NOTE 8. LEASES

In May 2012, the Company signed a lease for new office space for its corporate headquarters, and moved into the new location in August 2012. The lease has a five-year term; rental costs are approximately $13,000 per month, increasing 3% annually.

The Company’s research facility in Madison, Wisconsin is leased through February 28, 2019. Monthly rental expense is approximately $22,000. Other monthly rental expenses include common area maintenance and real estate taxes totaling approximately $13,000 per month. Utilities costs are approximately $16,000 per month. Including monthly payments recorded under a capital lease of approximately $21,000, total monthly costs are approximately $72,000 per month.

Facility and equipment rent expense, related to continuing operations, for the year ended September 30, 2012 and 2011 was $480,000 and $162,000, respectively. From inception to date, rent expense was $4,125,485. Rent expense related to Unidym, until its disposal in January 2011, is included as a part of income/loss from discontinued operations.

As of September 30, 2012, future minimum lease payments due in fiscal years under capitalized leases are as follows:


2013	$	256,846
2014		256,846
2015		256,846
2016		256,846
2017		256,846
2018 and thereafter		363,864
Less interest		(150,835	)

Principal		1,497,259
Less current portion		(214,801	)

Noncurrent portion	$	1,282,458

As of September 30, 2012, future minimum lease payments due in fiscal years under operating leases are as follows:


2013	$	356,672
2014		434,229
2015		445,921
2016		457,961
2017		470,154
2018 and thereafter		484,785

Total	$	2,649,723