NOTE 9. 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 August 2014. The leases for the expansion space and the current space will expire in July 2018. Rental costs, including the expansion space are approximately $22,000 per month, increasing 3% annually.

The Company’s research facility in Madison, Wisconsin is leased through February 28, 2019. Monthly rental expense is approximately $23,000. Other monthly rental expenses include common area maintenance and real estate taxes totaling approximately $15,000 per month. Utilities costs are approximately $14,000 per month. Including monthly payments recorded under a capital lease of approximately $19,000, total monthly costs are approximately $71,000 per month.

Facility and equipment rent expense, related to continuing operations, for six months ended March 31, 2014 and 2013 was $264,000 and $281,000, respectively. From inception to date, rent expense was $4,924,000.

As of March 31, 2014, future minimum lease payments due in fiscal years under capitalized leases are as follows:

2014 (remainder of)	$	114,211
2015		228,420
2016		228,420
2017		228,420
2018		228,420
2019 and thereafter		95,175
Less interest		(45,055	)
Principal		1,078,011
Less current portion		(212,234	)
Noncurrent portion	$	865,777

As of March 31, 2014, future minimum lease payments due in fiscal years under operating leases are as follows:

2014 (remainder of)	$	234,692
2015		552,028
2016		567,904
2017		583,932
2018		607,437
2019 and thereafter		393,133
Total	$	2,939,126