COMMITMENTS AND CONTINGENCIES

6 Months Ended

Mar. 31, 2012

Notes to Financial Statements

COMMITMENTS AND CONTINGENCIES

G. 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 March 31, 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 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 six months ended March 31, 2012 and 2011 was $353,726 and $379,725, respectively.  The amortization of the deferred rent for the three months ended March 31, 2012 and 2011 was $174,775 and $187,835, 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 March 31, 2012 and September 30, 2011, the Company has recorded a deferred rent liability of $1,767 and $4,526, respectively.