NOTE 8. LEASES

The Company leases office space for its corporate headquarters in Pasadena, California. In March 2014, the Company signed a lease addendum to expand its corporate headquarters. It is expected the new space will be available in September 2014. The leases for the expansion space and the current space will expire in August 2019. Rental costs, including the expansion space are approximately $22,000 per month, increasing approximately 3% annually.

The Company’s research facility in Madison, Wisconsin is leased through February 28, 2019. Monthly rental expense is approximately $25,000. Other monthly rental expenses include common area maintenance and real estate taxes totaling approximately $16,000 per month. Utilities costs are approximately $15,000 per month. Including monthly payments recorded under a capital lease of approximately $19,000, total monthly costs are approximately $75,000 per month.

Facility and equipment rent expense, related to continuing operations, for the three and nine months ended June 30, 2014 was $138,000 and $403,000, respectively. Facility and equipment rent expense, related to continuing operations, for the three and nine months ended June 30, 2013 was $126,000 and $407,000, respectively.

As of June 30, 2014, future minimum lease payments due in fiscal years under capitalized leases are as follows:

2014 (remainder of)	$	57,105
2015		228,420
2016		228,420
2017		228,420
2018		228,420
2019 and thereafter		95,175
Less interest		(40,681	)
Principal		1,025,279
Less current portion		(213,110	)
Noncurrent portion	$	812,169

As of June 30, 2014, future minimum lease payments due in fiscal years under operating leases are as follows:

2014 (remainder of)	$	134,164
2015		580,626
2016		597,196
2017		613,984
2018		638,217
2019 and thereafter		432,861
Total	$	2,997,048