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Changes in Contractual Commitments
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9 Months Ended |
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Sep. 30, 2012
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| Commitments and Contingencies Disclosure [Text Block] |
9.
Changes
in Contractual Commitments
Software
License Agreement
Effective
June 22, 2012, the Company and its ClearPoint system
software development partner entered into an amendment
(the “Software Amendment”) to the master
services and licensing agreement (the “Master
Software Agreement”) between the parties.
The
Company entered into the Master Software Agreement in
July 2007 for the software development partner to develop
on the Company’s behalf, based on the
Company’s detailed specifications, a customized
software solution for the Company’s ClearPoint
system. The software development partner was in the
business of providing software development and
engineering services on a contract basis to a number of
companies. In developing the Company’s ClearPoint
system software, the software development partner
utilized certain of its own pre-existing software code.
Under the Master Software Agreement, the Company received
a non-exclusive, worldwide license to that code as an
integrated component of the Company’s ClearPoint
system software. In return, the Company agreed to pay the
software development partner a license fee for each copy
of the ClearPoint system software that the Company
distributes, subject to certain minimum license purchase
commitments by the Company.
Pursuant
to the Software Amendment, the Company agreed to issue
the software development partner 1,500,000 shares of the
Company’s common stock (1) in full payment and
satisfaction of license fees owed to the software
development partner in the amount of $612,500 for
licenses previously purchased by the Company, (2) in full
payment and satisfaction of all of the Company’s
remaining minimum license purchase commitments from the
software development partner in the amount of $962,500,
and (3) in exchange for additional licenses provided by
the software development partner to the Company valued at
$87,500 based on the original terms of the Master
Software Agreement. The Company applied guidance in ASC
505-50, Equity-Based Payments to Non-Employees, using the
contractual value of the amounts owed and of the licenses
acquired to measure and record the transaction. The
portion of the licenses purchased by the Company that is
not expected to be sold or placed in service during the
next twelve months, in the amount of $1,137,500, has been
recorded as a non-current asset, software license
inventory.
Key
Personnel Incentive Program
The
Company adopted its Key Personnel Incentive Program to
provide a key consultant (who is a non-employee director
of the Company) and a key employee (collectively, the
“Participants”) with the opportunity to
receive incentive bonus payments based on the performance
of future services to the Company or upon a consummation
of a transaction involving the sale of the Company. In
June 2012, the Participants voluntarily and irrevocably
relinquished their rights to receive, and the
Participants discharged the Company from its obligations
to make, any and all incentive bonus payments under the
Key Personnel Incentive Program based on the performance
of services.
Pursuant
to the Key Personnel Incentive Program, in the event of a
sale transaction, each of the Participants will be
entitled to receive an incentive bonus payment equal to
$1,000,000. In addition, one of the
Participants will also receive an incentive bonus payment
equal to 1.4% of net proceeds from the sale transaction
in excess of $50,000,000, but not to exceed $700,000. If
a sale has not occurred by December 31, 2025, the Key
Personnel Incentive Program will terminate.
Because
the Company was discharged from any obligations to make
incentive bonus payments related to performance of
services under the Key Personnel Incentive Program, in
June 2012 the Company reversed all amounts previously
accrued for such service-based payments under the
program. This resulted in a credit to reversal of R&D
obligation of $882,537 for the amounts that had been
accrued as research and development costs in 2010, 2011
and during the three months ended March 31, 2012
($120,895 had been accrued during the three months ended
March 31, 2012).
Employment
Agreements
In
June 2012, the Company entered into employment agreements
(each, an “Employment Agreement,” and
collectively, the “Employment Agreements”)
with four of its executive officers (each, an
“Executive,” and collectively, the
“Executives”). Among other
provisions customary for agreements of this nature, the
Employment Agreements provide for severance in the event
of a termination without cause or if the Executive
terminates his employment for good reason, as those terms
are defined in each Employment Agreement. Likewise, the
Employment Agreements provide for certain payments in
connection with a change of control
transaction. The initial base salaries set
forth in the Employment Agreements are the same as the
base salaries for each of the Executives immediately
prior to the execution of the Employment
Agreements.
Sponsored
Research Agreement
In
September 2012, the Company entered into a research
agreement with a university pursuant to which the Company
agreed to provide the university funding in the amount of
$317,415 to support certain research activities over the
one-year period beginning October 1,
2012. Under the terms of the research
agreement, the Company will make four quarterly payments
of $79,354. The first of these payments was made in
October 2012.
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