Stock Option Plans

12 Months Ended

Dec. 31, 2011

Stock Option Plans [Abstract]

STOCK OPTION PLANS

NOTE K — STOCK OPTION PLANS

In July 2004, the Board of Directors approved the adoption of the 2004 Stock Option Plan. The 2004 Stock Option Plan provides for the grant of options to purchase up to 750,000 shares of Milestone’s common stock. Options may be granted to employees, officers, directors and consultants of Milestone for the purchase of common stock of Milestone at a price not less than the fair market value of the common stock on the date of the grant. In general, options become exercisable over a three-year period from the grant date and expire five years after the date of grant.

In December 2007, the Board of Directors authorized the Company to issue up to $2 million of its Company stock to vendors or employees, and to grant them piggy back registration rights in the usual form, at a value of not less than 90% of the market value on the date of the agreement for the vendor or employee to accept said shares. Such future shares are not included in the above noted shares reserved for future issuance.

In November 2009, the Board of Directors authorized 666,667 options be reserved for a special bonus to the Chief Executive Officer of the Company, for obtaining a three year purchase order for the sale of 12,000 STA Instruments and related handpieces over a four year period. These options were reserved and 73,333 were granted but not vested in 2010. The remaining 593,334 were reserved until specific performance targets are achieved. The options will be issued upon achievement of the specific target on a yearly basis. The options were valued at $1.49 per share.

A summary of option activity for employees under the plans as of December 31, 2011 and 2010, and changes during the year then ended is presented below:

		September 30,			September 30,		September 30,		September 30,
	Number of Options			Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Outstanding, January 1, 2010		1,060,142			1.33		3.61		632,624
Granted		313,333			1.11		5.88		—
Exercised		—			—		—		—
Forfeited or expired		(444,971	)		1.72		—		—
Outstanding, December 31, 2010		928,504			1.07		3.92		115,849
Exercisable, December 31, 2010		471,722			0.95		2.74		110,142
Granted		277,778			0.36		5.00
Exercised during 2011		—			—		—		—
Forfeited or expired		67,000			1.17		—		—
Outstanding, December 31, 2011		1,139,282			0.89		3.62		1,000
Exercisable, December 31, 2011		638,176			0.89		2.79		1,000

		September 30,			September 30,		September 30,
	Number of Options			Weighted Averaged Exercise Price $		Weighted Average Grant Date Fair Value $
VESTED OPTIONS
Outstanding, January 1, 2010		559,154			1.45		—
Exercised during 2010		—			—		—
Vested Options during 2010		214,456			0.81		—
Forfeited during 2010		(301,888	)		1.72		—
Outstanding, December 31, 2010		471,722			0.95		—
Exercised during 2011		—			—		—
Vested Options during 2011		233,454			0.83		—
Forfeited during 2011		67,000			1.17		—
Outstanding, December 31, 2011		638,176			0.89		—
NONVESTED OPTIONS
Nonvested, January 1, 2010		500,988			1.20		—
Granted during 2010		313,333			1.11		—
Vested during 2010		(214,456	)		0.81		—
Forfeited during 2010		(143,083	)		1.62		—
Nonvested, December 31, 2010		456,782			1.20		—
Granted during 2011		277,778			0.36		—
Vested during 2011		(233,454	)		0.83		—
Forfeited during 2011		—			—		—
Nonvested, December 31, 2011		501,106			0.90		—

Milestone recognizes compensation expense on a straight line basis over the requisite service period and in case of performance based options over the period of the expected performance. During the years ended December 31, 2011 and 2010 Milestone recognized $225,257, and $140,226 of total compensation cost related to options that vested each year, respectively. As of December 31, 2011 and 2010, there was $156,753 and $258,369 of total unrecognized compensation cost related to non-vested options which Milestone expects to recognize over a weighted average period of 2.3 years and 2.5 years for December 31, 2011 and December 31, 2010, respectively.

A summary of option activity for non-employees under the plans as of December 31, 2010 and 2011, and changes during the year ended is presented below:

		September 30,			September 30,		September 30,		September 30,
	Number of Options			Weighted Averaged Exercise Price $		Weighted Average Remaining Contracted Life (years)		Aggregate Intrinsic Options Value $
Outstanding, January 1, 2010		414,999			1.90		2.70		236,083
Exercisable, December 31, 2010		336,387			1.96		2.71		234,638
Granted during 2010		136,666			1.69		0.72		—
Forfeited during 2010		(16,666	)		1.98		—		—
Outstanding, December 31, 2010		534,999			1.85		1.51		99,617
Exercisable, December 31, 2010		514,998			1.87		1.41		99,311
Granted during 2011		100,000			0.24		2.50		—
Exercised during 2011		(100,000	)		0.25		—
Forfeited during 2011		(120,000	)		1.75		—		—
Outstanding, December 31, 2011		414,999			1.87		1.43		12,000
Exercisable, December 31, 2011		399,443			1.90		1.36		12,000

		September 30,			September 30,
	Number of Options			Weighted Averaged Exercise Price $
VESTED OPTIONS
Outstanding, January 1, 2010		336,387			1.96
Vested during 2010		195,277			1.72
Forfeited during 2010		(16,666	)		1.98
Outstanding, December 31, 2010		514,998			1.87
Exercised during 2011		(100,000	)		0.25
Vested during 2011		104,445			0.29
Forfeited during 2011		(120,000	)		1.75
Outstanding, December 31, 2011		399,443			1.90
NONVESTED OPTIONS
Nonvested January 1, 2010		78,612			1.64
Granted during 2010		136,666			1.69
Vested during 2010		(195,277	)		1.72
Forfeited during 2010		—			—
Nonvested December 31, 2010		20,001			1.21
Granted during 2011		100,000			0.24
Exercised during 2011		—			—
Vested during 2011		(104,445	)		0.29
Outstanding, December 31, 2011		15,556			1.16

The fair value of the options was estimated on the date of grant using the Black Scholes option-pricing model. For the year ended December 31, 2011, the following weighted average assumptions were used in calculating fair value; expected life of 3 years; volatility of 117.82 and risk-free interest rate of 1.64%. During the year ended December 31, 2011 and 2010 Milestone recognized $44,002 and $86,231 of expense related to non-employee options that vested, respectively. The total unrecognized compensation cost related to nonvested options was $2,358 and $24,316 as of December 31, 2011 and 2010.