NOTE 17 - Subsequent Events

Management has evaluated events occurring after the date of these financial statements through the date these financial statements were issued.  Other than disclosed below, there were no material subsequent events as of that date.

Between October 7 and 9, 2013 we issued 4,080,943 shares of common stock to seven note holders upon conversion of the notes at $0.20 per share.

On October 10, 2013, the Company filed a Certificate of Amendment to its Articles of Incorporation to increase its authorized shares of common stock to 200,000,000 and authorize 5,000,000 shares of preferred stock.  Prior to the amendment, Biozone was authorized to issue 100,000,000 shares of common stock and no shares of preferred stock

On October 17, 2013, the Company issued 1,000,000 shares of common stock for services rendered to the Company.

Effective October 18, 2013, the Company, BZL, Fisher and Aphena Pharma Solutions (“Aphena”) entered into a Settlement Agreement (the “Settlement Agreement”). Pursuant to the Settlement Agreement, Aphena agreed to dismiss all of its claims against t, BZL and Fisher contained in the action, entitled Aphena Pharma Solutions - Maryland, LLC v. BioZone Laboratories, Inc. filed in the United States District Court for the Northern District of California No. C12-06292 (the “Lawsuit”). In consideration for dismissal of the Lawsuit, Aphena will be paid the sum of $400,000 within 30 days by the Company’s insurer, Evanston Insurance Company.  In addition, BioZone and BZL issued to Aphena a Promissory Note in the amount of $500,000, subsequently paid, and the Company issued to Aphena five-year warrants to purchase up to 200,000 shares of the Company’s common stock at $0.50 per share.

On October 18, 2013, we issued 29,069 shares of common stock upon the cashless exercise of 100,000 warrants.

Effective October 22, 2013, the Company, BZL, Matrixx Initiatives, Inc. (“Matrixx”) and Zicam, LLC (“Zicam”) entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”) related to a voluntary recall initiated by Matrixx on December 18, 2012 of one lot of Zicam® Extreme Congestion Relief nasal gel that BZL manufactured on Matrixx’ behalf (the “Product Recall”). In connection with the Product Recall, Matrixx sent BZL on January 3, 2013 a Notice of Default under the Supply Agreement dated May 8, 2009 by and between BZL and Zicam, LLC (the “Supply Agreement”) to formally notify BZL that Matrixx is handling the Product Recall and will require BZL to reimburse Matrixx for all costs and expenses related to the Product Recall. Pursuant to the Settlement Agreement, the Company agreed to pay Zicam seven hundred thousand dollars ($700,000) within 10 days of the date of execution of the Settlement Agreement to settle all remaining amounts due to Zicam under the Supply Agreement and the parties agreed to terminate the Supply Agreement effective as of the date of the Settlement Agreement. In addition, Zicam agreed to release BZL from the post-termination non-compete provision contained in the Supply Agreement.  The Company has now paid in full the required cash settlement payment.

On October 23, 2013, the Company issued 442,204 shares of common stock for services rendered to the Company.

On October 25, 2013, the Company closed on the sale of 3,500 shares of Series A Preferred Stock (“Series A”) in a private placement offering to 22 accredited investors for total gross proceeds of $3,500,000. The Series A investors also were issued 7,000,000 10-year warrants exercisable at $0.50 per share (the “Series A Warrants”).  The Series A: (i) have a stated value of $1,000, (ii) are convertible at $0.50 per share (the “Conversion Price”) or a total of 7,000,000 shares of common stock and (iii) provide for 10% dividends per annum payable quarterly on March 31, June 30, September 30, and December 31, beginning on June 30, 2014 and on each conversion date.  In lieu of a cash dividend payment, the Company may elect to pay all or part of a dividend in shares of common stock based on a conversion price equal to the lesser of: (i) the Conversion Price and (ii) the average of the volume weighted average prices for the 20 consecutive trading days ending on the trading day that is immediately prior to the dividend payment date.  The Company’s right to pay a dividend in common stock is subject to the Company meeting certain equity conditions.  The holders of Series A: (i) will vote together with the holders of common stock on an as converted basis and (ii) have a liquidation preference over the holders of the Company’s common stock.   The net proceeds to the Company were $3,410,000. The Series A Warrants have a 10-year term, are exercisable at $0.50 per share (subject to stock splits, stock dividends and combinations) and contain a cashless exercise provision. The Company paid a placement agent $50,000 and agreed to issue the placement agent 100,000 shares of common stock and 100,000 warrants with the same terms as the Series A Warrants.

From November 15-18, 2013, all of the holders of Series A shares converted the Series A into shares of common stock.