Note Q – Sale/Leaseback

6 Months Ended

Jun. 30, 2011

Sale Leaseback Transaction Disclosure [Text Block]

NOTE Q – SALE/LEASEBACK

On May 24, 2011 (the “Closing Date”), we sold our real property located at 110 Little Falls Road, Fairfield, New Jersey, with the buildings and improvements thereon, and any furniture, machinery, equipment and other personal property (other than property used in the conduct of our laboratory business) that the Company owned and used to operate, repair and maintain the property (the “Property”), to RCP Birch Road, L.L.C. (the “Purchaser”).  This sale was effected pursuant to an Agreement for Sale of Real Estate, dated as of January 31, 2011, by and between Unigene and the Purchaser.  In connection with the transfer of title of the Property, on the Closing Date, we received an aggregate purchase price of $1,200,000 from the Purchaser.  In connection with the transfer of title of the Property, pursuant to the Settlement Agreement, the Levy Parties released their secondary mortgage and related liens on the Property (see Note G).

In connection with the sale of the Property, we executed a Lease for Real Property, dated as of the Closing Date, pursuant to which we have leased the Property from the Purchaser for an initial term of seven years, which may be extended for one renewal term of five years, for an annual base rent during the initial term ranging from $135,000 to $145,000, and up to approximately $156,000 in the renewal term.

After expenses of $80,000, we received net proceeds of $1,120,000.  Our basis in the land, building and improvements was $303,000.  Therefore, we will recognize a gain on this transaction in the amount of $817,000.  This gain will be recognized ratably over seven years, the length of the lease term.  For the period ended June 30, 2011, we recognized a gain in the amount of $10,000 which is included in the statement of operations.