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Item 9A. Controls and Procedures

2021-06-14 compared with 2020-06-29 · 1806 added, 2467 removed, 462 unchanged (90% of the section changed)

ITEM 9A CONTROLS AND PROCEDURES

Management’s

Annual Report on Internal Control over Financial Reporting

The Company’s

management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the

effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) under the

Securities Exchange Act of 1934, as amended (the “

Exchange Act ”)) as of March 31, 2020, based on the criteria

set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control (“COSO”).

on that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer have concluded

that the Company’s disclosure controls and procedures were effective as of March 31, 2020 to ensure that information required

to be disclosed by our Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and

reported within the time periods specified in Securities and Exchange Commission rules and forms and such information is accumulated

and communicated to management as appropriate to allow timely decisions regarding required disclosures.

The Company’s

internal control over financial reporting was designed to provide reasonable assurance regarding the preparation of financial statements

for external purposes in accordance with generally accepted accounting principles.

Please note, however,

as a result of inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

projections of any evaluation of effectiveness of current internal controls over financial reporting to future periods, are subject

to the risk that such current controls may become inadequate due to changes in conditions, or that a future deterioration in the

degree of compliance with current policies and procedures may occur.

The Company’s

management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2020, with

such assessment being pursuant to the criteria set forth by COSO in Internal Control-Integrated Framework (2013) .

on our assessment, we determined that, based on those criteria, as of March 31, 2020, the Company’s internal control over

financial reporting is effective.

Changes in internal

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and

term “disclosure controls and procedures,”

as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, refers to controls

and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits

under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required

to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s

management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding

required disclosure.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, our management, with the participation of our

Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the

end of the period covered by this Annual Report on Form 10-K.

Based on that evaluation, our Chief Executive Officer and our Chief Financial

Officer concluded that our disclosure controls and procedures were effective as of March 31, 2021 at the reasonable assurance level.

Management’s Report on Internal

Control Over Financial Reporting

During Fiscal 2020,

the Company has taken significant actions to remediate the material weaknesses as described in our Annual Report on Form 10-K filed

with the SEC on June 21, 2019 (the “2019 10-K”).

Additional personnel were hired and independent, third party subject

matter experts were engaged to assist with the documentation and evaluation of the existing control environment, identification

of gaps and weaknesses in controls, as well as advise on the formulation and implementation of improved controls, testing and remediation

of weaknesses identified.

Changes in controls

concerning remediation of material weaknesses relating to segregation of duties:

In connection with

the current year assessment, management, with the assistance of engaged subject matter experts, implemented the following in order

to remediate material weaknesses relating to segregation of duties as described in the 2019 10-K:

Key accounting/finance personnel were hired;

New position in supply chain operations was created and staffed;

Increased utilization of software resources resulting in more effective segregation of duties;

Independent, third party, financial reporting experts were engaged to support the financial reporting process, providing enhancements to review and reconciliation activities during the financial statement preparation and review process.

Changes in controls

concerning remediation of material weaknesses relating to the testing of controls

In connection with

the current year assessment, management, with the assistance of engaged subject matter experts, implemented the following in order

to remediate material weaknesses relating to the testing of controls, as described in the 2019 10-K:

Internal personnel, including newly hired accounting/finance and supply chain professionals were trained in the relevant controls, the testing activities and assumed the increased responsibility of performing tests, as appropriate;

Independent, third party, internal control experts were engaged to support the Company’s testing activities as well as perform selected tests, as necessary;

Changes in controls

concerning remediation of material weaknesses relating to the formalizing and implementation of revised controls, policies and

procedure documentation

Key accounting/finance and supply chain personnel were hired to assist in the formalizing and implementation of revised controls;

Certain personnel, key to the implementation of the control environment received additional “Open SAP”

training to enhance in-house SAP knowledge, capabilities, resulting in enhanced controls being identified, formulated and implemented;

Independent, third party, internal control experts were engaged to support the Company’s formalizing and implementation of revised controls, policies and procedure documentation

ITEM 9B OTHER

ITEM 10 DIRECTORS,

EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following sets

forth biographical information about each of our directors and executive officers as of the date of this report:

control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief

Financial Officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding

the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles, and includes those policies and procedures that:

(1) pertain to the maintenance of records that in reasonable

detail accurately and fairly reflect the transactions and dispositions of our assets;

(2) provide reasonable assurance that transactions

are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,

and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s

assets that could have a material effect on the financial statements.

control over financial reporting may not prevent or detect all errors and all fraud.

A control system, no matter how well conceived and

operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are achieved.

Further, the design

of a control system must be balanced against resource constraints, and therefore the benefits of controls must be considered relative

to their costs.

Given the inherent limitations in all systems of controls, no evaluation of controls can provide absolute assurance all

control issues and instances of fraud, if any, within a company have been detected.

These inherent limitations include the realities

that judgments in decision making can be faulty and that breakdowns can occur because of a simple error or mistake.

Additionally, controls

can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.

The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there

can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions;

over time, controls

may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate.

given the inherent limitations in a cost-effective system of internal control, financial statement misstatements due to error or fraud

may occur and may not be detected.

Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance

of achieving their objectives.

We conduct periodic evaluations of our systems of controls to enhance, where necessary, our control policies

and procedures.

is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rules

13a-15(f) and 15d-15(f) under the Exchange Act.

Under the supervision and with the participation of our management, including our Chief

Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial

Management has used the framework set forth in the report entitled “Internal Control—Integrated Framework (2013)”

published by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate the effectiveness of our internal control

over financial reporting.

Based on its evaluation, management has concluded that our internal control over financial reporting was effective

as of March 31, 2021 at the reasonable assurance level.

Changes in internal control

over financial reporting

There were no changes in

our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of

the Exchange Act during the fiscal quarter ended March 31, 2021 that materially affected, or are reasonably likely to materially affect,

our internal control over financial reporting.

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND

CORPORATE GOVERNANCE

The following sets forth

biographical information about each of our directors and executive officers as of the date of this report:

Director/Officer

President, Chief Executive Officer and

President, Chief Executive Officer and Director

Barry Dash, Ph.

Jeffrey Whitnell

Chief Financial Officer, Secretary and

Chief Financial Officer, Secretary and Treasurer

Douglas Plassche

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and employment of each Director during the past five years is set forth below.

In each instance in which dates are not provided

in connection with a director’s business experience, such nominee has held the position indicated for at least the past

Each director currently

holds office until the expiration of his Tier (each for three years) or until such director’s death, resignation, or removal.

Pursuant to our recently amended and restated bylaws, our Board of Directors is now classified into three separate tiers of directors,

with each respective tier to serve a three-year term and until their successors are duly elected and qualified.

has served as a Director, President, and Chief Executive officer since August 2013.

He has been a member of the Audit Committee,

member and chairman of the nominating Committee and member of the Compensation Committee since September 2016.

Hakim has more

than 30 years of pharmaceutical and medical industry experience in Quality Assurance, Analytical Research and Development, Technical

Services, and Regulatory Compliance.

He brings with him proven management experience, in-depth knowledge of manufacturing systems,

development knowledge in immediate and extended release formulations and extensive regulatory experience of GMP and FDA regulations.

In each instance in which dates are not provided in connection

with a director’s business experience, such nominee has held the position indicated for at least the past five years.

Each director currently holds

office until the expiration of his Tier (each for three years) or until such director’s death, resignation, or removal.

to our recently amended and restated bylaws, our Board of Directors is now classified into three separate tiers of directors, with each

respective tier to serve a three-year term and until their successors are duly elected and qualified.

Nasrat Hakim has served

as a Director, President, and Chief Executive officer since August 2013.

He has been a member of the Audit Committee, member and chairman

of the nominating Committee and member of the Compensation Committee since September 2016.

Hakim has more than 30 years of pharmaceutical

and medical industry experience in Quality Assurance, Analytical Research and Development, Technical Services, and Regulatory Compliance.

He brings with him proven management experience, in-depth knowledge of manufacturing systems, development knowledge in immediate and

extended release formulations and extensive regulatory experience of GMP and FDA regulations.

From 2004 to 2013, Mr.

Hakim was employed by Actavis, Watson and Alpharma in various senior management positions.

Most recently,

Hakim served as International Vice President of Quality Assurance at Actavis, overseeing 25 sites with more than 3,000 employees

under his leadership.

Hakim also served as Corporate Vice President of Technical Services, Quality and Regulatory Compliance

for Actavis U.S., Global Vice President, Quality, and Regulatory Compliance for Alpharma, as well as Executive Director of Quality

Unit at TheraTech, overseeing manufacturing and research and development.

Hakim founded Mikah Pharma, LLC, a virtual,

fully functional pharmaceutical company.

Hakim holds a Bachelor in Chemistry/Bio-Chemistry and Masters of Science in Chemistry

from California State University at Sacramento, Sacramento, CA;

a Masters in Law with Graduate Certification in U.S.

and International

Taxation from St.

Hakim was employed

by Actavis, Watson and Alpharma in various senior management positions.

Most recently, Mr.

Hakim served as International Vice President

of Quality Assurance at Actavis, overseeing 25 sites with more than 3,000 employees under his leadership.

Hakim also served as Corporate

Vice President of Technical Services, Quality and Regulatory Compliance for Actavis U.S., Global Vice President, Quality, and Regulatory

Compliance for Alpharma, as well as Executive Director of Quality Unit at TheraTech, overseeing manufacturing and research and development.

Hakim founded Mikah Pharma, LLC, a virtual, fully functional pharmaceutical company.

Hakim holds a Bachelor in Chemistry/Bio-Chemistry

and Masters of Science in Chemistry from California State University at Sacramento, Sacramento, CA;

a Masters in Law with Graduate Certification

and International Taxation from St.

Thomas University, School of Law, Miami, FL.;

and a Graduate Certification in Regulatory Affairs (RAC) from

California State University at San Diego, San Diego, CA.

Hakim’s leadership experience (consisting of extensive experience

in senior management positions, responsible for 25 global manufacturing/regulatory sites with more than 3,000 employees under

his leadership), industry experience (comprising more than 30 years of pharmaceutical and medical industry experience served in

various quality assurance, analytical research and development/technical services and compliance positions) and academic experience

(including Bachelor degrees in Chemistry and Bio-Chemistry, Masters degrees in Chemistry and Law, with Graduate Certification

and International Taxation, and a Graduate Certification in Regulatory Affairs) led to the conclusion that he is qualified

to serve as a director.

and a Graduate Certification in Regulatory

Affairs (RAC) from California State University at San Diego, San Diego, CA.

Hakim’s leadership experience (consisting of extensive

experience in senior management positions, responsible for 25 global manufacturing/regulatory sites with more than 3,000 employees under

his leadership), industry experience (comprising more than 30 years of pharmaceutical and medical industry experience served in various

quality assurance, analytical research and development/technical services and compliance positions) and academic experience (including

Bachelor degrees in Chemistry and Bio-Chemistry, Masters degrees in Chemistry and Law, with Graduate Certification in U.S.

and International

Taxation, and a Graduate Certification in Regulatory Affairs) led to the conclusion that he is qualified to serve as a director.

Barry Dash, Ph.D.

has served as a Director since April 2005, member of the Audit Committee since April 2005, member of the Nominating Committee

since April 2005 and member and Chairman of the Compensation Committee since June 2007.

Dash has been, since 1995, President

and Managing Member of Dash Associates, L.L.C., an independent consultant to the pharmaceutical and health industries.

to 1996 he was employed by Whitehall-Robins Healthcare, a division of American Home Products Corporation (now known as Wyeth),

initially as Vice President of Scientific Affairs, then as Senior Vice President of Scientific Affairs and then as Senior Vice

President of Advanced Technologies, during which time he personally supervised six separate departments:

Medical and Clinical

Affairs, Regulatory Affairs, Technical Affairs, Research and Development, Analytical R&D and Quality Management/Q.C.

had been employed by the Whitehall Robins Healthcare from 1960 to 1976, during which time he served as Director of Product Development

Research, Assistant Vice President of Product Development and Vice President of Scientific Affairs.

Dash had been employed

Barry Dash has

served as a Director since April 2005, member of the Audit Committee since April 2005, member of the Nominating Committee since April

2005 and member and Chairman of the Compensation Committee since June 2007.

Dash has been, since 1995, President and Managing Member

of Dash Associates, L.L.C., an independent consultant to the pharmaceutical and health industries.

From 1983 to 1996 he was employed

by Whitehall-Robins Healthcare, a division of American Home Products Corporation (now known as Wyeth), initially as Vice President of

Scientific Affairs, then as Senior Vice President of Scientific Affairs and then as Senior Vice President of Advanced Technologies, during

which time he personally supervised six separate departments:

Medical and Clinical Affairs, Regulatory Affairs, Technical Affairs, Research

and Development, Analytical R&D and Quality Management/Q.C.

Dash had been employed by the Whitehall Robins Healthcare from 1960

to 1976, during which time he served as Director of Product Development Research, Assistant Vice President of Product Development and

Vice President of Scientific Affairs.

Dash had been employed by J.B.

Williams Company (Nabisco Brands, Inc.) from 1978 to 1982.

From 1976 to 1978 he was Vice President and Director of Laboratories

of the Consumer Products Division of American Can Company.

Dash holds a Ph.D.

1976 to 1978 he was Vice President and Director of Laboratories of the Consumer Products Division of American Can Company.

from the University of Florida and M.S.

degrees from Columbia University where he was Assistant Professor at the College of Pharmaceutical Sciences from 1956 to

He is a member of the American Pharmaceutical Association, the American Association for the Advancement of Science and the

Society of Cosmetic Chemist, American Association of Pharmaceutical Scientists, Drug Information Association, American Foundation

for Pharmaceutical Education, and Diplomate American Board of Forensic Examiners.

He is the author of scientific publications

and patents in the pharmaceutical field.

Dash’s extensive education in pharmaceutical sciences and his experience in

the development of scientific products, including his experience in regulatory affairs, led to the conclusion that he is qualified

degrees from Columbia University where he was Assistant Professor at the College

of Pharmaceutical Sciences from 1956 to 1960.

He is a member of the American Pharmaceutical Association, the American Association for

the Advancement of Science and the Society of Cosmetic Chemist, American Association of Pharmaceutical Scientists, Drug Information Association,

American Foundation for Pharmaceutical Education, and Diplomate American Board of Forensic Examiners.

He is the author of scientific

publications and patents in the pharmaceutical field.

Dash’s extensive education in pharmaceutical sciences and his experience

in the development of scientific products, including his experience in regulatory affairs, led to the conclusion that he is qualified

to serve as a director.

Jeffrey Whitnell

has served as a Director since October 23, 2009, Chairman of the Audit Committee, member of the Compensation Committee since

October 2009 and designated by the Board as an “

Jeffrey Whitnell has

served as a Director since October 23, 2009, Chairman of the Audit Committee, member of the Compensation Committee since October 2009

and designated by the Board as an “

audit committee financial expert ”

as defined under applicable

rules under the Exchange Act.

as defined under applicable rules under the Exchange

Since April 2015, Mr.

Whitnell has provided financial advisory services, primarily to the healthcare

industry, including LifeWatch Services, where he served as the Vice President, Finance & Controller.

From June2010 to March

Whitnell was the Chief Financial Officer for ReliefBand Medical Technologies, a medical device company.

From June 2009

to June 2010, Mr.

Whitnell provided financial advisory services to various healthcare companies, including ReliefBand Medical

Technologies.

Whitnell has provided financial advisory services, primarily to the healthcare industry, including LifeWatch

Services, where he served as the Vice President, Finance & Controller.

From June2010 to March 2015, Mr.

Whitnell was the Chief Financial

Officer for ReliefBand Medical Technologies, a medical device company.

From June 2009 to June 2010, Mr.

Whitnell was Chief Financial Officer and Senior Vice President of Finance at Akorn,

Whitnell provided financial advisory

services to various healthcare companies, including ReliefBand Medical Technologies.

From June 2004 to June 2009, Mr.

Whitnell was Vice President of Finance and Treasurer for Ovation Pharmaceuticals.

Whitnell was Vice President of Finance and Treasurer for MediChem Research.

Whitnell was Chief

Financial Officer and Senior Vice President of Finance at Akorn, Inc.

From June 2002 to June 2004, Mr.

Whitnell was Vice President of

Finance and Treasurer for Ovation Pharmaceuticals.

From 1997 to 2001, Mr.

Whitnell was Vice President of Finance and Treasurer for MediChem

Prior to 1997, Mr.

Whitnell held various

finance positions at Akzo Nobel and Motorola.

Whitnell began his career as an auditor with Arthur Andersen & Co.

a certified public accountant and holds an M.B.A.

in Finance from the University of Chicago Booth School of Business and a B.S.

Whitnell held various finance positions at Akzo Nobel and Motorola.

Whitnell began his career as an

auditor with Arthur Andersen & Co.

He is a certified public accountant and holds an M.B.A.

in Finance from the University of Chicago

Booth School of Business and a B.S.

in Accounting from the University of Illinois.

Whitnell’s qualifications as an accounting and audit expert provide specific

experience to serve as a director for the Company.

has served as a Director since April 2016, and a member of the Audit Committee, the nominating Committee and the Compensation Committee

since September 2016.

Whitnell’s qualifications as an accounting

and audit expert provide specific experience to serve as a director for the Company.

Davis Caskey has served

as a Director since April 2016, and a member of the Audit Committee, the nominating Committee and the Compensation Committee since September

He brings more than 40 years of pharmaceutical industry experience to this position.

Caskey is currently

President & CEO of Caskey LLC, which he formed in 2013 to serve as an umbrella to manage his pharmaceutical consulting and

other business interests.

From 1990 to 2013, Davis served as the operating officer of ECR Pharmaceuticals, of which he was a founding

HiTech Pharmacal acquired the privately held ECR in 2009 and Mr.

Caskey is currently President & CEO

of Caskey LLC, which he formed in 2013 to serve as an umbrella to manage his pharmaceutical consulting and other business interests.

From 1990 to 2013, Davis served as the operating officer of ECR Pharmaceuticals, of which he was a founding member.

HiTech Pharmacal

acquired the privately held ECR in 2009 and Mr.

Caskey continued in his role until retiring in 2013.

Caskey was credited with the establishment of the company's sales and marketing structure, its product distribution format,

and the development and management of the firm’s internal organization.

His responsibilities included the oversight of drug

development and regulatory filings, product acquisitions, and acquisition of other companies.

A primary focus was to conceive and

develop, with the assistance of key strategic partners, unique dosage forms and extended release formulations of products which

enhance patient compliance and safety.

Caskey was credited

with the establishment of the company’s sales and marketing structure, its product distribution format, and the development and management

of the firm’s internal organization.

His responsibilities included the oversight of drug development and regulatory filings, product

acquisitions, and acquisition of other companies.

A primary focus was to conceive and develop, with the assistance of key strategic partners,

unique dosage forms and extended release formulations of products which enhance patient compliance and safety.

Prior to ECR, Mr.

Caskey was employed by A.H.

Robins for 18 years in various field and home

office management positions.

His experience brings critical insight into the marketing and distribution of pharmaceutical products

in a rapid and ever-changing competitive marketplace.

Caskey attended the University of Texas (Austin) and Lamar University,

and holds bachelor’s and master’s degrees.

has served as Chief Financial Officer, Secretary, and Treasurer of the Company since July 1, 2009.

Prior to joining the Company,

from July 2005 to April 2009, Mr.

Ward filled multiple finance and supply chain leadership roles with the Actavis Group and its

subsidiary, Amide Pharmaceuticals.

From September 2004 to June 2005, Mr.

Ward was a consultant, mainly engaged in improving

internal controls and supporting Sarbanes Oxley compliance of Centennial Communications Inc., a NASDAQ listed wireless communications

From 1999 to September 2004, Mr.

Ward was the Chief Financial Officer for Positive Healthcare/Ceejay Healthcare, a U.S.-Indian

joint venture engaged in the manufacture and distribution of generic pharmaceuticals and nutraceuticals in India.

his career as a certified public accountant in the audit department of KPMG and is a Certified Supply Chain Professional (“CSCP”).

Ward holds a B.S.

in Accounting from Long Island University, Brooklyn, NY, from where he graduated summa cum laude.

experience and expertise in the area of finance and supply chain, provides the qualifications, attributes, and skills to serve

as an officer for the Company.

was employed by A.H.

Robins for 18 years in various field and home office management positions.

His experience brings critical insight

into the marketing and distribution of pharmaceutical products in a rapid and ever-changing competitive marketplace.

Caskey attended

the University of Texas (Austin) and Lamar University, and holds bachelor’s and master’s degrees.

Marc Bregman has served

as Chief Financial Officer, Secretary and Treasurer of the Company since May 17, 2021.

Prior to joining the Company, from February 2015

to May 2021, Mr.

Bregman served as Controller of Langan Engineering.

From 2013 to 2015, Mr.

Bregman served as financial controller at

Chemtrade Logistics.

From 2009 to 2013, Mr.

Bregman held corporate finance positions at Chemetall.

From 1999 to 2009, Mr.

multiple corporate finance positions at National Starch and Chemical Company.

Bregman began his career as a certified public accountant

in the audit department of Ernst & Young, LLP.

Bregman is a Certified Public Accountant (“CPA”), and holds a Master

in Business degree from the New Jersey Institute of Technology, Newark, NJ and Bachelor of Science in Accounting from William Paterson

College, Wayne, NJ.

Bregman’s experience and expertise in the areas of finance, financial planning & analysis, Sarbanes

Oxley compliance, financial auditing and manufacturing accounting, provides the qualifications, attributes, and skills to serve as an

officer for the Company.

Douglas Plassche

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Prior to joining the Company, from 2009 to 2013, Mr.

served as the Managing Director of the New Jersey Solid Oral Dose Operations of Actavis, overseeing 450 employees and the production

of more than 100 products.

Plassche served

as the Managing Director of the New Jersey Solid Oral Dose Operations of Actavis, overseeing 450 employees and the production of more

than 100 products.

From 2007 to 2009, Mr.

Plassche was the Senior Director of Manufacturing for PAR Pharmaceuticals, overseeing

200 employees and the production of more than 70 products.

Plassche was the Senior Director of Manufacturing for PAR Pharmaceuticals, overseeing 200 employees

and the production of more than 70 products.

From 1990 –

Plassche was employed by Schering-Plough,

progressing steadily through multiple disciplines, locations, and technical operations sectors with increasing levels of responsibility.

Plassche has a bachelor’s degree in Economics from Rochester University.

There are no family

relationships between any of our directors and executive officers.

Plassche was employed by Schering-Plough, progressing steadily

through multiple disciplines, locations, and technical operations sectors with increasing levels of responsibility.

a bachelor’s degree in Economics from Rochester University.

There are no family relationships

between any of our directors and executive officers.

Committees of the Board

The Board of Directors

has an Audit Committee, a Compensation Committee, and a Nominating Committee.

The Board of Directors has

an Audit Committee, a Compensation Committee, and a Nominating Committee.

Audit Committee

During Fiscal 2020,

the members of the Audit Committee were Jeffrey Whitnell (Chairman of the Audit Committee), Dr.

Barry Dash, Davis Caskey and Nasrat

We deem Messrs.

During Fiscal 2021, the members

of the Audit Committee were Jeffrey Whitnell (Chairman of the Audit Committee), Dr.

Barry Dash, Davis Caskey and Nasrat Hakim.

Whitnell, Dash, and Caskey to be independent and Mr.

Whitnell to be qualified as an audit committee financial

The Board of Directors has determined that Messrs.

Whitnell, Dash and Caskey are independent directors as (i) defined

in Rule 10A-3(b)(1)(ii) under the Exchange Act and (ii) under Sections 803A(2) and 803B(2)(a) of the NYSE American LLC Company

Guide (although our securities are not listed on the NYSE American LLC or any other national exchange).

Whitnell to be qualified as an audit committee financial expert.

of Directors has determined that Messrs.

Whitnell, Dash and Caskey are independent directors as (i) defined in Rule 10A-3(b)(1)(ii) under

the Exchange Act and (ii) under Sections 803A(2) and 803B(2)(a) of the NYSE American LLC Company Guide (although our securities are not

listed on the NYSE American LLC or any other national exchange).

Nominating Committee

During Fiscal 2020,

the members of the Nominating Committee were Nasrat Hakim (Chairman of the Nominating Committee), Dr.

During Fiscal 2021, the members

of the Nominating Committee were Nasrat Hakim (Chairman of the Nominating Committee), Dr.

Barry Dash, and Davis Caskey.

There were no material changes to the procedures by which security holders may recommend nominees to our Board of Directors since

the filing of our last Annual Report on Form 10-K.

There were no

material changes to the procedures by which security holders may recommend nominees to our Board of Directors since the filing of our

last Annual Report on Form 10-K.

Compensation Committee

During Fiscal 2020,

the members of the Compensation Committee were Dr.

Barry Dash (Chairman of the Compensation Committee), Jeffrey Whitnell, Davis

Caskey and Nasrat Hakim.

During Fiscal 2021, the members

of the Compensation Committee were Dr.

Barry Dash (Chairman of the Compensation Committee), Jeffrey Whitnell, Davis Caskey and Nasrat

Code of Conduct and Ethics

At the first meeting

of the Board of Directors following the annual meeting of stockholders held on June 22, 2004, and as further updated effective

July 2009, the Board of Directors adopted a Code of Business Conduct and Ethics that is applicable to the Company’s directors,

officers, and employees.

A copy of the Code of Business Conduct and Ethics is available on our website at www.elitepharma.com ,

under Investor Relations.

At the first meeting of the

Board of Directors following the annual meeting of stockholders held on June 22, 2004, and as further updated effective July 2009, the

Board of Directors adopted a Code of Business Conduct and Ethics that is applicable to the Company’s directors, officers, and employees.

A copy of the Code of Business Conduct and Ethics is available on our website at www.elitepharma.com, under Investor Relations.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange

Act requires our directors and executive officers and persons who beneficially own more than ten percent of our common stock to report

their ownership of, and transactions in, our stock in filings with the SEC.

Copies of these reports are also required to be supplied

VPG believes, based solely on a review of the copies of such reports received, that our directors and executive officers and

persons who beneficially own more than ten percent of our common stock complied with all applicable Section 16(a) reporting requirements

during the year ended March 31, 2021, except that Mr.

Plassche filed one late Form 4 reporting the award of salary shares.

ITEM 11 EXECUTIVE COMPENSATION

Compensation discussion and analysis

Our approach to executive

compensation, one of the most important and complex aspects of corporate governance, is influenced by our belief in rewarding

people for consistently strong execution and performance.

We believe that the ability to attract and retain qualified executive

officers and other key employees is essential to our long-term success.

Compensation Linked to Attainment of

Performance Goals

Our plan to obtain

and retain highly skilled employees is to provide significant incentive compensation opportunities and market competitive salaries.

The plan was intended to link individual employee objectives with overall company strategies and results, and to reward executive

officers and significant employees for their individual contributions to those strategies and results.

Furthermore, we believe

that equity awards serve to align the interests of our executives with those of our stockholders.

As such, equity is a key component

of our compensation program.

Role of the Compensation Committee

The Company formed

the Compensation Committee in June 2007.

The Company formed the Compensation

Committee in June 2007.

Since the formation of the Compensation Committee all elements of the executives’

compensation are determined by the Compensation Committee, which currently is comprised of three independent non-employee directors,

and one director who is also the Company’s Chief Scientific Officer.

However, the Compensation Committee’s decisions

concerning the compensation of the Company’s Chief Executive Officer are subject to ratification by the independent directors

of the Board of Directors.

The members of the Compensation Committee are Dr.

Barry Dash (Chairman

of the Compensation Committee), Jeffrey Whitnell, Davis Caskey and Nasrat Hakim.

compensation are determined

by the Compensation Committee, which currently is comprised of three independent non-employee directors, and one director who is also

the Company’s Chief Scientific Officer.

However, the Compensation Committee’s decisions concerning the compensation of the

Company’s Chief Executive Officer are subject to ratification by the independent directors of the Board of Directors.

of the Compensation Committee are Dr.

Barry Dash (Chairman of the Compensation Committee), Jeffrey Whitnell, Davis Caskey and Nasrat Hakim.

The Committee operates pursuant to a charter.

Under the Compensation

Committee charter, the Compensation Committee has authority to retain compensation consultants, outside counsel, and other advisors

that the committee deems appropriate, in its sole discretion, to assist it in discharging its duties, and to approve the terms

of retention and fees to be paid to such consultants.

The Compensation Committee did not engage any advisors.

Under the Compensation Committee charter, the Compensation Committee has authority to retain

compensation consultants, outside counsel, and other advisors that the committee deems appropriate, in its sole discretion, to assist

it in discharging its duties, and to approve the terms of retention and fees to be paid to such consultants.

During the fiscal year ended

March 31, 2021, the Compensation Committee did not engage any advisors.

Named Executive Officers

The named executive

officers for the fiscal year ended March 31, 2020 were:

Nasrat Hakim, Chief Executive Officer, and President for the

Ward, Chief Financial Officer, Secretary, and Treasurer

for the full year;

The named executive officers

for the fiscal year ended March 31, 2021 were:

Nasrat Hakim, Chief Executive Officer, and President for the full year;

Ward, Chief Financial Officer, Secretary, and Treasurer for

the full year;

Douglas Plassche, Executive Vice President for the full year.

These individuals

are referred to collectively as the “

These individuals are referred

to collectively as the “

Named Executive Officers ”.

We also had one key

employee during the fiscal year ended March 31, 2020 - George Kenneth Smith.

Our executive compensation program

The primary elements

of our executive compensation program are base salary, incentive cash and stock bonus opportunities and equity incentives typically

in the form of stock option grants or payment of a portion of annual salary as stock.

Although we provide other types of compensation,

these three elements are the principal means by which we provide the Named Executive Officers with compensation opportunities.

The annual bonus opportunity

and equity compensation components of the executive compensation program reflect our belief that a portion of an executive’s

compensation should be performance-based.

This compensation is performance-based because payment is tied to the achievement of

corporate performance goals.

To the extent that performance goals are not achieved, executives will receive a lesser amount of

total compensation.

Elements of our executive compensation

We pay a base salary

to certain of the Named Executive Officers, with such payments being made in either cash, Common Stock or a combination of cash

and Common Stock.

In general, base salaries for the Named Executive Officers are determined by evaluating the responsibilities

of the executive’s position, the executive’s experience, and the competitive marketplace.

Base salary adjustments

are considered and take into account changes in the executive’s responsibilities, the executive’s performance, and

changes in the competitive marketplace.

We believe that the base salaries of the Named Executive Officers are appropriate within

the context of the compensation elements provided to the executives and because they are at a level which remains competitive

in the marketplace.

The Board of Directors

may authorize us to give discretionary bonuses, payable in cash or shares of Common Stock, to the Named Executive Officers and

other key employees.

Such bonuses are designed to motivate the Named Executive Officers and other employees to achieve specified

corporate, business unit and/or individual, strategic, operational, and other performance objectives.

Stock Options

Stock options constitute

performance-based compensation because they have value to the recipient only if the price of our Common Stock increases.

options for each of the Named Executive Officers generally vest over time, obtainment of a corporate goal or a combination of

The grant of stock

options at Elite is designed to motivate our Named Executive Officers to achieve our short-term and long-term corporate goals.

Retirement and Deferred Compensation

We do not presently

provide the Named Executive Officers with a defined benefit pension plan or any supplemental executive retirement plans, nor do

we provide the Named Executive Officers with retiree health benefits.

We have adopted a deferred compensation plan under Section

401(k) of the Code.

The plan provides for employees to defer compensation on a pre-tax basis subject to certain limits, however,

Elite does not provide a matching contribution to its participants.

The retirement and

deferred compensation benefits provided to the Named Executive Officers are not material factors considered in making other compensation

determinations with respect to Named Executive Officers.

Post-Termination/Change of Control

Pursuant to his employment

agreement, Nasrat Hakim, our Chief Executive Officer, is entitled to a payment in an amount equal to two year’s base annual

salary in effect upon the date of termination, less applicable deductions, and withholdings, payable in Common Stock upon a Change

of Control (as defined in the Hakim Employment Agreement).

For more detailed information, please see “

Agreements with

Named Executive Officers ”

We do not presently

provide the Named Executive Officers with any plan or arrangement, other than those that may be contained in employment contracts,

in connection with any termination, including, without limitation, through retirement, resignation, severance, or constructive

termination (including a change in responsibilities) of such Named Executive Officer’s employment with the Company.

As part of the Company’s

efforts to ensure the retention and continuity of key employees, officers, and directors in the event of a change of control of

the ownership of the Company, unless otherwise stated in applicable employment contracts, key executives would receive an amount

equal to twelve months of such executive’s salary, and certain Directors and managers would receive an amount equal to six

months of such Director’s or manager’s fees or salaries, as applicable.

In addition, any outstanding and unvested

options would immediately vest, in the event of a change of control.

As described in more

detail below, the perquisites provided to certain of the Named Executive Officers consist of car allowances and life insurance

These perquisites represent a small fraction of the total compensation of each such Named Executive Officer.

of the perquisites we provide are taxable to the Named Executive Officers and the incremental cost to us of providing these perquisites

is reflected in the Summary Compensation Table.

The Board of Directors believes that the perquisites provided are reasonable and

For more information on perquisites provided to the Named Executive Officers, please see the “

Compensation ”

column of the Summary Compensation Table and “

Our approach to executive

compensation, one of the most important and complex aspects of corporate governance, is influenced by our belief in rewarding people for

consistently strong execution and performance.

We believe that the ability to attract and retain qualified executive officers and other

key employees is essential to our long-term success.

Our plan to obtain and retain highly skilled employees is to provide significant

incentive compensation opportunities and market competitive salaries.

We strive to link individual employee objectives with overall company

strategies and results, and to reward executive officers and significant employees for their individual contributions to those strategies

Furthermore, we believe that equity ownership serves to align the interests of our executives with those of our stockholders.

As such, equity is a key component of our compensation program.

The primary elements of our

executive compensation program are base salary, incentive cash and stock bonus opportunities and equity incentives typically in the form

of stock option grants or stock awards.

Although we provide other types of compensation, these three elements are the principal means

by which we provide the Named Executive Officers with compensation opportunities.

Elements of our executive compensation program

We pay a base salary to certain

of the Named Executive Officers, with such payments being made in either cash, Common Stock or a combination of cash and Common Stock.

In general, base salaries for the Named Executive Officers are determined by evaluating the responsibilities of the executive’s

position, the executive’s experience, and the competitive marketplace.

Base salary adjustments are considered and take into account

changes in the executive’s responsibilities, the executive’s performance, and changes in the competitive marketplace.

believe that the base salaries of the Named Executive Officers are appropriate within the context of the compensation elements provided

to the executives and because they are at a level which remains competitive in the marketplace.

In the section below entitled

Agreements with Named Executive Officers ”, we describe the breakdown between compensation paid in cash and in equity

for each Named Executive Officer during the fiscal year ended March 31, 2021.

Named Executive Officers may

earn discretionary bonuses, which are awarded by the Compensation Committee in its discretion after the end of a fiscal year based on

its assessment of factors including Company and individual performance.

Pursuant to his employment agreement, Mr.

Hakim was eligible to

earn a discretionary bonus for the fiscal year ended March 31, 2021 up to 100% of his base salary ($500,000 for fiscal 2021), which he

earned in full.

In addition, as described in the section below entitled “Agreements with Named Executive Officers,”

was guaranteed a $75,000 annual bonus for the fiscal year ended March 31, 2021.

Ward was awarded a $25,000 discretionary bonus for

his service during fiscal 2021.

As noted above, certain components of our Named Executive

Officers’

fiscal year 2021 base salary and bonuses were payable in shares of Common Stock.

In addition, Messrs.

Plassche are each entitled to an annual grant of restricted shares of Common Stock, as described in the section entitled

Agreements with Named Executive Officers ”

Agreements with Named Executive

During the fiscal year ended 2021, this amount was $25,000

worth of fully vested restricted shares for Mr.

Ward and $30,000 worth of fully vested restricted shares for Mr.

From time to time, we also

grant stock options to our Named Executive Officers which generally vest over time, obtainment of a corporate goal or a combination of

We did not grant any stock options to our named executive officers in fiscal year 2021.

Retirement Benefits

We maintain a tax-qualified

retirement plan under Section 401(k) of the Code.

The plan allows employees to defer compensation on a pre-tax basis subject to certain

however, Elite does not provide a matching contribution to its participants.

Hakim receives a monthly

car allowance of up to $1,500 pursuant to the terms of his employment agreement.

Plassche receives a monthly car allowance of up to

Hakim is also entitled to a monthly housing allowance up to $5,000.

These perquisites represent a small fraction of the total

compensation of each such Named Executive Officer.

The value of the perquisites we provide are taxable to the Named Executive Officers

and the incremental cost to us of providing these perquisites is reflected in the Summary Compensation Table.

The Board of Directors believes

that the perquisites provided are reasonable and appropriate.

The Company generally covers life insurance premiums for its employee population,

including its Named Executive Officers.

For more information on perquisites provided to the Named Executive Officers, please see the “

Other Compensation ”

column of the Summary Compensation Table.

Agreements with Named Executive Officers

Pursuant to his August 2013

2013 employment agreement, and as amended on January 12, 2016 (the “

employment agreement, as amended on January 12, 2016 (the “

Hakim Employment Agreement ”), Mr.

receives an annual salary of $500,000 per year.

The Salary is paid in shares of the Company’s Common Stock pursuant to the

Company’s current procedures for paying Company executives in Stock.

He also is entitled to an annual bonus equal to up

to 100% of his annual salary, payable in accordance with the Company’s payroll practices.

The Board may also award discretionary

bonuses in its sole discretion.

Hakim is entitled to employee benefits (e.g., health, vacation, employee benefit plans and

programs) consistent with other Company employees of his seniority and a car allowance.

The Hakim Employment Agreement contains

confidentially, non-competition and other standard restrictive covenants.

Hakim’s

employment is terminable by the Company for cause (as defined in the Hakim Employment Agreement).

The Hakim Employment Agreement

also may be terminated by the Company upon at least 30 days written notice due to disability (as defined in the Hakim Employment

Agreement) or without cause.

Hakim can terminate the Hakim Employment Agreement by resigning, provided he gives notice at

least 60 days prior to the effective resignation date.

Hakim is terminated for cause or he resigns, he only is entitled

to accrued and unpaid annual salary, accrued vacation time and any reasonable and necessary business expenses, all through the

date of termination and payable in stock (“Basic Termination Benefits”).

Hakim is terminated because of disability

or death, in addition to Basic Termination Benefits, He is entitled his pro rata annual bonus through the date of termination

(payable in Stock).

Hakim receives an annual

salary of $500,000 per year.

The Salary is paid in shares of the Company’s Common Stock pursuant to the Company’s current

procedures for paying Company executives in Stock.

He also is entitled to an annual performance bonus equal to up to 100% of his annual

salary, payable in shares of Common Stock as well.

The Board may also award discretionary bonuses in its sole discretion.

entitled to employee benefits (e.g., health, vacation, employee benefit plans and programs) consistent with other Company employees of

his seniority and a car allowance of up to $1,500 per month.

The Hakim Employment Agreement contains restrictive covenants including a

confidentiality provision and a one year post-termination non-solicit provision.

Hakim’s employment

is terminable by the Company for cause (as defined below).

The Hakim Employment Agreement also may be terminated by the Company upon at

least 30 days written notice due to disability (as defined below) or without cause.

Hakim can terminate the Hakim Employment Agreement

by resigning, provided he gives notice at least 60 days prior to the effective resignation date.

Hakim is terminated

for cause or he resigns, he only is entitled to accrued and unpaid annual salary, accrued vacation time and any reasonable and necessary

business expenses, all through the date of termination and payable in stock (“Basic Termination Benefits”).

terminated because of disability or death, in addition to Basic Termination Benefits, he is entitled to a pro rata annual bonus through

the date of termination (payable in Stock), payable in a lump sum.

In addition, in the event of the termination of Mr.

Hakim’s employment

due to his disability, he will be entitled to a lump sum payment within 60 days of the termination date equal to one year of his base

salary (payable in Stock), subject to his execution of a release.

If the Company terminates Mr.

Hakim without cause, in addition to Basic Termination Benefits, Mr.

entitled to his pro rata annual bonus through the date of termination and an amount equal to two years’

annual salary (all

payable in Stock).

Upon a Change of Control

(as defined in the Hakim Employment Agreement), Mr.

Hakim is entitled to a payment in an amount equal to two year’s base

annual salary in effect upon the Date of Termination, less applicable deductions, and withholdings, payable in Stock computed

in the same manner as set forth as the Salary.

On November 12, 2009,

the Company entered into an employment agreement with Mr.

Hakim without cause, in addition to Basic

Termination Benefits, Mr.

Hakim is entitled to his pro rata annual bonus through the date of termination and an amount equal to two years’

annual salary (all payable in Stock in a lump sum within 60 days of the termination date), and 12 months of continued health insurance

continuation under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), at active employee rates,

subject to his execution of a release and his continued compliance with applicable restrictive covenants.

Upon a termination of employment

in connection with a Change of Control (as defined below), in addition to Basic Termination Benefits, Mr.

Hakim is entitled to a pro rata

annual bonus and payment in an amount equal to two year’s base annual salary in effect upon the Date of Termination, less applicable

deductions, and withholdings, payable in Stock in a lump sum within 60 days, and two years of health care continuation benefits.

all outstanding unvested equity held by Mr.

Hakim will then vest.

Under the Hakim Employment

“Cause”

Hakim’s failure or refusal to perform the services required under the agreement, (2) the material breach by Mr.

any of the terms of the agreement, or (3) Mr.

Hakim’s conviction of a crime that results in imprisonment or involves embezzlement,

dishonest or activities injurious to the Company or its reputation.

“Change of Control”

means generally (1) an acquisition or merger resulting in the holders of the Company’s voting stock immediately prior to the transaction

holding less than fifty (50%) percent of the combined voting power after the transaction;

(2) the sale of all or substantially all of

the assets or capital stock of the Company;

or (3) the securities of the Company representing greater than fifty (50%) percent of the

combined voting power of the Company’s then outstanding voting securities are acquired in a single transaction or series of related

transactions.

“Disability”

Hakim is prevented by illness, accident or other disability (mental or physical) from performing the essential functions of his

position for one or more periods cumulatively totaling 3 months during any consecutive 12 month period.

On November 12, 2009, the

Company entered into an employment agreement with Mr.

Ward (the “

Ward Employment Agreement ”).

Ward Employment Agreement ”) which superseded

his prior agreement with the Company.

Pursuant to the terms of the Ward Employment Agreement, Mr.

Ward continues as an at-will employee of the Company as its Chief

Financial Officer.

Ward receives a base salary of $150,000, with $125,000 of such amount being paid in accordance with the

Company’s payroll practices and $25,000 of such amount being paid by the issuance of restricted shares of Common Stock,

in lieu of cash.

The Common Stock component of Mr.

Ward’s compensation is to be computed on a quarterly basis, with the

number of shares issued equal to the quotient of the quarterly amount due of $6,250 divided by the average daily closing price

of the Company’s Common Stock for the quarter just ended.

On February 2, 2013,

the Board of Directors increased Mr.

Ward’s base salary to $155,000 retroactive to January 1, 2013.

This $5,000 increase

to be paid by the issuance of restricted shares of Common Stock.

Ward continues as an at-will employee

of the Company as its Chief Financial Officer.

Under the Ward Employment Agreement, Mr.

Ward was entitled to an initial base salary of

$125,000 in accordance with the Company’s payroll practices and an additional $25,000 per annum paid by the issuance of restricted

shares of Common Stock.

The Common Stock component of Mr.

Ward’s compensation is

to be computed on a quarterly basis, with the number of shares issued equal to the quotient of the quarterly amount due of $7,500

divided by the average daily closing price of the Company’s Common Stock for the quarter just ended.

On March 1, 2015,

Ward’s compensation was adjusted to include a total compensation of $187,200, consisting of $157,200 being paid in accordance

with the Company’s payroll practices and $30,000 being paid by the issuance of restricted shares of Common Stock in lieu

On March 1, 2016,

Ward’s compensation was adjusted to include a total compensation of $192,816, consisting of $162,816 being paid in accordance

with the Company’s payroll practices and $30,000 being paid by the issuance of restricted shares of Common Stock in lieu

On April 1, 2020,

Ward’s compensation was adjusted to include a total compensation of $200,529, consisting of $170,529 being paid in accordance

with the Company’s payroll practices and $30,000 being paid by the issuance of restricted shares of Common Stock in lieu

Ward’s rate

of compensation has not changed since April 1, 2020.

The Common Stock component

Ward’s compensation is to be computed on a quarterly basis, with the number of shares issued being equal to the quotient

of the quarterly amount due, divided by the average daily closing price of the Company’s Common Stock for the quarter just

Ward’s compensation is to be computed on a quarterly basis, with the number

of shares issued equal to the quotient of the quarterly amount due of $6,250 divided by the average daily closing price of the Company’s

Common Stock for the quarter just ended.

On April 1, 2020, Mr.

compensation was adjusted to include a total compensation of $200,529, consisting of $170,529 being paid in cash in accordance with the

Company’s payroll practices and $30,000 being paid by the issuance of restricted shares of Common Stock.

On March 1, 2021, Mr.

compensation was adjusted to include a total compensation of $208,543, consisting of $178,543 being paid in accordance with the Company’s

payroll practices and $30,000 being paid by the issuance of restricted shares of Common Stock.

Ward subsequently

resigned as CFO of the Company, effective May 14, 2021.

Douglas Plassche

On July 20, 2013,

the Company entered into an employment agreement with Mr.

On July 20, 2013, the Company

entered into an employment agreement with Mr.

Douglas Plassche (the “

Plassche Employment Agreeme nt”).

Pursuant to the Plassche Employment Agreement, Mr.

Plassche serves as an at-will employee, in the position of Vice President of

Operations, commencing on August 12, 2013.

The Plassche Employment Agreement includes a total base compensation of $236,000, consisting

of $211,000 being paid in accordance with the Company’s payroll practices and $25,000 being paid by the issuance of restricted

shares of Common Stock in lieu of cash.

Plassche is also eligible for an annual bonus in cash and/or equity-based awards for

up to an equivalent of 30% of base salary, with such annual bonus being granted based upon the achievement of agreed milestones

and at the discretion of the Company and its Chief Executive Officer.

In addition, pursuant to the Plassche Employment Agreement,

he was granted options to purchase 3,000,000 shares of Common Stock, at a price of $ 0.07 per share, (the closing price of the

Common Stock on the date of the Plassche Employment Agreement).

The options were issued pursuant to the 2004 Employee Stock Option

Plan and vest over a period of three years with the vesting period commencing one year from the date of issuance.

Plassche’s

employment is terminable by either party.

Pursuant to the

Plassche Employment Agreement, Mr.

Plassche serves as an at-will employee, in the position of Vice President of Operations, commencing

on August 12, 2013.

The Plassche Employment Agreement includes an initial base salary of $205,000 being paid in accordance with the Company’s

payroll practices and an additional $25,000 being paid by the issuance of restricted shares of Common Stock.

The Common Stock component

Plassche’s compensation is to be computed on an annual basis, with the number of shares issued being equal to the quotient

of the annual amount due, divided by the average daily closing price of the Company’s Common Stock for the calendar year just ended.

Plassche is also eligible

for an annual bonus in cash and/or equity-based awards for up to an equivalent of 30% of base salary, with such annual bonus being granted

based upon the achievement of agreed milestones and at the discretion of the Company and its Chief Executive Officer.

In addition, pursuant

to the Plassche Employment Agreement, he was initially granted options to purchase 3,000,000 shares of Common Stock, at a price of $ 0.07

per share, (the closing price of the Common Stock on the date of the Plassche Employment Agreement).

The options were issued pursuant

to the 2004 Employee Stock Option Plan and vested over a period of three years with the vesting period commencing one year from the date

Plassche’s employment

is terminable by either party.

If the Company terminates Mr.

Plassche without cause, Mr.

Plassche is entitled to an

amount equal to six months of base annual salary in effect upon the date of termination.

On March 1, 2015,

Plassche’s compensation was adjusted to include a total base compensation of $249,800, consisting of $224,800 being

paid in accordance with the Company’s payroll practices and $25,000 being paid by the issuance of restricted shares of Common

Stock in lieu of cash.

On March 1, 2016,

Plassche’s compensation was adjusted to include a total base compensation of $253,552, consisting of $228,552 being

paid in accordance with the Company’s payroll practices and $25,000 being paid by the issuance of restricted shares of Common

Stock in lieu of cash.

Plassche is entitled to an amount equal to six

months of base annual salary in effect upon the date of termination.

Throughout his tenure, Mr.

Plassche’s compensation was increased from time to time by the Board.

On June 21, 2019, Mr.

Plassche entered into a retention agreement

with the Company (the “Plassche Retention Agreement”), pursuant to which Mr.

Plassche will be entitled to a lump sum

retention payment of $253,552 at any time after June 30, 2021, provided Mr.

entered into a retention agreement with the Company (the “Plassche Retention Agreement”), as an in incentive for his continued

employment and cooperating during a transitional period for the Company.

Pursuant to the Plassche Retention Agreement, Mr.

entitled to a lump sum retention payment of $253,552 as of June 30, 2021, provided Mr.

Plassche remains continuously employed by the Company

1 unchanged sentence

In addition, Mr.

Plassche is due a one-time $30,000 relocation payment and a guaranteed annual bonus of $75,000

pursuant to the Plassche Retention Agreement.

On April 1, 2020,

Plassche’s compensation was adjusted to include a total base compensation of $272,530, consisting of $247,530 being

paid in accordance with the Company’s payroll practices and $25,000 being paid by the issuance of restricted shares of Common

Stock in lieu of cash.

The Common Stock component

Plassche’s compensation is to be computed on a quarterly basis, with the number of shares issued being equal to the

quotient of the quarterly amount due, divided by the average daily closing price of the Company’s Common Stock for the quarter

George Kenneth Smith

On October 20, 2014,

the Company entered into an employment agreement with Mr.

George Kenneth Smith (the “

Smith Employment Agreement ”).

Pursuant to the Smith Employment Agreement, Mr.

Smith serves as an at-will employee, in the position of Vice President, Legal,

commencing on October 20, 2014.

The Smith Employment Agreement includes a total base compensation of $400,000, consisting of $150,000

being paid in accordance with the Company’s payroll practices and $250,000 being paid by the issuance of restricted shares

of Common Stock in lieu of cash.

Smith is also eligible for an annual bonus and discretionary bonus, with such being at the

discretion of the Company and its Chief Executive Officer.

In addition, pursuant to the Smith Employment Agreement, Mr.

was granted options to purchase 1,500,000 shares of Common Stock, at a price of $ 0.29 per share, (the closing price of the Common

Stock on the date of the Smith Employment Agreement).

The options were issued pursuant to the 2009 Employee Stock Option Plan

and vest over a period of three years with the vesting period commencing one year from the date of issuance.

Smith’s

employment is terminable by either party.

If the Company terminates Mr.

Smith without cause, or if Mr.

Smith is terminated upon

a change of control event, as defined in the Smith Employment Agreement, Mr.

Smith is entitled to an amount equal to one year

of base annual salary in effect upon the date of termination.

On March 1, 2016,

Smith’s compensation was adjusted to include a total base compensation of $412,000, consisting of $162,000 being paid

in accordance with the Company’s payroll practices and $250,000 being paid by the issuance of restricted shares of Common

Stock in lieu of cash.

Smith’s

rate of compensation has not changed since March 1, 2016.

The Common Stock component

Smith’s compensation is to be computed on a quarterly basis, with the number of shares issued being equal to the

quotient of the quarterly amount due, divided by the average daily closing price of the Company’s Common Stock for the quarter

Hedging Policy

We do not permit the

Named Executive Officers to “hedge”

ownership by engaging in short sales or trading in any options contracts involving

Options Exercised and Stock Vested

No options have been

exercised by our Named Executive Officers during the 2020 Fiscal Year.

There was no vesting

during Fiscal 2020 of options to purchase Common Stock that were issued to Named Executive Officers in prior periods.

Pension Benefits

We do not provide

pension benefits to the Named Executive Officers.

Nonqualified Deferred Compensation

We do not have any

defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax qualified.

Potential Payments Upon Termination

or Change of Control

We do not presently

provide the Named Executive Officers with any plan or arrangement, other than those that may be contained in the employment contracts

Nasrat Hakim, Mr.

Douglass Plassche, and Mr.

George Kenneth Smith, as disclosed above, in connection with any termination,

including, without limitation, through retirement, resignation, severance, or constructive termination (including a change in

responsibilities) of such Named Executive Officer’s employment with the Company.

Plassche was paid a one-time $30,000 relocation payment during fiscal year 2020.

Under the Plassche

Retention Agreement, the Company also guaranteed Mr.

Plassche a salary of $253,552 and an annual bonus of $75,000 during the two year

period following the agreement date.

On April 1, 2020, Mr.

Plassche’s

compensation was adjusted to include a total base compensation package of $272,530, consisting of $247,530 being paid in accordance with

the Company’s payroll practices and $25,000 being paid by the issuance of restricted shares of Common Stock.

On March 1, 2021, Mr.

Plassche’s

compensation was adjusted to include a total base compensation package of $278,606, consisting of $253,606 being paid in accordance with

the Company’s payroll practices and $25,000 being paid by the issuance of restricted shares of Common Stock.

Potential Payments Upon Termination or Change

Hakim and Plassche

are entitled to certain benefits upon a termination event (and in the case of Mr.

Hakim, in connection with a change of control), as described

in the section entitled “

Agreements with Named Executive Officers ”

We do not presently provide the Named Executive

Officers with any plan or arrangement, other than those that may be contained in the employment contracts disclosed above, in connection

with any termination, including, without limitation, through retirement, resignation, severance, or constructive termination (including

a change in responsibilities) of such Named Executive Officer’s employment with the Company.

As part of the Company’s

efforts to ensure the retention and continuity of key employees, officers, and directors in the event of a change of control of

the ownership of the Company, unless otherwise stated in applicable employment contracts, key executives would receive an amount

equal to twelve months of such executive’s salary, and certain Directors and managers would receive an amount equal to six

months of such Director’s or manager’s fees or salaries, as applicable.

In addition, any outstanding and unvested

options would immediately vest, in the event of a change of control.

Compensation of named executive officers:

efforts to ensure the retention and continuity of key employees, officers, and directors in the event of a change of control of the ownership

of the Company, unless otherwise stated in applicable employment contracts, key executives would receive an amount not to exceed twelve

months of such executive’s salary, and certain Directors and managers would receive an amount equal to six months of such Director’s

or manager’s fees or salaries, as applicable.

In addition, any outstanding and unvested options would immediately vest, in the event

of a change of control.

Hedging Policy

We do not permit the Named

Executive Officers to “hedge”

ownership by engaging in short sales or trading in any options contracts involving securities.

Summary Compensation Table

Name and Principal Position

Compensation (1)

Nasrat Hakim, President, Chief Executive Officer and Chairman of the Board of Directors

1 unchanged sentence

Douglas Plassche, Executive Vice President

George Kenneth Smith, Vice President

Represents amounts paid or accrued for the fiscal years ended

March 31, 2020 and 2019, respectively.

Represents total salaries paid or accrued to Mr.

Hakim pursuant

to the Hakim Employment Agreement, with such amounts to be paid via the issuance of Common Stock in lieu of cash.

No shares of Common Stock have been issued to Mr.

Hakim in payment

of salaries due for Fiscal 2020.

(1) Represents

salary earned by Mr.

Hakim pursuant to the Hakim Employment Agreement for Fiscal 2021, with such amounts to be paid via the issuance

of Common Stock in lieu of cash.

No shares of Common Stock have been issued

Hakim in payment of salaries due for Fiscal 2021.

A total of 7,388,707 shares of Common Stock are due and owing to Mr.

Hakim in payment of salaries

earned by during Fiscal 2020.

in payment of salaries earned during Fiscal 2021.

A total of 6,305,856 shares of Common Stock are due and owing to Mr.

Hakim in payment of salaries

earned by Mr.

Hakim during Fiscal 2019.

Hakim in payment

of salaries earned during Fiscal 2020.

In aggregate, a total of $2,125,000 is accrued, due and owing to Mr.

Hakim for salaries

earned during Fiscal 2020, Fiscal 2019 and the twenty-four months ended March 31, 2018, but not paid.

This amount is to be paid

via the issuance of 16,954,026 shares of Common Stock, with the date of such issuance of shares of Common Stock being undetermined.

Represents bonuses paid or accrued to Mr.

Hakim pursuant to the Hakim Employment Agreement.

A total of $125,000 of bonus earned by

Hakim for salaries earned

during Fiscal 2021, Fiscal 2020, and the thirty-six months ended March 31, 2019, but not paid.

This amount is to be paid via the

issuance of 24,342,733 shares of Common Stock, with the date of such issuance of shares of Common Stock being undetermined.

The bonus earned by Mr.

Hakim for fiscal 2021.

Bonuses earned by Mr.

Hakim during Fiscal

2021 were paid in accordance with the Company’s payroll practices during Fiscal 2021.

Hakim was also paid $437,500 during Fiscal 2021 for bonuses earned

and accrued during the twelve months ended March 31, 2018, and not paid previously.

Hakim was also paid $312,500 during Fiscal 2021

for bonuses earned and accrued during the twelve months ended March 31, 2019, and not previously paid.

Hakim accordingly was paid

a total of $1,250,000 during Fiscal 2021, with such amount representing bonuses earned during Fiscal 2021 and the twenty-four month period

ending March 31, 2019, and not previously paid.

A total of $125,000 of bonus earned by Mr.

Hakim during Fiscal 2020 was paid in accordance with the Company’s payroll practices.

A total of $375,000 of bonus earned

A total of $375,000 of bonus earned by

Hakim during Fiscal 2020 was accrued and is owing to Mr.

Hakim was also paid $125,000 during

Fiscal 2020 for bonuses earned and accrued during the twelve months ended March 31, 2017, with such amount being paid in accordance

with the Company’s payroll practices.

As of March 31, 2021, Mr.

Hakim is owed

an additional $1,000,000 in bonus earned during the twenty-four-month period ending March 31, 2019.

Pursuant to the Hakim Employment

Agreement, these bonuses are to be paid in accordance with the Company’s payroll practices.

Represents amounts paid for auto and housing allowances.

Hakim is owed $562,500 in bonuses earned

during the twenty-four-month period ending March 31, 2020.

Pursuant to the Hakim Employment Agreement, these bonuses are to be paid in

accordance with the Company’s payroll practices.

Represents $18,000 amounts paid for auto allowance and $60,000 for housing allowances.

Represents salaries earned by Mr.

Ward pursuant to the Ward Employment Agreement.

Fiscal 2020 salaries consist of $162,816

being paid in accordance with the Company’s payroll practices and $30,000 being accrued, due and owing to be paid via the

issuance of 378,362 shares of Common Stock.

Fiscal 2019 salaries consist of $162,816

being paid in accordance with the Company’s payroll practices and $30,000 being accrued, due and owing to be paid via the

issuance of 328,414 shares of Common Stock.

In aggregate, salaries totaling $67,500

are accrued, due and owing to Mr.

Ward for salaries earned and not paid during Fiscal 2020, Fiscal 2019 and the twelve month period

ended March 31, 2018, with such accrued amount to be paid via the issuance of 775,171 shares of Common Stock, with the date of

such issuance of shares of Common Stock being undetermined.

Discretionary cash bonuses awarded by the Chief Executive Officer which was accrued and owing as of March 31, 2020 and paid during April 2020 in accordance with the Company’s payroll practices

Fiscal 2021 salaries consist of $171,197 being

paid in accordance with the Company’s payroll practices and $30,000 being accrued, due, owing and to be paid via the issuance of

443,355 shares of Common Stock.

In aggregate, salaries totaling $97,500 are accrued,

due and owing to Mr.

Ward for salaries earned and not paid during Fiscal 2021, Fiscal 2020 and the twenty-four month period ended March

31, 2019, with such accrued amount being paid via the issuance of 1,218,536 shares of Common Stock during May 2021.

Represents the bonus earned by Mr.

Ward for fiscal 2021.

Represents salaries earned by Mr.

Plassche pursuant to the Plassche Employment Agreement.

Fiscal 2020 salaries consist of $228,552

being paid in accordance with the Company’s payroll practices and $25,000 being accrued, due and owing and to be paid via

the issuance of 315,302 shares of Common Stock.

Fiscal 2019 salaries consist of $228,552 being paid in accordance with the Company’s

payroll practices and $25,000 being accrued, due and owing and to be paid via the issuance of 276,678 shares of Common Stock.

In aggregate, salaries totaling $56,250

are accrued, due and owing to Mr.

Plassche for salaries earned and not paid during Fiscal 2020, Fiscal 2019, and the twelve month

period ended March 31, 2018, with such accrued amount to be paid via the issuance of 645,976 shares of Common Stock, with the date

of such issuance of shares of Common Stock being undetermined.

Cash bonuses paid pursuant to the Plassche Employment Agreement

Bonus awarded during Fiscal 2020 was accrued as of March 31, 2020 and paid in April 2020 in accordance with the Company’s payroll practices.

Bonus awarded during Fiscal 2019 was accrued as of March 31, 2019 and paid in April 2019 in accordance with the Company’s payroll practices.

Fiscal 2021 salaries consist of $242,536 being

paid in accordance with the Company’s payroll practices and $25,000 being accrued, due, owing and to be paid via the issuance of

369,462 shares of Common Stock.

In aggregate, salaries totaling $25,000 are accrued,

due and owing to Mr.

Plassche for salaries earned and not paid during Fiscal 2021, with such accrued amount to be paid via the issuance

of 369,462 shares of Common Stock, with the date of such issuance of shares of Common Stock being undetermined.

Represents the bonus earned by Mr.

Plassche for fiscal 2021 pursuant to the Plassche Employment Agreement.

Represents amounts paid for auto allowances.

Represents salaries earned by Mr.

Smith pursuant to the Smith Employment Agreement.

Fiscal 2020 salaries consist of $162,000

being paid in accordance with the Company’s payroll practices and $250,000 being accrued, due and owing and to paid via the

issuance of 3,153,020 shares of Common Stock.

Fiscal 2019 salaries consist of $162,000 being paid in accordance with the Company’s

payroll practices and $250,000 being accrued, due and owing and to be paid via the issuance of 2,736,780 shares of Common Stock.

In aggregate, salaries totaling $562,500

are accrued, due and owing to Mr.

Smith for salaries earned and not paid during Fiscal 2020, Fiscal 2019, and the twelve month

period ended March 31, 2018, with such accrued amount to be paid via the issuance of 6,459,757 shares of Common Stock, with the

date of such issuance of shares of Common Stock being undetermined.

Consists of auto allowances of $6,000 paid to Mr.

Plassche during Fiscal 2020 and $30,000 relocation reimbursement due and owing to Mr.

Plassche, pursuant to the Plassche Retention Agreement.

Outstanding Equity Awards at March 31, 2021

Option Awards

Unexercisable

4 unchanged sentences

Douglas Plassche

George Kenneth Smith

The following table sets forth information

concerning director compensation for the year ended March 31, 2020:

Non-qualified

Director Compensation

The following table sets forth

information concerning director compensation for the year ended March 31, 2021:

Jeffrey Whitnell

2 unchanged sentences

for details on the Company’s director fee compensation policy.

Amounts represent Director fees earned during the fiscal year

ended March 31, 2020 which are to be paid in cash.

These fees were accrued and unpaid as of March 31, 2020, with a payment date

being undetermined.

No directors held unexercised or unvested stock awards as of March 31, 2021.

Amounts represent Director fees earned during the

fiscal year ended March 31, 2021 which are to be paid in cash.

These fees were accrued and unpaid as of March 31, 2021, with a payment

date being undetermined.

In aggregate, Directors fees totaling $30,000 ($10,000 for each of the Company’s three non-employee

Directors) is accrued, due and owing for Director fees earned during Fiscal 2020, Fiscal 2019 and the twelve month period ended

March 31, 2018.

This amount is to be paid in cash, with the date of such payment being undetermined.

Director fees earned during the fiscal year ended March 31,

2020 which are to be paid via the issuance of an aggregate of 756,725 shares of Common Stock, with Dr.

Directors) is accrued, due and owing for Director fees earned during Fiscal 2021.

This amount is to be paid in cash, with the date

of such payment being undetermined.

Director equity compensation for the fiscal year ended March 31, 2021 consists of an entitlement to 295,570 shares of Common Stock for each of Dr.

Whitnell and Mr.

Caskey each receiving 295,570 shares of Common Stock.

In aggregated, a total of 1,550,342 shares of Common Stock is

accrued, due and owing as of March 31, 2018 (with each of Company’s three non-employee Directors being owed 516,781

shares of this aggregate total) for Director fees earned during Fiscal 2020, Fiscal 2019 and the twelve month period ended

March 31, 2018.

Payment of this amount due via share issuance will be made at an undetermined date

Payment of this amount due via share issuance will be made at an as yet undetermined date.

Director Fee Compensation

The Company’s

policy regarding director fees is as follows:

(i) Directors who are employees or consultants of the Company (and/or any of its

subsidiaries) receive no additional remuneration for serving as directors or members of committees of the Board;

(ii) all Directors

are entitled to reimbursement for out-of-pocket expenses incurred by them in connection with their attendance at the Board or

committee meetings;

(iii) Directors who are not employees or consultants of the Company (and/or any of its subsidiaries) receive

a $30,000 annual retainer fee, with $20,000 of this amount being paid via the issuance of restricted Common Stock of the Company

in lieu of cash, as described below, and the remaining $10,000 being paid in cash;

(iv) The Chairman of the Board receives a $30,000

annual retainer fee paid via the issuance of restricted shares of Common Stock of the Company in lieu of cash, as described below;

(v) Directors and the Chairman do not receive any additional compensation for attendance at or chairing of any meetings;

Nasrat Hakim received no additional compensation, above the annual retainer fee due to the Chairman of the Board, for

the period that he also served as Chief Executive Officer.

The Company’s policy

regarding director fees is as follows:

(i) Directors who are employees or consultants of the Company (and/or any of its subsidiaries)

receive no additional remuneration for serving as directors or members of committees of the Board;

(ii) all Directors are entitled to

reimbursement for out-of-pocket expenses incurred by them in connection with their attendance at the Board or committee meetings;

Directors who are not employees or consultants of the Company (and/or any of its subsidiaries) receive a $30,000 annual retainer fee,

with $20,000 of this amount being paid via the issuance of restricted Common Stock, and the remaining $10,000 being paid in cash;

Directors and the Chairman do not receive any additional compensation for attendance at or chairing of any meetings.

Director Equity Compensation

Members of the Board

of Directors and the Chairman are paid their annual retainer fees via the issuance of restricted shares of Common Stock of the

Company, in lieu of cash.

The number of shares to be issued to each Director and the Chairman is equal to the quotient of the

quarterly amount due to each Director and the Chairman, respectively, divided by the average daily closing price of the Company’s

stock for the quarter just ended.

Members of the Board

of Directors during the fiscal years ended March 31, 2020 and March 31, 2019 did not receive any options or equity compensation

for serving as directors other than shares of Common Stock earned in lieu of cash in relation to Director fees due.

The Company’s

Articles of Incorporation provide for the indemnification of each of the Company’s directors to the fullest extent permitted

under Nevada General Corporation Law.

ITEM 12 SECURITY

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table

sets forth certain information, as of June 23, 2020 (except as otherwise indicated), regarding beneficial ownership of our Common

Stock and our Series J Preferred Stock by (i) each person who is known by us to own beneficially more than 5% of each such class,

(ii) each of our directors, (iii) each of our executive officers and (iv) all our directors and executive officers as a group.

As of June 23, 2020, we had 840,404,367 million shares of Common Stock outstanding (exclusive of 0.1 million treasury shares) and

24.0344 shares of Series J Preferred Stock outstanding.

On any matter presented to the holders of our Common Stock for their action

or consideration at any meeting of our Shareholders, each share of Common Stock entitles the holder to one vote and each share

of Series J Preferred Stock entitles the holder to the number of votes equal to the number of shares of Common Stock into which

such share of Series J Preferred Stock is convertible (6,574,631 shares of Common Stock per whole share of Series J Preferred Stock).

As used in the table

below and elsewhere in this report, the term beneficial ownership with respect to a security consists of sole or shared voting

power, including the power to vote or direct the vote, and/or sole or shared investment power, including the power to dispose or

direct the disposition, with respect to the security through any contract, arrangement, understanding, relationship, or otherwise,

including a right to acquire such power(s) during the 60 days immediately following June 23, 2020.

Except as otherwise indicated,

the Shareholders listed in the table have sole voting and investment powers with respect to the shares indicated.

Amount and Nature of

Name and Address of Beneficial Owner of Common Stock

Nasrat Hakim, President, Chief Executive

Officer and Chairman of the Board of Directors*

107,760,381 (1)

As described above, members

of the Board of Directors and the Chairman are paid a portion of their annual retainer fees via the issuance of restricted shares of Common

Stock of the Company.

The number of shares to be issued to each Director and the Chairman is equal to the quotient of the quarterly amount

due to each Director and the Chairman, respectively, divided by the average daily closing price of the Company’s stock for the quarter

Members of the Board of Directors

during the fiscal year ended March 31, 2021 did not receive any options or equity compensation for serving as directors other than shares

of Common Stock earned in lieu of cash in relation to Director fees due.

The Company’s Articles

of Incorporation provide for the indemnification of each of the Company’s directors to the fullest extent permitted under Nevada

General Corporation Law.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth

certain information, as of June 7, 2021 (except as otherwise indicated), regarding beneficial ownership of our Common Stock by (i) each

person who is known by us to own beneficially more than 5% of each such class, (ii) each of our directors, (iii) each of our executive

officers and (iv) all our directors and executive officers as a group.

As of June 7, 2021, we had 1,009,176,752 shares of Common Stock

outstanding (exclusive of 0.1 million treasury shares).

On any matter presented to the holders of our Common Stock for their action or

consideration at any meeting of our Shareholders, each share of Common Stock entitles the holder to one vote.

As used in the table below

and elsewhere in this report, the term beneficial ownership with respect to a security consists of sole or shared voting power, including

the power to vote or direct the vote, and/or sole or shared investment power, including the power to dispose or direct the disposition,

with respect to the security through any contract, arrangement, understanding, relationship, or otherwise, including a right to acquire

such power(s) during the 60 days immediately following June 7, 2021.

Except as otherwise indicated, the Shareholders listed in the table

have sole voting and investment powers with respect to the shares indicated.

Name and Address of Beneficial

Owner of Common Stock

Voting Securities

Nasrat Hakim, President, Chief Executive Officer

and Chairman of the Board of Directors*

273,166,287 (1)

4 unchanged sentences

Davis Caskey, Director*

Ward, Chief Financial Officer *

1,042,243 (4)

Douglas Plassche, Executive Vice President *

Ward, Former Chief Financial Officer

5,185,023 (5)

Ashok Nigalaye, Former Director

Douglas Plassche, Executive Vice President *

4,503,394 (6)

1 unchanged sentence

283,120,113 (7)

24.03443452410 (2)

* The address is c/o Elite Pharmaceuticals Inc.,

165 Ludlow Avenue, Northvale, NJ 07647.

** Less than 1%

Includes 11,797,561 shares of Common Stock held and 16,954,159

shares of Common Stock due and owing to Mr.

Hakim as of March 31, 2020 (the latest practicable date) for compensation earned

pursuant to Mr.

Hakim’s employment agreement with the Company and 79,008,661 shares of Common Stock issuable upon exercise

of the Series J Warrants.

Series J Preferred Stock has an aggregate of 158,017,321 voting

Includes 1,416,011 shares of Common Stock held and 516,781 shares

of Common Stock due and owing to Dr.

Dash as of March 31, 2020 (the latest practicable date) for Directors fees accrued as

of such date.

address is c/o Elite Pharmaceuticals Inc., 165 Ludlow Avenue, Northvale, NJ 07647.

Includes 169,814,882 shares of Common Stock held and 24,342,744 shares

of Common Stock due and owing to Mr.

Whitnell as of March 31, 2020 (the latest practicable date) for Directors fees accrued

Hakim as of March 31, 2021 (the latest practicable date) for compensation earned pursuant to Mr.

Hakim’s employment agreement with the Company and 79,008,661 shares of Common Stock issuable upon cash exercise of the Series J

Warrants with an exercise price of $0.1521 per share.

Includes 1,932,792 shares of Common Stock held and

295,570 shares of Common Stock due and owing to Dr.

Dash as of March 31, 2021 (the latest practicable date) for Directors fees accrued

as of such date.

Includes 229,892 shares of Common Stock held and 516,781 shares

of Common Stock due and owing to Mr.

Includes 1,884,257 shares of Common Stock held and

295,570 shares of Common Stock due and owing to Mr.

Whitnell as of March 31, 2021 (the latest practicable date) for Directors fees

accrued as of such date.

Includes 746,673 shares of Common Stock held and 295,570

shares of Common Stock due and owing to Mr.

Caskey as of March 31, 2021 (the latest practicable date) Date for Directors fees accrued

as of such date.

Includes 3,771,919 shares of Common Stock held and 775,170 shares

of Common Stock due and owing to Mr.

Ward as of March 31, 2020 (the latest practicable date) for salaries earned pursuant

Ward’s employment agreement with the Company, and vested options to purchase 150,000 shares of Common Stock.

Includes 487,596 shares of Common Stock held 645,976 shares

of Common Stock due and owing to Mr.

Ward resigned on May 14, 2021.

is c/o Enveric Biosciences Inc., 4851 Tamiami Trail N, Naples FL 34103.

Includes 3,771,919 shares of Common Stock

held and 1,263,104 shares of Common Stock due and owing to Mr.

Ward as of May 14, 2021.

for salaries earned pursuant to Mr.

employment agreement with the Company, with such shares being issued to Mr.

Ward during May 2021, and vested options to purchase

150,000 shares of Common Stock.

Includes 1,133,932 shares of Common Stock held 369,462

shares of Common Stock due and owing to Mr.

Plassche as of March 31, 2021 (the latest practicable date) for salaries earned pursuant

Plassche’s employment agreement with the Company, and vested options to purchase 3,000,000 shares of Common Stock.

Nigalaye resigned on June 5, 2015.

Address is c/o Granulation

Technology Inc.

12 Industrial Road, Fairfield, NJ 07004.

Includes 50,265,539 shares of Common Stock held with the Company’s

transfer agent in account(s) that is (are) beneficially owned by Dr.

Plassche’s employment agreement with the Company, and shares of Common Stock issuable upon cash exercise of vested options

to purchase 3,000,000 shares of Common Stock.

Relates only to current directors and officers.

19,070,455 shares of Common Stock held, 19,925,648 shares of Common Stock due and owing as of June 23, 2020 for

director’s fees and salaries accrued as of such date, vested options to purchase 3,150,000 shares of Common Stock, and

warrants to purchase 79,008,661 shares of Common Stock.

The denominator includes 158,017,321 votes attributable to the

outstanding Series J Preferred Stock.

Accordingly, the percentage of Common Stock beneficially owned by each Owner listed

in the table other than Mr.

Hakim is slightly greater than the percentage listed in this column.

Series J Preferred

Each share of Series

J Preferred has a stated value of $1,000,000 (the “

Stated Value ”).

Commencing on the earlier of four years

from the date of issuance of the Series J Preferred or the date that shareholder approval of an increase in the authorized shares

of common stock is obtained (the “

Shareholder Approval ”) and the requisite corporate action has been effected,

each share of Series J Preferred is convertible into shares of Company Common Stock at a rate calculated by dividing the Stated

Value by $0.1521 (the “

Conversion Price”

) (prior to any adjustment, 6,574,622 shares of Common Stock per whole

share of Series J Preferred).

Shareholder Approval was obtained, so the Series J Preferred is now convertible.

Subject to certain

exceptions, the Conversion Price is subject to adjustment for any issuances or deemed issuances of common stock or common stock

equivalents at an effective price below the then Conversion Price.

The Conversion price also is adjustable upon the happening

of certain customary events such as stock dividends and splits, pro rata distributions and fundamental transactions.

Holders of Series

J Preferred vote, along with the holders of Common Stock, on any matter presented to the shareholders.

Each holder of Series J

Preferred is entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of

Series J Preferred held by such holder are convertible.

The Series J Preferred

ranks senior to the Common Stock with respect to the payment of dividends.

So long as any shares of Series J Preferred remain

outstanding, the Company cannot declare, pay, or set aside any dividends on shares of any other of its capital stock, unless the

holders receive, a dividend on each outstanding share of Series J Preferred in an amount equal to the dividend the holders would

have been entitled to receive upon conversion, in full, of the shares of Series J Preferred.

Upon liquidation,

dissolution or winding up of the Company, holders of Series J Preferred are entitled to receive for each share of Series J Preferred

Stock, pari passu and pro rata with the holders of Common Stock, out of the Company’s assets, an amount equal to the amount

distributable with regard to the number of whole shares of Common Stock into which the shares of Series J Preferred held by the

holders are convertible as of the date of the Liquidation regardless of whether an Authorized Share Deficiency exists.

Series J Warrants

The Series J Warrants

are exercisable for a period of 10 years from the date of issuance.

The initial exercise price is $0.1521 per share and the Warrants

can be exercised for cash or on a cashless basis.

The exercise price is subject to adjustment for any issuances or deemed issuances

of common stock or common stock equivalents at an effective price below the then exercise price.

The Warrants provide for other

standard adjustments upon the happening of certain customary events.

ITEM 13 CERTAIN RELATIONSHIPS AND

RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

175,512,536 shares of Common Stock held, 25,598,916 shares of Common Stock due and owing as of March 31, 2021 (the latest practicable

date) for director’s fees and salaries accrued as of such date, 3,000,000 shares of Common Stock issuable upon cash exercise

of vested options and 79,008,661 shares of Common Stock issuable upon cash exercise of warrants at an exercise price of $0.1521 per

share of Common Stock.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

Certain Related Person Transactions

In May 2020, SunGen,

under an asset purchase agreement, assigned its rights and obligations under the SunGen Agreement for Amphetamine IR and Amphetamine

ER to Mikah Pharmaceuticals.

In May 2020, SunGen, under

an asset purchase agreement, assigned its rights and obligations under the SunGen Agreement for Amphetamine IR and Amphetamine ER to

Mikah Pharmaceuticals.

The ANDAs for Amphetamine IR and Amphetamine ER are now registered under Elite’s name.

will now be Elite’s partner with respect to Amphetamine IR and ER and will assume all the rights and obligations for these

products from SunGen.

Mikah will now be

Elite’s partner with respect to Amphetamine IR and ER and will assume all the rights and obligations for these products from SunGen.

Mikah Pharmaceuticals was founded in 2009 by Nasrat Hakim.

Director Independence

All related person

transactions are reviewed and, as appropriate, may be approved or ratified by the Board of Directors.

If a Director is involved

in the transaction, he or she may not participate in any review, approval, or ratification of such transaction.

Related person

transactions are approved by the Board of Directors only if, based on all of the facts and circumstances, they are in, or not

inconsistent with, our best interests and the best interests of our stockholders, as the Board of Directors determines in good

The Board of Directors takes into account, among other factors it deems appropriate, whether the transaction is on terms

generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s

interest in the transaction.

The Board of Directors may also impose such conditions as it deems necessary and appropriate on us

or the related person in connection with the transaction.

All related person transactions

are reviewed and, as appropriate, may be approved or ratified by the Board of Directors.

If a Director is involved in the transaction,

he or she may not participate in any review, approval, or ratification of such transaction.

Related person transactions are approved

by the Board of Directors only if, based on all of the facts and circumstances, they are in, or not inconsistent with, our best interests

and the best interests of our stockholders, as the Board of Directors determines in good faith.

The Board of Directors takes into account,

among other factors it deems appropriate, whether the transaction is on terms generally available to an unaffiliated third-party under

the same or similar circumstances and the extent of the related person’s interest in the transaction.

The Board of Directors may

also impose such conditions as it deems necessary and appropriate on us or the related person in connection with the transaction.

In the case of a transaction

1 unchanged sentence

of the transaction is appropriate.

ITEM 14 PRINCIPAL ACCOUNTANT FEES

The Company’s

independent registered public accounting firm is Buchbinder Tunick & Company LLP (“

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Company’s independent

registered public accounting firm for the fiscal year ending March 31, 2022 is Buchbinder Tunick & Company LLP (“

Buchbinder ”).

The following table

presents fees, including reimbursements for expenses, for professional audit services rendered by Buchbinder, for the audits of

our financial statements and interim reviews of our quarterly financial statements.

The following table presents

fees, including reimbursements for expenses, for professional audit services rendered by Buchbinder, for the audits of our financial

statements and interim reviews of our quarterly financial statements.

Audit-Related Fees

Represents fees for

professional services provided for the audit of our annual financial statements, services that are performed to comply with generally

accepted auditing standards, and review of our financial statements included in our quarterly reports and services in connection

with statutory and regulatory filings.

Represents fees for professional

services provided for the audit of our annual financial statements, services that are performed to comply with generally accepted auditing

standards, and review of our financial statements included in our quarterly reports and services in connection with statutory and regulatory

Audit-Related Fees

Represents the fees

for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements.

Represents preparation

of Federal, State and Local income tax returns.

The Audit Committee

has determined that Buchbinder’s rendering of these audit-related services was compatible with maintaining auditor’s

independence.

The Board of Directors considered Buchbinder to be well qualified to serve as our independent public accountants.

The Committee also pre-approved the charges for services performed in Fiscal 2020.

The Audit Committee

pre-approves all audit related and tax services and the terms thereof (which may include providing comfort letters in connection

with securities underwriting) and non-audit services (other than non-audit services prohibited under Section 10A(g) of the Exchange

Act or the applicable rules of the SEC or the Public Company Accounting Oversight Board) to be provided to us by the independent

provided, however, the pre-approval requirement is waived with respect to the provisions of non-audit services for us

if the “de minimus”

provisions of Section 10A (i)(1)(B) of the Exchange Act are satisfied.

This authority to pre-approve

non-audit services may be delegated to one or more members of the Audit Committee, who shall present all decisions to pre-approve

an activity to the full Audit Committee at its first meeting following such decision.

ITEM 15 EXHIBITS, FINANCIAL STATEMENTS

AND SCHEDULES

The following are filed as part of this Annual Report

The financial statements and schedules required to be filed

by Item 8 of this Annual Report on Form 10-K and listed in the Index to Consolidated Financial Statements.

The Exhibits required by Item 601 of Regulation S-K and listed

below in the “

Represents the fees for assurance

and related services that were reasonably related to the performance of the audit or review of our financial statements.

Represents preparation of

Federal, State and Local income tax returns.

The Audit Committee has determined

that Buchbinder’s rendering of these audit-related services was compatible with maintaining auditor’s independence.

of Directors considered Buchbinder to be well qualified to serve as our independent public accountants.

The Committee also pre-approved

the charges for services performed in Fiscal 2021.

Pre-Approval Procedures

The Audit Committee pre-approves

all audit and tax services and the terms thereof (which may include providing comfort letters in connection with securities underwriting)

and non-audit services (other than non-audit services prohibited under Section 10A(g) of the Exchange Act or the applicable rules of

the SEC or the Public Company Accounting Oversight Board) to be provided to us by the independent auditor;

provided, however, the pre-approval

requirement is waived with respect to the provisions of non-audit services for us if the “de minimus”

provisions of Section

10A (i)(1)(B) of the Exchange Act are satisfied.

This authority to pre-approve non-audit services may be delegated to one or more members

of the Audit Committee, who shall present all decisions to pre-approve an activity to the full Audit Committee at its first meeting following

such decision.

EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES

The following are filed as part of this Annual Report on

The financial statements and schedules required to be filed by Item

8 of this Annual Report on Form 10-K and listed in the Index to Consolidated Financial Statements.

The Exhibits required by Item 601 of Regulation S-K and listed below

in the “

Index to Exhibits required by Item 601 of Regulation S- K.”

2 unchanged sentences

Index to Exhibits required by Item 601 of Regulation S-K.

of Incorporation of Elite-Nevada, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the

SEC on January 9, 2012.

of Designations of the Series G Convertible Preferred Stock as filed with the Secretary of State of the State of Nevada on

April 18, 2013, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, dated April 18, 2013 and filed

with the SEC on April 22, 2013.

of Designation of the Series H Junior Participating Preferred Stock, incorporated by reference to Exhibit 2 (contained in

Exhibit 1) to the Registration Statement on Form 8-A filed with the SEC on November 15, 2013.

Certificate of Designations of the Series I Convertible Preferred Stock as filed with the Secretary of State of the State of Nevada on February 6, 2014, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, dated February 6, 2014 and filed with the SEC on February 7, 2014.

Certificate of Designations of the Series J Convertible Preferred Stock as filed with the Secretary of State of the State of Nevada on May 3, 2017, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, dated April 28, 2017 and filed with the SEC on April 28, 2017.

Certificate of Amendment to Articles of Incorporation, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, dated June 24, 2020 and filed with the SEC on June 24, 2020.

Amended and Restated By-Laws of the Company, incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K dated April 23, 2020 and filed with the SEC on April 23, 2020.

of specimen certificate for Series G Convertible Preferred Stock of the Company, incorporated by reference to Exhibit 4.2

to the Current Report on Form 8-K, dated April 18, 2013 and filed with the SEC on April 22, 2013.

Form of specimen certificate for Series I Convertible Preferred Stock of the Company, incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, dated February 6, 2014 and filed with the SEC on February 7, 2014.

Rights Agreement, dated as of November 15, 2013, between the Company and American Stock Transfer & Trust Company, LLC., incorporated by reference to Exhibit 1 to the Registration Statement on Form 8-A filed with the SEC on November 15, 2013.

Form of Series H Preferred Stock Certificate, incorporated by reference to Exhibit 1 to the Registration Statement on Form 8-A filed with the SEC on November 15, 2013.

Warrant to purchase shares of Common Stock issued to Nasrat Hakim dated April 28, 2017 incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, dated April 28, 2017, and filed with the SEC on April 28, 2017.

Description of Common Stock.*

of Incorporation of Elite-Nevada, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on

January 9, 2012.

of Designations of the Series G Convertible Preferred Stock as filed with the Secretary of State of the State of Nevada on April

18, 2013, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, dated April 18, 2013 and filed with the SEC

on April 22, 2013.

of Designation of the Series H Junior Participating Preferred Stock, incorporated by reference to Exhibit 2 (contained in Exhibit

1) to the Registration Statement on Form 8-A filed with the SEC on November 15, 2013.

of Designations of the Series I Convertible Preferred Stock as filed with the Secretary of State of the State of Nevada on February

6, 2014, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, dated February 6, 2014 and filed with the SEC

on February 7, 2014.

of Designations of the Series J Convertible Preferred Stock as filed with the Secretary of State of the State of Nevada on May 3,

2017, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, dated April 28, 2017 and filed with the SEC on

April 28, 2017.

of Amendment to Articles of Incorporation, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, dated June

24, 2020 and filed with the SEC on June 24, 2020.

and Restated By-Laws of the Company, incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K dated April 23, 2020

and filed with the SEC on April 23, 2020.

of specimen certificate for Series G Convertible Preferred Stock of the Company, incorporated by reference to Exhibit 4.2 to the

Current Report on Form 8-K, dated April 18, 2013 and filed with the SEC on April 22, 2013.

of specimen certificate for Series I Convertible Preferred Stock of the Company, incorporated by reference to Exhibit 4.2 to the

Current Report on Form 8-K, dated February 6, 2014 and filed with the SEC on February 7, 2014.

Agreement, dated as of November 15, 2013, between the Company and American Stock Transfer & Trust Company, LLC., incorporated

by reference to Exhibit 1 to the Registration Statement on Form 8-A filed with the SEC on November 15, 2013.

of Series H Preferred Stock Certificate, incorporated by reference to Exhibit 1 to the Registration Statement on Form 8-A filed with

the SEC on November 15, 2013.

to purchase shares of Common Stock issued to Nasrat Hakim dated April 28, 2017 incorporated by reference to Exhibit 4.1 to the Current

Report on Form 8-K, dated April 28, 2017, and filed with the SEC on April 28, 2017.

of Common Stock, incorporated by reference to Exhibit 4.6 to the Report 10-K filed in June 2020.

Pharmaceuticals, Inc.

2014 Equity Incentive Plan, incorporated by reference to Appendix B to the Company’s Definitive

Proxy Statement for its Annual Meeting of Shareholders, filed with the SEC on April 3, 2014.

Form of Confidentiality Agreement (corporate), incorporated by reference to Exhibit 10.7 to the Form SB-2.

2014 Equity Incentive Plan, incorporated by reference to Appendix B to the Company’s Definitive Proxy

Statement for its Annual Meeting of Shareholders, filed with the SEC on April 3, 2014.

of Confidentiality Agreement (corporate), incorporated by reference to Exhibit 10.7 to the Form SB-2.

of Confidentiality Agreement (employee), incorporated by reference to Exhibit 10.8 to the Form SB-2.

Agreement, dated as of August 15, 2005, between New Jersey Economic Development Authority (“NJEDA”) and the Company,

incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated August 31, 2005 and filed with the SEC

on September 6, 2005.

A Note in the aggregate principal amount of $3,660,000.00 payable to the order of the NJEDA, incorporated by reference to

Exhibit 10.2 to the Current Report on Form 8-K, dated August 31, 2005 and filed with the SEC on September 6, 2005.

incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated August 31, 2005 and filed with the SEC on September

A Note in the aggregate principal amount of $3,660,000.00 payable to the order of the NJEDA, incorporated by reference to Exhibit

10.2 to the Current Report on Form 8-K, dated August 31, 2005 and filed with the SEC on September 6, 2005.

B Note in the aggregate principal amount of $495,000.00 payable to the order of the NJEDA, incorporated by reference to Exhibit 10.3

2 unchanged sentences

and filed with the SEC on September 6, 2005.

between NJEDA and the Bank of New York as Trustee, dated as of August 15, 2005, incorporated by reference to Exhibit 10.5

to the Current Report on Form 8-K, dated August 31, 2005 and filed with the SEC on September 6, 2005.

Strategic Alliance Agreement, dated as of March 18, 2009, by and among the Company, Epic Pharma, LLC and Epic Investments, LLC, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated March 18, 2009 and filed with the SEC on March 23, 2009.

Amendment to Strategic Alliance Agreement, dated as of April 30, 2009, by and among the Company, Epic Pharma, LLC and Epic Investments, LLC, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated April 30, 2009 and filed with the SEC on May 6, 2009.

Second Amendment to Strategic Alliance Agreement, dated as of June 1, 2009, by and among the Company, Epic Pharma, LLC and Epic Investments, LLC, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated June 1, 2009, and filed with the SEC on June 5, 2009.

Third Amendment to Strategic Alliance Agreement, dated as of Aug 18, 2009, by and among the Company, Epic Pharma LLC and Epic Investments, LLC, incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q, for the period ending June 30, 2009 and filed with the SEC on August 19, 2009.

Employment Agreement, dated as of November 13, 2009, by and between the Company and Carter J.

Ward, incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, for the period ending September 30, 2009 and filed with the SEC on November 16, 2009.

Elite Pharmaceuticals Inc.

2009 Equity Incentive Plan, as adopted November 24, 2009, incorporated by reference to Exhibit 10.1 to the Registration Statement Under the Securities Act of 1933 on Form S-8, dated December 18, 2009 and filed with the SEC on December 22, 2009.

License Agreement, dated as of September 10, 2010, by and among Precision Dose Inc.

and the Company, incorporated by reference to Exhibit 10.8 to the Quarterly Report on Form 10-Q, for the period ended September 30, 2010 and filed with the SEC on November 15, 2010 (Confidential Treatment granted with respect to portions of the Agreement).

Manufacturing and Supply Agreement, dated as of September 10, 2010, by and among Precision Dose Inc.

and the Company, incorporated by reference to Exhibit 10.9 to the Quarterly Report on Form 10-Q, for the period ended September 30, 2010 and filed with the SEC on November 15, 2010 (Confidential Treatment granted with respect to portions of the Agreement).

August 1, 2013 Employment Agreement with Nasrat Hakim, incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, dated August 1, 2013 and filed with the SEC on August 5, 2013.

August 1, 2013 Mikah LLC Asset Purchase Agreement, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K/A, dated August 1, 2013 and filed with the SEC on August 30, 2018.

(Confidential Treatment granted with respect to portions of the Agreement).

August 1, 2013 Secured Convertible Note from the Company to Mikah Pharma LLC., incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, dated August 1, 2013 and filed with the SEC on August 5, 2013.

August 1, 2013 Security Agreement from the Company to Mikah Pharma LLC., incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, dated August 1, 2013 and filed with the SEC on August 5, 2013.

October 15, 2013 Hakim Credit Line Agreement, incorporated by reference to Exhibit 10.16 to the Quarterly Report on Form 10-Q for the period ended September 30, 2013.

October 2, 2013 Manufacturing and Licensing Agreement with Epic Pharma LLC, incorporated by reference to Exhibit 10.17 to the Amended Quarterly Report on Form 10-Q/A for the period ended September 30, 2013 and filed with the SEC on April 25, 2014.

Confidential Treatment granted with respect to portions of the Agreement.

February 7, 2014 Amendment to Secured Convertible Note from the Company to Mikah, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated February 7, 2014 and filed with the SEC on February 7, 2014.

Employment Agreement with Dr.

Kenneth Smith, dated October 20, 2014, incorporated by reference to Exhibit 10.82 to the Quarterly Report on Form 10-Q for the period ended September 30, 2014 and filed with the SEC on November 14, 2014.

January 28, 2015 First Amendment to the Loan Agreement between Nasrat Hakim and Elite Pharmaceuticals dated October 15, 2013, incorporated by reference to Exhibit 10.83 to the Quarterly Report on Form 10-Q for the period ended December 31, 2014 and filed with the SEC on February 17, 2015.

January 28, 2015 Termination of Development and License Agreement for Mikah-001 between Elite Pharmaceuticals, Inc.

and Mikah Pharma LLC and Transfer of Payment, incorporated by reference to Exhibit 10.84 to the Quarterly Report on Form 10-Q for the period ended December 31, 2014 and filed with the SEC on February 17, 2015.

June 4, 2015 License Agreement with Epic Pharma LLC, incorporated by reference to Exhibit 10.85 to Amendment No.

1 to the Annual Report on Form 10-K for the fiscal year ended March 31, 2015 and filed with the SEC on July 11, 2016.

(Confidential Treatment granted with respect to portions of the Agreement).

Amendment No.

1 to Hakim Employment Agreement, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on January 29, 2016.

August 24, 2016 Master Development and License Agreement between Elite and SunGen Pharma LLC.

incorporated by reference to Exhibit 10.44 to the Quarterly Report on Form 10-Q for the period ended September 30, 2016 and filed with the SEC on November 9, 2016.

(Confidential Treatment granted with respect to portions of the Agreement).

Purchase Agreement between the Company and Lincoln Park Capital LLC dated May 1, 2017, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated May 2, 2017 and filed with the SEC on May 2, 2017.

Registration Rights Agreement between the Company and Lincoln Park Capital LLC dated May 1, 2017, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, dated May 2, 2017 and filed with the SEC on May 2, 2017.

April 28, 2017 Exchange Agreement between the Company and Nasrat Hakim, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated April 28, 2017 and filed with the SEC on April 28.

May 2017 Trimipramine Acquisition Agreement from Mikah Pharma, incorporated by reference to Exhibit 10.50 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

May 2017 Secured Promissory Note from the Company to Mikah Pharma, incorporated by reference to Exhibit 10.51 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

May 2017 Security Agreement between the Company to Mikah Pharma, incorporated by reference to Exhibit 10.52 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

May 2017 Assignment of Supply and Distribution Agreement between Dr.

Reddy’s Laboratories and Mikah Pharma, incorporated by reference to Exhibit 10.53 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

May 2017 Assignment of Manufacturing and Supply Agreement between Epic and Mikah Pharma, incorporated by reference to Exhibit 10.54 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

Supply and Distribution Agreement between Dr.

Reddy’s Laboratories and Mikah Pharma, incorporated by reference to Exhibit 10.55 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

(Confidential Treatment granted with respect to portions of the Agreement).

Manufacturing and Supply Agreement between Epic and Mikah Pharma, incorporated by reference to Exhibit 10.56 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

between NJEDA and the Bank of New York as Trustee, dated as of August 15, 2005, incorporated by reference to Exhibit 10.5 to the

Current Report on Form 8-K, dated August 31, 2005 and filed with the SEC on September 6, 2005.

Agreement, dated as of November 13, 2009, by and between the Company and Carter J.

Ward, incorporated by reference to Exhibit 10.2

to the Quarterly Report on Form 10-Q, for the period ending September 30, 2009 and filed with the SEC on November 16, 2009.+

Agreement, dated as of September 10, 2010, by and among Precision Dose Inc.

and the Company, incorporated by reference to Exhibit

10.8 to the Quarterly Report on Form 10-Q, for the period ended September 30, 2010 and filed with the SEC on November 15, 2010 (Confidential

Treatment granted with respect to portions of the Agreement).

Manufacturing

and Supply Agreement, dated as of September 10, 2010, by and among Precision Dose Inc.

and the Company, incorporated by reference

to Exhibit 10.9 to the Quarterly Report on Form 10-Q, for the period ended September 30, 2010 and filed with the SEC on November

15, 2010 (Confidential Treatment granted with respect to portions of the Agreement).

Master Development and License Agreement For Products Between Elite Pharmaceuticals, Inc.

And SunGen dated July 6, 2017, incorporated by reference to Exhibit 10.57 to the Quarterly Report on Form 10-Q for the period ended June 30, 2017 and filed with the SEC on August 9, 2017.

1, 2013 Employment Agreement with Nasrat Hakim, incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, dated

August 1, 2013 and filed with the SEC on August 5, 2013.+

1, 2013 Mikah LLC Asset Purchase Agreement, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K/A, dated

August 1, 2013 and filed with the SEC on August 30, 2018.

(Confidential Treatment granted with respect to portions of the Agreement).

First Amendment to Master Development And License Agreement For Products Between Elite Pharmaceuticals, Inc.

and SunGen Pharma, LLC, incorporated by reference to Exhibit 10.59 to the Quarterly Report on Form 10-Q for the period ended June 30, 2017 and filed with the SEC on August 9, 2017.

1, 2013 Secured Convertible Note from the Company to Mikah Pharma LLC., incorporated by reference to Exhibit 10.2 to the Current

Report on Form 8-K, dated August 1, 2013 and filed with the SEC on August 5, 2013.

1, 2013 Security Agreement from the Company to Mikah Pharma LLC., incorporated by reference to Exhibit 10.3 to the Current Report

on Form 8-K, dated August 1, 2013 and filed with the SEC on August 5, 2013.

15, 2013 Hakim Credit Line Agreement, incorporated by reference to Exhibit 10.16 to the Quarterly Report on Form 10-Q for the period

ended September 30, 2013.

2, 2013 Manufacturing and Licensing Agreement with Epic Pharma LLC, incorporated by reference to Exhibit 10.17 to the Amended Quarterly

Report on Form 10-Q/A for the period ended September 30, 2013 and filed with the SEC on April 25, 2014.

Confidential Treatment granted

with respect to portions of the Agreement.

7, 2014 Amendment to Secured Convertible Note from the Company to Mikah, incorporated by reference to Exhibit 10.1 to the Current

Report on Form 8-K, dated February 7, 2014 and filed with the SEC on February 7, 2014.

Agreement with Dr.

Kenneth Smith, dated October 20, 2014, incorporated by reference to Exhibit 10.82 to the Quarterly Report on

Form 10-Q for the period ended September 30, 2014 and filed with the SEC on November 14, 2014.+

28, 2015 First Amendment to the Loan Agreement between Nasrat Hakim and Elite Pharmaceuticals dated October 15, 2013, incorporated

by reference to Exhibit 10.83 to the Quarterly Report on Form 10-Q for the period ended December 31, 2014 and filed with the SEC

on February 17, 2015.

28, 2015 Termination of Development and License Agreement for Mikah-001 between Elite Pharmaceuticals, Inc.

and Mikah Pharma LLC

and Transfer of Payment, incorporated by reference to Exhibit 10.84 to the Quarterly Report on Form 10-Q for the period ended December

31, 2014 and filed with the SEC on February 17, 2015.

1 to Hakim Employment Agreement, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC

on January 29, 2016.

24, 2016 Master Development and License Agreement between Elite and SunGen Pharma LLC.

incorporated by reference to Exhibit 10.44

to the Quarterly Report on Form 10-Q for the period ended September 30, 2016 and filed with the SEC on November 9, 2016.

(Confidential

Treatment granted with respect to portions of the Agreement).

Purchase Agreement between the Company and Lincoln Park Capital LLC dated July 8, 2020, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated July 9, 2020 and filed with the SEC on July 9, 2020.

Rights Agreement between the Company and Lincoln Park Capital LLC dated July 8, 2020, incorporated by reference to Exhibit 10.2 to

the Current Report on Form 8-K, dated July 9, 2020 and filed with the SEC on July 9, 2020.

2017 Trimipramine Acquisition Agreement from Mikah Pharma, incorporated by reference to Exhibit 10.50 to the Annual Report on Form

10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

2017 Secured Promissory Note from the Company to Mikah Pharma, incorporated by reference to Exhibit 10.51 to the Annual Report on

Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

2017 Security Agreement between the Company to Mikah Pharma, incorporated by reference to Exhibit 10.52 to the Annual Report on Form

10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

2017 Assignment of Supply and Distribution Agreement between Dr.

Reddy’s Laboratories and Mikah Pharma, incorporated by reference

to Exhibit 10.53 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

2017 Assignment of Manufacturing and Supply Agreement between Epic and Mikah Pharma, incorporated by reference to Exhibit 10.54 to

the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

and Distribution Agreement between Dr.

Reddy’s Laboratories and Mikah Pharma, incorporated by reference to Exhibit 10.55 to

the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

(Confidential Treatment

granted with respect to portions of the Agreement).

Manufacturing

and Supply Agreement between Epic and Mikah Pharma, incorporated by reference to Exhibit 10.56 to the Annual Report on Form 10-K,

for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

(Confidential Treatment granted with respect to portions

of the Agreement).

Development and License Agreement For Products Between Elite Pharmaceuticals, Inc.

And SunGen dated July 6, 2017, incorporated by

reference to Exhibit 10.57 to the Quarterly Report on Form 10-Q for the period ended June 30, 2017 and filed with the SEC on August

(Confidential Treatment granted with respect to portions of the Agreement).

Second Amendment to Master Development And License Agreement For Products Between Elite Pharmaceuticals, Inc.

and SunGen Pharma, LLC, incorporated by reference to Exhibit 10.58 to the Quarterly Report on Form 10-Q for the period ended June 30, 2017 and filed with the SEC on August 9, 2017.

Amendment to Master Development And License Agreement For Products Between Elite Pharmaceuticals, Inc.

and SunGen Pharma, LLC, incorporated

by reference to Exhibit 10.59 to the Quarterly Report on Form 10-Q for the period ended June 30, 2017 and filed with the SEC on August

(Confidential Treatment granted with respect to portions of the Agreement).

May 22, 2018 License, Manufacturing and Supply Agreement with Glenmark Pharmaceuticals Inc.

USA, incorporated by reference to Exhibit 10.60 to the Annual Report on Form 10-K for the fiscal year ended March 31, 2018 and filed with the SEC on June 14, 2018.

Amendment to Master Development And License Agreement For Products Between Elite Pharmaceuticals, Inc.

and SunGen Pharma, LLC, incorporated

by reference to Exhibit 10.58 to the Quarterly Report on Form 10-Q for the period ended June 30, 2017 and filed with the SEC on August

(Confidential Treatment granted with respect to portions of the Agreement).

August 1, 2018 Amendment to the Glenmark Pharmaceuticals Inc.

USA License, Supply and Distribution Agreement, incorporated by reference to Exhibit 10.44 to the Quarterly Report on Form 10-Q, for the period ended December 31, 2019 and filed with the SEC on February 10, 2020.

(Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

License, Supply And Distribution Agreement effective March 6, 2019 by and between Elite Pharmaceuticals, Inc., and Elite Laboratories, Inc.

and Lannett Company, Inc., USA, incorporated by reference to Exhibit 10.45 to the Quarterly Report on Form 10-Q, for the period ended December 31, 2019 and filed with the SEC on February 10, 2020.

(Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

License, Supply and Distribution Agreement effective April 9, 2019 by and between Elite Pharmaceuticals, Inc., and Elite Laboratories, Inc.

and Lannett Company, Inc., USA, incorporated by reference to Exhibit 10.49 to the Annual Report on Form 10-K for the period ended March 31, 2019 and filed with the SEC on June 21, 2019 (portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

License, Supply and Distribution Agreement effective March 6, 2019 by and between Elite Pharmaceuticals, Inc., and Elite Laboratories, Inc.

and Lannett Company, Inc., USA, incorporated by reference to Exhibit 10.50 to the Annual Report on Form 10-K for the period ended March 31, 2019 and filed with the SEC on June 21, 2019 (portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

Development Agreement effective December 3, 2018 by and between Mikah Pharma LLC and Elite Laboratories, Inc., incorporated by reference to Exhibit 10.51 to the Annual Report on Form 10-K for the period ended March 31, 2019 and filed with the SEC on June 21, 2019 (portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

Asset Purchase Agreement dated November 13, 2019 by and between the Company and Nostrum Laboratories Inc.

, incorporated by reference to Exhibit 10.49 to the Quarterly Report on Form 10-Q, for the period ended December 31, 2019 and filed with the SEC on February 10, 2020.

January 2, 2020 Amendment to the Glenmark Pharmaceuticals Inc.

USA License, Supply and Distribution Agreement, incorporated by reference to Exhibit 10.50 to the Quarterly Report on Form 10-Q, for the period ended December 31, 2019 and filed with the SEC on February 10, 2020.

Supply And Distribution Agreement effective March 6, 2019 by and between Elite Pharmaceuticals, Inc., and Elite Laboratories, Inc.

and Lannett Company, Inc., USA, incorporated by reference to Exhibit 10.45 to the Quarterly Report on Form 10-Q, for the period ended

December 31, 2019 and filed with the SEC on February 10, 2020.

(Portions of this Agreement have been redacted in compliance with

Regulation S-K Item 601(b)(10)).

Supply and Distribution Agreement effective April 9, 2019 by and between Elite Pharmaceuticals, Inc., and Elite Laboratories, Inc.

and Lannett Company, Inc., USA, incorporated by reference to Exhibit 10.49 to the Annual Report on Form 10-K for the period ended

March 31, 2019 and filed with the SEC on June 21, 2019 (portions of this Agreement have been redacted in compliance with Regulation

S-K Item 601(b)(10)).

Supply and Distribution Agreement effective March 6, 2019 by and between Elite Pharmaceuticals, Inc., and Elite Laboratories, Inc.

and Lannett Company, Inc., USA, incorporated by reference to Exhibit 10.50 to the Annual Report on Form 10-K for the period ended

March 31, 2019 and filed with the SEC on June 21, 2019 (portions of this Agreement have been redacted in compliance with Regulation

S-K Item 601(b)(10)).

Agreement effective December 3, 2018 by and between Mikah Pharma LLC and Elite Laboratories, Inc., incorporated by reference to Exhibit

10.51 to the Annual Report on Form 10-K for the period ended March 31, 2019 and filed with the SEC on June 21, 2019 (portions of

this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

Purchase Agreement dated November 13, 2019 by and between the Company and Nostrum Laboratories Inc.

, incorporated by reference to

Exhibit 10.49 to the Quarterly Report on Form 10-Q, for the period ended December 31, 2019 and filed with the SEC on February 10,

2, 2020 Amendment to the Glenmark Pharmaceuticals Inc.

USA License, Supply and Distribution Agreement, incorporated by reference

to Exhibit 10.50 to the Quarterly Report on Form 10-Q, for the period ended December 31, 2019 and filed with the SEC on February

(Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

Asset Purchase Agreement executed January 16, 2020 by and between the Company and Nostrum Laboratories Inc., incorporated by reference to Exhibit 10.49 to the Quarterly Report on Form 10-Q, for the period ended December 31, 2019 and filed with the SEC on February 10, 2020.

Employment Agreement

with Douglas Plassche *

Purchase Agreement executed January 16, 2020 by and between the Company and Nostrum Laboratories Inc., incorporated by reference

to Exhibit 10.49 to the Quarterly Report on Form 10-Q, for the period ended December 31, 2019 and filed with the SEC on February

Employment Agreement with Douglas Plassche *+

June 21, 2019 Retention Agreement with Douglas Plassche.* +

2 unchanged sentences

(Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).*

Subsidiaries of the Company, incorporated by reference to Exhibit 21 to the Annual Report on Form 10-K, for the period ended March 31, 2019 and filed with the SEC on June 21, 2019.

of the Company, incorporated by reference to Exhibit 21 to the Annual Report on Form 10-K, for the period ended March 31, 2019 and

filed with the SEC on June 21, 2019.

Consent of Buchbinder Tunick & Company LLP, Independent Registered Public Accounting Firm*

5 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

Instance Document

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ITEM 16 FORM 10-K SUMMARY

Pursuant to the requirements of Section 13 or 15(d) of the

Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto

duly authorized.

XBRL Instance Document

XBRL Taxonomy Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File

Indicates management contract or compensatory plan or arrangement.

FORM 10-K SUMMARY

Pursuant to the requirements of Section 13 or

15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,

thereunto duly authorized.

ELITE PHARMACEUTICALS, INC.

2 unchanged sentences

June 14, 2021

/s/ Carter J.

/s/ Marc Bregman

Chief Financial Officer

1 unchanged sentence

Pursuant to the requirements of the Securities

Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and

on the dates indicated.

/s/ Nasrat Hakim

Chief Executive Officer, President and Chairman of the Board of Directors

June 29, 2020

/s/ Carter J.

Chief Financial Officer, Treasurer, Secretary

Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the

dates indicated.

Chief Executive Officer,

President and Chairman of the

Board of Directors (Principal Executive Officer)

Chief Financial Officer, Treasurer, Secretary (Principal

June 14, 2021

/s/ Barry Dash

Financial Officer and Principal Accounting Officer)

June 14, 2021

/s/ Jeffrey Whitnell

Jeffrey Whitnell

June 14, 2021

/s/ Davis Caskey

June 14, 2021

ELITE PHARMACEUTICALS,

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL

FOR THE YEARS

ENDED MARCH 31, 2020 AND 2019

REPORT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

CONSOLIDATED BALANCE

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MARCH 31, 2021 AND 2020

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS

OF STOCKHOLDERS EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS

OF CASH FLOWS

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Board of Directors and

Stockholders of Elite Pharmaceuticals, Inc.

and Subsidiary

Stockholders of Elite Pharmaceuticals, Inc., and Subsidiary

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of

Elite Pharmaceuticals, Inc.

and Subsidiary (the Company) as of March 31, 2020 and 2019, and the related consolidated statements

of operations, stockholders’

Equity (deficit), and cash flows for each of the years in the two-year period ended March 31,

We have audited the accompanying

consolidated balance sheets of Elite Pharmaceuticals, Inc.

and Subsidiary (the Company) as of March 31, 2021 and 2020, and the related

consolidated statements of operations, stockholders’

equity, and cash flows for each of the years in the two-year period ended March

31, 2021, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated

financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2020 and 2019

and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2020 in conformity

with accounting principles generally accepted in the United States of America.

financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2021 and 2020 and

the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2021 in conformity with

accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of

the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements

based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)

(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and

the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of

internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

These consolidated financial statements

are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance

with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were

we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an

understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the

Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting

principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated

financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Buchbinder

& Tunick Company LLP

Our audits also included evaluating the accounting principles used and significant estimates made by management,

as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable

basis for our opinion.

Critical Audit Matter

The critical audit matter communicated

below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated

to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved

our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way

our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing

separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Indefinite-Lived Intangible Assets Impairment

Assessments of ANDAs and Patents —

Refer to Notes 1, 4 and 15 to the financial statements

Critical Audit Matter Description

As of March 31,

2021, the Company has capitalized costs of $6,168,351 for ANDAs and $465,684 for patents.

The Company evaluates its intangible assets

for impairment annually during the fourth quarter in accordance with ASC Topic 350, Intangibles Goodwill and Other, and between annual

evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the assets carrying amount.

Management evaluates qualitative

factors to determine whether it is more likely than not that the fair value of the intangible assets is less than its carrying amount.

The qualitative factors management considers include, but are not limited to, the current project status, expected future cash flows,

decline in the Company’s stock price, legal and regulatory factors and industry and market considerations.

We identified the impairment evaluation

of the intangibles as a critical audit matter because of the significant judgements made by management to estimate the fair value of the

intangible assets.

Our audit procedures related to impairment

of indefinite lived intangible assets included review of management’s analysis and testing the significant assumptions used by management.

/s/ Buchbinder Tunick & Company LLP

Buchbinder Tunick & Company LLP

We have served as the Company’s auditor since 2010.

1 unchanged sentence

June 14, 2021,

PHARMACEUTICALS, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

Current assets:

Accounts receivable, net of allowance for doubtful accounts of $-0-, respectively

Prepaid expenses and other current assets

Accounts receivable, net of allowance for doubtful accounts

of $-0-, respectively

Prepaid expenses and other current

Total current assets

Property and equipment, net of accumulated depreciation of $10,957,334 and $9,651,718, respectively

Intangible assets, net of accumulated amortization of $-0-, respectively

Operating lease –

right-of-use asset

Property and equipment, net of accumulated

depreciation of $12,153,626 and $10,957,334, respectively

Intangible assets, net of accumulated

amortization of $-0-, respectively

Operating lease - right-of-use asset

Other assets:

2 unchanged sentences

Total other assets

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’

EQUITY (DEFICIT)

LIABILITIES AND SHAREHOLDERS’

Current liabilities:

5 unchanged sentences

Lease obligation - operating lease, current portion

Customer deposits

Senior secured promissory note - related party, current portion

Senior secured promissory note -

related party, current portion

Total current liabilities

1 unchanged sentence

Deferred revenue, net of current portion

Bonds payable, net of current portion and bond issuance costs

Senior secured promissory note - related party, net of current portion

Bonds payable, net of current portion and bond issuance

Loans payable, net of current portion

4 unchanged sentences

Total liabilities

The accompanying notes are an integral

part of these audited consolidated financial statements.

ELITE PHARMACEUTICALS,

AND SUBSIDIARIES

CONSOLIDATED BALANCE

Mezzanine equity

Series J convertible

preferred stock;

par value $0.01;

50 shares authorized, 24.0344 issued and outstanding as of March 31, 2019

The accompanying notes are an integral part

of these audited consolidated financial statements.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

Shareholders’

equity (deficit):

Series J convertible preferred stock;

par value of $0.01 50 shares authorized;

24.0344 issued and outstanding as of March 31, 2020

value of $0.01;

50 shares authorized;

0 issued and outstanding as of March 31, 2021 and 24.0344 issued and outstanding as of March

Common Stock;

1 unchanged sentence

1,445,000,000 shares authorized;

shares issued and 840,404,367 outstanding as of March 31, 2020;

995,000,000 shares authorized;

824,946,559 shares issued and

824,846,559 outstanding as of March 31, 2019

1,009,276,752

shares issued and 1,009,176,752 shares outstanding as of March 31, 2021;

840,504,367 shares issued and 840,404,367 shares outstanding

as of March 31, 2020

Additional paid-in capital

5 unchanged sentences

Total shareholders’

Total liabilities, mezzanine equity

Total liabilities

and shareholders’

equity (deficit)

The accompanying notes are an integral

part of these audited consolidated financial statements.

PHARMACEUTICALS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS

OF OPERATIONS

Years Ended March 31,

The accompanying notes are an integral part

of these audited consolidated financial statements.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended

Manufacturing fees

1 unchanged sentence

Total revenue

Cost of revenue

Cost of manufacturing

Operating expenses:

4 unchanged sentences

Total operating expenses

Loss from operations

Income (loss) from operations

Other income (expense):

Interest expense

Change in fair value of derivative instruments - warrants

Change in fair value of derivative instruments

Interest expense and amortization of debt issuance costs

Gain on sale of fixed assets

Gain on transfer/discontinuance of intangible assets

Interest income

Gain (loss) realized from

transfer/discontinuance of intangible assets

Other income (expense), net

Loss from operations before income taxes

Income tax provision

Net benefit from sale of state net operating loss credits

Net loss attributable to common shareholders

$ (2,240,351 )

PPP loan forgiveness

Other income, net

Income (loss) from operations before income taxes

Income tax benefit (expense)

Net income (loss) attributable to common shareholders

$ (2,240,351 )

Basic net loss per share attributable to common shareholders

Diluted net loss per share attributable to common shareholders

Basic net income (loss) per share attributable to common shareholders

Diluted net income (loss) per share attributable to common shareholders

Basic weighted average Common Stock outstanding

Diluted weighted average Common Stock outstanding

The accompanying notes are an integral

part of these audited consolidated financial statements.

PHARMACEUTICALS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS

OF STOCKHOLDERS’

EQUITY (DEFICIT)

Series J Preferred Stock

Additional Paid-In

The accompanying notes are an integral part

of these audited consolidated financial statements.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’

Preferred Stock

Treasury Stock

Total Shareholders’

Shareholders’

Balance as of March 31, 2019

1 unchanged sentence

$ (151,806,059 )

Common Stock sold pursuant to the Lincoln Park

purchase agreement

Common Stock issued as additional commitment shares

pursuant to the LPC purchase agreement

$ (2,507,864 )

Common Stock sold pursuant to the Lincoln Park purchase

Common Stock issued as additional commitment shares pursuant

to the LPC purchase agreement

Costs associated with raising capital

Non-cash compensation through

the issuance of employee stock options

Non-cash compensation through the issuance of employee

stock options

Reclassification of mezzanine equity

to permanent equity

Balance at March 31, 2020

1 unchanged sentence

$ (154,046,410 )

Conversion of Preferred Stock to Common Stock

(13,903,960 )

Common Stock sold pursuant to the Lincoln Park

purchase agreement

Common Stock issued as additional commitment shares

pursuant to the LPC purchase agreement

Initial commitment shares issued pursuant to the 2020

Lincoln Park purchase agreement

Common Stock sold pursuant to the Lincoln Park purchase

Common Stock issued as additional commitment shares pursuant

to the LPC purchase agreement

Costs associated with raising capital

1 unchanged sentence

stock options

Reclassification of mezzanine

equity to permanent equity

Shares issued in payment of Director fees

Shares issued in payment of salaries

Shares issued in payment of consulting

Balance at March 31, 2021

1 unchanged sentence

$ 164,407,480

The accompanying notes are an integral

part of these audited consolidated financial statements.

PHARMACEUTICALS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS

OF CASH FLOWS

Years Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

$ (148,957,989 )

The accompanying notes are an integral part

of these audited consolidated financial statements.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$ (2,240,351 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

Amortization of operating leases –

right-of-use assets

Amortization of operating leases - right-of-use assets

Gain on the disposal of property and equipment

Change in fair value of derivative financial instruments - warrants

PPP loan forgiveness

Non-cash compensation accrued

Non-cash compensation through the issuance of employee stock options

Non-cash compensation from issuances of options

Non-cash rent expense and lease accretion

Non-cash loss on sale and discontinuance of intangible assets

Change in operating assets and liabilities:

4 unchanged sentences

Lease obligations - operating leases

Net cash used in operating activities

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

Proceeds from sale of intangible assets

Net cash (used in) provided by investing activities

Proceeds from disposal of property and equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from the issuance of stock

Proceeds from the issuance of Common Stock

Proceeds from PPP loan

Payment of related party note payable

Payment of bond principal

Other loan payments

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Net change in cash and restricted cash

4 unchanged sentences

Financing of equipment purchases and insurance renewal

Stock issued in payment of Directors fees, salaries and consulting expenses

Commitment shares issued to Lincoln Park Capital

Conversion of preferred stock to Common Stock

Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets

The accompanying notes are an integral

part of these audited consolidated financial statements.

PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Elite Pharmaceuticals,

Elite Pharmaceuticals, Inc.

(the “Company”

or “Elite”) was incorporated on October 1, 1997 under the laws of the State of Delaware,

and its wholly-owned subsidiary Elite Laboratories, Inc.

(“Elite Labs”) which was incorporated on August 23, 1990

under the laws of the State of Delaware.

On January 5, 2012, Elite Pharmaceuticals was reincorporated under the laws of the State

Elite Labs engages primarily in researching, developing, manufacturing and licensing generic, oral dose pharmaceuticals

and proprietary orally administered, controlled-release drug delivery systems.

The Company is equipped to manufacture immediate

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

These products include drugs that cover therapeutic areas that include, without limitation, pain, allergy, bariatric and infection.

Research and development activities are done so with an objective of developing products that will secure marketing approvals

from the United States Food and Drug Administration (“FDA”), and thereafter, commercially exploiting such products.

or “Elite”) was incorporated on October 1, 1997 under the laws of the State of Delaware, and its

wholly-owned subsidiary Elite Laboratories, Inc.

(“Elite Labs”) was incorporated on August 23, 1990 under the laws of the

State of Delaware.

On January 5, 2012, Elite Pharmaceuticals was reincorporated under the laws of the State of Nevada.

Elite Labs engages

primarily in researching, developing, licensing and manufacture of generic, oral dose pharmaceuticals.

The Company is equipped to manufacture

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

These products include

drugs that cover therapeutic areas for allergy, bariatric, attention deficit and infection.

Research and development activities are performed

with an objective of developing products that will secure marketing approvals from the United States Food and Drug Administration (“FDA”),

and thereafter, commercially exploiting such products.

Principles of Consolidation

The accompanying audited

consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United

States (“GAAP”) and in conformity with the instructions on Form 10-K and Rule 8-03 of Regulation S-X and the related

rules and regulations of the Securities and Exchange Commission (“SEC”).

The consolidated financial statements include

the accounts of the Company and its wholly owned subsidiary, Elite Laboratories, Inc.

All significant intercompany accounts and

transactions have been eliminated in consolidation.

The consolidated financial statements reflect all adjustments, consisting

of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of such statements.

consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States

(“GAAP”).

The audited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary,

Elite Laboratories, Inc.

All significant intercompany accounts and transactions have been eliminated in consolidation.

The audited consolidated

financial statements reflect all adjustments, consisting of normal recurring items, which are, in the opinion of management, necessary

for a fair presentation of such statements.

Segment Information

Financial Accounting

Standards Board (“FASB”) Accounting Standards Codification (“ASC 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 GAAP when making decisions about allocating resources and assessing performance of the Company.

Financial Accounting Standards

Board (“FASB”) Accounting Standards Codification 280 (“ASC 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 GAAP when making decisions about allocating resources and assessing performance of the Company.

The Company has determined

1 unchanged sentence

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.

ELITE PHARMACEUTICALS,

AND SUBSIDIARIES

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

The Company generates revenue

primarily from manufacturing and licensing fees.

Manufacturing fees include the development of pain management products, manufacturing

of a line of generic pharmaceutical products with approved ANDA, through the manufacture of formulations and the development of new products.

Licensing fees include the commercialization of products either by license and the collection of royalties, or the expansion of licensing

agreements with other pharmaceutical companies, including co-development projects, joint ventures and other collaborations.

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.

The Company recognize 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;

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.

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

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

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.

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

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 manufacturers

immediate-release and controlled release generic pharmaceutical products for which required FDA approvals have been received and

are owned by the Company.

These products are either sold directly by the Company, under its own label, or are sold under licenses

granted to a third party, under a third-party label.

Please note that while the Company is equipped to manufacture immediate-release

and controlled release generic pharmaceutical which are owned by third parties, on a contract basis, it did not engage in any

such contract manufacturing activities during the periods within the scope of these financial statements.

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.

The Company also develops and markets (either on its own or by license to

other companies) generic and proprietary controlled-release 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.

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.

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 milestone 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.

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 recognize revenue from the milestone when 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 31,

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

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

The Company entered into

a sales and distribution licensing agreement with Epic Pharma LLC, (“Epic”) dated June 4, 2015 (the “2015 Epic License

Agreement”), which has been determined to satisfy the criteria for consideration as a collaborative agreement, and is accounted

for accordingly.

The 2015 Epic License Agreement expired on June 4, 2020 without renewal.

The Company entered into

a Master Development and License Agreement with SunGen Pharma LLC dated August 24, 2016 (the “SunGen Agreement”), which has

been determined to satisfy the criteria for consideration as a collaborative agreement, and is accounted for accordingly.

2020, Elite and SunGen mutually agreed to discontinue any further joint product development activities.

Disaggregation of revenue

In the following table,

revenue is disaggregated by type of revenue generated by the Company and timing of revenue recognition.

The table also includes

a reconciliation of the disaggregated revenue with the reportable segments:

For the Year Ended March 31,

In the following table, revenue

is disaggregated by type of revenue generated by the Company.

The table also includes a reconciliation of the disaggregated revenue with

the reportable segments:

For the Years Ended March 31,

Licensing fees

4 unchanged sentences

Total revenue

Collaborative Arrangements

Contracts are considered

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 entered

into a sales and distribution licensing agreement with Epic Pharma LLC, (“Epic”) dated June 4, 2015 (the “2015

Epic License Agreement”), which has been determined to satisfy the criteria for consideration as a collaborative agreement,

and is accounted for accordingly, in accordance with GAAP.

The 2015 Epic License Agreement expired on June 4, 2020 without renewal.

The Company entered

into a Master Development and License Agreement with SunGen Pharma LLC dated August 24, 2016 (the “SunGen Agreement”),

which has been determined to satisfy the criteria for consideration as a collaborative agreement, and is accounted for accordingly,

in accordance with GAAP.

On April 3, 2020, Elite and SunGen mutually agreed to discontinue any further joint product development

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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.

1 unchanged sentence

As of March 31, 2021

and March 31, 2019, the Company had $404,802 and $398,125 of restricted cash, respectively, related to debt service reserve in

regard to the New Jersey Economic Development Authority (“NJEDA”) bonds (see Note 5).

Accounts Receivable

and March 31, 2020, the Company had restricted cash of $405,013 and $404,802, respectively, related to debt service reserve in regard

to the New Jersey Economic Development Authority (“NJEDA”) bonds (see Note 5).

Accounts Receivable

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

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 specific identification by lot number basis.

Accounts receivable are comprised

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

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 specific identification by lot number basis.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

As of March 31, 2021,

the Company did not identify any indicators of impairment.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Please also see Note

4 for further details on intangible assets.

Please also see Note 4 for

further details on intangible assets.

Research and Development

2 unchanged sentences

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 are:

United States –

Federal, 2016 and forward, and State, 2012 and forward.

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

The Company did not record unrecognized

tax positions for the years ended March 31, 2021 and 2020.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 instrument

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 is 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 718, Compensation-Stock Compensation .

Under the fair value recognition

provisions, 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 average closing price of the Company’s common stock.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company accounts for

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

Under the fair value recognition provisions,

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 (“Common Stock”), in lieu of cash, with the valuation

of such shares 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 just ended.

Earnings (Loss) Per Share Attributable

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 potential dilutive shares if their effect was

anti-dilutive.

The following is the

computation of loss per share applicable to common shareholders for the periods indicated:

Years Ended March 31,

Net loss attributable to common shareholders –

$ (2,240,351 )

$ (9,279,320 )

Effect of dilutive instrument on net loss

Net loss attributable to common shareholders - diluted

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.

The computation of diluted net income (loss) per share does not include the conversion of securities that would have

an antidilutive effect.

The following is the computation

of earnings (loss) per share applicable to common shareholders for the periods indicated:

For the Years Ended March 31,

Net income (loss) - basic

$ (2,240,351 )

Effect of dilutive instrument on net income

Net income (loss) - diluted

$ (1,128,803 )

Weighted average shares of Common Stock outstanding - basic

Dilutive effect of stock options, warrants and convertible securities

Weighted average shares of common stock outstanding –

Net loss per share attributable to common shareholders

Dilutive effect of stock options and convertible securities

Weighted average shares of Common Stock outstanding - diluted

Net income (loss) per share

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Financial Instruments

ASC 820, Fair Value

Measurements and Disclosures (“ASC 820”) provides a framework for measuring fair value in accordance with generally

accepted accounting principles.

ASC 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 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 820, Fair Value Measurements

and Disclosures (“ASC 820”) provides a framework for measuring fair value in accordance with generally accepted accounting

ASC 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 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 820 are described as follows:

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

820 are described as follows:

Level 1 –

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

at the measurement date.

quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2 –

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.

other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

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;

inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 –

are unobservable for the asset or liability.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

that are unobservable for the asset or liability.

Measured on a Recurring

The following table

presents information about our liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value

hierarchy within which those measurements fell:

Fair Value Measurement Using

The following table presents

information about our liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within

which those measurements fell:

Value Measurement Using

March 31, 2021

Derivative financial instruments –

Derivative financial instruments

March 31, 2020

Derivative financial instruments –

See Note 11, for specific inputs used in

determining fair value.

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.

Treasury Stock

The Company records

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

Recently Adopted Accounting Pronouncements

The Financial Accounting

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

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

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

ASC 842, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement

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 ASC 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.

Derivative financial instruments - warrants

See Note 11, for specific

inputs used in determining fair value.

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.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On April 1, 2019,

the Company adopted ASC 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 ASC 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 9.

Recently Issued Accounting Pronouncements

Treasury Stock

The Company records treasury

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

Recently Adopted Accounting Standards

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”).

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.

Early adoption is permitted.

The Company 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 (ASC 808), Clarifying the Interaction between ASC 808 and ASC 606

(“ASU 2018-18”).

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 is not materially impacted by the implementation of this pronouncement.

In March 2020, the

FASB issued ASU No.

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 (ASC 326) with Leases (ASC 842) and Transfers and Servicing-Sales of Financial Assets

(ASC 860-20) .

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 2020-04, Reference Rate Reform (ASC 848):

Facilitation of the Effects of Reference Rate Reform on Financial

Reporting (“ASU 2020-04”).

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

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

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 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.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inventory consisted

of the following:

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.

Inventory consisted of the

Finished goods

1 unchanged sentence

Raw materials

Inventory reserve

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PROPERTY AND EQUIPMENT, NET

Property and equipment

consisted of the following:

Property and equipment consisted

of the following:

Land, building and improvements

Laboratory, manufacturing, warehouse and transportation equipment

Laboratory, manufacturing, warehouse and transportation

Office equipment and software

1 unchanged sentence

Accumulated depreciation

(10,957,334 )

Depreciation expense

was $1,305,616 and $1,242,739 for the years ended March 31, 2020 and 2019, respectively.

Depreciation expense was

$1,299,668 and $1,305,616 for the years ended March 31, 2021 and 2020, respectively.

INTANGIBLE ASSETS

The following table

summarizes the Company’s intangible assets:

March 31, 2020

The following table summarizes

the Company’s intangible assets:

Patent application costs

ANDA acquisition costs

March 31, 2019

Patent application costs

ANDA acquisition costs

* Patent application costs were incurred in

relation to the Company’s abuse deterrent opioid technology.

Amortization of the

patent costs will begin upon the issuance of marketing authorization by the FDA.

will then be calculated on a straight-line basis through the expiry of the related patent(s).

ELITE PHARMACEUTICALS,

AND SUBSIDIARIES

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

The following ANDA’s, with an aggregate

carrying amount of $291,491 were discontinued during Fiscal 2019:

● 40227 –

Phentermine 30mg capsules

● 40448 –

Phentermine 30mg capsules

● 40460 –

Phentermine 15mg capsules

The following ANDA’s,

with an aggregate carrying amount of $787,475 were transferred to Epic Pharma for cash consideration totaling $450,000 during Fiscal

● 40600 –

Hydroxyzine 10mg

● 40602 –

Hydroxyzine 25mg

● 40604 –

Hydroxyzine 50mg

The primary catalyst

for the discontinuance and transfer of the above referenced ANDA’s was the FDA’s Generic Drug User Fee Amendment (“GDUFA”)

fee structure, which provides for additional annual fees in excess of $1.1 million (as per the most current fee schedule published

in August 2018) for entities that own in excess of 19 ANDA’s as of the annual April 15 measurement date.

The ANDA’s approved

by the FDA subsequent to the prior year’s measurement date, when added to those previously approved and owned by the Company,

would have resulted in the Company owning more than 19 ANDA’s.

Management conducted an evaluation of all ANDA’s held

and the feasibility of incurring the additional GDUFA fees and identified the above ANDA’s as being not significant to the

Company’s plans.

The ANDA’s that were discontinued were duplicates of ANDA’s currently in commercial production

and the ANDA’s sold to Epic Pharma were related to products that were not qualified for manufacture at the Northvale Facility.

The aggregate carrying

amount of the four ANDAs discontinued or transferred during Fiscal 2020 was $0 and the aggregate cash consideration received in

relation to the transfer of ANDAs was $1,502,500, resulting in a realized gain on transfer/discontinuance of intangible assets

of $1,502,500.

The aggregate carrying

amount of the six ANDAs discontinued or transferred during Fiscal 2019 was $1,078,966 and the aggregate cash consideration received

in relation to the transfer of ANDAs was $450,000, resulting in a realized loss on transfer/discontinuance of intangible assets

During August 2005,

the Company refinanced a bond issue occurring in 1999 through the issuance of Series A and B Notes tax-exempt bonds (the “NJEDA

and/or “Bonds”).

During July 2014, the Company retired all outstanding Series B Notes, at par, along

with all accrued interest due and owed.

In relation to the

Series A Notes, the Company is required to maintain a debt service reserve.

The debt service reserve is classified as restricted

cash on the accompanying audited consolidated balance sheets.

The NJEDA Bonds require the Company to make an annual principal

payment on September 1 st based on the amount specified in the loan documents and semi-annual interest payments on March

1 st and September 1 st , equal to interest due on the outstanding principal.

The annual interest rate on the

Series A Note is 6.5%.

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

with the proceeds of the original and refinanced bonds.

Patent application costs

were incurred in relation to the Company’s abuse deterrent opioid technology.

Amortization of the patent costs will begin upon

the issuance of marketing authorization by the FDA.

Amortization will then be calculated on a straight-line basis through the expiry

of the related patent(s).

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables

summarize the Company’s bonds payable liability:

During August 2005, the Company

refinanced a bond issue occurring in 1999 through the issuance of Series A and B Notes tax-exempt bonds (the “NJEDA Bonds”

and/or “Bonds”).

During July 2014, the Company retired all outstanding Series B Notes, at par, along with all accrued interest

due and owed.

In relation to the Series

A Notes, the Company is required to maintain a debt service reserve.

The debt service reserve is classified as restricted cash on the

accompanying consolidated balance sheets.

The NJEDA Bonds require the Company to make an annual principal payment on September 1st based

on the amount specified in the loan documents and semi-annual interest payments on March 1st and September 1st, equal to interest due

on the outstanding principal.

The annual interest rate on the Series A Note is 6.5%.

The NJEDA 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 following tables summarize

the Company’s bonds payable liability:

Gross bonds payable

NJEDA Bonds - Series A Notes

Current portion of bonds payable (prior to deduction

of bond offering costs)

Long-term portion of bonds payable (prior to deduction

of bond offering costs)

NJEDA Bonds -

Series A Notes

Current portion of

bonds payable (prior to deduction of bond offering costs)

Long-term portion of bonds

payable (prior to deduction of bond offering costs)

Bond offering costs

1 unchanged sentence

Bond offering costs, net

Current portion of bonds payable - net of bond offering costs

Current portions of bonds payable

Bonds offering costs to be amortized in the next

Current portion of bonds payable - net of bond offering

Long term portion of bonds payable - net of bond offering costs

Long term portion of bonds payable

Bond offering costs to be amortized subsequent

to the next 12 months

Long term portion of bonds payable, net of bond offering

Amortization expense

was $14,174 and $14,172 for the years ended March 31, 2020 and 2019, respectively.

Maturities of bonds for the next five years

are as follows:

Current portions of bonds

Bonds offering costs

to be amortized in the next 12 months

Current portion of bonds

payable, net of bond offering costs

Long term portion of bonds payable - net of bond

offering costs

Long term portion of bonds

Bond offering costs

to be amortized subsequent to the next 12 months

Long term portion of bonds

payable, net of bond offering costs

Amortization expense was

$14,179 and $14,174 for the year ended March 31, 2021 and 2020, respectively.

As of March 31, 2021 and 2020, interest payable was $7,963

and $8,531, respectively.

Maturities of bonds for the next five years are

Years ending March 31,

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

LOANS PAYABLE

Loans payable consisted

of the following:

Equipment and insurance financing loans

payable, between 3.5% and 12.73% interest and maturing between March 2020 and July 2024

Loans payable consisted of

the following:

Equipment and insurance financing

loans payable, between 3.5% and 12.73% interest and maturing between January 2021 and October 2026

Current portion of loans payable

Long-term portion of loans payable

The interest expense

associated with the loans payable was $79,870 and $114,980 for the years ended March 31, 2020 and 2019, respectively.

The interest expense associated

with the loans payable was $77,218 and $79,870 for the years ended March 31, 2021 and 2020, respectively.

Loan principal payments for

the next five years are as follows:

Years ending March 31,

2020 Paycheck Protection

Program Term Note

In April 2020, the Company

entered into a Paycheck Protection Program Term Note (the “PPP Note”) with TD Bank, NA in the amount of $1,013,480.

Note was issued to the Company pursuant to the Coronavirus, Aid, Relief, and Economic Security Act’s (the “CARES Act”)

116-136) Paycheck Protection Program (the “Program”).

Under the Program, all or a portion of the PPP Note may be forgiven

in accordance with the Program requirements.

On January 12, 2021, the

Company received notification that the United States Small Business Administration (“SBA”), had approved, in full, the Company’s

application for forgiveness of amounts received pursuant to the CARES Act and the Program.

RELATED PARTY SECURED PROMISSORY NOTE

WITH MIKAH PHARMA, LLC

For consideration of the

assets acquired on May 15, 2017, the Company issued a Secured Promissory Note (the “Mikah Note”) to Mikah Pharma, LLC (“Mikah”)

for the principal sum of $1,200,000.

Mikah was founded in 2009 by Nasrat Hakim (“Hakim”), a related party and, the Company’s

President, Chief Executive Officer and Chairman of the Board.

The Mikah Note matured on December 31, 2020 and was retired at par in March

The principal amount of $1,200,000 was repaid by the Company at maturity.

Interest expense associated with the Note was $90,000 and $120,000

for the years ended March 31, 2021 and 2020, respectively.

A total of $435,000 in accrued interest expense, representing interest expense

accrued during the life of the Mikah Note was due and owing as of the maturity date of the Note.

Of the $435,000 accrued interest due

at maturity, $238,451 of accrued interest was satisfied by offset against amounts due from Mikah pursuant to the development agreement

between the Company and Mikah, dated December 3, 2018 (see Note 16).

The balance of $196,549 of accrued interest expense owing in relation

to the Mikah Note is recorded as a non-interest bearing, general liability of the Company.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loan principal payments for the next five

years are as follows:

Years ending March 31,

RELATED PARTY SECURED PROMISSORY

NOTE WITH MIKAH PHARMA LLC

For consideration

of the assets acquired on May 15, 2017, the Company issued a Secured Promissory Note (the “Note”) to Mikah for the

principal sum of $1,200,000.

The Note matures on December 31, 2020 in which the Company shall pay the outstanding principal balance

Interest shall be computed on the unpaid principal amount at the per annum rate of ten percent (10%);

provided, upon

the occurrence of an Event of Default as defined within the Note, the principal balance shall bear interest from the date of such

occurrence until the date of actual payment at the per annum rate of fifteen percent (15%).

All interest payable hereunder shall

be computed on the basis of actual days elapsed and a year of 360 days.

Instalment payments of interest on the outstanding principal

shall be paid as follows:

quarterly commencing August 1, 2017 and on November 1, February 1, May 1 and August 1 of each year thereafter.

No principal or interest payments have been made on the Note since its issuance.

All unpaid principal and accrued but unpaid interest

shall be due and payable in full on the Maturity Date.

The interest expense associated with the Note was $120,000 for the years

ended March 31, 2020 and 2019.

Accrued interest due and owing on this note was $345,000 and $225,000 as of March 31, 2020 and

March 31, 2019, respectively.

DEFERRED REVENUE

Deferred revenues

in the aggregate amount of $238,891 as of March 31, 2020, were comprised of a current component of $180,000 and a long-term component

Deferred revenues in the aggregate amount of $1,252,223 as of March 31, 2019, were comprised of a current component

of $1,013,333 and a long-term component of $238,890.

These line items represent the unamortized amounts of a $200,000 advance

payment received for a TAGI licensing agreement with a fifteen-year term beginning in September 2010 and ending in August 2025

and the $5,000,000 advance payment Epic Collaborative Agreement with a five-year term beginning in June 2015 and ending in May

These advance payments were recorded as deferred revenue when received and are earned, on a straight-line basis over the

life of the licenses.

The current component is equal to the amount of revenue to be earned during the 12-month period immediately

subsequent to the balance date and the long-term component is equal to the amount of revenue to be earned thereafter.

Deferred revenues in the

aggregate amount of $58,891 as of March 31, 2021, were comprised of a current component of $13,333 and a long-term component of

Deferred revenues in the aggregate amount of $238,891 as of March 31, 2020, were comprised of a current component of $180,000

and a long-term component of $58,891.

These line items represent the unamortized amounts of a $200,000 advance payment received for a

TAGI Pharma (“TAGI”) licensing agreement with a fifteen-year term beginning in September 2010 and ending in August 2025 and

the $5,000,000 advance payment Epic Collaborative Agreement with a five-year term beginning in June 2015 and ending in May 2020.

advance payments were recorded as deferred revenue when received and are earned, on a straight-line basis over the life of the licenses.

The current component is equal to the amount of revenue to be earned during the 12-month period immediately subsequent to the balance

sheet date and the long-term component is equal to the amount of revenue to be earned thereafter.

COMMITMENTS AND 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 is both probable that a liability has been incurred, and the amount can be reasonably

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.

Operating Leases –

The Company entered

into an operating lease for a portion of a one-story warehouse, located at 135 Ludlow Avenue, Northvale, New Jersey (the “135

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 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.

Operating Leases

The Company entered into

an operating lease for a portion of a one-story warehouse, located at 135 Ludlow Avenue, Northvale, New Jersey (the “135 Ludlow

lease”).

1 unchanged sentence

lease is for approximately 15,000 square feet of floor space and began on July 1, 2010.

During July 2014, the Company modified the 135 Ludlow Ave.

lease in which the Company was permitted to occupy the entire

35,000 square feet of floor space in the building (“135 Ludlow Ave.

July 2014, the Company modified the 135 Ludlow Ave.

lease in which the Company was permitted to occupy the entire 35,000 square feet

of floor space in the building (“135 Ludlow Ave.

Modified Lease”).

The 135 Ludlow Ave.

modified lease includes an initial term, which expired on December 31, 2016 with two tenant renewal options of five years each,

at the sole discretion of the Company.

On June 22, 2016, the Company exercised the first of these renewal options, with such option

including a term that begins on January 1, 2017 and expires on December 31, 2021.

Lease includes an initial term, which expired on December 31, 2016 with two tenant renewal options of five years each, at the sole discretion

of the Company.

On June 22, 2016, the Company exercised the first of these renewal options, with such option including a term that begins

on January 1, 2017 and expires on December 31, 2021.

The 135 Ludlow Ave.

property required significant leasehold improvements and qualifications, as a prerequisite, for its intended future use.

lease property required significant leasehold improvements and qualifications, as a prerequisite, for its intended future use.

Manufacturing,

packaging, warehousing and regulatory activities are currently conducted at this location.

Additional renovations and construction

to further expand the Company’s manufacturing resources are in process.

Additional renovations and construction to

further expand the Company’s manufacturing resources are in progress.

The Company plans to exercise

the second option pursuant to the 135 Ludlow Ave.

Modified Lease in June 2021.

This option includes a term that begins on January 1, 2022

and expires on December 31, 2026.

Minimum lease payments required during the five year term of this option total $1,212,480.

In October 2020, the Company

entered into an operating lease for office space in Pompano Beach, Florida (the “Pompano Office Lease”).

The Pompano Office

Lease is for approximately 1,275 square feet of office space, with Elite taking occupancy on November 1, 2020.

The Pompano Office includes

a 3 month abatement from November 2020 through February 2021 and has a term of three years, ending on October 31, 2023.

The Company assesses whether

an arrangement is a lease or contains a lease at inception.

For arrangements considered leases or that contain a lease that is accounted

for separately, the Company determines the classification and initial measurement of the right-of-use asset and lease liability at the

lease commencement date, which is the date that the underlying asset becomes available for use.

The Company has elected to account for

non-lease components associated with its leases and lease components as a single lease component.

The Company recognizes a

right-of-use asset, which represents the Company’s right to use the underlying asset for the lease term, and a lease liability,

which represents the present value of the Company’s obligation to make payments arising over the lease term.

The present value

of the lease payments is calculated using either the implicit interest rate in the lease or an incremental borrowing rate.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company assesses

whether an arrangement is a lease or contains a lease at inception.

For arrangements considered leases or that contain a lease

that is accounted for separately, the Company determines the classification and initial measurement of the right-of-use asset

and lease liability at the lease commencement date, which is the date that the underlying asset becomes available for use.

Company has elected to account for non-lease components associated with our leases and lease components as a single lease component.

The Company recognizes

a right-of-use asset, which represents the Company’s right-of-use the underlying asset for the lease term, and a lease liability,

which represents the present value of the Company’s obligation to make payments arising over the lease term.

value of the lease payments is calculated using either the implicit interest rate in the lease or an incremental borrowing rate.

Lease assets and liabilities

are classified as follows on the consolidated balance sheet:

Lease assets and liabilities are classified as follows on the consolidated

balance sheet:

Classification

of March 31, 2021

Operating lease –

right-of-use asset

Total leased assets

1 unchanged sentence

operating lease

Lease obligation –

obligation –

operating lease, net of current portion

Total lease liabilities

expense is recorded on the straight-line basis.

Rent expense under the 135 Ludlow Ave.

modified lease for the years ended March

31, 2020 and 2019, was $220,650 and $219,638, respectively.

Rent expense is recorded in general and administrative expense in

the audited consolidated statements of operations.

table below show the future minimum rental payments, exclusive of taxes, insurance and other costs, under the 135 Ludlow Ave.

Rent expense is recorded on the straight-line basis.

Rent expense under

the 135 Ludlow Ave.

Modified lease for the years ended March 31, 2021 and 2020, is $219,638 and $220,650, respectively.

Rent expense under

the Pompano Office Lease for the years ended March 31, 2021 and 2020, is $9,544 and $0, respectively.

Rent expense is recorded in general

and administrative expense in the audited consolidated statements of operations.

The table below show the

future minimum rental payments, exclusive of taxes, insurance and other costs, in aggregate, under the 135 Ludlow Ave.

modified lease

Years ending March 31,

Total future minimum lease payments

and the Pompano Office Lease:

Subsequent to March 31, 2026

Total future minimum lease

Present value of lease payments

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The weighted-average

remaining lease term and the weighted-average discount rate of our lease was as follows:

The weighted-average remaining

lease term and the weighted-average discount rate of our lease was as follows:

Lease Term and Discount Rate

March 31, 2021

Remaining lease term (years)

2 unchanged sentences

Operating leases

The Company has an

obligation for the restoration of its leased facility and the removal or dismantlement of certain property and equipment as a

result of its business operation in accordance with ASC 410, Asset Retirement and Environmental Obligations –

Asset Retirement

Obligations .

The Company records the fair value of the asset retirement obligation in the period in which it is incurred.

The Company increases, annually, the liability related to this obligation.

The liability is accreted to its present value each

period and the capitalized cost is depreciated over the useful life of the related asset.

Upon settlement of the liability, the

Company records either a gain or loss.

As of March 31, 2020, and March 31, 2019, the Company had a liability of $35,442 and $46,402,

respectively, and recorded as a component of other long-term liabilities.

PREFERRED STOCK

Series J convertible preferred stock

On April 28, 2017,

the Company created the Series J Convertible Preferred Stock (“Series J Preferred”) in conjunction with the Certificate

of Designations (“Series J COD”).

A total of 50 shares of Series J Preferred were authorized, 24.0344 shares are issued

and outstanding, with a stated value of $1,000,000 per share and a par value of $0.01 as of March 31, 2020.

The shares were issued

pursuant to an Exchange Agreement with Nasrat Hakim, (“Hakim”) a related party and the Company’s President,

CEO and Chairman of the Board of Directors.

Pursuant to the Exchange Agreement the Company exchanged 158,017,321 shares of Common

Stock for 24.0344 shares of Series J Preferred and warrants to purchase 79,008,661 shares of common stock at $0.1521 per share.

The aggregate stated value of the Series J Preferred issued was equal to the aggregate value of the shares of common stock exchanged,

with such value of each share of Common Stock exchanged being equal to the closing price of the Common Stock on April 27, 2017.

In connection with the Exchange Agreement, the Company also issued warrants to purchase 79,008,661 shares of common stock at $0.1521

per share, and such warrants were classified as liabilities on the accompanying audited consolidated balance sheet as of March

31, 2020 (See Note 11).

Each Series J Preferred

is convertible at the option of the holder into shares of common stock, that is the earlier of (i) the date that shareholder approval

is obtained, and the requisite corporate action has been effected regarding a Fundamental Transaction (as defined in the Series

or (ii) not less than three years subsequent to the Original Issue Date (the date of the first issuance of any shares

of the Series J Preferred Stock) (the “Conversion Date”).

The number of common shares is calculated by dividing the

Stated Value of such share of Series J Preferred by the Conversion Price.

The conversion price for the Series J Preferred shall

equal $0.1521, subject to adjustment as discussed below.

Based on the current

conversion price, the Series J Preferred is convertible into 158,017,321 shares of common stock.

The conversion price is subject

to the following adjustments:

(i) stock dividends and splits, (ii) sale or grant of shares below the conversion price, unless

such adjustment is specifically excluded (iii) pro rata distributions;

or (iv) fundamental changes (merger, consolidation, or

sale of all or substantially all assets).

The holders of the

Series J Preferred shall have voting rights on any matter presented to the shareholders of the Company for their action or consideration

at any meeting of shareholders of the Company (or by written consent of shareholders in lieu of meeting).

Each holder shall be

entitled to cast the number of votes equal to the number of whole shares of common stock into which the shares of Series J Preferred

held by the holder are convertible as of the record date for determining the shareholders entitled to vote on such matter regardless

of whether an Authorized Share Deficiency Exists.

The Company has an obligation

for the restoration of its leased facility and the removal or dismantlement of certain property and equipment as a result of its business

operation in accordance with ASC 410, Asset Retirement and Environmental Obligations –

Asset Retirement Obligations .

Company records the fair value of the asset retirement obligation in the period in which it is incurred.

The Company increases, annually,

the liability related to this obligation.

The liability is accreted to its present value each period and the capitalized cost is depreciated

over the useful life of the related asset.

Upon settlement of the liability, the Company records either a gain or loss.

As of March 31,

2021, and March 31, 2020, the Company had a liability of $37,628 and $35,442, respectively, recorded as a component of other long-term

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has determined

that the Series J Preferred host instrument was more akin to equity than debt and that the above identified conversion feature,

subject to adjustments, was clearly and closely related to the host instrument, and accordingly bifurcation and classification

of the conversion feature as a derivative liability was not required.

The Company has accounted for the Series J Preferred as

contingently redeemable preferred stock for which redemption is not probable.

Accordingly, the Series J Preferred is presented

in mezzanine equity based on their initial measurement amount (fair value), as required by ASC 480-10-S99, Distinguishing Liabilities

from Equity –

SEC Materials.

No subsequent adjustment of the initial measurement amounts for these contingently redeemable

Series J Preferred is necessary unless the redemption of the Series J Preferred becomes probable.

Accordingly, the amount presented

as temporary equity for the contingently redeemable Series J Preferred outstanding is its issuance-date fair value.

J Preferred was initially measured at its fair value, $13,903,960 at April 28, 2017.

The fair value of

the Series J Preferred issued by the Company pursuant to the exchange agreement was calculated using a Monte Carlo Simulation

because of the probability assumptions associated with the shareholder approval provisions;

the following are the Monte Carlo

Fair value of the Company’s common stock

Initial exercise price

Number of Series J Preferred issued

Fully diluted shares outstanding as of measurement date

Risk-free rate

Shareholder approval threshold

Probability of approval is ending stock price is greater than threshold - midpoint

PREFERRED STOCK

Series J convertible preferred stock

On April 28, 2017, the Company

created the Series J Convertible Preferred Stock (“Series J Preferred”) in conjunction with the Certificate of Designations

(“Series J COD”).

A total of 50 shares of Series J Preferred were authorized, zero shares are outstanding, with a stated

value of $1,000,000 per share and a par value of $0.01 as of March 31, 2021.

On April 27, 2017, a total of 24.0344 shares of Series J Preferred

were issued pursuant to an exchange agreement (the “Exchange Agreement”) with Nasrat Hakim (“Mr.

Hakim”), a related

party and the Company’s President, Chief Executive Officer and Chairman of the Board of Directors.

The Exchange Agreement provided

for Hakim to exchange 158,017,321 shares of Common Stock for 24.0344 shares of Series J Preferred and warrants to purchase 79,008,661

shares of Common Stock at $0.1521 per share.

The aggregate stated value of the Series J Preferred issued was equal to the aggregate value

of the shares of Common Stock exchanged, with such value of each share of Common Stock exchanged being equal to the closing price of the

Common Stock on April 27, 2017.

In connection with the Exchange Agreement, the Company also issued warrants to purchase 79,008,661 shares

of Common Stock at $0.1521 per share, and such warrants are classified as liabilities on the accompanying consolidated balance sheet as

of March 31, 2021 (See Note 11).

An amendment to the Company’s

Articles of Incorporation to increase the number of shares of Common Stock the Company is authorized to issue from 995,000,000 shares

to 1,445,000,000 shares was approved at the Company’s Annual Meeting of Shareholders held on December 4, 2019.

Prior to the approval

of the increase in the number of authorized shares, there were insufficient authorized shares if the Series J Preferred Stock were converted.

As a result, the shares were classified in mezzanine equity.

After the approval of the increase in the number of authorized shares, there

are now sufficient authorized shares in the event of a full conversion of Series J Preferred Stock.

With the approval of the increase

in the number of authorized shares, there is no longer the presumption that a cash settlement will be required.

Therefore, the Series

J Preferred was reclassified from mezzanine equity to permanent equity at its carrying amount of $13,903,960 on the consolidated balance

sheet as of March 31, 2020.

On June 23, 2020, the Company

held a Special Meeting of Shareholders, with such including a proposal for shareholders to again vote on the above referenced amendment

to the Company’s Articles of Incorporation.

This proposal was also passed by shareholder vote.

On August 24, 2020, Hakim

converted the 24.0344 shares of Series J Preferred into 158,017,321 shares of Common Stock at a conversion price of $0.1521 per share.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Authorized, issued

and outstanding shares, along with carrying value are as follows:

Shares authorized

Shares outstanding

Conversion price

Common Stock to be issued upon conversion

Carrying value of Series J convertible preferred stock

Increase in Authorized Shares

to the Company’s Articles of Incorporation to increase the number of shares of common stock the Company is authorized to

issue from 995,000,000 shares to 1,445,000,000 shares was approved at the Company’s Annual Meeting of Shareholders held

on December 4, 2019.

Prior to the approval of the increase in the number of authorized shares, there were insufficient authorized

shares if the Series J Preferred Stock were converted.

As a result, the shares were classified in mezzanine equity.

approval of the increase in the number of authorized shares, there are now sufficient authorized shares in the event of a full

conversion of Series J Preferred Stock.

With the approval of the increase in the number of authorized shares, there is no longer

the presumption that a cash settlement will be required.

Therefore, the Series J Preferred has been reclassified from mezzanine

equity to permanent equity at its current carrying amount of $13,903,960 on the accompanying consolidated balance sheet.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company evaluates

and accounts for its freestanding instruments in accordance with ASC 815, Accounting for Derivative Instruments and Hedging

The Company issued

warrants, with a term of seven years, to Nasrat Hakim, pursuant to the Exchange Agreement detailed below.

A summary of warrant

activity is as follows:

March 31 2020

March 31, 2019

The Company evaluates and

accounts for its freestanding instruments in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities .

The Company issued warrants,

with a term of ten years, to affiliates in connection with an exchange agreement dated April 28, 2017, as further described in this note

A summary of warrant activity

is as follows:

Average Exercise Price

Balance at beginning of period

Warrants granted pursuant to the issuance of Series J convertible

preferred shares

granted pursuant to the issuance of Series J convertible preferred shares

Warrants exercised, forfeited and/or expired, net

Balance at end of period

On April 28, 2017,

the Company entered into an exchange agreement (the “Exchange Agreement”

) with Nasrat Hakim, the Chairman of

the Board, President, and Chief Executive Officer of the Company, pursuant to which the Company issued to Mr.

Hakim 23.0344 shares

of its newly designated Series J Convertible Preferred Stock ( “Series J Preferred ”) and Warrants to purchase

an aggregate of 79,008,661 shares of its Common Stock (the “Series J Warrants”

and, along with the Series J Preferred

issued to Mr.

Hakim, the “

Securities”

) in exchange for 158,017,321 shares of Common Stock owned by Mr.

On April 28, 2017, the Company entered into an Exchange Agreement with

Hakim, the Chairman of the Board, President, and Chief Executive Officer of the Company, pursuant to which the Company issued to Hakim

24.0344 shares of its Series J Preferred and warrants to purchase an aggregate of 79,008,661 shares of its Common Stock (the “Series

J Warrants”

and, along with the Series J Preferred issued to Mr.

Hakim, the “Securities”) in exchange for 158,017,321

shares of Common Stock owned by Mr.

The fair value of the Series J Warrants was determined to be $6,474,674 upon issuance at April

The Series J Warrants

are exercisable for a period of 10 years from the date of issuance, commencing on the earlier of (i) the date that Shareholder

Approval is obtained, and the requisite corporate action has been effected;

or (ii) April 28, 2020.

The initial exercise price

is $0.1521 per share and the Series J Warrants can be exercised for cash or on a cashless basis.

The exercise price is subject

to adjustment for any issuances or deemed issuances of common stock or common stock equivalents at an effective price below the

then exercise price.

Such exercise price adjustment feature prohibits the Company from being able to conclude the warrants are

indexed to its own stock and thus such warrants are classified as liabilities and measured initially and subsequently at fair

The Series J Warrants also provide for other standard adjustments upon the happening of certain customary events.

J Warrants are not exercisable during any period when an Authorized Share Deficiency exists and will expire on the expiry date,

without regards to the existence of an Authorized Shares Deficiency (see Note 10).

As of March 31, 2020, the Company does not

have a sufficient number of unreserved authorized shares to effect the entire conversion of the Series J Preferred, therefore

the Series J Warrants are not currently exercisable.

Please also see Note 10.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value of

the warrants issued by the Company pursuant to the issuance of Series J convertible preferred shares (79,008,661 warrant shares)

was calculated using a Monte Carlo Simulation because of the probability assumptions associated with the Shareholder Approval

The following are the key assumptions used in the Monte Carlo Simulation:

Fair value of the Company's Common Stock

Initial exercise price

Number of common warrants

Fully diluted shares outstanding as of measurement date

Warrant term (in years)

Risk-free rate

Shareholder approval threshold

Probability of approval if ending stock price is greater than threshold - midpoint

Fair value of derivative financial instruments - warrants

The fair value of

the warrants issued by the Company pursuant to the issuance of Series J convertible preferred shares (79,008,661 warrant shares)

was calculated using a Black-Scholes model instead of a Monte Simulation because the probability with the shareholder approval

provisions was no longer a factor.

The following assumptions were used in the Black-Scholes model to calculate the fair value

of warrants issued by the Company pursuant to the issuance of Series J convertible preferred shares (79,008,661 warrant shares):

Fair value of the Company’s common stock

The Series J Warrants are

exercisable for a period of 10 years from the date of issuance, commencing April 28, 2020.

The initial exercise price is $0.1521 per

share and the Series J Warrants can be exercised for cash or on a cashless basis.

The exercise price is subject to adjustment for any

issuances or deemed issuances of Common Stock or Common Stock equivalents, other than shares issued pursuant to the 2020LPC Purchase

Agreement (as defined below), at an effective price below the then exercise price.

Such exercise price adjustment feature prohibits the

Company from being able to conclude the warrants are indexed to its own stock and thus such warrants are classified as liabilities and

measured initially and subsequently at fair value.

The Series J Warrants also provide for other standard adjustments upon the happening

of certain customary events.

The fair value of the Series

J Warrants was calculated using a Black-Scholes model.

The following assumptions were used in the Black-Scholes model to calculate the

fair value of the Series J Warrants:

Fair value of the Company’s Common

Initial exercise price

2 unchanged sentences

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The changes in warrants

(Level 3 financial instruments) measured at fair value on a recurring basis for the year ended March 31, 2020 were as follows:

Balance as of March 31, 2018

The changes in warrants (Level

3 financial instruments) measured at fair value on a recurring basis for the years ended March 31, 2021 were as follows:

Balance at March 31, 2019

Change in fair value of derivative financial instruments

Balance as of March 31, 2019

Balance at March 31, 2020

Change in fair value of derivative financial instruments

Balance as of March 31, 2020

Balance at March 31, 2021

SHAREHOLDERS’

1 unchanged sentence

Purchase Agreement

On May 1, 2017, the

Company 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, the Company has the right to sell to and Lincoln Park is obligated

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

period commencing on June 5, 2017.

The Company may direct Lincoln Park, at its 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, “

Regular Purchases ”).

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

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, the Company may direct Lincoln Park to purchase additional amounts as accelerated purchases

under certain circumstances.

In the case of both Regular Purchases and accelerated purchases, the purchase price per share will

be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar

transaction occurring during the business days used to compute the purchase price.

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, the Company issued to Lincoln Park 5,540,551 shares of common stock and is required to issue

up to 5,540,551 additional shares of Common Stock pro rata as the Company requires Lincoln Park to purchase shares under the 2017

LPC Purchase Agreement over the term of the agreement.

Lincoln Park has represented to the Company, 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 “Securities Act”)).

The Company 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.

The Company has 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 2017 LPC 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 2017 LPC Purchase Agreement.

Lincoln Park has no right to require any sales by the Company but is

obligated to make purchases from the Company as directed in accordance with the 2017 LPC Purchase Agreement.

Lincoln Park has

covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company’s

The net proceeds received

by the Company under the 2017 LPC Purchase Agreement will depend on the frequency and prices at which the Company sells shares

of common stock to Lincoln Park.

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 Company, from

time to time and at the Company’s sole discretion but no more frequently than every other business day, could direct Lincoln

Park to purchase (a “Regular Purchase”) up to 500,000 shares of common stock on any such business day, increasing

up to 1,000,000 shares, depending upon the closing sale price of the common stock, provided that in no event shall Lincoln Park

purchase more than $760,000 worth of common stock on any single business day.

The purchase price of shares of common stock related

to the future Regular Purchase funding will be based on the prevailing market prices of such shares at the time of sales (or over

a period of up to ten business days leading up to such time), but in no event, will shares be sold to Lincoln Park on a day the

Common Stock closing price is less than the floor price of $0.10 per share, subject to adjustment.

ELITE PHARMACEUTICALS,

AND SUBSIDIARIES

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

In addition to Regular

Purchases, on any business day on which the Company has properly submitted a Regular Purchase notice and the closing sale price

is not below $0.15, the Company may purchase (an “Accelerated Purchase”) an additional “accelerated amount”

under certain circumstances.

The amount of any Accelerated Purchase cannot exceed the lesser of three times the number of purchase

shares purchased pursuant to the corresponding Regular Purchase;

and 30% of the aggregate shares of the Company’s common

stock traded during normal trading hours on the purchase date.

The purchase price per share for each such Accelerated Purchase

will be equal to the lower of (i) 97% of the volume weighted average price during the purchase date;

or (ii) the closing sale

price of the Company’s common stock on the purchase date.

In the case of both

Regular Purchases and Accelerated Purchases, the purchase price per share will be equitably adjusted for any reorganization, recapitalization,

non-cash dividend, stock split, reverse stock split or other similar transaction occurring during the business days used to compute

the purchase price.

Other than as set

forth above, there are no trading volume requirements or restrictions under the Purchase Agreement, and the Company will control

the timing and amount of any sales of the Company’s common stock to Lincoln Park.

The Company’s

sales of shares of common stock to Lincoln Park under the 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 9.99%

of the then outstanding shares of common stock.

The Purchase Agreement

and the Registration Rights Agreement contain customary representations, warranties, agreements, and conditions to completing

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

The Company has the right to terminate the 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 the Company from time to time, including, without limitation, market conditions,

the trading price of the Common Stock and determinations by the Company as to appropriate sources of funding for the Company and

its operations.

There are no trading volume requirements or restrictions under the Purchase Agreement.

Lincoln Park has no right

to require any sales by the Company but is obligated to make purchases from the Company as it directs in accordance with the Purchase

Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or

hedging of Company shares.

During the year ended

March 31, 2020, a total of 15,358,627 shares were sold to Lincoln Park pursuant to the 2017 LPC Agreement for net proceeds totaling

In addition, 199,181 shares were issued to Lincoln Park as additional commitment shares, pursuant to the 2017 LPC Agreement.

During the year ended March 31, 2019, a total of 22,033,967 shares were sold to Lincoln Park pursuant to the 2017 LPC Agreement

On May 1, 2017, the Company

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, the Company had the right to sell to and Lincoln Park was obligated to purchase up to $40 million in shares of Common Stock,

subject to certain limitations, from time to time, over the 36-month period that commenced on June 5, 2017.

The 2017 LPC Purchase Agreement

expired on July 1, 2020.

During the year ended March

31, 2021, there were no shares sold to Lincoln Park pursuant to the 2017 LPC Purchase Agreement.

In addition, there were no shares issued

to Lincoln Park as additional commitment shares, pursuant to the 2017 LPC Purchase Agreement.

During the year ended March 31, 2020, a

total of 15,358,627 shares were sold to Lincoln Park pursuant to the 2017 LPC Purchase Agreement for net proceeds totaling $15,359.

addition, 199,181 shares were issued to Lincoln Park as additional commitment shares, pursuant to the 2017 LPC Purchase Agreement.

Lincoln Park Capital Transaction - July

8, 2020 Purchase Agreement

On July 8, 2020, Elite Pharmaceuticals,

Inc., a Nevada corporation (the “Company”), entered into a purchase agreement (the “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, 285,831 shares were issued to Lincoln Park as additional commitment shares,

pursuant to the 2017 LPC Agreement.

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

to the 2020 LPC Agreement.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of Common Stock Activity

During the years ended

March 31, 2020 and 2019, the Company issued 15,557,808 and 22,319,798 shares of Common Stock, respectively, with such issuances

of Common Stock being summarized as follows:

Years Ended March 31,

Common Stock issued as of March 31, 2019 and 2018, respectively

Common Stock sold pursuant to the Lincoln Park Capital Purchase Agreements, with net proceeds of such shares totaling $1,437,978 and $2,063,541 for the years ended March 31, 2020 and 2019, respectively.

Common Stock issued as initial and additional commitment shares pursuant to the Lincoln Park Capital Purchase Agreements

Common Stock issued during the fiscal year

Common Stock issued as of March 31, 2020 and 2019, respectively

During the years ended March

31, 2021 and 2020, the Company issued 168,772,385 and 15,557,808 shares of Common Stock, respectively, with such issuances of Common

Stock being summarized as follows:

Stock issued as of March 31, 2021 and 2020, respectively

stock converted from Preferred Stock

Stock sold pursuant to the Lincoln Park Capital Purchase Agreements, with net proceeds of such shares totaling $42,223 and $1,437,978

for the years ended March 31, 2021 and 2020, respectively.

Stock issued as initial and additional commitment shares pursuant to the Lincoln Park Capital Purchase Agreements

Stock issued in payment of Directors fees, salaries and consulting fees

Stock issued during the fiscal year

Stock issued as of March 31, 2021 and 2020, respectively

1,009,276,752

STOCK-BASED COMPENSATION

Part of the compensation

paid by the Company to its Directors and employees consists of the issuance of common stock or via the granting of options to

purchase common stock.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

paid by the Company to its Directors and employees consists of the issuance of Common Stock or via the granting of options to purchase

Common Stock.

Stock-based Director Compensation

The Company’s

Director compensation policy was instituted in October 2009 and further revised in January 2016, includes provisions that a portion

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

valuation of such shares being calculated on quarterly basis and equal to the average closing price of the Company’s common

During the year ended

March 31, 2020, the Company did not issue any shares of common stock to its Directors in payment of director’s fees.

During the year ended

March 31, 2020, the Company accrued director’s fees totaling $60,000, which will be paid via cash payments totaling $30,000

and the issuance of 756,725 shares of Common Stock.

The Company’s Director

compensation policy, instituted in October 2009 and further revised in January 2016, includes provisions that a portion of director’s

fees are to be paid via the issuance of shares of the Company’s Common Stock, in lieu of cash, with the valuation of such shares

being calculated on quarterly basis and equal to the average closing price of the Company’s Common Stock.

During the year ended March

31, 2021, the Company issued 1,550,343 shares of Common Stock to its Directors in payment of director’s fees totaling an aggregate of

$135,000 and with such aggregate director’s fees being earned and accrued over the twenty-seven month period beginning on January 1,

2018 and ending on March 31, 2020.

In addition, the Company made cash payments totaling an aggregate of $67,500 in payment of director’s

fees earned over the same twenty-seven month period.

During the year ended March 31, 2021, the Company

accrued director’s fees totaling $60,000, which will be paid via cash payments totaling $30,000 and the issuance of 886,710 shares

of Common Stock.

As of March 31, 2021,

the Company owed its Directors a total of $67,500 in cash payments and 1,550,342 shares of Common Stock in payment of director

fees totaling $202,500 due and owing.

The Company anticipates that these shares of Common Stock will be issued prior to the end

of the current fiscal year.

the Company owed its Directors a total of $30,000 in cash payments and 886,710 shares of Common Stock in payment of director fees totaling

$60,000 due and owing.

The Company anticipates that these shares of Common Stock will be issued prior to the end of the subsequent fiscal

Stock-based Employee/Consultant Compensation

Employment contracts

with the Company’s President and Chief Executive Officer, Chief Financial Officer and certain other employees and engagement

contracts with certain consultants include provisions for a portion of each employee’s salaries or consultant’s fees

to be paid via the issuance of shares of the Company’s Common Stock, in lieu of cash, with the valuation of such shares being

calculated on a quarterly basis and equal to the average closing price of the Company’s Common Stock.

During the year ended

March 31, 2020, the Company did not issue any shares pursuant to employment contracts with the Company’s President and Chief

Executive Officer, Chief Financial Officer or certain other employees.

During the year ended March 31, 2020, the Company did not

issue any shares pursuant to the engagement contracts with certain consultants.

During the year ended

March 31, 2020, the Company accrued salaries totaling $305,000 owed to the Company’s President and Chief Executive Officer,

Chief Financial Officer and certain other employees which will be paid via the issuance of 3,846,685 shares of Common Stock.

Employment contracts with

the Company’s President and Chief Executive Officer, Chief Financial Officer and certain other employees and engagement contracts

with certain consultants include provisions for a portion of each employee’s salaries or consultant’s fees to be paid via

the issuance of shares of the Company’s Common Stock, in lieu of cash, with the valuation of such shares being calculated on a

quarterly basis and equal to the average closing price of the Company’s Common Stock.

During the year ended March

31, 2021, the Company issued 646,336 shares of Common Stock in payment of salaries totaling $56,250 pursuant to the employment contract

of the Company’s Executive Vice President of Operations and with such salaries being earned and accrued over the thirty-month period

beginning on January 1, 2018 and ending on June 30, 2020.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended March

31, 2021, the Company accrued salaries totaling $748,750 owed to the Company’s President and Chief Executive Officer, Chief Financial

Officer and certain other employees which will be paid via the issuance of 11,250,185 shares of Common Stock.

As of March 31, 2021,

the Company owed its President and Chief Executive Officer, Chief Financial Officer and certain other employees’

totaling $2,311,250 which will be paid via the issuance of 24.8 million shares of Common Stock.

Under its 2014 Stock

Option Plan and prior option plans, the Company may grant stock options to officers, selected employees, as well as members of

the Board of Directors and advisory board members.

All options have generally been granted at a price equal to or greater than

the fair market value of the Company’s Common Stock at the date of the grant.

Generally, options are granted with a vesting

period of up to three years and expire ten years from the date of grant.

salaries totaling

$3,060,000 which will be paid via the issuance of 36,085,114 shares of Common Stock.

During the year ended March

31, 2021, the Company issued 1,931,891 shares of Common Stock in payment of consulting fees totaling $161,033, pursuant to engagement

contracts with a certain consultant, and with such consulting expenses being earned and accrued over the twenty seven month period beginning

on January 1, 2018 and ending March 31, 2020.

Under its 2014 Stock Option

Plan and prior options plans, the Company may grant stock options to officers, selected employees, as well as members of the Board of

Directors and advisory board members.

All options have generally been granted at a price equal to or greater than the fair market value

of the Company’s Common Stock at the date of the grant.

Generally, options are granted with a vesting period of up to three years

and expire ten years from the date of grant.

A summary of the activity of Company’s 2014 Stock Option Plan for the years ended March

31, 2021and 2020 is as follows:

Outstanding at March 31, 2019

4 unchanged sentences

Exercisable at March 31, 2021

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

aggregate intrinsic value for outstanding options is calculated as the difference between the exercise price of the underlying

awards and the quoted price of the Company common stock as of March 31, 2020 and March 31, 2019 of $0.07 and $0.10, respectively.

CONCENTRATIONS AND CREDIT

The aggregate intrinsic value

for outstanding options is calculated as the difference between the exercise price of the underlying awards and the quoted price of the

Company’s Common Stock as of March 31, 2021 and March 31, 2020 of $0.06 and $0.07, respectively.

CONCENTRATIONS AND CREDIT RISK

Two customers accounted for

approximately 92% of the Company’s revenues for the year ended March 31, 2021.

These two customers accounted for approximately

77% and 15% of revenues each, respectively.

Three customers accounted

1 unchanged sentence

These three customers accounted for approximately

55%, 24%, and 13% of revenues each.

Four customers accounted

for substantially all the Company’s revenues for the year ended March 31, 2019.

These four customers accounted for approximately

55%, 24%, and 13% of revenues each, respectively.

Accounts Receivable

Four customers accounted

for substantially all the Company’s accounts receivable as of March 31, 2020.

These four customers accounted for approximately

73%, 13%, 8% and 5% of accounts receivable each.

Three customers accounted

for approximately 99% of the Company’s accounts receivable as of March 31, 2021.

These three customers accounted for approximately

73%, 15% and 11% of accounts receivable each, respectively.

Four customers accounted

1 unchanged sentence

These four customers accounted for approximately

38%, 34%, 19%, and 4% of accounts receivable each.

Three suppliers accounted

73%, 13%, 8%, and 5% of accounts receivable each, respectively.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Four suppliers accounted

for approximately 78% of the Company’s purchases of raw materials for the year ended March 31, 2021.

These three suppliers

that accounted for approximately 41%, 23%, and 7% of purchases each.

These four suppliers accounted

for approximately 54%, 13%, 6% and 5% of purchases each, respectively.

Three suppliers accounted

for more than 60% of the Company’s purchases of raw materials for year ended March 31, 2019.

for more than 71% of the Company’s purchases of raw materials for the year ended March 31, 2020.

These three suppliers accounted

1 unchanged sentence

SEGMENT RESULTS

ASC 280-10-50 requires

FASB ASC 280-10-50 requires

use of the “management approach”

2 unchanged sentences

management organized segments within the company for making operating decisions and assessing performance.

Reportable segments

are based on products and services, geography, legal structure, management structure, or any other manner in which management

disaggregates a company.

Reportable segments are based

on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

The Company has determined

that its reportable segments are ANDAs for generic products and NDAs for branded products.

The Company identified its reporting

segments based on the marketing authorization relating to each and the financial information used by its chief operating decision

maker to make decisions regarding the allocation of resources to and the financial performance of the reporting segments.

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.

The Company identified its reporting segments

based on the marketing authorization relating to each and the financial information used by its chief operating decision maker to make

decisions regarding the allocation of resources to and the financial performance of the reporting segments.

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 consolidated financial statements.

Disaggregated revenue

by reportable segments is disclosed in Note 1.

The following represents

selected information for the Company’s reportable segments:

Years Ended March 31,

Revenue by Segment

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended March 31,

Operating Income (Loss) by Segment

$ (4,361,649 )

$ (4,238,688 )

For the Years Ended March 31,

Operating Income by Segment

The table below reconciles

the Company’s operating loss by segment to loss from operations before provision for income taxes as reported in the Company’s

audited consolidated statements of operations.

Years Ended March 31,

Operating income (loss) by segment

$ (4,238,688 )

the Company’s operating income by segment to income (loss) from operations before provision for income taxes as reported in the

Company’s consolidated statements of operations.

For the Years Ended March 31,

Operating income by segment

Corporate unallocated costs

Interest income

Interest expense and amortization of debt issuance

Interest expense and amortization of debt issuance costs

Depreciation and amortization expense

Significant non-cash items

Change in fair value of derivative

Loss from operations before income

$ (2,238,351 )

PPP loan forgiveness

Change in fair value of derivative instruments

Income (loss) from operations before income taxes

$ (2,238,351 )

COLLABORATIVE AGREEMENT WITH

EPIC PHARMA LLC

On June 4, 2015, the

Company executed an exclusive License Agreement (the “

2015 SequestOx™

License Agreement ”) with Epic Pharma

LLC (“Epic”), to market and sell in the U.S., SequestOx™, an immediate release oxycodone with sequestered naltrexone

capsule, owned by us.

Epic will have the exclusive right to market ELI-200 and its various dosage forms as listed in Schedule A

of the Agreement.

Epic is responsible for all regulatory and pharmacovigilance matters related to the products.

Pursuant to the

2015 SequestOx™

License Agreement, Epic will pay us non-refundable milestone payments totaling $15 million, with such amount

representing the cost of an exclusive license to SequestOx™, the cost of developing the product, the filing of an NDA with

the FDA and the receipt of the approval letter for the NDA from the FDA.

The 2015 SequestOx™

License Agreement expired

on June 4, 2020.

During the term of this agreement, the Company received $7.5 million in non-refundable payments, with such amount

consisting of $5 million due and owing on the execution date of the 2015 SequestOx™

License Agreement and $2.5 million

being earned upon the Company’s filing of an NDA with the FDA for the relevant product in January 2016.

The remaining $7.5

million in non-refundable payments required FDA approval of the relevant product, a milestone that was not achieved prior to the

expiration of the agreement.

COLLABORATIVE

AGREEMENT WITH SUNGEN PHARMA LLC

On August 24, 2016,

as amended we entered into an agreement with SunGen Pharma LLC (“SunGen”) (the “SunGen Agreement”) to undertake

and engage in the research, development, sales and marketing of eight generic pharmaceutical products.

Two of the products are

classified as CNS stimulants (the “CNS Products”), two of the products are classified as beta blockers and the remaining

four products consist of antidepressants, antibiotics and antispasmodics.

The Company has received approval from the FDA for Amphetamine

IR Tablets, Amphetamine ER Capsules and has filed an ANDA for an antibiotic product.

Under the terms of

the SunGen Agreement, Elite and SunGen will share in the responsibilities and costs in the development of these products and will

share substantially in the profits from sales.

Upon approval, the know-how and intellectual property rights to the products will

be owned jointly by Elite and SunGen.

Three of the eight products will be jointly owned, three products will be owned by SunGen,

with Elite having exclusive marketing rights and the remaining two products will be owned by Elite, with SunGen having exclusive

marketing rights.

Elite will manufacture and package all eight products on a cost-plus basis.

On December 10, 2018,

the Company received approval from the FDA for Amphetamine IR Tablets, a generic version of Adderall ®

, an immediate-release

mixed salt of a single entity Amphetamine product (Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate,

Amphetamine Sulfate) with strengths of 5 mg, 7.5 mg, 10 mg, 12.5 mg, 15 mg, 20 mg, and 30 mg tablets.

The product is a central

nervous system stimulant and is indicated for the treatment of Attention Deficit Hyperactivity Disorder (ADHD) and Narcolepsy.

The product is jointly owned by Elite and SunGen.

Elite manufactures and packages this product, at the Northvale Facility,

on a cost-plus basis, and it is currently sold pursuant to the Lannett Alliance, with the first commercial shipment of this product

occurring in April 2019.

Please see the section below titled “Strategic Marketing Alliance with Lannett Company Inc.”

for further details on the Lannett Alliance

On January 3, 2019,

the Company filed an ANDA with the FDA for a generic version of an antibiotic product.

According to QVIA (formerly QuintilesIMS

Health) data, the branded product for this antibiotic and its equivalents had total annual U.S.

sales of approximately $94 million

for the twelve months ending September 30, 2018.

The product is jointly owned by Elite and SunGen.

Upon approval by the

FDA of this ANDA, Elite will manufacture and package the product on a cost-plus basis.

The ANDA is currently under review by the

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On December 12, 2019,

the Company received approval from the FDA for Amphetamine ER Capsules, a generic version of Adderall XR ®

, an extended-release

mixed salt of a single entity Amphetamine product (Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate,

Amphetamine Sulfate) with strengths of 5mg, 10mg, 15mg, 20mg, 25mg and 30mg capsules.

The product is a central nervous system stimulant

and is indicated for the treatment of Attention Deficit Hyperactivity Disorder (ADHD).

The product is jointly owned by Elite

Elite manufactures and packages this product, at the Northvale Facility, on a cost-plus basis and it is currently sold

pursuant to the Lannett Alliance, with the first commercial shipment of this product occurring in March 2020.

Please see the section

below titled “Strategic Marketing Alliance with Lannett Company Inc.”

for further details on the Lannett Alliance.

On April 3, 2020, the

Company and SunGen mutually agreed to discontinue any further joint product development activities.

In May 2020, SunGen,

under an asset purchase agreement, assigned its rights and obligations under the Master Development and License Agreement for Amphetamine

IR and Amphetamine ER to Mikah Pharmaceuticals.

The ANDAs for Amphetamine IR and Amphetamine ER are now registered under Elite’s

Mikah will now be Elite’s partner with respect to Amphetamine IR and ER and will assume all the rights and obligations

for these products from SunGen.

There can be no assurances

that any of these products will receive marketing authorization and achieve commercialization within this time period, or at all.

In addition, even if marketing authorization is received, and even for those products for which marketing authorization has already

been received, there can be no assurances that there will be future revenues of profits, or that any such future revenues or profits

would be in amounts that provide adequate return on the significant investments made to secure these marketing authorizations or

provide sufficient financial contributions to support costs of operations and overheads.

RELATED PARTY TRANSACTION AGREEMENTS WITH EPIC PHARMA

The Company has entered

into two agreements with Epic which constitute agreements with a related party due to the management of Epic including a member

on our Board of Directors at the time such agreements were executed.

On June 4, 2015, the

Company entered into the 2015 Epic License Agreement (please see Note 16 above).

The 2015 Epic License Agreement includes milestone

payments totaling $10 million upon the filing with and approval of an NDA with the FDA.

The Company has determined these milestones

to be substantive, with such assessment being made at the inception of the 2015 Epic License Agreement, and based on the following:

● The Company’s performance

is required to achieve each milestone;

● The milestones will relate

to past performance, when achieved;

● The milestones are reasonable

relative to all of the deliverables and payment terms within the 2015 Epic License Agreement

The 2015 SequestOx™

License Agreement expired on June 4, 2020.

During the term of this agreement, the Company received $7.5 million in non-refundable

payments, with such amount consisting of $5 million due and owing on the execution date of the 2015 SequestOx™

Agreement and $2.5 million being earned upon the Company’s filing of an NDA with the FDA for the relevant product in

January 2016.

The remaining $7.5 million in non-refundable payments required FDA approval of the relevant product, a milestone

that was not achieved prior to the expiration of the agreement.

This transaction is

not to be considered as an arms-length transaction.

Please also note that,

effective April 7, 2016, all Directors on the Company’s Board of Directors that were also owners/managers of Epic had resigned

as Directors of the Company and all current members of the Company’s Board of Directors have no relationship to Epic.

Epic no longer qualifies as a party that is related to the Company.

MANUFACTURING, LICENSE AND

DEVELOPMENT AGREEMENTS

The Company has entered into the following

active agreements:

● License agreement with Precision Dose, dated September

10, 2010, as amended (the “Precision Dose License Agreement”);

● Development and License Agreement with SunGen (the “SunGen

Agreement”);

● Strategic Marketing Alliance with Glenmark Pharmaceuticals,

USA dated May 22, 2018 (the “Glenmark Alliance”).

● Strategic Marketing Alliance with Lannett Company.

dated March 6, 2019 (the “Lannett-SunGen Product Alliance”)

● Strategic Marketing Alliance with Lannett Company.

dated April 9, 2019 (the “Lannett-Elite Product Alliance”)

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Precision Dose

Agreement currently provides for the marketing and distribution, by Precision Dose and its wholly owned subsidiary, TAGI Pharma,

of Phentermine 37.5mg tablets (launched in April 2011), Phentermine 15mg capsules (launched in April 2013), Phentermine 30mg capsules

(launched in April 2013), Naltrexone 50mg tablets (launched in September 2013) and certain additional products that require approval

from the FDA which has not been received.

Precision Dose will have the exclusive right to market these products in the United

States and Puerto Rico and a non-exclusive right to market the products in Canada.

Pursuant to the Precision Dose License Agreement,

Elite received $200k at signing, and is receiving milestone payments and a license fee which is based on profits achieved from

the commercial sale of the products included in the agreement.

Revenue from the $200k

payment made upon signing of the Precision Dose Agreement is being recognized over the life of the Precision Dose Agreement.

The milestones, totaling

$500k (with $405k already received), consist of amounts due upon the first shipment of each identified product, as follows:

37.5mg tablets ($145k), Phentermine 15 & 30mg capsules ($45k), Hydromorphone 8mg ($125k), Naltrexone 50mg ($95k) and the balance

of $95k due in relation to the first shipment of generic products which still require marketing authorizations from the FDA, and

to which there can be no assurances of such marketing authorizations being granted and accordingly there can be no assurances that

the Company will earn and receive these milestone amounts.

These milestones have been determined to be substantive, with such determination

being made by the Company after assessments based on the following:

● The Company’s performance

is required to achieve each milestone;

● The milestones will relate

to past performance, when achieved;

● The milestones are reasonable

relative to all of the deliverables and payment terms within the Precision Dose License

The license fees provided

for in the Precision Dose Agreement are calculated as a percentage of net sales dollars realized from commercial sales of the

What changed 10-K

Item 9A. Controls and Procedures