A summary of option activity for employees under the plans and changes during the six months ended June 30, 2013, is presented below:


Outstanding, January 1, 2013	1,283,741	0.79	3.07	768,692
Granted	—	—	-	—
Exercised	40,000	0.74	—	—
Forfeited or expired	36,666	.094	—	—
Outstanding, June 30, 2013	1,207,075	0.87	2.74	614,768
Exercisable, June 30, 2013	794,620	0.84	2.18	421,506

Milestone recognizes compensation expense on a straight line basis over the requisite service period. For the three months ended June 30, 2013, the Company recognized $18,735 of total compensation cost. During the six months ended June 30, 2013, Milestone recognized $37,470 of total compensation cost. As of June 30, 2013, there was $129,902 of total unrecognized compensation cost related to non-vested options which Milestone expects to recognize over a weighted average period of 2.25 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 and changes during the six months ended June 30, 2013, is presented below:


Outstanding, January 1, 2013	239,999	1.56	1.32	168,166
Granted	—	—	—	—
Exercised	—	—	—	—
Forfeited or expired	—	—	—	—
Outstanding, June 30, 2013	239,999	1.04	0.83	151,750
Exercisable, June 30, 2013	237,220	1.04	0.81	150,805