NOTE J

— STOCK OPTION PLANS

The

2004

Stock Option Plan provided for the grant of options to purchase up to

750,000

shares of Milestone Scientific'

s common stock. Options

may

be granted to employees, officers, directors and consultants of Milestone Scientific for the purchase of common stock 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. There were no shares available for grant at

December

31,

2016

under this plan.

June

2011,

the stockholders of Milestone Scientific

approved the

2011

Stock Option Plan (the

"2011

Plan") which originally provided for stock options to our employees, directors and consultants and incentive and non-qualified stock options to purchase up to

2,000,000

shares of common stock. Such future share issuances are included in the above noted shares reserved for future issuances. I

n general, options become exercisable over a

three

-year period from the grant date and expire

five

years after the date of grant.

May

2016,

Mileston

e Scientific's stockholders approved the following amendments to the

2011

Plan:

Renaming of the

2011

plan to the “Milestone Scientific Inc.,

2011

Equity Compensation Plan”

ii.

Providing for awards of restricted common stock; and

iii.

Increasing the maximum number of shares of common stock reserved for grants under the

2011

Plan from

2,000,000

4,000,000.

Milestone Scientific recognizes compensation expense on a straight line basis over the requisite service period and in the case of performance based options over the period of the expected performance. For the

twelve

months ended

December

31,

2016

and

2015

respectively, Milestone Scientific recognized

$579,103

and

$637,108

of total employee compensation cost, respectively. As of

December

31,

2016

and

2015,

there was

$678,842

and

$1,167,865

of total unrecognized compensation cost related to nonvested options, respectively. Which Milestone Scientific expects to recognize these cost over a weighted average period of

2.58

years and

2.78

years as of

December

31,

2016

and

2015,

respectively.

A summary of option activity for employees under the plans and changes during the year ended

December

31,

2016,

is presented below:

	Number of Options			Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Outstanding January 1, 2015		1,472,130			0.79		2.88		1,430,231
Exercisable, December 31, 2015		1,036,185			1.10		2.75		1,244,074
Granted		157,306			3.01		4.18
Exercised during 2015		(200,000	)		1.00		-		-
Forfeited or expired		(10,000	)		1.00		-		-
Outstanding December 31, 2015		1,419,436			1.56		2.79		1,220,338
Exercisable, December 31, 2015		1,041,680			1.29		2.41		1,135,819
Granted		520,337			1.79		4.38		-
Exercised during 2016		(327,778	)		.75		-		-
Forfeited or expired		(100,000	)		2.35		-		-
Outstanding December 31,2016		1,511,995			1.74		2.97		102,605
Exercisable, December 31, 2016		1,054,202			1.65		2.51		102,605

A summary of option activity for non-employees under the plans as of

December

31,

2016

and

2015,

and changes during the year ended is presented below:

	Number of Options			Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Outstanding, January 1, 2015		16,666			1.27		0.62		17,166
Exercisable, January 1, 2015		16,666			1.27		0.62		17,166
Granted		8333			2.70		4.83		22,499
Exercised		(16,666	)		1.27		-		-
Outstanding, December 31, 2015		8,333			2.70		4.83		-
Exercisable, December 31, 2015		2,777			2.70		4.83		-
Granted		216,666			2.53		-		-
Exercised		-			-		-		-
Outstanding, December 31, 2016		224,999			2.53		5.32		-
Exercisable, December 31, 2016		14,734			2.72		4.36		-

The fair value of the non-employee options was estimated on the date of grant using the Black Scholes option-pricing model at the date of grant. In accordance with the provisions of FASB ASC

505,

Milestone Scientific will re-measure the value

of the grant at each presentation date unless there is a significant disincentive for non-performance or until performance has been. For the

twelve

months end

December

31,

2016,

Milestone Scientific recognized

$25,346

expense related to non-employee options. For the

twelve

months end

December

31,

2015,

Milestone Scientific recognized

$7,050

expense related to non-employee options. As of

December

31,

2016,

there was a total of

$678,842

of unrecognized compensation cost related to non-vested options, which Milestone Scientific expects to recognize over a weighted average period of

2.49

years.