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Item 5. Market for Registrant’s Common Equity

2021-06-14 compared with 2020-06-29 · 509 added, 709 removed, 124 unchanged (91% of the section changed)

ITEM 5 MARKET

FOR COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR COMPANY’S

COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our Common Stock is

quoted on the Over-the-Counter Bulletin Board under the ticker symbol “ELTP”.

The following table shows, for the periods

indicated, the high and low bid prices per share of our Common Stock as by OTC Bulletin Board.

Over-the-counter market quotations

reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Our Common Stock is quoted

on the Over-the-Counter Bulletin Board under the ticker symbol “ELTP”.

The following table shows, for the periods indicated,

the high and low bid prices per share of our Common Stock as by OTC Bulletin Board.

Over-the-counter market quotations reflect inter-dealer

prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Quarter Ended

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June 30, 2019

As of June 26, 2020,

the last reported sale price of our Common Stock, as reported by the OTCBB, was $0.0900.

As of June 23, 2020, there were, respectively, approximately

124 and 1 holders of record of our Common Stock and Series J Preferred Stock.

We have never paid

cash dividends on our Common Stock.

Unless required to pay dividends on our Series J Preferred Stock, we currently anticipate

that we will retain all available funds for use in the operation and expansion of our business.

As of June 7, 2021, the last reported

sale price of our Common Stock, as reported by the OTCBB, was $0.60.

As of June 7, 2021, there

were, respectively, approximately 116 holders of record of our Common Stock.

We have never paid cash dividends

on our Common Stock.

We currently anticipate that we will retain all available funds for use in the operation and expansion of our business.

Recent Sales of Unregistered Securities

Securities Authorized for Issuance under Equity Compensation

The following table

sets forth certain information regarding Elite’s equity compensation plans as of March 31, 2020:

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets

forth certain information regarding Elite’s equity compensation plans as of March 31, 2021:

Plan Category

securities to

securities to be

price per share

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Number of securities

remaining available

for future issuance

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Equity compensation plans approved by security holders (1)

Equity compensation plans not approved by security holders

(1) Represents securities reserved and available for grant under the 2014

Equity Incentive Plan

(2) Represents securities reserved and available for grant under the 2009

Equity Incentive Plan

(1) Represents

securities reserved and available for grant under the 2014 Equity Incentive Plan

2014 Equity Incentive Plan

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Plan (the “

2014 Plan ”) was adopted by the Board on March 17, 2014, to attract, motivate and retain officers,

employees, consultants, and directors by issuing common stock-based incentives to directors, officers, employees, and consultants

who are selected for participation.

By relating incentive compensation to increases in shareholder value, it is hoped that these

individuals will both continue in the long-term service of the Company and be motivated to experience a heightened interest and

participate in the future success of Company operations.

An aggregate of 3,000,000 shares of Common Stock are reserved for grant

and issuance pursuant to the 2014 Plan.

2014 Plan ”) was adopted by the Board on March 17, 2014, to attract, motivate and retain officers, employees,

consultants, and directors by issuing common stock-based incentives to directors, officers, employees, and consultants who are selected

for participation.

By relating incentive compensation to increases in shareholder value, it is hoped that these individuals will both

continue in the long-term service of the Company and be motivated to experience a heightened interest and participate in the future success

of Company operations.

An aggregate of 3,000,000 shares of Common Stock are reserved for grant and issuance pursuant to the 2014 Plan.

The 2014 Plan is administered and interpreted by our Compensation Committee (the “

Administrator ”).

Awards under the 2014 Plan may be granted in any one or all of the following forms:

(i) incentive stock options (“ISOs”)

intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”);

(ii) non-qualified

stock options (“NSOs”);

(iii) stock appreciation rights, which may be granted in tandem with options or on a stand-alone

Awards under the

2014 Plan may be granted in any one or all of the following forms:

(i) incentive stock options (“ISOs”) intended to qualify

under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”);

(ii) non-qualified stock options (“NSOs”);

(iii) stock appreciation rights, which may be granted in tandem with options or on a stand-alone basis;

(iv) shares of restricted stock;

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(vi) performance shares, and (vii) performance units.

Options may not be

granted under the 2014 Plan at an exercise price of less than the fair market value of the common stock on the date of grant and

the term of options cannot exceed ten years.

Options may not be granted

under the 2014 Plan at an exercise price of less than the fair market value of the common stock on the date of grant and the term of

options cannot exceed ten years.

ISOs may only be granted to persons who are employees of the Company.

price of an ISO granted to a holder of more than 10% of the common stock must be at least 110% of the fair market value of the

common stock on the date of grant, and the term of these options cannot exceed five years.

The Administrator

also may grant stock appreciation rights.

Stock appreciation rights represent the right to receive upon exercise an amount payable

in cash or common stock equal to (A) the number of shares with respect to which the stock appreciation right is being exercised

multiplied by (B) the excess of (i) the fair market value of a share of common stock on the date the award is exercised over (ii)

the exercise price specified in the award agreement.

Under the performance

award component of the 2014 Plan, participants may be granted an award denominated in shares of common stock or in dollars.

of the performance targets, or multiple performance targets established by the Administrator relating to corporate, group, unit

or individual performance based upon standards set by the Administrator shall entitle the participant to payment at the full amount

or a portion of the amount specified with respect to the award, at the discretion of the Administrator based on its evaluation

of the performance of the target goals applicable to such award.

Payment may be made in cash, common stock or any combination

thereof, as determined by the Administrator, and shall be adjusted in the event the participant ceases to be an employee of the

Company before the end of a performance cycle by reason of death, disability, or retirement.

The exercise price of an ISO granted

to a holder of more than 10% of the common stock must be at least 110% of the fair market value of the common stock on the date of grant,

and the term of these options cannot exceed five years.

The Administrator also may

grant stock appreciation rights.

Stock appreciation rights represent the right to receive upon exercise an amount payable in cash or

common stock equal to (A) the number of shares with respect to which the stock appreciation right is being exercised multiplied by (B)

the excess of (i) the fair market value of a share of common stock on the date the award is exercised over (ii) the exercise price specified

in the award agreement.

Under the performance award

component of the 2014 Plan, participants may be granted an award denominated in shares of common stock or in dollars.

Achievement of

the performance targets, or multiple performance targets established by the Administrator relating to corporate, group, unit or individual

performance based upon standards set by the Administrator shall entitle the participant to payment at the full amount or a portion of

the amount specified with respect to the award, at the discretion of the Administrator based on its evaluation of the performance of

the target goals applicable to such award.

Payment may be made in cash, common stock or any combination thereof, as determined by the

Administrator, and shall be adjusted in the event the participant ceases to be an employee of the Company before the end of a performance

cycle by reason of death, disability, or retirement.

Under the stock component

of the 2014 Plan, the Administrator may, in selected cases, grant to a plan participant a given number of shares of restricted

stock or unrestricted stock.

Restricted stock under the 2014 Plan is common stock restricted as to sale pending fulfilment of

such vesting schedule and employment requirements as the Administrator shall determine.

Prior to the lifting of the restrictions,

the participant will nevertheless be entitled to receive distributions in liquidation and dividends on, and to vote the shares

of, the restricted stock.

of the 2014 Plan, the Administrator may, in selected cases, grant to a plan participant a given number of shares of restricted stock

or unrestricted stock.

Restricted stock under the 2014 Plan is common stock restricted as to sale pending fulfilment of such vesting

schedule and employment requirements as the Administrator shall determine.

Prior to the lifting of the restrictions, the participant

will nevertheless be entitled to receive distributions in liquidation and dividends on, and to vote the shares of, the restricted stock.

The 2014 Plan provides for forfeiture of restricted stock for breach of conditions of grant.

The 2014 Plan also

permits the board of directors (and not the Compensation Committee) to grant awards of NSOs, restricted stock or unrestricted

stock to non-employee directors.

The board may authorize individual grants or adopt one or more formulas for grants of awards

to the non-employee directors.

All options granted to non-employee directors must have an exercise price equal to the fair market

value at the date of grant.

The exercise price

of awards may be paid in cash, in shares of common stock (valued at fair market value at the date of exercise), by delivery of

a notice of exercise together with irrevocable instructions to a broker to deliver to the Company the proceeds of the sale of

common stock or of a loan from the broker sufficient to pay the exercise price, by having the Company withhold from shares being

exercised the number of shares having a fair market value equal to the exercise price for all shares being exercised, or by a

combination of the foregoing means of payment, as may be determined by the Administrator.

2009 Equity Incentive Plan

Our 2009 Equity Incentive

Plan was adopted by the Board on November 24, 2009, to provide incentives to attract, retain and motivate eligible persons whose

present and potential contributions are important to the success of Elite and its subsidiaries, by offering them an opportunity

to participate in our future performance through awards of Options, the right to purchase Common Stock and Stock Bonuses.

of 8,000,000 shares of Common Stock are reserved for grant and issuance pursuant to the 2009 Equity Incentive Plan.

The 2009 Equity

Incentive Plan is administered and interpreted by our Compensation Committee (the “

Compensation Committee ”).

Under the 2009 Equity Incentive Plan, we are permitted to grant both incentive stock options (“Incentive Stock Options”

or “ISOs”) within the meaning of Section 422 of the Internal Revenue Code (the “Code”) to employees, and

other options which do not qualify as Incentive Stock Options (the “

Non-Qualified Options ”) to employees, officers,

Directors of and consultants to Elite.

The per share purchase price of options granted under the 2009 Equity Incentive Plan may

not be less than the fair market value of the shares on the date of the grant, provided that the exercise price of any ISO granted

to a ten percent stockholder will not be less than 110% of the fair market value on the date of the grant.

Recipients of ISO’s

and Non-Qualified Options have no voting, dividend, or other rights as stockholders with respect to shares of Common Stock covered

by options prior to becoming the holders of record of such shares.

Under the 2009 Equity

Incentive Plan, we also are permitted to offer stock awards (“

2009 Equity Incentive Plan Stock Awards ”) to

eligible persons.

The 2009 Equity Incentive Plan defines such stock awards as an offer by us to sell to an eligible person shares

that may or may not be subject to restrictions.

The purchase of price of shares sold pursuant to a 2009 Equity Incentive Plan

Stock Award may not be less than the fair market value of the shares on the grant date, provided, however, that the number of

shares issued for the payment of employee and officers’

salaries, or directors’

fees will be computed using the average

daily closing price, which is defined as the simple average of the closing price of each trading day in the quarter or other applicable

period for which payment is due.

We also are permitted

to award stock bonuses under the 2009 Equity Incentive Plan, which defines such stock bonuses as an award of shares for extraordinary

services rendered to the Company.

The 2009 Equity Incentive

Plan expired on November 24, 2019.

The 2014 Plan also permits

the board of directors (and not the Compensation Committee) to grant awards of NSOs, restricted stock or unrestricted stock to non-employee

The board may authorize individual grants or adopt one or more formulas for grants of awards to the non-employee directors.

All options granted to non-employee directors must have an exercise price equal to the fair market value at the date of grant.

The exercise price of awards

may be paid in cash, in shares of common stock (valued at fair market value at the date of exercise), by delivery of a notice of exercise

together with irrevocable instructions to a broker to deliver to the Company the proceeds of the sale of common stock or of a loan from

the broker sufficient to pay the exercise price, by having the Company withhold from shares being exercised the number of shares having

a fair market value equal to the exercise price for all shares being exercised, or by a combination of the foregoing means of payment,

as may be determined by the Administrator.

Issuer Purchases of Equity Securities

ITEM 6 SELECTED

FINANCIAL DATA

SELECTED FINANCIAL

Not Applicable.

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DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Management’s

Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is intended to provide a reader of our

consolidated financial statements with a narrative from the perspective of our management on our financial condition, results

of operations, liquidity and certain other factors that may affect our future results.

You should read the following discussion

and analysis of our financial condition and results of operations together with our financial statements and the related notes

and other financial data included elsewhere in this Annual Report.

Some of the information contained in this discussion and analysis

or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes

forward-looking statements that involve risks and uncertainties.

You should review Item 1A of this Annual Report for a discussion

of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking

statements contained in the following discussion and analysis.

Management’s Discussion

and Analysis of Financial Condition and Results of Operations, or MD&A, is intended to provide a reader of our consolidated financial

statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain

other factors that may affect our future results.

You should read the following discussion and analysis of our financial condition and

results of operations together with our financial statements and the related notes and other financial data included elsewhere in this

Annual Report.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including

information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.

You should review Item 1A of this Annual Report for a discussion of important factors that could cause actual results to differ materially

from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Results of Operations:

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Revenue, Cost of revenue and Gross profit:

Years Ended March 31,

For the Years Ended

Manufacturing fees

1 unchanged sentence

Total revenue

Cost of revenue

Cost of manufacturing

Gross profit - percentage

Total revenues

for the year ended March 31, 2020 increased by $10.4 million or 138%, to $18.0 million, as compared to $7.6 million, for the

corresponding period of the prior year.

Manufacturing fees

increase by $9.1 million, or 170%, due to the commercial launch of Amphetamine ER Capsules and Amphetamine IR Tablets during the

fiscal year ended March 31, 2020.

Licensing fees increased

by $1.3 million, or 59% due to license fees earned in relation to the shipment and sales of Amphetamine ER Capsules and Amphetamine

IR Tablets, which were launched during the fiscal year ended March 31, 2020.

Total revenues for the year

ended March 31, 2021 increased by $7.4 million or 41%, to $25.4 million, as compared to $18.0 million for the prior year, primarily due

to revenues earned from Amphetamine ER Capsules, which were launched during the current fiscal year, increased revenues from Amphetamine

IR Tablets, as compared to the prior year, offset by decreases in license fee revenues resulting from the full amortization of SequestOx™

milestone revenues occurring in June 2020 and accordingly providing partial year contribution to revenues during the year ended March

31, 2021, while contributing a full year of revenues to the prior year.

Manufacturing fees increased

by $6.5 million, or 45%, primarily due to manufacturing revenues earned from Amphetamine ER Capsules, which were launched during the

current fiscal year, and increased sales of Amphetamine IR Tablets, as compared to the prior year.

Licensing fees increased by

$0.9 million, or 26%.This increase is primarily due to licensing fees earned from the sale of Amphetamine ER Capsules, which were launched

during the current fiscal year, and increased licensing revenues earned from the sale of Amphetamine IR Tablets and Isradipine Capsules,

as compared to the prior year.

Costs of revenue consists

of manufacturing and assembly costs.

Our costs of revenue increased by $5.3 million or 113%, to $10.0 million as compared to $4.7

million for the corresponding period of the prior year.

The increase in costs of revenue is due to increased manufacturing volumes,

with costs of revenue having a strong positive correlation to manufacturing volume.

Our gross profit margin

was 44% during the year ended March 31, 2020 as compared to 38% during the year ended March 31, 2019.

The increase in profit margin

percentage is due to difference in manufacturing product mix on a year on year basis, combined higher license revenues earned

due to increase in-market revenues.

Our costs of revenue increased by $3.5 million or 35%, to $13.5 million as compared to $10.0 million

for the prior fiscal year.

This increase was due in large part to increased manufacturing activities and related manufacturing revenues

during the year ended March 31, 2021, as compared to the prior year, and also due to there being a strong positive correlation of costs

of revenue to manufacturing revenues.

Our gross profit margin was

47% during the year ended March 31, 2021 as compared to 44% during the comparable prior fiscal year.

Operating expenses:

Years Ended March 31,

For the Years Ended

Operating expenses:

Research and development

$ (2,067,358 )

General and administrative

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Total operating expenses

$ (1,762,038 )

Operating expenses

consist of research and development costs, general and administrative, non-cash compensation and depreciation and amortization

Operating expenses for the year ended March 31, 2020 decreased by $1.8 million, or 15%, to $10.3 million, as compared

to $12.0 million for the prior year.

Operating expenses consist

of research and development costs, general and administrative, non-cash compensation and depreciation and amortization expenses.

expenses for the year ended March 31,2021 decreased by $0.5 million or 5% to $9.8 million, as compared to $10.3 million for the prior

Research and development

costs for the year ended March 31, 2020 were $5.5 million, a decrease of $2.1 million or 27% from $7.6 million of such costs for

the prior year.

The decrease was due to the timing and composition of ongoing development of our generic product pipeline, combined

with approvals received on Amphetamine IR Tablets and Amphetamine ER Tablets resulting in commencement of commercialization and

termination of development activities.

costs for the year ended March 31,2021 were $5.1 million, a decrease of $0.4 million, or 8%, from $5.5 million of such costs for the

The decrease was a result of the timing and nature of product development activities during the year ended March 31,2021

as compared to the prior year.

General and administrative

expenses for the year ended March 31, 2020 were $3.3 million, an increase of $0.3 million or 9% from $3.1 million of such costs

for the prior year.

The increase was due to increased regulatory compliance and health and commercial insurance costs as compared

to the prior year.

Non-cash compensation

expense for the year ended March 31, 2020 was $0.06 million, a decrease of $0.07 million or 54% from $0.13 million of such costs

expenses for the year ended March 31,2021 were $3.32 million, a decrease of less than $0.1 million or 1%, from $3.35 million of such costs

for the prior year.

Non-cash compensation expense derives from the timing in amortization of the value of employee stock options

issued over the course of the last three years.

The decrease was due in large part to savings achieved from ongoing cost reduction and control initiatives.

Non-cash compensation expense

for the years ended March 31, 2021 and 2020 was less than $0.1 million.

Depreciation and amortization

expense for the year ended March 31, 2020 was $1.3 million, an increase of $0.1 million, or 9% from $1.2 million of such costs

for the comparable period of the prior year.

The increase was due to acquisitions of additional fixed assets as well as higher

depreciation absorption rates as compared to the prior year.

As a result of the

foregoing, our loss from operations for the year ended March 31, 2020 was $2.3 million, compared to a loss from operations of

$9.2 million for the year ended March 31, 2019.

expenses for the year ended March 31, 2021 were $1.3 million, and remained consistent related to such costs for the prior year.

As a result of the foregoing,

our income from operations for the year ended March 31, 2021 was $2.1 million, compared to an operating loss of $2.3 million for the prior

Other income (expense):

Years Ended March, 31

For the Years Ended

Other income (expense):

Interest expense and amortization of debt

issuance costs

Change in fair value of derivative instruments

$ (1,111,548 )

Interest expense and amortization of debt issuance costs

Gain on sale of fixed assets

Gain on transfer/discontinuance of intangible assets

Interest income

Income (loss) realized from

transfer / discontinuance of intangible assets

Other income/(expense), net

Other income (expense), net for the year ended March 31, 2020

was net other income of $0.05 million, an increase in net other income of $0.84 million from the net other expense of $0.80 million

for the comparable period of the prior year.

The increase in other income was primarily due to income realized from the sale

of intangible assets of approximately $1.5 million during the year ended March 31, 2020, as compared to a loss of $0.6 million

for the comparable period of the prior year, offset by the change in the fair value of our outstanding warrants (derivative instruments)

during the year ended March 31, 2020 totaling other expense of $1.1 million, as compared to $0.2 million income for the comparable

period of the prior year.

Please note that the change in fair value of derivative instruments is determined in large part by the

number of warrants outstanding and the change in the closing price of our Common Stock as of the end of the year, as compared to

the closing price at the beginning of the year, with a strong inverse relationship between derivative revenues and increases in

the closing price of our Common Stock.

a result of the foregoing, our net loss from operations before the net benefit from sale of state net operating loss credits for

the year ended March 31, 2020 was $2.2 million, compared to net loss from operations before the net benefit from sale of state

net operating loss credits of $10.0 million for the comparable period of the prior year.

benefit from sale of state net operating loss credits

Labs, a wholly owned subsidiary of Elite did not received final approval from the New Jersey Economic Development Authority for

the sale of net tax benefits during the year ended March 31, 2020 and accordingly did not sell net tax benefits during Fiscal

2020, as compared to net tax benefits sold for total proceeds of $0.7 million during the comparable period of the prior year.

Change in value

of convertible preferred share mezzanine equity

There was no change

in the value of our convertible preferred stock, which is included in the calculation of net income (loss) attributable to common

shareholders for the years ended March 31, 2020 and March 31, 2019.

PPP Loan Forgiveness

Other income, net

Other income, net for the

year ended March 31, 2021 was $2.0 million, an increase in other income, net of $1.9 million from other income of $0.1 million for the

The increase in other income (expense), net was due to an increase in income relating to changes in the fair value of our

outstanding derivative warrants, as compared to the prior fiscal year, PPP loan forgiveness which occurred during the current fiscal

year and not during the prior fiscal year, offset by gains on transfer/discontinuance of intangible assets which were recognized during

the prior fiscal year and not during the current fiscal year.

Please note that the change in the fair value of derivative instruments

is determined in large part by the change in the closing price of the Company’s Common Stock as of the end of the period, as compared

to the closing price at the beginning of the period, with a strong inverse relationship between the fair value of our derivatives instruments

and decreases in the closing price of the Company’s Common Stock.

As a result of the foregoing,

our income before income taxes for the year ended March 31,2021 was $4.3 million, compared to a loss before income taxes of $2.2 million

for the prior year.

Liquidity and Capital Resources

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Working capital

considers cash and working capital balances as several of the factors the Company uses in evaluating its performance, without

As of March 31, 2020, the Company had cash on hand of $1.1 million and accounts receivable to be collected within

expected operating cycles of $4.1 million.

The Company believes that such resources, combined with the working capital surplus

of $1.6 million and the continuation of ongoing operations are sufficient to fund operations through the current operating cycle.

For the year ended March 31, 2020, the Company had losses from operations totaling $2.3 million, net other income totaling $0.05

million and a net loss of $2.2 million.

In addition, there were no changes in the carrying value of preferred share mezzanine

equity for the year ended March 31, 2020.

Please note that the Company’s other income and net loss available to common shareholders

are significantly influenced by the fluctuations in the fair value of warrant derivatives, change in carry value of convertible

preferred share mezzanine equity with such fair values bearing a strong inverse correlation to the market share price of the Company’s

Common Stock.

Please also note that

while the equity line available under the 2017 LPC Purchase Agreement had approximately $34.5 million available for purchase of

shares of Common Stock, the equity line expires on July 1, 2020, pursuant to its terms and conditions, and the Company does not

anticipate selling a significant amount of shares, if at all, pursuant to the 2017 LPC Purchase Agreement during the period subsequent

to March 31, 2020 through the expiration of the equity line.

Our working capital

(total current assets less total current liabilities) decreased by $0.4 million from $2.0 million as of March 31, 2019 to $1.6

million as of March 31, 2020, with such decrease being primarily related to the increase in receivables and inventory resulting

from significantly increased manufacturing revenues and operations during the last half of Fiscal 2020, offset by a higher rate

of increase in corresponding current liabilities during the same period.

In addition, the Company

had previously received Notices of Default from the Trustee of the NJEDA Bonds as a result of the utilization of the debt service

reserve being used to pay interest payments as well as the company’s failure to make scheduled principal payments.

defaults were cured during Fiscal 2015 and the Company is current on all NJEDA Bond interest and principal payments.

Bonds ”

below and the Risk Factor in Part I, Item 1A entitled “

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 ”.

Summary of Cash

Years Ended March 31,

Net cash used in operating activities

$ (1,793,821 )

The Company considers cash

and working capital balances as several of the factors the Company uses in evaluating its performance.

As of March 31, 2021, the

Company had cash on hand of $3.2 million and accounts receivable to be collected within expected operating cycles of $3.5 million.

Company believes that such resources, combined with the working capital surplus of $6.4 million and the continuation of ongoing operations

are sufficient to fund operations through the current operating cycle.

For the year ended March 31, 2021, the Company had income

from operations totaling $2.1 million, net other income totaling $2.0 million and a net income of $5.1 million.

The Company’s other

income and net income (loss) available to common shareholders are significantly influenced by the fluctuations in the fair value of warrant

derivatives with such fair value bearing a strong inverse correlation to the market share price of the Company’s Common Stock.

Our working capital (total

current assets less total current liabilities) increased by $4.8 million from $1.6 million as of March 31, 2020 to $6.4 million

as of March 31, 2021, with such increase being primarily related to the net income of $5.1 million and a net positive cash flow

of $2.1 million achieved during the year ended March 31, 2021

Summary of Cash Flows:

For the Years Ended

Net cash provided by (used in) operating activities

$ (1,793,821 )

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Year Ended March

Net cash used in operating activities for the year ended March

31, 2020 was $1.8 million, which included a net loss of $2.2 million, and net use of cash resulting from changes in operating assets

and liabilities of $3.2 million.

The changes in the balance of assets and liabilities include increases in account receivables

of $2.8 million and decrease in deferred revenues and customer deposits of $1.2 million, which result in a net decrease in cash

offset by decreases in inventory of $0.4 million, which results in a net increase in operating cash flow.

The net loss of $2.2

million is offset by non-cash expenses which include, without limitation, depreciation, and amortization of $1.5 million.

in fair value of derivative financial instruments –

warrants of $1.1 million and non-cash compensation of $1.0 million.

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net cash provided by operating

activities for the year ended March 31, 2021 was $3.2 million, which included net income of $5.1 million and increases in non-cash expenses

totaling $0.2 million, offset by net increases in assets and decreases in liabilities totaling $2.1 million.

Net cash used in investing

activities for the year ended March 31, 2020 was $0.03 million, which primarily resulted from cash payments made in relation to

equipment purchases.

Net cash provided

by financing activities for the year ended March 31, 2020 was $0.7 million.

This consisted of proceeds from the sale of common

stock to Lincoln Park Capital of $1.5 million, offset by $0.7 million in loan principal payments, including repayment of an NJEDA

Bonds of $0.1 million.

Overall, as a result

of the foregoing, the Company had a net decrease in cash of $1.1 million during the year ended March 31, 2020.

Year Ended March

Net cash used in operating activities for the year ended March

31, 2019 was $6.8 million, which included a net loss of $9.3 million, and net use of cash resulting from changes in operating assets

and liabilities of $0.9 million.

The changes in the balance of assets and liabilities include increases in account receivables

of $0.5 million and decrease in deferred revenues of $1.0 million, which result in a net decrease in cash offset by decreases in

inventory of $0.4 million, which results in a net increase in operating cash flow.

The net loss of $9.3 million is offset by non-cash

expenses which include, without limitation, depreciation and amortization of $1.3 million, non-cash compensation of $1.7 million

and non-cash loss realized on the sale and discontinuance of intangible assets of $0.6 million.

Net cash provided

by investing activities for the year ended March 31, 2019 was $0.3 million, which primarily resulted from cash proceeds realized

from the sale of intangible assets.

Net cash provided

by financing activities for the year ended March 31, 2018 was $1.6 million.

This consisted of proceeds from the sale of common

stock to Lincoln Park Capital of $2.1 million, offset by $0.5 million in loan principal payments, including repayment of an NJEDA

Bonds of $0.1 million.

Overall, as a result

of the foregoing, the Company had a net decrease in cash of $4.9 million during the year ended March 31, 2019.

activities for the year ended March 31, 2021 was comprised of purchases of purchases of property and equipment of $0.3 million offset

by proceeds from the sale of property and equipment of less than $0.1 million.

Net cash used in financing

activities was $0.9 million for the year ended March 31, 2021 which consisted primarily of proceeds from the payroll protection program

loan offset by loan payments.

Lincoln Park Capital

On May 1, 2017, we

entered into a purchase agreement (the “

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

agreement (the “

2017 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.

We may direct Lincoln Park, at our sole discretion and subject to certain conditions, to purchase up to 500,000

shares of Common Stock on any business day, provided that at least one business day has passed since the most recent purchase,

increasing to up to 1,000,000 shares, depending upon the closing sale price of the Common Stock (such purchases, “

Purchases ”).

However, in no event shall a Regular Purchase be more than $1,000,000.

The purchase price of shares of

Common Stock related to the future funding will be based on the prevailing market prices of such shares at the time of sales.

In addition, we may direct Lincoln Park to purchase additional amounts as accelerated purchases under certain circumstances.

sales of shares of Common Stock to Lincoln Park under the 2017 LPC Purchase Agreement are limited to no more than the number of

shares that would result in the beneficial ownership by Lincoln Park and its affiliates, at any single point in time, of more

than 4.99% of the then outstanding shares of Common Stock.

In connection with

the 2017 LPC Purchase Agreement, we issued to Lincoln Park 5,540,551 shares of Common Stock and we are required to issue up to

5,540,551 additional shares of Common Stock pro rata as we require Lincoln Park to purchase our shares under the Purchase Agreement

over the term of the agreement.

Lincoln Park has represented to us, among other things, that it is an “accredited investor”

(as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “

Act ”)).

We sold the securities in reliance upon an exemption from registration contained in Section 4(a)(2) under the

Securities Act.

The securities sold may not be offered or sold in the United States absent registration or an applicable exemption

from registration requirements.

The 2017 LPC Purchase

Agreement and the 2017 LPC Registration Rights Agreement contain customary representations, warranties, agreements and conditions

to completing future sale transactions, indemnification rights and obligations of the parties.

We have the right to terminate

the 2017 LPC Purchase Agreement at any time, at no cost or penalty.

Actual sales of shares of Common Stock to Lincoln Park under

the Purchase Agreement will depend on a variety of factors to be determined by us from time to time, including, among others,

market conditions, the trading price of the Common Stock and determinations by us as to the appropriate sources of funding for

us and our operations.

There are no trading volume requirements or, other than the limitation on beneficial ownership discussed

above, restrictions under the Purchase Agreement.

Lincoln Park has no right to require any sales by us but is obligated to make

purchases from us as we direct in accordance with the Purchase Agreement.

Lincoln Park has covenanted not to cause or engage in

any manner whatsoever, any direct or indirect short selling or hedging of our shares.

The net proceeds received

by us under the 2017 LPC Purchase Agreement will depend on the frequency and prices at which we sell shares of our stock to Lincoln

We anticipate that any proceeds received by us from such sales to Lincoln Park under the 2017 LPC Purchase Agreement will

be used for research and product development, general corporate purposes and working capital requirements.

A registration statement

on form S-3 was filed with the SEC on May 10, 2017 and was declared effective on June 5, 2017.

The 2017 LPC Purchase

Agreement expires on July 1, 2020, in accordance with its terms and conditions.

During the fiscal year ended March 31, 2020, the Company issued

199,181 shares of its common stock as additional commitment shares and sold 15,358,627 shares of its common stock for proceeds

totaling $1,437,978.

On August 31, 2005,

the Company successfully completed a refinancing of a prior 1999 bond issue through the issuance of new tax-exempt bonds (the

“Bonds”).

The refinancing involved borrowing $4,155,000, evidenced by a 6.5% Series A Note in the principal amount

of $3,660,000 maturing on September 1, 2030 and a 9% Series B Note in the principal amount of $495,000 maturing on September 1,

The net proceeds, after payment of issuance costs, were used (i) to redeem the outstanding tax-exempt Bonds originally issued

by the Authority on September 2, 1999, (ii) refinance other equipment financing and (iii) for the purchase of certain equipment

to be used in the manufacture of pharmaceutical products.

As of March 31, 2016, all of the proceeds were utilized by the Company

for such stated purposes.

Interest is payable semi-annually on March 1 and September 1

of each year.

The Bonds are collateralized by a first lien on the Company’s facility and equipment acquired with the proceeds

of the original and refinanced Bonds.

The related Indenture requires the maintenance of a Debt Service Reserve Fund of $366,000

in relation to the Series A Notes.

July 8, 2020 Purchase Agreement

On July 8, 2020, Elite Pharmaceuticals,

Inc., a Nevada corporation (the “Company”), entered into a purchase agreement (the “2020 LPC Purchase Agreement”),

and a registration rights agreement (the “Registration Rights Agreement”), with Lincoln Park Capital Fund, LLC (“Lincoln

Park”), pursuant to which Lincoln Park has committed to purchase up to $25.0 million of the Company’s common stock, $0.001

par value per share (the “Common Stock”), from time to time over the term of the Purchase Agreement, at the Company’s

During the year ended March

31, 2021 the Company issued an aggregate of 5,975,857 shares of Common Stock in the amount of $469,105 to Lincoln Park as initial commitment

The Company sold 640,543 shares of its Common Stock pursuant to the 2020 LPC Purchase Agreement during the year ended March 31,

2021 for net proceeds totaling $42,223.

In addition, 10,094 shares were issued to Lincoln Park as additional commitment shares, pursuant

to the 2020 LPC Agreement.

On August 31, 2005, the Company

successfully completed a refinancing of a prior 1999 bond issue through the issuance of new tax-exempt bonds (the “Bonds”).

The refinancing involved borrowing $4,155,000, evidenced by a 6.5% Series A Note in the principal amount of $3,660,000 maturing on September

1, 2030 and a 9% Series B Note in the principal amount of $495,000 maturing on September 1, 2012.

The net proceeds, after payment of

issuance costs, were used (i) to redeem the outstanding tax-exempt Bonds originally issued by the Authority on September 2, 1999, (ii)

refinance other equipment financing and (iii) for the purchase of certain equipment to be used in the manufacture of pharmaceutical products.

As of March 31, 2016, all of the proceeds were utilized by the Company for such stated purposes.

Interest is payable semi-annually

on March 1 and September 1 of each year.

The Bonds are collateralized by a first lien on the Company’s facility and equipment acquired

with the proceeds of the original and refinanced Bonds.

The related Indenture requires the maintenance of a Debt Service Reserve Fund

of $366,000 in relation to the Series A Notes.

Bond issue costs of $354,454

were paid from the bond proceeds and are being amortized over the life of the bonds.

Amortization of bond issuance costs

amounted to $14,178 for the fiscal year ended March 31, 2020.

The NJEDA Bonds require

the Company to make an annual principal payment on September 1st of varying amounts as specified in the loan documents and semi-annual

interest payments on March 1st and September 1st, equal to interest due on the outstanding principal at the applicable rate for

the semi-annual period just ended.

As of the date of

filing of this Annual Report on Form 10-K, there are no interest or principal amounts in arrears.

The Series B Notes were retired,

at par in July 2014.

Exchange Agreement

On April 28, 2017,

we entered into an exchange agreement (the “

Exchange Agreement ”) with Nasrat Hakim, our Chief Executive Officer,

pursuant to which we issued to Mr.

Hakim 24.0344 shares of our newly designated Series J Convertible Preferred Stock and Warrants

to purchase an aggregate of 79,008,661 shares of our Common Stock in exchange for 158,017,321 shares of our common stock owned

Please see “

Item 13 Certain Relationships And Related Transactions, And Director Independence;

Related Person Transactions;

Transactions with Nasrat Hakim and Mikah Pharma LLC ”

Amortization of bond issuance costs amounted to

$14,178 for the fiscal year ended March 31, 2021.

The NJEDA Bonds require the

Company to make an annual principal payment on September 1st of varying amounts as specified in the loan documents and semi-annual interest

payments on March 1st and September 1st, equal to interest due on the outstanding principal at the applicable rate for the semi-annual

period just ended.

As of the date of filing

of this Annual Report on Form 10-K, there are no interest or principal amounts in arrears.

The Series B Notes were retired, at par in

Off-Balance Sheet Arrangements

We have not entered

into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial

condition, changes in financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures, or capital

resources that would be considered material to investors.

We have not entered into

any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,

changes in financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures, or capital resources that

would be considered material to investors.

Effects of Inflation

We are subject to

price risks arising from price fluctuations in the market prices of the products that we sell.

Management does not believe that

inflation risk is material to our business or our consolidated financial position, results of operations, or cash flows.

Cybersecurity

As of March 31, 2020,

the Company had no reportable incidents of cybersecurity.

We are subject to price risks

arising from price fluctuations in the market prices of the products that we sell.

Management does not believe that inflation risk is

material to our business or our consolidated financial position, results of operations, or cash flows.

Critical Accounting Policies and Estimates

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policies are disclosed in Note 1 of our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

The following discussion addresses our most critical accounting policies, which are those that are both important to the portrayal

of our financial condition and results of operations and that require significant judgment or use of complex estimates.

following discussion addresses our most critical accounting policies, which are those that are both important to the portrayal of our

financial condition and results of operations and that require significant judgment or use of complex estimates.

Segment Information

Financial Accounting

Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting ,

establishes standards for reporting information about operating segments.

Operating segments are defined as components of an enterprise

about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or

decision-making group, in deciding how to allocate resources and in assessing performance.

The Company’s chief operating

decision maker is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments

prepared in accordance with U.S.

GAAP when making decisions about allocating resources and assessing performance of the Company.

Financial Accounting Standards

Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting , establishes standards

for reporting information about operating segments.

Operating segments are defined as components of an enterprise about which separate

financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding

how to allocate resources and in assessing performance.

The Company’s chief operating decision maker is the Chief Executive Officer,

who reviews the financial performance and the results of operations of the segments prepared in accordance with U.S.

GAAP when making

decisions about allocating resources and assessing performance of the Company.

The Company has determined

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and products whose marketing approvals were secured via a New Drug Application (“NDA”).

ANDA products are referred

to as generic pharmaceuticals and NDA products are referred to as branded pharmaceuticals.

There are currently

no intersegment revenues.

Asset information by operating segment is not presented below since the chief operating decision maker

does not review this information by segment.

The reporting segments follow the same accounting policies used in the preparation

of the Company’s audited consolidated financial statements.

ANDA products are referred to as

generic pharmaceuticals and NDA products are referred to as branded pharmaceuticals.

There are currently no intersegment

Asset information by operating segment is not presented below since the chief operating decision maker does not review this

information by segment.

The reporting segments follow the same accounting policies used in the preparation of the Company’s audited

consolidated financial statements.

Please see note 15 for further details.

Revenue Recognition

The Company generates

revenue from the development of pain management products, manufacturing of a line of generic pharmaceutical products with approved

ANDA, commercialization of products either by license and the collection of royalties, or through the manufacture of formulations

and the development of new products and the expansion of licensing agreements with other pharmaceutical companies, including co-development

projects, joint ventures and other collaborations.

The Company also generates revenue through its focus on the development of

various types of drug products, including branded drug products which require NDAs.

Under ASC 606, Revenue

from Contacts with Customers (“ASC 606”), the Company recognizes revenue when the customer obtains control of promised

goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or

The Company recognizes revenues following the five-step model prescribed under ASC 606:

(i) identify contract(s) with

(ii) identify the performance obligation(s) in the contract;

The Company generates revenue

from the development of pain management products, manufacturing of a line of generic pharmaceutical products with approved ANDA, commercialization

of products either by license and the collection of royalties, or through the manufacture of formulations and the development of new

products and the expansion of licensing agreements with other pharmaceutical companies, including co-development projects, joint ventures

and other collaborations.

The Company also generates revenue through its focus on the development of various types of drug products,

including branded drug products which require NDAs.

Under ASC 606, Revenue from

Contacts with Customers (“ASC 606”), the Company recognizes revenue when the customer obtains control of promised goods or

services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services.

Company recognizes revenues following the five-step model prescribed under ASC 606:

(i) identify contract(s) with a customer;

(ii) identify

the performance obligation(s) in the contract;

(iii) determine the transaction price;

(iv) allocate

the transaction price to the performance obligation(s) in the contract;

and (v) recognize revenues when (or as) the Company satisfies

a performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect

the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception,

once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within

each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation

when (or as) the performance obligation is satisfied.

Sales, value add, and other taxes collected on behalf of third parties are

excluded from revenue.

(iv) allocate the transaction price to the performance

obligation(s) in the contract;

and (v) recognize revenues when (or as) the Company satisfies a performance obligation.

The Company only

applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange

for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within the scope

of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations

and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the transaction

price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Sales, value add,

and other taxes collected on behalf of third parties are excluded from revenue.

Nature of goods and services

The following is a

description of the Company’s goods and services from which the Company generates revenue, as well as the nature, timing

of satisfaction of performance obligations, and significant payment terms for each, as applicable:

The following is a description

of the Company’s goods and services from which the Company generates revenue, as well as the nature, timing of satisfaction of

performance obligations, and significant payment terms for each, as applicable:

a) Manufacturing Fees

The Company is equipped

to manufacture controlled-release products on a contract basis for third parties, if and when the products are approved.

products include products using controlled-release drug technology and products utilizing abuse deterrent technologies.

also develops and markets (either on its own or by license to other companies) generic and proprietary controlled-release and

abuse deterrent pharmaceutical products.

The Company recognizes

revenue when the customer obtains control of the Company’s product based on the contractual shipping terms of the contract.

Revenue on product are presented gross because the Company is primarily responsible for fulfilling the promise to provide the

product, is responsible to ensure that the product is produced in accordance with the related supply agreement and bears risk

of loss while the inventory is in-transit to the commercial partner.

Revenue is measured as the amount of consideration the Company

expects to receive in exchange for transferring products to a customer.

The Company is equipped to

manufacture controlled-release products on a contract basis for third parties, if and when the products are approved.

These products

include products using controlled-release drug technology and products utilizing abuse deterrent technologies.

The Company also develops

and markets (either on its own or by license to other companies) generic and proprietary controlled-release and abuse deterrent pharmaceutical

The Company recognizes revenue

when the customer obtains control of the Company’s product based on the contractual shipping terms of the contract.

product are presented gross because the Company is primarily responsible for fulfilling the promise to provide the product, is responsible

to ensure that the product is produced in accordance with the related supply agreement and bears risk of loss while the inventory is

in-transit to the commercial partner.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for

transferring products to a customer.

b) License Fees

The Company enters

into licensing and development agreements, which may include multiple revenue generating activities, including milestones payments,

licensing fees, product sales and services.

The Company analyzes each element of its licensing and development agreements in accordance

with ASC 606 to determine appropriate revenue recognition.

The terms of the license agreement may include payment to the Company

of licensing fees, non-refundable upfront license fees, milestone payments if specified objectives are achieved, and/or royalties

on product sales.

The Company enters into licensing

and development agreements, which may include multiple revenue generating activities, including milestones payments, licensing fees,

product sales and services.

The Company analyzes each element of its licensing and development agreements in accordance with ASC 606

to determine appropriate revenue recognition.

The terms of the license agreement may include payment to the Company of licensing fees,

non-refundable upfront license fees, milestone payments if specified objectives are achieved, and/or royalties on product sales.

If the contract contains

a single performance obligation, the entire transaction price is allocated to the single performance obligation.

Contracts that

contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone

selling prices of the promised products or services underlying each performance obligation.

The Company determines standalone

selling prices based on the price at which the performance obligation is sold separately.

If the standalone selling price is not

observable through past transactions, the Company estimates the standalone selling price taking into account available information

such as market conditions and internally approved pricing guidelines related to the performance obligations.

The Company recognizes

revenue from non-refundable upfront payments at a point in time, typically upon fulfilling the delivery of the associated intellectual

property to the customer.

For those milestone payments which are contingent on the occurrence of particular future events (for

example, payments due upon a product receiving FDA approval), the Company determined that these need to be considered for inclusion

in the calculation of total consideration from the contract as a component of variable consideration using the most-likely amount

As such, the Company assesses each milestone to determine the probability and substance behind achieving each milestone.

Given the inherent uncertainty of the occurrence of future events, the Company will not recognize revenue from the milestone until

there is not a high probability of a reversal of revenue, which typically occurs near or upon achievement of the event.

Significant management

judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects

to complete its performance obligations under the arrangement.

If the Company cannot reasonably estimate when its performance

obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably

make such estimates.

Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up

When determining the

transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly

after performance, resulting in a significant financing component.

Applying the practical expedient in ASC 606-10-32-18, the Company

does not assess whether a significant financing component exists if the period between when the Company performs its obligations

under the contract and when the customer pays is one year or less.

None of the Company’s contracts contained a significant

financing component as of March 31, 2020.

In accordance with

ASC 606-10-55-65, royalties are recognized when the subsequent sale of the customer’s products occurs.

Contracts that contain

multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices

of the promised products or services underlying each performance obligation.

The Company determines standalone selling prices based on

the price at which the performance obligation is sold separately.

If the standalone selling price is not observable through past transactions,

the Company estimates the standalone selling price taking into account available information such as market conditions and internally

approved pricing guidelines related to the performance obligations.

The Company recognizes revenue

from non-refundable upfront payments at a point in time, typically upon fulfilling the delivery of the associated intellectual property

to the customer.

For those milestone payments which are contingent on the occurrence of particular future events (for example, payments

due upon a product receiving FDA approval), the Company determined that these need to be considered for inclusion in the calculation

of total consideration from the contract as a component of variable consideration using the most-likely amount method.

As such, the Company

assesses each milestone to determine the probability and substance behind achieving each milestone.

Given the inherent uncertainty of

the occurrence of future events, the Company will not recognize revenue from the milestone until there is not a high probability of a

reversal of revenue, which typically occurs near or upon achievement of the event.

Significant management judgment

is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete

its performance obligations under the arrangement.

If the Company cannot reasonably estimate when its performance obligations either

are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates.

is then recognized over the remaining estimated period of performance using the cumulative catch-up method.

When determining the transaction

price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance,

resulting in a significant financing component.

Applying the practical expedient in ASC 606-10-32-18, the Company does not assess whether

a significant financing component exists if the period between when the Company performs its obligations under the contract and when

the customer pays is one year or less.

None of the Company’s contracts contained a significant financing component as of March

In accordance with ASC 606-10-55-65,

royalties are recognized when the subsequent sale of the customer’s products occurs.

Collaborative Arrangements

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to be collaborative arrangements when they satisfy the following criteria defined in ASC 808, Collaborative Arrangements :

● The parties to the contract

must actively participate in the joint operating activity;

● The joint operating activity

must expose the parties to the possibility of significant risk and rewards, based on

whether or not the activity is successful.

The Company considers

all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Cash and cash equivalents

consist of cash on deposit with banks and money market instruments.

The Company places its cash and cash equivalents with high-quality,

The parties to the contract must actively participate in the joint

operating activity;

The joint operating activity must expose the parties to the possibility

of significant risk and rewards, based on whether or not the activity is successful.

The Company considers all

highly liquid investments with an original maturity of three months or less to be cash equivalents.

Cash and cash equivalents consist

of cash on deposit with banks and money market instruments.

The Company places its cash and cash equivalents with high-quality, U.S.

financial institutions and, to date has not experienced losses on any of its balances.

Accounts Receivable

Accounts receivable

are comprised of balances due from customers, net of estimated allowances for uncollectible accounts, if any.

In determining collectability,

historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances.

Inventory is recorded

at the lower of cost or market on a specific identification by lot number basis.

Accounts receivable are comprised

of balances due from customers, net of estimated allowances for uncollectible accounts, if any.

In determining collectability, historical

trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances.

Inventory is recorded at

the lower of cost or market on a specific identification by lot number basis.

Long-Lived Assets

The Company periodically

evaluates the fair value of long-lived assets, which include property and equipment and intangibles, whenever events or changes

in circumstances indicate that its carrying amounts may not be recoverable.

Property and equipment

are stated at cost.

Depreciation is provided on the straight-line method based on the estimated useful lives of the respective

assets which range from three to forty years.

evaluates the fair value of long-lived assets, which include property and equipment and intangibles, whenever events or changes in circumstances

indicate that its carrying amounts may not be recoverable.

Property and equipment are

stated at cost.

Depreciation is provided on the straight-line method based on the estimated useful lives of the respective assets which

range from three to forty years.

Major repairs or improvements are capitalized.

Minor replacements and maintenance

and repairs which do not improve or extend asset lives are expensed currently.

Upon retirement or

other disposition of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain

or loss, if any, is recognized in income.

Minor replacements and maintenance and repairs which

do not improve or extend asset lives are expensed currently.

Upon retirement or other

disposition of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if

any, is recognized in income.

Intangible Assets

The Company capitalizes

certain costs to acquire intangible assets;

if such assets are determined to have a finite useful life they are amortized on a

straight-line basis over the estimated useful life.

Costs to acquire indefinite lived intangible assets, such as costs related

to ANDAs are capitalized accordingly.

The Company tests

its intangible assets for impairment at least annually (as of March 31st) and whenever events or circumstances change that indicate

impairment may have occurred.

The Company capitalizes certain

costs to acquire intangible assets;

if such assets are determined to have a finite useful life they are amortized on a straight-line

basis over the estimated useful life.

Costs to acquire indefinite lived intangible assets, such as costs related to ANDAs are capitalized

The Company tests its intangible

assets for impairment at least annually (as of March 31st) and whenever events or circumstances change that indicate impairment may have

A significant amount of judgment is involved in determining if an indicator of impairment has occurred.

Such indicators may include, among others and without limitation:

a significant decline in the Company’s expected future

a sustained, significant decline in the Company’s stock price and market capitalization;

a significant adverse

change in legal factors or in the business climate of the Company’s segments;

Such indicators may

include, among others and without limitation:

a significant decline in the Company’s expected future cash flows;

a sustained, significant

decline in the Company’s stock price and market capitalization;

a significant adverse change in legal factors or in the business

climate of the Company’s segments;

unanticipated competition;

and slower growth

and slower growth rates.

Research and Development

1 unchanged sentence

are charged to expense as incurred.

Lease agreements are

evaluated to determine if they are capital leases meeting any of the following criteria at inception:

Lease agreements are evaluated

to determine if they are capital leases meeting any of the following criteria at inception:

(a) transfer of ownership;

(b) bargain purchase option;

(b) bargain purchase

or (d) the present value at the beginning of the lease term of the minimum lease payments, excluding that portion of the payments

representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon,

equals or exceeds 90 percent of the excess of the fair value of the leased property to the lessor at lease inception over any

related investment tax credit retained by the lessor and expected to be realized by the lessor.

If at its inception

a lease meets any of the four lease criteria above, the lease is classified by the Company as a capital lease;

and if none of

the four criteria are met, the lease is classified by the Company as an operating lease.

or (d) the present value

at the beginning of the lease term of the minimum lease payments, excluding that portion of the payments representing executory costs

such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon, equals or exceeds 90 percent of the

excess of the fair value of the leased property to the lessor at lease inception over any related investment tax credit retained by the

lessor and expected to be realized by the lessor.

If at its inception a lease

meets any of the four lease criteria above, the lease is classified by the Company as a capital lease;

and if none of the four criteria

are met, the lease is classified by the Company as an operating lease.

Contingencies

Occasionally, the

Company may be involved in claims and legal proceedings arising from the ordinary course of its business.

The Company records

a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be

reasonably estimated.

If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the

Company’s consolidated financial statements.

Contingencies are inherently unpredictable, and the assessments of the value

can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

Occasionally, the Company

may be involved in claims and legal proceedings arising from the ordinary course of its business.

The Company records a provision for

a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated.

If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated

financial statements.

Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments

about future events and can rely heavily on estimates and assumptions.

Income taxes are accounted

2 unchanged sentences

attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary

differences are expected to be recovered or settled.

Where applicable, the Company records a valuation allowance to reduce any

deferred tax assets that it determines will not be realizable in the future.

The Company recognizes

the benefit of an uncertain tax position that it has taken or expects to take on income tax returns it files if such tax position

is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position.

These tax benefits are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate

The Company operates

in multiple tax jurisdictions within the United States of America.

The Company remains subject to examination in all tax jurisdiction

until the applicable statutes of limitation expire.

As of March 31, 2020, a summary of the tax years that remain subject to examination

in our major tax jurisdictions are:

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences

are expected to be recovered or settled.

Where applicable, the Company records a valuation allowance to reduce any deferred tax assets

that it determines will not be realizable in the future.

The Company recognizes the

benefit of an uncertain tax position that it has taken or expects to take on income tax returns it files if such tax position is more

likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position.

These tax benefits

are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.

The Company operates in multiple

tax jurisdictions within the United States of America.

The Company remains subject to examination in all tax jurisdiction until the applicable

statutes of limitation expire.

As of March 31, 2021, a summary of the tax years that remain subject to examination in our major tax jurisdictions

United States –

Federal, 2015 and forward, and State, 2011 and forward.

did not have any unrecognized tax positions for the years ended March 31, 2020 and 2019.

The Company did not have any unrecognized tax positions

for the years ended March 31, 2021 and 2020.

Warrants and Preferred Shares

The accounting treatment

of warrants and preferred share series issued is determined pursuant to the guidance provided by ASC 470, Debt , ASC 480,

Distinguishing Liabilities from Equity , and ASC 815, Derivatives and Hedging , as applicable.

Each feature of a freestanding

financial instruments including, without limitation, any rights relating to subsequent dilutive issuances, dividend issuances,

equity sales, rights offerings, forced conversions, optional redemptions, automatic monthly conversions, dividends and exercise

are assessed with determinations made regarding the proper classification in the Company’s financial statements.

of warrants and preferred share series issued is determined pursuant to the guidance provided by ASC 470, Debt , ASC 480, Distinguishing

Liabilities from Equity , and ASC 815, Derivatives and Hedging , as applicable.

Each feature of a freestanding financial instruments

including, without limitation, any rights relating to subsequent dilutive issuances, dividend issuances, equity sales, rights offerings,

forced conversions, optional redemptions, automatic monthly conversions, dividends and exercise are assessed with determinations made

regarding the proper classification in the Company’s financial statements.

Stock-Based Compensation

The Company accounts

for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation .

Under the fair value recognition

provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and

is recognized as an expense on a straight-line basis over the requisite service period, based on the terms of the awards.

cost of the stock-based payments to nonemployees that are fully vested and non-forfeitable as at the grant date is measured and

recognized at that date, unless there is a contractual term for services in which case such compensation would be amortized over

the contractual term.

In accordance with

the Company’s Director compensation policy and certain employment contracts, director’s fees and a portion of employee’s

salaries are to be paid via the issuance of shares of the Company’s common stock, in lieu of cash, with the valuation of

such share being calculated on a quarterly basis and equal to the simple average closing price of the Company’s common stock.

Earnings (Loss) Per Share Applicable

to Common Shareholders’

The Company follows

ASC 260, Earnings Per Share , which requires presentation of basic and diluted earnings (loss) per share (“EPS”)

on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator

and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.

In the accompanying

financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number

of shares of common stock outstanding during the period.

Diluted EPS excluded all dilutive potential shares if their effect was

anti-dilutive.

The Company accounts for

stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation .

Under the fair value recognition provisions

of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as

an expense on a straight-line basis over the requisite service period, based on the terms of the awards.

The cost of the stock-based

payments to nonemployees that are fully vested and non-forfeitable as at the grant date is measured and recognized at that date, unless

there is a contractual term for services in which case such compensation would be amortized over the contractual term.

In accordance with the Company’s

Director compensation policy and certain employment contracts, director’s fees and a portion of employee’s salaries are to

be paid via the issuance of shares of the Company’s common stock, in lieu of cash, with the valuation of such share being calculated

on a quarterly basis and equal to the simple average closing price of the Company’s common stock for each trading day of the quarter

Earnings (Loss) Per Share Applicable to

Common Shareholders’

The Company follows ASC 260,

Earnings Per Share , which requires presentation of basic and diluted earnings (loss) per share (“EPS”) on the face

of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator

of the basic EPS computation to the numerator and denominator of the diluted EPS computation.

In the accompanying financial statements,

basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding

during the period.

Diluted EPS excluded all dilutive potential shares if their effect was anti-dilutive.

Fair Value of Financial Instruments

ASC Topic 820, Fair

Value Measurements and Disclosures ("

ASC Topic 820 ") provides a framework for measuring fair value in accordance

with generally accepted accounting principles.

ASC Topic 820 defines

fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date.

ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market

participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's

own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable

ASC Topic 820, Fair Value

Measurements and Disclosures (“

ASC Topic 820 ”) provides a framework for measuring fair value in accordance with

generally accepted accounting principles.

ASC Topic 820 defines fair

value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants

at the measurement date.

ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions

developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market

participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

The fair value hierarchy

consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets

or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy

under ASC Topic 820 are described as follows:

Unadjusted quoted prices in active markets for identical assets or liabilities that are

accessible at the measurement date.

Inputs other than quoted prices included within Level 1 that

are observable for the asset or liability, either directly or indirectly.

Level 2 inputs include quoted prices for similar

assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in markets that are

inputs other than quoted prices that are observable for the asset or liability;

and inputs that are derived principally

from or corroborated by observable market data by correlation or other means.

consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or

liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy under ASC

Topic 820 are described as follows:

Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible

at the measurement date.

Inputs other than quoted prices included within Level 1 that are observable

for the asset or liability, either directly or indirectly.

Level 2 inputs include quoted prices for similar assets or liabilities

in active markets;

quoted prices for identical or similar assets or liabilities in markets that are not active;

inputs other than

quoted prices that are observable for the asset or liability;

and inputs that are derived principally from or corroborated by observable

market data by correlation or other means.

Inputs that are unobservable for the asset or liability.

The carrying amounts

of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and other current

assets, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.

Based upon current borrowing rates with similar maturities the carrying value of long-term debt approximates fair value.

Non-Financial Assets

that are Measured at Fair Value on a Non-Recurring Basis

Non-financial assets

such as intangible assets, and property and equipment are measured at fair value only when an impairment loss is recognized.

Company did not record an impairment charge related to these assets in the periods presented.

The carrying amounts of the

Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and other current assets, accounts

payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.

Based upon current borrowing

rates with similar maturities the carrying value of long-term debt approximates fair value.

Non-Financial Assets that

are Measured at Fair Value on a Non-Recurring Basis

Non-financial assets such

as intangible assets, and property and equipment are measured at fair value only when an impairment loss is recognized.

The Company did

not record an impairment charge related to these assets in the periods presented.

Treasury Stock

The Company records

treasury stock at the cost to acquire it and includes treasury stock as a component of shareholders’

The Company records treasury

stock at the cost to acquire it and includes treasury stock as a component of shareholders’

equity (deficit).

Recently Adopted Accounting Standards

The Financial Accounting

Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842)

in February 2016 and subsequent ASUs in 2018 and 2019 (collectively referred to as “Topic 842”) on the treatment of

leases, which guidance is effective for annual reporting periods beginning after December 15, 2019 and early adoption is

Under Topic 842, lessees will be required to recognize the following for all leases (with the exception of short-term

leases) at the commencement date:

1) a lease liability, which is a lessee’s obligation to make lease payments arising

from a lease, measured on a discounted basis, and 2) a right-of-use asset, which is an asset that represents the lessee’s

right-of-use, or control the use of, a specified asset for the lease term.

Entities are allowed to apply Topic 842 using a modified

retrospective approach either (1) retrospectively to each reporting period presented in the financial statements with the cumulative

effect adjustment recognized at the beginning of the earliest comparative period;

or (2) retrospectively at the beginning of the

period of adoption through a cumulative-effective adjustment.

The modified retrospective approach includes a number of optional

practical expedients that entities may elect to apply.

On April 1, 2019,

the Company adopted Topic 842 using the modified retrospective basis with a cumulative-effect adjustment at the beginning of the

period of adoption and therefore did not revise prior period information or disclosure.

Further, the Company elected the package

of practical expedients upon transition that allows the Company not to reassess the lease classification for expired and existing

leases, whether initial direct costs qualify for capitalization for any expired or existing leases or whether any expired contracts

are or contain leases.

The adoption of ASU 2016-02 resulted in the recognition of operating leases and lease liabilities of approximately

$0.6 million on the consolidated balance sheet as of April 1, 2019.

The operating leases and lease liabilities relate to a real

estate lease.

The impact of the

adoption of Topic 842 on the accompanying consolidated balance sheet as of April 1, 2019 was as follows:

Operating lease - right of use

Deferred rent liability

Lease obligation - operating lease

Lease obligation - operating lease, net of current portion

See additional lease disclosures in Note

Recently Issued Accounting Pronouncements

August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC 820):

Disclosure Framework-Changes to the Disclosure

Requirements for Fair Value Measurement .

ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional

Disclosure Framework-Changes to the Disclosure Requirements

for Fair Value Measurement .

ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures.

The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019.

adoption is permitted.

The Company adopted the guidance as of April 1, 2020.

The Company is not materially impacted by the implementation

of this pronouncement.

In November 2018, the FASB

issued ASU 2018-18, Collaborative Arrangements (Topic 808) , Clarifying the Interaction between Topic 808 and Topic 606.

clarifies when transactions between collaborative participants are in the scope of ASC 606.

The ASU also provides some guidance on presentation

of transactions not in the scope of ASC 606.

ASU 2018-18 is effective for fiscal years, and interim periods within those years, beginning

after December 15, 2019.

Early adoption is permitted for fiscal years, and interim periods within those years.

The Company adopted the

guidance as of April 1, 2020.

The Company is not materially impacted by the implementation of this pronouncement.

In March 2020, the FASB issued

ASU 2020-03, Codification Improvements to Financial Instruments .

The ASU clarifies disclosure guidance for fair value options,

adds clarifications to the subsequent measurement of fair value, clarifies disclosure for depository and lending institutions, clarifies

the line-of-credit or revolving-debt arrangements guidance, and the interaction of Financial Instruments - Credit Losses (Topic 326) with

Leases (Topic 842) and Transfers and Servicing-Sales of Financial Assets (Subtopic 860-20).

In accordance with ASU 2020-03, the Company

adopted the guidance as of April 1, 2020.

The Company is not materially impacted by the implementation of this pronouncement.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued

ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

This update requires

immediate recognition of management’s estimates of current expected credit losses (“CECL”).

Under the prior model,

losses were recognized only as they were incurred.

The new model is applicable to all financial instruments that are not accounted for

at fair value through net income.

The standard is effective for fiscal years beginning after December 15, 2022 for public entities qualifying

as smaller reporting companies.

Early adoption is permitted.

The Company adopted the guidance as of April 1, 2020 and is evaluating the effect that

this update will have on its consolidated financial statements and related disclosures.

In November 2018,

the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808) , Clarifying the Interaction between Topic 808 and Topic

The ASU clarifies when transactions between collaborative participants are in the scope of ASC 606.

The ASU also provides

some guidance on presentation of transactions not in the scope of ASC 606.

ASU 2018-18 is effective for fiscal years, and interim

periods within those years, beginning after December 15, 2019.

Early adoption is permitted for fiscal years, and interim periods

within those years.

The Company adopted the guidance as of April 1, 2020 and is currently evaluating the impact the standard will

have on our consolidated financial statements and related disclosures.

In March 2020, the

FASB issued ASU 2020-03, Codification Improvements to Financial Instruments .

The ASU clarifies disclosure guidance for

fair value options, adds clarifications to the subsequent measurement of fair value, clarifies disclosure for depository and lending

institutions, clarifies the line-of-credit or revolving-debt arrangements guidance, and the interaction of Financial Instruments

Credit Losses (Topic 326) with Leases (Topic 842) and Transfers and Servicing-Sales of Financial Assets (Subtopic 860-20).

accordance with ASU 2020-03, the Company adopted the guidance as of April 1, 2020.

The Company is currently evaluating the impact

of this guidance on its consolidated financial statements and related disclosures.

In March 2020, the

FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial

The guidance provides optional expedients and exceptions for applying U.S.

GAAP to contract modifications and hedging

relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued.

The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022.

The Company is not

materially impacted by the implementation of this pronouncement.

The Company is currently assessing the impact of this update on the consolidated

financial statements and does not expect a material impact on the consolidated financial statements.

Management has evaluated

other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant

impact on our consolidated financial statements and related disclosures.

other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact

on our consolidated financial statements and related disclosures.

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

Not Applicable.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Attached hereto and filed

as a part of this Annual Report on Form 10-K are our Consolidated Financial Statements, beginning on page F-1.

CHANGES IN AND DISAGREEMENTS WITH

ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 5. Market for Registrant’s Common Equity