Stock Option Plans

6 Months Ended

Jun. 30, 2011

NOTE — 4 STOCK OPTION PLANS

FASB ASC Topic 505, “Share-Based Payment”, requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statements of operations over the service period, as an operating expense, based on the grant-date fair values.

A summary of option activity for employees under the plans as of June 30, 2011, and changes during the six months ended, is presented below:


					Weighted
			Weighted		Average		Aggregate
	Number		Averaged		Remaining		Intrinsic
	of		Exercise		Contractual		Options
	Options		Price		Life (Years)		Value

Outstanding, January 1, 2011		928,504	$	1.07		3.92	$	—
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited or expired		30,000		0.83		—		—
Outstanding, June 30, 2011		898,504		1.08		3.54		51,600
Exercisable, June 30, 2011		443,397		0.96		2.40		51,214

Milestone recognizes compensation expense on a straight line basis over the requisite service period. During the six months ended June 30, 2011, Milestone recognized $101,794 of total compensation cost. As of June 30, 2011, there was $188,096 of total unrecognized compensation cost related to non-vested options which Milestone expects to recognize over a weighted average period of 1.80 years. A six percent rate of forfeitures is assumed in the calculation of the compensation cost for the period.

Expected volatilities are based on historical volatility of Milestone’s common stock over a period commensurate with anticipated term. Milestone uses historical data to estimate option exercise and employee termination within the valuation model.

A summary of option activity for non-employees under the plans as of June 30, 2011, and changes during the six months ended, is presented below:


					Weighted
			Weighted		Average		Aggregate
	Number		Averaged		Remaining		Intrinsic
	of		Exercise		Contractual		Options
	Options		Price		Life (Years)		Value

Outstanding, January 1, 2011		534,999		1.85		1.51		—
Granted		—		—		—		—
Exercised		100,000		0.25		—		—
Forfeited or expired		120,000		1.75		—		—
Outstanding, June 30, 2011		314,999		2.39		1.59		13,300
Exercisable, June 30, 2011		297,776		2.46		1.47		13,300

During the six months ended June 30, 2011, Milestone recognized $18,079 of expenses related to non-employee options that vested during the period. The total unrecognized compensation cost related to non-vested options was $5,936 as of June 30, 2011.

In accordance with the provisions of FASB ASC 505-50-15, all other issuances of common stock, stock options or other equity instruments to non-employees as consideration for goods or services received by Milestone are accounted for based on the fair value of the equity instruments issued (unless the fair value of the consideration received can be more reliably measured). The fair value of any options or similar equity instruments issued is estimated based on the Black-Scholes option-pricing model, and the assumption that all of the options or other equity instruments will ultimately vest. Such fair value is measured as of an appropriate date pursuant to the guidance, (generally, the earlier of the date the other party becomes committed to provide goods or services or the date of performance by the other party is complete) and capitalized or expensed as if Milestone had paid cash for the goods or services.

The Company held its Annual Meeting of the Stockholders on June 16, 2011. There was an approval of the Company’s 2011 Stock Option Plan for the issuance of up to 2,000,000 common shares.