Note 3 — Commitments:
The Company has employment agreements with the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) and, until September 30, 2012, the Chief Business Officer (“CBO”), who resigned effective that day, which provide for aggregate base salaries of $875,000 per year, a guaranteed bonus of $75,000 per year for the CEO and annual performance-based bonuses of up to 50%, 25% and 20%, respectively, of their base salaries. The agreements for the CEO and CFO also provide incentive bonuses of $250,000 and $500,000 for each in the event that the Company’s market capitalization exceeds specified levels. The first threshold was met and each of the $250,000 bonuses were paid in the third quarter of 2011.
In 2011, the agreements with the CEO and CFO were amended to provide that if the second market capitalization threshold is attained, the bonus of $500,000 will be paid in a combination of shares of the Company’s common stock worth $300,000 and $200,000 in cash. The number of the shares of common stock each was determined by the closing price of the Company’s common stock as reported on NASDAQ on August 24, 2011 ($9.85), which results in 30,457 shares to be issued to each of our CEO and our CFO if the second market capitalization threshold is attained. As of September 30, 2012, the second market capitalization threshold had not been attained.