What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-08-16 · 643 added, 692 removed, 351 unchanged (79% of the section changed)

FINANCIAL STATEMENTS

PHARMACEUTICALS, INC.

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

receivable, net of allowance for doubtful accounts of $- 0 -, respectively

expenses and other current assets

current assets

Accounts receivable, net of allowance for doubtful accounts of $- 0 -, respectively

Prepaid expenses and other current assets

Total current assets

Property and equipment, net of accumulated depreciation of $ 12,462,783 and $ 12,153,626 , respectively

Intangible assets, net of accumulated amortization of $- 0 -, respectively

Operating lease - right-of-use asset

Other assets:

Restricted cash - debt service for NJEDA bonds

Security deposits

Total other assets

LIABILITIES AND SHAREHOLDERS’ EQUITY

and equipment, net of accumulated depreciation of $ 12,758,274 and $ 12,153,626 , respectively

assets, net of accumulated amortization of $- 0 -, respectively

lease - right-of-use asset

cash - debt service for NJEDA bonds

AND SHAREHOLDERS’ EQUITY

revenue, current portion

payable, current portion, net of bond issuance costs

payable, current portion

obligation - operating lease, current portion

current liabilities

Accounts payable

Accrued expenses

Deferred revenue, current portion

Bonds payable, current portion, net of bond issuance costs

Loans payable, current portion

Lease obligation - operating lease, current portion

Total current liabilities

revenue, net of current portion

payable, net of current portion and bond issuance costs

payable, net of current portion

obligation - operating lease, net of current portion

financial instruments - warrants

long-term liabilities

Deferred revenue, net of current portion

Bonds payable, net of current portion and bond issuance costs

Loans payable, net of current portion

Lease obligation - operating lease, net of current portion

Derivative financial instruments - warrants

Other long-term liabilities

Total long-term liabilities

Total liabilities

Shareholders’ equity:

Series J convertible preferred stock;

long-term liabilities

Shareholders’

J convertible preferred stock;

par value of $ 0.01 ;

50 shares authorized;

0 issued and outstanding as of June 30, 2021 and March 31, 2021

Common Stock;

0 issued and outstanding as of September 30, 2021 and March

par value $ 0.001 ;

1,445,000,000 shares authorized;

1,011,381,988 shares issued and 1,011,281,988 shares outstanding as of June 30, 2021;

1,011,381,988 shares issued and 1,011,281,988 shares outstanding as of

September 30, 2021;

1,009,276,752 shares issued and 1,009,176,752 shares outstanding as of March 31, 2021

Additional paid-in capital

Treasury stock;

100,000 shares as of June 30, 2021 and March 31, 2021;

Accumulated deficit

paid-in capital

100,000 shares as of September 30, 2021 and March 31, 2021;

( 144,771,894 )

( 148,957,989 )

Total shareholders’ equity

Total liabilities and shareholders’ equity

shareholders’ equity

liabilities and shareholders’ equity

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended June 30,

Manufacturing fees

Licensing fees

Total revenue

Cost of manufacturing

the Three Months Ended

September 30,

the Six Months Ended

September 30,

Manufacturing

of manufacturing

and development

and administrative

compensation through issuance of stock options

and amortization

operating expenses

Research and development

General and administrative

Non-cash compensation through issuance of stock options

Depreciation and amortization

Total operating expenses

Income from operations

Other income (expense):

Change in fair value of derivative instruments

Interest expense and amortization of debt issuance costs

Gain on sale of fixed assets

Interest income

Other income (expense), net

Income from operations before income taxes

Net benefit for sale of state net operating losses and credits

Net income attributable to common shareholders

Basic net income per share attributable to common shareholders

Diluted net income per share attributable to common shareholders

Basic weighted average Common Stock outstanding

from operations

in fair value of derivative instruments

expense and amortization of debt issuance costs

on sale of fixed assets

from operations before income taxes

benefit for sale of state net operating losses and credits

income attributable to common shareholders

net income per share attributable to common shareholders

weighted average Common Stock outstanding

1,011,281,988

Diluted weighted average Common Stock outstanding

1,010,059,593

weighted average Common Stock outstanding

1,011,281,988

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

1,010,059,593

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PHARMACEUTICALS, INC.

2 unchanged sentences

J Preferred Stock

Additional Paid-In

Treasury Stock

Total Shareholders’

Balance as of March 31, 2021

Shareholders’

as of March 31, 2021

1,009,276,752

2 unchanged sentences

$ ( 148,957,989 )

Non-cash compensation through the issuance of employee stock options

Shares issued in payment of salaries

Balance at June 30, 2021

of Preferred Stock to Common Stock

of Preferred Stock to Common Stock, shares

commitment shares issued pursuant to the 2020 Lincoln Park purchase agreement

Initial commitment shares issued pursuant to the 2020

Lincoln Park purchase agreement, shares

Stock sold pursuant to the 2020 Lincoln Park purchase agreement

Common Stock sold pursuant to the 2020 Lincoln Park

purchase agreement, shares

Stock issued as additional commitment shares pursuant to the 2020 Lincoln Park purchase agreement

Common Stock issued as additional commitment shares

pursuant to the 2020 Lincoln Park purchase agreement, shares

associated with raising capital

issued in payment of Director fees

issued in payment of Director fees, shares

issued in payment of consulting expense

issued in payment of consulting expenses, shares

compensation through the issuance of employee stock options

issued in payment of salaries

at June 30, 2021

1,011,381,988

2 unchanged sentences

$ ( 146,568,871 )

Additional Paid-In

Treasury Stock

Total Shareholders’

Balance as of March 31, 2020

compensation through the issuance of employee stock options

at September 30, 2021

1,011,381,988

1 unchanged sentence

$ ( 306,841 )

Non-cash compensation through the issuance of employee stock options

Shares issued in payment of salaries

Balance at June 30, 2020

$ ( 144,771,894 )

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Shareholders’

as of March 31, 2020

$ 150,264,605

$ ( 306,841 )

$ ( 154,046,410 )

compensation through the issuance of employee stock options

issued in payment of salaries

at June 30, 2020

$ 150,319,552

$ ( 306,841 )

$ ( 152,969,061 )

at June 30, 2020

$ 150,319,552

$ ( 306,841 )

$ ( 152,969,061 )

of Preferred Stock to Common Stock

( 13,903,960 )

commitment shares issued pursuant to the 2020 Lincoln Park purchase agreement

Stock sold pursuant to the 2020 Lincoln Park purchase agreement

Stock issued as additional commitment shares pursuant to the 2020 Lincoln Park purchase agreement

associated with raising capital

compensation through the issuance of employee stock options

issued in payment of Director fees

issued in payment of salaries

issued in payment of consulting expenses

at September 30, 2020

1,009,276,752

$ 164,401,909

$ ( 306,841 )

$ ( 150,487,499 )

at September 30, 2020

1,009,276,752

$ 164,401,909

$ ( 306,841 )

$ ( 150,487,499 )

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

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

Non-cash compensation accrued

Non-cash compensation through the issuance of employee stock options

Non-cash rent expense and lease accretion

Change in operating assets and liabilities:

Accounts receivable

the Six Months Ended September 30,

FLOWS FROM OPERATING ACTIVITIES:

to reconcile net income to net cash provided by operating activities:

and amortization

of operating leases - right-of-use assets

on the disposal of property and equipment

in fair value of derivative financial instruments - warrants

( 1,033,894 )

compensation accrued

compensation through the issuance of employee stock options

rent expense and lease accretion

in operating assets and liabilities:

( 1,175,982 )

Prepaid expenses and other current assets

Accounts payable, accrued expenses and other current liabilities

Deferred revenue and customer deposits

Lease obligations - operating leases

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

Proceeds from disposal of property and equipment

Net cash (used in) provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from loans payable

Other loan payments

Net cash provided by financing activities

Net change in cash and restricted cash

Cash and restricted cash, beginning of period

Cash and restricted cash, end of period

Supplemental disclosure of cash and non-cash transactions:

Cash paid for interest

Financing of equipment purchases and insurance renewal

Stock issued in payment of Directors fees, salaries and consulting expenses

Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets

( 1,532,756 )

expenses and other current assets

payable, accrued expenses and other current liabilities

( 1,408,835 )

revenue and customer deposits

obligations - operating leases

cash provided by operating activities

FLOWS FROM INVESTING ACTIVITIES:

of property and equipment

from disposal of property and equipment

cash used in investing activities

FLOWS FROM FINANCING ACTIVITIES:

of bond principal

loan payments

from the issuance of Common Stock

loan proceeds

cash (used in) provided by financing activities

change in cash and restricted cash

and restricted cash, beginning of period

and restricted cash, end of period

disclosure of cash and non-cash transactions:

paid for interest

of equipment purchases and insurance renewal

issued in payment of Directors fees, salaries and consulting expenses

non-cash amounts of lease liabilities arising from obtaining right of use assets

shares issued to Lincoln Park Capital

of preferred stock to Common Stock

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

24 unchanged sentences

which are, in the opinion of management, necessary for a fair presentation of such statements.

The results of operations for the three

months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the entire year.

The results of operations for the six

months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the entire year.

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

16 unchanged sentences

Please see Note 15 for further details.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company generates revenue primarily from manufacturing and licensing fees.

5 unchanged sentences

collaborations.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

45 unchanged sentences

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

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

7 unchanged sentences

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

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

10 unchanged sentences

None of the Company’s contracts contained a significant financing

component as of June 30, 2021.

component as of September 30, 2021.

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

6 unchanged sentences

April 3, 2020, Elite and SunGen mutually agreed to discontinue any further joint product development activities.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Disaggregation

3 unchanged sentences

SCHEDULE OF DISAGGREGATION OF REVENUE

For the Three Months Ended

Licensing fees

Total NDA revenue

Manufacturing fees

Licensing fees

Total ANDA revenue

Total revenue

the Three Months Ended September 30,

the Six Months Ended September 30,

Manufacturing

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

4 unchanged sentences

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

of June 30, 2021, and March 31, 2021, the Company had $ 405,013 and $ 405,013 , of restricted cash, respectively, related to debt service

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of September 30, 2021, and March 31, 2021, the Company had $ 405,019 and $ 405,013 , of restricted cash, respectively, related to debt service

reserve in regard to the New Jersey Economic Development Authority (“NJEDA”) bonds (see Note 5).

13 unchanged sentences

gain or loss, if any, is recognized in income.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company capitalizes certain costs to acquire intangible assets;

13 unchanged sentences

and slower growth rates.

of June 30, 2021, the Company did not identify any indicators of impairment.

of September 30, 2021, the Company did not identify any indicators of impairment.

also see Note 4 for further details on intangible assets.

1 unchanged sentence

and development expenditures are charged to expense as incurred.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Contingencies

21 unchanged sentences

tax jurisdiction until the applicable statutes of limitation expire.

As of June 30, 2021, a summary of the tax years that remain subject

to examination in our major tax jurisdictions are:

As of September 30, 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, 2013 and forward.

Company did not record unrecognized tax positions for the three months ended June 30, 2021 and 2020.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company did not record unrecognized tax positions for the six months ended September 30, 2021 and 2020.

and Preferred Shares

16 unchanged sentences

Company’s Common Stock.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Per Share Attributable to Common Shareholders’

6 unchanged sentences

The computation of diluted net income per share does not include the conversion of securities that would have an antidilutive

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

following is the computation of earnings per share applicable to common shareholders for the periods indicated:

SCHEDULE OF EARNINGS (LOSS) PER SHARE APPLICABLE TO COMMON SHAREHOLDERS

For the Three Months Ended

Net income - basic

Effect of dilutive instrument on net income

Net income - diluted

Weighted average shares of Common Stock outstanding - basic

the Three Months Ended

September 30,

the Six Months Ended

September 30,

income - basic

of dilutive instrument on net income

( 1,220,069 )

Dilutive effect of stock options and convertible securities

Weighted average shares of Common Stock outstanding - diluted

( 1,033,894 )

income - diluted

Weighted average

shares of Common Stock outstanding - basic

1,011,281,988

1,010,059,593

effect of stock options and convertible securities

average shares of Common Stock outstanding - diluted

1,011,281,988

1,010,059,593

Net income per share

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Value of Financial Instruments

10 unchanged sentences

hierarchy under ASC 820 are described as follows:

1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly

or indirectly.

Level 2 inputs include quoted prices for similar assets or liabilities in active markets;

quoted prices for identical

or similar assets or liabilities in markets that are not active;

inputs other than quoted prices that are observable for the asset

or liability;

and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

1 – Unadjusted quoted prices in active markets for identical assets or liabilities

that are accessible at the measurement date.

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

the asset or liability, either directly or indirectly.

Level 2 inputs include quoted prices

for similar assets or liabilities in active markets;

quoted prices for identical or similar

assets or liabilities in markets that are not active;

inputs other than quoted prices that

are observable for the asset or liability;

and inputs that are derived principally from or

corroborated by observable market data by correlation or other means.

3 – Inputs that are unobservable for the asset or liability.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Measured on a Recurring Basis

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:

on a Recurring Basis

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:

SCHEDULE OF LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS

Fair Value Measurement Using

June 30, 2021

Derivative financial instruments - warrants

March 31, 2021

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.

Treasury Stock

The Company records treasury stock

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

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 .

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.

Value Measurement Using

at Fair Value

financial instruments - warrants

Note 11 , for specific inputs used in determining fair value.

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.

PHARMACEUTICALS, INC.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Inventory consisted of the following:

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.

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

Issued Accounting Pronouncements

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.

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.

consisted of the following:

SCHEDULE OF INVENTORY

June 30, 2021

March 31, 2021

Finished goods

Work-in-progress

Raw materials

Inventory, net

PROPERTY AND EQUIPMENT, NET

Property and equipment consisted

of the following:

and equipment consisted of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

June 30, 2021

March 31, 2021

Land, building and improvements

Laboratory, manufacturing, warehouse and transportation equipment

Office equipment and software

Furniture and fixtures

Property and equipment, gross

building and improvements

manufacturing, warehouse and transportation equipment

equipment and software

Accumulated depreciation

Property and equipment, net

Depreciation expense was $ 309,157

and $ 324,071 for the three months ended June 30, 2021 and 2020, respectively.

( 12,758,274 )

( 12,153,626 )

expense was $ 295,491 and $ 255,118 for the three months ended, and $ 604,648 and $ 654,871 for the six months ended September 30, 2021 and

2020, respectively.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

INTANGIBLE ASSETS

The following table summarizes

the Company’s intangible assets:

following table summarizes the Company’s intangible assets:

SCHEDULE OF INTANGIBLE ASSETS

June 30, 2021

Patent application costs

ANDA acquisition costs

March 31, 2021

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.

Amortization will then be calculated on a straight-line basis through the expiry of the related patent(s).

Carrying Amount

application costs

acquisition costs

Carrying Amount

application costs

acquisition costs

application costs were incurred in relation to the Company’s abuse deterrent opioid

Amortization of the patent costs will begin upon the issuance of marketing authorization

Amortization will then be calculated on a straight-line basis through the expiry

of the related patent(s).

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.

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 unaudited condensed 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 %.

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

refinanced bonds.

PHARMACEUTICALS, INC.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

unaudited condensed 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:

OF BONDS PAYABLE LIABILITY

June 30, 2021

March 31, 2021

Gross bonds payable

NJEDA Bonds - Series A Notes

following tables summarize the Company’s bonds payable liability:

SCHEDULE OF BONDS PAYABLE LIABILITY

bonds payable

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

portion of bonds payable (prior to deduction of bond offering costs)

offering costs

Accumulated amortization

Bond offering costs, net

Current portion of bonds payable - net of bond offering costs

Current portions of bonds payable

offering costs, net

portion of bonds payable - net of bond offering costs

portions of bonds payable

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 payable

portion of bonds payable, net of bond offering costs

term portion of bonds payable - net of bond offering costs

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 costs

Amortization expense was $ 3,545

and $ 3,545 for the three months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021 and March 31, 2021, interest payable was

$ 31,850 and $ 7,963 , respectively.

LOANS PAYABLE

Loans payable consisted of the

OF LOANS PAYABLE

June 30, 2021

March 31, 2021

Equipment and insurance financing loans payable, between 3.5 % and 12.73 % interest and maturing between June 2021 and October 2025

Current portion of loans payable

Long-term portion of loans payable

The interest expense associated

with the loans payable was $ 6,109 and $ 17,880 for the three months ended June 30, 2021 and 2020, respectively.

term portion of bonds payable, net of bond offering costs

expense was $ 3,545 and $ 3,545 for the three months ended, and $ 7,090 and $ 7,090 for the six months ended September 30, 2021 and 2020,

respectively.

As of September 30, 2021 and March 31, 2021, interest payable was $ 7,367 and $ 7,963 , respectively.

PHARMACEUTICALS, INC.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

LOANS PAYABLE

payable consisted of the following:

SCHEDULE OF LOANS PAYABLE

and insurance financing loans payable, between 3.5% and 12.73% interest and maturing between June 2021 and October 2025

Current portion of loans payable

portion of loans payable

interest expense associated with the loans payable was $ 17,001 and $ 20,760 for the three months ended, and $ 35,598 and $ 38,640 for the

six months ended September 30, 2021 and 2020, respectively.

RELATED PARTY SECURED PROMISSORY NOTE WITH MIKAH PHARMA, LLC

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 2021.

The principal amount of $ 1,200,000 was repaid by the Company at maturity.

Interest expense associated with

the Note was $ 30,000 for the three months ended June 30, 2020.

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 Mikah Note.

expense associated with the Note was $ 30,000

for the three months ended and $ 60,000

for the six months ended September 30, 2020.

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 Mikah Note.

Of the $ 435,000

accrued interest due at maturity, $ 343,379 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 $ 91,621 of accrued interest

expense owing in relation to the Mikah Note was recorded as a non-interest bearing, general liability of the Company.

accrued interest due at maturity, $ 435,000

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) .

DEFERRED REVENUE

Deferred revenues in the aggregate

amount of $ 55,558 as of June 30, 2021, were comprised of a current component of $ 13,333 and a long-term component of $ 42,225 .

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 $ 45,558 .

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 .

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 sheet date and the long-term component

is equal to the amount of revenue to be earned thereafter.

revenues in the aggregate amount of $ 52,225 as of September 30, 2021, were comprised of a current component of $ 13,333 and a long-term

component of $ 38,892 .

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 $ 45,558 .

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 .

These advance payments were recorded as deferred revenue when received and are earned, on a straight-line basis over the life of the

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 estimated.

If these estimates

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

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 Ave.

The 135 Ludlow Ave.

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.

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 .

On June 30, 2021, the Company exercised the second of the renewal options, with such

option including a term that begins on January 1, 2022 and expires on December 31, 2026.

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 condensed

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.

PHARMACEUTICALS, INC.

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Leases – 135 Ludlow Ave.

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 Ave.

The 135 Ludlow Ave.

lease is for approximately 15,000 square feet of floor space and began on July

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.

modified 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 progress.

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.

Lease assets and liabilities are

classified as follows on the condensed consolidated balance sheet:

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 .

On June 30, 2021, the Company exercised the second

of the renewal options, with such option including a term that begins on January 1, 2022 and expires on December 31, 2026.

135 Ludlow Ave.

modified lease property required significant leasehold improvements and qualifications, as a prerequisite, for its intended

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 progress.

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.

Pompano Office includes a 3 month abatement from November 2020 through February 2021 and has a term of three years, ending on October

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.

has elected to account for non-lease components associated with its leases and lease components as a single lease component.

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

assets and liabilities are classified as follows on the condensed consolidated balance sheet:

SCHEDULE OF LEASE ASSETS AND LIABILITIES

Classification

As of June 30, 2021

Operating lease – right-of-use asset

Total leased assets

Lease obligation – operating lease

Lease obligation – operating lease, net of current portion

Total lease liabilities

Rent expense is recorded on the

straight-line basis.

September 30, 2021

lease – right-of-use asset

leased assets

obligation – operating lease

obligation – operating lease, net of current portion

lease liabilities

expense is recorded on the straight-line basis.

Rent expense under the 135 Ludlow Ave.

modified lease for the three months ended June 30, 2021 and 2020 was $ 57,105

and $ 55,986 , respectively.

Rent expense under the Pompano Office Lease for the three months ended June 30, 2021 and 2020 was $ 5,772 and

modified lease for the three months ended September

30, 2021 and 2020 was $ 57,105 and $ 55,986 , respectively, and $ 114,210 and $ 111,972 for the six months ended September 30, 2021 and 2020,

respectively.

Rent expense is recorded in general and administrative expense in the unaudited condensed consolidated statements of

Rent expense under the Pompano Office Lease the three months ended September 30, 2021 was $ 5,772 , and $ 11,544 for the six months ended September 30, 2021.

Rent expense is recorded in

general and administrative expense in the unaudited condensed consolidated statements of operations.

PHARMACEUTICALS, INC.

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The table below shows

the future minimum rental payments, exclusive of taxes, insurance and other costs, under the 135 Ludlow Ave.

modified lease and the Pompano

Office Lease:

OF THE FUTURE MINIMUM RENTAL PAYMENTS

Years ending March 31,

Total future minimum lease payments

Present value of lease payments

The weighted-average remaining

lease term and the weighted-average discount rate of our lease was as follows:

OF WEIGHTED-AVERAGE REMAINING LEASE TERM AND THE WEIGHTED-AVERAGE DISCOUNT RATE

Lease Term and Discount Rate

June 30, 2021

Remaining lease term (years)

Operating leases

Discount rate

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 .

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 June 30,

2021, and March 31, 2021, the Company had a liability of $ 38,195 and $ 37,628 , respectively, recorded as a component of other long-term

table below shows the future minimum rental payments, exclusive of taxes, insurance and other costs, under the 135 Ludlow Ave.

lease and the Pompano Office Lease:

SCHEDULE OF THE FUTURE MINIMUM RENTAL PAYMENTS

ending March 31,

future minimum lease payments

value of lease payments

weighted-average remaining lease term and the weighted-average discount rate of our lease was as follows:

SCHEDULE OF WEIGHTED-AVERAGE REMAINING LEASE TERM AND THE WEIGHTED-AVERAGE DISCOUNT RATE

Term and Discount Rate

lease term (years)

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.

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

As of September 30, 2021, and March 31, 2021, the Company had a liability of $ 38,771 and $ 37,628 , respectively, 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, zero shares are issued and outstanding, with

a stated value of $ 1,000,000 per share and a par value of $ 0.01 as of June 30, 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 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 unaudited condensed consolidated

balance sheet as of June 30, 2021 (See Note 11).

J convertible preferred stock

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

issued and outstanding, with a stated value of $ 1,000,000 per share and a par value of $ 0.01 as of September 30, 2021.

April 27, 2017, a total of 24.0344 shares of Series J Preferred were issued pursuant to an exchange agreement (the “Exchange Agreement”)

with Hakim, a related party and the Company’s President, Chief Executive Officer and Chairman of the Board of Directors.

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

unaudited condensed consolidated balance sheet as of September 30, 2021 (See Note 11).

PHARMACEUTICALS, INC.

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

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.

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

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.

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.

DERIVATIVE FINANCIAL INSTRUMENTS –

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 below.

A summary of warrant activity

is as follows:

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.

DERIVATIVE FINANCIAL INSTRUMENTS – WARRANTS

Company evaluates and accounts for its freestanding instruments in accordance with ASC 815, Accounting for Derivative Instruments

and Hedging Activities .

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 below.

summary of warrant activity is as follows:

SCHEDULE OF WARRANT ACTIVITY

June 30, 2021

March 31, 2021

Warrant Shares

Weighted Average Exercise Price

Warrant Shares

Weighted Average Exercise Price

Balance at beginning of period

Warrants 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 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 Hakim, the “Securities”)

in exchange for 158,017,321 shares of Common Stock owned by Hakim.

The fair value of the Series J Warrants was determined to be $ 6,474,674

upon issuance at April 28, 2017.

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 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.

Average Exercise Price

at beginning of period

granted pursuant to the issuance of Series J convertible preferred shares

exercised, forfeited and/or expired, net

at end of period

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 Hakim, the “Securities”) in exchange for 158,017,321 shares of Common Stock owned by Hakim.

The fair value of the Series

J Warrants was determined to be $ 6,474,674 upon issuance at April 28, 2017.

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 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.

J Warrants also provide for other standard adjustments upon the happening of certain customary events.

PHARMACEUTICALS, INC.

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The fair value of the Series J

Warrants was calculated using a Black-Scholes model instead of a Monte Carlo 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 the Series

OF THE FAIR VALUE OF THE WARRANTS ISSUED

June 30, 2021

March 31, 2021

Fair value of the Company’s Common Stock

Initial exercise price

Warrant term (in years)

Risk free rate

The changes in warrants (Level

3 financial instruments) measured at fair value on a recurring basis for the three months ended June 30, 2021 were as follows:

OF CHANGES IN WARRANTS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Balance at March 31, 2021

Change in fair value of derivative financial instruments - warrants

Balance at June 30, 2021

fair value of the Series J Warrants was calculated using a Black-Scholes model instead of a Monte Carlo 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 the Series J Warrants:

SCHEDULE OF FAIR VALUE OF THE WARRANTS ISSUED

value of the Company’s Common Stock

Initial exercise

term (in years)

changes in warrants (Level 3 financial instruments) measured at fair value on a recurring basis for the six months ended September 30,

2021 were as follows:

SCHEDULE OF CHANGES IN WARRANTS MEASURED AT FAIR VALUE ON A RECURRING BASIS

at March 31, 2021

in fair value of derivative financial instruments - warrants

( 1,033,894 )

at September 30, 2021

SHAREHOLDERS’ EQUITY

Lincoln Park Capital – May 1, 2017 Purchase

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 Agreement expired

on July 1, 2020.

During the three months ended

June 30, 2020, there were no shares sold to Lincoln Park pursuant to the 2017 LPC Agreement.

In addition, there were no shares issued

to Lincoln Park as additional commitment shares, pursuant to the 2017 LPC Agreement.

Lincoln Park Capital Transaction - July 8, 2020

Purchase Agreement

On July 8, 2020, the Company entered

into a purchase agreement (the “2020 LPC Purchase Agreement”), and a registration rights agreement (the “2020 LPC 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, from time to time over the term of the

2020 LPC Purchase Agreement, at the Company’s direction.

During the three months ended

June 30, 2021, there were no shares sold to Lincoln Park pursuant to the 2020 LPC Purchase Agreement.

In addition, there were no shares

issued to Lincoln Park as additional commitment shares, pursuant to the 2020 LPC Purchase Agreement.

Park Capital Transaction - July 8, 2020 Purchase Agreement

July 8, 2020, the Company entered into a purchase agreement (the “2020 LPC Purchase Agreement”), and a registration rights

agreement (the “2020 LPC 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, from time to time over the term of the 2020 LPC Purchase Agreement, at the Company’s direction.

Company did not issue any shares of its Common Stock pursuant to the 2020 LPC Purchase Agreement during the six months ended September

In addition, there were no shares issued to Lincoln Park as additional commitment shares, pursuant to the 2020 LPC Agreement.

the six months ended September 30, 2020 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 shares.

The Company sold 640,543 shares of its Common Stock pursuant to the 2020 LPC Purchase Agreement

during the six months ended September 30, 2020 for net proceeds totaling $ 42,223 .

In addition, 10,094 shares were issued to Lincoln Park

as additional commitment shares, pursuant to the 2020 LPC Agreement.

STOCK-BASED COMPENSATION

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.

Director Compensation

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

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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-based Director Compensation

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 a quarterly basis and equal to the average closing price of the Company’s Common Stock.

During the three months ended

June 30, 2021, the Company issued 886,710 shares of Common Stock to its Directors in payment of director’s fees totaling an aggregate

of $ 60,000 and with such aggregate director’s fees being earned and accrued over the twelve month period beginning on April 1, 2020

and ending on March 31, 2021.

In addition, the Company made cash payments totaling an aggregate of $ 30,000 in payment of director’s

fees earned over the same twelve month period.

During the three months ended

June 30, 2021, the Company accrued director’s fees totaling $ 22,500 , which will be paid via cash payments totaling $ 7,500 and the

issuance of 268,963 shares of Common Stock.

As of June 30, 2021, the Company

owed its Directors a total of $ 7,500 in cash payments and 268,963 shares of Common Stock in payment of director fees totaling $ 22,500

due and owing.

The Company anticipates that these shares of Common Stock will be issued prior to the end of the current fiscal year.

Stock-based Employee/Consultant Compensation

Employment contracts with the

Company’s President and Chief Executive 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

the six months ended September 30, 2021, the Company issued 886,710 shares of Common Stock to its Directors in payment of director’s

fees totaling an aggregate of $ 60,000 and with such aggregate director’s fees being earned and accrued over the twelve month period

beginning on April 1, 2020 and ending on March 31, 2021.

In addition, the Company made cash payments totaling an aggregate of $ 30,000

in payment of director’s fees earned over the same twelve month period.

the six months ended September 30, 2021, the Company accrued director’s fees totaling $ 45,000 , which will be paid via cash payments

totaling $ 15,000 and the issuance of 562,975 shares of Common Stock.

of September 30, 2021, the Company owed its Directors a total of $15,000 in cash payments and 562,975 shares of Common Stock in payment

of director fees totaling $45,000 due and owing.

The Company anticipates that these shares of Common Stock will be issued prior to the

end of the current fiscal year.

Employee/Consultant Compensation

contracts with the Company’s President and Chief Executive 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 three months ended

June 30, 2021, the Company issued 1,218,526 shares of Common Stock in payment of salaries totaling $ 97,500 pursuant to the employment

contract of the Company’s former Chief Financial Officer, with such salaries being earned and accrued over the thirty-month

period beginning on October 1, 2018 and ending on March 31, 2021.

During the three months ended

June 30, 2021, the Company accrued salaries totaling $ 193,750 owed to the Company’s President and Chief Executive Officer and certain

other employees which will be paid via the issuance of 3,506,847 shares of Common Stock.

As of June 30, 2021, the Company

owed its President and Chief Executive Officer and certain other employees’ salaries totaling $ 3,156,250 , which will be

paid via the issuance of 38,373,435 shares of Common Stock.

the six months ended September 30, 2021, the Company issued 2,105,236 shares of Common Stock in payment of salaries totaling $ 157,500

pursuant to the employment contract of the Company’s former Chief Financial Officer, with such salaries being earned and accrued

over the thirty-month period beginning on October 1, 2018 and ending on March 31, 2021.

the six months ended September 30, 2021, the Company accrued salaries totaling $ 387,500

owed to the Company’s President and Chief

Executive Officer and certain other employees which will be paid via the issuance of 7,544,112

shares of Common Stock.

of September 30, 2021, the Company owed its President and Chief Executive Officer and certain other employees’ salaries totaling

$ 3,350,000 which will be paid via the issuance of 42,410,700 shares of Common Stock.

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 six months ended September 30, 2021 is as follows:

SCHEDULE OF STOCK OPTION PLAN

Underlying Options

Average Exercise Price

Average Remaining Contractual Term (in years)

Intrinsic Value

at March 31, 2021

at September 30, 2021

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 September 30, 2021 and March 31, 2021 of $ 0.09 and $ 0.07 , respectively.

PHARMACEUTICALS, INC.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 three months ended June 30, 2021 is

OF STOCK OPTION PLAN

Remaining Contractual

Term (in years)

Outstanding at March 31, 2021

Outstanding at June 30, 2021

Exercisable at June 30, 2021

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 June 30, 2021 and March 31, 2021 of $ 0.08 and $ 0.07 , respectively.

CONCENTRATIONS AND CREDIT RISK

Two customers accounted for approximately

92 % of the Company’s revenues for the three months ended June 30, 2021.

These two customers accounted for approximately 83 % and

9 % of revenues each, respectively.

Two customers accounted for approximately

92 % of the Company’s revenues for the three months ended June 30, 2020.

These two customers accounted for approximately 73 % and

19 % of revenues each, respectively.

Accounts Receivable

Two customers accounted for approximately

93 % of the Company’s accounts receivable as of June 30, 2021.

These two customers accounted for approximately 84 % and 9 % of accounts

receivable each, respectively.

Three customers accounted for

substantially all 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 suppliers accounted for more

than 64 % of the Company’s purchases of raw materials for the three months ended June 30, 2021.

These four suppliers accounted for

approximately 38 %, 14 %, 7 % and 5 % of purchases each, respectively.

Three suppliers accounted for

more than 81 % of the Company’s purchases of raw materials for the three months ended June 30, 2020.

These three suppliers accounted

for approximately 63 %, 14 %, and 4 % of purchases each, respectively.

customers accounted for approximately 95 % of the Company’s revenues for the six months ended September 30, 2021.

These two customers

accounted for approximately 85 % and 9 % of revenues each, respectively.

The same two customers accounted for 88 % and 9 % of revenues each,

respectively, for the three months ended September 30, 2021.

customers accounted for approximately 93 % of the Company’s revenues for the six months ended September 30, 2020.

These two customers

accounted for approximately 78 % and 15 % of revenues each, respectively.

The same two customers accounted for 83 % and 11 % of revenues

each, respectively, for the three months ended September 30, 2020.

customers accounted for approximately 99 % of the Company’s accounts receivable as of September 30, 2021.

These two customers accounted

for approximately 94 % and 5 % of accounts receivable each, respectively.

customers accounted for substantially all 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.

suppliers accounted for more than 74 % of the Company’s purchases of raw materials for the six months ended September 30, 2021.

These four suppliers accounted for approximately 61 %, 5 %, 5 % and 4 % of purchases each, respectively.

suppliers accounted for more than 83 % of the Company’s purchases of raw materials for the six months ended September 30, 2020.

These four suppliers accounted for approximately 63 %, 11 %, 5 % and 4 % of purchases each, respectively.

SEGMENT RESULTS

FASB ASC 280-10-50 requires use

of the “management approach” model for segment reporting.

The management approach is based on the way a company’s 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.

ASC 280-10-50 requires use of the “management approach” model for segment reporting.

The management approach is based on

the way a company’s 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.

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.

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

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

consolidated financial statements.

following represents selected information for the Company’s reportable segments:

SCHEDULE OF SELECTED INFORMATION FOR REPORTABLE SEGMENTS

the Three Months Ended September 30,

the Six Months Ended September 30,

Income by Segment

PHARMACEUTICALS, INC.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 unaudited condensed consolidated financial statements.

The following represents selected

information for the Company’s reportable segments:

OF SELECTED INFORMATION FOR REPORTABLE SEGMENTS

For the three Months Ended June 30,

Operating Income by Segment

The table below reconciles the

Company’s operating income by segment to income from operations before provision for income taxes as reported in the Company’s

unaudited condensed consolidated statements of operations.

OF OPERATING LOSS BY SEGMENT TO (LOSS) INCOME FROM OPERATIONS

For the Three Months Ended June 30,

Operating income by segment

Corporate unallocated costs

Interest income

Interest expense and amortization of debt issuance costs

Depreciation and amortization expense

Significant non-cash items

Change in fair value of derivative instruments

Income from operations before income taxes

RELATED PARTY AGREEMENTS WITH MIKAH PHARMA,

On December 3, 2018, the Company

executed a development agreement with Mikah, pursuant to which Mikah and the Company will collaborate to develop and commercialize

generic products including formulation development, analytical method development, bioequivalence studies and manufacture of development

batches of generic products.

As of March 31, 2021, the Company has incurred costs which are $ 238,451 in excess of advanced payments received

to date from Mikah.

This balance due from Mikah was offset, in full, against accrued interest due and owing to Mikah pursuant to the

Mikah Note (see Note 7).

In May 2020, SunGen Pharma LLC

(“SunGen”), pursuant to 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.

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, a related party and the Company’s

President, Chief Executive Officer and Chairman of the Board.

In June 2021, the Company entered

into a development and license agreement with Mikah Pharma LLC, pursuant to which Mikah Pharma LLC will engage in the research,

development, sales and licensing of generic pharmaceutical products.

In addition, Mikah Pharma LLC will collaborate to develop

and commercialize generic products including formulation development, analytical method development, manufacturing, sales and marketing

of generic products.

table below reconciles the Company’s operating income by segment to income from operations before provision for income taxes as

reported in the Company’s unaudited condensed consolidated statements of operations:

SCHEDULE OF OPERATING LOSS BY SEGMENT TO (LOSS) INCOME FROM OPERATIONS

the Three Months Ended September 30,

the Six Months Ended September 30,

income by segment

unallocated costs

( 1,570,128 )

expense and amortization of debt issuance costs

and amortization expense

non-cash items

in fair value of derivative instruments

from operations before income taxes

RELATED PARTY AGREEMENTS WITH MIKAH PHARMA, LLC

December 3, 2018, the Company executed a development agreement with Mikah, pursuant to which Mikah and the Company will collaborate to

develop and commercialize generic products including formulation development, analytical method development, bioequivalence studies and

manufacture of development batches of generic products.

As of March 31, 2021, the Company has incurred costs which are $ 238,451 in excess

of advanced payments received to date from Mikah.

This balance due from Mikah was offset, in full, against accrued interest due and owing

to Mikah pursuant to the Mikah Note (see Note 7).

May 2020, SunGen Pharma LLC (“SunGen”), pursuant to 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.

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, a related party

and the Company’s President, Chief Executive Officer and Chairman of the Board.

June 2021, the Company entered into a development and license agreement with Mikah Pharma LLC, pursuant to which Mikah Pharma LLC will

engage in the research, development, sales and licensing of generic pharmaceutical products.

In addition, Mikah Pharma LLC will collaborate

to develop and commercialize generic products including formulation development, analytical method development, manufacturing, sales

and marketing of generic products.

Initially two generic products were identified for the parties to develop.

2 unchanged sentences

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Sale of New Jersey Net Operating Loss

In April 2020, Elite Labs

received final approval from the New Jersey Economic Development Authority for the sale of net tax benefits of $ 607,635 relating

to New Jersey net operating losses and net tax benefits of $ 338,772 , relating to R&D tax credits.

The Company sold the net tax benefits

approved for sale for total proceeds of $ 946,407 , during the three months ended June 30, 2020.

Sale of New Jersey Net Operating Loss and Research

and Development Tax Credit

In April 2021, Elite Labs

received final approval from the New Jersey Economic Development Authority for the sale of net tax benefits of $ 796,860 relating

to New Jersey net operating losses and net tax benefits of $ 58,490 , relating to research and development tax credits.

of New Jersey Net Operating Loss

April 2020, Elite Labs received final approval from the New Jersey Economic Development Authority for the sale of net tax benefits of

$ 607,635 relating to New Jersey net operating losses and net tax benefits of $ 338,772 , relating to R&D tax credits.

The Company sold

the net tax benefits approved for sale at a transfer price equal to ninety three and one half cents for every benefit dollar and incurred

transaction fees of $ 12,861 , resulting in net proceeds to the Company of $ 855,350 , during the three months ended June 30, 2021.

the net tax benefits approved for sale for total proceeds of $ 946,407 during the six months ended September 30, 2020.

of New Jersey Net Operating Loss and Research and Development Tax Credit

April 2021, Elite Labs received final approval from the New Jersey Economic Development Authority for the sale of net tax benefits of

$ 796,860 relating to New Jersey net operating losses and net tax benefits of $ 58,490 , relating to research and development tax credits.

The Company sold the net tax benefits approved for sale at a transfer price equal to ninety three and one half cents for every benefit

dollar and incurred transaction fees of $ 12,861 , resulting in net proceeds to the Company of $ 857,379 , during the six months ended September

COVID-19 UPDATE

In December 2019, the Novel Corona

Virus, COVID-19 was reported to have emerged in Wuhan, China.

In March 2020, the World Health Organization (“WHO”) declared

the COVID-19 outbreak a global pandemic.

Governments at the national, state and local level in the United States, and globally, have implemented

aggressive actions to reduce the spread of the virus, with such actions including, without limitation, lockdown and shelter in place orders,

limitations on non-essential gatherings of people, suspension of all non-essential travel, and ordering certain businesses and governmental

agencies to cease non-essential operations at physical locations.

Under current and applicable laws and regulations, the Company’s

business is deemed essential and it has continued to operate in all aspects of its pharmaceutical manufacturing, distribution, product

development, regulatory compliance and other activities.

The Company’s management has developed and implemented a range of measures

to address the risks, uncertainties, and operational challenges associated with operating in a COVID-19 environment.

The Company is closely

monitoring the rapidly evolving and changing situation and are implementing plans intended to limit the impact of COVID-19 on our business

so that the Company can continue to manufacture those medicines used by end user patients.

Actions the Company has taken to date are,

without limitation, further described below.

The Company has taken and will

continue to take, proactive measures to provide for the well-being of its workforce while continuing to safely produce pharmaceutical

The Company has implemented alternative working practices, which include, without limitation, modified schedules, shift rotation

and work at home abilities for appropriate employees to best ensure adequate social distancing.

In addition, the Company increased its

already thorough cleaning protocols throughout its facilities and has prohibited visits from non-essential visitors.

Certain of these

measures have resulted in increased costs.

Manufacturing and Supply Chain

During the three months ended

June 30, 2021, and as of the date of this Quarterly Report on Form 10-Q, the Company has not experienced material, detrimental issues

related to COVID-19 in its manufacturing, supply chain, quality assurance and regulatory compliance activities, and has been able to operate

without interruption.

The Company has taken, and plans to continue to take, commercially practical measures to keep its facilities open.

The Company’s supply chains remain intact and operational, and the Company is in regular communications with its suppliers and third-party

A prolonging of the current situation relating to COVID-19 may result in an increased risk of interruption in the Company supply

chain in the future, with no assurances given as the materiality of such future interruption on the Company’s business, financial

condition, results of operations and cash flows.

December 2019, the Novel Corona Virus, COVID-19 was reported to have emerged in Wuhan, China.

In March 2020, the World Health Organization

(“WHO”) declared the COVID-19 outbreak a global pandemic.

Governments at the national, state and local level in the United

States, and globally, have implemented aggressive actions to reduce the spread of the virus, with such actions including, without limitation,

lockdown and shelter in place orders, limitations on non-essential gatherings of people, suspension of all non-essential travel, and

ordering certain businesses and governmental agencies to cease non-essential operations at physical locations.

Under current and applicable

laws and regulations, the Company’s business is deemed essential and it has continued to operate in all aspects of its pharmaceutical

manufacturing, distribution, product development, regulatory compliance and other activities.

The Company’s management has developed

and implemented a range of measures to address the risks, uncertainties, and operational challenges associated with operating in a COVID-19

The Company is closely monitoring the rapidly evolving and changing situation and are implementing plans intended to limit

the impact of COVID-19 on our business so that the Company can continue to manufacture those medicines used by end user patients.

the Company has taken to date are, without limitation, further described below.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company has taken and will continue to take, proactive measures to provide for the well-being of its workforce while continuing to safely

produce pharmaceutical products.

The Company has implemented alternative working practices, which include, without limitation, modified

schedules, shift rotation and work at home abilities for appropriate employees to best ensure adequate social distancing.

the Company increased its already thorough cleaning protocols throughout its facilities and has prohibited visits from non-essential

Certain of these measures have resulted in increased costs.

Manufacturing

and Supply Chain

the three months ended September 30, 2021, and as of the date of this Quarterly Report on Form 10-Q, the Company has not experienced

material, detrimental issues related to COVID-19 in its manufacturing, supply chain, quality assurance and regulatory compliance activities,

and has been able to operate without interruption.

The Company has taken, and plans to continue to take, commercially practical measures

to keep its facilities open.

The Company’s supply chains remain intact and operational, and the Company is in regular communications

with its suppliers and third-party partners.

A prolonging of the current situation relating to COVID-19 may result in an increased risk

of interruption in the Company supply chain in the future, with no assurances given as the materiality of such future interruption on

the Company’s business, financial condition, results of operations and cash flows.

SUBSEQUENT EVENTS

The Company has evaluated

subsequent events from the balance sheet date through November 15, 2021 and noted no material subsequent events.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements