What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-06-29 compared with 2021-06-14 · 72 added, 607 removed, 26 unchanged (96% of the section changed)

MARKET FOR COMPANY’S

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

Market Information

Our Common Stock is quoted

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

The following table shows, for the periods indicated,

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

Over-the-counter market quotations reflect inter-dealer

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

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

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

The following table shows,

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

Over-the-counter market

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

Quarter Ended

9 unchanged sentences

June 30, 2020

As of June 7, 2021, the last reported

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

As of June 7, 2021, there

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

We have never paid cash dividends

on our Common Stock.

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

Recent Sales of Unregistered Securities

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets

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

of June 23, 2022, the last reported sale price of our Common Stock, as reported by the OTCBB, was $0.05.

of June 23, 2022, there were, respectively, approximately 115 holders of record of our Common Stock.

have never paid cash dividends on our Common Stock.

We currently anticipate that we will retain all available funds for use in the operation

and expansion of our business.

Sales of Unregistered Securities

Authorized for Issuance under Equity Compensation Plans

following table sets forth certain information regarding Elite’s equity compensation plans as of March 31, 2022:

Plan Category

securities to be

price per share

of outstanding

Number of securities to be issued upon

exercise of outstanding

options, warrants,

Weighted-average

exercise price per share

of outstanding options,

warrants, and rights

Number of securities

5 unchanged sentences

Equity compensation plans approved by security holders (1)

(1) Represents

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

Equity Incentive Plan

Our 2014 Equity Incentive

Plan (the “

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

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

for participation.

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

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

of Company operations.

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

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

Administrator ”).

Awards under the

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

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

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

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

2014 Equity Incentive Plan (the “2014 Plan”) was adopted by the Board on March 17, 2014, to attract, motivate and retain

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

who are selected for participation.

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

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

future success of Company operations.

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

the 2014 Plan.

The 2014 Plan is administered and interpreted by our Compensation Committee (the “Administrator”).

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

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

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

(ii) non-qualified stock options

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

(iv) shares of restricted stock;

of restricted stock;

(v) shares of unrestricted stock;

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

Options may not be granted

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

options cannot exceed ten years.

may not be granted under the 2014 Plan at an exercise price of less than the fair market value of the common stock on the date of grant

and the term of options cannot exceed ten years.

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

The exercise price of an ISO granted

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

and the term of these options cannot exceed five years.

The Administrator also may

grant stock appreciation rights.

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

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

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

in the award agreement.

Under the performance award

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

Achievement of

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

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

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

the target goals applicable to such award.

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

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

cycle by reason of death, disability, or retirement.

Under the stock component

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

or unrestricted stock.

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

schedule and employment requirements as the Administrator shall determine.

Prior to the lifting of the restrictions, the participant

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

The exercise price

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

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

Administrator also may grant stock appreciation rights.

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

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

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

exercise price specified in the award agreement.

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

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

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

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

performance of the target goals applicable to such award.

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

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

performance cycle by reason of death, disability, or retirement.

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

of restricted stock or unrestricted stock.

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

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

Prior to the lifting of the restrictions,

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

restricted stock.

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

The 2014 Plan also permits

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

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

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

The exercise price of awards

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

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

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

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

as may be determined by the Administrator.

Issuer Purchases of Equity Securities

SELECTED FINANCIAL

Not Applicable.

ITEM 7 MANAGEMENT’S

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Management’s Discussion

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

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

other factors that may affect our future results.

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

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

Annual Report.

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

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

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

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

Results of Operations:

Years Ended March 31, 2021 and 2020

Revenue, Cost of revenue and Gross profit:

For the Years Ended

Manufacturing fees

Licensing fees

Total revenue

Cost of manufacturing

Gross profit - percentage

Total revenues for the year

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

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

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

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

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

Manufacturing fees increased

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

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

Licensing fees increased by

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

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

as compared to the prior year.

Costs of revenue consists

of manufacturing and assembly costs.

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

for the prior fiscal year.

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

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

of revenue to manufacturing revenues.

Our gross profit margin was

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

Operating expenses:

For the Years Ended

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

Research and development

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

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

as compared to the prior year.

General and administrative

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

for the prior year.

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

Non-cash compensation expense

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

Depreciation and amortization

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

As a result of the foregoing,

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

Other income (expense):

For the Years Ended

Other income (expense):

Change in fair value of derivative instruments

$ (1,111,548 )

Interest expense and amortization of debt issuance costs

Gain on sale of fixed assets

Gain on transfer/discontinuance of intangible assets

Interest income

PPP Loan Forgiveness

Other income, net

Other income, net for the

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

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

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

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

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

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

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

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

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

As a result of the foregoing,

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

for the prior year.

Liquidity and Capital Resources

Capital Resources

Current assets

Current liabilities

Working capital

The Company considers cash

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

As of March 31, 2021, the

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

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

are sufficient to fund operations through the current operating cycle.

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

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

The Company’s other

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

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

Our working capital (total

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

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

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

Summary of Cash Flows:

For the Years Ended

Net cash provided by (used in) operating activities

$ (1,793,821 )

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net cash provided by operating

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

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

Net cash used in investing

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

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

Net cash used in financing

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

loan offset by loan payments.

Lincoln Park Capital

July 8, 2020 Purchase Agreement

On July 8, 2020, Elite Pharmaceuticals,

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

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

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

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

During the year ended March

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

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

2021 for net proceeds totaling $42,223.

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

to the 2020 LPC Agreement.

On August 31, 2005, the Company

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

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

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

The net proceeds, after payment of

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

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

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

Interest is payable semi-annually

on March 1 and September 1 of each year.

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

with the proceeds of the original and refinanced Bonds.

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

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

Bond issue costs of $354,454

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

Amortization of bond issuance costs amounted to

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

The NJEDA Bonds require the

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

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

period just ended.

As of the date of filing

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

The Series B Notes were retired, at par in

Off-Balance Sheet Arrangements

We have not entered into

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

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

would be considered material to investors.

Effects of Inflation

We are subject to price risks

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

Management does not believe that inflation risk is

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

Critical Accounting Policies and Estimates

Our significant accounting

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

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

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

Segment Information

Financial Accounting Standards

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

for reporting information about operating segments.

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

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

how to allocate resources and in assessing performance.

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

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

GAAP when making

decisions about allocating resources and assessing performance of the Company.

The Company has determined

that its reportable segments are products whose marketing approvals were secured via an Abbreviated New Drug Applications (“ANDA”)

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

ANDA products are referred to as

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

There are currently no intersegment

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

information by segment.

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

consolidated financial statements.

Please see note 15 for further details.

Revenue Recognition

The Company generates revenue

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

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

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

and other collaborations.

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

including branded drug products which require NDAs.

Under ASC 606, Revenue from

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

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

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

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

(ii) identify

the performance obligation(s) in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance

obligation(s) in the contract;

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

The Company only

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

for the goods or services it transfers to the customer.

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

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

and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the transaction

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

Sales, value add,

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

Nature of goods and services

The following is a description

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

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

a) Manufacturing Fees

The Company is equipped to

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

These products

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

The Company also develops

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

The Company recognizes revenue

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

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

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

in-transit to the commercial partner.

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

transferring products to a customer.

b) License Fees

The Company enters into licensing

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

product sales and services.

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

to determine appropriate revenue recognition.

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

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

If the contract contains

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

Contracts that contain

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

of the promised products or services underlying each performance obligation.

The Company determines standalone selling prices based on

the price at which the performance obligation is sold separately.

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

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

approved pricing guidelines related to the performance obligations.

The Company recognizes revenue

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

to the customer.

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

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

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

As such, the Company

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

Given the inherent uncertainty of

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

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

Significant management judgment

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

its performance obligations under the arrangement.

If the Company cannot reasonably estimate when its performance obligations either

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

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

When determining the transaction

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

resulting in a significant financing component.

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

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

the customer pays is one year or less.

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

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

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

Collaborative Arrangements

Contracts are considered

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

The parties to the contract must actively participate in the joint

operating activity;

The joint operating activity must expose the parties to the possibility

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

The Company considers all

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

Cash and cash equivalents consist

of cash on deposit with banks and money market instruments.

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

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

Accounts Receivable

Accounts receivable are comprised

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

In determining collectability, historical

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

Inventory is recorded at

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

Long-Lived Assets

The Company periodically

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

indicate that its carrying amounts may not be recoverable.

Property and equipment are

stated at cost.

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

range from three to forty years.

Major repairs or improvements are capitalized.

Minor replacements and maintenance and repairs which

do not improve or extend asset lives are expensed currently.

Upon retirement or other

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

any, is recognized in income.

Intangible Assets

The Company capitalizes certain

costs to acquire intangible assets;

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

basis over the estimated useful life.

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

The Company tests its intangible

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

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

Such indicators may

include, among others and without limitation:

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

a sustained, significant

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

a significant adverse change in legal factors or in the business

climate of the Company’s segments;

unanticipated competition;

and slower growth rates.

Research and Development

Research and development expenditures

are charged to expense as incurred.

Lease agreements are evaluated

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

(a) transfer of ownership;

(b) bargain purchase

or (d) the present value

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

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

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

lessor and expected to be realized by the lessor.

If at its inception a lease

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

and if none of the four criteria

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

Contingencies

Occasionally, the Company

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

The Company records a provision for

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

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

financial statements.

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

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

Income taxes are accounted

for under the asset and liability method.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences

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

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

are expected to be recovered or settled.

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

that it determines will not be realizable in the future.

The Company recognizes the

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

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

These tax benefits

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

The Company operates in multiple

tax jurisdictions within the United States of America.

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

statutes of limitation expire.

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

United States –

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

The Company did not have any unrecognized tax positions

for the years ended March 31, 2021 and 2020.

Warrants and Preferred Shares

The accounting treatment

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

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

Each feature of a freestanding financial instruments

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

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

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

Stock-Based Compensation

The Company accounts for

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

Under the fair value recognition provisions

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

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

The cost of the stock-based

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

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

In accordance with the Company’s

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

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

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

Earnings (Loss) Per Share Applicable to

Common Shareholders’

The Company follows ASC 260,

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

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

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

In the accompanying financial statements,

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

during the period.

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

Fair Value of Financial Instruments

ASC Topic 820, Fair Value

Measurements and Disclosures (“

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

generally accepted accounting principles.

ASC Topic 820 defines fair

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

at the measurement date.

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

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

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

The fair value hierarchy

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

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

The three levels of the fair value hierarchy under ASC

Topic 820 are described as follows:

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

at the measurement date.

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

for the asset or liability, either directly or indirectly.

Level 2 inputs include quoted prices for similar assets or liabilities

in active markets;

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

inputs other than

quoted prices that are observable for the asset or liability;

and inputs that are derived principally from or corroborated by observable

market data by correlation or other means.

Inputs that are unobservable for the asset or liability.

The carrying amounts of the

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

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

Based upon current borrowing

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

Non-Financial Assets that

are Measured at Fair Value on a Non-Recurring Basis

Non-financial assets such

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

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 (deficit).

Recently Adopted Accounting Standards

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

Disclosure Framework-Changes to the Disclosure Requirements

for Fair Value Measurement .

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

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

adoption is permitted.

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

The Company is not materially impacted by the implementation

of this pronouncement.

In November 2018, the FASB

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

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

The ASU also provides some guidance on presentation

of transactions not in the scope of ASC 606.

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

after December 15, 2019.

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

The Company adopted the

guidance as of April 1, 2020.

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

In March 2020, the FASB issued

ASU 2020-03, Codification Improvements to Financial Instruments .

The ASU clarifies disclosure guidance for fair value options,

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

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

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

In accordance with ASU 2020-03, the Company

adopted the guidance as of April 1, 2020.

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

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued

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

Measurement of Credit Losses on Financial Instruments.

This update requires

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

Under the prior model,

losses were recognized only as they were incurred.

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

at fair value through net income.

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

as smaller reporting companies.

Early adoption is permitted.

The Company 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.

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

Not Applicable.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Attached hereto and filed

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

CHANGES IN AND DISAGREEMENTS WITH

ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

2014 Plan also permits the board of directors (and not the Compensation Committee) to grant awards of NSOs, restricted stock or unrestricted

stock to non-employee directors.

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

non-employee directors.

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

date of grant.

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

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

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

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

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

Purchases of Equity Securities

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity