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Note 9 - 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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