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Item 2. Management’s Discussion and Analysis

2021-11-15 compared with 2021-08-16 · 228 added, 211 removed, 7 unchanged (98% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of

our financial condition and results of operations for the three months ended June 30, 2021 and 2020 should be read in conjunction with

our unaudited condensed consolidated financial statements and the notes to those statements that are included elsewhere in this report.

Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans,

objectives, expectations and intentions.

Actual results and the timing of events could differ materially from those anticipated in these

forward-looking statements as a result of a number of factors, including those set forth under Item 1A.

Risk Factors appearing in our

Annual Report on Form 10-K for the year ended March 31, 2021.

We use words such as “anticipate,” “estimate,” “plan,”

“project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,”

“may,” “will,” “should,” “could,” and similar expressions to identify forward-looking

Unless expressly indicated

or the context requires otherwise, the terms “Elite”, the “Company”, “we”, “us”, and “our”

refer to Elite Pharmaceuticals, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion of our financial condition and results of operations for the six months ended September 30, 2021 and 2020 should

be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those statements that are included

elsewhere in this report.

Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties,

such as our plans, objectives, expectations and intentions.

Actual results and the timing of events could differ materially from those

anticipated in these forward-looking statements as a result of a number of factors, including those set forth under Item 1A.

appearing in our Annual Report on Form 10-K for the year ended March 31, 2021.

We use words such as “anticipate,” “estimate,”

“plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,”

“intend,” “may,” “will,” “should,” “could,” and similar expressions to identify

forward-looking statements.

expressly indicated or the context requires otherwise, the terms “Elite”, the “Company”, “we”, “us”,

and “our” refer to Elite Pharmaceuticals, Inc.

and subsidiary.

Elite Pharmaceuticals, Inc., a

Nevada corporation (the “Company”, “Elite”, “Elite Pharmaceuticals”, the “registrant”,

“we”, “us” or “our”) 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.

We are a specialty pharmaceutical

company principally engaged in the development and manufacture of oral, controlled-release products, using proprietary know-how and technology

for the manufacture of generic pharmaceuticals.

Our strategy includes developing generic versions of controlled-release drug products

with high barriers to entry.

We occupy manufacturing, warehouse,

laboratory and office space at 165 Ludlow Avenue and 135 Ludlow Avenue in Northvale, NJ (the “Northvale Facility”).

The Northvale

Facility operates under Current Good Manufacturing Practice (“cGMP”) and is a United States Drug Enforcement Agency (“DEA”)

registered facility for research, development and manufacturing.

We focus our efforts on the following

(i) manufacturing of a line of generic pharmaceutical products with approved Abbreviated New Drug Applications (“ANDAs”);

Pharmaceuticals, Inc., a Nevada corporation (the “Company”, “Elite”, “Elite Pharmaceuticals”, the

“registrant”, “we”, “us” or “our”) 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.

are a specialty pharmaceutical company principally engaged in the development and manufacture of oral, controlled-release products, using

proprietary know-how and technology for the manufacture of generic pharmaceuticals.

Our strategy includes developing generic versions

of controlled-release drug products with high barriers to entry.

occupy manufacturing, warehouse, laboratory and office space at 165 Ludlow Avenue and 135 Ludlow Avenue in Northvale, NJ (the “Northvale

The Northvale Facility operates under Current Good Manufacturing Practice (“cGMP”) and is a United States

Drug Enforcement Agency (“DEA”) registered facility for research, development and manufacturing.

focus our efforts on the following areas:

(i) manufacturing of a line of generic pharmaceutical products with approved Abbreviated New

Drug Applications (“ANDAs”);

(ii) development of additional generic pharmaceutical products;

(iii) development of the other products in our pipeline including the

products with our partners;

(iv) commercial exploitation of our products either by license and the collection of royalties, or through

the manufacture of our formulations;

and (v) development of new products and the expansion of our licensing agreements with other pharmaceutical

companies, including co-development projects, joint ventures and other collaborations.

Our focus is on the development

of various types of drug products, including generic drug products which require ANDAs as well as branded drug products which require

New Drug Applications (“NDAs”) under Section 505(b)(1) or 505(b)(2) of the Drug Price Competition and Patent Term Restoration

Act of 1984 (the “Drug Price Competition Act”).

We believe that our business strategy

enables us to reduce its risk by having a diverse product portfolio that includes generic products in various therapeutic categories and

to build collaborations and establish licensing agreements with companies with greater resources thereby allowing us to share costs of

development and improve cash-flow.

Commercial Products

We own, license, contract manufacture

or have contractual rights to receive royalties from the following products currently approved for commercial sale:

Phentermine HCl 37.5mg tablets (“Phentermine 37.5mg”)

Phendimetrazine Tartrate 35mg tablets (“Phendimetrazine 35mg”)

November 2012

Phentermine HCl 15mg and 30mg capsules (“Phentermine 15mg” and “Phentermine 30mg”)

Naltrexone HCl 50mg tablets (“Naltrexone 50mg”)

Addiction Treatment

September 2013

Isradipine 2.5mg and 5mg capsules (“Isradipine 2.5mg” and “Isradipine 5mg”)

(iii) development of the other

products in our pipeline including the products with our partners;

(iv) commercial exploitation of our products either by license and

the collection of royalties, or through the manufacture of our formulations;

and (v) development of new products and the expansion of

our licensing agreements with other pharmaceutical companies, including co-development projects, joint ventures and other collaborations.

focus is on the development of various types of drug products, including generic drug products which require ANDAs as well as branded

drug products which require New Drug Applications (“NDAs”) under Section 505(b)(1) or 505(b)(2) of the Drug Price Competition

and Patent Term Restoration Act of 1984 (the “Drug Price Competition Act”).

believe that our business strategy enables us to reduce its risk by having a diverse product portfolio that includes generic products

in various therapeutic categories and to build collaborations and establish licensing agreements with companies with greater resources

thereby allowing us to share costs of development and improve cash-flow.

own, license, contract manufacture or have contractual rights to receive royalties from the following products currently approved for

commercial sale:

HCl 37.5mg tablets (“Phentermine 37.5mg”)

Phendimetrazine

Tartrate 35mg tablets (“Phendimetrazine 35mg”)

HCl 15mg and 30mg capsules (“Phentermine 15mg” and “Phentermine 30mg”)

HCl 50mg tablets (“Naltrexone 50mg”)

2.5mg and 5mg capsules (“Isradipine 2.5mg” and “Isradipine 5mg”)

Cardiovascular

Oxycodone HCl Immediate Release 5mg, 10mg, 15mg, 20mg and 30mg tablets (“OXY IR 5mg”, “Oxy IR 10mg”, “Oxy IR 15mg”, “OXY IR 20mg” and “Oxy IR 30mg”)

Trimipramine Maleate Immediate Release 25mg, 50mg and 100mg capsules (“Trimipramine 25mg”, “Trimipramine 50mg”, “Trimipramine 100mg”)

HCl Immediate Release 5mg, 10mg, 15mg, 20mg and 30mg tablets (“OXY IR 5mg”, “Oxy IR 10mg”, “Oxy IR

15mg”, “OXY IR 20mg” and “Oxy IR 30mg”)

Maleate Immediate Release 25mg, 50mg and 100mg capsules (“Trimipramine 25mg”, “Trimipramine 50mg”, “Trimipramine

Antidepressant

Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate Immediate Release 5mg, 7.5mg, 10mg, 12.5mg, 15mg, 20mg and 30mg tablets (“Amphetamine IR 5mg”, “Amphetamine IR 7.5mg”, “Amphetamine IR 10mg”, “Amphetamine IR 12.5mg”, “Amphetamine IR 15mg”, “Amphetamine IR 20mg” and “Amphetamine IR 30mg”)

Central Nervous System (“CNS”) Stimulant

Dantrolene Sodium Capsules 25mg, 50mg and 100mg (“Dantrolene 25mg”, “Dantrolene 50mg”, “Dantrolene 100mg”)

Muscle Relaxant

Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate Extended Release 5mg, 10mg, 15mg, 20mg, 25mg, and 30mg capsules (“Amphetamine ER 5mg”, “Amphetamine ER 10mg”, “Amphetamine ER 15mg”, “Amphetamine ER 20mg”, “Amphetamine ER 25mg”, and “Amphetamine ER 30mg”)

Central Nervous System (“CNS”) Stimulant

Loxapine Succinate 5mg, 10mg, 25mg and 50gm capsules (“Loxapine 5mg”, “Loxapine 10mg”, “Loxapine 25mg”, and Loxapine 50mg”)

Dextroamphetamine

Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate Immediate Release 5mg, 7.5mg, 10mg, 12.5mg, 15mg,

20mg and 30mg tablets (“Amphetamine IR 5mg”, “Amphetamine IR 7.5mg”, “Amphetamine IR 10mg”, “Amphetamine

IR 12.5mg”, “Amphetamine IR 15mg”, “Amphetamine IR 20mg” and “Amphetamine IR 30mg”)

Nervous System (“CNS”) Stimulant

Sodium Capsules 25mg, 50mg and 100mg (“Dantrolene 25mg”, “Dantrolene 50mg”, “Dantrolene 100mg”)

Dextroamphetamine

Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate Extended Release 5mg, 10mg, 15mg, 20mg, 25mg, and

30mg capsules (“Amphetamine ER 5mg”, “Amphetamine ER 10mg”, “Amphetamine ER 15mg”, “Amphetamine

ER 20mg”, “Amphetamine ER 25mg”, and “Amphetamine ER 30mg”)

Nervous System (“CNS”) Stimulant

Succinate 5mg, 10mg, 25mg and 50gm capsules (“Loxapine 5mg”, “Loxapine 10mg”, “Loxapine 25mg”,

and Loxapine 50mg”)

Antipsychotic

Approved Products Not Yet Commercialized

Acetaminophen and Codeine

The Company received approval

from the FDA of an ANDA for a generic version of Tylenol® with Codeine (acetaminophen and codeine phosphate).

Acetaminophen with codeine

is a combination medication indicated for the management of mild to moderate pain, where treatment with an opioid is appropriate and for

which alternative treatments are inadequate.

The Company is not pursuing licensing deals for any opioids at this time and, in light of

the current market and litigation around opioid products, the Company has no plans to commercialize this product at this time.

Critical Accounting Policies and Estimates

The preparation of the unaudited

condensed consolidated financial statements and related disclosures in conformity with GAAP, and our discussion and analysis of its financial

condition and operating results require our management to make judgments, assumptions and estimates that affect the amounts reported in

its unaudited condensed consolidated financial statements and accompanying notes.

Management bases its estimates on historical experience

and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making

judgments about the carrying values of assets and liabilities.

Actual results may differ from these estimates and such differences may

There were no significant changes

during the three months ended June 30, 2021 to the items that we disclosed as our significant accounting policies and estimates described

in “Note 1, Summary of Significant Accounting Policies” to the Company’s financial statements as contained in the Company’s

Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Results of Operations

The following set forth our results

of operations for the periods presented.

The period-to-period comparison of financial results is not necessarily indicative of future

Three months ended June

30, 2021 compared to June 30, 2020

Revenue, Cost of revenue and

Gross profit:

For the Three Months Ended

Manufacturing fees

Licensing fees

Total revenue

Cost of manufacturing

Gross profit - percentage

Total revenues for the

three-month period ended June 30, 2021 decreased by $0.5 million or 6%, to $7.1 million, as compared to $7.5 million, for the

corresponding period of the prior year, primarily due to timing of sales of Amphetamine IR Tablets and Amphetamine ER Capsules, somewhat

offset by an increase in licensing fees of many of our products during the three month period ended June 30, 2021 as compared to the

comparable period of the prior fiscal year.

Manufacturing fees

decreased by $0.9 million, or 13%, primarily due to lower revenue due to the timing of sales of Amphetamine IR Tablets and

Amphetamine ER Capsules during the three month period ended June 30, 2021 as compared to the comparable period of the prior fiscal

Licensing fees increased

by $0.4 million, or 45%.

This increase is primarily due to licensing fees earned from the sale of Amphetamine ER Capsules and Amphetamine

IR Tablets during the three months ended June 30, 2021 as compared to the comparable period of the prior fiscal year.

Costs of revenue consists

of manufacturing and assembly costs.

Our costs of revenue decreased by $1.1 million or 23%, to $3.5 million as compared to $4.6 million

for the corresponding period in the prior fiscal year.

This decrease was due in large part to a decrease in manufacturing revenues, and

also due to an improved margin on products sold during the three months ended June 30, 2021, as compared to the comparable period of

the prior fiscal year.

Our gross profit margin was

50% during the three months ended June 30, 2021 as compared to 39% during the comparable period of the prior fiscal year.

Products Not Yet Commercialized

Acetaminophen

and Codeine Phosphate

Company received approval from the FDA of an ANDA for a generic version of Tylenol® with Codeine (acetaminophen and codeine phosphate).

Acetaminophen with codeine is a combination medication indicated for the management of mild to moderate pain, where treatment with an

opioid is appropriate and for which alternative treatments are inadequate.

The Company is not pursuing licensing deals for any opioids

at this time and, in light of the current market and litigation around opioid products, the Company has no plans to commercialize this

product at this time.

Accounting Policies and Estimates

preparation of the unaudited condensed consolidated financial statements and related disclosures in conformity with GAAP, and our discussion

and analysis of its financial condition and operating results require our management to make judgments, assumptions and estimates that

affect the amounts reported in its unaudited condensed consolidated financial statements and accompanying notes.

Management bases its

estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results

of which form the basis for making judgments about the carrying values of assets and liabilities.

Actual results may differ from these

estimates and such differences may be material.

were no significant changes during the three months ended September 30, 2021 to the items that we disclosed as our significant accounting

policies and estimates described in “Note 1, Summary of Significant Accounting Policies” to the Company’s financial

statements as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

of Operations

following set forth our results of operations for the periods presented.

The period-to-period comparison of financial results is not

necessarily indicative of future results.

months ended September 30, 2021 compared to September 30, 2020

Cost of revenue and Gross profit:

the Three Months Ended September 30,

Manufacturing

of manufacturing

profit - percentage

revenues for the three-month period ended September 30, 2021 increased by $1.2 million or 16%, to $8.6 million, as compared to $7.4 million,

for the corresponding period of the prior year, primarily due to strong sales of Amphetamine IR and ER tablets during the three

month period ended September 30, 2021 as compared to the comparable period of the prior fiscal year.

Manufacturing

fees increased by $1.0 million, or 17%, primarily due to strong sales of Amphetamine IR and ER tablets during the three month

period ended September 30, 2021 as compared to the comparable period of the prior fiscal year.

fees increased by $0.1 million, or 9%.

This increase is primarily due to strong sales of Amphetamine IR and ER tablets during

the three months ended September 30, 2021 as compared to the comparable period of the prior fiscal year.

of revenue consists of manufacturing and assembly costs.

Our costs of revenue increased by $1.0 million or 27%, to $4.8 million

as compared to $3.8 million for the corresponding period in the prior fiscal year.

This increase was due to higher revenues during

the three months ended September 30, 2021, as compared to the comparable period of the prior fiscal year.

gross profit margin was 44% during the three months ended September 30, 2021 as compared to 49% during the comparable period of the prior

the Three Months Ended September 30,

and development

and administrative

and amortization

operating expenses

For the Three Months Ended June 30,

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

Operating expenses for the three months ended September 30, 2021 increased by $0.1 million, or 3%, to $2.3 million

as compared to $2.3 million for the corresponding period in the prior fiscal year.

and development costs for the three months ended September 30, 2021 were $1.1 million, which was virtually unchanged from $1.1

million of such costs for the comparable period of the prior year.

and administrative expenses for the three months ended September 30, 2021 were $0.9 million, which was virtually unchanged from $0.8

million of such costs for the comparable period of the prior year.

compensation expense for the three months ended September 30, 2021 and 2020 was less than $0.1 million.

and amortization expenses for the three months ended September 30, 2021 were $0.3 million, which remained consistent from $0.3 million

of such costs for the comparable period of the prior fiscal year.

a result of the foregoing, our income from operations for the three months ended September 30, 2021 was $1.4 million, compared to income

from operations of $1.3 million for the comparable period of the prior fiscal year.

the Three Months Ended September 30,

in fair value of derivative instruments

expense and amortization of debt issuance costs

on sale of fixed assets

income, net for the three months ended September 30, 2021 was $0.4 million, a decrease of $0.8 million from the other income, net of

$1.1 million for the comparable period of the prior fiscal year.

The decrease in other income was due to income relating to changes in

the fair value of our outstanding derivative warrants during the three months ended September 30, 2021.

Please note that the change in

the fair value of derivative instruments is determined in large part by the change in the closing price of the Company’s Common

Stock as of the end of the period, as compared to the closing price at the beginning of the period, with a strong inverse relationship

between the fair value of our derivatives instruments and decreases in the closing price of the Company’s Common Stock.

see Note 11 to the Unaudited Condensed Consolidated Financial Statements above.

a result of the foregoing, our net income before the net benefit from sale of net operating loss credits for the three months ended September

30, 2021 was $1.8 million, compared to net income of $2.5 million for the comparable period of the prior fiscal year.

months ended September 30, 2021 compared to September 30, 2020 2021

Cost of revenue and Gross profit:

the Six Months Ended September 30,

Manufacturing

of manufacturing

profit - percentage

revenues for the six-month period ended September 30, 2021 increased by $0.7 million or 5%, to $15.6 million, as compared to $14.9 million,

for the corresponding period of the prior year, primarily due strong sales of Amphetamine IR and ER tablets during the six month

period ended September 30, 2021 as compared to the comparable period of the prior fiscal year.

Manufacturing

fees for the six month period ended September 30, 2021 were $13.0 million, which was virtually unchanged from $12.8 million of such fees

for the comparable period of the prior year.

fees increased by $0.5 million, or 24%.

This increase is primarily due to strong sales of Amphetamine IR and ER tablets during

the six months ended September 30, 2021 as compared to the comparable period of the prior fiscal year.

of revenue consists of manufacturing and assembly costs.

Our costs of revenue for the six month period ended September 30, 2021 were

$8.3 million which was virtually unchanged from $8.3 million of such fees for the comparable period of the prior year.

gross profit margin was 47% during the six months ended September 30, 2021 as compared to 44% during the comparable period of the prior

the Six Months Ended September 30,

and development

and administrative

and amortization

operating expenses

Research and development

General and administrative

Non-cash compensation

Depreciation and amortization

Total operating expenses

Operating expenses consist of

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

expenses for the three months ended June 30, 2021 increased by $0.5 million, or 21%, to $2.6 million as compared to $2.1 million

for the corresponding period in the prior fiscal year.

Research and development

costs for the three months ended June 30, 2021 were $1.2 million, an increase of $0.3 million, or 27%, from approximately $0.9 million

of such costs for the comparable period of the prior year.

The increase was a result of the timing and nature of product development

activities during the three month period ended June 30, 2021 as compared to the comparable period of the prior fiscal year.

General and administrative

expenses for the three months ended June 30, 2021 were $1.1 million, an increase of $0.2 million, or 23% from $0.9 million of such costs

for the comparable period of the prior year due to increased costs and headcounts relating to regulatory compliance and laboratory activities.

Non-cash compensation expense

for the three months ended June 30, 2021 and 2020 was less than $0.1 million.

Depreciation and amortization

expenses for the three months ended June 30, 2021 were $0.3 million, which was virtually unchanged from $0.3 million in such costs for

the comparable period of the prior fiscal year.

As a result of the foregoing,

our income from operations for the three months ended June 30, 2021 was $1.0 million, compared to income from operations of $0.8 million

for the comparable period of the prior fiscal year.

Other income (expense):

For the Three Months Ended June 30,

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

Other income, net for the three

months ended June 30, 2021 was $0.6 million, an increase of $1.3 million from the other expense, net of $0.7 million for the comparable

period of the prior fiscal year.

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

outstanding derivative warrants during the three months ended June 30, 2021.

Please note that the change in the fair value of derivative

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

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

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

Please see Note 11 to the Unaudited Condensed

Consolidated Financial Statements above.

As a result of the foregoing,

our net income before the net benefit from sale of net operating loss credits for the three months ended June 30, 2021 was $1.5 million,

compared to net income $0.1 million for the comparable period of the prior fiscal year.

Liquidity and Capital Resources

Capital Resources

June 30, 2021

March 31, 2021

Current assets

Current liabilities

Working capital

Our working capital (total current

assets less total current liabilities) increased by $2.1 million from $6.4 million as of March 31, 2021 to $8.5 million as of June 30,

2021, with such increase being primarily related to the net income of $2.4 million and a net positive cash flow of $1.6 million achieved

during the three months ended June 30, 2021.

Summary of Cash Flows:

For the Three Months Ended June 30,

Net cash provided by operating activities

Net cash (used in) provided by investing activities

Net cash provided by financing activities

Net cash provided by operating

activities for the three months ended June 30, 2021 was $1.7 million, which included net income of $2.4 million and increases in non-cash

expenses totaling $0.02 million, offset by net increases in assets and decreases in liabilities totaling $0.7 million.

Net cash used in investing activities

for the three months ended June 30, 2021 was comprised of purchases of property and equipment of less than $0.01 million.

Net cash used in financing activities

was $0.2 million for the three months ended June 30, 2021 which consisted primarily of loan payments.

Lincoln Park Capital –

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, 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 and 2020, respectively, there were no shares sold to Lincoln Park pursuant to the 2020 LPC Purchase Agreement.

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

As a smaller reporting company,

we are not required to provide the information required by this Item.

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

Operating expenses for the six months ended September 30, 2021 increased by $0.5 million, or 12%, to $5.0 million as compared

to $4.4 million for the corresponding period in the prior fiscal year.

and development costs for the six months ended September 30, 2021 were $2.4 million, an increase of $0.3 million, or 13%, from approximately

$2.1 million of such costs for the comparable period of the prior year.

The increase was due to higher product development activities

during the six month period ended September 30, 2021 as compared to the comparable period of the prior fiscal year.

and administrative expenses for the six months ended September 30, 2021 were $2.0 million, an increase of $0.3 million, or 20% from $1.7

million of such costs for the comparable period of the prior year due to increased costs and headcounts relating to regulatory compliance

and laboratory activities.

compensation expense for the six months ended September 30, 2021 and 2020 was less than $0.1 million.

and amortization expenses for the six months ended September 30, 2021 were $0.6 million, which was virtually unchanged from $0.7 million

in such costs for the comparable period of the prior fiscal year.

a result of the foregoing, our income from operations for the six months ended September 30, 2021 was $2.4 million, compared to income

from operations of $2.2 million for the comparable period of the prior fiscal year.

the Six Months Ended September 30,

in fair value of derivative instruments

expense and amortization of debt issuance costs

on sale of fixed assets

income, net for the six months ended September 30, 2021 was $0.9 million, an increase of $0.5 million from the other income, net of $0.4

million for the comparable period of the prior fiscal year.

The increase in other income was due to income relating to changes in the

fair value of our outstanding derivative warrants during the six month period ended September 30, 2021.

Please note that the change in

the fair value of derivative instruments is determined in large part by the change in the closing price of the Company’s Common

Stock as of the end of the period, as compared to the closing price at the beginning of the period, with a strong inverse relationship

between the fair value of our derivatives instruments and decreases in the closing price of the Company’s Common Stock.

see Note 11 to the Unaudited Condensed Consolidated Financial Statements above.

a result of the foregoing, our net income before the net benefit from sale of net operating loss credits for the six months ended September

30, 2021 was $3.3 million, compared to net income $2.6 million for the comparable period of the prior fiscal year.

and Capital Resources

working capital (total current assets less total current liabilities) increased by $3.2 million from $6.4 million as of March 31, 2021

to $9.6 million as of September 30, 2021, with such increase being primarily related to the net income of $4.2 million and a net positive

cash flow of $1.3 million achieved during the six months ended September 30, 2021.

of Cash Flows:

the Six Months Ended September 30,

cash provided by operating activities

cash used in investing activities

cash (used in) provided by financing activities

cash provided by operating activities for the six months ended September 30, 2021 was $1.9 million, which included net income

of $4.2 million and increases in non-cash expenses totaling $0.1 million, offset by net increases in assets and decreases in liabilities

totaling $2.4 million.

cash used in investing activities for the six months ended September 30, 2021 was comprised of purchases of property and equipment of

$0.2 million.

cash used in financing activities was $0.4 million for the six months ended September 30, 2021 which consisted of loan

Park Capital – 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, 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 for net proceeds totaling $732.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

a smaller reporting company, we are not required to provide the information required by this Item.

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 2. Management’s Discussion and Analysis