|
Commitments
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Dec. 31, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments Disclosure [Text Block] |
12.
Commitments
Leases
The
Company leases office space in Maryland, California and
Tennessee under non-cancellable operating leases. Leases
expire in 2012 and 2014.
Future
minimum lease payments under non-cancellable operating
leases are as follows:
Rent
expense under all operating leases was approximately
$174,000, $181,000 and $190,000 for the years ended
December 31, 2011, 2010, and 2009,
respectively.
Licenses
Certain
license arrangements require minimum royalty payments. As
of December 31, 2011, future minimum royalty payments
are as follows:
Royalty
payment amounts may be greater than the minimum required
payment amounts based on the negotiated royalty rates. If
the Company sublicenses the intellectual property that is
licensed from the licensor and the Company receives any
royalty payment under or with respect to such sublicense,
the Company is obligated to pay the licensor an agreed upon
percentage of any such payment(s). Under the terms of these
license agreements, the Company is required to reimburse
the licensor for all costs associated with patent filing,
prosecution and maintenance as well as expenses related to
enforcing the related patent rights. The Company may
terminate these license agreements for any reason, upon
giving the licensor either 60 or 90 days’ written
notice, depending on the agreement. One of the licenses is
cancelable by the licensor if, by the fourth anniversary of
the effective date (June 30, 2012), there have been no
commercial sales of a product subject to the
license.
Co-Development
Agreement
The
Company has entered into a co-development agreement whereby
it would pay up to approximately $2,476,000 in
milestone-based payments for software development to be
used in conjunction with products being developed by the
Company. The software, upon completion, will be owned by
the co-developer and sold through licenses. The
co-developer will pay the Company a fixed amount per
license sold by the co-developer until the Company recoups
its investment in the software. At December 31, 2011,
the Company has made a total of $850,000 in milestone
payments and the Company’s accounts payable balance
includes approximately $524,000 related to these
milestones. Based on negotiations between the Company and
the co-developer, the parties have agreed in principle to
modify the terms of the co-development agreement such that
the co-developer would fund the future remaining
development work it performs under the agreement. However,
the negotiations between the Company and the co-developer
are ongoing with respect to any modification of the
co-development agreement.
Shared
Research Agreements
The
Company has entered into research agreements with certain
universities whereby the Company has committed to pay
certain research-related expenses. At December 31,
2011, the Company’s other accounts payable and
accrued liabilities includes approximately $1,301,000
related to these agreements. As of December 31, 2011
the Company does not have any additional commitments under
any such agreements.
Software
License Agreement
The
Company is obligated under a master services and license
agreement to purchase a minimum number of licenses for
software code that is incorporated in the Company’s
ClearPoint system software. The minimum future purchase
obligation is $87,500 per calendar quarter in 2012, 2013
and 2014, with an aggregate remaining commitment at
December 31, 2011 totaling $1,050,000. At
December 31, 2011, the Company had purchased licenses
under this agreement totaling $675,000, of which $525,000
had not yet been paid and is included in accounts payable
at December 31, 2011. The cost of each license will be
charged to cost of sales as each ClearPoint system is sold
or amortized over a five year period for licenses used in
loaned systems.
Cardiac
EP Business Participation Plan
In
June 2010, the Company adopted a plan that provides a key
product development advisor and consultant with financial
rewards in the event that the Company sells its business
operations relating to catheter-based MRI-guided cardiac
ablation to treat cardiac arrhythmias, which the Company
refers to as its cardiac EP operations. In the event that
the Company sells its cardiac EP operations, whether on a
stand-alone basis or as part of the sale of the Company,
the participant will receive a payment under the plan equal
to (i) the transaction value paid for or allocated to
the cardiac EP operations in the sale, multiplied by
(ii) the participant’s “participation
interest” at the time of the sale. The participant
was initially awarded a participation interest of 6.6%.
That participation interest is 6.5% at December 31,
2011. The participation interest, expressed as a
percentage, will be equitably reduced from time to time to
take into account future equity financing transactions in
which the Company issues shares of its common stock, or
securities convertible into shares of its common stock, in
exchange for cash proceeds. The plan will terminate in June
2025.
Key
Personnel Incentive Program
In
June 2010, the Company amended its Key Personnel Incentive
Program, which provides a key employee and a key
consultant, who is also a non-employee director of the
Company, 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 the event of a sale
transaction, each participant will receive a bonus payment
under the program if the participant continues to provide
services to the Company as its employee or consultant as of
the date of the transaction. Until the occurrence of a sale
transaction, each participant will be entitled to receive
semi-annual service bonuses beginning in June 2012 and
continuing through December 2015, if the participant
continues to provide services to the Company as its
employee or consultant as of the respective scheduled
payment dates. Pursuant to their awards, the two
participants would receive service bonuses totaling up to
$1,700,000 and $1,000,000, respectively, payable in eight
equal semi-annual installments. At December 31, 2011,
the Company has approximately $762,000 recorded as accrued
compensation, approximately $87,000 of which is included in
other accrued liabilities as a long-term liability.
If
the participant’s employment or consultancy is
(i) terminated due to the participant’s death or
disability, or (ii) involuntarily terminated by the
Company other than for cause, then the participant will be
deemed vested, as of the termination date, in all future
scheduled service bonus payments, and the Company will be
required to pay that aggregate amount no later than
March 15 of the year following the year in which the
termination occurred. If the participant’s employment
or consultancy is involuntarily terminated by the Company
for cause, or if the participant voluntarily terminates his
employment or consultancy, the participant thereafter will
not be entitled to any payments under the program. The
program will terminate on the earlier of December 31,
2015 or the occurrence of a transaction involving the sale
of the Company.
Legal
Settlement
On
April 22, 2010, SurgiVision Consultants, Inc. and Guy
M. Kezirian, or the plaintiffs, filed a lawsuit against the
Company in the United States District Court, Central
District of California, alleging trademark infringement,
unfair competition, trademark dilution and violation of the
Anti-Cybersquatting Protection Act, all relating to the
Company’s use of its SURGI-VISION and SURGIVISION
trademarks and the Company’s www.surgivision.com
domain name. On February 16, 2011, the parties entered
into a settlement agreement which resulted in the dismissal
of the litigation. Pursuant to the settlement agreement,
the Company agreed to discontinue use of any form of the
SURGIVISION name and agreed to pay the plaintiffs $425,000
for reimbursement of out of pocket legal expenses incurred
by the plaintiffs in connection with the litigation. The
Company accrued the full amount of the settlement at
December 31, 2010 as selling, general and
administrative expenses and the liability is included in
other accrued liabilities. The $425,000 was payable in
twelve equal monthly installments of $35,417 beginning in
March of 2011. At December 31, 2011, the balance of
$70,834 is included in other accrued liabilities.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||