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7. COMMITMENTS AND CONTINGENCIES
 9 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
COMMITMENTS AND CONTINGENCIES

Lease Agreement - In August 2007, the Company leased a building near Baltimore, Maryland.  The building, which consists of approximately 73,000 square feet, was remodeled in accordance with the Company’s specifications so that it can be used by the Company to manufacture Multikine for the Company’s Phase III clinical trial and sales of the drug if approved by the FDA.  The lease is for a term of twenty years and required an annual base rent payments of $1,575,000 during the first year of the lease.  The annual base rent escalates each year at 3%.  The Company is also required to pay all real and personal property taxes, insurance premiums, maintenance expenses, repair costs and utilities.  The lease allows the Company, at its election, to extend the lease for two ten-year periods or to purchase the building at the end of the 20-year lease.

 

In August 2011, the Company’s minimum cash balances were less than required by the lease.  The Company paid an additional deposit of $1,670,917 to the landlord that remains a deposit as of June 30, 2012.

 

On December 7, 2011, the Company entered into a sublease for a period of four months commencing on December 10, 2011.  The Company receives $5,000 per month in rent for the subleased space.  The lease is now a month to month term lease with a 30 day notice requirement for termination.

 

The Company began amortizing the deferred rent on the building on October 7, 2008, the day that the Company took possession of the building.  The amortization of the deferred rent for the nine months ended June 30, 2012 and 2011 was $528,498and $559,868, respectively.  The amortization of the deferred rent for the three monthsended June 30, 2012 and 2011 was $174,773 and $180,144, respectively.

 

On February 1, 2012, the Company extended its lease for its research and development laboratories for a period of five (5) years until February 28, 2017.  The operating lease includes escalating rental payments. The Company is recognizing the related rent expense on a straight line basis over the full 60 month term of the lease at the rate of $11,290 per month.  As of June 30, 2012 and September 30, 2011, the Company has recorded a deferred rent liability of $646 and $4,526, respectively.