NOTE 15 – SERVICE AGREEMENTS
Sales Consulting Agreement
On March 1, 2012, and as amended on May 31, 2012, we entered into a two-year Sales Consulting Agreement (“Consulting Agreement”) with an unrelated entity and an unrelated individual (collectively, the “Sales Consultant”) wherein a Distribution Agreement dated January 9, 2010 between the Sales Consultant and the Company was terminated and future services to be provided by the Consultant relative to designated hospitals would be provided pursuant to the Consulting Agreement. We agreed to pay the Sales Consultant a monthly consultant fee equal to the greater of (i) $10,000 or (ii) the sum of $250 per month per designated hospital. Warrants for an aggregate of 100,000 shares were to be issued to the Sales Consultant as follows: (i) one Warrant for 50,000 shares to be issued May 31, 2012 with an exercise price $1.55 per share and (ii) one Warrant for 50,000 shares to be issued upon the first anniversary date of the Sales Consulting Agreement with an exercise price set at the closing price of the Company’s Common Stock on the date of issuance. Shares underlying the Warrants vest immediately upon issuance of each Warrant. On May 31, 2012 we issued a five-year Warrant to purchase 50,000 shares of the Company’s Common Stock (with a fair value of $52,300). On December 4, 2012, the Company and the Sales Consultant agreed to terminate the Consulting Agreement and we issued a five-year Warrant to purchase 50,000 shares of the Company’s Common Stock (with a fair value of $28,100) with an exercise price of $0.77 per share. For the year ended December 31, 2012, $80,400 was charged to expense and recorded as non-cash cost in the accompanying financial statements. No Warrants have been exercised as of December 31, 2013.
Advisory Services Agreement
On May 7, 2012, we entered into an Advisory Services Agreement (the “Agreement”) with an unrelated entity (the “Advisor”) under which the Advisor provided services related to micro-cap market research and investor relations. The Agreement was for a term of 12 months and was terminated on May 7, 2013. Compensation for the Advisor included a retainer of $5,000 per month. In addition, we issued a five-year Warrant for the purchase of 240,000 shares of our Common Stock at an exercise price of $1.65 per share. Vesting of the underlying shares occurred at the rate of 20,000 shares on the monthly anniversary date of the Agreement and all shares became fully vested on May 7, 2013. At grant date the Warrant had a fair value of $265,200 at an exercise price of $1.65 per share. Because the Warrant was issued to a non-employee and had specific vesting requirements, the fair value of the Warrant was re-valued at each reporting period and any change in the fair value of the unvested portion of the Warrant is recorded as a charge or credit. Through December 31, 2012, $100,956 was charged to expense and recorded as non-cash cost in the accompanying financial statements. No Warrants have been exercised as of December 31, 2013.