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Item 1A. Risk Factors

2021-06-14 compared with 2020-06-29 · 2326 added, 2637 removed, 102 unchanged (98% of the section changed)

An investment in the

Company’s Common Stock involves a high degree of risk.

You should carefully consider the risks described below as well as

other information provided to you in this report, including information in the section of this document entitled “

investment in the Company’s securities involves a high degree of risk.

You should carefully consider the risks described below

as well as other information provided to you in this report, including information in the section of this document entitled “

Looking Statements.

The risks and uncertainties described below are not the only ones facing us.

Additional risks and

uncertainties not presently known to us or that we currently believe are immaterial may also impair our business operations.

any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely

affected, the value of our Common Stock could decline, and you may lose all or part of your investment.

In addition to the other information contained

in this report, the following risk factors should be considered carefully in evaluating an investment in us and in analyzing our

forward-looking statements.

Risks Related to Our Business

Widespread health problems, including the recent global

COVID-19 pandemic, natural disasters or other unexpected events could materially and adversely affect our business.

Public health outbreaks,

epidemics or pandemics, such as the coronavirus, could materially and adversely impact our business.

For example, in December

2019, COVID-19 was reported to have surfaced in Wuhan, China.

In March 2020, the World Health Organization declared the COVID-19

outbreak a global pandemic.

By April 11, 2020, the President of the United States had issued major disaster declarations for all

fifty states for the first time in the country’s history.

COVID-19 has resulted in global business and economic disruption

and extreme volatility in the financial markets as many jurisdictions have placed restrictions on travel and non-essential business

operations and implemented social distancing, shelter-in-place, quarantine and other similar measures for their residents to contain

the spread of the virus.

In response to these public health directives and orders, we have implemented alternative working practices

and work-from-home capabilities for appropriate employees, as well as social distancing, modified schedules, shift rotation and

other similar policies at our manufacturing facilities.

We have also suspended international and domestic travel on behalf of

Despite these actions, the Company continues to be exposed to the risk of a significant disruption or ceasing of

all manufacturing or other operations resulting from laws, executive orders or other directives from various governmental authorities

which could require such disruption or ceasing of operations due to our products and or operations being determined to be non-essential

or any other reason for which it has been determined that such actions taken against the Company will further the protection of

the general population from harm that may be caused or related to COVID-19 or any similar threat to public health.

The effects of COVID-19,

including these public health directives and orders and our policies, have had an impact on our business and may in the future

materially disrupt our business, including our manufacturing and supply chain operations by significantly reducing our output,

negatively impact our productivity and delay our product development programs.

Additional risks and uncertainties

not presently known to us or that we currently believe are immaterial may also impair our business operations.

If any of the following

risks actually occur, our business, financial condition or results of operations could be materially adversely affected, the value of

our Common Stock could decline, and you may lose all or part of your investment.

addition to the other information contained in this report, the following risk factors should be considered carefully in evaluating an

investment in us and in analyzing our forward-looking statements.

Factor Summary

following is a summary of the risk factors contained in this Annual Report on Form 10-K that could adversely affect our business, ability

to operate, financial condition, results of operation, equity and cash flows.

This summary does not address all of the risks that we

face and is qualified in its entirety by reference to the more detailed descriptions included below.

In addition to this summary, we

strongly encourage you to carefully review the full risk factors in their entirety.

Related Risks

pharmaceutical industry is highly competitive.

pandemic and natural disasters.

Interruptions

in operations at our sole facility could have a material adverse effect on our business.

are dependent on a small number of customers, suppliers and other third parties for core business aspects.

may sell, withdraw or discontinue manufacture of certain products.

may fail to successfully identify, develop, complete clinical trials, secure regulatory approvals and commercialize new products.

operations could be disrupted by failure of our information systems or cyber-attacks.

in product development may result in failure to achieve adequate return on investment.

business is dependent on market perceptions, social and political pressures.

economic conditions may adversely affect our business.

depend on qualified scientific and technical personnel and our ability to attract and retained such.

collaboration or licensing arrangements could limit revenues and product development.

and Liquidity Related Risks

have a relatively limited operating history and our operating results could fluctuate significantly.

ability to fund operations is uncertain and we may require additional financing to meet objectives.

have substantial indebtedness which may adversely affect our financial condition.

is a risk impairment of significant intangible assets on our balance sheet.

requires estimates, judgements and assumptions which inherently contain uncertainties.

and Regulatory Risks

pharmaceutical industry is heavily regulated which creates uncertainty and substantial compliance costs.

in the degree to which individuals are covered by healthcare insurance and levels of third party reimbursement could result in decreased

use of our products and lower prices.

business may be adversely affected by legislation or healthcare regulatory reform and initiatives.

of generics may be limited through legislative, regulatory or efforts of pharma companies.

tariffs and evolving trade policy between the US and other countries may adversely affect our business.

DEA could limit the availability of active ingredients used in many of our products.

in FDA approval requirements may prevent or delay approval of new products.

received a CRL from the FDA indicating that the SequestOx TM NDA is not ready for approval.

factors may cause us to be unable to manufacture products or face interruptions in our manufacturing process.

between branded pharmaceutical companies and generic pharmaceutical companies are facing increased government scrutiny in the United

States and Internationally.

and Liability Related Risks

may not be able to obtain or maintain adequate insurance coverages.

product liability claims, product recalls, government investigations and other significant legal proceedings are common in the pharmaceutical

products contain narcotic ingredients which may subject us to increased litigation risk and regulation.

concern over abuse of opioids has negatively affected our business.

distribution and third party sale of counterfeit versions of our products could have a detrimental effect on our reputation and business.

and Organizational Risks

have identified material weaknesses in internal controls in prior years.

of our Articles of Incorporation could deter a change of management and discourage offers to acquire us.

Property Related Risks

ability to protect intellectual property rights and successfully defend third party allegations of intellectual property infringement

is vital to our business and uncertain.

Related to our Common Shares

from issuance of shares to Lincoln Park, Directors, Employees, Consultants or upon exercise of warrants and options or the perception

that dilution may occur could cause the price per share of common stock to fall.

common stock is a penny stock, quoted on the OTC bulletin board, with rules in place that could limit trading and liquidity of our

shares, increased transaction costs that could adversely affect our price per share.

activism could negatively affect us.

stock price has been volatile.

raises through sales of securities may cause substantial dilution to existing shareholders.

of shares of common or preferred stock could make achieving a change of control more difficult.

have no plans to pay regular dividends or conduct ordinary share purchases.

Related Risks

pharmaceutical industry is highly competitive.

pharmaceutical industry is highly competitive and subject to rapid and significant technological change, and we may be unable to compete

effectively, which could impair our ability to implement our business model.

Competitive factors faced include, without limitation, product

development, safety, efficacy, commercialization, marketing, promotion, product quality, cost-effectiveness, reputation, service, patient

convenience, access to scientific and technical information, and ability to manage operations in an economic environment that is severely

impacted by a global pandemic such as COVID-19.

In addition, the pharmaceutical industry is undergoing rapid and significant technological

change, and we expect competition to intensify as technical advances in each field are made and become more widely known.

An increasing

number of pharmaceutical companies have been or are becoming interested in the development and commercialization of products incorporating

advanced or novel drug delivery systems.

We expect that competition in the field of drug delivery will increase in the future as other

specialized research and development companies begin to concentrate on this aspect of the business.

Some of the major pharmaceutical

companies have invested and are continuing to invest significant resources in the development of their own drug delivery systems and

technologies and some have invested funds in specialized drug delivery companies.

Many of our competitors have longer operating histories

and, they, and future competitors, may have greater financial, research and development, marketing, and other resources than we do.

recent trends in this industry include market consolidation, which may further concentrate financial, technical, market and other strengths

and resources with the result being a further increase competitive pressures existent in this industry.

Such companies may develop new

formulations and products, or may improve existing ones, more efficiently than we can.

Our success, if any, will depend in part on our

ability to keep pace with the changing technology in the fields in which we operate.

we expand our presence in the generic pharmaceuticals market our product candidates may face intense competition from brand-name companies

that have taken aggressive steps to thwart competition from generic companies.

In particular, brand-name companies continue to sell or

license their products directly or through licensing arrangements or strategic alliances with generic pharmaceutical companies (so-called

“authorized generics”).

No significant regulatory approvals are required for a brand-name company to sell directly or through

a third party to the generic market, and brand-name companies do not face any other significant barriers to entry into such market.

addition, such companies continually seek to delay generic introductions and to decrease the impact of generic competition, using tactics

which include, without limitation:

new patents on drugs whose original patent protection is about to expire;

patent applications that are more complex and costly to challenge;

suits for patent infringement that automatically delay approval from the FDA;

citizens’

petitions with the FDA contesting approval of the generic versions of products due to alleged health and safety issues;

controlled-release or other “next-generation”

products, which often reduce demand for the generic version of the existing

product for which we may be seeking approval;

product claims and product labeling;

and marketing as over-the-counter products those branded products which are about to face generic competition;

arrangements with managed care companies and insurers to reduce the economic incentives to purchase generic pharmaceuticals.

strategies may increase the costs and risks associated with our efforts to introduce our generic products under development and may delay

or prevent such introduction altogether.

addition, sales of our products may be adversely affected by the continuing consolidation within the retail and wholesale pharmaceutical

Our products, whether sold directly by the Company or through third parties that are licensed to market and distribute our products

are sold in large part to a market that is comprised of a relatively few retail drug chains, wholesalers, and managed care organizations,

with such entities continuing to undergo consolidation.

Such consolidation may provide these customers or our products with additional

purchasing leverage, and consequently, may increase the pricing pressures faced by us.

Additionally, the emergence of large buying groups

representing independent retail pharmacies, and the prevalence and influence of managed care organizations and similar institutions,

enable those groups to extract price discounts on our products and our revenues and quarterly results comparisons may also be affected

by fluctuations in the buying patterns of retail chains, major distributors, and other trade buyers.

policies regarding returns, rebates, allowances and chargebacks, and marketing programs adopted by wholesalers may reduce our revenues

in future fiscal periods.

Based on industry practice, generic drug manufacturers have liberal return policies and have been willing to

give customers post-sale inventory allowances.

Such industry practices apply to the current sales of our products by our marketing partners,

which in turn effect profit splits and license fees received, and they will also affect prospective future sales made directly by Company.

these arrangements, from time to time, customers are given credits on our generic products that are held by them in inventory after there

is a decrease in the market prices of the same generic products due to competitive pricing.

Therefore, if new competitors enter the marketplace

and significantly lower the prices of any of their competing products, the price of our products would also likely be reduced.

we, or are marketing partners, would be obligated to provide credits to our customers who are then holding inventories of such products,

which could reduce sales revenue, profit splits, license fees and gross margin for the period the credit is provided.

Like most competitors

in this market, our marketing partners, or us in the case of prospective direct sales made by the Company, also give credits for chargebacks

to wholesalers that have contracts with our marketing partners, or us, prospectively, for their sales to hospitals, group purchasing

organizations, pharmacies, or other customers.

A chargeback is the difference between the price the wholesaler pays and the price that

the wholesaler’s end-customer pays for a product.

Although, our marketing partners establish, and prospectively we would also establish

reserves based on prior experience and best estimates of the impact that these policies may have in subsequent periods, we cannot ensure

that such reserves established are adequate or that actual product returns, rebates, allowances, and chargebacks will not exceed estimates.

Differences between established reserves and actual amounts of such credits and charges, could result in a material adverse effect on

our business, financial condition, results of operations, cash flow and stock price.

existence and occurrence of any of the above could have a material adverse effect on our business, financial condition, results of operations,

cash flow, ability to operate and stock price.

pandemic and natural disasters.

health problems, including the recent global COVID-19 pandemic, natural disasters or other unexpected events could materially and adversely

affect our business.

health outbreaks, epidemics or pandemics, such as the coronavirus, could materially and adversely impact our business.

For example, the

COVID-19 pandemic has resulted in global business and economic disruption and extreme volatility in the financial markets as many jurisdictions

have placed restrictions on travel and non-essential business operations and implemented social distancing, shelter-in-place, quarantine

and other similar measures for their residents with the stated objective being to contain the spread of the virus.

In response to these

public health directives and orders, we have implemented alternative working practices and work-from-home capabilities for appropriate

employees, installed improved air flow and filtration at the Northvale Facility, as well as social distancing, modified schedules, shift

rotation, daily temperature checks, multiple hand sanitation stations and other similar policies at our manufacturing facilities.

have also suspended international and domestic travel on behalf of the Company.

Despite these actions, the Company continues to be exposed

to the risk of a significant disruption or ceasing of all manufacturing or other operations resulting from laws, executive orders or

other directives from various governmental authorities which could require such disruption or ceasing of operations due to our products

and or operations being determined to be non-essential or any other reason for which it has been determined that such actions taken against

the Company will further the protection of the general population from harm that may be caused or related to COVID-19 or any similar

threat to public health.

effects of COVID-19, including these public health directives and orders and our policies, have had an impact on our business and may

in the future materially disrupt our business, including our manufacturing and supply chain operations by significantly reducing our

output, negatively impact our productivity and delay our product development programs.

The global pandemic may have significant impacts

on third-party arrangements, including those with our manufacturing, supply chain and distribution partners, information technology

and other vendors and other service providers and business partners.

For example, there may be significant disruptions in the

ability of any or all of these third-party providers to meet their obligations to us on a timely basis, or at all, which may be

caused by their own financial or operational difficulties, including any closures of their facilities pursuant to a governmental

order or otherwise.

As a result of these disruptions and other factors, including changes in our workforce availability and increased

demand for any of our products during this pandemic, our ability to meet our obligations to third-party marketing and distribution

partners may be negatively impacted.

As a result, the Company, or our third-party providers may deliver notices of the occurrent

of force majeure or similar event under certain contracts which could result in prolonged commercial disputes and ultimately

legal proceedings to enforce contractual performance and/or recover losses.

Any such occurrences could result in significant management

distraction and use of resources and, in the event of an adverse judgment, could result in significant cash payments.

the publicity of any such dispute could harm our reputation and make the negotiation of any replacement contracts more difficult

and costly, thereby prolonging the effects of any resulting disruption in our operations.

Such disruptions could be acute with

respect to certain of our raw material suppliers where we may not have readily accessible alternatives or alternatives may take

longer to source than usual.

While we attempt, when possible, to mitigate our raw material supply risks through stock management

and alternative sourcing strategies, some raw materials are only available from one source.

Any of these disruptions could harm

our ability to meet consumer demand, including any increase in demand for any of our products used during a pandemic.

While to date we have

not experienced a significant detrimental change in customer demand, the heightened possibility of changes in customer demand

as the COVID-19 pandemic evolves remains.

The current economic crisis and rising unemployment rates resulting from COVID-19 have

the potential to significantly reduce individual disposable income and depress consumer confidence, which could limit the ability

on third-party arrangements, including those with our manufacturing, supply chain and distribution partners, information technology and

other vendors and other service providers and business partners.

For example, there may be significant disruptions in the ability of

any or all of these third-party providers to meet their obligations to us on a timely basis, or at all, which may be caused by their

own financial or operational difficulties, including any closures of their facilities pursuant to a governmental order or otherwise.

As a result of these disruptions and other factors, including changes in our workforce availability and increased demand for any of our

products during this pandemic, our ability to meet our obligations to third-party marketing and distribution partners may be negatively

As a result, the Company, or our third-party providers may deliver notices of the occurrent of force majeure or similar

event under certain contracts which could result in prolonged commercial disputes and ultimately legal proceedings to enforce contractual

performance and/or recover losses.

Any such occurrences could result in significant management distraction and use of resources and,

in the event of an adverse judgment, could result in significant cash payments.

Further, the publicity of any such dispute could harm

our reputation and make the negotiation of any replacement contracts more difficult and costly, thereby prolonging the effects of any

resulting disruption in our operations.

Such disruptions could be acute with respect to certain of our raw material suppliers where we

may not have readily accessible alternatives or alternatives may take longer to source than usual.

While we attempt, when possible, to

mitigate our raw material supply risks through stock management and alternative sourcing strategies, some raw materials are only available

from one source.

Any of these disruptions could harm our ability to meet consumer demand, including any increase in demand for any of

our products used during a pandemic.

to date we have not experienced a significant detrimental change in customer demand, the heightened possibility of changes in customer

demand as the COVID-19 pandemic evolves remains.

The current economic crisis and higher levels of unemployment rates resulting from COVID-19

have the potential to significantly reduce individual disposable income and depress consumer confidence, which could limit the ability

of some consumers to purchase certain pharmaceutical products and reduce consumer spend on certain medical procedures in the short-,

medium- and long term.

Additionally, as part of the measures to address COVID-19, certain healthcare providers are not currently

performing various medical procedures and an increased portion of the general public are reducing their consumption of medical

services which may result in decreased demand for certain of our products.

Furthermore, we are

unable to predict the impact that COVID-19 may have going forward on the business, results of operations or financial position

of any of our major customers, which could impact each customer to varying degrees and at different times and could ultimately

impact our own financial performance.

Certain or many of our competitors may also be better equipped to weather the impact of COVID-19

domestically and may be better equipped to address changes in customer demand.

Additionally, our product development programs may

be adversely affected by the global pandemic and the prioritization of production during this pandemic.

The public health directives

in response to COVID-19 requiring social distancing and restricting non-essential business operations have in certain cases caused

and may continue to cause delays, increased costs and additional challenges in our product development programs, including obtaining

adequate patient enrolment and successfully bringing product candidates to market.

In addition, we may face additional challenges

receiving regulatory approvals as previously scheduled dates or anticipated deadlines for action by the FDA on our applications

and products in development, including dates scheduled for 2020, if any, could be subject to delays beyond our control as regulators

such as the FDA focus on COVID-19.

To the extent our

operating cash flows, together with our cash, cash equivalents, restricted cash and restricted cash equivalents, become insufficient

to cover our liquidity and capital requirements, including funds for any future acquisitions and other corporate transactions,

Additionally, as part of the measures to address COVID-19, certain healthcare providers are not currently performing

various medical procedures and an increased portion of the general public are reducing their consumption of medical services which may

result in decreased demand for certain of our products.

we are unable to predict the impact that COVID-19 may have going forward on the business, results of operations or financial position

of any of our major customers, which could impact each customer to varying degrees and at different times and could ultimately impact

our own financial performance.

Certain or many of our competitors may also be better equipped to weather the impact of COVID-19 domestically

and may be better equipped to address changes in customer demand.

Additionally, our product development programs may be adversely affected

by the global pandemic and the prioritization of production during this pandemic.

The public health directives in response to COVID-19

requiring social distancing and restricting non-essential business operations have in certain cases caused and may continue to cause

delays, increased costs and additional challenges in our product development programs, including obtaining adequate patient enrolment

and successfully bringing product candidates to market.

In addition, we may face additional challenges receiving regulatory approvals

as previously scheduled dates or anticipated deadlines for action by the FDA on our applications and products in development, including

dates scheduled for 2021, if any, could be subject to delays beyond our control as regulators such as the FDA focus on COVID-19.

the extent our operating cash flows, together with our cash, cash equivalents, restricted cash and restricted cash equivalents, become

insufficient to cover our liquidity and capital requirements, including funds for any future acquisitions and other corporate transactions,

we may be required to seek third-party financing, and/or engage in one or more capital markets transactions.

The COVID-19 pandemic

has resulted in significant disruptions to and volatility in the local, national and global financial markets and, with the equity

line with Lincoln Park Capital expiring on July 1, 2020, there can be no assurance that we would be able to obtain any required

financing on a timely basis or at all.

Further, lenders and other financial institutions could require us to agree to more restrictive

covenants, grant liens on our assets as collateral (resulting in an increase in our total outstanding secured indebtedness) and/or

accept other terms that are not commercially beneficial to us in order to obtain financing, as a result of the actual or perceived

impact that financial institutions believe the pandemic will have on our business.

Such terms could further restrict our operations

and exacerbate any impact on our results of operations and liquidity that may result from COVID-19.

In addition, a recession

or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our ordinary

Additionally, COVID-19

could increase the magnitude of many of the other risks described herein and have other adverse effects on our operations that

The COVID-19 pandemic has

resulted in significant disruptions to and volatility in the local, national and global financial markets and, there can be no assurance

that we would be able to obtain any required financing on a timely basis or at all.

Further, lenders and other financial institutions

could require us to agree to more restrictive covenants, grant liens on our assets as collateral (resulting in an increase in our total

outstanding secured indebtedness) and/or accept other terms that are not commercially beneficial to us in order to obtain financing,

as a result of the actual or perceived impact that financial institutions believe the pandemic will have on our business.

could further restrict our operations and exacerbate any impact on our results of operations and liquidity that may result from COVID-19.

addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of

our ordinary shares.

Additionally,

COVID-19 could increase the magnitude of many of the other risks described herein and have other adverse effects on our operations that

we are not currently able to predict.

For example, the global economic disruptions and volatility in the financial markets could

further depress our ability to obtain or renew insurance on satisfactory terms or at all.

Additionally, we may also be required

to delay or limit our internal strategies in the short- and medium-term by, for example, redirecting significant resources and

management attention away from implementing our strategic priorities or executing opportunistic corporate development transactions.

The magnitude of the effect of COVID-19 on our business will depend, in part, on the length and severity of the restrictions (including

the effects of recently announced “re-opening”

plans following a recent slowdown of the virus infection rate in certain

countries and localities) and other limitations on our ability to conduct our business in the ordinary course.

The longer the

pandemic continues or resurges, the more severe the impacts described above will be on both our domestic business and international

supply chains.

The full extent to which COVID-19 may impact our business will depend on future developments, which are highly

uncertain and cannot be predicted with accuracy or confidence, such as the duration of the outbreak, the severity of COVID-19,

the possibility of re-occurrences of outbreaks of COVID-19, future legal requirements, executive orders or other actions requiring

compliance by the Company and general population, or the effectiveness of actions to contain and treat COVID-19, particularly

in the geographies where we or our third party suppliers or other strategic partners operate or our customers and end-users of

our products reside.

Taking the speed and frequency of continuously evolving developments with respect to this pandemic, or in

the event of a pandemic relating to something other than COVID-19, we cannot reasonably estimate the magnitude of any impact on

our operations, and the full extent to which COVID-19 or another pandemic may impact, in a material and adverse fashion, our business,

financial condition, results of operations and cash flow, and could cause significant volatility in the trading prices of our

Furthermore, the occurrence

of one or more unexpected events, including fires, tornadoes, tsunamis, hurricanes, earthquakes, floods, and other forms of severe

hazards in the United States or in other countries in which we or our suppliers operate or are located could adversely affect

For example, the global economic disruptions and volatility in the financial markets could further

depress our ability to obtain or renew insurance on satisfactory terms or at all.

Additionally, we may also be required to delay or limit

our internal strategies in the short- and medium-term by, for example, redirecting significant resources and management attention away

from implementing our strategic priorities or executing opportunistic corporate development transactions.

The magnitude of the effect

of COVID-19 on our business will depend, in part, on the length and severity of the restrictions (including the effects of recently announced

“re-opening”

plans following a recent slowdown of the virus infection rate in certain countries and localities) and other

limitations on our ability to conduct our business in the ordinary course.

The longer the pandemic continues or resurges, the more severe

the impacts described above will be on both our domestic business and international supply chains.

The full extent to which COVID-19

may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with accuracy or confidence,

such as the duration of the outbreak, the severity of COVID-19, the possibility of re-occurrences of outbreaks of COVID-19, future legal

requirements, executive orders or other actions requiring compliance by the Company and general population, or the effectiveness of actions

to contain and treat COVID-19, particularly in the geographies where we or our third party suppliers or other strategic partners operate

or our customers and end-users of our products reside.

Taking the speed and frequency of continuously evolving developments with respect

to this pandemic, or in the event of a pandemic relating to something other than COVID-19, we cannot reasonably estimate the magnitude

of any impact on our operations, and the full extent to which COVID-19 or another pandemic may impact, in a material and adverse fashion,

our business, financial condition, results of operations and cash flow, and could cause significant volatility in the trading prices

of our securities.

the occurrence of one or more unexpected events, including fires, tornadoes, tsunamis, hurricanes, earthquakes, floods, and other forms

of severe hazards in the United States or in other countries in which we or our suppliers operate or are located could adversely affect

our operations and financial performance.

We have lost power or had to shut down operations as a result of extreme weather, natural

disasters, most notably Superstorm Sandy.

These types of unexpected events could result in physical damage to and complete or

partial closure of one or more of distribution centers or manufacturing facilities, or the temporary or long-term disruption in

the supply of products, and/or disruption of our ability to deliver products to customers.

Further, the long-term effects of climate

change on general economic conditions and the pharmaceutical manufacturing and distribution industry in particular are unclear,

and changes in the supply, demand or available sources of energy and the regulatory and other costs associated with energy production

and delivery may affect the availability or cost of goods and services, including natural resources, necessary to run our businesses.

Existing insurance arrangements may not provide protection for the costs that may arise from such events, particularly if such

events are catastrophic in nature or occur in combination.

Any long-term disruption in our ability to service our customers from

one or more distribution centers or outsourcing facilities could have a material adverse effect on our operations, our business,

results of operations and stock price.

Our revenues and operating results

could fluctuate significantly

Our revenues and operating

results may vary significantly from year-to-year and quarter-to-quarter as well as in comparison to the corresponding quarter

of the preceding year.

We have lost power or had to shut down operations as a result of extreme weather, natural disasters,

most notably Superstorm Sandy.

These types of unexpected events could result in physical damage to and complete or partial closure of

one or more of distribution centers or manufacturing facilities, or the temporary or long-term disruption in the supply of products,

and/or disruption of our ability to deliver products to customers.

Further, the long-term effects of climate change on general economic

conditions and the pharmaceutical manufacturing and distribution industry in particular are unclear, and changes in the supply, demand

or available sources of energy and the regulatory and other costs associated with energy production and delivery may affect the availability

or cost of goods and services, including natural resources, necessary to run our businesses.

Existing insurance arrangements may not

provide protection for the costs that may arise from such events, particularly if such events are catastrophic in nature or occur in

Any long-term disruption in our ability to service our customers from one or more distribution centers or outsourcing facilities

could have a material adverse effect on our operations, our business, results of operations and stock price.

Interruptions

in operations at our sole facility could have a material adverse effect on our business.

our manufacturing facility or the facilities of any of our suppliers fail to comply with regulatory requirements or encounter other manufacturing

difficulties, it could adversely affect our ability to manufacture and supply products.

All facilities and manufacturing processes used

for the manufacture of pharmaceutical products are subject to inspection by regulatory agencies at any time and must be operated in conformity

with current good manufacturing practice (“cGMP”) and, in the case of controlled substances, DEA regulations.

with the FDA’s cGMP and DEA requirements applies to both drug products seeking regulatory approval and to approved drug products.

In complying with cGMP requirements, pharmaceutical manufacturing facilities must continually expend significant time, money and effort

in production, recordkeeping, quality assurance and quality control so that their products meet applicable specifications and other requirements

for product safety, efficacy and quality.

Failure to comply with applicable legal requirements subjects us, our manufacturing facilities

and the facilities of our third-party suppliers to possible legal or regulatory action, including, without limitation, shutdown, which

may adversely affect our ability to supply the product.

Additionally, our manufacturing facilities, and those of our third party suppliers

may face other significant disruptions due to labor strikes, failure to reach acceptable agreement with labor unions, infringement of

intellectual property rights, vandalism, natural disaster, storm or other environmental damage, civil or political unrest, export or

import restrictions or other events.

Were we not able to manufacture products at our manufacturing facilities or were our third party

suppliers unable to manufacture products at their facilities because of regulatory, business or any other reasons, the manufacture and

marketing of these products would be interrupted.

This could have a material adverse impact on our business, results of operation, financial

condition, cash flows, competitive position and ability to operate.

all of our manufacturing operations are conducted at the Northvale Facility and any delays or unanticipated expenses in connection with

the operation at the Northvale Facility, resulting in a significant disruption at this facility, even on a short-term basis, whether

due to, without limitation, an adverse quality or compliance observation, including a total or partial suspension of production and/or

distribution by regulatory authorities, an act of God, civil or political unrest, force majeure situation or other events could impair

our ability to produce and ship products on a timely basis, and could, among other consequences, subject us to exposure to claims from

Any of these events could have a material adverse effect on our business, results of operations, financial condition, and

are dependent on a small number of customers, suppliers and other third parties for core business aspects.

are dependent on a small number of suppliers for our raw materials and any delay or unavailability of raw materials can materially adversely

affect our ability to produce products.

The FDA requires identification of raw material suppliers in applications for approval of drug

If raw materials were unavailable from a specified supplier, FDA approval of a new supplier could delay the manufacture of

the drug involved.

addition, some materials used in our products are currently available from only one supplier or a limited number of suppliers and there

is a risk of a sole approved supplier significantly raising prices.

Please note that such an occurrence has taken place recently, wherein

significant price increases from a sole supplier greatly reduced profit margins, sales, and delayed product launches.

These occurrences

were ultimately resolved by the successful FDA approval of an alternate supplier, with such approval process being lengthy and costly.

a significant portion of our raw materials may be available only from foreign sources.

Foreign sources can be subject to the special

risks of doing business abroad, including, without limitation:

possibility for disruption due to transportation or communication problems;

relative instability of some foreign governments and economies;

price volatility based on labor unrest, materials or equipment shortages, export duties, restrictions on the transfer of funds, or

fluctuations in currency exchange rates;

regarding recourse to a dependable legal system for the enforcement of contracts and other rights.

addition, patent laws in certain foreign jurisdictions (primarily, but not necessarily, in Europe) may make it increasingly difficult

to obtain raw materials for research and development prior to expiration of applicable United States or foreign patents.

inability to obtain raw materials on a timely basis, or any significant price increases that cannot be passed on to customers, can materially

adversely affect our ability to produce products.

This can materially adversely affect our business and operations.

also depend on a limited number of customers and any reduction, delay or cancellation of an order from these customers or the loss of

any of these customers could cause our revenue to decline.

Each year we have had one or a few customers that have accounted for a large

percentage of our limited revenues therefore the termination of a contract with a customer may result in the loss of substantially all

of our revenues.

We are constantly working to develop new relationships with existing or new customers, but despite these efforts we

may not, at the time that any of our current contracts expire, have other contracts in place generating similar or material revenue.

We have agreements with Lannett, Epic Pharma, Burel and Precision Dose for the sales and distribution of products that we manufacture.

We receive revenues to manufacture these products and also receive a profit split or royalties based on in-market sales of the products.

a significant portion of our revenues is derived from a relatively few customers, any financial difficulties experienced by any one of

these customers, or any delay in receiving payments from any one of these customers, could have a material adverse effect on our business,

results of operations, financial condition, and cash flows.

we are dependent on third parties to supply raw materials used in our products and to provide services for certain core aspects of our

Any interruption or failure by these suppliers, distributors and collaboration partners to meet their obligations pursuant

to various agreements with us could have a material adverse effect on our business, financial condition, results of operations and cash

rely on third parties to supply raw material used in our products.

In addition, we rely on third party suppliers, distributors and other

third party service providers to provide services for certain core aspects of our business, including, without limitation, manufacturing,

warehousing, freight and distribution, medical affairs services, regulatory compliance activities, sales and marketing, clinical studies,

lab services and other technical and financial services.

Many such third-party suppliers and contractors are subject to requirements

proscribed by FDA, DEA or both.

Our business and financial viability are dependent on the continued supply of goods, materials and services,

by these third parties, their regulatory compliance and on the strength, validity and terms of our various contracts and arrangements

with these third parties.

Any interruption or failure by our third party suppliers, distributors and other third party service providers

to meet their obligations pursuant to the various agreements with us on schedule or in accordance terms and/or expectations, or any termination

by these third parties of their arrangements with us, which in each case, could be the result of one or more factors outside of our control,

could delay or prevent the development, approval, commercialization or manufacture of our products, result in non-compliance with applicable

laws and/or regulations, cause us to incur failure to supply penalties, disrupt our operations, increase the cost of our operations or

cause harm to our reputation in the industry, any or all of which could have a material adverse effect on our business, financial condition,

results of operations, cash flows and stock price.

We may also be unsuccessful in resolving any underlying issues with such suppliers,

distributors or other third-party service providers or in replacing them within a reasonable time frame on commercially reasonable terms.

we rely on third parties to conduct clinical trials and testing for our product candidates, and if they do not properly and successfully

perform their legal and regulatory obligations, as well as their contractual obligations to us, we may not be able to obtain regulatory

approvals for our product candidates.

design the clinical trials for our product candidates but rely on contract research organizations and other third parties to assist us

in managing, monitoring and otherwise carrying out these trials, including, without limitation, with respect to site selection, contract

negotiation, analytical testing, and data management.

We do not control these third parties and, as a result, delays may occur as a result

of the priorities and operations of these third parties differing from those which we may feel would be most optimal to the completion

of such activities in the most efficient manner possible.

we rely on third parties to conduct our clinical trials and related activities, we are responsible for confirming that each of our clinical

trials is conducted in accordance with our general investigational plan and protocol.

Moreover, the FDA and other relevant regulatory

agencies require us to comply with regulations and standards, commonly referred to as good clinical practices and good laboratory practices,

for conducting, recording, and reporting the results of clinical trials to ensure that the data and results are credible and accurate

and that the trial participants are adequately protected.

Our reliance on third parties does not relieve us of these responsibilities

and requirements.

The FDA enforces good clinical practices and good laboratory practices through periodic inspections of trial sponsors,

principal investigators, and trial sites.

If we, our contract research organizations, or our study sites fail to comply with applicable

good clinical practices and good laboratory practices, the clinical data generated in our clinical trials may be deemed unreliable and

the FDA may require us to perform additional clinical trials before approving our marketing applications.

We cannot assure you that,

upon inspection, the FDA will determine that any of our clinical trials comply with good clinical practices and good laboratory practices.

In addition, our clinical trials must be conducted with product manufactured under the FDA’s current Good Manufacturing Practices,

or cGMP, regulations.

Our failure or the failure of our contract manufacturers if any are involved in the process, to comply with these

regulations may require us to repeat clinical trials, which would delay the regulatory approval process.

third parties do not successfully carry out their duties under their agreements with us, if the quality or accuracy of the data they

obtain is compromised due to failure to adhere to our clinical protocols or regulatory requirements, or if they otherwise fail to comply

with clinical trial protocols or meet expected deadlines, our clinical trials may not meet regulatory requirements.

If our clinical trials

do not meet regulatory requirements or if these third parties need to be replaced, our clinical trials may be extended, delayed, suspended,

or terminated.

If any of these events occur, we may not be able to obtain regulatory approval of our product candidates, which could

have a material adverse effect on our business, results of operations and financial condition.

may sell, withdraw or discontinue manufacture of certain products.

may discontinue the manufacture and distribution of certain existing products, which may adversely affect our business, results of operations,

financial condition, and cash flows.

As part of regular evaluations of product performance, we may determine that it is in our best interest

to discontinue the manufacture and distribution of certain of our products.

We cannot guarantee that we have correctly forecasted, or

will correctly forecast in the future, the appropriate products to discontinue or that a decision to discontinue various products is

prudent if market conditions change.

In addition, there can be no assurances that the discontinuance of products will reduce operating

expense or no cause the incurrence of material charges associated with such a decision.

Furthermore, the discontinuance of existing products,

entails various risks, including, without limitation, the ability to find a purchaser for such products, if there is a decision to sell

the product, as well as the risk that the purchase price obtained will not be equal to at least the book value of the net assets relating

to such products.

Other risks associated with a product discontinuance, include, without limitation, managing the expectations of and

maintaining good relations with our customers who previously purchased a discontinued product from us, and the effects such would have

on future sales to these customers.

We may also incur significant liabilities and costs associated with our product discontinuance.

addition, we may, from time to time, sell and/or withdraw approved ANDAs if we determine that the costs of maintaining such ANDAs is

excessive when compared to their actual current value and their perceived value and place in our strategic plans.

For example, and without

limitation, during the twelve months ended March 31, 2020, we received new product approvals that would have resulted in us owning a

number of ANDAs that would have required us to self-identify as a large size ANDA holder, on the measurement date, as per the FDA’s

Generic Drug User Fee Amendment (“GDUFA”) program fee structure, as opposed to the medium size ANDA classification in effect

prior to these new ANDA approvals.

Based on the GDUFA program fees in effect for the period October 1, 2020 through September 30, 2021,

the annual fee for large sized ANDA holders was approximately $0.9 million greater than the fee for medium sized ANDA holders.

conducting a study of ANDAs held, with the GDUFA program fee levels being one of several relevant factors considered, we identified and

sold ANDAs relating to Methadone Tablets, Second Phendimetrazine Product, Hydromorphone Tablets, Oxycodone and Acetaminophen Tablets

and Hydrocodone and Acetaminophen Tablets.

our expectations are to engage only in the sale or withdrawal of ANDAs if they advance or otherwise support our overall strategy, any

such ANDA sale by definition reduces the size and scope of our business, with a direct correlation to opportunities with respect to certain

markets, products or therapeutic categories.

of the foregoing could have a material adverse effect on our business, results of operations, financial condition, cash flows and ability

may fail to successfully identify, develop and commercialize new products.

Elite’s

product pipeline, including the paused development of its abuse deterrent opioid products, are in various stages of development.

to commercialization, product development must be completed that could include scale-up, clinical studies, regulatory filing, regulatory

review, approval by the FDA, and/or other development steps.

Development is subject to risks.

We cannot assure you that development will

be successful, or that during development unexpected delays might occur or additional costs might be incurred.

order to obtain FDA approval to market a new drug product, we must demonstrate proof of safety and effectiveness in humans.

To meet these

requirements, we must conduct extensive preclinical testing and “

adequate and well-controlled ”

clinical trials.

clinical trials is a lengthy, time-consuming, and expensive process.

Completion of necessary clinical trials may take several years or

Delays associated with products for which we are directly conducting preclinical or clinical trials may cause us to incur additional

operating expenses.

The commencement and rate of completion of clinical trials may be delayed by many factors, including, without limitation,

ineffectiveness

of our product candidate or perceptions by physicians that the product candidate is not safe or effective for a particular indication;

to manufacture sufficient quantities of the product candidate for use in clinical trials;

or failure in obtaining approval of our clinical trial protocols from the FDA or institutional review boards;

than expected rate of patient recruitment and enrollment;

to adequately follow and monitor patients after treatment;

in managing multiple clinical sites;

safety issues;

or regulatory delays;

trial costs that are greater than we currently anticipate.

if we achieve positive interim results in clinical trials, these results do not necessarily predict final results, and positive results

in early trials may not be indicative of success in later trials.

A number of companies in the pharmaceutical industry have suffered

significant setbacks in advanced clinical trials, even after achieving promising results in earlier trials.

Negative or inconclusive

results or adverse medical events during a clinical trial could cause us to repeat or terminate a clinical trial or require us to conduct

additional trials.

We do not know whether our existing or any future clinical trials will demonstrate safety and efficacy sufficiently

to result in marketable products.

Our clinical trials may be suspended at any time for a variety of reasons, including if the FDA or

we believe the patients participating in our trials are exposed to unacceptable health risks or if the FDA finds deficiencies in the

conduct of these trials.

or perceived failures in our clinical trials will directly delay our product development and regulatory approval process, damage our

business prospects, make it difficult for us to establish collaboration and partnership relationships, and negatively affect our reputation

and competitive position in the pharmaceutical community.

ability to sustain current operations, engender business growth, achieve current and future revenues and profitability, significantly

depends on our ability to successfully identify, develop, obtain regulatory approval, commercialize and market new pharmaceutical products,

including, without limitation, our own products as well as those that may be developed in partnership with other entities, such as those

that were previously developed with SunGen pursuant to a now terminated product development agreement.

As a result, we must continually

develop, test and manufacture new products, which must meet regulatory standards to receive requisite marketing authorizations.

process of developing and obtaining regulatory approvals for new products is time-consuming, costly and inherently unpredictable.

are direct, indirect, known and unknown risks inherent in the development of pharmaceuticals, including, without limitation, products

which initially show promise in preliminary pharmacological or marketing studies, but fail to yield the positive results consistent with

initial indications.

Products we are currently developing may not receive the regulatory approvals or clearances necessary for us to

market them and, if approved, we may be unable to successfully commercialize them on a timely basis or at all, or if commercialized,

revenues and profits achieved from the sale of such products might not reach levels that provide sufficient return on those costs incurred

during the commercialization process.

successful commercialization of a product is subject to a number of factors, including:

timely filing of any NDA, ANDA or other regulatory submission applicable to our product candidates;

adverse development or perceived adverse development with respect to the applicable regulatory agency’s review of such regulatory

submission and approval for the indication sought;

effectiveness, ease of use and safety of our products as compared to existing products;

demand and the willingness of physicians and customers to adopt our products over products with which they may have more loyalty

or familiarity and overcoming any biases towards our products;

cost of our product compared to alternative products and the pricing and commercialization strategies of our competitors;

success of our launch and marketing efforts;

publicity about us, our products, our competitors and their products or the industry as a whole or favorable publicity about competitors;

advent of new and innovative alternative products;

unforeseen issues or adverse developments in connection with a product and any resulting litigation or regulatory scrutiny and harm

to our reputation or the reputation or acceptance of the product in the market.

addition, there are many risks associated with developing, commercializing and marketing new products that are beyond our control.

example, without limitation, our collaboration partner(s) may decide to make substantial changes to a product’s formulation or

design, may experience financial difficulties or may have limited financial resources.

Any of the foregoing may delay the development,

commercialization and/or marketing of new products.

In addition, if a codeveloper on a new product terminates our collaboration agreement

or does not perform under the agreement, we may experience delays and additional costs in developing and marketing that product, with

no assurances of us having the resources that may be required to overcome such delays or additional costs that were beyond our control.

conduct research and development to enable us to manufacture and market pharmaceutical products in accordance with specific government

Our drug development efforts relating to SequestOx TM and certain generics are focused on technically difficult-to-formulate

products and/or products that require advanced manufacturing technology.

Typically, expenses related to research, development, and regulatory

approval of compounds for SequestOx TM , which is a branded pharmaceutical product are significantly greater than those expenses

associated with generic products.

Expanded research and development efforts are required, resulting in increased research expenses.

of the inherent risk associated with research and development efforts in the healthcare industry, particularly with respect to new drugs,

our research and development expenditures may not result in the successful regulatory approval and introduction of new pharmaceutical

products and failure in the development of any new product can occur at any point in the process, including late in the process after

substantial investment.

Also, after we submit a regulatory application, the relevant governmental health authority may require that we

conduct additional studies, including, for example, studies to assess the product’s interaction with alcohol.

As a result, we may

be unable to reasonably predict the total research and development costs to develop a particular product and there is a significant risk

that the funds we invest in research and development will not generate financial returns.

In addition, our operating results and financial

condition may fluctuate as the amount we spend to research and develop, commercialize, acquire or license new products, technologies

and businesses changes.

Much of the preceding occurred with the development of SequestOx TM , which has not received marketing

approval from the FDA, for which continued development has been paused and with material adverse effects on our business, results of

operations, financial condition, cash flows and ability to operate resulting in the past, as well as the risk remaining for the future.

of these risks, our research and development efforts may not result in any commercially viable products.

Any delay in, or termination

of, our preclinical or clinical trials will delay the filing of our drug applications with the FDA and, ultimately, our ability to commercialize

our product candidates and generate product revenues.

If a significant portion of these development efforts are not successfully completed,

required regulatory approvals are not obtained, or any approved products are not commercially successful, our business, financial condition,

and results of operations may be materially harmed.

operations could be disrupted by failure of our information systems or cyber-attacks.

operations could be disrupted if our information systems fail, if we are unsuccessful in implementing necessary upgrades or if we are

subject to cyber-attacks.

Our business depends on the efficient and uninterrupted operation of our computer and communications systems

and networks, hardware and software systems and our other information technology.

We collect and maintain information, which includes

confidential and proprietary information as well as personal information regarding our customers and employees, in digital form.

maintained in digital form is subject to risk of cyber-attacks, which are increasing in frequency and sophistication.

Cyber-attacks could

include the deployment of harmful malware, viruses, worms, and other means to affect service reliability and threaten data confidentiality,

integrity and availability.

Despite our efforts to monitor and safeguard our systems to prevent data compromise, the possibility of a

future data compromise cannot be eliminated entirely, and risks associated with intrusion, tampering, and theft remain.

we do not have insurance coverage with respect to system failures or cyber- attacks.

A failure of our systems, or an inability to successfully

expand the capacity of these systems, or an inability to successfully integrate new technologies into our existing systems could have

a material adverse effect on our business, results of operations, financial condition, and cash flows.

also have outsourced significant elements of our information technology infrastructure to third parties, some of which may be outside

Accordingly, significant elements of our information technology infrastructure, require our management of multiple independent

vendor relationships with third parties who may or could have access to our confidential information.

The size and complexity of our

information technology systems, and those of our third-party vendors with whom we contract, make such systems potentially vulnerable

to service interruptions.

The size and complexity of our and our vendors’

systems and the large amounts of confidential information

that is present on them also makes them potentially vulnerable to security breaches from inadvertent or intentional actions by our employees,

partners, or vendors, or from attacks by malicious third parties.

Company and its vendors’

sophisticated information technology operations are spread across multiple, sometimes inconsistent, platforms,

which pose difficulties in maintaining data integrity across systems.

The ever-increasing use and evolution of technology, including

cloud-based computing, creates opportunities for the unintentional or improper dissemination or destruction of confidential information

stored in the Company’s systems.

breach of our security measures or the accidental loss, inadvertent disclosure, unapproved dissemination, misappropriation or misuse

of trade secrets, proprietary information or other confidential information, whether as a result of theft, hacking, fraud, trickery or

other forms of deception, or for any other cause, could enable others to produce competing products, use our proprietary technology or

information and/or adversely affect our business position.

Further, any such interruption, security breach, loss or disclosure of confidential

information could result in financial, legal, business and reputational harm to our company and could have a material adverse effect

on our business, financial condition, results of operations, cash flows and stock price.

in product development may result in failure to achieve adequate return on investment.

time necessary to develop generic drugs may adversely affect whether, and the extent to which, we receive a return on our capital.

development process for branded and generic products, including, without limitation, drug formulation, testing, and FDA review and approval,

often takes three or more years.

This process requires that we expend considerable capital to pursue activities that do not yield an

immediate or near-term return.

Also, because of the significant time necessary to develop a product, the actual market for a product

at the time it is available for sale may be significantly less than the originally projected market for the product.

If this were to

occur, our potential return on our investment in developing the product, if approved for marketing by the FDA, would be adversely affected

and we may never receive a return on our investment in the product.

It is also possible for the manufacturer of the brand-name product

for which we are developing a generic drug to obtain approvals from the FDA to switch the brand-name drug from the prescription market

to the OTC market.

If this were to occur, we would be prohibited from marketing our product other than as an OTC drug, in which case

revenues could be substantially less than we anticipated.

are also risks and uncertainties inherent in conducting clinical trials could delay or prevent the development and commercialization

of our own branded products.

With respect to our branded products which do not qualify for the FDA’s abbreviated application procedures,

we must demonstrate through clinical trials that these products are safe and effective for use.

We have only limited experience in conducting

and supervising clinical trials.

The process of completing clinical trials and preparing an NDA may take several years and requires substantial

Our studies and filings may not result in FDA approval to market our new drug products and, if the FDA grants approval, we

cannot predict the timing of any approval.

There are substantial filing fees for NDAs, often in excess of $1 million in addition to the

cost of product development and clinical trials, that are not refundable if FDA approval is not obtained.

are a number of risks and uncertainties associated with clinical trials.

The results of clinical trials may not be indicative of results

that would be obtained from large scale testing.

Clinical trials are often conducted with patients having advanced stages of disease

and, as a result, during the course of treatment these patients can die or suffer adverse medical effects for reasons that may not be

related to the pharmaceutical agents being tested, but which nevertheless affect the clinical trial results.

In addition, side effects

experienced by the patients may cause delay of approval or limit the profile of an approved product.

Moreover, our clinical trials may

not demonstrate sufficient safety and efficacy to obtain approval from the FDA or foreign regulatory authorities.

The FDA or foreign

regulatory authorities may not agree with our assessment of the clinical data or they may interpret it differently.

Such regulatory authorities

may require additional or expanded clinical trials.

Even if the FDA or foreign regulatory authorities approve certain products developed

by us, there is no assurance that such regulatory authorities will not subject marketing of such products to certain limits on indicated

can occur at any time during the clinical trial process and, in addition, the results from early clinical trials may not be predictive

of results obtained in later and larger clinical trials, and product candidates in later clinical trials may fail to show the desired

safety or efficacy despite having progressed successfully through earlier clinical testing.

of clinical trials for our product candidates may be delayed or halted for the reasons noted above in addition to many other reasons,

including, without limitation:

in patient enrolment, and variability in the number and types of patients available for clinical trials;

or institutional review boards may not allow us to commence or continue a clinical trial;

inability, or the inability of our partners, if any, to manufacture or obtain from third parties those materials required to complete

clinical trials;

or failure in reaching agreement on acceptable clinical trial contracts or clinical trial protocols with prospective clinical trial

associated with trial design, which may result in a failure of the trial to show statistically significant results even if the product

candidate is effective;

in maintaining contact with patients after treatment commences, resulting in incomplete data

effectiveness of product candidates during clinical trials;

issues, including adverse events associated with product candidates;

of patients to complete clinical trials due to adverse side effects, dissatisfaction with the product candidate, or other reasons;

or regulatory delays or changes in regulatory requirements, policy, and guidelines;

interpretation of data by the FDA or other relevant regulatory authorities.

addition, our product candidates could be subject to competition for clinical study sites and patients from other therapies under development

which may delay the enrolment in or initiation of our clinical trials.

FDA or other relevant regulatory authorities may require us to conduct unanticipated additional clinical trials, which could result in

additional expense and delays in bringing our product candidates to market.

Any failure or delay in completing clinical trials for our

product candidates would prevent or delay the commercialization of our product candidates.

We cannot assure that our expenses related

to clinical trials will lead to the development of brand-name drugs that will generate revenues in the near future.

Delays or failure

in the development and commercialization of our own branded products could have a material adverse effect on our business, results of

operations and financial condition.

business is dependent on market perceptions, social and political pressures.

acceptance of our products among physicians, patients, health care payors and the medical community, is a key component of commercial

success and if such is not achieved, our business will be adversely affected.

The degree of market acceptance of any of our approved

product candidates among physicians, patients, health care payors and the medical community will depend on a number of factors, including,

without limitation:

evidence of safety and efficacy;

convenience and ease of administration;

prevalence and severity of any adverse side effects;

of alternative treatments;

and cost effectiveness;

effectiveness

of sales and marketing strategies;

to obtain sufficient third-party coverage or reimbursement.

we are unable to achieve market acceptance for our product candidates, then such product candidates will not be commercially successful,

and our business will be adversely affected.

addition, even if we are able to obtain regulatory approvals for our new products, the success of those products as well as the success

of our previously approved products, is dependent upon market acceptance.

Levels of market acceptance for our new products could be affected

by several factors, including, without limitation:

availability of alternative products from our competitors;

prices of our products relative to those of our competitors;

timing of our market entry;

ability to market our products effectively at the retail level;

perception of patients and the healthcare community, including third-party payers, regarding the safety, efficacy and benefits of

our drug products compared to those of competing products;

acceptance of our products by government and private formularies.

of these factors are not within our control, and our products may not achieve expected levels of market acceptance.

Additionally, continuing

and increasingly sophisticated studies of the proper utilization, safety and efficacy of pharmaceutical products are being conducted

by the industry, government agencies and others which can call into question the utilization, safety, and efficacy of previously marketed

In some cases, studies have resulted, and may in the future result, in the discontinuance of product marketing or other risk

management programs such as the need for a patient registry.

may also experience downward pressure on the price of our products due to social or political pressure to lower the cost of drugs, which

would reduce our revenue and future profitability.

Recent events have resulted in increased public and governmental scrutiny of the cost

of drugs, especially in connection with price increases following companies’

acquisition of the rights to certain drug products.

In particular, U.S.

federal prosecutors have issued subpoenas to pharmaceutical companies seeking information about drug pricing practices.

In addition, the U.S.

Senate is publicly investigating a number of pharmaceutical companies relating to drug-price increases and pricing

Our revenue and future profitability could be negatively affected if these inquiries were to result in legislative or regulatory

proposals that limit our ability to increase the prices of our products which could have a material adverse effect on our business, growth

prospects, financial condition, results of operations, cash flow and stock price.

addition, in September 2016, a group of U.S.

Senators introduced legislation that would require pharmaceutical manufacturers to justify

price increases of more than 10% in a 12-month period, and a large number of individual States have introduced legislation aimed at drug

pricing regulation, transparency or both.

While this proposed legislation has not been enacted into law to date, our revenue and future

profitability could be negatively affected by the passage of this law or similar federal or state legislation.

Furthermore, pressure

from social activist groups and future government regulations may also put downward pressure on the price of drugs, which could result

in downward pressure on the prices of our products in the future, which could have a material adverse effect on our business, growth

prospects, financial condition, results of operations, cash flow and stock price.

public concern over the abuse of opioid medications, including increased legal and regulatory action, could also negatively affect our

While Elite has de-emphasized its programs with respect to opioids and will continue to focus on products other than opioids,

certain governmental and regulatory agencies, as well as state and local jurisdictions, are focused on the abuse of opioid medications

in the United States.

State and local governmental agencies may investigate us as a manufacturer and/or distributor of medicines containing

opioids or in conjunction with their investigation of other pharmaceutical wholesale distributors, and others in the supply chain that

have a direct or indirect connection to our operations in relation to the distribution of opioid medications.

In addition, multiple lawsuits

have been filed against other pharmaceutical manufacturers and distributors alleging, among other claims, that they failed to provide

effective controls and procedures to guard against the diversion of controlled substances, acted negligently by distributing controlled

substances to pharmacies that serve individuals who abuse controlled substances, and failed to report suspicious orders of controlled

substances in accordance with regulations.

Additional governmental entities have indicated an intent to sue these other manufacturers

and distributors.

While no such actions have been taken against us, the immediate effect on the Company has been an inability to commercialize

and market three opioid products approved during fiscal years prior to the twelve months ended March 31, 2021 and a cessation of orders

for another two other opioid products that had been marketed by our marketing partners.

During the year ended March 31, 2020, we disposed

of four approved ANDA’s for opioid products.

As of March 31, 2021, we continue to hold one approved ANDA for an opioid product

that, while approved by the FDA, has not been launched commercially.

Further, defense against any such opioid related lawsuits could

be cost-prohibitive resulting in an adverse material effect on our business, financial condition, results of operations, cash flows and

Similar allegations made against us, even without litigation, could also negatively affect our business in various ways,

including through increased costs and harm to our reputation.

In addition, an adverse resolution of any lawsuit or investigation could

also have a material adverse effect on our business, results of operations, cash flows and stock price.

perceptions or our business are important to us, especially market perceptions of the safety and quality of our products.

If any of our

products or similar products that other companies distribute are subject to market withdrawal, recall, or are proven to be, or are claimed

to be, harmful to consumers, then this could have a material adverse effect on our business, results of operations, financial condition,

and cash flows.

Furthermore, due to the importance of market perceptions, negative publicity associated with product quality, illness

or other adverse effects resulting from, or perceived to be resulting from, our products, or similar products made by other companies,

could have a material adverse effect on our business, results of operations, financial condition, and cash flows.

or all of the above could result in a material adverse effect on our business, financial condition, results of operations, cash flow,

ability to operate and stock price.

economic conditions may adversely affect our business.

global economy has undergone a period of significant volatility, especially during a global pandemic, such as the COVID-19 pandemic,

which has led to diminished credit availability, declines in consumer confidence, and increases in unemployment rates.

There remains

caution about the stability of the U.S.

economy, and we cannot assure that further deterioration in the financial markets will not occur.

These economic conditions have resulted in, and could lead to further, reduced consumer spending related to healthcare in general and

pharmaceutical products in particular.

addition, we have exposure to many different industries and counterparties, including our partners under our alliance and collaboration

agreements, suppliers of raw chemical materials, drug wholesalers and other customers that may be affected by an unstable economic environment.

Any economic instability may affect these parties’

ability to fulfil their respective contractual obligations to us, cause them

to limit or place burdensome conditions upon future transactions with us or drive us and our competitors to decrease prices, each of

which could materially and adversely affect our business, results of operations and financial condition, cash flows and stock price.

depend on qualified scientific and technical personnel and our ability to attract and retain such personnel.

of the specialized scientific nature of our business, we are highly dependent upon our ability to continue to attract and retain qualified

scientific and technical personnel.

We are not aware of any pending, significant losses of scientific or technical personnel.

the services of, or failure to recruit, key scientific and technical personnel, however, would be significantly detrimental to our product-development

As a result of our small size and limited financial and other resources, it may be difficult for us to attract and retain qualified

officers and qualified scientific and technical personnel.

addition, marketing of our branded product, SequestOx™

will require much greater use of a direct sales force compared to marketing

of our generic products, should we reinstate development and achieve commercialization of this product.

Our ability to realize significant

revenues from marketing and sales activities depends on our ability or the ability of our partners to attract and retain qualified sales

Competition for qualified sales personnel is intense.

Any failure to attract or retain qualified sales personnel could negatively

impact our sales revenue and have a material adverse effect on our business, results of operations, financial condition, cash flows and

have entered into employment agreements with our executive officers and certain other key employees.

We do not maintain “

life insurance on any executives.

collaboration or licensing arrangements could limit revenues and product development.

have entered into several collaborations and licensing arrangements for the development of products.

However, there can be no assurance

that any of these agreements will result in FDA approvals, or that we will be able to market any such finished products at a profit.

Collaboration and licensing arrangements pose the following risks:

collaborations

and licensing arrangements may be terminated, in which case we will experience increased operating expenses and capital requirements

if we elect to pursue further development of the related product candidate;

collaborators

and licensees may delay clinical trials and prolong clinical development, under-fund a clinical trial program, stop a clinical trial,

or abandon a product candidate;

revenue might not be generated because milestones may not be achieved, and product candidates may not be developed;

collaborators

and licensees could independently develop, or develop with third parties, products that could compete with our future products;

terms of our contracts with current or future collaborators and licensees may not be favorable to us in the future;

collaborator or licensee with marketing and distribution rights to one or more of our products may not commit enough resources to

the marketing and distribution of our products, limiting our potential revenues from the commercialization of a product;

may arise delaying or terminating the research, development, or commercialization of our product candidates, or result in significant

and costly litigation or arbitration;

or more third-party developers could obtain approval for a similar product prior to the collaborator or licensee resulting in unforeseen

price competition in connection with the development product.

or all of the above could result in a material adverse effect on our business, financial condition, results of operations, cash flow,

ability to operate and stock price.

and Liquidity Risks

have a relatively limited operating history and our operating results could fluctuate significantly.

revenues and operating results may vary significantly from year-to-year and quarter-to-quarter as well as in comparison to the corresponding

quarter of the preceding year.

Variations may result from one or more factors, including, without limitation:

● Effects of a global pandemic

or similar situation, including, without limitation the COVID-19 pandemic that emerged

in 2020, with such effects to include actions taken by the Company, its suppliers, partners,

competitors, other entities involved in the industry, other entities, and any laws, regulations,

executive orders or other governmental/regulatory actions taken in relation to such a

pandemic or similar circumstance;

of a global pandemic or similar situation, including, without limitation the COVID-19 pandemic that emerged in 2020, with such effects

to include actions taken by the Company, its suppliers, partners, competitors, other entities involved in the industry, other entities,

and any laws, regulations, executive orders or other governmental/regulatory actions taken in relation to such a pandemic or similar

circumstance;

of approval of applications filed with the FDA;

of process validation, product launches and market acceptance of products launched;

in the amounts spent to research, develop, acquire, license or promote new and existing

in the amounts spent to research, develop, acquire, license or promote new and existing products;

of clinical trial programs;

or unexpected health or safety concerns with our products, brand products which we have

genericized, products currently under development or any other product candidates;

● Introduction

or unexpected health or safety concerns with our products, brand products which we have genericized, products currently under development

or any other product candidates;

of new products by others that render our products obsolete or non-competitive;

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of product manufactured and sold due to each product having different gross margins;

cost and outcome of litigation, in the event that such occurs in relation to, without

limitation, intellectual property issues, regulatory or other matters;

ability to comply with complex and numerous governmental regulations and regulatory authorities

which oversee and regulate many aspects of our business and operations;

in coverage and reimbursement policies of health plans and other health insurers, including

changes to Medicare, Medicaid, and similar state programs, especially in relation to

those products that are currently manufactured, under development or identified for future

cost and outcome of litigation, in the event that such occurs in relation to, without limitation, intellectual property issues, regulatory

or other matters;

ability to comply with complex and numerous governmental regulations and regulatory authorities which oversee and regulate many aspects

of our business and operations;

in coverage and reimbursement policies of health plans and other health insurers, including changes to Medicare, Medicaid, and similar

state programs, especially in relation to those products that are currently manufactured, under development or identified for future

development by the Company;

1 unchanged sentence

Manufacturing

and supply interruptions, including product rejections or recalls due to failure to comply

with manufacturing specifications;

and supply interruptions, including product rejections or recalls due to failure to comply with manufacturing specifications;

of revenue recognition relating to our licensing and other agreements;

3 unchanged sentences

addition or loss of customers.

A negative variation

in one, many or all of the above factors could, may or will have a material adverse effect on Elite’s business, results

of operations, financial condition, and cash flow and ability to operate in the future, depending on the nature and magnitude

negative variation in one, many or all of the above factors could, may or will have a material adverse effect on Elite’s business,

results of operations, financial condition, and cash flow and ability to operate in the future, depending on the nature and magnitude

of the variation(s).

We have a relatively limited operating

history, which makes it difficult to evaluate our future prospects.

Although we have been

in operation since 1990, we have a relatively short operating history and limited financial data upon which you may evaluate our

business and prospects.

In addition, our business model is likely to continue to evolve as we attempt to expand our product offerings

and our presence in the generic pharmaceutical market.

As a result, our potential for future profitability must be considered

in view of the risks, uncertainties, expenses, and difficulties frequently encountered by companies that are attempting to move

into new markets and continuing to innovate with new and unproven technologies.

Some of these risks relate to our potential inability

addition, although we have been in operation since 1990, we have a relatively short operating history, have only achieved profitability

for the first time during the fiscal year ended March 31, 2021 and have limited financial data upon which you may evaluate our business

and prospects.

There can be no assurances of our ability to sustain current profitability and in certain years prior to the year ended

March 31, 2021, the auditor’s opinion on our financials were qualified with respect to there being substantial doubt as to the

Company’s ability to continue as a going concern due to continued losses not being sufficiently offset by operating revenues.

failure to generate sufficient revenues to offset related costs of operations will have a material adverse effect on our business, results

of operations, financial condition, cash flow and ability to operate.

Furthermore, our business

model is likely to continue to evolve as we attempt to expand our product offerings and our presence in the generic pharmaceutical market.

As a result, our potential for future profitability must be considered in view of the risks, uncertainties, expenses, and difficulties

frequently encountered by companies that are attempting to move into new markets and continuing to innovate with new and unproven technologies

and there can be no assurances of continued profitability subsequent to the current fiscal year.

Some of these risks relate to our potential

inability to:

develop new products;

obtain regulatory approval of our products;

manage our growth, control expenditures and align costs with

manage our growth, control expenditures and align costs with revenues;

attract, retain, and motivate qualified personnel;

to competitive developments.

Sustain operations during a global pandemic or similar situation,

such as the COVID-19 global pandemic first identified in 2020.

and respond to competitive

developments;

Sustain operations during a global pandemic or similar situation, such

as the COVID-19 global pandemic first identified in 2020.

If we do not effectively

address the risks we face, our business model may become unworkable and we may not achieve or sustain profitability or successfully

develop any products, resulting in a material adverse effect on Elite’s business, results of operations, financial condition,

and cash flow and ability to operate in the future.

We have not been profitable and may

not be profitable in the future.

To date, we have not

been profitable, and we may never be profitable or, if we become profitable, we may be unable to sustain profitability.

sustained losses from operations in each year since our incorporation in 1990.

During the years ended March 31, 2020 and 2019,

we incurred net losses from operations of approximately $2.3 million and $9.2 million, respectively.

In addition, in certain years

prior to the year ended March 31, 2020, including, without limitation, for the year ended March 31, 2019, the auditor’s opinion

on the financial statements were qualified with respect to there being substantial doubt as to the Company’s ability to continue

as a going concern due to continued losses not being sufficiently offset by operating revenues.

A failure to generate sufficient

revenues to offset related costs of operations will have a material adverse effect on our business, results of operations, financial

condition, cash flow and ability to operate in the future.

address the risks we face, our business model may become unworkable and we may not achieve or sustain profitability or successfully develop

any products, resulting in a material adverse effect on Elite’s business, results of operations, financial condition, and cash

flow and ability to operate in the future.

Our ability to fund operations is uncertain

and we may require additional financing to meet objectives.

Our ability to fund our operations,

maintain liquidity and meet our financing obligations is reliant on our operations, which are subject to significant risks and

uncertainties

We rely on cash generated

by operations as well as access to financial markets, such as the equity line with Lincoln Park and equipment financings, to fund

our commercial, product development and other operations, maintain liquidity and meet our financial obligations.

The equity line

with Lincoln Park expires on July 1, 2020 and there can be no assurances as to the securing of a capital facility beyond July

1, 2020 and that even if we are able to secure such a facility, there can be no assurances as to the levels of cost and potential

dilution that would be related to such a facility.

Our operations are

also subject to many significant risks and uncertainties, as described, without limitation, in this “Risk Factors”

section, including, without limitation, those risks related to the effects of a global pandemic such as or similar to the COVID-19

pandemic, competition in the markets in which we operate, litigation risks, government investigations, including those related

to our sale, marketing and/or distribution of prescription opioid medications in prior periods, and others.

Any negative development

or outcome in connection with any or all of these risks and uncertainties could result in significant consequences, including,

without limitation, one or more of the following:

● The dedication of a substantial

portion of our cash flows from operations to the payment of legal or related expenses,

resulting in these same funds being unavailable for other purposes, including, without

limitation, debt service, operations, capital expenditures, product development and future

business opportunities;

● A limitation in our ability

to adjust to changing market conditions, causing us to be more vulnerable to periods

of negative or impaired growth in the general economy or in our business, resulting the

company being put at a competitive disadvantage as a result of a decreased or unavailable

ability to engage in capital spending and take all other actions that would otherwise

be required to ensure growth and competitiveness;

● A limitation in our ability

to attract and retain key personnel;

● A decrement in our debt service

and compliance obligations related to certain of our outstanding debt obligations, exposing

us to events of default and reduced credit ratings, which in turn lead to increased capital

costs and potential unavailability of capital;

● An overall inability to fund

our operations and liquidity needs.

The occurrence or

possibility of one or more of these or similar events may cause us to pursue one or more significant corporate transactions as

well as other remedial measures, including refinancing all or part of our then-existing indebtedness, selling assets, reducing,

delaying or eliminating capital expenditures, seeking to raise additional capital or pursuing internal reorganizations, restructuring

activities, strategic alliances, or cost-saving initiatives.

Any refinancing of our substantial indebtedness could be at significantly

higher interest rates, which will depend on both the conditions of the market as well as the Company’s finances at such

time, and may also require our compliance with covenants that could be more onerous than current, which in turn could result in

the further restriction of our business operations.

maintain liquidity and meet our financing obligations is reliant on our operations, which are subject to significant risks and uncertainties.

We rely on cash generated by operations as well as access to financial markets, such as the equity line with Lincoln Park and equipment

financings, to fund our commercial, product development and other operations, maintain liquidity and meet our financial obligations.

Amounts available under the equity line with Lincoln Park have a strong and direct correlation to the Company’s publicly traded

price per share and volumes.

There can be no assurances of our traded price per share and volumes being at sufficient levels to provide

adequate funding from the equity line with Lincoln Park.

In addition, there can be no assurances of our ability to secure equipment financing,

resulting in an increased risk of our inability to achieve critical or necessary facility upgrades.

Our operations are also subject

to many significant risks and uncertainties, as described, without limitation, in this “Risk Factors”

section, including,

without limitation, those risks related to the effects of a global pandemic such as or similar to the COVID-19 pandemic, competition

in the markets in which we operate, litigation risks, government investigations, including those related to our sale, marketing and/or

distribution of prescription opioid medications in prior periods, and others.

Any negative development or outcome in connection with

any or all of these risks and uncertainties could result in significant consequences, including, without limitation, one or more of the

The dedication of a substantial portion of our cash flows from operations

to the payment of legal or related expenses, resulting in these same funds being unavailable for other purposes, including, without

limitation, debt service, operations, capital expenditures, product development and future business opportunities;

A limitation in our ability to adjust to changing market conditions,

causing us to be more vulnerable to periods of negative or impaired growth in the general economy or in our business, resulting the

company being put at a competitive disadvantage as a result of a decreased or unavailable ability to engage in capital spending and

take all other actions that would otherwise be required to ensure growth and competitiveness;

A limitation in our ability to attract and retain key personnel;

A decrement in our debt service and compliance obligations related

to certain of our outstanding debt obligations, exposing us to events of default and reduced credit ratings, which in turn lead to

increased capital costs and potential unavailability of capital;

An overall inability to fund our operations and liquidity needs.

The occurrence or possibility

of one or more of these or similar events may cause us to pursue one or more significant corporate transactions as well as other remedial

measures, including refinancing all or part of our then-existing indebtedness, selling assets, reducing, delaying or eliminating capital

expenditures, seeking to raise additional capital or pursuing internal reorganizations, restructuring activities, strategic alliances,

or cost-saving initiatives.

Any refinancing of our substantial indebtedness could be at significantly higher interest rates, which will

depend on both the conditions of the market as well as the Company’s finances at such time, and may also require our compliance

with covenants that could be more onerous than current, which in turn could result in the further restriction of our business operations.

Any refinancing may also increase the amount of our secured indebtedness.

In addition, the terms of existing or future debt agreements may restrict us from adopting any of the alternatives.

Internal reorganizations,

restructuring activities, asset sales and cost saving initiatives may also be complex and could entail significant costs and charges

or could otherwise negatively impact shareholder value.

There can also be no assurance that we will be able to accomplish any

of these alternatives on terms acceptable to us, or at all, or that even if accomplished, that the intended results and benefits

would be realized.

In addition, the terms of existing or future debt agreements

may restrict us from adopting any of the alternatives.

Internal reorganizations, restructuring activities, asset sales and cost saving

initiatives may also be complex and could entail significant costs and charges or could otherwise negatively impact shareholder value.

There can also be no assurance that we will be able to accomplish any of these alternatives on terms acceptable to us, or at all, or

that even if accomplished, that the intended results and benefits would be realized.

We most likely will require additional

financing to meet our business objectives.

We most likely will

need additional funding to accomplish our plans to conduct the clinical development and commercialization of a range of multiple

abuse resistant opioids or initiate, continue or complete the development of additional generic products already identified for

development or currently in development.

As of March 31, 2020, we had cash on hand of approximately $1.1 million and a working

capital surplus of $1.6 million, and, for the fiscal year ended March 31, 2020, we had losses from operations totaling $2.3 million,

net other income totaling $0.05 million and net loss of $2.2 million.

On May 1, 2017, we

entered into another purchase agreement (the “

2017 LPC Purchase Agreement ”), together with a registration rights

agreement (the “

We also will likely need

additional funding to accomplish our plans to conduct the clinical development and commercialization of a range of multiple abuse resistant

opioids or initiate, continue or complete the development of additional generic products already identified for development or currently

in development.

As of March 31, 2021, we

had cash on hand of approximately $3.2 million and a working capital surplus of $6.8 million, and, for the fiscal year ended March 31,

2021, we had profits from operations totaling $2.5 million, net other income totaling $3.0 million and net income of $5.5 million.

On July 8, 2020, we entered

into another purchase agreement (the “

2020 LPC Purchase Agreement ”), together with a registration rights agreement

2020 LPC Registration Rights Agreement ”), with Lincoln Park.

Under the terms and subject to

the conditions of the 2017 LPC Purchase Agreement, we have the right to sell to and Lincoln Park is obligated to purchase up to

$40 million in shares of our common stock, subject to certain limitations, from time to time, over the 36-month period commencing

on June 5, 2017 and expiring on July 1, 2020.

While growth in our

current generic product line, consisting of Phentermine Tablets, Phentermine Capsules, Phendimetrazine Tablets, Naltrexone Tablets,

Isradipine Capsules, Trimipramine Capsules, Oxy IR, Amphetamine IR Tablets, Amphetamine ER Capsules and Dantrolene Capsules, combined

with manufacturing, profit split and royalty revenues earned pursuant to the Lannett Alliance, the Glenmark Alliance, the Precision

Dose License Agreement, from sales of Oxy IR by Epic, and successful commercialization of other products in our product development

pipeline, may lead to eventual profitability, there can be no assurances of Elite becoming profitable.

Furthermore, there can

be no assurances of the continuation revenues being earned from the current generic product line, no assurances of Elite’s

successful commercialization of other products in our development pipeline, and no assurances of Elite’s ability to continue

as a going concern.

In addition, there can be no assurances of Elite being able to raise additional funds in a timely manner,

on acceptable terms, if needed to support commercial operations resulting in a material detrimental effect on Elite’s ability

to become profitable and accordingly being a material factor to the detriment of Elite’s ability to continue as a going

concern as well as having a material adverse effect on our business, results of operations, financial condition, and cash flow

and ability to operate in the future.

To sustain operations

and meet our business objectives we must be able to commercialize our products and other products or pipeline opportunities.

we are unable to timely obtain additional financing, if necessary, and/or we are unable to timely generate greater revenues from

our operations, we will be required to reduce and, possibly, cease operations and liquidate our assets.

No assurance can be given

that we will be able to commercialize the new opportunities or consummate such other financing or strategic alternative in the

time necessary to avoid the cessation of our operations and liquidation of our assets.

Under the terms and subject to the conditions of

the 2020 LPC Purchase Agreement, we have the right to sell to and Lincoln Park is obligated to purchase up to $25 million in shares of

our common stock, subject to certain limitations, from time to time, over the 36-month period commencing on July 27, 2020 and expiring

on August 1, 2023.

While growth in our current

generic product line, consisting of Phentermine Tablets, Phentermine Capsules, Phendimetrazine Tablets, Naltrexone Tablets, Isradipine

Capsules, Trimipramine Capsules, Amphetamine IR Tablets, Amphetamine ER Capsules, Dantrolene Capsules, and Loxapine Capsules combined

with manufacturing, profit split and royalty revenues earned pursuant to the Lannett Alliance, the Precision Dose License Agreement,

the Burel License Agreement and the Epic License Agreement, and successful commercialization of other products in our product development

pipeline, may lead to sustained profitability, there can be no assurances of such.

Furthermore, there can be no assurances of the continuation

revenues being earned from the current generic product line, no assurances of Elite’s successful commercialization of other products

in our development pipeline, and no assurances of Elite’s ability to continue as a going concern.

In addition, there can be no

assurances of Elite being able to raise additional funds in a timely manner, on acceptable terms, if needed to support commercial operations

resulting in a material detrimental effect on Elite’s ability to become profitable and accordingly being a material factor to the

detriment of Elite’s ability to continue as a going concern as well as having a material adverse effect on our business, results

of operations, financial condition, and cash flow and ability to operate in the future.

To sustain operations and

meet our business objectives we must be able to commercialize our products and other products or pipeline opportunities.

If we are unable

to timely obtain additional financing, if necessary, and/or we are unable to timely generate greater revenues from our operations, we

will be required to reduce and, possibly, cease operations and liquidate our assets.

No assurance can be given that we will be able to

commercialize the new opportunities or consummate such other financing or strategic alternative in the time necessary to avoid the cessation

of our operations and liquidation of our assets.

Furthermore, the capital

and credit markets have experienced extreme volatility.

Disruptions in the credit markets make it harder and more expensive to

obtain funding.

Disruptions in the credit markets make it harder and more expensive to obtain

In the event current resources do not satisfy our needs, we may have to seek additional financing.

The availability

of additional financing will depend on a variety of factors such as market conditions and the general availability of credit.

Future debt financing may not be available to us when required or may not be available on acceptable terms, and as a result we

may be unable to grow our business, take advantage of business opportunities, or respond to competitive pressures.

Please also see the risk factor titled

Widespread health problems, including the recent global COVID-19 pandemic, natural disasters or other unexpected events,

could materially and adversely affect our business”.

We have in prior years, identified material

weaknesses in our internal control over financial reporting which could, if not remediated, adversely affect our ability to report

our financial condition, cash flows and results of operations in a timely and accurate manner and/or increase the risk of future

misstatements, which could have a material adverse effect on our business, financial condition, cash flows and results of operations

and could cause the market value of our common shares and/or debt securities to decline.

Our management is responsible

for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the

Exchange Act.

During the prior fiscal

year ended March 31, 2019, the Company identified certain material weaknesses in internal controls over financial reporting which

were remediated during the fiscal year ended March 31, 2020.

A material weakness is a deficiency, or a combination of deficiencies,

in internal controls over financial reporting such that there is a reasonable possibility that a material misstatement of our annual

or interim financial statements will not be prevented or detected on a timely basis.

The remediation actions taken required the

retention of additional personnel and consultants, the continued retention of which is subject to the Company’s financial

Despite the successful

remediation of material weaknesses identified in the prior fiscal year, there can be no assurances of the continued operation of

controls, due to the financial burden such controls place on the Company, as well as the effects of other operating challenges,

such as the COVID-19 global pandemic or similar situation, which may result in our inability to maintain an environment of internal

controls over financial reporting that does not have material weaknesses.

Furthermore, additional

material weaknesses in our internal controls may be discovered or occur in the future that may materially adversely affect our

ability to report our financial condition and results of operations in a timely and fairly stated manner and there will be an increased

risk of future misstatements.

Although we regularly

review and evaluate internal controls systems to allow management to report on the effectiveness of our internal controls over

financial reporting, we may discover additional weaknesses in our internal controls over financial reporting or disclosure controls

and procedures.

The next time we evaluate our internal controls over financial reporting and disclosure controls and procedures,

if we identify one or more new material weaknesses or are unable to timely remediate our previously identified material weaknesses,

we would be unable to conclude that our internal controls over financial reporting or disclosure controls and procedures are effective.

If we are unable to conclude that our internal controls over financial reporting or our disclosure controls and procedures are

effective, or if our independent registered public accounting firm expresses an opinion, if such is required, that our internal

controls over financial reporting is ineffective, we may not be able to report our financial condition and results of operations

in a timely and fairly stated manner, which could have a material adverse effect on our business, financial condition, cash flows

and results of operations and could cause the market value of our common shares to decline.

In addition, any potential future restatements

could subject us to additional adverse consequences, including sanctions by the SEC, shareholder litigation and other adverse actions.

Moreover, we may be the subject of further negative publicity focusing on such financial statement adjustments and resulting restatement

and negative reactions from our shareholders, creditors or others with whom we do business.

The occurrence of any of the foregoing

could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause

the market value of our common shares to decline.

We have significant intangible assets

on our balance sheet.

Consequently, potential impairment of intangible assets may have an adverse material effect on our profitability.

Intangible assets

represent a significant portion of our assets.

As of March 31, 2020, intangible assets were approximately $6.6 million, or approximately

27% of our assets.

Generally accepted

accounting principles in the United States (“

GAAP ”) requires that intangible assets be subject to regular impairment

analysis to determine if changes in circumstances indicate that the value of the asset as recorded may not be recoverable.

events or changes in circumstances are an inherent risk in the pharmaceutical industry and often cannot be predicted.

should a change in circumstance occur, requiring the impairment of an intangible asset, the result of such an impairment may have

an adverse material effect on our business, financial condition, results of operations, cash flows and stock price.

Rising insurance costs, as well as

the inability to obtain certain insurance coverage for risks faced by us, could negatively impact profitability

The cost of insurance, including directors and officer insurance,

workers compensation, product liability, truck and general liability insurance have increase significantly in recent years and

may continue to increase in the future.

We have increased deductibles and/or decreased coverages to mitigate some of these costs.

These insurance premium increases, as well as our increased risk due to reduced coverage and increased deductibles could have an

adverse material effect on our business, financial condition, results of operations, cash flows and stock price.

Furthermore, certain

insurance coverages may not be available to us for risks faced by us, or the coverage we are able to obtain for certain risks

may not be adequate to fully reimburse the potential damages.

Should either of these events occur, the lack of adequate insurance

to cover the entire cost of damages could have an adverse material effect on our business, financial condition, results of operations,

cash flows and stock price.

A notice of default was issued by the

New Jersey Economic Development Authority in relation to prior obligations of our tax-exempt bonds.

Although we are current in

our payments under these bonds, if the principal balances due under these bonds are accelerated pursuant to the notice of default,

our ability to operate in the future will be materially and adversely affected.

Although we are, and

have been for some time, current in our payments under the NJEDA Bonds, we previously were in default and a notice of default

was issued in March 2009.

There can be no assurances of Elite making principal and interest payments in the amounts and on the

dates specified the NJEDA Bond agreement.

The failure by Elite to make principal and/or interest payments required by the NJEDA

Bonds, could result in the increased possibility of an acceleration of amounts due pursuant to such notice of default previously

issued, with such an acceleration having a material adverse effect on Elite’s business, results of operations, financial

condition, cash flow and ability to operate in the future.

For more information

on the NJEDA Bonds, see Part II, Item 7 “

Management’s Discussion and Analysis of Financial Condition and Results

of Operations;

Liquidity and Capital Resources;

NJEDA Bonds ”.

The availability of additional

financing will depend on a variety of factors such as market conditions and the general availability of credit.

Future debt financing

may not be available to us when required or may not be available on acceptable terms, and as a result we may be unable to grow our business,

take advantage of business opportunities, or respond to competitive pressures.

Please also see the risk

factor titled “

Global pandemic and natural disasters ”.

We have substantial indebtedness which

may adversely affect our financial health

We currently have

substantial indebtedness.

Total liabilities as of March 31, 2020, were $14.3 million, with such amount including, without

limitation, $4.3 million in various loans, leases and bonds payable, $3.6 million in derivative liabilities, and $6.4 million

in current payables and accruals.

may adversely affect our financial condition.

We currently have substantial

indebtedness.

Total liabilities as of March 31, 2021, were $10.1 million, with such amount including, without limitation, $2.4 million

in various loans, leases and bonds payable, $2.3 million in derivative liabilities, and $5.3 million in current payables and accruals.

The consequences of this substantial indebtedness could include:

● An increase in our vulnerability

to general economic and industry conditions, including recessions, depressions, effects

of global pandemics such as the COVID-19 pandemic, significant inflation and other financial

An increase in our vulnerability to general economic and industry conditions,

including recessions, depressions, effects of global pandemics such as the COVID-19 pandemic, significant inflation and other financial

market volatility;

● Exposure to the risk of increased

interest rates;

● The Company being required

to dedicate a substantial portion of cash flow from operations for debt service and the

attendant result of a diminished ability to fund working capital, capital expenditures

Exposure to the risk of increased interest rates;

The Company being required to dedicate a substantial portion of cash

flow from operations for debt service and the attendant result of a diminished ability to fund working capital, capital expenditures

and other expenses;

● A limitation in our flexibility

in planning for, or reacting to, changes in our business and the industry in which we

● Our being at a competitive

disadvantage as compared to competitors with less indebtedness;

● A limitation in our ability

to borrow additional funds that may be needed to operate and expand our business.

If our manufacturing facilities are

unable to manufacture our products or the manufacturing process is interrupted due to failure to comply with regulations or for

other reasons, it could have a material adverse impact on our business.

If our manufacturing facility or the facilities of any of our

suppliers fail to comply with regulatory requirements or encounter other manufacturing difficulties, it could adversely affect

our ability to manufacture and supply products.

All facilities and manufacturing processes used for the manufacture of pharmaceutical

products are subject to inspection by regulatory agencies at any time and must be operated in conformity with current good manufacturing

practice (“cGMP”) and, in the case of controlled substances, DEA regulations.

Compliance with the FDA’s cGMP

and DEA requirements applies to both drug products seeking regulatory approval and to approved drug products.

In complying with

cGMP requirements, pharmaceutical manufacturing facilities must continually expend significant time, money and effort in production,

recordkeeping, quality assurance and quality control so that their products meet applicable specifications and other requirements

for product safety, efficacy and quality.

Failure to comply with applicable legal requirements subjects us, our manufacturing facilities

and the facilities of our third-party suppliers to possible legal or regulatory action, including, without limitation, shutdown,

which may adversely affect our ability to supply the product.

Additionally, our manufacturing facilities, and those of our third

party suppliers may face other significant disruptions due to labor strikes, failure to reach acceptable agreement with labor unions,

infringement of intellectual property rights, vandalism, natural disaster, storm or other environmental damage, civil or political

unrest, export or import restrictions or other events.

Were we not able to manufacture products at our manufacturing facilities

or were our third party suppliers unable to manufacture products at their facilities because of regulatory, business or any other

reasons, the manufacture and marketing of these products would be interrupted.

This could have a material adverse impact on our

business, results of operation, financial condition, cash flows, competitive position and ability to operate.

Any delays or unanticipated expenses

in connection with the operation of sole facility could have a material adverse effect on our business.

All of our manufacturing

operations are conducted at the Northvale Facility.

A significant disruption at this facility, even on a short-term basis, whether

due to, without limitation, an adverse quality or compliance observation, including a total or partial suspension of production

and/or distribution by regulatory authorities, an act of God, civil or political unrest, force majeure situation or other events

could impair our ability to produce and ship products on a timely basis, and could, among other consequences, subject us to exposure

to claims from customers.

Any of these events could have a material adverse effect on our business, results of operations, financial

condition, and cash flows.

We may discontinue the manufacture

and distribution of certain existing products, which may adversely affect our business, results of operations, financial condition,

and cash flows.

As part of regular

evaluations of product performance, we may determine that it is in our best interest to discontinue the manufacture and distribution

of certain of our products.

We cannot guarantee that we have correctly forecasted, or will correctly forecast in the future, the

appropriate products to discontinue or that a decision to discontinue various products is prudent if market conditions change.

In addition, there can be no assurances that the discontinuance of products will reduce operating expense or no cause the incurrence

of material charges associated with such a decision.

Furthermore, the discontinuance of existing products, entails various risks,

including, without limitation, the ability to find a purchaser for such products, if there is a decision to sell the product,

as well as the risk that the purchase price obtained will not be equal to at least the book value of the net assets relating to

such products.

Other risks associated with a product discontinuance, include, without limitation, managing the expectations of

and maintaining good relations with our customers who previously purchased a discontinued product from us, and the effects such

would have on future sales to these customers.

We may also incur significant liabilities and costs associated with our product

discontinuance.

All of the foregoing could have a material adverse effect on our business, results of operations, financial condition,

and cash flows.

Our operations

could be disrupted if our information systems fail, if we are unsuccessful in implementing necessary upgrades or if we are subject

to cyber-attacks.

Our business depends

on the efficient and uninterrupted operation of our computer and communications systems and networks, hardware and software systems

and our other information technology.

We collect and maintain information, which includes confidential and proprietary information

as well as personal information regarding our customers and employees, in digital form.

Data maintained in digital form is subject

to risk of cyber-attacks, which are increasing in frequency and sophistication.

Cyber-attacks could include the deployment of

harmful malware, viruses, worms, and other means to affect service reliability and threaten data confidentiality, integrity and

availability.

Despite our efforts to monitor and safeguard our systems to prevent data compromise, the possibility of a future

data compromise cannot be eliminated entirely, and risks associated with intrusion, tampering, and theft remain.

we do not have insurance coverage with respect to system failures or cyber- attacks.

A failure of our systems, or an inability

to successfully expand the capacity of these systems, or an inability to successfully integrate new technologies into our existing

systems could have a material adverse effect on our business, results of operations, financial condition, and cash flows.

also have outsourced significant elements of our information technology infrastructure to third parties, some of which may be

outside the U.S.

Accordingly, significant elements of our information technology infrastructure, require our management of multiple

independent vendor relationships with third parties who may or could have access to our confidential information.

complexity of our information technology systems, and those of our third-party vendors with whom we contract, make such systems

potentially vulnerable to service interruptions.

The size and complexity of our and our vendors’

systems and the large amounts

of confidential information that is present on them also makes them potentially vulnerable to security breaches from inadvertent

or intentional actions by our employees, partners, or vendors, or from attacks by malicious third parties.

Company and its vendors’

sophisticated information technology operations are spread across multiple, sometimes inconsistent,

platforms, which pose difficulties in maintaining data integrity across systems.

The ever-increasing use and evolution of technology,

including cloud-based computing, creates opportunities for the unintentional or improper dissemination or destruction of confidential

information stored in the Company’s systems.

We are dependent on a small number

of suppliers for our raw materials and any delay or unavailability of raw materials can materially adversely affect our ability

to produce products.

The FDA requires identification

of raw material suppliers in applications for approval of drug products.

If raw materials were unavailable from a specified supplier,

FDA approval of a new supplier could delay the manufacture of the drug involved.

In addition, some

materials used in our products are currently available from only one supplier or a limited number of suppliers and there is a

risk of a sole approved supplier significantly raising prices.

Please note that such an occurrence has taken place recently, wherein

significant price increases from a sole supplier greatly reduced profit margins, sales, and delayed product launches.

These occurrences

were ultimately resolved by the successful FDA approval of an alternate supplier, with such approval process being lengthy and

Further, a significant

portion of our raw materials may be available only from foreign sources.

Foreign sources can be subject to the special risks of

doing business abroad, including, without limitation:

greater possibility for disruption due to transportation or

communication problems;

the relative instability of some foreign governments and economies;

interim price volatility based on labor unrest, materials or

equipment shortages, export duties, restrictions on the transfer of funds, or fluctuations in currency exchange rates;

uncertainty regarding recourse to a dependable legal system

for the enforcement of contracts and other rights.

In addition, patent

laws in certain foreign jurisdictions (primarily, but not necessarily, in Europe) may make it increasingly difficult to obtain

raw materials for research and development prior to expiration of applicable United States or foreign patents.

Any delay or inability

to obtain raw materials on a timely basis, or any significant price increases that cannot be passed on to customers, can materially

adversely affect our ability to produce products.

This can materially adversely affect our business and operations.

We depend on a limited number of customers

and any reduction, delay or cancellation of an order from these customers or the loss of any of these customers could cause our

revenue to decline.

Each year we have

had one or a few customers that have accounted for a large percentage of our limited revenues therefore the termination of a contract

with a customer may result in the loss of substantially all of our revenues.

We are constantly working to develop new relationships

with existing or new customers, but despite these efforts we may not, at the time that any of our current contracts expire, have

other contracts in place generating similar or material revenue.

We have agreements with Lannett, Glenmark and Precision Dose

for the sales and distribution of products that we manufacture.

We receive revenues to manufacture these products and also receive

a profit split or royalties based on in-market sales of the products.

In addition, since

a significant portion of our revenues is derived from a relatively few customers, any financial difficulties experienced by any

one of these customers, or any delay in receiving payments from any one of these customers, could have a material adverse effect

on our business, results of operations, financial condition, and cash flows.

We are dependent on third parties to

supply raw materials used in our products and to provide services for certain core aspects of our business.

Any interruption or

failure by these suppliers, distributors and collaboration partners to meet their obligations pursuant to various agreements with

us could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We rely on third parties

to supply raw material used in our products.

In addition, we rely on third party suppliers, distributors and other third party

service providers to provide services for certain core aspects of our business, including, without limitation, manufacturing,

warehousing, freight and distribution, medical affairs services, regulatory compliance activities, sales and marketing, clinical

studies, lab services and other technical and financial services.

Many such third-party suppliers and contractors are subject

to requirements proscribed by FDA, DEA or both.

Our business and financial viability are dependent on the continued supply of

goods, materials and services, by these third parties, their regulatory compliance and on the strength, validity and terms of

our various contracts and arrangements with these third parties.

Any interruption or failure by our third party suppliers, distributors

and other third party service providers to meet their obligations pursuant to the various agreements with us on schedule or in

accordance terms and/or expectations, or any termination by these third parties of their arrangements with us, which in each case,

could be the result of one or more factors outside of our control, could delay or prevent the development, approval, commercialization

or manufacture of our products, result in non-compliance with applicable laws and/or regulations, cause us to incur failure to

supply penalties, disrupt our operations, increase the cost of our operations or cause harm to our reputation in the industry,

any or all of which could have a material adverse effect on our business, financial condition, results of operations, cash flows

and stock price.

We may also be unsuccessful in resolving any underlying issues with such suppliers, distributors or other third-party

service providers or in replacing them within a reasonable time frame on commercially reasonable terms.

Elite’s pipeline consists of

products in various stages of development, including products in early development.

Elite’s product

pipeline, including the paused development of its abuse deterrent opioid products, are in various stages of development.

to commercialization, product development must be completed that could include scale-up, clinical studies, regulatory filing,

regulatory review, approval by the FDA, and/or other development steps.

Development is subject to risks.

We cannot assure you

that development will be successful, or that during development unexpected delays might occur or additional costs might be incurred.

Failure to bring to commercialization any of the products already in development by Elite will have a material adverse effect

on Elite’s ability to operate in the future.

The failure to successfully identify,

develop, commercialize and market new products most likely will result in a material adverse effect on our ability to operate

in the future.

To sustain current

operations, engender business growth, achieve current and future revenues and profitability, we significantly depend on our ability

to successfully identify, develop, commercialize and market new pharmaceutical products., including, without limitation, our own

products as well as those that may be developed in partnership with other entities, such as those that were previously developed

with SunGen pursuant to a now terminated product development agreement.

a result, we must continually develop, test and manufacture new products, which must meet regulatory standards to receive requisite

marketing authorizations.

The process of developing

and obtaining regulatory approvals for new products is time-consuming, costly and inherently unpredictable.

There are direct,

indirect, known and unknown risks inherent in the development of pharmaceuticals, including, without limitation, products which

initially show promise in preliminary pharmacological or marketing studies, but fail to yield the positive results consistent

with initial indications.

Products we are currently developing may not receive the regulatory approvals or clearances necessary

for us to market them and, if approved, we may be unable to successfully commercialize them on a timely basis or at all, or if

commercialized, revenues and profits achieved from the sale of such products might not reach levels that provide sufficient return

on those costs incurred during the commercialization process.

The successful commercialization

of a product is subject to a number of factors, including:

timely filing of any NDA, ANDA or other regulatory submission applicable to our product

adverse development or perceived adverse development with respect to the applicable regulatory

agency’s review of such regulatory submission and approval for the indication sought;

effectiveness, ease of use and safety of our products as compared to existing products;

demand and the willingness of physicians and customers to adopt our products over products

with which they may have more loyalty or familiarity and overcoming any biases towards

our products;

cost of our product compared to alternative products and the pricing and commercialization

strategies of our competitors;

success of our launch and marketing efforts;

publicity about us, our products, our competitors and their products or the industry

as a whole or favorable publicity about competitors;

advent of new and innovative alternative products;

unforeseen issues or adverse developments in connection with a product and any resulting

litigation or regulatory scrutiny and harm to our reputation or the reputation or acceptance

of the product in the market.

In addition, there

are many risks associated with developing, commercializing and marketing new products that are beyond our control.

without limitation, our collaboration partner(s) may decide to make substantial changes to a product’s formulation or design,

may experience financial difficulties or may have limited financial resources.

Any of the foregoing may delay the development,

commercialization and/or marketing of new products.

In addition, if a codeveloper on a new product terminates our collaboration

agreement or does not perform under the agreement, we may experience delays and additional costs in developing and marketing that

product, with no assurances of us having the resources that may be required to overcome such delays or additional costs that were

beyond our control.

We conduct research and development to enable us to manufacture

and market pharmaceutical products in accordance with specific government regulations.

Our drug development efforts relating to

SequestOx and certain generics are focused on technically difficult-to-formulate products and/or products that require advanced

manufacturing technology.

Typically, expenses related to research, development, and regulatory approval of compounds for SequestOx,

which is a branded pharmaceutical product are significantly greater than those expenses associated with generic products.

research and development efforts are required, resulting in increased research expenses.

Because of the inherent risk associated

with research and development efforts in the healthcare industry, particularly with respect to new drugs, our research and development

expenditures may not result in the successful regulatory approval and introduction of new pharmaceutical products and failure in

the development of any new product can occur at any point in the process, including late in the process after substantial investment.

Also, after we submit a regulatory application, the relevant governmental health authority may require that we conduct additional

studies, including, for example, studies to assess the product’s interaction with alcohol.

As a result, we may be unable

to reasonably predict the total research and development costs to develop a particular product and there is a significant risk

that the funds we invest in research and development will not generate financial returns.

In addition, our operating results and

financial condition may fluctuate as the amount we spend to research and develop, commercialize, acquire or license new products,

technologies and businesses changes.

Much of the preceding occurred with the development of SequestOx, which has not yet received

marketing approval from the FDA, with material adverse effects on our business, results of operations, financial condition, cash

flows and ability to operate resulting in the past, as well as the risk remaining for the future.

We expend a significant amount of resources

on product development efforts that may not result in successful product commercializations.

We conduct product

development to enable us to gain approval, manufacture and market pharmaceuticals in accordance with applicable laws and regulations.

We have also partnered with third parties, such as SunGen, in the past, to develop products.

There can be no assurances of the

recovery of any or all investments made conducting such product development activities, even if the product or products are successful

in achieving regulatory approval and commercialization.

An event of significant resources, financial and otherwise, being consumed

by product development activities that fail to achieve approval/commercialization or fail to achieve sufficient return of such

investments and resources consumed, that any investment made in such product development activities could result in a material

adverse effect on our business, results of operations, financial condition, cash flow, ability to operate and our stock price.

Before we can obtain regulatory approval,

we need to successfully complete clinical trials, outcomes of which are uncertain.

In order to obtain

FDA approval to market a new drug product, we must demonstrate proof of safety and effectiveness in humans.

To meet these requirements,

we must conduct extensive preclinical testing and “

adequate and well-controlled ”

clinical trials.

clinical trials is a lengthy, time-consuming, and expensive process.

Completion of necessary clinical trials may take several

years or more.

Delays associated with products for which we are directly conducting preclinical or clinical trials may cause us

to incur additional operating expenses.

The commencement and rate of completion of clinical trials may be delayed by many factors,

including, without limitation, for example:

ineffectiveness of our product candidate or perceptions by physicians

that the product candidate is not safe or effective for a particular indication;

inability to manufacture sufficient quantities of the product

candidate for use in clinical trials;

delay or failure in obtaining approval of our clinical trial

protocols from the FDA or institutional review boards;

slower than expected rate of patient recruitment and enrollment;

inability to adequately follow and monitor patients after treatment;

difficulty in managing multiple clinical sites;

unforeseen safety issues;

government or regulatory delays;

clinical trial costs that are greater than we currently anticipate.

Even if we achieve

positive interim results in clinical trials, these results do not necessarily predict final results, and positive results in early

trials may not be indicative of success in later trials.

A number of companies in the pharmaceutical industry have suffered significant

setbacks in advanced clinical trials, even after achieving promising results in earlier trials.

Negative or inconclusive results

or adverse medical events during a clinical trial could cause us to repeat or terminate a clinical trial or require us to conduct

additional trials.

We do not know whether our existing or any future clinical trials will demonstrate safety and efficacy sufficiently

to result in marketable products.

Our clinical trials may be suspended at any time for a variety of reasons, including if the

FDA or we believe the patients participating in our trials are exposed to unacceptable health risks or if the FDA finds deficiencies

in the conduct of these trials.

Failures or perceived

failures in our clinical trials will directly delay our product development and regulatory approval process, damage our business

prospects, make it difficult for us to establish collaboration and partnership relationships, and negatively affect our reputation

and competitive position in the pharmaceutical community.

Because of these risks,

our research and development efforts may not result in any commercially viable products.

Any delay in, or termination of, our

preclinical or clinical trials will delay the filing of our drug applications with the FDA and, ultimately, our ability to commercialize

our product candidates and generate product revenues.

If a significant portion of these development efforts are not successfully

completed, required regulatory approvals are not obtained, or any approved products are not commercially successful, our business,

financial condition, and results of operations may be materially harmed.

Our pipeline of products under development

include products that would be filed as branded pharmaceuticals and if generic manufacturers use litigation and regulatory means

to obtain approval for generic versions of one or more of such branded drugs, our sales may be adversely affected.

Under the Hatch-Waxman

Act, the FDA can approve an ANDA for a generic bioequivalent version of a previously approved drug, without undertaking the full

clinical testing necessary to obtain approval to market a new drug.

In place of such clinical studies, an ANDA applicant usually

needs only to submit data demonstrating that its generic product is bioequivalent to the branded product.

Our product development

pipeline includes a range of abuse resistant opioid products, with full clinical testing activity being currently planned, in

progress or successfully completed.

In recent years, various generic manufacturers have filed ANDAs seeking FDA approval for generic

versions of opioids and opioids with abuse resistant characteristics.

In connection with our filings, these manufacturers may

challenge the validity and/or enforceability of one or more of the underlying patents protecting our products.

While it is the

Company’s intention to vigorously defend and pursue all available legal and regulatory avenues in defense of the intellectual

property rights protecting our products, it must also be stressed that litigation is inherently uncertain, and we cannot predict

the timing or outcome of our efforts.

There can also be no assurance that our efforts in defense of the intellectual property

rights protecting our products will be successful.

If we are not successful

in defending our intellectual property rights, or opt to settle, or if a product’s marketing exclusivity rights expire or

become otherwise unenforceable, our competitors could ultimately launch generic versions of one or more of our branded products,

after such products have been approved by the FDA, which could significantly decrease our revenues and could have a material adverse

effect on our business, financial conditions, results of operations and cash flow.

Furthermore, such a material adverse effect

may result in a material adverse effect on our share price.

The time necessary to develop generic

drugs may adversely affect whether, and the extent to which, we receive a return on our capital.

The development process

for branded and generic products, including, without limitation, drug formulation, testing, and FDA review and approval, often

takes three or more years.

This process requires that we expend considerable capital to pursue activities that do not yield an

immediate or near-term return.

Also, because of the significant time necessary to develop a product, the actual market for a product

at the time it is available for sale may be significantly less than the originally projected market for the product.

to occur, our potential return on our investment in developing the product, if approved for marketing by the FDA, would be adversely

affected and we may never receive a return on our investment in the product.

It is also possible for the manufacturer of the brand-name

product for which we are developing a generic drug to obtain approvals from the FDA to switch the brand-name drug from the prescription

market to the OTC market.

If this were to occur, we would be prohibited from marketing our product other than as an OTC drug,

in which case revenues could be substantially less than we anticipated.

The risks and uncertainties inherent

in conducting clinical trials could delay or prevent the development and commercialization of our own branded products, which

could have a material adverse effect on our business, results of operations and financial condition.

With respect to our

branded products which do not qualify for the FDA’s abbreviated application procedures, we must demonstrate through clinical

trials that these products are safe and effective for use.

We have only limited experience in conducting and supervising clinical

The process of completing clinical trials and preparing an NDA may take several years and requires substantial resources.

Our studies and filings may not result in FDA approval to market our new drug products and, if the FDA grants approval, we cannot

predict the timing of any approval.

There are substantial filing fees for NDAs, often in excess of $1 million in addition to the

cost of product development and clinical trials, that are not refundable if FDA approval is not obtained.

There are a number

of risks and uncertainties associated with clinical trials.

The results of clinical trials may not be indicative of results that

would be obtained from large scale testing.

Clinical trials are often conducted with patients having advanced stages of disease

and, as a result, during the course of treatment these patients can die or suffer adverse medical effects for reasons that may

not be related to the pharmaceutical agents being tested, but which nevertheless affect the clinical trial results.

side effects experienced by the patients may cause delay of approval or limit the profile of an approved product.

Moreover, our

clinical trials may not demonstrate sufficient safety and efficacy to obtain approval from the FDA or foreign regulatory authorities.

The FDA or foreign regulatory authorities may not agree with our assessment of the clinical data or they may interpret it differently.

Such regulatory authorities may require additional or expanded clinical trials.

Even if the FDA or foreign regulatory authorities

approve certain products developed by us, there is no assurance that such regulatory authorities will not subject marketing of

such products to certain limits on indicated use.

Failure can occur

at any time during the clinical trial process and, in addition, the results from early clinical trials may not be predictive of

results obtained in later and larger clinical trials, and product candidates in later clinical trials may fail to show the desired

safety or efficacy despite having progressed successfully through earlier clinical testing.

Completion of clinical

trials for our product candidates may be delayed or halted for the reasons noted above in addition to many other reasons, including,

without limitation:

Delays in patient enrolment, and variability in the number and

types of patients available for clinical trials;

Regulators or institutional review boards may not allow us to

commence or continue a clinical trial;

Our inability, or the inability of our partners, if any, to

manufacture or obtain from third parties those materials required to complete clinical trials;

Delays or failure in reaching agreement on acceptable clinical

trial contracts or clinical trial protocols with prospective clinical trial sites;

Risks associated with trial design, which may result in a failure

of the trial to show statistically significant results even if the product candidate is effective;

Difficulty in maintaining contact with patients after treatment

commences, resulting in incomplete data

Poor effectiveness of product candidates during clinical trials;

Safety issues, including adverse events associated with product

Failure of patients to complete clinical trials due to adverse

side effects, dissatisfaction with the product candidate, or other reasons;

Governmental or regulatory delays or changes in regulatory requirements,

policy, and guidelines;

Varying interpretation of data by the FDA or other relevant

regulatory authorities.

In addition, our product

candidates could be subject to competition for clinical study sites and patients from other therapies under development which may

delay the enrolment in or initiation of our clinical trials.

The FDA or other relevant

regulatory authorities may require us to conduct unanticipated additional clinical trials, which could result in additional expense

and delays in bringing our product candidates to market.

Any failure or delay in completing clinical trials for our product candidates

would prevent or delay the commercialization of our product candidates.

We cannot assure that our expenses related to clinical

trials will lead to the development of brand-name drugs that will generate revenues in the near future.

Delays or failure in the

development and commercialization of our own branded products could have a material adverse effect on our business, results of

operations and financial condition.

We rely on third parties to conduct

clinical trials and testing for our product candidates, and if they do not properly and successfully perform their legal and regulatory

obligations, as well as their contractual obligations to us, we may not be able to obtain regulatory approvals for our product

We design the clinical

trials for our product candidates but rely on contract research organizations and other third parties to assist us in managing,

monitoring and otherwise carrying out these trials, including, without limitation, with respect to site selection, contract negotiation,

analytical testing, and data management.

We do not control these third parties and, as a result, delays may occur as a result

of the priorities and operations of these third parties differing from those which we may feel would be most optimal to the completion

of such activities in the most efficient manner possible.

Although we rely on

third parties to conduct our clinical trials and related activities, we are responsible for confirming that each of our clinical

trials is conducted in accordance with our general investigational plan and protocol.

Moreover, the FDA and other relevant regulatory

agencies require us to comply with regulations and standards, commonly referred to as good clinical practices and good laboratory

practices, for conducting, recording, and reporting the results of clinical trials to ensure that the data and results are credible

and accurate and that the trial participants are adequately protected.

Our reliance on third parties does not relieve us of these

responsibilities and requirements.

The FDA enforces good clinical practices and good laboratory practices through periodic inspections

of trial sponsors, principal investigators, and trial sites.

If we, our contract research organizations, or our study sites fail

to comply with applicable good clinical practices and good laboratory practices, the clinical data generated in our clinical trials

may be deemed unreliable and the FDA may require us to perform additional clinical trials before approving our marketing applications.

We cannot assure you that, upon inspection, the FDA will determine that any of our clinical trials comply with good clinical practices

and good laboratory practices.

In addition, our clinical trials must be conducted with product manufactured under the FDA’s

current Good Manufacturing Practices, or cGMP, regulations.

Our failure or the failure of our contract manufacturers if any are

involved in the process, to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory

approval process.

If third parties do

not successfully carry out their duties under their agreements with us, if the quality or accuracy of the data they obtain is

compromised due to failure to adhere to our clinical protocols or regulatory requirements, or if they otherwise fail to comply

with clinical trial protocols or meet expected deadlines, our clinical trials may not meet regulatory requirements.

If our clinical

trials do not meet regulatory requirements or if these third parties need to be replaced, our clinical trials may be extended,

delayed, suspended, or terminated.

If any of these events occur, we may not be able to obtain regulatory approval of our product

candidates, which could have a material adverse effect on our business, results of operations and financial condition.

Decreases in the degree to which individuals

are covered by healthcare insurance could result in the decreased use of our products.

Employers may seek to reduce costs by reducing or eliminating

employer group healthcare plans or by transferring a greater portion of their healthcare costs to their employees.

or other economic hardships, especially, but not limited to those hardships resulting from the effects of the COVID-19 global pandemic,

may also result in reduced levels of coverage for some individuals, potentially resulting in lower healthcare coverage for themselves

or their families.

Furthermore, increased instability in the insurance marketplace or an increase in uninsured Americans or others

living and working in the USA may result from the Tax Cuts and Jobs Act of 2017 elimination of the Patient Protection and Affordable

Care Act (PPACA)’s requirement that individuals maintain health insurance or incur a financial penalty and other steps taken

by various governmental and other organizations to limit or end subsidies to such individuals at comparatively lower income levels.

These economic conditions may affect an individual’s ability to afford healthcare as a result of increased premiums, co-pay

or deductible obligations, greater cost sensitivity to existing co-pay or deductible obligations, lost healthcare coverage or for

other reasons.

It is possible that such conditions could lead to changes in patient behavior and spending patterns that could negatively

affect prescription and usage of certain or all of our products, including, without limitation, delaying of treatment, rationing

of prescription medications, non-filling of prescriptions, reduction in the frequency of visits to healthcare facilities, utilizing

alternative therapies or foregoing healthcare insurance coverage altogether.

Such changes may result in the reduced demand for

any or all of our products, which could have a material adverse effect on our business, results of operations, financial condition,

cash flows and ability to operate as a going concern.

In December 2018,

District Court for the Northern District of Texas held in Texas v.

Azar that, because the provisions of the PPACA requiring

certain individuals to either obtain health insurance or pay a shared responsibility payment (known as the individual mandate)

are no longer permissible under the U.S.

Congress’

taxing power, the entire PPACA is no longer constitutional.

was appealed to the U.S.

Court of Appeals for the Fifth Circuit.

In December 2019, the Fifth Circuit issued an opinion holding

that, while the individual mandate was no longer constitutional, the case must be remanded to the district court to further evaluate

whether the mandate can be severed from the PPACA or the entire PPACA must be stricken down.

In January 2020, petitions for certiorari

were filed requesting that the U.S.

Supreme Court review the Fifth Circuit’s decision and ultimately decide the constitutionality

of the PPACA.

In March 2020, the U.S.

Supreme Court granted certiorari in the consolidated cases of Texas v.

California and

California v.

Texas , both of which address the Fifth Circuit’s decision to strike down the individual mandate, while

sending back to the district court the question of the overall law’s constitutionality.

Changes in law resulting from this

ongoing lawsuit or other court challenges to the PPACA could have a material

adverse effect on our business, results of operations, financial condition, cash flows and ability to operate as a going concern.

We may decide to sell or withdraw approved

ANDAs, which could result in a material adverse effect on our ability to operate in the future.

We may, from time to time, sell and/or withdraw approved ANDAs

if we determine that the costs of maintaining such ANDAs is excessive when compared to their actual current value and their perceived

value and place in our strategic plans.

For example, and without limitation, during the twelve months ended March 31, 2020, we

received new product approvals that would have resulted in us owning a number of ANDAs that would have required us to self-identify

as a large size ANDA holder, on the measurement date, as per the FDA’s Generic Drug User Fee Amendment (“GDUFA”)

program fee structure, as opposed to the medium size ANDA classification in effect prior to these new ANDA approvals.

the GDUFA program fees in effect for the period October 1, 2019 through September 30, 2020, the annual fee for large sized ANDA

holders was approximately $1.0 million greater than the fee for medium sized ANDA holders.

After conducting a study of ANDAs held,

with the GDUFA program fee levels being one of several relevant factors considered, we identified and sold ANDAs relating to Methadone

Tablets, Second Phendimetrazine Product, Hydromorphone Tablets, Oxycodone and Acetaminophen Tablets and Hydrocodone and Acetaminophen

Although our expectations

are to engage only in the sale or withdrawal of ANDAs if they advance or otherwise support our overall strategy, any such ANDA

sale by definition reduces the size and scope of our business, with a direct correlation to opportunities with respect to certain

markets, products or therapeutic categories, resulting in the potential for any such ANDA sale or withdrawal having a material

adverse effect on our business, results of operations, financial condition, cash flow and ability to operate in the future.

A limitation in our flexibility in planning for, or reacting to, changes

in our business and the industry in which we operate;

Our being at a competitive disadvantage as compared to competitors

with less indebtedness;

A limitation in our ability to borrow additional funds that may be

needed to operate and expand our business.

In addition, a notice of

default was issued by the New Jersey Economic Development Authority in relation to prior obligations of our tax-exempt bonds.

we are current in our payments under these bonds, if the principal balances due under these bonds are accelerated pursuant to the notice

of default, our ability to operate in the future will be materially and adversely affected.

For more information on the

NJEDA Bonds, see Part II, Item 7 “

Management’s Discussion and Analysis of Financial Condition and Results of Operations;

Liquidity and Capital Resources;

NJEDA Bonds ”.

There is a risk impairment of significant

intangible assets on our balance sheet.

We have significant intangible

assets on our balance sheet.

Consequently, potential impairment of intangible assets may have an adverse material effect on our profitability.

Intangible assets represent

a significant portion of our assets.

As of March 31, 2021, intangible assets were approximately $6.6 million, or approximately 25% of

Generally accepted accounting

principles in the United States (“

GAAP ”) requires that intangible assets be subject to regular impairment analysis

to determine if changes in circumstances indicate that the value of the asset as recorded may not be recoverable.

Such events or changes

in circumstances are an inherent risk in the pharmaceutical industry and often cannot be predicted.

However, should a change in circumstance

occur, requiring the impairment of an intangible asset, the result of such an impairment may have an adverse material effect on our business,

financial condition, results of operations, cash flows and stock price.

GAAP requires estimates, judgements and

assumptions which inherently contain uncertainties.

There are inherent uncertainties

involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with GAAP.

changes in estimates, judgments and assumptions used or necessary revisions to prior estimates, judgments or assumptions could lead to

a restatement of our results.

The consolidated financial

statements included in this Annual Report on Form 10-K are prepared in accordance with GAAP.

This involves making estimates, judgments

and assumptions that affect reported amounts of assets (including intangible assets), liabilities, mezzanine equity, stockholders’

equity, operating revenues, costs of sales, operating expenses, other income, and other expenses.

Estimates, judgments, and assumptions

are inherently subject to change in the future and any necessary revisions to prior estimates, judgments or assumptions could lead to

a restatement.

Any such changes could result in corresponding changes to the amounts of assets (including goodwill and other intangible

assets), liabilities, mezzanine equity, stockholders’

equity, operating revenues, costs of sales, operating expenses, other income

and other expenses.

Legal and Regulatory Risks

The pharmaceutical industry is heavily

regulated, which creates uncertainty about our ability to bring new products to market and imposes substantial compliance costs

on our business in relation to product development as well as commercial operations.

Governmental authorities such as the FDA impose substantial

requirements on the development, manufacture, holding, labelling, marketing, advertising, promotion, distribution and sale of therapeutic

pharmaceutical products through lengthy and detailed laboratory and clinical testing and other costly and time-consuming procedures.

In addition, before obtaining regulatory approvals for certain generic products, we must conduct limited bioequivalence studies

and other research to show comparability to the branded products.

A failure to obtain satisfactory results in required pre-marketing

trials may prevent us from obtaining required regulatory approvals.

The FDA may also require companies to conduct post-approval

studies and post-approval surveillance regarding their drug products and to report adverse events.

Before obtaining regulatory approvals for the sale of any of

our new product candidates, we must demonstrate through preclinical studies and clinical trials that the product is safe and effective

for each intended use.

Preclinical and clinical studies may fail to demonstrate the safety and effectiveness of a product.

we may not be able to demonstrate through clinical trials that a product candidate’s therapeutic benefits outweigh its risks.

Even promising results from preclinical and early clinical studies do not always accurately predict results in later, large scale

regulated which creates uncertainty and substantial compliance costs.

The pharmaceutical industry

is heavily regulated, which creates uncertainty about our ability to bring new products to market and imposes substantial compliance

costs on our business in relation to product development as well as commercial operations.

Governmental authorities

such as the FDA impose substantial requirements on the development, manufacture, holding, labelling, marketing, advertising, promotion,

distribution and sale of therapeutic pharmaceutical products through lengthy and detailed laboratory and clinical testing and other costly

and time-consuming procedures.

In addition, before obtaining regulatory approvals for certain generic products, we must conduct limited

bioequivalence studies and other research to show comparability to the branded products.

A failure to obtain satisfactory results in

required pre-marketing trials may prevent us from obtaining required regulatory approvals.

The FDA may also require companies to conduct

post-approval studies and post-approval surveillance regarding their drug products and to report adverse events.

Before obtaining regulatory

approvals for the sale of any of our new product candidates, we must demonstrate through preclinical studies and clinical trials that

the product is safe and effective for each intended use.

Preclinical and clinical studies may fail to demonstrate the safety and effectiveness

of a product.

Likewise, we may not be able to demonstrate through clinical trials that a product candidate’s therapeutic benefits

outweigh its risks.

Even promising results from preclinical and early clinical studies do not always accurately predict results in later,

large scale trials.

A failure to demonstrate safety and efficacy could or would result in our failure to obtain regulatory approvals.

trials can be delayed for reasons outside of our control, which can lead to increased development costs and delays in regulatory

For example, due to competition to enroll patients in clinical trials, there have been instances of delays in clinical

development of our products in the past, as a result of patients not enrolling in clinical trials at the rate expected, or patients

dropping out of trials after enrolling, at rates that were higher than expected.

In addition, we rely on collaboration partners

and third-party subject matter experts that may recommend changes in trial protocol and design enhancements that are put into effect,

or encounter clinical trial compliance-related issues, which may also delay clinical trials.

Product supplies may be delayed or

be insufficient to treat the patients participating in the clinical trials, or manufacturers or suppliers may not meet the requirements

of the FDA or foreign regulatory authorities, such as those relating to Current Good Manufacturing Practices.

We also may experience

delays in obtaining, or we may not obtain, required initial and continuing approval of our clinical trials from institutional review

We cannot confirm to you that we will not experience delays or undesired results in these or any other of our clinical

We cannot confirm

to you that the FDA will approve, clear for marketing or certify any products developed by us or that such approval will not subject

the marketing of our products to certain limits on indicated use.

The FDA may not agree with our assessment of the clinical data

or they may interpret it differently.

Clinical trials can be delayed for reasons outside of our control, which can lead to increased development costs and delays in regulatory

For example, due to competition to enroll patients in clinical trials, there have been instances of delays in clinical development

of our products in the past, as a result of patients not enrolling in clinical trials at the rate expected, or patients dropping out

of trials after enrolling, at rates that were higher than expected.

In addition, we rely on collaboration partners and third-party subject

matter experts that may recommend changes in trial protocol and design enhancements that are put into effect, or encounter clinical trial

compliance-related issues, which may also delay clinical trials.

Product supplies may be delayed or be insufficient to treat the patients

participating in the clinical trials, or manufacturers or suppliers may not meet the requirements of the FDA or foreign regulatory authorities,

such as those relating to Current Good Manufacturing Practices.

We also may experience delays in obtaining, or we may not obtain, required

initial and continuing approval of our clinical trials from institutional review boards.

We cannot confirm to you that we will not experience

delays or undesired results in these or any other of our clinical trials.

We cannot confirm to you

that the FDA will approve, clear for marketing or certify any products developed by us or that such approval will not subject the marketing

of our products to certain limits on indicated use.

The FDA may not agree with our assessment of the clinical data or they may interpret

it differently.

Such regulatory authorities may require additional or expanded clinical trials.

Any limitation

on use imposed by the FDA or delay in or failure to obtain FDA approvals or clearances of products developed by us would adversely

affect the marketing of these products and our ability to generate product revenue, which would adversely affect our financial

condition and results of operations.

In addition, with

respect specifically to pharmaceutical products, the submission of a New Drug Application (NDA), such as SequestOx™, or

ANDA to the FDA with supporting clinical safety and efficacy data, for example, does not guarantee that the FDA will grant approval

to market the product.

Meeting the FDA’s regulatory requirements to obtain approval to market a drug product, which varies

substantially based on the type, complexity and novelty of the pharmaceutical product, typically takes years and is subject to

Additional delays

may result if an FDA Advisory Committee or other regulatory authority recommends non-approval or restrictions on approval.

the FDA is not required to follow the recommendations of its Advisory Committees, it usually does.

A negative Advisory Committee

meeting could signal a lower likelihood of approval, although the FDA may still end up approving our application.

Regardless of

an Advisory Committee meeting outcome or the FDA’s final approval decision, public presentation of our data may shed positive

or negative light on our application.

Any limitation on use imposed by the

FDA or delay in or failure to obtain FDA approvals or clearances of products developed by us would adversely affect the marketing of

these products and our ability to generate product revenue, which would adversely affect our financial condition and results of operations.

In addition, with respect

specifically to pharmaceutical products, the submission of a New Drug Application (NDA), such as SequestOx™, or ANDA to the FDA

with supporting clinical safety and efficacy data, for example, does not guarantee that the FDA will grant approval to market the product.

Meeting the FDA’s regulatory requirements to obtain approval to market a drug product, which varies substantially based on the

type, complexity and novelty of the pharmaceutical product, typically takes years and is subject to uncertainty.

Additional delays may result

if an FDA Advisory Committee or other regulatory authority recommends non-approval or restrictions on approval.

Although the FDA is not

required to follow the recommendations of its Advisory Committees, it usually does.

A negative Advisory Committee meeting could signal

a lower likelihood of approval, although the FDA may still end up approving our application.

Regardless of an Advisory Committee meeting

outcome or the FDA’s final approval decision, public presentation of our data may shed positive or negative light on our application.

Some drugs are available

in the United States that are not the subject of an FDA-approved NDA.

In 2011, the FDA’s Center for Drug Evaluation and

Research (“

CDER ”) Office of Compliance modified its enforcement policy with regard to the marketing of such

“unapproved”

In 2011, the FDA’s Center for Drug Evaluation and Research

CDER ”) Office of Compliance modified its enforcement policy with regard to the marketing of such “unapproved”

marketed drugs.

Under CDER’s revised guidance, the FDA encourages manufacturers to obtain NDA approvals

for such drugs by requiring unapproved versions to be removed from the market after an approved version has been introduced, subject

to a grace period at the FDA’s discretion.

This grace period is intended to allow an orderly transition of supply to the

market and to mitigate any potential related drug shortage.

Depending on the length of the grace period and the time it takes

for subsequent applications to be approved, this may result in a period of de facto market exclusivity to the first manufacturer

that has obtained an approved NDA for the previously unapproved marketed drug.

We may seek FDA approval for certain unapproved

marketed drug products through the 505(b)(2) regulatory pathway.

Even if we receive approval for an NDA under Section 505(b)(2),

the FDA may not take timely enforcement action against companies marketing unapproved versions of the drug;

therefore, we cannot

be sure that that we will receive the benefit of any de facto exclusive marketing period or that we will fully recoup the expenses

incurred to obtain an approval.

In addition, certain competitors and others have objected to the FDA’s interpretation of

Section 505(b)(2).

If the FDA’s interpretation of Section 505(b)(2) is successfully challenged, this could delay or even

prevent the FDA from approving any NDA that we submit under Section 505(b)(2).

Moreover, even if

our product candidates are approved under Section 505(b)(2), the approval may be subject to limitations on the indicated uses

for which the products may be marketed or to other conditions of approval or may contain requirements for costly post-marketing

testing and surveillance to monitor the safety or efficacy of the products.

The ANDA approval

process for a new product varies in time, is difficult to estimate and can vary significantly, from as little as 10 months from

the date of application, to several years or more.

Furthermore, ANDA approvals, if granted, may not include all indications for

which the Company may seek to market each product.

Further, once a product

is approved or cleared for marketing, failure to comply with applicable regulatory requirements can result in, among other things,

suspensions or withdrawals of approvals or clearances, seizures or recalls of products, injunctions against the manufacture, holding,

distribution, marketing and sale of a product, and civil and criminal sanctions.

Furthermore, changes in existing regulations

or the adoption of new regulations could prevent us from obtaining, or affect the timing of, future regulatory approvals or clearances.

Meeting regulatory requirements and evolving government standards may delay marketing of our new products for a considerable period

of time, impose costly procedures upon our activities and result in a competitive advantage to larger companies that compete against

Based on scientific

developments, post-market experience, or other legislative or regulatory changes, the current FDA standards of review for approving

new pharmaceutical products, or new indications or uses for approved or cleared products, are sometimes more stringent than those

that were applied in the past.

Some new or evolving

FDA review standards or conditions for approval or clearance were not applied to many established products currently on the market,

including certain opioid products.

As a result, the FDA does not have as extensive safety databases on these products as on some

products developed more recently.

Accordingly, we believe the FDA has expressed an intention to develop such databases for certain

of these products, including many opioids.

In particular, the FDA has expressed interest in specific chemical structures that

may be present as impurities in a number of opioid narcotic active pharmaceutical ingredients, such as oxycodone, which based

on certain structural characteristics and laboratory tests may indicate the potential for having mutagenic effects.

FDA has required,

and may continue to require, more stringent controls of the levels of these impurities in drug products for approval.

Also, the FDA may require labelling revisions, formulation,

or manufacturing changes and/or product modifications for new or existing products containing such impurities.

The FDA’s

more stringent requirements, together with any additional testing or remedial measures that may be necessary, could result in increased

costs for, or delays in, obtaining approval for certain of our products in development.

Although we do not believe that the FDA

would seek to remove a currently marketed product from the market unless such mutagenic effects are believed to indicate a significant

risk to patient health, we cannot make any such assurance.

In May of 2016, an

FDA advisory panel recommended mandatory training of all physicians who prescribe opioids on the risks of prescription opioids.

In 2016, the CDC also issued a guideline for prescribing opioids for chronic pain that provides recommendations for primary care

clinicians who are prescribing opioids for chronic pain outside of active cancer treatment, palliative care, and end-of-life care.

In addition, state health departments and boards of pharmacy have authority to regulate distribution and may modify their regulations

with respect to prescription narcotics in an attempt to curb abuse.

In either case, any such new regulations or requirements may

be difficult and expensive for us to comply with, may delay our introduction of new products, may adversely affect our total revenues,

and may have a material adverse effect on our business, results of operations, financial condition and cash flows.

The FDA has the authority to require companies to undertake

additional post-approval studies to assess known or signaled safety risks and to make any labelling changes to address those risks.

The FDA also can require companies to formulate approved Risk Evaluation and Mitigation Strategies (REMS) to confirm a drug’s

benefits outweigh its risks.

The FDA’s exercise of its authority under the FFDCA could

result in delays or increased costs during product development, clinical trials and regulatory review, increased costs to comply

with additional post-approval regulatory requirements and potential restrictions on sales of approved products.

Foreign regulatory

agencies often have similar authority and may impose comparable requirements and costs.

Post-marketing studies and other emerging

data about marketed products, such as adverse event reports, may also adversely affect sales of our products.

Furthermore, the

discovery of significant safety or efficacy concerns or problems with a product in the same therapeutic class as one of our products

that implicate or appear to implicate the entire class of products could have an adverse effect on sales of our product or, in

some cases, result in product withdrawals.

The FDA has continuing authority over the approval of an NDA or ANDA and may withdraw

approval if, among other reasons, post-marketing clinical or other experience, tests, or data show that a drug is unsafe for use

under the conditions upon which it was approved, or if FDA determines that there is a lack of substantial evidence of the drug’s

efficacy under the conditions described in its labelling.

Furthermore, new data and information, including information about product

misuse or abuse at the user level, may lead government agencies, professional societies, practice management groups or patient

or trade organizations to recommend or publish guidance or guidelines related to the use of our products, which may lead to reduced

sales of our products.

The FDA and the DEA

have important and complementary responsibilities with respect to our business.

The FDA administers an application and post-approval

monitoring process to confirm that products that are available in the market are safe, effective, and consistently of uniform,

high quality.

The DEA administers registration, drug allotment and accountability systems to satisfy against loss and diversion

of controlled substances.

Both agencies have trained investigators that routinely, or for cause, conduct inspections, and both

have authority to seek to enforce their statutory authority and regulations through administrative remedies as well as civil and

criminal enforcement actions.

The FDA regulates and monitors the quality of drug clinical trials to provide human subject protection

and to support marketing applications.

The FDA may place a hold on a clinical trial and may cause a suspension or withdrawal of

product approvals if regulatory standards are not maintained.

The FDA also regulates the facilities, processes, and procedures

used to manufacture and market pharmaceutical products in the U.S.

Manufacturing facilities must be registered with the FDA and

all products made in such facilities must be manufactured in accordance with the latest cGMP regulations, which are enforced by

Compliance with clinical trial requirements and cGMP regulations requires the dedication of substantial resources and

requires significant expenditures.

In the event an approved manufacturing facility for a particular drug is required by the FDA

to curtail or cease operations, or otherwise becomes inoperable, or a third-party contract manufacturing facility faces manufacturing

problems, obtaining the required FDA authorization to manufacture at the same or a different manufacturing site could result in

production delays, which could adversely affect our business, results of operations, financial condition, and cash flow and ability

to operate in the future.

The FDA is authorized

to perform inspections of U.S.

Under CDER’s revised guidance, the FDA encourages manufacturers to obtain NDA approvals for such drugs by requiring

unapproved versions to be removed from the market after an approved version has been introduced, subject to a grace period at the FDA’s

This grace period is intended to allow an orderly transition of supply to the market and to mitigate any potential related

drug shortage.

Depending on the length of the grace period and the time it takes for subsequent applications to be approved, this may

result in a period of de facto market exclusivity to the first manufacturer that has obtained an approved NDA for the previously unapproved

marketed drug.

We may seek FDA approval for certain unapproved marketed drug products through the 505(b)(2) regulatory pathway.

if we receive approval for an NDA under Section 505(b)(2), the FDA may not take timely enforcement action against companies marketing

unapproved versions of the drug;

therefore, we cannot be sure that that we will receive the benefit of any de facto exclusive marketing

period or that we will fully recoup the expenses incurred to obtain an approval.

In addition, certain competitors and others have objected

to the FDA’s interpretation of Section 505(b)(2).

If the FDA’s interpretation of Section 505(b)(2) is successfully challenged,

this could delay or even prevent the FDA from approving any NDA that we submit under Section 505(b)(2).

Moreover, even if our product

candidates are approved under Section 505(b)(2), the approval may be subject to limitations on the indicated uses for which the products

may be marketed or to other conditions of approval or may contain requirements for costly post-marketing testing and surveillance to

monitor the safety or efficacy of the products.

The ANDA approval process

for a new product varies in time, is difficult to estimate and can vary significantly, from as little as 10 months from the date of application,

to several years or more.

Furthermore, ANDA approvals, if granted, may not include all indications for which the Company may seek to

market each product.

Further, once a product is

approved or cleared for marketing, failure to comply with applicable regulatory requirements can result in, among other things, suspensions

or withdrawals of approvals or clearances, seizures or recalls of products, injunctions against the manufacture, holding, distribution,

marketing and sale of a product, and civil and criminal sanctions.

Furthermore, changes in existing regulations or the adoption of new

regulations could prevent us from obtaining, or affect the timing of, future regulatory approvals or clearances.

Meeting regulatory requirements

and evolving government standards may delay marketing of our new products for a considerable period of time, impose costly procedures

upon our activities and result in a competitive advantage to larger companies that compete against us.

Even if regulatory approval

is obtained for a particular product candidate, the FDA and foreign regulatory authorities may, nevertheless, impose significant restrictions

on the indicated uses or marketing of such products, or impose ongoing requirements for post-approval studies.

Following any regulatory

approval of our product candidates, we will be subject to continuing regulatory obligations, such as safety reporting requirements, and

additional post-marketing obligations, including regulatory oversight of the promotion and marketing of our products.

If we become aware

of previously unknown problems with any of our product candidates here or overseas or at our contract manufacturers’

a regulatory agency may impose restrictions on our products, our contract manufacturers or on us, including requiring us to reformulate

our products, conduct additional clinical trials, make changes in the labelling of our products, implement changes to or obtain re-approvals

of our contract manufacturers’

facilities or withdraw the product from the market.

In addition, we may experience a significant

drop in the sales of the affected products, our reputation in the marketplace may suffer and we may become the target of lawsuits, including

class action suits.

Moreover, if we fail to comply with applicable regulatory requirements, we may be subject to fines, suspension or

withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, and criminal prosecution.

events could harm or prevent sales of the affected products or could substantially increase the costs and expenses of commercializing

and marketing these products.

In March 2011, the FDA issued

a directive removing from the market approximately 500 cough/cold and allergy products, including our Lodrane®

extended release product

At that time, the Lodrane®

extended release products constituted approximately 97% of our revenues.

Based on scientific developments,

post-market experience, or other legislative or regulatory changes, the current FDA standards of review for approving new pharmaceutical

products, or new indications or uses for approved or cleared products, are sometimes more stringent than those that were applied in the

Some new or evolving FDA

review standards or conditions for approval or clearance were not applied to many established products currently on the market, including

certain opioid products.

As a result, the FDA does not have as extensive safety databases on these products as on some products developed

more recently.

Accordingly, we believe the FDA has expressed an intention to develop such databases for certain of these products, including

many opioids.

In particular, the FDA has expressed interest in specific chemical structures that may be present as impurities in a number

of opioid narcotic active pharmaceutical ingredients, such as oxycodone, which based on certain structural characteristics and laboratory

tests may indicate the potential for having mutagenic effects.

FDA has required, and may continue to require, more stringent controls

of the levels of these impurities in drug products for approval.

Also, the FDA may require

labelling revisions, formulation, or manufacturing changes and/or product modifications for new or existing products containing such

The FDA’s more stringent requirements, together with any additional testing or remedial measures that may be necessary,

could result in increased costs for, or delays in, obtaining approval for certain of our products in development.

Although we do not

believe that the FDA would seek to remove a currently marketed product from the market unless such mutagenic effects are believed to

indicate a significant risk to patient health, we cannot make any such assurance.

In May of 2016, an FDA advisory

panel recommended mandatory training of all physicians who prescribe opioids on the risks of prescription opioids.

In 2016, the CDC also

issued a guideline for prescribing opioids for chronic pain that provides recommendations for primary care clinicians who are prescribing

opioids for chronic pain outside of active cancer treatment, palliative care, and end-of-life care.

In addition, state health departments

and boards of pharmacy have authority to regulate distribution and may modify their regulations with respect to prescription narcotics

in an attempt to curb abuse.

In either case, any such new regulations or requirements may be difficult and expensive for us to comply

with, may delay our introduction of new products, may adversely affect our total revenues, and may have a material adverse effect on

our business, results of operations, financial condition and cash flows.

The FDA has the authority

to require companies to undertake additional post-approval studies to assess known or signaled safety risks and to make any labelling

changes to address those risks.

The FDA also can require companies to formulate approved Risk Evaluation and Mitigation Strategies (REMS)

to confirm a drug’s benefits outweigh its risks.

The FDA’s exercise

of its authority under the FFDCA could result in delays or increased costs during product development, clinical trials and regulatory

review, increased costs to comply with additional post-approval regulatory requirements and potential restrictions on sales of approved

Foreign regulatory agencies often have similar authority and may impose comparable requirements and costs.

Post-marketing studies

and other emerging data about marketed products, such as adverse event reports, may also adversely affect sales of our products.

the discovery of significant safety or efficacy concerns or problems with a product in the same therapeutic class as one of our products

that implicate or appear to implicate the entire class of products could have an adverse effect on sales of our product or, in some cases,

result in product withdrawals.

The FDA has continuing authority over the approval of an NDA or ANDA and may withdraw approval if, among

other reasons, post-marketing clinical or other experience, tests, or data show that a drug is unsafe for use under the conditions upon

which it was approved, or if FDA determines that there is a lack of substantial evidence of the drug’s efficacy under the conditions

described in its labelling.

Furthermore, new data and information, including information about product misuse or abuse at the user level,

may lead government agencies, professional societies, practice management groups or patient or trade organizations to recommend or publish

guidance or guidelines related to the use of our products, which may lead to reduced sales of our products.

The FDA and the DEA have

important and complementary responsibilities with respect to our business.

The FDA administers an application and post-approval monitoring

process to confirm that products that are available in the market are safe, effective, and consistently of uniform, high quality.

DEA administers registration, drug allotment and accountability systems to satisfy against loss and diversion of controlled substances.

Both agencies have trained investigators that routinely, or for cause, conduct inspections, and both have authority to seek to enforce

their statutory authority and regulations through administrative remedies as well as civil and criminal enforcement actions.

regulates and monitors the quality of drug clinical trials to provide human subject protection and to support marketing applications.

The FDA may place a hold on a clinical trial and may cause a suspension or withdrawal of product approvals if regulatory standards are

not maintained.

The FDA also regulates the facilities, processes, and procedures used to manufacture and market pharmaceutical products

Manufacturing facilities must be registered with the FDA and all products made in such facilities must be manufactured in

accordance with the latest cGMP regulations, which are enforced by the FDA.

Compliance with clinical trial requirements and cGMP regulations

requires the dedication of substantial resources and requires significant expenditures.

In the event an approved manufacturing facility

for a particular drug is required by the FDA to curtail or cease operations, or otherwise becomes inoperable, or a third-party contract

manufacturing facility faces manufacturing problems, obtaining the required FDA authorization to manufacture at the same or a different

manufacturing site could result in production delays, which could adversely affect our business, results of operations, financial condition,

and cash flow and ability to operate in the future.

The FDA is authorized to

perform inspections of U.S.

and foreign facilities under the FFDCA.

At the end of such an inspection, FDA could issue a Form

483 Notice of Inspectional Observations, which could cause us to modify certain activities identified during the inspection.

such inspections, the FDA may issue an untitled letter as an initial correspondence that cites violations that do not meet the

threshold of regulatory significance of a Warning Letter.

FDA guidelines also provide for the issuance of Warning Letters for

violations of “regulatory significance”

for which the failure to adequately and promptly achieve correction may be

expected to result in an enforcement action.

FDA also may issue Warning Letters and untitled letters in connection with events

or circumstances unrelated to an FDA inspection.

At the end of such an inspection, FDA could issue a Form 483 Notice

of Inspectional Observations, which could cause us to modify certain activities identified during the inspection.

Following such inspections,

the FDA may issue an untitled letter as an initial correspondence that cites violations that do not meet the threshold of regulatory

significance of a Warning Letter.

FDA guidelines also provide for the issuance of Warning Letters for violations of “regulatory

significance”

for which the failure to adequately and promptly achieve correction may be expected to result in an enforcement action.

FDA also may issue Warning Letters and untitled letters in connection with events or circumstances unrelated to an FDA inspection.

Similar to other pharmaceutical

2 unchanged sentences

resulted in FDA Form 483 observations and a warning letter regarding post marketing adverse drug experience reporting.

responded to all inspection observations within the required time frame and have implemented, or are continuing to implement,

the corrective action plans as agreed with the relevant regulatory agencies.

Please also see the risk factor titled “

received a Warning Letter from the U.S.

Food and Drug Administration regarding Post marketing Adverse Drug Experience reporting.

The Warning Letter does not restrict the production or shipment of any of the Company’s products, or the sale or marketing

of the Company’s products, however, unless and until the Company is able to correct the outstanding issues identified, to

the FDA’s satisfaction, the FDA may withhold approval of pending drug applications or take other actions that would have

a material adverse impact on the Company ”

Many of our products

contain controlled substances.

The stringent DEA regulations on our use of controlled substances include restrictions on their

use in research, manufacture, distribution, and storage.

A breach of these regulations could result in imposition of civil penalties,

refusal to renew or action to revoke necessary registrations, or other restrictions on operations involving controlled substances.

In addition, failure to comply with applicable legal requirements subjects the manufacturing facilities of our subsidiaries and

manufacturing partners to possible legal or regulatory action, including shutdown.

Any such shutdown may adversely affect their

ability to supply us with product and thus, our ability to market affected products.

This could have a negative impact on our

business, results of operations, financial condition, cash flows and competitive position.

See also the risk described under the

caption “

The DEA limits the availability of the active ingredients used in many of our current products and products

in development, as well as the production of these products, and, as a result, our procurement and production quotas may not be

sufficient to meet commercial demand or complete clinical trials.

In addition, we are subject to the Federal Drug Supply

Chain Security Act (DSCSA).

government has enacted DSCSA which requires development of an electronic pedigree to track

and trace each prescription drug at the saleable unit level through the distribution system, which will be effective incrementally

over a 10-year period.

We have responded

to all inspection observations within the required time frame and have implemented, or are continuing to implement, the corrective action

plans as agreed with the relevant regulatory agencies.

Many of our products contain

controlled substances.

The stringent DEA regulations on our use of controlled substances include restrictions on their use in research,

manufacture, distribution, and storage.

A breach of these regulations could result in imposition of civil penalties, refusal to renew

or action to revoke necessary registrations, or other restrictions on operations involving controlled substances.

In addition, failure

to comply with applicable legal requirements subjects the manufacturing facilities of our subsidiaries and manufacturing partners to

possible legal or regulatory action, including shutdown.

Any such shutdown may adversely affect their ability to supply us with product

and thus, our ability to market affected products.

This could have a negative impact on our business, results of operations, financial

condition, cash flows and competitive position.

See also the risk described under the caption “

The DEA limits the availability

of the active ingredients used in many of our current products and products in development, as well as the production of these products,

and, as a result, our procurement and production quotas may not be sufficient to meet commercial demand or complete clinical trials.

In addition, we are subject to the Federal Drug Supply Chain Security Act (DSCSA).

government has enacted DSCSA which requires

development of an electronic pedigree to track and trace each prescription drug at the saleable unit level through the distribution system,

which will be effective incrementally over a 10-year period.

Compliance with DSCSA and future U.S.

federal or state electronic pedigree requirements may increase our

operational expenses and impose significant administrative burdens.

We cannot determine what effect changes in regulations or legal

interpretations or requirements by the FDA or the courts, when and if promulgated or issued, may have on our business in the future.

Changes could, among other things, require different labelling, monitoring of patients, interaction with physicians, education

programs for patients or physicians, curtailment of necessary supplies, or limitations on product distribution.

These changes,

or others required by the FDA or DEA could have an adverse effect on the sales of these products.

The evolving and complex nature

of regulatory science and regulatory requirements, the broad authority and discretion of the FDA and the generally high level of

regulatory oversight results in a continuing possibility that, from time to time, we will be adversely affected by regulatory actions

federal or state electronic pedigree

requirements may increase our operational expenses and impose significant administrative burdens.

We cannot determine what

effect changes in regulations or legal interpretations or requirements by the FDA or the courts, when and if promulgated or issued, may

have on our business in the future.

Changes could, among other things, require different labelling, monitoring of patients, interaction

with physicians, education programs for patients or physicians, curtailment of necessary supplies, or limitations on product distribution.

These changes, or others required by the FDA or DEA could have an adverse effect on the sales of these products.

The evolving and complex

nature of regulatory science and regulatory requirements, the broad authority and discretion of the FDA and the generally high level

of regulatory oversight results in a continuing possibility that, from time to time, we will be adversely affected by regulatory actions

despite our ongoing efforts and commitment to achieve and maintain full compliance with all regulatory requirements.

Furthermore, once a

product receives marketing approval, the manufacturing, distribution, processing, formulation, packaging, labelling, promotion

and sale of our products are subject to extensive regulation by federal agencies, including, without limitation, the FDA, DEA,

FTC, Consumer Product Safety Commission, and Environmental Protection Agency, among others.

We are also subject to state and local

laws, regulations, and agencies in New Jersey and elsewhere.

Such regulations are also subject to change by the relevant federal,

state and local agencies.

For instance, beginning from January 1, 2015, manufacturers, wholesale distributors, and repackages of

certain prescription drugs are required to provide and capture certain product tracing information under the Drug Quality and Security

Furthermore, once a product

receives marketing approval, the manufacturing, distribution, processing, formulation, packaging, labelling, promotion and sale of our

products are subject to extensive regulation by federal agencies, including, without limitation, the FDA, DEA, FTC, Consumer Product

Safety Commission, and Environmental Protection Agency, among others.

We are also subject to state and local laws, regulations, and agencies

in New Jersey and elsewhere.

Such regulations are also subject to change by the relevant federal, state and local agencies.

For instance,

beginning from January 1, 2015, manufacturers, wholesale distributors, and repackages of certain prescription drugs are required to provide

and capture certain product tracing information under the Drug Quality and Security Act (“

DQSA ”).

Title II of the DQSA, referred to as the Drug Supply Chain Security Act, requires companies in

certain prescription drugs’

chain of distribution to build electronic, interoperable systems to identify and trace the products

as they are distributed in the United States.

Compliance with the DQSA or any future federal or state electronic pedigree requirements

may increase the Company's operational expenses and impose significant administrative burdens.

Regulatory agencies

such as the FDA regularly inspect our manufacturing facilities and the facilities of our third-party suppliers.

The failure of

the Northvale Facility, or a facility of one of our third-party suppliers, to comply with applicable laws and regulations may

lead to breach of representations made to our customers or to regulatory or government action against us related to products made

in that facility.

We have in the past received and successfully resolved Form 483 observations from the FDA regarding certain

operations within our manufacturing network.

Although we remain committed to continuing to improve our quality control and manufacturing

practices, we cannot be assured that the FDA will continue to be satisfied with our quality control and manufacturing systems

and standards.

If we receive any future FDA observations, we may be subject to regulatory action including, among others, monetary

sanctions or penalties, product recalls or seizure, injunctions, total or partial suspension of production and/or distribution,

and suspension or withdrawal of regulatory approvals.

Further, other federal agencies, our customers and partners in our alliance,

development, collaboration, and other partnership agreements with respect to our products and services may take any such Form

483 observations into account when considering the award of contracts or the continuation or extension of such partnership agreements.

If we receive any future Form 483 observations or warning letters from the FDA, our business, consolidated results of operations

and consolidated financial condition could be materially and adversely affected.

Title II of the

DQSA, referred to as the Drug Supply Chain Security Act, requires companies in certain prescription drugs’

chain of distribution

to build electronic, interoperable systems to identify and trace the products as they are distributed in the United States.

with the DQSA or any future federal or state electronic pedigree requirements may increase the Company’s operational expenses and impose

significant administrative burdens.

Regulatory agencies such

as the FDA regularly inspect our manufacturing facilities and the facilities of our third-party suppliers.

The failure of the Northvale

Facility, or a facility of one of our third-party suppliers, to comply with applicable laws and regulations may lead to breach of representations

made to our customers or to regulatory or government action against us related to products made in that facility.

We have in the past

received and successfully resolved Form 483 observations from the FDA regarding certain operations within our manufacturing network.

Although we remain committed to continuing to improve our quality control and manufacturing practices, we cannot be assured that the

FDA will continue to be satisfied with our quality control and manufacturing systems and standards.

If we receive any future FDA observations,

we may be subject to regulatory action including, among others, monetary sanctions or penalties, product recalls or seizure, injunctions,

total or partial suspension of production and/or distribution, and suspension or withdrawal of regulatory approvals.

Further, other federal

agencies, our customers and partners in our alliance, development, collaboration, and other partnership agreements with respect to our

products and services may take any such Form 483 observations into account when considering the award of contracts or the continuation

or extension of such partnership agreements.

If we receive any future Form 483 observations or warning letters from the FDA, our business,

consolidated results of operations and consolidated financial condition could be materially and adversely affected.

With respect to environmental,

safety and health laws and regulations, we cannot accurately predict the outcome or timing of future expenditures that we may

be required to make in order to comply with such laws as they apply to our operations and facilities.

We are also subject to potential

liability for the remediation of contamination associated with both present and past hazardous waste generation, handling, and

disposal activities.

We are subject periodically to environmental compliance reviews by environmental, safety, and health regulatory

Environmental laws are subject to change and we may become subject to stricter environmental standards in the future

and face larger capital expenditures in order to comply with environmental laws.

Compliance with federal

and state and local law regulations, including compliance with any newly enacted regulations, requires substantial expenditures

of time, money, and effort to ensure full technical compliance.

Failure to comply with the FDA, DEA, EPA and other governmental

regulations can result in fines, disgorgement, unanticipated compliance expenditures, recall or seizure of products, exposure

to product liability claims, total or partial suspension of production or distribution, suspension of the FDA’s review of

NDAs or ANDAs, enforcement actions, injunctions and civil or criminal prosecution, any of which could have a material and adverse

effect on our business, results of operations and financial condition.

If pharmaceutical companies are successful

in limiting the use of generics through their legislative, regulatory and other efforts, our sales of generic products may suffer.

Many pharmaceutical

companies increasingly have used state and federal legislative and regulatory means to delay generic competition.

These efforts

have included:

new patents for existing products which may be granted just before the expiration of

earlier patents, which could extend patent protection for additional years;

the Citizen Petition process (for example, under 21 C.F.R.

10.30) to request amendments

to FDA standards;

to use the legislative and regulatory process to have drugs reclassified or rescheduled

or to set definitions of abuse-deterrent formulations to protect patents and profits;

in state-by-state initiatives to enact legislation that restricts the substitution of

some generic drugs.

If pharmaceutical

companies or other third parties are successful in limiting the use of generic products through these or other means, our sales

of generic products and our growth prospects may decline.

A material decline in generic product sales will have a material adverse

effect on our results of operations, financial condition, cash flows and our ability to operate.

The availability of third party reimbursement

for our products is uncertain, and thus we may find it difficult to maintain current price levels.

Additionally, the market may

not accept those products for which third party reimbursement is not adequately provided.

Our ability to commercialize

and generate revenues and profit splits relating to the sale of our products depends, in part, on the extent to which reimbursement

for the costs of these products is available from government healthcare programs, such as Medicaid and Medicare, private health

insurers and others.

safety and health laws and regulations, we cannot accurately predict the outcome or timing of future expenditures that we may be required

to make in order to comply with such laws as they apply to our operations and facilities.

We are also subject to potential liability

for the remediation of contamination associated with both present and past hazardous waste generation, handling, and disposal activities.

We are subject periodically to environmental compliance reviews by environmental, safety, and health regulatory agencies.

Environmental

laws are subject to change and we may become subject to stricter environmental standards in the future and face larger capital expenditures

in order to comply with environmental laws.

Compliance with federal and

state and local law regulations, including compliance with any newly enacted regulations, requires substantial expenditures of time,

money, and effort to ensure full technical compliance.

Failure to comply with the FDA, DEA, EPA and other governmental regulations can

result in fines, disgorgement, unanticipated compliance expenditures, recall or seizure of products, exposure to product liability claims,

total or partial suspension of production or distribution, suspension of the FDA’s review of NDAs or ANDAs, enforcement actions,

injunctions and civil or criminal prosecution, any of which could have a material and adverse effect on our business, results of operations

and financial condition.

Decreases in the degree to which individuals

are covered by healthcare insurance and levels of third party reimbursement could result in decreased use of our products and lower prices.

Employers may seek to reduce

costs by reducing or eliminating employer group healthcare plans or by transferring a greater portion of their healthcare costs to their

Job losses, or other economic hardships, especially, but not limited to those hardships resulting from the effects of the

COVID-19 global pandemic, may also result in reduced levels of coverage for some individuals, potentially resulting in lower healthcare

coverage for themselves or their families.

Furthermore, increased instability in the insurance marketplace or an increase in uninsured

Americans or others living and working in the USA may result from the Tax Cuts and Jobs Act of 2017 elimination of the Patient Protection

and Affordable Care Act (PPACA)’s requirement that individuals maintain health insurance or incur a financial penalty and other

steps taken by various governmental and other organizations to limit or end subsidies to such individuals at comparatively lower income

These economic conditions may affect an individual’s ability to afford healthcare as a result of increased premiums, co-pay

or deductible obligations, greater cost sensitivity to existing co-pay or deductible obligations, lost healthcare coverage or for other

It is possible that such conditions could lead to changes in patient behavior and spending patterns that could negatively affect

prescription and usage of certain or all of our products, including, without limitation, delaying of treatment, rationing of prescription

medications, non-filling of prescriptions, reduction in the frequency of visits to healthcare facilities, utilizing alternative therapies

or foregoing healthcare insurance coverage altogether.

Such changes may result in the reduced demand for any or all of our products,

which could have a material adverse effect on our business, results of operations, financial condition, cash flows and ability to operate

as a going concern.

In December 2018, the U.S.

District Court for the Northern District of Texas held in Texas v.

Azar that, because the provisions of the PPACA requiring certain

individuals to either obtain health insurance or pay a shared responsibility payment (known as the individual mandate) are no longer

permissible under the U.S.

Congress’

taxing power, the entire PPACA is no longer constitutional.

The decision was appealed to the

Court of Appeals for the Fifth Circuit.

In December 2019, the Fifth Circuit issued an opinion holding that, while the individual

mandate was no longer constitutional, the case must be remanded to the district court to further evaluate whether the mandate can be

severed from the PPACA or the entire PPACA must be stricken down.

In January 2020, petitions for certiorari were filed requesting that

Supreme Court review the Fifth Circuit’s decision and ultimately decide the constitutionality of the PPACA.

In March 2020,

Supreme Court granted certiorari in the consolidated cases of Texas v.

California and California v.

of which address the Fifth Circuit’s decision to strike down the individual mandate, while sending back to the district court the

question of the overall law’s constitutionality.

The cases were argued before the U.S.

Supreme Court in November 2020 and a decision

is expected during the current Supreme Court term in 2021.

Changes in law resulting from this ongoing lawsuit or other court challenges

to the PPACA could have a material adverse effect on our business, results of operations, financial condition, cash flows and ability

to operate as a going concern.

Furthermore, our ability

to commercialize and generate revenues and profit splits relating to the sale of our products depends, in part, on the extent to which

reimbursement for the costs of these products is available from government healthcare programs, such as Medicaid and Medicare, private

health insurers and others.

We cannot be certain that, over time, third party reimbursements for our products will be adequate for us

to maintain price levels sufficient for realization of an appropriate return on our investment.

Government payers, private insurers

and other third party payers are increasingly attempting to contain healthcare costs by:

(i) limiting both coverage and the level

of reimbursement (including adjusting co-pays) for drugs, (ii) refusing, in some cases, to provide any coverage for off-label

uses for drugs and (iii) requiring or encouraging, through more favorable reimbursement levels or otherwise, the substitution

of generic alternatives to branded drugs.

The Trump Administration also has been targeting drug prices in ways that could affect

reimbursement for our products.

For example, beginning in January 2019, Medicare Advantage Plans will be permitted to apply “step

therapy”

to products covered under Part B, which could impact our ability to negotiate for favorable product access in this

Additionally, in October 2018, President Trump announced a new initiative to contain drug costs by establishing an “international

pricing index”

that would be used as a benchmark in deciding how much to pay for Medicare Part B drugs.

The Centers for

Medicare and Medicaid Services (CMS) issued an Advance Notice of Proposed Rulemaking for the Medicare Program that would reduce

Part B drug spending and reimbursement in part based on the prices that manufacturers charge to customers in foreign countries

(also referred to as reference pricing).

This proposal targets physician-administered drugs, and it is therefore possible that

any final rule could adversely affect reimbursement for certain products that we sell, and we cannot anticipate the adverse impact

of this or similar developments on our business.

Additionally, the new Congress is considering multiple proposals impacting healthcare.

There can be no assurance as to which proposals, if any, will be adopted, the final terms of any such proposals and the ultimate

impact that such proposals would have on our business, but there can be no assurances given that any such impact will not be materially

detrimental to our business, results of operations, financial condition, cash flows and ability to operate in the future.

If we are unable to satisfy FDA regulatory

requirements, we may not be able to commercialize our product candidates.

We need FDA approval

prior to marketing our product candidates in the United States of America.

If we fail to obtain FDA approval to market our product

candidates, we will be unable to sell our product candidates in the United States of America and we will not generate any revenue

from the sale of such products.

This regulatory review

and approval process, which includes evaluation of preclinical studies and clinical trials of our product candidates, is lengthy,

expensive, and uncertain.

To receive approval, we must, among other things, demonstrate with substantial evidence from well-controlled

clinical trials that our product candidates are both safe and effective for each indication where approval is sought.

of these requirements typically takes several years, and the time needed to satisfy them may vary substantially, based on the

type, complexity, and novelty of the pharmaceutical product.

We cannot predict if or when we might submit for regulatory approval

any of our product candidates currently under development.

Any approvals we may obtain may not cover all of the clinical indications

for which we are seeking approval.

Also, an approval might contain significant limitations in the form of narrow indications,

warnings, precautions, or contra-indications with respect to conditions of use.

The FDA has substantial

discretion in the approval process and may either refuse to accept an application for substantive review or may form the opinion

after review of an application that the application is insufficient to allow approval of a product candidate.

If the FDA does

not accept our application for review or approve our application, it may require that we conduct additional clinical, preclinical

or manufacturing validation studies and submit the data before it will reconsider our application.

Depending on the extent of

these or any other studies that might be required, approval of any applications that we submit may be delayed by several years,

or we may be required to expend more resources than we have available.

It is also possible that any such additional studies, if

performed and completed, may not be considered sufficient by the FDA to make our applications approvable.

If any of these outcomes

occur, we may be forced to abandon our applications for approval.

We will also be subject

to a wide variety of foreign regulations governing the development, manufacture and marketing of our products.

Whether or not

an FDA approval has been obtained, approval of a product by the comparable regulatory authorities of foreign countries must still

be obtained prior to manufacturing or marketing the product in those countries.

The approval process varies from country to country

and the time needed to secure approval may be longer or shorter than that required for FDA approval.

We cannot assure you that

clinical trials conducted in one country will be accepted by other countries or that approval of our product in one country will

result in approval in any other country.

Litigation, product liability claims,

other significant legal proceedings, government investigations and product recalls are common in the pharmaceutical industry and

can be protracted and expensive and could delay and/or prevent entry of our products into the market, which, in turn, could have

Government payers, private insurers and

other third party payers are increasingly attempting to contain healthcare costs by:

(i) limiting both coverage and the level of reimbursement

(including adjusting co-pays) for drugs, (ii) refusing, in some cases, to provide any coverage for off-label uses for drugs and (iii)

requiring or encouraging, through more favorable reimbursement levels or otherwise, the substitution of generic alternatives to branded

For example, government agencies or third-party payers could attempt to reduce reimbursement for physician administered products

through their interpretation of complex government price reporting obligations and payment and reimbursement coding rules, and could

attempt to reduce reimbursement for separate physician administered products that share an active ingredient by requiring the blending

of sales and pricing information in the same payment and reimbursement code.

There have been several recent

Congressional inquiries, hearings and proposed and enacted federal and state legislation and rules, as well as executive orders,

designed to, among other things:

(i) reduce or limit the prices of drugs and make them more affordable for patients, such as by tying

the prices that Medicare reimburses for physician administered drugs to the prices of drugs in other countries;

(ii) reform the structure

and financing of Medicare Part D pharmaceutical benefits, including through increasing manufacturer contributions to offset Medicare

beneficiary costs;

(iii) bring more transparency to how manufacturers price their medicines;

(iv) enable the government to directly negotiate

prices for drugs covered under Medicare;

(v) revise rules associated with the calculation of Medicaid Average Manufacturer Price and

Best Price, including with regard to the manner in which pharmaceutical manufacturers may provide copayment assistance to patients and

the identification of “line extension”

drugs, which affect the amount of rebates that manufacturers must pay on prescription

drugs under Medicaid;

(vi) eliminate anti-kickback statute discount safe harbor protection for manufacturer rebate arrangements with

Medicare Part D Plan Sponsors and pharmacy benefit managers on behalf of Part D Plan Sponsors;

(vii) create new anti-kickback statute

safe harbors applicable to certain point-of-sale discounts to patients and fixed-fee administrative fee payment arrangements with pharmacy

benefit managers;

and (viii) and facilitate the importation of certain lower-cost drugs from other countries.

In addition, state legislatures

have enacted legislation and regulations designed to control pharmaceutical and biological product pricing, including restrictions on

pricing or reimbursement at the state government level, marketing cost disclosure and transparency measures, and, in some cases, policies

to encourage importation of drugs from other countries (subject to federal approval) and bulk purchasing, including the National Medicaid

Pooling Initiative.

While we cannot predict the final form of pending legislative, regulatory and/or administrative measures, some of

the pending and enacted legislative proposals or executive rulemaking, such as those incorporating International Pricing Index or Most-Favored-Nation

models, could significantly reduce the coverage and levels of reimbursement for products.

The unavailability of, or

reduction in, the reimbursement of our products could have a material adverse effect on our business, ability to operate as a going concern,

financial condition, results of operations and cash flow.

Our business may be adversely affected

by legislation or healthcare regulatory reform and initiatives.

Our business and financial

condition may be adversely affected by legislation or regulatory reform of the healthcare system in the United States.

We cannot predict

with any certainty how existing laws may be applied or how laws or legal standards may change in the future.

Current or future legislation,

whether state or federal, or in any of the non-U.S.

jurisdictions with authority over our suppliers, customers or operations, may have

a material effect on our business, ability to operate, financial condition, results of operations and cash flows.

In April 2018, New York enacted

a statute called the Opioid Stewardship Act (the Stewardship Act), which, among other things, provided for certain sellers and distributors

of certain opioids in the state of New York (the Contributing Parties) to make payments to a newly created Opioid Stewardship Fund (the

The Stewardship Act is a component in the degradation of commercial prospects of SequestOx TM , which are significant

factor in the decision to pause development of this product.

By its terms, the Stewardship Act required Contributing Parties to pay a

total of up to $100 million annually into the Fund, with each Contributing Party’s share based on the total amount of morphine

milligram equivalents of certain opioids sold or distributed by the Contributing Party in the state of New York during the preceding

calendar year, subject to potential adjustments by the New York State Department of Health.

Failure of a Contributing Party to make required

reports or pay its ratable share, or a Contributing Party passing on the cost of its ratable share to a purchaser, could subject the

Contributing Party to penalties.

In December 2018, the U.S.

District Court for the Southern District of New York held the Stewardship

Act unconstitutional.

This ruling is on appeal.

If the decision is reversed, we may be deemed to be a Contributing Party under the Stewardship

Act and even if we are not considered to be a Contributing Party, or such a determination is never made, other entities may attempt to

seek reimbursement from us for payments made related to products manufactured by us and distributed in New York.

Furthermore, the application

of the Stewardship Act may require additional regulatory guidance, which could be substantially delayed, increasing the uncertainty as

to the ultimate effect of the Stewardship Act on us.

If we are ultimately deemed to be a Contributing Party under the Stewardship Act,

or similar legislation that could be enacted by New York or other jurisdictions, compliance with those laws could have an adverse effect

on our business, results of operations, financial condition and cash flows.

Providing further impediment

to the commercial viability of SequestOx TM , New York State, in April 2019 enacted an excise tax on the first sale of every

opioid unit in New York.

Additionally, in October

2018, the U.S.

Congress enacted the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities

Intended to achieve sweeping reform to combat the opioid epidemic, H.R.

6, among other provisions, amends related laws

administered by the FDA, DEA and CMS.

Among other things, the law:

amends requirements related to the FDA’s authority to include

packaging requirements in REMS requirements;

increases civil and criminal penalties for drug manufacturers and distributors for failing

to maintain effective controls against diversion of opioids or for failing to report suspicious opioid orders;

requires the DEA to estimate

the amount of opioid diversion when establishing manufacturing and procurement quotas;

implements expanded anti-kickback and financial

disclosure provisions;

and authorizes the Department of Health and Human Services to implement a demonstration program which would award

grants to hospitals and emergency departments to develop, implement, enhance or study alternative pain management protocols and treatments

that limit the use and prescription of opioids in emergency departments.

While the effect of this legislation is still uncertain, it

is not reasonably unlikely that our products will be affected by enforcement of the legislation, including through related policies and

implementing regulations.

There can be no assurances that the effects of this legislation will not be detrimental to our business, results

of operations, financial condition, cash flow or ability to operate.

Furthermore, the Patient

Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively commonly referred to

as the “Affordable Care Act”

may affect the operational results of companies in the pharmaceutical industry such as ours

by imposing additional costs.

Effective January 1, 2010, the Affordable Care Act, amongst other changes, increased the minimum Medicaid

drug rebates for pharmaceutical companies and revised the definition of “average manufacturer price”

for reporting purposes,

which may affect the amount of Medicaid drug rebates to states related to the sales of our products, whether such sales are made directly

by Company or by one of the Company’s licensees.

Beginning in 2011, the law also imposed a significant annual fee on companies

that manufacture or import branded prescription drug products.

The Affordable Care Act contemplates

the promulgation of significant future regulatory action which may also further affect our business.

In addition, since its enactment,

the legislative and executive branches of the federal government have proposed multiple revisions to the Affordable Care Act, the effect

of which, if implemented, may result in changes to the health care laws or regulatory framework that could result in the reduction of

revenues or increased costs which could also have a material adverse effect on our business, results of operations and financial condition.

Extensive industry regulation

has had and will continue to have, a significant impact on business in the areas of cost of goods, product development and our manufacturing

and distribution capabilities.

We, like all other pharmaceutical companies located or engaged in business in the U.S.

are subject to

extensive, complex, costly and evolving regulation by the federal government, including the FDA and, in the case of controlled drugs,

the DEA, as well as applicable state government agencies.

The Federal Food, Drug and Cosmetic Act, the Controlled Substance Act and multiple

other federal statutes, regulations and guidance govern or influence the development, testing, manufacture, packing, labelling, storing,

record keeping, safety, approval, advertising, promotion, sale, shipment and distribution of our products.

The process for obtaining

governmental approval to manufacture and market pharmaceutical products is rigorous, time-consuming and costly and we cannot predict

the extent to which we may be affected by legislative and regulatory developments.

We are dependent on receiving FDA and other governmental

or third-party approvals prior to manufacturing, marketing and shipping our products.

The FDA approval process for a particular product

candidate can take several years and requires us to dedicate substantial resources to complete all activities necessary to secure approvals

and we may not be able to obtain regulatory approval for our product candidates in a timely manner, or at all.

In order to obtain approval

for our generic product candidates, we must demonstrate that our drug product is therapeutically equivalent and bioequivalent to a drug

previously approved by the FDA through the drug approval process, known as the reference listed drug (“RLD”) or reference

standard drug (“RS”).

Bioequivalence may be demonstrated in vivo or in vitro by comparing the generic product candidate to

the innovator drug product.

During the FDA review process, the FDA may request additional information and studies to support approval

of an application, which could delay approval of the product and impair our ability to compete with other versions of the generic drug

Inherent to this process

is the possibility that we will not obtain FDA or other necessary approvals, or that the rate, timing and cost of such approvals will

adversely affect our product introduction plans or results of operations.

We may carry inventories of certain products in anticipation

of launch and if such products are not subsequently launched, we may be required to write-off the related inventory, if such inventories

have no foreseeable commercial value to us.

In addition, facilities used

to manufacture and/or test materials and drug products we market are subject to periodic inspection of facilities by the FDA, the DEA,

and other authorities to confirm that firms are in compliance with all applicable regulations.

The FDA conducts pre-approval and/or post-approval

inspections to determine whether systems and processes are in compliance with cGMP and other FDA regulations.

A Form 483 notice is generally

issued at the conclusion of an FDA inspection and lists conditions the FDA inspectors believe may violate cGMP or other FDA regulations.

If more serious violations are identified, the FDA may take additional action, such as issuing warning letters, import alerts, etc.

DEA and comparable state-level agencies also heavily regulate the manufacturing, holding, processing, security, record-keeping and distribution

of drugs that are controlled substances.

We manufacture and/or distribute certain controlled substances and are accordingly subject to

oversight, regulation and inspection by the DEA.

The DEA periodically inspects facilities for compliance with its regulations.

manufacturing facilities or those of our suppliers fail to comply with applicable regulatory requirements, it could result in regulatory

action and additional costs.

Our inability or the inability

of our suppliers to comply with applicable FDA and other regulatory requirements can result in, among other things, delays in or denials

of new product approvals, warning letters, import alerts, fines, consent decrees restricting or suspending manufacturing operations,

injunctions, civil penalties, recall or seizure of products, total or partial suspension of sales and/or criminal prosecution.

these or other regulatory actions could have an adverse material effect on our business, financial condition, results of operations,

cash flows and stock price.

While we have instituted

internal compliance programs, if these programs do not meet regulatory agency standards or if compliance is deemed deficient in any significant

way, it could have an adverse material effect on our business, financial condition, results of operations, cash flows and stock price.

Furthermore, health care

initiatives and other third-party payor cost-containment pressures have caused and could continue to cause us to sell our products at

lower prices, resulting in decreased revenues.

Some of our products that are marketed under license granted to marketing partners such

as Lannett, Burel, Epic Pharma and TAGI, in turn, purchased or reimbursed by state and federal government authorities, private health

insurers and other organizations, such as health maintenance organizations, or HMOs and managed care organizations, or MCOs.

payors increasingly challenge pharmaceutical product pricing.

There also continues to be a trend toward managed health care in the United

Pricing pressures by third-party payors and the growth of organizations such as HMOs and MCOs could result in lower prices and

a reduction in demand for our products.

One such governmental program,

known as the 340B Program, requires pharmaceutical manufacturers to enter into an agreement, called a pharmaceutical pricing agreement

(PPA), with the Secretary of Health and Human Services.

Under the PPA, the manufacturer agrees to provide front-end discounts on covered

outpatient drugs purchased by specified providers, called “covered entities,”

that serve the nation’s most vulnerable

patient populations.

Outpatient prescription drugs, over the counter drugs (accompanied by a prescription), and clinic-administered drugs

within eligible facilities are covered.

In addition, legislative

and regulatory proposals and enactments to reform health care and government insurance programs could significantly influence the manner

in which pharmaceutical products and medical devices are prescribed and purchased.

We expect there will continue to be federal and state

laws and/or regulations, proposed and implemented, that could limit the amounts that federal and state governments will pay for health

care products and services.

The extent to which future legislation or regulations, if any, relating to the health care industry or third-party

coverage and reimbursement may be enacted or what effect such legislation or regulation would have on our business remains uncertain.

For example, H.R.987, the “Strengthening Health Care and Lowering Prescription Drug Costs Act,”

which incorporated a bipartisan

effort to address prescription drug pricing combined with broader provisions protecting the Affordable Care Act, was passed by the House

of Representatives on May 16, 2019, but it is not expected to pass in the Senate.

The bill does represent bipartisan consensus on the

need to reform the drug pricing system.

Such measures or other health care system reforms that are adopted could have a material adverse

effect on our industry generally and our ability to successfully commercialize our products or could limit or eliminate our spending

on development projects and affect our ultimate profitability, which could have a material adverse effect on our business, financial

condition, results of operations, cash flow and stock price.

Recently enacted state laws

could also affect the pricing of our products and could reduce our profitability.

Since 2016, several state legislatures have enacted

laws regulating the pricing of various types of pharmaceutical products, including generic pharmaceutical products.

These laws vary in

applicability and scope, and generally require manufacturers to notify various state agencies of price increases over a given threshold

for a given period of time and to include a justification for any price increases.

At least one state law (subsequently struck by the

court) authorized the state attorney general to seek civil penalties and disgorgement in the event a price increase is deemed unconscionable.

To the extent these laws apply to our products, they could limit the prices which the company may charge for its products and reduce

the company’s profitability and could have a material adverse effect on our business, growth prospects, financial condition, results

of operations, cash flow and stock price.

Use of generics may be limited through

legislative, regulatory or efforts of pharma companies.

Many pharmaceutical companies

increasingly have used state and federal legislative and regulatory means to delay generic competition, which, if successful, could limit

the use of generic pharmaceuticals.

These efforts have included:

Pursuing new patents for existing products which may be granted just

before the expiration of earlier patents, which could extend patent protection for additional years;

Using the Citizen Petition process (for example, under 21 C.F.R.

10.30) to request amendments to FDA standards;

Attempting to use the legislative and regulatory process to have drugs

reclassified or rescheduled or to set definitions of abuse-deterrent formulations to protect patents and profits;

Engaging in state-by-state initiatives to enact legislation that restricts

the substitution of some generic drugs.

Seeking changes to U.S.

Pharmacopeia, an organization that publishes

industry recognized compendia of drug standards;

Attaching patent extension amendments to non-related federal legislation;

Persuading regulatory bodies to withdraw the approval of brand-name

drugs for which the patents are about to expire and converting the market to another product of the brand company on which longer

patent protection exists;

Entering into agreements whereby other generic companies will begin

to market an authorized generic at the same time or after generic competition initially enters the market;

Filing suits for patent infringement and other claims that may delay

or prevent regulatory approval, manufacture and/or scale of generic products;

Introducing “next generation”

products prior to the expiration

of market exclusivity for the reference product, which often materially reduces demand for the generic or the reference product for

which we seek regulatory approval for a generic equivalent.

Some pharmaceutical companies

have lobbied the United States Congress for amendments to the Hatch-Waxman Act that would give them additional advantages over generic

For example, although the term of a company’s drug patent can be extended to reflect a portion of the time an NDA

is under regulatory review, some companies have proposed extending the patent term by a full year for each year spent in clinical trials

rather than the one-half year that is currently permitted.

If pharmaceutical companies

or other third parties are successful in limiting the use of generic products through these or other means, our sales of generic products

and our growth prospects may decline.

A material decline in generic product sales will have a material adverse effect on our results

of operations, financial condition, cash flows and our ability to operate.

New tariffs and evolving trade policy between

the US and other countries may adversely affect our business.

New tariffs and evolving

trade policy between the United States and other countries, including China and Mexico, may have an adverse effect on our sourcing of

critical raw materials from suppliers located outside of the United States and corresponding adverse effects on our business and results

of operations.

Some of our suppliers, including

those of critical active pharmaceutical ingredients are located outside of the United States.

There is uncertainty about the future relationship

between the U.S.

and various other countries, including China, with respect to trade policies, treaties, government regulations and tariffs

under the Biden Administration.

It is unclear to what extent

the Biden Administration will continue to pursue the trade policies of the Trump Administration.

The Biden Administration may seek to

impose certain additional restrictions on international trade, such as increased tariffs on goods imported into the U.S.

could potentially disrupt our existing supply chains and impose additional costs on our business, including costs with respect to raw

materials upon which our business depends.

Furthermore, if tariffs, trade restrictions or trade barriers are placed on products such

as ours by foreign governments, it could cause us to raise prices for our products, which may result in the loss of customers.

are unable to pass along increased costs to our customers, our margins could be adversely affected.

Additionally, it is possible that

further tariffs may be imposed that could affect imports of APIs and other materials used in our products, or our business may be adversely

impacted by retaliatory trade measures taken by other countries, including restricted access to APIs or other materials used in our products,

causing us to raise prices or make changes to our products.

Further, the continued threats of tariffs, trade restrictions and trade barriers

could have a generally disruptive impact on the global economy and, therefore, negatively impact our sales.

For example, the Trump Administration

placed tariffs on certain goods imported from China.

In January 2020, the U.S.

and China agreed to roll back certain tariffs, expand

trade purchases and impose binding commitments on intellectual property, technology transfer and currency practices.

Nevertheless, given

the volatility and uncertainty regarding the scope and duration of these tariffs and other aspects of U.S.

international trade policy,

the impact on our operations and results is uncertain and could be significant.

Further governmental action related to tariffs, additional

taxes, regulatory changes or other retaliatory trade measures could occur in the future.

Any of these factors could have a material adverse

effect on our business, financial condition, results of operations and cash flows.

The DEA could limit the availability of

active ingredients used in many of our products.

The DEA limits the availability

of the active ingredients used in many of our current products and products in development, as well as the production and distribution

of these products, and, as a result, our procurement, production, and distribution quotas may not be sufficient to meet commercial demand

or complete clinical trials.

The DEA regulates chemical

compounds as Schedule I, II, III, IV or V substances, with Schedule I substances considered to present the highest risk of substance

abuse and Schedule V substances the lowest risk.

The active ingredients in some of our current products and products in development,

including, without limitation, hydromorphone, methadone, phentermine, phendimetrazine and oxycodone, are listed by the DEA as Scheduled

substances under the Controlled Substances Act of 1970.

Consequently, their manufacture, shipment, storage, sale, and use are subject

to a high degree of regulation.

Furthermore, the DEA limits the availability of the active ingredients used in many of our current products

and products in development and we and/or our contract customers and suppliers, must annually apply to the DEA for procurement quotas

in order to obtain and distribute these substances.

As a result, our procurement and production quotas may not be sufficient to meet

commercial demand or to complete clinical trials.

Moreover, the DEA may adjust these quotas from time to time during the year, although

the DEA has substantial discretion in whether or not to make such adjustments.

Any delay or refusal by the DEA in establishing our quotas,

or modification of our quotas, for controlled substances could delay or result in the stoppage of our clinical trials or product launches

or could cause trade inventory disruptions for those products that already been launched, which could have a material adverse effect

on our business, financial position, cash flows and stock price.

Changes in FDA approval requirements may

prevent or delay approval of new products.

Approvals for our new generic

drug products may be delayed or become more difficult to obtain if the FDA institutes changes to its approval requirements.

The FDA may institute changes

to its ANDA approval requirements, which may make it more difficult or expensive for us to obtain approval for our new generic products.

For instance, in July 2012, the Generic Drug Fee User Amendments of 2012 (“

GDUFA ”) was enacted into law.

legislation implemented fees for new ANDAs, Drug Master Files, product and establishment fees and a one-time fee for back-logged ANDAs

pending approval as of October 1, 2012.

In return, the program is intended to provide faster and more predictable ANDA reviews by the

FDA and increased inspections of drug facilities.

Under GDUFA, generic product companies face significant penalties for failure to pay

the new user fees, including rendering an ANDA not “substantially complete”

until the fee is paid.

Any failure by us or our

suppliers to pay the fees or to comply with the other provisions of GDFUA may impact or delay our ability to file ANDAs, obtain approvals

for new generic products, generate revenues and thus may have a material adverse effect on our business, results of operations and financial

In addition to the implementation

of new fees and review procedures by the FDA, the FDA may also implement other changes that may directly affect some of our ANDA filings

pending approval from the FDA, such as changes to guidance from the FDA regarding bioequivalency requirements for particular drugs.

changes may cause our development of such generic drugs to be significantly more difficult or result in delays in FDA approval or result

in our decision to abandon or terminate certain projects.

Any changes in FDA requirements may make it more difficult for us to file ANDAs

or obtain approval of our ANDAs and generate revenues and thus have a material adverse effect on our business, results of operations

and financial condition.

We received a CRL from the FDA indicating

that the SequestOx™

NDA is not ready for approval.

We received a Complete Response

Letter from the FDA that indicated that our SequestOx™

NDA is not ready for approval in its present form.

We have paused further

development of this product and we cannot assure that development will restart.

If we are unable to obtain approval for SequestOx™

or if we incur significant costs or delays in obtaining such approval, our ability to commercialize SequestOx™

may be materially

adversely affected.

In July 2016, the FDA issued

a Complete Response Letter, or CRL, regarding the NDA.

The CRL stated that the review cycle for the SequestOx™

NDA is complete

and the application is not ready for approval in its present form.

On December 21, 2016, we met with the FDA for an end-of-review meeting

to discuss steps that we could take to obtain approval of SequestOx™.

Based on the FDA response, we believe there is a path forward

to address the issues cited in the CRL, with such path forward including modification of the SequestOx™

formulation, and the successful

completion of in vitro and in vivo studies.

If we are unable to modify the formulation or if we are unable to successfully complete the

required studies, we will not meet the requirements specified by the FDA for resubmission of the NDA.

Furthermore, there can be no assurances

given that the FDA will eventually approve our NDA.

If we are unable to obtain approval for SequestOx™, or if we incur significant

costs or delays in obtaining such approval, our ability to commercialize SequestOx™

may be materially adversely affected.

in the event that the Company does receive marketing approval for SequestOx™, there can be no assurances of the Company realizing

future revenues or profits related to this product, or that any such future revenues and profits would be in amounts that provide adequate

return on the significant investments made to secure this marketing authorization.

The Company has currently paused further development

of SequestOx™

due to the prohibitive cost of such and attendant risks related thereto.

Regulatory factors may cause us to be unable

to manufacture products or face interruptions in our manufacturing process.

Our manufacturing operations

as well as our suppliers’

manufacturing operations are subject to establishment registration by the FDA and periodic inspections by the

FDA to assure compliance regarding the manufacturing of our products.

If we or our suppliers do not maintain the current registrations

or if we or our partners receive notices of manufacturing and quality-related observations following inspections by the FDA, our operating

results would be materially negatively impacted.

Our facilities, as well as

those of applicable suppliers, rely on maintaining current FDA, and DEA if applicable, registration and other license to produce and

develop generic drugs and raw materials used in such operations.

If we, or one of our suppliers does not successfully renew and maintain

current FDA, DEA and other required licenses, our operations and financial results would be negatively impacted.

We and our suppliers

are subject to periodic inspection by the FDA, DEA and other regulatory agencies, as applicable, to assure regulatory compliance regarding

the manufacture and distribution of pharmaceutical products and raw materials.

These regulatory bodies impose stringent mandatory requirements

on the manufacture and distribution of pharmaceutical products to ensure their safety and efficacy.

If we or any of our third party suppliers

receive notices of manufacturing and quality-related observations and are unable to satisfactorily resolve the issues and observations

identified in a timely fashion, there could be a material adverse effect on our business, financial condition, results of operations,

cash flow and stock price.

Agreements between branded pharmaceutical

companies and generic pharmaceutical companies are facing increased government scrutiny in the United States and Internationally.

There are numerous and continuing

litigation in which generic companies challenge the validity or enforceability of an innovator products patents and/or the applicability

of such patents to a generic applicant’s products.

Settlement of such litigation is a common outcome, with review of such agreements

Federal Trade Commission (the “

FTC ”) and the Antitrust Division of the Department of Justice (the “

being required by law.

The FTC has stated publicly its view that some of these settlement agreements violate antitrust laws and has commenced

actions against the branded and generic companies that are parties to these agreements.

Accordingly, in the event of the Company being

party to a settlement agreement, either as the branded, innovator product owner, or as the generic applicant, we may receive formal or

informal requests from the FTC for information about a settlement agreement and there is a risk of the FTC alleging a violation of antitrust

laws and commencing an action against us.

In addition, the United States

Congress has proposed legislation that would limit the types of settlement agreements generic manufacturers can enter into with brand

In 2013, the Supreme Court, in FTC v.

Actavis , determined that reverse payment patent settlements between generic and

brand companies should be evaluated under the rule of reason, and provided limited guidance beyond the selection of this standard.

to the court’s non-articulation of a precise rule of lawfulness for such settlements, there may be extensive litigation over what

constitutes a reasonable and lawful patent settlement between and brand and generic company.

The impact of such future

litigation, if any, legislative proposals, and potential future court decisions is uncertain, and there can be no assurances that such

impact will not have an adverse effect on the Company’s business, its financial condition, results of operations, cash flows and

its stock price.

Litigation and Liability Related Risks

We may not be able to obtain or maintain

adequate insurance coverages.

The cost of insurance, including

directors and officer insurance, workers compensation, product liability, truck and general liability insurance have increase significantly

in recent years and may continue to increase in the future.

We have increased deductibles and/or decreased coverages to mitigate some

of these costs.

These insurance premium increases, as well as our increased risk due to reduced coverage and increased deductibles could

have an adverse material effect on our business, financial condition, results of operations, cash flows and stock price.

We may not have and may be

unable to obtain or maintain in the future insurance, on acceptable terms, that provide adequate coverage against potential liabilities

or other losses, such as the cost of a recall or defense against claims, if any claim is brought against us, for any reason, regardless

of the merits, success or failure of such claim.

In the past year, as a result of product liability and securities litigation in the

general marketplace, and a threatened claim of action against us in relation to the shareholder vote conducted in December 2019, our

insurance premiums have increased significantly, while also providing no greater, and in most cases, lower levels of coverage.

The significant

premium increases experienced were prior to, and accordingly did not consider, the impact of the COVID-19 global pandemic on the legal

and litigation environment in which we and all other companies operate.

The amount of our insurance

coverage is accordingly limited by our financial resources and greatly impacted by the significant premium increases of the past year

and reasonably expected further increases in the near to mid-term due to the global pandemic.

Furthermore, even where claims are submitted

to insurance carriers for defenses and indemnity that are within coverage limits, there can be no assurance that such claims will be

fully covered by insurance or that the indemnitors or insurers will remain financially viable to provide reimbursement consistent with

coverage maintained.

Any failure by us, to obtain

sufficient insurance coverage, with reimbursement of claims being provided and generate sufficient cash flow, if needed, above insurance

coverage, to pay amounts due in relation to potential claims, will have a material adverse effect on our business, financial condition,

results of operations, cash flow and ability to operate as a going concern.

Litigation, product liability claims, product

recalls, government investigations and other significant legal proceedings are common in the pharmaceutical industry.

Litigation, product liability

claims, other significant legal proceedings, government investigations and product recalls are common in the pharmaceutical industry

and can be protracted and expensive and could delay and/or prevent entry of our products into the market, which, in turn, could have

a material adverse effect on our business.

As a business that

operates in the pharmaceutical industry, we are inherently exposed to significant potential risks from lawsuits, product liability

claims, patent and proprietary rights claims, other significant proceedings, government investigations or product recalls, including,

without limitation, such matters associated with the testing, manufacturing, marketing and sale of our products.

While no such

judgements have been made against us to date, some plaintiffs have received substantial damage awards or settlements against other

healthcare companies based upon various legal theories, including, without limitation, claims for injuries allegedly caused by

use of their products.

Our business continues to be inherently exposed to the risk of being subject to product liability cases,

as well as other significant legal proceedings and government investigations.

For example, we have been a manufacturer of prescription opioid

medications in the past, and while we have not been subject to lawsuits, other manufacturers of such products, as well as distributors

and other sellers of such medications, have been subjects of subject of lawsuits and have received subpoenas and other requests

for information from various federal, state and local government agencies regarding the sale, marketing and/or distribution of

prescription opioid medications.

Numerous claims against opioid manufacturers, have been and may continue to be filed by or on

behalf of states, counties, cities, Native American tribes, other government-related persons or entities, hospitals, health systems,

unions, health and welfare funds, other third-party payers and/or individuals.

As a business that operates

in the pharmaceutical industry, we are inherently exposed to significant potential risks from lawsuits, product liability claims, patent

and proprietary rights claims, other significant proceedings, government investigations or product recalls, including, without limitation,

such matters associated with the testing, manufacturing, marketing and sale of our products.

While no such judgements have been made

against us to date, some plaintiffs have received substantial damage awards or settlements against other healthcare companies based upon

various legal theories, including, without limitation, claims for injuries allegedly caused by use of their products.

Our business continues

to be inherently exposed to the risk of being subject to product liability cases, as well as other significant legal proceedings and

government investigations.

For example, we have been

a manufacturer of prescription opioid medications in the past, and while we have not been subject to lawsuits, other manufacturers of

such products, as well as distributors and other sellers of such medications, have been subjects of subject of lawsuits and have received

subpoenas and other requests for information from various federal, state and local government agencies regarding the sale, marketing

and/or distribution of prescription opioid medications.

Numerous claims against opioid manufacturers, have been and may continue to be

filed by or on behalf of states, counties, cities, Native American tribes, other government-related persons or entities, hospitals, health

systems, unions, health and welfare funds, other third-party payers and/or individuals.

In these cases, plaintiffs seek various remedies,

4 unchanged sentences

fees, costs and/or other relief.

Settlement demands may seek significant monetary

and other remedies, or otherwise be on terms that would result in material adverse effects on our business and ability to operate

as a going concern.

The precedent of awards against and settlements by our competitors could also incentivize parties to bring

additional claims against us.

In addition to the risks of direct expenditures for defense costs, settlements and/or judgments in

connection with these claims, proceedings and investigations, there is a possibility of loss of revenues, injunctions and disruption

Furthermore, we and other manufacturers of prescription opioid medications have been, and will likely continue to

be, subject to negative publicity and press, which could harm our brand and the demand for our products.

In addition, current or

future regulatory and legislative proposals could impact us and other manufacturers of prescription opioid medications.

risk factor “Our business and financial condition may be adversely affected by legislation”

Settlement demands may seek significant monetary and other

remedies, or otherwise be on terms that would result in material adverse effects on our business and ability to operate as a going concern.

The precedent of awards against and settlements by our competitors could also incentivize parties to bring additional claims against

In addition to the risks of direct expenditures for defense costs, settlements and/or judgments in connection with these claims,

proceedings and investigations, there is a possibility of loss of revenues, injunctions and disruption of business.

Furthermore, we and

other manufacturers of prescription opioid medications have been, and will likely continue to be, subject to negative publicity and press,

which could harm our brand and the demand for our products.

In addition, current or future regulatory and legislative proposals could

impact us and other manufacturers of prescription opioid medications.

See the risk factor “Our business and financial condition

may be adversely affected by legislation”

for more information.

In addition, our current

and former products may cause or appear to cause serious adverse side effects or potentially dangerous drug interactions if misused

or improperly prescribed or as a result of faulty surgical technique.

Any failure to effectively identify, analyze, report and

protect adverse event data and/or to fully comply with relevant laws, rules and regulations around adverse event reporting could

expose the Company to legal proceedings, penalties, fines and/or reputational damage.

Also, through the

use of social media, plaintiff’s attorneys have a wide variety of tools to advertise their services and solicit new clients

for litigation, including using judgments and settlements obtained in litigation against us or other pharmaceutical companies

as an advertising tool.

For these or other reasons, any significant product liability or mass tort litigation in which we are

a defendant could have a larger number of plaintiffs than such actions have seen historically and we could also see an increase

in the number of cases filed against us because of the increasing use of widespread and media-varied advertising.

a ruling against other pharmaceutical companies in product liability or mass tort litigation in which we are not a defendant could

have a negative impact on pending litigation where we are a defendant.

In addition, in certain

circumstances, such as in the case of products that do not meet approved specifications or for which subsequent data demonstrate

such products may be unsafe, ineffective or misused, it may be necessary for us to initiate voluntary or mandatory recalls or withdraw

such products from the market.

Any such recall or withdrawal could result in adverse publicity, costs connected to the recall and

loss of revenue.

Adverse publicity could also result in an increased number of additional product liability claims, whether or

not these claims have a basis in scientific fact.

See the risk factor “Public concern around the abuse of opioids or other

products, including without limitation law enforcement concerns over diversion or marketing practices, regulatory efforts to combat

abuse, and litigation could result in costs to our business”

and former products may cause or appear to cause serious adverse side effects or potentially dangerous drug interactions if misused or

improperly prescribed or as a result of faulty surgical technique.

Any failure to effectively identify, analyze, report and protect adverse

event data and/or to fully comply with relevant laws, rules and regulations around adverse event reporting could expose the Company to

legal proceedings, penalties, fines and/or reputational damage.

Also, through the use of

social media, plaintiff’s attorneys have a wide variety of tools to advertise their services and solicit new clients for litigation,

including using judgments and settlements obtained in litigation against us or other pharmaceutical companies as an advertising tool.

For these or other reasons, any significant product liability or mass tort litigation in which we are a defendant could have a larger

number of plaintiffs than such actions have seen historically and we could also see an increase in the number of cases filed against

us because of the increasing use of widespread and media-varied advertising.

Furthermore, a ruling against other pharmaceutical companies

in product liability or mass tort litigation in which we are not a defendant could have a negative impact on pending litigation where

we are a defendant.

In addition, in certain circumstances,

such as in the case of products that do not meet approved specifications or for which subsequent data demonstrate such products may be

unsafe, ineffective or misused, it may be necessary for us to initiate voluntary or mandatory recalls or withdraw such products from

Any such recall or withdrawal could result in adverse publicity, costs connected to the recall and loss of revenue.

publicity could also result in an increased number of additional product liability claims, whether or not these claims have a basis in

scientific fact.

See the risk factor “Public concern around the abuse of opioids or other products, including without limitation

law enforcement concerns over diversion or marketing practices, regulatory efforts to combat abuse, and litigation could result in costs

to our business”

for more information.

We are also inherently

exposed to litigation concerning patents and proprietary rights which can be protracted and expensive.

Companies routinely bring

litigation against applicants and allege patent infringement or other violations of intellectual property rights as the basis

for filing suit against an applicant.

Elite develops, owns, and/or manufactures generic and branded pharmaceutical products and

such drug products may be subject to such litigation.

Litigation often involves significant expense and can delay or prevent introduction

or sale of our products.

There may also be situations where we use our business judgment

and decide to market and sell products, notwithstanding the fact that allegations of patent infringement(s) have not been finally

resolved by the courts.

The risk involved in doing so can be substantial because the remedies available to the owner of a patent

for infringement include, among other things, damages measured by the profits lost by the patent owner and not by the profits earned

by the infringer.

We are also inherently exposed

to litigation concerning patents and proprietary rights which can be protracted and expensive.

Companies routinely bring litigation against

applicants and allege patent infringement or other violations of intellectual property rights as the basis for filing suit against an

Elite develops, owns, and/or manufactures generic and branded pharmaceutical products and such drug products may be subject

to such litigation.

Litigation often involves significant expense and can delay or prevent introduction or sale of our products.

There may also be situations

where we use our business judgment and decide to market and sell products, notwithstanding the fact that allegations of patent infringement(s)

have not been finally resolved by the courts.

The risk involved in doing so can be substantial because the remedies available to the

owner of a patent for infringement include, among other things, damages measured by the profits lost by the patent owner and not by the

profits earned by the infringer.

In the case of a willful infringement, the definition of which is subjective, such damages may be trebled.

because of the discount pricing typically involved with bioequivalent products, patented brand products generally realize a substantially

higher profit margin than bioequivalent products.

An adverse decision in a case such as this or in other similar litigation could

have a material adverse effect on our business, financial position and results of operations and could cause the market value of

Moreover, because of the discount pricing typically involved with bioequivalent products, patented brand products generally realize a

substantially higher profit margin than bioequivalent products.

An adverse decision in a case such as this or in other similar litigation

could have a material adverse effect on our business, financial position and results of operations and could cause the market value of

our Common Stock to decline.

If we are found liable

in any lawsuits, including patent infringement, violation of proprietary rights, product liability claims or actions related to

our manufacture, sales, marketing or pricing practices or the sale, marketing and/or distribution of prescription opioid medications,

or if we are subject to government investigations or product recalls, it could result in the imposition of damages, including

punitive damages, fines, reputational harm, civil lawsuits, criminal penalties, interruptions of business, modification of business

practices, equitable remedies and other sanctions against us or our personnel as well as significant legal and other costs.

may also voluntarily settle cases even if we believe that we have meritorious defenses because of the significant legal and other

costs that may be required to defend such actions.

Any judgments, claims, settlements and related costs could be well in excess

of any applicable insurance.

As a result, we may experience significant negative impacts on our operations.

To satisfy judgments

or settlements, we also may need to seek financing, which may not be available on terms acceptable to us, or at all, when required.

Judgments also could cause defaults under our debt agreements and/or restrictions on our product use and we could incur losses

Any of the risks above could have a material adverse effect on our business, financial condition, results of operations

and cash flows and ability to operate as a going concern.

If we are found liable in

any lawsuits, including patent infringement, violation of proprietary rights, product liability claims or actions related to our manufacture,

sales, marketing or pricing practices or the sale, marketing and/or distribution of prescription opioid medications, or if we are subject

to government investigations or product recalls, it could result in the imposition of damages, including punitive damages, fines, reputational

harm, civil lawsuits, criminal penalties, interruptions of business, modification of business practices, equitable remedies and other

sanctions against us or our personnel as well as significant legal and other costs.

We may also voluntarily settle cases even if we believe

that we have meritorious defenses because of the significant legal and other costs that may be required to defend such actions.

Any judgments,

claims, settlements and related costs could be well in excess of any applicable insurance.

As a result, we may experience significant

negative impacts on our operations.

To satisfy judgments or settlements, we also may need to seek financing, which may not be available

on terms acceptable to us, or at all, when required.

Judgments also could cause defaults under our debt agreements and/or restrictions

on our product use and we could incur losses as a result.

Any of the risks above could have a material adverse effect on our business,

financial condition, results of operations and cash flows and ability to operate as a going concern.

The occurrence or possibility

1 unchanged sentence

internal reorganizations, restructuring activities, strategic corporate alignments, cost saving initiatives or asset sales.

the risk factor “Our ability to fund our operations, maintain liquidity and meet our financing obligations is reliant on

our operations, which are subject to significant risks and uncertainties”

factor “Our ability to fund our operations, maintain liquidity and meet our financing obligations is reliant on our operations,

which are subject to significant risks and uncertainties”

for more information.

Likewise, any internal reorganizations,

restructuring activities, strategic corporate alignments, cost-saving initiatives or asset sales may be complex, could entail significant

costs and charges or could otherwise negatively impact shareholder value and there can be no assurance that we will be able to

accomplish any of these alternatives on terms acceptable to us, or at all, or that they will result in their intended benefits.

Please also see “

Legal Proceedings ”

below for further details.

The pharmaceutical industry is highly

competitive and subject to rapid and significant technological change, which could impair our ability to implement our business

The pharmaceutical

industry is highly competitive, and we may be unable to compete effectively.

Competitive factors faced include, without limitation,

product development, safety, efficacy, commercialization, marketing, promotion, product quality, cost-effectiveness, reputation,

service, patient convenience, access to scientific and technical information, and ability to manage operations in an economic

environment that is severely impacted by a global pandemic such as COVID-19.

In addition, the pharmaceutical industry is undergoing

rapid and significant technological change, and we expect competition to intensify as technical advances in each field are made

and become more widely known.

An increasing number of pharmaceutical companies have been or are becoming interested in the development

and commercialization of products incorporating advanced or novel drug delivery systems.

We expect that competition in the field

of drug delivery will increase in the future as other specialized research and development companies begin to concentrate on this

aspect of the business.

Some of the major pharmaceutical companies have invested and are continuing to invest significant resources

in the development of their own drug delivery systems and technologies and some have invested funds in specialized drug delivery

Many of our competitors have longer operating histories and, they, and future competitors, may have greater financial,

research and development, marketing, and other resources than we do.

Furthermore, recent trends in this industry include market

consolidation, which may further concentrate financial, technical, market and other strengths and resources with the result being

a further increase competitive pressures existent in this industry.

Such companies may develop new formulations and products,

or may improve existing ones, more efficiently than we can.

Our success, if any, will depend in part on our ability to keep pace

with the changing technology in the fields in which we operate.

As we expand our presence

in the generic pharmaceuticals market our product candidates may face intense competition from brand-name companies that have

taken aggressive steps to thwart competition from generic companies.

In particular, brand-name companies continue to sell or license

their products directly or through licensing arrangements or strategic alliances with generic pharmaceutical companies (so-called

“authorized generics”).

No significant regulatory approvals are required for a brand-name company to sell directly

or through a third party to the generic market, and brand-name companies do not face any other significant barriers to entry into

In addition, such companies continually seek to delay generic introductions and to decrease the impact of generic

competition, using tactics which include, without limitation:

obtaining new patents on drugs whose original patent protection

is about to expire;

filing patent applications that are more complex and costly

to challenge;

filing suits for patent infringement that automatically delay

approval from the FDA;

filing citizens’

petitions with the FDA contesting approval

of the generic versions of products due to alleged health and safety issues;

developing controlled-release or other “next-generation”

products, which often reduce demand for the generic version of the existing product for which we may be seeking approval;

changing product claims and product labeling;

developing and marketing as over-the-counter products those

branded products which are about to face generic competition;

making arrangements with managed care companies and insurers

to reduce the economic incentives to purchase generic pharmaceuticals.

These strategies may

increase the costs and risks associated with our efforts to introduce our generic products under development and may delay or

prevent such introduction altogether.

New tariffs and evolving trade policy

between the United States and other countries, including China and Mexico, may have an adverse effect on our sourcing of critical

raw materials from suppliers located outside of the United States and corresponding adverse effects on our business and results

of operations.

Some of our suppliers,

including those of critical active pharmaceutical ingredients are located outside of the United States.

There is currently significant

uncertainty about the future relationship between the U.S.

and various other countries, including China and Mexico, with respect

to trade policies, treaties, government regulations and tariffs.

The Trump Administration has called for substantial changes to

foreign trade policy, including the possibility of imposing greater restrictions on international trade and significant increases

in tariffs on goods imported into the U.S.

These tariffs could potentially disrupt our existing supply chains and impose additional

costs on our business, including, without limitation, costs with respect to raw materials upon which our business depends.

if tariffs, trade restrictions or trade barriers are placed on products such as ours by foreign governments, especially China,

it could cause us to raise prices for our products, which may result in the loss of customers with a corresponding detrimental

impact on our business, financial condition, results of operations, cash flow and ability to operate.

If we are unable to pass

along increased costs to our customers, our margins could be adversely affected, with a corresponding detrimental impact on our

business, financial condition, results of operations, cash flow and ability to operate.

Additionally, it is possible further tariffs

may be imposed that could affect imports of active pharmaceutical ingredients and excipients used in our products, or our business

may be adversely impacted by retaliatory trade measures taken by China or other countries, including restricted access to such

raw materials used in our products, causing us to raise prices or make changes to our products, which could require significant

resources and time for regulatory compliance.

This would have a corresponding detrimental impact on our business, financial condition,

results of operations, cash flow and ability to operate.

Furthermore, the continued threats of tariffs, trade restrictions and

trade barriers could have a generally disruptive impact on the global economy and, therefore, negatively impact our sales profit

margins, profit splits, raw material costs and ability to source raw materials.

For example, the Trump Administration has placed

tariffs on certain goods imported from China.

In January 2020, the U.S.

and China agreed to roll back certain tariffs, expand

trade purchases and renew commitments on intellectual property, technology transfer and currency practices.

Nevertheless, given

the volatility and uncertainty regarding the scope and duration of these tariffs, and the effects of the global COVID-19 pandemic

on such trade and diplomatic relations, the impact on our operations and results in uncertain and could be significant.

the unpredictable regulatory environment in China and the U.S.

and uncertainty regarding how the U.S.

or foreign governments will

act with respect to tariffs, international trade agreements and policies, further governmental action related to tariffs, additional

taxes, regulatory changes or other retaliatory trade measures in the future could occur with a corresponding detrimental impact

on our business, financial condition, results of operations, cash flow and ability to operate.

Even after regulatory approval, we

will be subject to ongoing significant regulatory obligations and oversight as evidenced by the FDA’s removal from the market

of our Lodrane®

extended release product line in 2011.

Even if regulatory

approval is obtained for a particular product candidate, the FDA and foreign regulatory authorities may, nevertheless, impose significant

restrictions on the indicated uses or marketing of such products, or impose ongoing requirements for post-approval studies.

any regulatory approval of our product candidates, we will be subject to continuing regulatory obligations, such as safety reporting

requirements, and additional post-marketing obligations, including regulatory oversight of the promotion and marketing of our products.

If we become aware of previously unknown problems with any of our product candidates here or overseas or at our contract manufacturers’

facilities, a regulatory agency may impose restrictions on our products, our contract manufacturers or on us, including requiring

us to reformulate our products, conduct additional clinical trials, make changes in the labelling of our products, implement changes

to or obtain re-approvals of our contract manufacturers’

facilities or withdraw the product from the market.

we may experience a significant drop in the sales of the affected products, our reputation in the marketplace may suffer and we

may become the target of lawsuits, including class action suits.

Moreover, if we fail to comply with applicable regulatory requirements,

we may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions,

and criminal prosecution.

Any of these events could harm or prevent sales of the affected products or could substantially increase

the costs and expenses of commercializing and marketing these products.

In March 2011, the

FDA issued a directive removing from the market approximately 500 cough/cold and allergy products, including our Lodrane®

extended release product line.

At that time, the Lodrane®

extended release products constituted approximately 97% of our revenues.

Agreements between branded pharmaceutical

companies and generic pharmaceutical companies are facing increased government scrutiny in the United States and Internationally.

There are numerous

and continuing litigation in which generic companies challenge the validity or enforceability of an innovator products patents

and/or the applicability of such patents to a generic applicant’s products.

Settlement of such litigation is a common outcome,

with review of such agreements by the U.S.

Federal Trade Commission (the “

FTC ”) and the Antitrust Division

of the Department of Justice (the “

DOJ ”) being required by law.

The FTC has stated publicly its view that some

of these settlement agreements violate antitrust laws and has commenced actions against the branded and generic companies that

are parties to these agreements.

Accordingly, in the event of the Company being party to a settlement agreement, either as the

branded, innovator product owner, or as the generic applicant, we may receive formal or informal requests from the FTC for information

about a settlement agreement and there is a risk of the FTC alleging a violation of antitrust laws and commencing an action against

In addition, the United

States Congress has proposed legislation that would limit the types of settlement agreements generic manufacturers can enter into

with brand companies.

In 2013, the Supreme Court, in FTC v.

Actavis , determined that reverse payment patent settlements

between generic and brand companies should be evaluated under the rule of reason, and provided limited guidance beyond the selection

of this standard.

Due to the court’s non-articulation of a precise rule of lawfulness for such settlements, there may be

extensive litigation over what constitutes a reasonable and lawful patent settlement between and brand and generic company.

The impact of such

future litigation, if any, legislative proposals, and potential future court decisions is uncertain, and there can be no assurances

that such impact will not have an adverse effect on the Company’s business, its financial condition, results of operations,

cash flows and its stock price.

We may incur significant liability

if it is determined that we are promoting or have in the past promoted the “off-label”

Likewise, any internal reorganizations, restructuring

activities, strategic corporate alignments, cost-saving initiatives or asset sales may be complex, could entail significant costs and

charges or could otherwise negatively impact shareholder value and there can be no assurance that we will be able to accomplish any of

these alternatives on terms acceptable to us, or at all, or that they will result in their intended benefits.

We also may incur significant

liability if it is determined that we are promoting or have in the past promoted the “off-label”

use of drugs.

In jurisdictions including,

without limitation, the United States, a company is not permitted to promote drugs for uses that are not described in the product’s

labelling and that differ from those that were approved or cleared by the FDA.

Such users are commonly referred to as “off-label

Under what is known as the “practice of medicine”, physicians and other healthcare practitioners may prescribe

drug products for off-label or unapproved uses.

While the FDA does not regulate a physician’s choice of medications, treatments,

or product uses, the Federal Food Drug and Cosmetic Act (“

In jurisdictions

including, without limitation, the United States, a company is not permitted to promote drugs for uses that are not described in the

product’s labelling and that differ from those that were approved or cleared by the FDA.

Such users are commonly referred to as

“off-label uses”.

Under what is known as the “practice of medicine”, physicians and other healthcare practitioners

may prescribe drug products for off-label or unapproved uses.

While the FDA does not regulate a physician’s choice of medications,

treatments, or product uses, the Federal Food Drug and Cosmetic Act (“

FFDC ”) and FDA regulations significantly restrict

permissible communications on the subject of off-label uses of drug products by pharmaceutical companies.

The FDA, FTC, the Office

of the Inspector General of the Department of Health and Human Services (“

The FDA, FTC, the Office of

the Inspector General of the Department of Health and Human Services (“

HHS ”), the DOJ and various state Attorneys

2 unchanged sentences

promoted off-label uses may be subject to significant liability, including civil fines, criminal fines and penalties, civil damages,

exclusion from federal funded healthcare programs and potential liability under the federal False Claims Act and any applicable

state false claims act.

Conduct giving rise to such liability could also form the basis for private civil litigation by third-party

payers or other persons claiming to be harmed by such conduct.

Notwithstanding the

regulatory restrictions on off-label promotion, the FDA’s regulations and judicial case law allows companies to engage in

some forms of truthful, non-misleading and non-promotional speech concerning the off-label use of products.

Elite believes it

and its marketing partners comply with these restrictions.

Nonetheless, the FDA,

HHS, DOJ, and/or state Attorneys General, and qui tam relators may take the position that the Company is not in compliance

with such requirements, and if such non-compliance is proven, the consequences of such may have an adverse material effect on

our business, financial condition, results of operations, cash flows and stock price.

Our products contain narcotic ingredients.

As a result of reports of misuse or abuse of prescription narcotics, the sale of such drugs may be subject to increased litigation

risk and new regulation, including the development of Risk Evaluation and Mitigation Strategy (“

REMS ”), which

may prove difficult or expensive to comply with.

Some of our current

products and products under development contain narcotics.

Misuse or abuse of such drugs can lead to physical or other hard.

FDA and/or the DEA may impose new regulations concerning the manufacture, storage, transportation, distribution, and sale of prescription

Such regulations may include new labelling requirements, the development and implementation of a formal REMS, restrictions

on prescription and sale of such products and mandatory reformulation in order to make abuse of such products more difficult.

2007, Congress passed legislation authorizing the FDA to require companies to undertake post-approval studies in order to assess

known or signaled potential serious safety risks and to make any labelling changes necessary to address safety risks.

also empowered the FDA to require companies to formulate REMS to confirm a drug’s benefits exceed its risks.

FDA issued letters to manufacturers of long-acting and extended-release opioids requiring them to develop and submit to the FDA

a post-market REMS plan to require that training is provided to prescribers of these products and that information is provided

to prescribers that they can use in counselling patients on the risks and benefits of opioid drug use.

Elite does not currently

own a product that requires a REMS plan, but some of the products in our pipeline may require a REMS plan.

The federal government

has also released a comprehensive action plan to reduce prescription drug abuse, which may include proposed legislation to amended

existing controlled substances laws to require healthcare practitioners who request DEA registration to prescribe controlled substances

to receive training on opioid prescribing practices as a condition of registration.

In addition, state health departments and boards

of pharmacy have authority to regulate distribution and may modify their regulations with respect to prescription narcotics in

an attempt to curb abuse.

Such new regulations

or requirements may be difficult or cost prohibitive for us to comply with, resulting in delays in the commercialization of new

products, and decreased profitability of existing and new products.

Such occurrences may have material adverse effects on our

business, financial condition, results of operations, cash flows and stock price.

Our business and financial condition may be adversely affected

by legislation or regulatory reform of the healthcare system in the United States.

In April 2018, New

York enacted a statute called the Opioid Stewardship Act (the Stewardship Act), which, among other things, provided for certain

sellers and distributors of certain opioids in the state of New York (the Contributing Parties) to make payments to a newly created

Opioid Stewardship Fund (the Fund).

By its terms, the Stewardship Act required Contributing Parties to pay a total of up to $100

million annually into the Fund, with each Contributing Party’s share based on the total amount of morphine milligram equivalents

of certain opioids sold or distributed by the Contributing Party in the state of New York during the preceding calendar year, subject

to potential adjustments by the New York State Department of Health.

Failure of a Contributing Party to make required reports or

pay its ratable share, or a Contributing Party passing on the cost of its ratable share to a purchaser, could subject the Contributing

Party to penalties.

In December 2018, the U.S.

District Court for the Southern District of New York held the Stewardship Act unconstitutional.

This ruling is on appeal.

If the decision is reversed, we may be deemed to be a Contributing Party under the Stewardship Act and

even if we are not considered to be a Contributing Party, or such a determination is never made, other entities may attempt to

seek reimbursement from us for payments made related to products manufactured by us and distributed in New York.

Furthermore, the

application of the Stewardship Act may require additional regulatory guidance, which could be substantially delayed, increasing

the uncertainty as to the ultimate effect of the Stewardship Act on us.

If we are ultimately deemed to be a Contributing Party

under the Stewardship Act, or similar legislation that could be enacted by New York or other jurisdictions, compliance with those

laws could have an adverse effect on our business, results of operations, financial condition and cash flows.

Additionally, in

October 2018, the U.S.

Congress enacted the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients

and Communities Act (H.R.

Intended to achieve sweeping reform to combat the opioid epidemic, H.R.

6, among other provisions,

amends related laws administered by the FDA, DEA and CMS.

Among other things, the law:

amends requirements related to the FDA’s

authority to include packaging requirements in REMS requirements;

increases civil and criminal penalties for drug manufacturers

and distributors for failing to maintain effective controls against diversion of opioids or for failing to report suspicious opioid

requires the DEA to estimate the amount of opioid diversion when establishing manufacturing and procurement quotas;

expanded anti-kickback and financial disclosure provisions;

and authorizes the Department of Health and Human Services to implement

a demonstration program which would award grants to hospitals and emergency departments to develop, implement, enhance or study

alternative pain management protocols and treatments that limit the use and prescription of opioids in emergency departments.

the effect of this legislation is still uncertain, it is likely that our products will be affected by enforcement of the legislation,

including through related policies and implementing regulations.

There can be no assurances that the effects of this legislation

will not be detrimental to our business, results of operations, financial condition, cash flow or ability to operate.

Furthermore, the Patient

Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively commonly referred

to as the “Affordable Care Act”

may affect the operational results of companies in the pharmaceutical industry such

as ours by imposing additional costs.

Effective January 1, 2010, the Affordable Care Act, amongst other changes, increased the

minimum Medicaid drug rebates for pharmaceutical companies and revised the definition of “average manufacturer price”

for reporting purposes, which may affect the amount of Medicaid drug rebates to states related to the sales of our products, whether

such sales are made directly by Company or by one of the Company’s licensees.

Beginning in 2011, the law also imposed a

significant annual fee on companies that manufacture or import branded prescription drug products.

The Affordable Care

Act contemplates the promulgation of significant future regulatory action which may also further affect our business.

since its enactment, the legislative and executive branches of the federal government have proposed multiple revisions to the

Affordable Care Act, the effect of which, if implemented, may result in changes to the health care laws or regulatory framework

that could result in the reduction of revenues or increased costs which could also have a material adverse effect on our business,

results of operations and financial condition.

Please also see the

above risk factor titled “The availability of third-party reimbursement for our products is uncertain, and thus we may find

it difficult to maintain current price levels.

Additionally, the market may not accept those products for which third party reimbursement

is not adequately provided”.

The DEA limits the availability of

the active ingredients used in many of our current products and products in development, as well as the production and distribution

of these products, and, as a result, our procurement, production, and distribution quotas may not be sufficient to meet commercial

demand or complete clinical trials.

The DEA regulates

chemical compounds as Schedule I, II, III, IV or V substances, with Schedule I substances considered to present the highest risk

of substance abuse and Schedule V substances the lowest risk.

The active ingredients in some of our current products and products

in development, including, without limitation, hydromorphone, methadone, phentermine, phendimetrazine and oxycodone, are listed

by the DEA as Scheduled substances under the Controlled Substances Act of 1970.

Consequently, their manufacture, shipment, storage,

sale, and use are subject to a high degree of regulation.

Furthermore, the DEA limits the availability of the active ingredients

used in many of our current products and products in development and we and/or our contract customers and suppliers, must annually

apply to the DEA for procurement quotas in order to obtain and distribute these substances.

As a result, our procurement and production

quotas may not be sufficient to meet commercial demand or to complete clinical trials.

Moreover, the DEA may adjust these quotas

from time to time during the year, although the DEA has substantial discretion in whether or not to make such adjustments.

delay or refusal by the DEA in establishing our quotas, or modification of our quotas, for controlled substances could delay or

result in the stoppage of our clinical trials or product launches or could cause trade inventory disruptions for those products

that already been launched, which could have a material adverse effect on our business, financial position, cash flows and stock

Approvals for our new generic drug

products may be delayed or become more difficult to obtain if the FDA institutes changes to its approval requirements.

The FDA may institute

changes to its ANDA approval requirements, which may make it more difficult or expensive for us to obtain approval for our new

generic products.

For instance, in July 2012, the Generic Drug Fee User Amendments of 2012 (“

GDUFA ”) was enacted

The GDUFA legislation implemented fees for new ANDAs, Drug Master Files, product and establishment fees and a one-time

fee for back-logged ANDAs pending approval as of October 1, 2012.

In return, the program is intended to provide faster and more

predictable ANDA reviews by the FDA and increased inspections of drug facilities.

Under GDUFA, generic product companies face

significant penalties for failure to pay the new user fees, including rendering an ANDA not “substantially complete”

until the fee is paid.

Any failure by us or our suppliers to pay the fees or to comply with the other provisions of GDFUA may

impact or delay our ability to file ANDAs, obtain approvals for new generic products, generate revenues and thus may have a material

adverse effect on our business, results of operations and financial condition.

In addition to the

implementation of new fees and review procedures by the FDA, the FDA may also implement other changes that may directly affect

some of our ANDA filings pending approval from the FDA, such as changes to guidance from the FDA regarding bioequivalency requirements

for particular drugs.

Such changes may cause our development of such generic drugs to be significantly more difficult or result

in delays in FDA approval or result in our decision to abandon or terminate certain projects.

Any changes in FDA requirements

may make it more difficult for us to file ANDAs or obtain approval of our ANDAs and generate revenues and thus have a material

adverse effect on our business, results of operations and financial condition.

The illegal distribution and sale by

third parties of counterfeit versions of our products or of stolen products could have a negative impact on our reputation and

a material adverse effect on our business, results of operations and financial condition.

Third parties could

illegally distribute and sell counterfeit versions of our products, which do not meet the rigorous manufacturing and testing standards

that our products undergo.

Counterfeit products are frequently unsafe or ineffective and can be life-threatening.

medicines may contain harmful substances, the wrong dose of the active pharmaceutical ingredient or no active pharmaceutical ingredients

However, to distributors and users, counterfeit products may be visually indistinguishable from the authentic version.

Reports of adverse

reactions to counterfeit drugs or increased levels of counterfeiting could materially affect patient confidence in the authentic

It is possible that adverse events caused by unsafe counterfeit products will mistakenly be attributed to the authentic

In addition, thefts of inventory at warehouses, plants or while in-transit, which are not properly stored, and which

are sold through unauthorized channels could adversely impact patient safety, our reputation, and our business.

Public loss of confidence

in the integrity of pharmaceutical products as a result of counterfeiting or theft could have a material adverse effect on our

business, results of operations and financial condition.

We received a Complete Response Letter

from the FDA that indicated that our SequestOx™

NDA is not ready for approval in its present form.

We have paused further

development of this product and we cannot assure that development will restart.

If we are unable to obtain approval for SequestOx™

or if we incur significant costs or delays in obtaining such approval, our ability to commercialize SequestOx™

may be materially

adversely affected.

In July 2016, the

FDA issued a Complete Response Letter, or CRL, regarding the NDA.

The CRL stated that the review cycle for the SequestOx NDA is

complete and the application is not ready for approval in its present form.

On December 21, 2016, we met with the FDA for an end-of-review

meeting to discuss steps that we could take to obtain approval of SequestOx.

Based on the FDA response, we believe there is a

path forward to address the issues cited in the CRL, with such path forward including modification of the SequestOx formulation,

and the successful completion of in vitro and in vivo studies.

If we are unable to modify the formulation or if we are unable

to successfully complete the required studies, we will not meet the requirements specified by the FDA for resubmission of the

Furthermore, there can be no assurances given that the FDA will eventually approve our NDA.

If we are unable to obtain approval

for SequestOx, or if we incur significant costs or delays in obtaining such approval, our ability to commercialize SequestOx may

be materially adversely affected.

Furthermore, in the event that the Company does receive marketing approval for SequestOx™,

there can be no assurances of the Company realizing future revenues or profits related to this product, or that any such future

revenues and profits would be in amounts that provide adequate return on the significant investments made to secure this marketing

authorization.

The Company has currently paused further development of SequestOx due to the prohibitive cost of such and attendant

risks related thereto.

Our business and operations could be negatively affected

by shareholder activism, which could cause us to incur significant expenses, hinder execution of our business strategy and impact

our share price

In recent years, shareholder

activism involving corporate governance, fiduciary duties of Directors and Officers, strategic direction and operations has become

increasingly prevalent.

If we become the subject of such shareholder activism, their demands may disrupt our business and divert

the attention of our management, Board and employees.

Also, we may incur substantial costs, including legal fees and other expenses,

related to such activist shareholder matters.

Perceived uncertainties resulting from such activist shareholder matters may result

in loss of potential business opportunities with our current and potential customers and business partners, be exploited by our

competitors and make attracting and retaining qualified personnel more difficult.

In addition, such shareholder activism may cause

significant fluctuations in our share price based on temporary or speculative market perceptions, uncertainties or other factors

that do not necessarily reflect the underlying fundamentals and prospects of our business.

The effects of shareholder

activism pursued against the Company could have an adverse material effect on our business, financial condition, results of operations,

cash flows and stock price.

Extensive industry regulation has had

and will continue to have, a significant impact on our business in the area of cost of goods, especially our product development,

manufacturing and distribution capabilities.

We, like all other

pharmaceutical companies located or engaged in business in the U.S.

are subject to extensive, complex, costly and evolving regulation

by the federal government, including the FDA and, in the case of controlled drugs, the DEA, as well as applicable state government

The Federal Food, Drug and Cosmetic Act, the Controlled Substance Act and multiple other federal statutes, regulations

and guidance govern or influence the development, testing, manufacture, packing, labelling, storing, record keeping, safety, approval,

advertising, promotion, sale, shipment and distribution of our products.

The process for obtaining

governmental approval to manufacture and market pharmaceutical products is rigorous, time-consuming and costly and we cannot predict

the extent to which we may be affected by legislative and regulatory developments.

We are dependent on receiving FDA and other

governmental or third-party approvals prior to manufacturing, marketing and shipping our products.

The FDA approval process for

a particular product candidate can take several years and requires us to dedicate substantial resources to complete all activities

necessary to secure approvals and we may not be able to obtain regulatory approval for our product candidates in a timely manner,

In order to obtain approval for our generic product candidates, we must demonstrate that our drug product is therapeutically

equivalent and bioequivalent to a drug previously approved by the FDA through the drug approval process, known as the reference

listed drug (“RLD”) or reference standard drug (“RS”).

Bioequivalence may be demonstrated in vivo or in

vitro by comparing the generic product candidate to the innovator drug product.

During the FDA review process, the FDA may request

additional information and studies to support approval of an application, which could delay approval of the product and impair

our ability to compete with other versions of the generic drug product.

Inherent to this process

is the possibility that we will not obtain FDA or other necessary approvals, or that the rate, timing and cost of such approvals

will adversely affect our product introduction plans or results of operations.

We may carry inventories of certain products in

anticipation of launch and if such products are not subsequently launched, we may be required to write-off the related inventory,

if such inventories have no foreseeable commercial value to us.

In addition, facilities

used to manufacture and/or test materials and drug products we market are subject to periodic inspection of facilities by the

FDA, the DEA, and other authorities to confirm that firms are in compliance with all applicable regulations.

The FDA conducts pre-approval

and/or post-approval inspections to determine whether systems and processes are in compliance with cGMP and other FDA regulations.

A Form 483 notice is generally issued at the conclusion of an FDA inspection and lists conditions the FDA inspectors believe may

violate cGMP or other FDA regulations.

If more serious violations are identified, the FDA may take additional action, such as

issuing warning letters, import alerts, etc.

The DEA and comparable state-level agencies also heavily regulate the manufacturing,

holding, processing, security, record-keeping and distribution of drugs that are controlled substances.

We manufacture and/or

distribute certain controlled substances and are accordingly subject to oversight, regulation and inspection by the DEA.

periodically inspects facilities for compliance with its regulations.

If our manufacturing facilities or those of our suppliers

fail to comply with applicable regulatory requirements, it could result in regulatory action and additional costs.

Our inability or the

inability of our suppliers to comply with applicable FDA and other regulatory requirements can result in, among other things,

delays in or denials of new product approvals, warning letters, import alerts, fines, consent decrees restricting or suspending

manufacturing operations, injunctions, civil penalties, recall or seizure of products, total or partial suspension of sales and/or

criminal prosecution.

Any of these or other regulatory actions could have an adverse material effect on our business, financial

exclusion from federal funded healthcare programs and potential liability under the federal False Claims Act and any applicable state

false claims act.

Conduct giving rise to such liability could also form the basis for private civil litigation by third-party payers

or other persons claiming to be harmed by such conduct.

Notwithstanding the regulatory

restrictions on off-label promotion, the FDA’s regulations and judicial case law allows companies to engage in some forms of truthful,

non-misleading and non-promotional speech concerning the off-label use of products.

Elite believes it and its marketing partners comply

with these restrictions.

Nonetheless, the FDA, HHS,

DOJ, and/or state Attorneys General, and qui tam relators may take the position that the Company is not in compliance with such

requirements, and if such non-compliance is proven, the consequences of such may have an adverse material effect on our business, financial

condition, results of operations, cash flows and stock price.

While we have instituted

internal compliance programs, if these programs do not meet regulatory agency standards or if compliance is deemed deficient in

any significant way, it could have an adverse material effect on our business, financial condition, results of operations, cash

flows and stock price.

Our manufacturing operations as well

as our suppliers' manufacturing operations are subject to establishment registration by the FDA and periodic inspections by the

FDA to assure compliance regarding the manufacturing of our products.

If we or our suppliers do not maintain the current registrations

or if we or our partners receive notices of manufacturing and quality-related observations following inspections by the FDA, our

operating results would be materially negatively impacted.

Our facilities, as

well as those of applicable suppliers, rely on maintaining current FDA, and DEA if applicable, registration and other license

to produce and develop generic drugs and raw materials used in such operations.

If we, or one of our suppliers does not successfully

renew and maintain current FDA, DEA and other required licenses, our operations and financial results would be negatively impacted.

We and our suppliers are subject to periodic inspection by the FDA, DEA and other regulatory agencies, as applicable, to assure

regulatory compliance regarding the manufacture and distribution of pharmaceutical products and raw materials.

These regulatory

bodies impose stringent mandatory requirements on the manufacture and distribution of pharmaceutical products to ensure their

safety and efficacy.

If we or any of our third party suppliers receive notices of manufacturing and quality-related observations

and are unable to satisfactorily resolve the issues and observations identified in a timely fashion, there could be a material

adverse effect on our business, financial condition, results of operations, cash flow and stock price.

If brand pharmaceutical companies are successful in limiting

the use of generics through legislative and regulatory efforts, our sales of generic products may suffer

Many brand pharmaceutical companies have

increasingly used state and federal legislative and regulatory means to delay generic competition.

These efforts have included,

without limitation:

● Pursuing new patents for existing

products which may be granted prior to the expiration of an existing patent, thereby

achieving extended patent protection for additional years or otherwise delay market entry

of generic competition;

the Citizen Petition process to request amendments to FDA standards;

changes to U.S.

Pharmacopeia, an organization that publishes industry recognized compendia

of drug standards;

patent extension amendments to non-related federal legislation;

in state by state initiatives to enact legislation that restricts the substitution of

some generic drugs, which could have an impact on products that we are developing;

regulatory bodies to withdraw the approval of brand-name drugs for which the patents

are about to expire and converting the market to another product of the brand company

on which longer patent protection exists;

into agreements whereby other generic companies will begin to market an authorized generic

at the same time or after generic competition initially enters the market;

suits for patent infringement and other claims that may delay or prevent regulatory approval,

manufacture and/or scale of generic products;

● Introducing

“next generation”

products prior to the expiration of market exclusivity

for the reference product, which often materially reduces demand for the generic or the

reference product for which we seek regulatory approval for a generic equivalent.

Some pharmaceutical

companies have lobbied the United States Congress for amendments to the Hatch-Waxman Act that would give them additional advantages

over generic competitors.

For example, although the term of a company’s drug patent can be extended to reflect a portion

of the time an NDA is under regulatory review, some companies have proposed extending the patent term by a full year for each

year spent in clinical trials rather than the one-half year that is currently permitted.

If proposals like

these were to become effective, or if any other actions, such as those listed above or otherwise, by our competitors and other

third parties to prevent or delay activities necessary to the approval, manufacture, distribution or sale of our products are

successful, our entry in to the market and our ability to generate revenues associated with new products may be delayed, reduced

or eliminated, any or all of which could have a material adverse effect on our business, financial condition, results of operations,

cash flows and stock price.

Health care initiatives and other third-party

payor cost-containment pressures have and could continue to cause us to sell our products at lower prices, resulting in decreased

Some of our products

that are marketed under license granted to marketing partners such as Lannett, Glenmark and TAGI, in turn, purchased or reimbursed

by state and federal government authorities, private health insurers and other organizations, such as health maintenance organizations,

or HMOs and managed care organizations, or MCOs.

Third-party payors increasingly challenge pharmaceutical product pricing.

also continues to be a trend toward managed health care in the United States.

Pricing pressures by third-party payors and the

growth of organizations such as HMOs and MCOs could result in lower prices and a reduction in demand for our products.

One such governmental

program, known as the 340B Program, requires pharmaceutical manufacturers to enter into an agreement, called a pharmaceutical

pricing agreement (PPA), with the Secretary of Health and Human Services.

Under the PPA, the manufacturer agrees to provide front-end

discounts on covered outpatient drugs purchased by specified providers, called “covered entities,”

that serve the

nation’s most vulnerable patient populations.

Outpatient prescription drugs, over the counter drugs (accompanied by a prescription),

and clinic-administered drugs within eligible facilities are covered.

In addition, legislative

and regulatory proposals and enactments to reform health care and government insurance programs could significantly influence

the manner in which pharmaceutical products and medical devices are prescribed and purchased.

We expect there will continue to

be federal and state laws and/or regulations, proposed and implemented, that could limit the amounts that federal and state governments

will pay for health care products and services.

The extent to which future legislation or regulations, if any, relating to the

health care industry or third-party coverage and reimbursement may be enacted or what effect such legislation or regulation would

have on our business remains uncertain.

For example, H.R.987, the “Strengthening Health Care and Lowering Prescription Drug

Costs Act,”

which incorporated a bipartisan effort to address prescription drug pricing combined with broader provisions

protecting the Affordable Care Act, was passed by the House of Representatives on May 16, 2019, but it is not expected to pass

in the Senate.

The bill does represent bipartisan consensus on the need to reform the drug pricing system.

Such measures or other

health care system reforms that are adopted could have a material adverse effect on our industry generally and our ability to

successfully commercialize our products or could limit or eliminate our spending on development projects and affect our ultimate

profitability, which could have a material adverse effect on our business, financial condition, results of operations, cash flow

and stock price.

We may become subject to federal and

state false claims litigation brought by private individuals and the government.

We are subject to

state and federal laws that govern the submission of claims for reimbursement.

The FFCA imposes civil liability on individuals

or entities that knowingly submit, or cause to be submitted, false or fraudulent claims for payment to the government.

of the FFCA and other similar laws may result in criminal fines, imprisonment and substantial civil penalties for each false claim

submitted (including civil penalties presently in excess of $22 thousand per claim, plus treble damages, plus liability for attorney’s

fees) and exclusion from federally funded health care programs, including Medicare and Medicaid.

The FFCA also allows private

individuals to bring a suit on behalf of the government against an individual or entity for violations of the FFCA.

also known as Qui Tam or whistle-blower actions, may be brought by, with only a few exceptions, any private citizen who has material

information of a false claim that has not yet been previously disclosed.

These suits have increased significantly in recent years

because the FFCA allows an individual to share in the amounts paid to the federal government in fines or settlement as a result

of a successful Qui Tam action, in addition to the recovery of legal fees in bringing such an action.

If our past or present operations

are found to be in violation of any of such laws or any other governmental regulations that may apply to us, we may be subject

to penalties, including civil and criminal penalties, damages, fines, exclusion from federal health care programs and/or the curtailment

or restructuring of our operations.

Any penalties, damages, fines, curtailment, or restructuring of our operations could adversely

affect our ability to operate our business and our financial results.

Action against us for violation of these laws, even if we

successfully defend against them, could cause us to incur significant legal expenses and divert our management’s attention

from the operation of our business.

We are also subject to state

and federal laws that govern the submission of claims for reimbursement.

The FFCA imposes civil liability on individuals or entities

that knowingly submit, or cause to be submitted, false or fraudulent claims for payment to the government.

Violations of the FFCA and

other similar laws may result in criminal fines, imprisonment and substantial civil penalties for each false claim submitted (including

civil penalties presently in excess of $22 thousand per claim, plus treble damages, plus liability for attorney’s fees) and exclusion

from federally funded health care programs, including Medicare and Medicaid.

The FFCA also allows private individuals to bring a suit

on behalf of the government against an individual or entity for violations of the FFCA.

These suits, also known as Qui Tam or whistle-blower

actions, may be brought by, with only a few exceptions, any private citizen who has material information of a false claim that has not

yet been previously disclosed.

These suits have increased significantly in recent years because the FFCA allows an individual to share

in the amounts paid to the federal government in fines or settlement as a result of a successful Qui Tam action, in addition to the recovery

of legal fees in bringing such an action.

If our past or present operations are found to be in violation of any of such laws or any other

governmental regulations that may apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines,

exclusion from federal health care programs and/or the curtailment or restructuring of our operations.

Any penalties, damages, fines,

curtailment, or restructuring of our operations could adversely affect our ability to operate our business and our financial results.

Action against us for violation of these laws, even if we successfully defend against them, could cause us to incur significant legal

expenses and divert our management’s attention from the operation of our business.

Recently, the Department

of Justice has begun to use the 1961 federal Travel Act as a tool to pursue criminal charges in the case of health care kickback

and commercial bribery allegations.

of Justice has begun to use the 1961 federal Travel Act as a tool to pursue criminal charges in the case of health care kickback and

commercial bribery allegations.

This law was enacted as part of the Kennedy administration’s war on organized crime.

It formed the basis for a federal enforcement action against a Texas physician-owned specialty hospital and a number of surgeons

and administrators, who were convicted of conspiring to pay or receive bribes in exchange for referrals of patients in violation

of a state commercial bribery law.

Importantly, this case was not limited to claims covered under federal programs, and the failure

of the state to bring charges under its own statute did not prevent the federal case from proceeding.

The Travel Act may be used

by the Justice Department as a way to expand its reach to penalize kickbacks and similar arrangements even when the Anti-Kickback

Statute and FFCA would not apply.

These efforts could increase our vulnerability to litigation and penalties if our past or present

operations are found to be in violation of applicable law which could have a material adverse effect on our business, financial

condition, results of operations, cash flow and stock price.

The design, development, manufacture

and sale of our products involves the risk of product liability claims by consumers and other third parties and insurance against

such potential claims is expensive and may be difficult to obtain.

The design, development,

manufacture, distribution and sale of our products involve an inherent risk of product liability claims and associated adverse

Insurance coverage is expensive, increasing in price to prohibitive levels, may be difficult to obtain or may be not

available in the future on acceptable terms, or at all.

Although we currently maintain product liability insurance for our products

in amounts we believe to be commercially reasonable, if the coverage limits of these insurance policies are not adequate, a claim

brought against us, whether covered by insurance or not, could have a material adverse effect on our business, financial condition,

results of operations, cash flow and stock price.

The recent enactment of State laws

affecting the pricing of our products could have the effect of reducing our profitability

Since 2016, several

state legislatures have enacted laws regulating the pricing of various types of pharmaceutical products, including generic pharmaceutical

These laws vary in applicability and scope, and generally require manufacturers to notify various state agencies of

price increases over a given threshold for a given period of time and to include a justification for any price increases.

one state law (subsequently struck by the court) authorized the state attorney general to seek civil penalties and disgorgement

in the event a price increase is deemed unconscionable.

To the extent these laws apply to our products, they could limit the prices

which the company may charge for its products and reduce the company’s profitability and could have a material adverse effect

on our business, growth prospects, financial condition, results of operations, cash flow and stock price.

Sales of our products may be adversely

affected by the continuing consolidation within the retail and wholesale pharmaceutical markets.

Our products, whether

sold directly by the Company or through third parties that are licensed to market and distribute our products are sold in large

part to a market that is comprised of a relatively few retail drug chains, wholesalers, and managed care organizations, with such

entities continuing to undergo consolidation.

Such consolidation may provide these customers or our products with additional purchasing

leverage, and consequently, may increase the pricing pressures faced by us.

Additionally, the emergence of large buying groups

representing independent retail pharmacies, and the prevalence and influence of managed care organizations and similar institutions,

enable those groups to extract price discounts on our products.

In addition, our revenues

and quarterly results comparisons may also be affected by fluctuations in the buying patterns of retail chains, major distributors,

and other trade buyers.

The occurrence of

any of the above could have a material adverse effect on our business, financial condition, results of operations, cash flow and

Policies regarding returns, rebates,

allowances and chargebacks, and marketing programs adopted by wholesalers may reduce our revenues in future fiscal periods.

Based on industry

practice, generic drug manufacturers have liberal return policies and have been willing to give customers post-sale inventory

Such industry practices apply to the current sales of our products by our marketing partners, which in turn effect

profit splits and license fees received, and they will also affect prospective future sales made directly by Company.

Under these arrangements,

from time to time, customers are given credits on our generic products that are held by them in inventory after there is a decrease

in the market prices of the same generic products due to competitive pricing.

Therefore, if new competitors enter the marketplace

and significantly lower the prices of any of their competing products, the price of our products would also likely be reduced.

As a result, we, or are marketing partners, would be obligated to provide credits to our customers who are then holding inventories

of such products, which could reduce sales revenue, profit splits, license fees and gross margin for the period the credit is

Like most competitors in this market, our marketing partners, or us in the case of prospective direct sales made by

the Company, also give credits for chargebacks to wholesalers that have contracts with our marketing partners, or us, prospectively,

for their sales to hospitals, group purchasing organizations, pharmacies, or other customers.

A chargeback is the difference between

the price the wholesaler pays and the price that the wholesaler’s end-customer pays for a product.

Although, our marketing

partners establish, and prospectively we would also establish reserves based on prior experience and best estimates of the impact

that these policies may have in subsequent periods, we cannot ensure that such reserves established are adequate or that actual

product returns, rebates, allowances, and chargebacks will not exceed estimates.

Differences between established reserves and

actual amounts of such credits and charges, could result in a material adverse effect on our business, financial condition, results

of operations, cash flow and stock price.

Unstable economic conditions may adversely

affect our industry, business, results of operations and financial condition.

The global economy

has undergone a period of significant volatility, especially during a global pandemic, such as the COVID-19 pandemic, which has

led to diminished credit availability, declines in consumer confidence, and increases in unemployment rates.

There remains caution

about the stability of the U.S.

economy, and we cannot assure that further deterioration in the financial markets will not occur.

These economic conditions have resulted in, and could lead to further, reduced consumer spending related to healthcare in general

and pharmaceutical products in particular.

In addition, we have

exposure to many different industries and counterparties, including our partners under our alliance and collaboration agreements,

suppliers of raw chemical materials, drug wholesalers and other customers that may be affected by an unstable economic environment.

Any economic instability may affect these parties’

ability to fulfil their respective contractual obligations to us, cause

them to limit or place burdensome conditions upon future transactions with us or drive us and our competitors to decrease prices,

each of which could materially and adversely affect our business, results of operations and financial condition, cash flows and

If our product candidates do not achieve

market acceptance among physicians, patients, health care payors and the medical community, they will not be commercially successful,

and our business will be adversely affected.

The degree of market

acceptance of any of our approved product candidates among physicians, patients, health care payors and the medical community

will depend on a number of factors, including, without limitation:

acceptable evidence of safety and efficacy;

relative convenience and ease of administration;

the prevalence and severity of any adverse side effects;

availability of alternative treatments;

pricing and cost effectiveness;

effectiveness of sales and marketing strategies;

ability to obtain sufficient third-party coverage or reimbursement.

If we are unable to

achieve market acceptance for our product candidates, then such product candidates will not be commercially successful, and our

business will be adversely affected.

In addition, even

if we are able to obtain regulatory approvals for our new products, the success of those products as well as the success of our

previously approved products, is dependent upon market acceptance.

Levels of market acceptance for our new products could be affected

by several factors, including, without limitation:

the availability of alternative products from our competitors;

the prices of our products relative to those of our competitors;

the timing of our market entry;

the ability to market our products effectively at the retail

the perception of patients and the healthcare community, including

third-party payers, regarding the safety, efficacy and benefits of our drug products compared to those of competing products;

the acceptance of our products by government and private formularies.

Some of these factors

are not within our control, and our products may not achieve expected levels of market acceptance.

Additionally, continuing and

increasingly sophisticated studies of the proper utilization, safety and efficacy of pharmaceutical products are being conducted

by the industry, government agencies and others which can call into question the utilization, safety, and efficacy of previously

marketed products.

In some cases, studies have resulted, and may in the future result, in the discontinuance of product marketing

or other risk management programs such as the need for a patient registry.

Any or all of the above could result in a material

adverse effect on our business, financial condition, results of operations, cash flow and stock price.

We may experience pricing pressure

on the price of our products due to social or political pressure to lower the cost of drugs, which would reduce our revenue and

future profitability.

We may experience

downward pricing pressure on the price of our products due to social or political pressure to lower the cost of drugs, which would

reduce our revenue and future profitability.

Recent events have resulted in increased public and governmental scrutiny of the

cost of drugs, especially in connection with price increases following companies’

acquisition of the rights to certain drug

In particular, U.S.

federal prosecutors have issued subpoenas to pharmaceutical companies seeking information about

drug pricing practices.

In addition, the U.S.

Senate is publicly investigating a number of pharmaceutical companies relating to

drug-price increases and pricing practices.

Our revenue and future profitability could be negatively affected if these inquiries

were to result in legislative or regulatory proposals that limit our ability to increase the prices of our products which could

have a material adverse effect on our business, growth prospects, financial condition, results of operations, cash flow and stock

In addition, in September

2016, a group of U.S.

Senators introduced legislation that would require pharmaceutical manufacturers to justify price increases

of more than 10% in a 12-month period, and a large number of individual States have introduced legislation aimed at drug pricing

regulation, transparency or both.

While this proposed legislation has not been enacted into law to date, our revenue and future

profitability could be negatively affected by the passage of this law or similar federal or state legislation.

Furthermore, pressure

from social activist groups and future government regulations may also put downward pressure on the price of drugs, which could

result in downward pressure on the prices of our products in the future, which could have a material adverse effect on our business,

growth prospects, financial condition, results of operations, cash flow and stock price.

Public concern over the abuse of opioid

medications, including increased legal and regulatory action, could negatively affect our business.

the basis for a federal enforcement action against a Texas physician-owned specialty hospital and a number of surgeons and administrators,

who were convicted of conspiring to pay or receive bribes in exchange for referrals of patients in violation of a state commercial bribery

Importantly, this case was not limited to claims covered under federal programs, and the failure of the state to bring charges under

its own statute did not prevent the federal case from proceeding.

The Travel Act may be used by the Justice Department as a way to expand

its reach to penalize kickbacks and similar arrangements even when the Anti-Kickback Statute and FFCA would not apply.

These efforts

could increase our vulnerability to litigation and penalties if our past or present operations are found to be in violation of applicable

law which could have a material adverse effect on our business, financial condition, results of operations, cash flow and stock price.

Furthermore, the design,

development, manufacture, distribution and sale of our products involve an inherent risk of product liability claims and associated adverse

Insurance coverage is expensive, increasing in price to prohibitive levels, may be difficult to obtain or may be not available

in the future on acceptable terms, or at all.

Although we currently maintain product liability insurance for our products in amounts

we believe to be commercially reasonable, if the coverage limits of these insurance policies are not adequate, a claim brought against

us, whether covered by insurance or not, could have a material adverse effect on our business, financial condition, results of operations,

cash flow and stock price.

Our products contain narcotic ingredients

which may subject us to increased litigation risk and regulation.

Some of our current products

and products under development contain narcotics.

Misuse or abuse of such drugs can lead to physical or other hard.

The FDA and/or the

DEA may impose new regulations concerning the manufacture, storage, transportation, distribution, and sale of prescription narcotics.

Such regulations may include new labelling requirements, the development and implementation of a formal REMS, restrictions on prescription

and sale of such products and mandatory reformulation in order to make abuse of such products more difficult.

In 2007, Congress passed

legislation authorizing the FDA to require companies to undertake post-approval studies in order to assess known or signaled potential

serious safety risks and to make any labelling changes necessary to address safety risks.

Congress also empowered the FDA to require

companies to formulate REMS to confirm a drug’s benefits exceed its risks.

In 2011, the FDA issued letters to manufacturers of

long-acting and extended-release opioids requiring them to develop and submit to the FDA a post-market REMS plan to require that training

be provided to prescribers of these products and that information is provided to prescribers that they can use in counselling patients

on the risks and benefits of opioid drug use.

Elite does not currently own a product that requires a REMS plan, but some of the products

in our pipeline may require a REMS plan.

The federal government has also released a comprehensive action plan to reduce prescription

drug abuse, which may include proposed legislation to amended existing controlled substances laws to require healthcare practitioners

who request DEA registration to prescribe controlled substances to receive training on opioid prescribing practices as a condition of

registration.

In addition, state health departments and boards of pharmacy have authority to regulate distribution and may modify their

regulations with respect to prescription narcotics in an attempt to curb abuse.

Such new regulations or requirements

may be difficult or cost prohibitive for us to comply with, resulting in delays in the commercialization of new products, and decreased

profitability of existing and new products.

Such occurrences may have material adverse effects on our business, financial condition,

results of operations, cash flows and stock price.

Public concern over abuse of opioids has

negatively affected our business.

While Elite has de-emphasized

its programs with respect to opioids and will continue to focus on products other than opioids, certain governmental and regulatory

agencies, as well as state and local jurisdictions, are focused on the abuse of opioid medications in the United States.

and local governmental agencies may investigate us as a manufacturer and/or distributor of medicines containing opioids or in

conjunction with their investigation of other pharmaceutical wholesale distributors, and others in the supply chain that have

a direct or indirect connection to our operations in relation to the distribution of opioid medications.

In addition, multiple

lawsuits have been filed against other pharmaceutical manufacturers and distributors alleging, among other claims, that they failed

to provide effective controls and procedures to guard against the diversion of controlled substances, acted negligently by distributing

controlled substances to pharmacies that serve individuals who abuse controlled substances, and failed to report suspicious orders

of controlled substances in accordance with regulations.

Additional governmental entities have indicated an intent to sue these

other manufacturers and distributors.

While no such actions have been taken against us, the immediate effect on the Company has

been an inability to commercialize and market three opioid products approved during fiscal years prior to the twelve months ended

March 31, 2020 and a cessation of orders for another two other opioid products that had been marketed by our marketing partners.

its programs with respect to opioids and will continue to focus on products other than opioids, certain governmental and regulatory agencies,

as well as state and local jurisdictions, are focused on the abuse of opioid medications in the United States.

State and local governmental

agencies may investigate us as a manufacturer and/or distributor of medicines containing opioids or in conjunction with their investigation

of other pharmaceutical wholesale distributors, and others in the supply chain that have a direct or indirect connection to our operations

in relation to the distribution of opioid medications.

In addition, multiple lawsuits have been filed against other pharmaceutical manufacturers

and distributors alleging, among other claims, that they failed to provide effective controls and procedures to guard against the diversion

of controlled substances, acted negligently by distributing controlled substances to pharmacies that serve individuals who abuse controlled

substances, and failed to report suspicious orders of controlled substances in accordance with regulations.

Additional governmental entities

have indicated an intent to sue these other manufacturers and distributors.

While no such actions have been taken against us, the immediate

effect on the Company has been an inability to commercialize and market three opioid products approved during fiscal years prior to the

twelve months ended March 31, 2020 and a cessation of orders for another two other opioid products that had been marketed by our marketing

During the year ended March 31, 2020, we disposed of four approved ANDA’s for opioid products.

As of March 31, 2020, we

continue to hold one approved ANDA for an opioid product that, while approved by the FDA, has not been launched commercially.

Further, defense against any such opioid related lawsuits could be prohibitive with regards to cost resulting in an adverse material

effect on our business, financial condition, results of operations, cash flows and stock price.

Similar allegations made against

us, even without litigation, could also negatively affect our business in various ways, including through increased costs and

harm to our reputation.

In addition, an adverse resolution of any lawsuit or investigation could also have a material adverse

effect on our business, results of operations, cash flows and stock price.

Our business is dependent on market

perceptions of us and the safety and efficacy or our products.

Negative publicity relating to us or our products could have a

material adverse effect on our business, results of operations, financial condition, and cash flows.

Market perceptions

or our business are important to us, especially market perceptions of the safety and quality of our products.

If any of our products

or similar products that other companies distribute are subject to market withdrawal, recall, or are proven to be, or are claimed

to be, harmful to consumers, then this could have a material adverse effect on our business, results of operations, financial

condition, and cash flows.

Furthermore, due to the importance of market perceptions, negative publicity associated with product

quality, illness or other adverse effects resulting from, or perceived to be resulting from, our products, or similar products

made by other companies, could have a material adverse effect on our business, results of operations, financial condition, and

If we are unable to protect our intellectual

property rights or avoid claims that we infringed on the intellectual property rights of others, our ability to conduct business

may be impaired.

Our success depends

on our ability to protect our current and future products and to defend our intellectual property rights.

If we fail to protect

our intellectual property adequately, competitors may manufacture and market products similar to ours.

We currently hold

As of March 31, 2020,

we continue to hold one approved ANDA for an opioid product that, while approved by the FDA, has not been launched commercially.

defense against any such opioid related lawsuits could be prohibitive with regards to cost resulting in an adverse material effect on

our business, financial condition, results of operations, cash flows and stock price.

Similar allegations made against us, even without

litigation, could also negatively affect our business in various ways, including through increased costs and harm to our reputation.

In addition, an adverse resolution of any lawsuit or investigation could also have a material adverse effect on our business, results

of operations, cash flows and stock price.

Illegal distribution and third party sale

of counterfeit versions of our products could have a detrimental effect on our reputation and business.

Third parties could illegally

distribute and sell counterfeit versions of our products, which do not meet the rigorous manufacturing and testing standards that our

products undergo.

Counterfeit products are frequently unsafe or ineffective and can be life-threatening.

Counterfeit medicines may contain

harmful substances, the wrong dose of the active pharmaceutical ingredient or no active pharmaceutical ingredients at all.

distributors and users, counterfeit products may be visually indistinguishable from the authentic version.

Reports of adverse reactions

to counterfeit drugs or increased levels of counterfeiting could materially affect patient confidence in the authentic product.

possible that adverse events caused by unsafe counterfeit products will mistakenly be attributed to the authentic product.

thefts of inventory at warehouses, plants or while in-transit, which are not properly stored, and which are sold through unauthorized

channels could adversely impact patient safety, our reputation, and our business.

Public loss of confidence

in the integrity of pharmaceutical products as a result of counterfeiting or theft could have a material adverse effect on our business,

results of operations and financial condition.

Structural and Organizational Risks

We have identified material weaknesses

in internal controls in prior years.

Our management is responsible

for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange

During the prior fiscal year

ended March 31, 2019, the Company identified certain material weaknesses in internal controls over financial reporting which were remediated

during the fiscal year ended March 31, 2020, with such remediation also being effective during this current fiscal year.

A material weakness

is a deficiency, or a combination of deficiencies, in internal controls over financial reporting such that there is a reasonable possibility

that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The remediation

actions taken required the retention of additional personnel and consultants, the continued retention of which is subject to the Company’s

financial condition.

Despite the successful remediation

of material weaknesses identified in the prior fiscal year, there can be no assurances of the continued operation of controls, due to

the financial burden such controls place on the Company, as well as the effects of other operating challenges, such as the COVID-19 global

pandemic or similar situation, which may result in our inability to maintain an environment of internal controls over financial reporting

that does not have material weaknesses.

Furthermore, additional material

weaknesses in our internal controls may be discovered or occur in the future that may materially adversely affect our ability to report

our financial condition and results of operations in a timely and fairly stated manner and there will be an increased risk of future

misstatements.

Although we regularly review

and evaluate internal controls systems to allow management to report on the effectiveness of our internal controls over financial reporting,

we may discover additional weaknesses in our internal controls over financial reporting or disclosure controls and procedures.

time we evaluate our internal controls over financial reporting and disclosure controls and procedures, if we identify one or more new

material weaknesses or are unable to timely remediate our previously identified material weaknesses, we would be unable to conclude that

our internal controls over financial reporting or disclosure controls and procedures are effective.

If we are unable to conclude that

our internal controls over financial reporting or our disclosure controls and procedures are effective, or if our independent registered

public accounting firm expresses an opinion, if such is required, that our internal controls over financial reporting is ineffective,

we may not be able to report our financial condition and results of operations in a timely and fairly stated manner, which could have

a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value

of our common shares to decline.

In addition, any potential future restatements could subject us to additional adverse consequences,

including sanctions by the SEC, shareholder litigation and other adverse actions.

Moreover, we may be the subject of further negative

publicity focusing on such financial statement adjustments and resulting restatement and negative reactions from our shareholders, creditors

or others with whom we do business.

The occurrence of any of the foregoing could have a material adverse effect on our business, financial

condition, cash flows and results of operations and could cause the market value of our common shares to decline.

Provisions of our Articles of Incorporation

could deter a change of management and discourage offers to acquire us.

Provisions of our Articles

of Incorporation and By-Laws law may make it more difficult for someone to acquire control of us or for our shareholders to remove existing

management and might discourage a third party from offering to acquire us, even if a change in control or in Management would be beneficial

to our shareholders.

For example, as discussed above, our Articles of Incorporation allows us to issue shares of preferred stock without

any vote or further action by our shareholders.

Our Board of Directors has the authority to fix and determine the relative rights and

preferences of preferred stock.

Our Board of Directors also has the authority to issue preferred stock without further shareholder approval.

As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred

right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common

stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock.

In this regard,

on November 15, 2013, we entered into a Shareholder Rights Plan and, under the Rights Plan, our Board of Directors declared a dividend

distribution of one Right for each outstanding share of our common stock and one right for each share of Common Stock into which any

of our outstanding Preferred Stock is convertible, to shareholders of record at the close of business on that date.

Each Right entitles

the registered holder to purchase from us one “Unit”

consisting of one one-millionth (1/1,000,000) of a share of Series H

Junior Participating preferred stock, at a purchase price of $2.10 per Unit, subject to adjustment, and may be redeemed prior to November

15, 2023, the expiration date, at $0.000001 per Right, unless earlier redeemed by the Company.

The Rights generally are not transferable

apart from the common stock and will not be exercisable unless and until a person or group acquires or commences a tender or exchange

offer to acquire, beneficial ownership of 15% or more of our common stock.

However, for Mr.

Hakim, our Chief Executive Officer, the Rights

Plan’s the 15% threshold excludes shares beneficially owned by him as of November 15, 2013 and all shares issuable to him pursuant

to his employment agreement and the Mikah Note.

Our By-Laws provide for the classification of our Board of Directors into three classes.

Intellectual Property Related Risks

Our ability to protect intellectual property

rights and successfully defend third party allegations of intellectual property infringement is vital to our business and uncertain.

Our success depends on our

ability to protect our current and future products and to defend our intellectual property rights.

If we fail to protect our intellectual

property adequately, competitors may manufacture and market products similar to ours.

We currently hold six patents.

We intend to file further patent applications in the future.

We cannot be certain that our pending patent applications

will result in the issuance of patents.

If patents are issued, third parties may sue us to challenge our patent protection, and

although we know of no reason why they should prevail, it is possible that they could.

In addition to modification or revocation

of patents in legal proceedings, issued patents may later be modified or revoked by the U.S.

Patent and Trademark Office or by

analogous foreign offices.

It is likewise possible that our patent rights may not prevent or limit our present and future competitors

from developing, using or commercializing products that are similar or functionally equivalent to our products.

In addition, we may

be required to obtain licenses to patents, or other proprietary rights of third parties, in connection with the development and

use of our products and technologies as they relate to other persons’

We cannot be certain that our pending patent applications will result in

the issuance of patents.

If patents are issued, third parties may sue us to challenge our patent protection, and although we know of

no reason why they should prevail, it is possible that they could.

In addition to modification or revocation of patents in legal proceedings,

issued patents may later be modified or revoked by the U.S.

Patent and Trademark Office or by analogous foreign offices.

It is likewise

possible that our patent rights may not prevent or limit our present and future competitors from developing, using or commercializing

products that are similar or functionally equivalent to our products.

In addition, we may be required

to obtain licenses to patents, or other proprietary rights of third parties, in connection with the development and use of our products

and technologies as they relate to other persons’

technologies.

At such time as we discover a need to

obtain any such license, we will need to establish whether we will be able to obtain such a license on favorable terms, if at

The failure to obtain the necessary licenses or other rights could preclude the sale, manufacture or distribution of our

We rely particularly

on trade secrets, unpatented proprietary expertise and continuing innovation that we seek to protect, in part, by entering into

confidentiality agreements with licensees, suppliers, employees, and consultants.

We cannot provide assurance that these agreements

will not be breached or circumvented.

At such time as we discover a need to obtain any such license,

we will need to establish whether we will be able to obtain such a license on favorable terms, if at all.

The failure to obtain the necessary

licenses or other rights could preclude the sale, manufacture or distribution of our products.

We rely particularly on trade

secrets, unpatented proprietary expertise and continuing innovation that we seek to protect, in part, by entering into confidentiality

agreements with licensees, suppliers, employees, and consultants.

We cannot provide assurance that these agreements will not be breached

or circumvented.

We also cannot be certain that there will be adequate remedies in the event of a breach.

Disputes may arise concerning the ownership of intellectual property or the applicability of confidentiality agreements.

be sure that our trade secrets and proprietary technology will not otherwise be obtained by other entities, such as government

or regulatory authorities, or become known, obtained, or independently developed by our competitors or by other entities through

means beyond our control.

We also cannot be sure that, if patents are not issued with respect to products arising from research,

we will be able to maintain the confidentiality of information relating to these products.

In addition, efforts to ensure our

intellectual property rights can be costly, time-consuming, and/or ultimately unsuccessful.

Our competitors or other third parties

may allege that we are infringing their intellectual property, forcing us to expend substantial resources in litigation, the outcome

of which is uncertain.

Companies that produce

branded pharmaceutical products routinely bring litigation against ANDA or similar applicants that seek regulatory approval to

manufacture and market generic forms of branded products, alleging patent infringement or other violations of intellectual property

Patent holders may also bring patent infringement suits against companies that are currently marketing and selling approved

generic products.

Disputes may arise concerning

the ownership of intellectual property or the applicability of confidentiality agreements.

We cannot be sure that our trade secrets and

proprietary technology will not otherwise be obtained by other entities, such as government or regulatory authorities, or become known,

obtained, or independently developed by our competitors or by other entities through means beyond our control.

We also cannot be sure

that, if patents are not issued with respect to products arising from research, we will be able to maintain the confidentiality of information

relating to these products.

In addition, efforts to ensure our intellectual property rights can be costly, time-consuming, and/or ultimately

unsuccessful.

Furthermore, companies that

produce branded pharmaceutical products routinely bring litigation against ANDA or similar applicants that seek regulatory approval to

manufacture and market generic forms of branded products, alleging patent infringement or other violations of intellectual property rights.

Patent holders may also bring patent infringement suits against companies that are currently marketing and selling approved generic products.

Litigation often involves significant expense.

Additionally, if the patents of others are held valid, enforceable

and infringed by our current products or future product candidates, we would, unless we could obtain a license from the patent

holder, need to delay selling our corresponding generic product and, if we are already selling our product, cease selling and

potentially destroy existing product stock.

Additionally, we could be required to pay monetary damages or royalties to license

proprietary rights from third parties and we may not be able to obtain such licenses on commercially reasonable terms or at all.

There may be situations

in which we may make business and legal judgments to market and sell products that are subject to claims of alleged patent infringement

prior to final resolution of those claims by the courts based upon our belief that such patents are invalid, unenforceable or

are not infringed by our marketing and sale of such products.

This is commonly referred to in the pharmaceutical industry as an

“at-risk”

The risk involved in an at-risk launch can be substantial because, if a patent holder ultimately

prevails against us, the remedies available to such holder may include, among other things, damages calculated based on the profits

lost by the patent holder, which can be significantly higher than the profits we make from selling the generic version of the

Moreover, if a court determines that such infringement is willful, the damages could be subject to trebling.

face substantial damages from adverse court decisions in such matters.

We could also be at risk for the value of such inventory

that we are unable to market or sell.

The occurrence of

any of the above could have a material adverse effect on our business, financial condition, results of operations, cash flow and

We depend on qualified scientific and

technical employees and are increasingly dependent on our direct sales force, if key personnel were to leave us or if we are unsuccessful

in attracting qualified personnel, our ability to develop products and grow our business could be materially harmed.

Because of the specialized

scientific nature of our business, we are highly dependent upon our ability to continue to attract and retain qualified scientific

and technical personnel.

We are not aware of any pending, significant losses of scientific or technical personnel.

services of, or failure to recruit, key scientific and technical personnel, however, would be significantly detrimental to our

product-development programs.

As a result of our small size and limited financial and other resources, it may be difficult for

us to attract and retain qualified officers and qualified scientific and technical personnel.

In addition, marketing

of our branded product, SequestOx™

will require much greater use of a direct sales force compared to marketing of our generic

Our ability to realize significant revenues from marketing and sales activities depends on our ability or the ability

of our partners to attract and retain qualified sales personnel.

Competition for qualified sales personnel is intense.

to attract or retain qualified sales personnel could negatively impact our sales revenue and have a material adverse effect on

our business, results of operations, financial condition, cash flows and stock price.

We have entered into

employment agreements with our executive officers and certain other key employees.

We do not maintain “

Key Man ”

life insurance on any executives.

If our collaboration or licensing arrangements

are unsuccessful, our revenues and product development may be limited.

We have entered into

several collaborations and licensing arrangements for the development of products.

However, there can be no assurance that any

of these agreements will result in FDA approvals, or that we will be able to market any such finished products at a profit.

Collaboration

and licensing arrangements pose the following risks:

collaborations and licensing arrangements may be terminated,

in which case we will experience increased operating expenses and capital requirements if we elect to pursue further development

of the related product candidate;

collaborators and licensees may delay clinical trials and prolong

clinical development, under-fund a clinical trial program, stop a clinical trial, or abandon a product candidate;

expected revenue might not be generated because milestones may

not be achieved, and product candidates may not be developed;

collaborators and licensees could independently develop, or

develop with third parties, products that could compete with our future products;

the terms of our contracts with current or future collaborators

and licensees may not be favorable to us in the future;

a collaborator or licensee with marketing and distribution rights

to one or more of our products may not commit enough resources to the marketing and distribution of our products, limiting

our potential revenues from the commercialization of a product;

disputes may arise delaying or terminating the research, development,

or commercialization of our product candidates, or result in significant and costly litigation or arbitration;

one or more third-party developers could obtain approval for

a similar product prior to the collaborator or licensee resulting in unforeseen price competition in connection with the development

Our operations could be disrupted if

our information systems fail, if we are unsuccessful in implementing necessary upgrades or if we are subject to cyber-attacks.

Our business depends

on the efficient and uninterrupted operation of our computer and communications systems and networks, hardware and software systems

and our other information technology.

As such, we continuously invest financial and other resources to maintain, enhance, further

develop, replace or add to our information technology infrastructure.

Such efforts carry risks such as cost overruns, project

delays and business interruptions, which could have a material adverse effect on our business, financial condition, results of

operations and cash flows.

Additionally, these measures are not guaranteed to protect against all cybersecurity incidents.

In the ordinary course

of our business, we collect and maintain information, which includes confidential, proprietary and personal information regarding

our customers and employees, in digital form.

Data maintained in digital form is subject to risk of cyber-attacks, which are increasing

in frequency and sophistication and are made by groups and individuals with a wide range of motives and expertise, including criminal

groups, “hackers”

Cyber-attacks could include the deployment of harmful malware, viruses, worms, denial-of-service

attacks, ransomware, social engineering and other means to affect service reliability and threaten data confidentiality, integrity

and availability.

Despite our efforts to monitor and safeguard our systems to prevent data compromise, the possibility of a future

data compromise cannot be eliminated entirely, and risks associated with intrusion, tampering and theft remain.

In addition, we

do not have insurance coverage with respect to system failures or cyber-attacks.

If our systems were to fail or we are unable

to successfully expand the capacity of these systems, or we are unable to integrate new technologies into our existing systems,

our operations and financial results could suffer.

We also have outsourced

certain elements and functions of our operations, including elements of our information technology infrastructure, to third parties,

some of which may be outside the U.S.

As a result, we are managing many independent vendor relationships with third parties who

may or could have access to our confidential information.

The size and complexity of our and our vendors’

systems make such

systems potentially vulnerable to service interruptions.

The size and complexity of our and our vendors’

systems and the

large amounts of confidential information that is present on them also makes them potentially vulnerable to security breaches

from inadvertent or intentional actions by our employees, our partners, our vendors or other third parties, or from attacks by

malicious third parties.

The Company and its

vendors’

information technology operations are spread across multiple, sometimes inconsistent platforms, which pose difficulties

in maintaining data integrity across systems.

The ever-increasing use and evolution of technology, including cloud-based computing,

creates opportunities for the unintentional or improper dissemination or destruction of confidential information stored in the

Company’s systems.

Any breach of our

security measures or the accidental loss, inadvertent disclosure, unapproved dissemination, misappropriation or misuse of trade

secrets, proprietary information or other confidential information, whether as a result of theft, hacking, fraud, trickery or

other forms of deception, or for any other cause, could enable others to produce competing products, use our proprietary technology

or information and/or adversely affect our business position.

Further, any such interruption, security breach, loss or disclosure

of confidential information could result in financial, legal, business and reputational harm to our company and could have a material

adverse effect on our business, financial condition, results of operations, cash flows and stock price.

We may experience pricing pressure

on the price of our products due to social or political pressure to lower the cost of drugs, which would reduce our revenue and

future profitability.

We may experience

downward pricing pressure on the price of our products due to social or political pressure to lower the cost of drugs, which would

reduce our revenue and future profitability.

Recent events have resulted in increased public and governmental scrutiny of the

cost of drugs, especially in connection with price increases following companies’

acquisition of the rights to certain drug

In particular, U.S.

federal prosecutors have issued subpoenas to pharmaceutical companies seeking information about

drug pricing practices.

In addition, the U.S.

Senate is publicly investigating a number of pharmaceutical companies relating to

drug-price increases and pricing practices.

Our revenue and future profitability could be negatively affected if these inquiries

were to result in legislative or regulatory proposals that limit our ability to increase the prices of our products.

In addition, in September

2016, a group of U.S.

Senators introduced legislation that would require pharmaceutical manufacturers to justify price increases

of more than 10% in a 12-month period, and a large number of individual States have introduced legislation aimed at drug pricing

regulation, transparency or both.

While this proposed legislation has not been enacted into law to date, our revenue and future

profitability could be negatively affected by the passage of this law or similar federal or state legislation.

Furthermore, pressure

from social activist groups and future government regulations may also put downward pressure on the price of drugs, which could

result in downward pressure on the prices of our products in the future.

We may not have and may be unable to

obtain or maintain adequate insurance coverage to cover all potential liabilities.

We may not have and

may be unable to obtain or maintain in the future insurance, on acceptable terms, that provide adequate coverage against potential

liabilities or other losses, such as the cost of a recall or defense against claims, if any claim is brought against us, for any

reason, regardless of the merits, success or failure of such claim.

In the past year, as a result of product liability and securities

litigation in the general marketplace, and a threatened claim of action against us in relation to the shareholder vote conducted

in December 2019, our insurance premiums have increased significantly, while also providing no greater, and in most cases, lower

levels of coverage.

The significant premium increases experienced were prior to, and accordingly did not consider, the impact

of the COVID-19 global pandemic on the legal and litigation environment in which we and all other companies operate.

The amount of our

insurance coverage is accordingly limited by our financial resources and greatly impacted by the significant premium increases

of the past year and reasonably expected further increases in the near to mid-term due to the global pandemic.

Furthermore, even

where claims are submitted to insurance carriers for defenses and indemnity that are within coverage limits, there can be no assurance

that such claims will be fully covered by insurance or that the indemnitors or insurers will remain financially viable to provide

reimbursement consistent with coverage maintained.

Any failure by us,

to obtain sufficient insurance coverage, with reimbursement of claims being provided and generate sufficient cash flow, if needed,

above insurance coverage, to pay amounts due in relation to potential claims, will have a material adverse effect on our business,

financial condition, results of operations, cash flow and ability to operate as a going concern.

of Federal Income Tax Reform

On December 22, 2017,

President Trump signed into law the Tax Cuts and Jobs Act (“TCJA”), that significantly changes the Internal Revenue

Code of 1986, as amended.

The TCJA, among other things, contains significant changes to corporate taxation, including reduction

of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest

expense to 30% of adjusted earnings (except for certain small businesses), limitation of the deduction for net operating losses

to 80% of current year taxable income and elimination of net operating loss carrybacks, one time taxation of offshore earnings

at reduced rates regardless of whether they are repatriated, immediate deductions for certain new investments instead of deductions

for depreciation expense over time, and modifying or repealing many business deductions and credits.

Any federal net operating

loss carryovers created in 2018 and thereafter will be carried forward indefinitely pursuant to the TCJA.

The changes described

herein could, individually or in aggregate, increase our future effective tax rate and have a material adverse effect on our business,

financial condition, results of operations, cash flows and stock price.

In addition, prospective

or retroactive regulatory and administrative guidance relating to the TCJA could adversely impact our business and current or

future projections of cash taxes.

Risk Related to Our Common Stock

Our stock price has been volatile and

may fluctuate in the future.

The market price for

the publicly traded stock of pharmaceutical companies is generally characterized by high volatility.

There has been significant

volatility in the market prices for our Common Stock.

For the twelve months ended March 31, 2020, the closing sale price on the

OTC Bulletin Board (“

OTC-BB ”) of our Common Stock fluctuated from a high of $0.1410 per share to a low of $0.033

The price per share of our Common Stock may not exceed or even remain at current levels in the future.

The market price

of our Common Stock may be affected by a number of factors, including, without limitation:

Additionally, if the patents of others are held valid, enforceable and infringed by our

current products or future product candidates, we would, unless we could obtain a license from the patent holder, need to delay selling

our corresponding generic product and, if we are already selling our product, cease selling and potentially destroy existing product

Additionally, we could be required to pay monetary damages or royalties to license proprietary rights from third parties and we

may not be able to obtain such licenses on commercially reasonable terms or at all.

There may be situations in

which we may make business and legal judgments to market and sell products that are subject to claims of alleged patent infringement

prior to final resolution of those claims by the courts based upon our belief that such patents are invalid, unenforceable or are not

infringed by our marketing and sale of such products.

This is commonly referred to in the pharmaceutical industry as an “at-risk”

The risk involved in an at-risk launch can be substantial because, if a patent holder ultimately prevails against us, the remedies

available to such holder may include, among other things, damages calculated based on the profits lost by the patent holder, which can

be significantly higher than the profits we make from selling the generic version of the product.

Moreover, if a court determines that

such infringement is willful, the damages could be subject to trebling.

We could face substantial damages from adverse court decisions

in such matters.

We could also be at risk for the value of such inventory that we are unable to market or sell.

The occurrence of any of

the above could have a material adverse effect on our business, financial condition, results of operations, cash flow and stock price.

Risks Related to our Common Shares

Dilution from issuance of shares to Lincoln

Park, Directors, Employees, Consultants or upon exercise of warrants and options or the perception that dilution may occur could cause

the price per share of common stock to fall.

On July 8, 2020, we entered

into the Purchase Agreement with Lincoln Park, pursuant to which Lincoln Park has committed to purchase up to $25,000,000 of our common

Concurrently with the execution of the Purchase Agreement, we issued 5,975,857 shares of our common stock to Lincoln Park as an

initial fee for its commitment to purchase shares of our common stock under the Purchase Agreement.

Furthermore, for each additional

purchase by Lincoln Park, additional commitment shares in commensurate amounts up to a total of 5,975,857 shares will be issued based

upon the relative proportion of the aggregate amount of $25,000,000 purchased by Lincoln Park.

The purchase shares that may be sold pursuant

to the Purchase Agreement may be sold by us to Lincoln Park at our discretion from time to time over a 36-month period commencing after

July 27, 2020 and expiring on August 1, 2023.

The purchase price for the shares that we may sell to Lincoln Park under the Purchase Agreement

will fluctuate based on the price of our common stock.

Depending on market liquidity at the time, sales of such shares may cause the

trading price of our common stock to fall.

We generally have the right

to control the timing and amount of any sales of our shares to Lincoln Park.

Additional sales of our common stock, if any, to Lincoln

Park will depend upon market conditions and other factors to be determined by us.

Lincoln Park may ultimately purchase all, some, or

none of the shares of our common stock that may be sold pursuant to the Purchase Agreement and, after it has acquired shares, Lincoln

Park may sell all, some or none of those shares.

In addition, as of March

31, 2021, there were outstanding warrants to purchase an aggregate of approximately 79 million shares of Common Stock at a cash exercise

price of $0.1521 per share, vested options to purchase an aggregate of approximately 5.2 million shares at a weighted average cash exercise

price of $0.13.

Additional shares of Common Stock may be issuable as a result of anti-dilution provisions in the outstanding warrants,

with such provisions excluding any shares issued to Lincoln Park from consideration .

As a result of the above

discussed potential issuance of securities, such issuances by us could result in substantial dilution to the interests of other holders

of our common stock.

Additionally, the sale of a substantial number of shares of our common stock to Lincoln Park or pursuant to the

conversion or exercise of outstanding shares of warrants, or the anticipation of such issuances, could make it more difficult for us

to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

Furthermore, pursuant to

the Company’s policies relating to the compensation of Directors, 2/3 of all director fees are paid via the issuance of shares

of Common Stock, with such shares being valued at the simple average of the closing price of the Company’s Common Stock for each

day in the period for which the director fees were incurred.

In addition, members of the Company’s management, certain employees

and consultants receive a portion of their salaries or compensation via the issuance of shares Common Stock, with such shares being valued

by the same method as that used for the shares issued in payment of director fees.

The issuance of these shares

is dilutive to holders of our Common Stock, and the subsequent sale of these shares, or the perception that the sale of these shares

may occur, could cause the price of our common stock to fall.

Our common stock is a penny stock, quoted

on the OTC bulletin board, with rules in place that could limit trading and liquidity of our shares, increased transaction costs that

could adversely affect our price per share.

Our common stock is a “low-priced”

security or “penny stock”

under rules promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange

In accordance with these rules, broker-dealers participating in transactions in low-priced securities must first deliver

a risk disclosure document which describes the risks associated with such stocks, the broker-dealer’s duties in selling the stock,

the customer’s rights and remedies and certain market and other information.

Furthermore, the broker-dealer must make a suitability

determination approving the customer for low-priced stock transactions based on the customer’s financial situation, investment

experience and objectives.

Broker-dealers must also disclose these restrictions in writing to the customer, obtain specific written consent

from the customer, and provide monthly account statements to the customer.

The effect of these restrictions will likely decrease the

willingness of broker-dealers to make a market in our Common Stock, will decrease liquidity of our Common Stock and will increase transaction

costs for sales and purchases of our Common Stock as compared to other securities.

In addition, our Common stock

is quoted on the Over-the-Counter Bulletin Board (the “OTCBB”) which is a regulated quotation service that displays real-time

quotes, last sale prices and volume limitations in over-the-counter securities.

Because trades and quotations on the OTCBB involve a

manual process, the market information for such securities cannot be guaranteed.

In addition, quote information, or even firm quotes,

may not be available.

The manual execution process may delay order processing and intervening price fluctuations may result in the failure

of a limit order to execute or the execution of a market order at a significantly different price.

Execution of trades, execution reporting

and the delivery of legal trade confirmations may be delayed significantly.

Consequently, one may not be able to sell shares of our Common

Stock at the optimum trading prices.

When fewer shares of a security

are being traded on the OTCBB, volatility of prices may increase, and price movement may outpace the ability to deliver accurate quote

Lower trading volumes in a security may result in a lower likelihood of an individual’s orders being executed, and

current prices may differ significantly from the price one was quoted by the OTCBB at the time of the order entry.

Orders for OTCBB securities

may be cancelled or edited like orders for other securities.

All requests to change or cancel an order must be submitted to, received,

and processed by the OTCBB.

Due to the manual order processing involved in handling OTCBB trades, order processing and reporting may

be delayed, and an individual may not be able to cancel or edit his order.

Consequently, one may not be able to sell shares of Common

Stock at the optimum trading prices.

The dealer’s spread

(the difference between the bid and ask prices) may be large and may result in substantial losses to the seller of securities on the

OTCBB if the Common Stock or other security must be sold immediately.

Further, purchasers of securities may incur an immediate “paper”

loss due to the price spread.

Moreover, dealers trading on the OTCBB may not have a bid price for securities bought and sold through

Due to the foregoing, demand for securities that are traded through the OTCBB may be decreased or eliminated.

Shareholder activism could negatively affect

In recent years, shareholder

activism involving corporate governance, fiduciary duties of Directors and Officers, strategic direction and operations has become increasingly

If we become the subject of such shareholder activism, their demands may disrupt our business and divert the attention of

our management, Board and employees.

Also, we may incur substantial costs, including legal fees and other expenses, related to such activist

shareholder matters.

Perceived uncertainties resulting from such activist shareholder matters may result in loss of potential business

opportunities with our current and potential customers and business partners, be exploited by our competitors and make attracting and

retaining qualified personnel more difficult.

In addition, such shareholder activism may cause significant fluctuations in our share

price based on temporary or speculative market perceptions, uncertainties or other factors that do not necessarily reflect the underlying

fundamentals and prospects of our business.

The effects of shareholder

activism pursued against the Company could have an adverse material effect on our business, financial condition, results of operations,

cash flows and stock price.

Our stock price has been volatile.

The market price for the publicly

traded stock of pharmaceutical companies is generally characterized by high volatility.

There has been significant volatility in the market

prices for our Common Stock.

For the twelve months ended March 31, 2021, the closing sale price on the OTC Bulletin Board (“

OTCBB ”)

of our Common Stock fluctuated from a high of $0.10 per share to a low of $0.05 per share.

The price per share of our Common Stock may

not exceed or even remain at current levels in the future.

The market price of our Common Stock may be affected by a number of factors,

including, without limitation:

Results of our clinical trials;

Approval or disapproval of our ANDAs or NDAs;

Announcements of innovations, new products, or new patents by

us or by our competitors;

Announcements of innovations, new products, or new patents by us or

by our competitors;

Announcements of other material events;

2 unchanged sentences

Proxy contests or litigation;

News regarding the efficacy of, safety of or demand for drugs

or drug technologies;

Economic and market conditions, generally and related to the

pharmaceutical industry;

News regarding the efficacy of, safety of or demand for drugs or drug

technologies;

Economic and market conditions, generally and related to the pharmaceutical

Healthcare legislation;

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Fluctuations in our operating results.

The sale or issuance of our common

stock to Lincoln Park or upon conversion of outstanding preferred stock or exercise of outstanding warrants and options may cause

dilution and the sale of the shares of common stock acquired by Lincoln Park or the issuance of shares upon conversion or exercise

of outstanding preferred stock and warrants, or the perception that such sales and issuances may occur, could cause the price

of our common stock to fall.

On May 1, 2017, we

entered into the Purchase Agreement with Lincoln Park, pursuant to which Lincoln Park has committed to purchase up to $40,000,000

of our common stock.

Concurrently with the execution of the Purchase Agreement, we issued 5,540,550 shares of our common stock

to Lincoln Park as an initial fee for its commitment to purchase shares of our common stock under the Purchase Agreement.

for each additional purchase by Lincoln Park, additional commitment shares in commensurate amounts up to a total of 5,540,550

shares will be issued based upon the relative proportion of the aggregate amount of $40,000,000 purchased by Lincoln Park.

purchase shares that may be sold pursuant to the Purchase Agreement may be sold by us to Lincoln Park at our discretion from time

to time over a 36-month period commencing after June 5, 2017 and expiring on July 1, 2020.

The purchase price for the shares that

we may sell to Lincoln Park under the Purchase Agreement will fluctuate based on the price of our common stock.

Depending on market

liquidity at the time, sales of such shares may cause the trading price of our common stock to fall.

We generally have

the right to control the timing and amount of any sales of our shares to Lincoln Park.

Additional sales of our common stock, if

any, to Lincoln Park will depend upon market conditions and other factors to be determined by us.

Lincoln Park may ultimately

purchase all, some, or none of the shares of our common stock that may be sold pursuant to the Purchase Agreement and, after it

has acquired shares, Lincoln Park may sell all, some or none of those shares.

In addition, as of

March 31, 2020, there were outstanding shares of preferred stock convertible into approximately 158 million shares of Common Stock

and warrants to purchase an aggregate of approximately 79 million shares of Common Stock at an exercise price of $0.1521 per share,

vested options to purchase an aggregate of approximately 4.9 million shares at a weighted average exercise price of $0.14.

shares of Common Stock may be issuable as a result of anti-dilution provisions in the outstanding preferred stock and warrants.

As a result of the

above discussed potential issuance of securities, such issuances by us could result in substantial dilution to the interests of

other holders of our common stock.

Additionally, the sale of a substantial number of shares of our common stock to Lincoln Park

or pursuant to the conversion or exercise of outstanding shares of preferred stock and warrants, or the anticipation of such issuances,

could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we

might otherwise wish to effect sales.

The issuance of our common stock to

Directors, Employees, and Consultants in payment of fees and salaries cause dilution and the sale of these shares of common stock

so issued, or the perception that sales of these shares so issued may occur, could cause the price of our common stock to fall.

Pursuant to the Company’s

policies relating to the compensation of Directors, 2/3 of all director fees are paid via the issuance of shares of Common Stock,

with such shares being valued at the simple average of the closing price of the Company’s Common Stock for each day in the

period for which the director fees were incurred.

In addition, members of the Company’s management, certain employees and

consultants receive a portion of their salaries or compensation via the issuance of shares Common Stock, with such shares being

valued by the same method as that used for the shares issued in payment of director fees.

The issuance of these

shares is dilutive to holders of our Common Stock, and the subsequent sale of these shares, or the perception that the sale of

these shares may occur, could cause the price of our common stock to fall.

Raising of additional funding through

sales of our securities could cause existing holders of our Common Stock to experience substantial dilution.

Capital raises through sales of securities

may cause substantial dilution to existing shareholders.

Any additional financing

that involves the further sale of our securities could cause existing holders of our Common Stock to experience substantial dilution.

On the other hand, if we incurred debt, we would be subject to risks associated with indebtedness, including the risk that interest

rates might fluctuate, and cash flow would be insufficient to pay principal and interest on such indebtedness.

The issuance of additional shares of

our Common Stock or our preferred stock could make a change of control more difficult to achieve.

On the other hand, if we incurred debt, we would be subject to risks associated with indebtedness, including the risk that interest rates

might fluctuate, and cash flow would be insufficient to pay principal and interest on such indebtedness.

Issuance of shares of common or preferred

stock could make achieving a change of control more difficult.

The issuance of additional

shares of our Common Stock, including those shares issued pursuant to conversion of convertible preferred shares, or the issuance

of shares of an additional series of preferred stock could be used to make a change of control of us more difficult and expensive.

Under certain circumstances, such shares could be used to create impediments to, or frustrate persons seeking to cause, a takeover

or to gain control of us.

Such shares could be sold to purchasers who might side with our Board of Directors in opposing a takeover

bid that the Board of Directors determines not to be in the best interests of our shareholders.

It might also have the effect

of discouraging an attempt by another person or entity through the acquisition of a substantial number of shares of our Common

Stock to acquire control of us with a view to consummating a merger, sale of all or part of our assets, or a similar transaction,

since the issuance of new shares could be used to dilute the stock ownership of such person or entity.

Provisions of our Articles of Incorporation

and By-Laws could defer a change of our Management which could discourage, or delay offers to acquire us.

Provisions of our

Articles of Incorporation and By-Laws law may make it more difficult for someone to acquire control of us or for our shareholders

to remove existing management and might discourage a third party from offering to acquire us, even if a change in control or in

Management would be beneficial to our shareholders.

For example, as discussed above, our Articles of Incorporation allows us to

issue shares of preferred stock without any vote or further action by our shareholders.

Our Board of Directors has the authority

to fix and determine the relative rights and preferences of preferred stock.

Our Board of Directors also has the authority to

issue preferred stock without further shareholder approval.

As a result, our Board of Directors could authorize the issuance of

a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive

dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares,

together with a premium, prior to the redemption of our common stock.

In this regard, on November 15, 2013, we entered into a

Shareholder Rights Plan and, under the Rights Plan, our Board of Directors declared a dividend distribution of one Right for each

outstanding share of our common stock and one right for each share of Common Stock into which any of our outstanding Preferred

Stock is convertible, to shareholders of record at the close of business on that date.

Each Right entitles the registered holder

to purchase from us one “Unit”

consisting of one one-millionth (1/1,000,000) of a share of Series H Junior Participating

preferred stock, at a purchase price of $2.10 per Unit, subject to adjustment, and may be redeemed prior to November 15, 2023,

the expiration date, at $0.000001 per Right, unless earlier redeemed by the Company.

The Rights generally are not transferable

apart from the common stock and will not be exercisable unless and until a person or group acquires or commences a tender or exchange

offer to acquire, beneficial ownership of 15% or more of our common stock.

However, for Mr.

Hakim, our Chief Executive Officer,

the Rights Plan’s the 15% threshold excludes shares beneficially owned by him as of November 15, 2013 and all shares issuable

to him pursuant to his employment agreement and the Mikah Note.

Our By-Laws provide for the classification of our Board of Directors

into three classes.

There are inherent uncertainties involved

in estimates, judgments and assumptions used in the preparation of financial statements in accordance with GAAP.

Any future changes

in estimates, judgments and assumptions used or necessary revisions to prior estimates, judgments or assumptions could lead to

a restatement of our results.

The consolidated financial

statements included in this Annual Report on Form 10-K are prepared in accordance with GAAP.

This involves making estimates, judgments

and assumptions that affect reported amounts of assets (including intangible assets), liabilities, mezzanine equity, stockholders’

equity, operating revenues, costs of sales, operating expenses, other income, and other expenses.

Estimates, judgments, and assumptions

are inherently subject to change in the future and any necessary revisions to prior estimates, judgments or assumptions could

lead to a restatement.

Any such changes could result in corresponding changes to the amounts of assets (including goodwill and

other intangible assets), liabilities, mezzanine equity, stockholders’

equity, operating revenues, costs of sales, operating

expenses, other income and other expenses.

Our Common Stock is considered a “penny

stock”.

The application of the “penny stock”

rules to our Common Stock could limit the trading and liquidity

of our Common Stock, adversely affect the market price of our Common Stock, and increase the transaction costs to sell shares

of our Common Stock.

Our common stock is

a “low-priced”

security or “penny stock”

under rules promulgated under the Securities Exchange Act of

1934, as amended.

In accordance with these rules, broker-dealers participating in transactions in low-priced securities must first

deliver a risk disclosure document which describes the risks associated with such stocks, the broker-dealer’s duties in

selling the stock, the customer’s rights and remedies and certain market and other information.

Furthermore, the broker-dealer

must make a suitability determination approving the customer for low-priced stock transactions based on the customer’s financial

situation, investment experience and objectives.

Broker-dealers must also disclose these restrictions in writing to the customer,

obtain specific written consent from the customer, and provide monthly account statements to the customer.

The effect of these

restrictions will likely decrease the willingness of broker-dealers to make a market in our Common Stock, will decrease liquidity

of our Common Stock and will increase transaction costs for sales and purchases of our Common Stock as compared to other securities.

Our Common Stock is quoted on the Over-the-Counter

Bulletin Board.

The Over-the-Counter Bulletin Board is a quotation system, not an issuer listing service, market, or exchange,

therefore, buying and selling stock on the Over-the-Counter Bulletin Board is not as efficient as buying and selling stock through

As a result, it may be difficult to sell our Common Stock for an optimum trading price or at all.

The Over-the-Counter

Bulletin Board (the “OTCBB”) is a regulated quotation service that displays real-time quotes, last sale prices and

volume limitations in over-the-counter securities.

Because trades and quotations on the OTCBB involve a manual process, the market

information for such securities cannot be guaranteed.

In addition, quote information, or even firm quotes, may not be available.

The manual execution process may delay order processing and intervening price fluctuations may result in the failure of a limit

order to execute or the execution of a market order at a significantly different price.

Execution of trades, execution reporting

and the delivery of legal trade confirmations may be delayed significantly.

Consequently, one may not be able to sell shares of

our Common Stock at the optimum trading prices.

When fewer shares

of a security are being traded on the OTCBB, volatility of prices may increase, and price movement may outpace the ability to

deliver accurate quote information.

Lower trading volumes in a security may result in a lower likelihood of an individual’s

orders being executed, and current prices may differ significantly from the price one was quoted by the OTCBB at the time of the

Orders for OTCBB securities may be cancelled or edited like orders for other securities.

All requests to change or

cancel an order must be submitted to, received, and processed by the OTCBB.

Due to the manual order processing involved in handling

OTCBB trades, order processing and reporting may be delayed, and an individual may not be able to cancel or edit his order.

Consequently,

one may not be able to sell shares of Common Stock at the optimum trading prices.

The dealer’s

spread (the difference between the bid and ask prices) may be large and may result in substantial losses to the seller of securities

on the OTCBB if the Common Stock or other security must be sold immediately.

Further, purchasers of securities may incur an immediate

“paper”

loss due to the price spread.

Moreover, dealers trading on the OTCBB may not have a bid price for securities

bought and sold through the OTCBB.

Due to the foregoing, demand for securities that are traded through the OTCBB may be decreased

or eliminated.

shares of our Common Stock, including those shares issued pursuant to conversion of convertible preferred shares, or the issuance of

shares of an additional series of preferred stock could be used to make a change of control of us more difficult and expensive.

certain circumstances, such shares could be used to create impediments to, or frustrate persons seeking to cause, a takeover or to gain

control of us.

Such shares could be sold to purchasers who might side with our Board of Directors in opposing a takeover bid that the

Board of Directors determines not to be in the best interests of our shareholders.

It might also have the effect of discouraging an attempt

by another person or entity through the acquisition of a substantial number of shares of our Common Stock to acquire control of us with

a view to consummating a merger, sale of all or part of our assets, or a similar transaction, since the issuance of new shares could

be used to dilute the stock ownership of such person or entity.

We have no plans to pay regular dividends

on our ordinary shares or to conduct ordinary share repurchases.

We do not intend to

pay any cash dividends either currently or in the foreseeable future on our ordinary shares.

Additionally, we do not intend to

conduct ordinary share repurchases either currently or in the foreseeable future.

1B UNRESOLVED STAFF COMMENTS

or conduct share purchases.

We do not intend to pay any

cash dividends either currently or in the foreseeable future on our common shares.

Additionally, we do not intend to conduct share repurchases

either currently or in the foreseeable future.

UNRESOLVED STAFF COMMENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors