  <tr valign=TOP>
    <td width=40%>&nbsp;</td>
    <td width=10%><font face="Times New Roman, Times, Serif" size=2></font></td>
    <td width=50%><font face="Times New Roman, Times, Serif" size=2><br>
      /s/ Leonard Osser<br>
      &#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
      Leonard Osser <br>
      Chief Executive Officer<br>
      August 15, 2005 </font></td>
  </tr>
</table>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26 </FONT></P>
<HR SIZE=5 NOSHADE>


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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>7
<FILENAME>d64931_ex32-2.htm
<DESCRIPTION>CFO CERTIFICATION
<TEXT>
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2 Final//EN">
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        X:\JOBS\05-64931\d05-64931.eep                                   -->
     <!-- Control Number: 05-64931                                                         -->
     <!-- Rev Number:     1.0                                                              -->
     <!-- Client Name:    Milestone Scientific, Inc.                                       -->
     <!-- Project Name:   Form Type: 10QSB                                                 -->
     <!-- Firm Name:      Milestone Scientific, Inc.                                       -->
     <TITLE>EX-32.2</TITLE>
</HEAD>
<BODY>

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<DIV STYLE="WIDTH:600" ALIGN=JUSTIFY>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major 10" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit
32.2<BR>CERTIFICATION PURSUANT TO<BR>18 U.S.C. SECTION 1350,<BR>AS ADOPTED PURSUANT
TO</FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002 </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection with the Quarterly
Report of Milestone Scientific, Inc. on Form 10-QSB for the six months ending June 30,
2005 as filed with the Securities and Exchange Commission on the date hereof (the &#147;Report&#148;),
I, Rosaline Shau, Acting Chief Financial Officer of Milestone, certify pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and (2) The information contained in the Report fairly
presents, in all material respects, the financial condition and result of operations of
Milestone.  </FONT></P>

<table width=600 cellspacing=0 cellpadding=0 border=0>
  <tr valign=TOP>
    <td width=40%>&nbsp;</td>
    <td width=10%><font face="Times New Roman, Times, Serif" size=2></font></td>
    <td width=50%><font face="Times New Roman, Times, Serif" size=2><br>
      /s/ Rosaline Shau<br>
      &#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
      Rosaline Shau<br>
      Acting Chief Financial Officer<br>
      August 15, 2005 </font></td>
  </tr>
</table>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>27 </FONT></P>
<HR SIZE=5 NOSHADE>


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</DOCUMENT>
</SEC-DOCUMENT>
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