NOTE E – INTANGIBLE ASSETS

Intangible assets consist of the following:

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 from FhCMB through a TTA in December 2003, as amended, for $3,600,000.

Terms of the TTA require FhCMB to provide the Company with research and development services related to the commercialization of the Technology and allow FhCMB to apply the Technology to the development and production of certain vaccines for use in developing countries as defined in the agreement. The most recent amendment to the TTA requires: a) the Company to make payments to FhCMB of $2,000,000 per year for five years, aggregating $10,000,000, for such services beginning in November 2009; and b) FhCMB to expend at least equal amounts during the same timeframe for research and development services related to the commercialization of the Technology. Additionally, under the terms of the TTA and for a period of fifteen years: a) the Company shall pay FhCMB a defined percent (per the agreement) of all receipts derived by the Company from sales of products produced utilizing the Technology and a defined percentage (per the agreement) of all receipts derived by the Company from licensing the Technology to third parties with an overall minimum annual payment of $200,000 beginning with the twelve months ended December 2010; and b) FhCMB shall pay the Company a defined percentage (per the agreement) of all receipts from sales, licensing, or commercialization of the Technology in developing countries as described above.

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

During the fourth quarter of June 30, 2011, the Company re-evaluated its business strategy and reviewed its product portfolio. After such review, the Company’s near-term potential for upfront milestone receipts and/or licensing deals led to further evaluation of its intellectual property including its patents. The Company recorded an impairment charge of approximately $87,000 and $586,000 for the years ended June 30, 2012 and 2011, respectively, which was charged to general and administrative expense in the accompanying Statements of Operations.

Amortization expense for intangible assets is recorded utilizing the straight-line method over periods ranging from 10 to 23 years, is included in general and administrative expenses, and was approximately $323,000 and $373,000 for the years ended June 30, 2012 and 2011, respectively. The weighted average remaining life for intellectual property and patents at June 30, 2012 was approximately 12 and 6 years, respectively.

The estimated annual amortization expense for intangible assets for the next five years and thereafter is as follows: