What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 177 added, 90 removed, 116 unchanged (70% of the section changed)

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

following discussion of our financial condition and results of operations for the three months ended June 30, 2022 and June 30, 2021

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, 2022.

words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,”

“ongoing,” “expect,” “believe,” “intend,” “may,” “will,”

“should,” “could,” and similar expressions to identify forward-looking statements.

following discussion of our financial condition and results of operations for the six months ended September 30, 2022 and 2021 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, 2022.

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”,

12 unchanged sentences

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.

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 are also party to an operating lease for office space in Pompano Beach, Florida (the “Pompano Office

focus our efforts on the following areas:

14 unchanged sentences

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

of Termination of License, Supply and Distribution Agreement

September 14, 2022, the Company has provided written notice pursuant to Section 8.2 of the License, Supply and Distribution Agreement

between the Company and Elite Laboratories, Inc.

and Epic Pharma, Inc.

dated November 21, 2020 (“the Epic Agreement”) that

the Company and Elite Laboratories, Inc.

are now providing notice of termination of the Epic Agreement, with such termination to be effective

March 31, 2023.

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

42 unchanged sentences

for solution packet.

Vigabatrin is an antiepileptic drug indicated for refractory complex

partial seizures and used as an adjunctive therapy in patients who have inadequately responded to several alternative treatments.

are evaluating potential commercial opportunities.

Vigabatrin is an antiepileptic drug indicated for refractory complex partial

seizures and used as an adjunctive therapy in patients who have inadequately responded to several alternative treatments.

We are evaluating

potential commercial opportunities.

Company received approval on April 4, 2022 from the FDA of an ANDA for a generic version of Doxycycline (doxycycline hyclate) 100mg tablets.

1 unchanged sentence

a wide variety of bacterial infections .

This product was co-developed and co-owned by

Elite and Praxgen Pharmaceuticals LLC, formerly

SunGen Pharma LLC.

We are evaluating potential commercial opportunities.

This product was co-developed and co-owned by Elite

and Praxgen Pharmaceuticals LLC, formerly SunGen Pharma LLC.

We are evaluating potential commercial

opportunities.

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 the Company’s financial condition and operating results require our management to make judgments, assumptions and estimates that

affect the amounts reported in the Company’s 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 June 30, 2022 to the items that we disclosed as our significant accounting

and analysis of the Company’s financial condition and operating results require our management to make judgments, assumptions and

estimates that affect the amounts reported in the Company’s unaudited condensed consolidated financial statements and accompanying

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 six months ended September 30, 2022 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

4 unchanged sentences

necessarily indicative of future results.

months ended June 30, 2022 compared to June 30, 2021

months ended September 30 2022 compared to September 30, 2021

Cost of revenue and Gross profit:

the Three Months Ended June 30,

For the Three Months Ended

September 30,

Manufacturing fees

Licensing fees

Total revenue

Cost of manufacturing

Gross profit - percentage

revenues for the three-month period ended September 30, 2022 increased by $0.03 million or 0.3%, to $8.59 million, as compared to $8.56

million, for the corresponding period of the prior year, primarily due to the increased sales of Amphetamine IR Tablets and Amphetamine

ER Capsules during the three month period ended September 30, 2022 as compared to the comparable period of the prior fiscal year.

Manufacturing

of manufacturing

profit - percentage

revenues for the three-month period ended June 30, 2022 increased by $0.6 million or 9%, to $7.7 million, as compared to $7.1 million,

fees decreased by $0.03 million, or 0.5%, primarily due to decreased sales of Amphetamine IR Tablets and Amphetamine ER Capsules during

the three month period ended September 30, 2022 as compared to the comparable period of the prior fiscal year.

fees increased by $0.06 million, or 5%.

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 September 30, 2022 as compared to the comparable period of the prior fiscal

of revenue consists of manufacturing and assembly costs.

Our costs of revenue decreased by $0.03 million or 0.6%, to $4.76 million as

compared to $4.79 million for the corresponding period in the prior fiscal year.

This decrease was due in large part to an improved margin

on products sold during the three months ended September 30, 2022, as compared to the comparable period of the prior fiscal year.

gross profit margin was 45% during the three months ended September 30, 2022 as compared to 44% during the comparable period of the prior

For the Three Months Ended

September 30,

Operating expenses:

Research and development

General and administrative

Non-cash compensation

Depreciation and amortization

Total operating expenses

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

Operating expenses from the three months ended September 30, 2022 increased by $0.4 million, or 17%, to $2.7 million as compared

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

and development costs during the three months ended September 30, 2022 were $1.2 million, an increase of $0.1 million, or 10%, from approximately

$1.1 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 months ended September 30, 2022 as compared to the comparable period of the prior fiscal

and administrative expenses during the three months ended September 30, 2022 were $1.2 million, an increase of $0.3 million, or 29% from

$0.9 million of such costs for the comparable period of the prior year due to increased spending in payroll and professional expense.

compensation expense during the three months ended September 30, 2022 and September 30, 2021 was less than $0.1 million.

and amortization expenses during the three months ended September 30, 2022 were $0.3 million, which was virtually unchanged from $0.3

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

a result of the foregoing, our income from operations during the three months ended September 30, 2022 was $1.1 million, compared to

income from operations of $1.4 million for the comparable period of the prior fiscal year.

income (expense):

For the Three Months Ended

September 30,

Other income (expense):

Change in fair value of derivative instruments

Interest expense and amortization of debt issuance costs

Interest income

Other (expense) income, net

income (expense) for the three months ended September 30, 2022 was $0.4 million, an increase of $0.1 million from the other income (expense) of $0.4 million for the comparable period of the prior fiscal year.

The increase was due to expenses relating to changes in the

fair value of our outstanding derivative warrants during the three months ended September 30, 2022.

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

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

increase in interest expense was primarily attributable to the increased interest payments related to the loan and mortgage the

Company obtained from East West Bank.

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, 2022 was $1.5 million, compared to net income $1.8 million for the comparable period of the prior fiscal year.

months ended September 30, 2022 compared to September 30, 2021

Cost of revenue and Gross profit:

For the Six Months Ended

September 30,

Manufacturing fees

Licensing fees

Total revenue

Cost of manufacturing

revenues for the six months period ended September 30, 2022 increased by $0.6 million or 4%, to $16.3 million, as compared to $15.6 million,

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

during the three month period ended June 30, 2022 as compared to the comparable period of the prior fiscal year.

during the six months ended September 30, 2022 as compared to the comparable period of the prior fiscal year.

Manufacturing

fees increased by $0.5 million, or 4%, primarily due to increased sales of Amphetamine IR Tablets and Amphetamine ER Capsules during

the three month period ended June 30, 2022 as compared to the comparable period of the prior fiscal year.

fees increased by less than $0.1 million, or 3%.

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, 2022 as compared to the comparable period of the prior

the six months ended September 30, 2022 as compared to the comparable period of the prior fiscal year.

fees increased by $0.1 million, or 4%.

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

and Amphetamine IR Tablets during the six months ended September 30, 2022 as compared to the comparable period of the prior fiscal year.

of revenue consists of manufacturing and assembly costs.

2 unchanged sentences

This increase was due in large part to an increase in manufacturing

revenues, and also due to an improved margin on products sold during the three months ended June 30, 2022, as compared to the comparable

revenues, and also due to an improved margin on products sold during the six months ended September 30, 2022, as compared to the comparable

period of the prior fiscal year.

gross profit margin was 52% during the three months ended June 30, 2022 as compared to 50% during the comparable period of the prior

the Three Months Ended June 30,

and development

and administrative

and amortization

gross profit margin was 48% during the six months ended September 30, 2022 as compared to 47% during the comparable period of the prior

For the Six Months Ended

September 30,

Operating expenses:

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

amortization expenses.

Operating expenses for the three months ended June 30, 2022 increased by $0.4 million, or 15%, to $3.0

million as compared to $2.6 million for the corresponding period in the prior fiscal year.

and development costs for the three months ended June 30, 2022 were $1.0 million, a decrease of $0.2 million, or 21%, from approximately

Research and development

General and administrative

Non-cash compensation

Depreciation and amortization

Total operating expenses

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

Operating expenses for the six months ended September 30, 2022 increased by $0.7 million, or 15%, to $5.7 million as compared

to $5.0 million for the corresponding period in the prior fiscal year.

and development costs during the six months ended September 30, 2022 were $2.2 million, a decrease of $0.2 million, or 7%, from approximately

$2.4 million of such costs for the comparable period of the prior year.

The decrease was a result of the timing and nature of product

development activities during the three month period ended June 30, 2022 as compared to the comparable period of the prior fiscal year.

and administrative expenses for the three months ended June 30, 2022 were $1.7 million, an increase of $0.6 million, or 60% from $1.1

million of such costs for the comparable period of the prior year due to increased spending in professional expense.

compensation expense for the three months ended June 30, 2022 and June 30, 2021 was less than $0.1 million.

and amortization expenses for the three months ended June 30, 2022 were $0.3 million, which was virtually unchanged from $0.3 million

development activities during the six months ended September 30, 2022 as compared to the comparable period of the prior fiscal

and administrative expenses for the six months ended September 30, 2022 were $2.9 million, an increase of $0.9 million, or 45% from $2.0

million of such costs for the comparable period of the prior year due to increased spending in payroll and professional expense.

compensation expense for the six months ended September 30, 2022 and September 30, 2021 was less than $0.1 million.

and amortization expenses from the six months ended September 30, 2022 were $0.6 million, which was virtually unchanged from $0.6 million

in 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 June 30, 2022 was $1.0 million, compared to income from

operations of $1.0 million for the comparable period of the prior fiscal year.

income (expense):

the Three Months Ended June 30,

a result of the foregoing, our income from operations during the six months ended September 30, 2022 was $2.1 million, compared to income

from operations of $2.4 million for the comparable period of the prior fiscal year.

income (expense):

in fair value of derivative instruments

$ (1,114,604 )

expense and amortization of debt issuance costs

income (expense), net

For the Six Months Ended

September 30,

Other income (expense):

Change in fair value of derivative instruments

Interest expense and amortization of debt issuance costs

Interest income

Other (expense) income, net

$ (1,216,174 )

income (expense) for the three months ended June 30, 2022 was $0.7 million, a decrease of $1.3 million from the other income, net of

$0.6 million for the comparable period of the prior fiscal year.

The decrease in other income (expense) was due to expense relating

to changes in the fair value of our outstanding derivative warrants during the three months ended June 30, 2022.

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.

The increase in

interest expense was primarily attributable to the increased interest payments related to the loan the Company obtained from East

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

income (expense) for the six months ended September 30, 2022 was $0.3 million, a decrease of $1.2 million from $0.9 million for the comparable

period of the prior fiscal year.

The decrease was due to expenses relating to changes in the fair value of our outstanding derivative

warrants during the six months ended September 30, 2022.

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.

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, 2022 was $1.8 million, compared to net income $3.3 million for the comparable period of the prior fiscal year.

and Capital Resources

September 30, 2022

March 31, 2022

Current assets

Current liabilities

Working capital

working capital (total current assets less total current liabilities) increased by $11.5 million from $12.2 million as of March 31, 2022

to $24.8 million as of June 30, 2022, with such increase being primarily related to the cash proceeds of $12.0 million from the new loan

during the three months ended June 30, 2022.

to $23.6 million as of September 30, 2022, with such increase being primarily related to the cash proceeds of $14.6 million from the

new loan during the six months ended September 30, 2022.

of Cash Flows:

the Three Months Ended June 30,

cash (used in) provided by operating activities

cash used in investing activities

cash provided by (used in) financing activities

cash used in operating activities for the three months ended June 30, 2022 was $(0.6) million, which included net income of $0.3 million

and increases in non-cash expenses totaling $1.0 million, offset by net changes in assets and liabilities totaling $1.9 million.

cash used in investing activities for the three months ended June 30, 2022 was comprised of purchases of property and equipment of less

than $0.1 million.

cash provided by financing activities was $11.9 million for the three months ended June 30, 2022 which proceeds from loan issuances totaling

$12.0 million, offset by loan payments totaling $0.1 million.

For the Six Months Ended September 30,

Net cash provided by operating activities

Net cash used in investing activities

$ (5,199,696 )

Net cash provided by (used in) financing activities

cash provided by operating activities for the six months ended September 30, 2022 was $0.9 million, which included net income of $1.8

million and increases in non-cash expenses totaling $0.8 million, offset by net changes in assets and liabilities totaling $1.7 million.

cash used in investing activities for the six months ended September 30, 2022 was comprised of purchases of property and equipment of

approximately $5.2 million.

cash provided by financing activities was $14.3 million for the six months ended September 30, 2022 which proceeds from loan issuances

totaling $14.6 million, offset by loan payments totaling $0.2 million.

Park Capital – July 8, 2020 Purchase Agreement

3 unchanged sentences

Purchase Agreement, at the Company’s direction.

the three months ended June 30, 2022 and June 30, 2021, respectively, there were no shares sold to Lincoln Park pursuant to the 2020

the six months ended September 30, 2022 and September 30, 2021, respectively, there were no shares sold to Lincoln Park pursuant to the

2020 LPC Purchase Agreement.

1 unchanged sentence

2020 LPC Purchase Agreement.

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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

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