NOTE 7. LEASES

In April 2011, the Company's corporate headquarters lease expired; the Company is currently leasing temporary offices for its corporate headquarters in Pasadena, California. The temporary offices are expected to be occupied for several months at a rental rate of approximately $8,000 per month. The current rental agreement is on a month-to-month basis and there were no long-term lease commitments in California at March 31, 2012. In April 2012, the Company signed a lease for new office space for its corporate headquarters, and expects to move to its new location in August 2012. The rental cost will be approximately $13,000 per month.

On October 21, 2011, Arrowhead acquired the RNAi operations from Roche, including its research facility in Madison, Wisconsin. Such lease expires on February 28, 2019; monthly rental expense is approximately $22,000, and monthly payments under a capitalized lease are approximately $21,000. 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, which increase the total monthly expenditures to approximately $72,000.

Facility and equipment rent expense for the six months ended March 31, 2012 and 2011 was $214,000 and $104,000, respectively. From inception to date, rent expense was $3,859,664. Rent expense related to Unidym, until its disposal in January 2011, is included as a part of income/loss from discontinued operations.

As of March 31, 2012, future minimum lease payments under capitalized leases are as follows:


2012	$	128,423
2013		256,846
2014		256,846
2015		256,846
2016		256,846
2017 and thereafter		620,710
Less interest		(174,250	)

Principal		1,602,266
Less current portion		211,602

Noncurrent portion	$	1,390,664

As of March 31, 2012, future minimum lease payments under operating leases are as follows:


2012		$ 129,845
2013		263,472
2014		269,956
2015		276,721
2016		283,685
2017 and thereafter		713,958

Total	$	1,937,637