NOTE B – INTANGIBLE ASSETS

Intangible assets consist of the following:

The Company accounts for intangible assets at their historical cost and records amortization utilizing the straight-line method based upon their estimated useful lives. Patents are amortized over a period of ten years and other intellectual property is amortized over a period from 18 to 23 years. The Company reviews the carrying value of its intangible assets for impairment whenever events or changes in business circumstances indicate the carrying amount of such assets may not be fully recoverable. Evaluating for impairment requires judgment, including the estimation of future cash flows, future growth rates and profitability and the expected life over which cash flows will occur. Changes in the Company’s business strategy or adverse changes in market conditions could impact impairment analyses and require the recognition of an impairment charge equal to the excess of the carrying value over its estimated fair value. There were no impairment charges during the three and six months ended December 31, 2012 and 2011.

Intellectual property consists of technology for producing targeted proteins in plants for the development and manufacture of novel vaccines and therapeutics for humans and certain veterinary applications (the “Technology”). The Company originally acquired this Technology in December 2003 from Fraunhofer USA Inc., acting through its Center for Molecular Biotechnology (“FhCMB”) pursuant to a Technology Transfer Agreement (as amended, the “TTA”). The consideration paid by the Company was $3,600,000.

Patents consist of payments for services and fees related to the further development and protection of the Company’s patent portfolio.

Amortization expense for intangible assets is recorded utilizing the straight-line method and is included in general and administrative expenses. For the three months ended December 31, 2012 and 2011, amortization expense approximated $83,000 and $80,000, respectively, and for the six months ended December 31, 2012 and 2011, amortization expense approximated $165,000 and $159,000, respectively.