NOTE

L — 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

shares available for grant at

December 31, 2017

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. In general, options become exercisable over a

three

-year period from the grant date and expire

five

years after the date of grant.

May 2016,

Milestone 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”

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, 2017

and

2016

respectively, Milestone Scientific recognized

$636,058

and

$579,103

of total employee compensation cost, respectively. As of

December 31, 2017,

and

2016,

there was

$603,979

and

$678,842

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

2.61

years and

3.04

years as of

December 31, 2017

and

2016,

respectively.

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

December 31, 2017,

and

2016

is presented below:

	Number of Options		Wei ghted Averaged Exercise Price $	Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Options Value $
Options outstanding January 1, 2016	1,419,436		1.56	2.79	1,220,338
Exercisable, January 1, 2016	1,041,680		1.29	2.41	1,135,819
Granted	520,337		1.79	4.38
Exercised during 2016	(327,778	)	0.75	-	-
Forfeited or expired	(100,000	)	2.35	-	-
Options 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
Granted	1,006,741		1.82	4.69	25,610
Exercised during 2017	(83,333	)	0.75	-	-
Forfeited, cancelled, or expired	(1,250,068	)		-	-
Options outstanding December 31, 2017	1,985,325		1.74	3.04	25,160
Exercisable, December 31, 2017	1,317,4416		1.84	2.46	8,537

July 2017,

Milestone Scientific's Compensation Committee approved the issuance of

400,000

stock options to Gian Domenico Trombetta, CEO of Wand Dental, a Director of Milestone Scientific and a director of Innovest S.p.A., an Italian investor (

250,000

options at an exercise price of

$2.55

per share were issued on

July 7, 2017

and

150,000

options having an exercise price at the higher of

$2.55

or the market price of the stock on the date of the

2018

Annual Stockholder meeting, subject to approval of a new or amended equity incentive plan at such meeting.) Mr. Trombetta elected to cancel the

400,00options

granted as of

December 31, 2017.

The weighted-average fair value of the options granted during

2017

and

2016

was estimated as

$1.73

and

$1.70

respectively, on the date of grant. The fair value for

2017

and

2016

was determined using the Black-Scholes option-pricing model with the following assumptions:

	2017		2016
Volatility		81.23% -97.24%		134.53%- 194.34%
Risk-free interest		1.4%- 2.2%		.04%-1.47%
Expected Life	2-5 years		5 years
Dividend yield		0		0
Forfeiture Rate		6		6

A summary of option activity for non-employees under the plans and changes during the years ended

December 31, 2017

and

2016,

is presented below:

	Number of Options	Weighted Averaged Exercise Price $	Weighted Average Remaining Contractual Life (Years)	Aggregate Intr insic Options Value $
Outstanding, January 1, 2016	8,333	2.70	4.83
Exercisable, January 1, 2016	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	-
Granted 2017	-	-	-	-
Exercised 2017	-	-	-	-
Outstanding, December 31, 2017	224,999	2.52	3.51	-
Exercisable, December 31, 2017	23,067	2.22	4.38	-

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 rendered. For the

twelve

months end

December 31, 2017,

Milestone Scientific recognized

$9,384

income related to non-employee options. For the

twelve

months end

December 31, 2016,

Milestone Scientific recognized

$25,346

expense related to non-employee options.