From time to time, we are a party to, or otherwise involved in, legal proceedings arising in the normal course of business.  As of the date of this report, except as described below, we are not aware of any proceedings, threatened or pending, against us which, if determined adversely, would have a material effect on our business, results of operations, cash flows or financial position.

The Company is named in two legal proceedings both arising out of that real property located at 580 Garcia Avenue, Pittsburg, California (the “Garcia Property”) – the location from which the Company previously conducted its principal operations.  With respect to the claim concerning the loan secured by the Garcia Property – said loan being guaranteed by one of the Company’s subsidiaries, BioZone Laboratories – the loan, as indicated in Note 10 to the Consolidated Financial Statements, was purchased by the Company.

The first proceeding disclosed in the immediately preceding Form 10-Q – the action by the founder/landlord in Contra Costa County is still pending and its status is unchanged.  However, the Company’s purchase of the loan secured by the Garcia Property potentially affords the Company and its subsidiaries additional defenses to the claims of the founder/landlord in that action.

Finally, the Company has been named as a party to a new lawsuit filed on April 15, 2014 in Contra Costa County by the same founder and former officer of BioZone Laboratories.  Also named in this new action are two of the Company’s subsidiaries – BioZone Laboratories and Cocrystal Discovery.  Filed in the name of the entity controlled by the founder/former officer which currently holds title to the Garcia Property, the action seeks recovery on a promissory note purportedly delivered by BioZone Laboratories in the amount of $295,000.   A motion challenging the sufficiency of the allegations in the Complaint was filed. The Company intends to vigorously defend the action.