What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-02-14 compared with 2022-11-14 · 107 added, 108 removed, 185 unchanged (54% 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 six months ended September 30, 2022 and 2021 should

following discussion of our financial condition and results of operations for the nine months ended December 31, 2022 and 2021 should

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

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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 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

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.

We are also party to an

operating lease for office space at Pompano Beach, Florida (the “Pompano Office Lease”).

focus our efforts on the following areas:

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

the nine months ended December 31, 2022, the Company entered into an agreement with Pyros Pharmaceuticals, Inc.

pursuant to which the Company sold to Pyros its rights in and to the Company’s approved abbreviated new drug applications (ANDAs)

for its generic Sabril drug.

The Company sold its rights to Pyros for $1,000,000, which was recorded as gain on sale of ANDA during the

nine months ended December 31, 2022.

There is no further action required by the Company regarding the rights which would affect future

conjunction with the sale of its Product to Pyros, the Company executed a Manufacturing and Supply agreement (the “Pyros Agreement”)

Under the terms of the Pyros Agreement, the Company will receive an agreed-upon price per drug for the manufacturing and

packaging of Sabril over a term of three years.

Revenue per the Pyros Agreement will be recognized as control of the manufactured and

supplied drugs is transferred to Pyros (at the time of delivery).

of Termination of License, Supply and Distribution Agreement

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commercial sale:

HCl 37.5mg tablets

(“Phentermine

Phendimetrazine

Tartrate 35mg tablets

Product Equivalent

HCl 37.5mg tablets (“Phentermine 37.5mg”)

Phendimetrazine

HCl 15mg and 30mg capsules

(“Phentermine

15mg” and “Phentermine 30mg”)

HCl 50mg tablets

2.5mg and 5mg capsules

2.5mg” and “Isradipine 5mg”)

Tartrate 35mg tablets (“Phendimetrazine 35mg”)

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

Naltrexone HCl 50mg tablets

(“Naltrexone 50mg”)

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

Cardiovascular

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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.

We 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.

Doxycycline hyclate is an antibiotic that is used to treat

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.

Doxycycline hyclate is an antibiotic that is used to treat 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.

Accounting Policies and Estimates

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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

were no significant changes during the nine months ended December 31, 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

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necessarily indicative of future results.

months ended September 30 2022 compared to September 30, 2021

months ended December 31, 2022 compared to December 31, 2021

Cost of revenue and Gross profit:

For the Three Months Ended

September 30,

For the Three Months Ended December 31,

Manufacturing fees

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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

revenues for the three-month period ended December 31, 2022 increased by $0.28 million or 3%, to $9.25 million, as compared to $8.97

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.

ER Capsules during the three month period ended December 31, 2022 as compared to the comparable period of the prior fiscal year.

Manufacturing

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 $0.13 million, or 2%, primarily due to increased sales of Amphetamine IR Tablets and Amphetamine ER Capsules during

the three month period ended December 31, 2022 as compared to the comparable period of the prior fiscal year.

fees increased by $0.14 million, or 11%.

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

and Amphetamine IR Tablets during the three months ended December 31, 2022 as compared to the comparable period of the prior fiscal year.

of revenue consists of manufacturing and assembly costs.

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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,

on products sold during the three months ended December 31, 2022, as compared to the comparable period of the prior fiscal year.

gross profit margin was 53% during the three months ended December 31, 2022 as compared to 45% during the comparable period of the prior

For the Three Months Ended December 31,

Operating expenses:

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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

Operating expenses from the three months ended December 31, 2022 increased by $0.8 million, or 35%, to $3.0 million as compared

to $2.2 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

and development costs during the three months ended December 31, 2022 were $1.4 million, an increase of $0.5 million, or 51%, from approximately

$1.0 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

development activities during the three month period ended December 31, 2022 as compared to the comparable period of the prior fiscal

and administrative expenses during the three months ended December 31, 2022 were $1.2 million, an increase of $0.3 million, or 28% 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

compensation expense during the three months ended December 31, 2022 and December 31, 2021 was less than $0.1 million.

and amortization expenses during the three months ended December 31, 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.

a result of the foregoing, our income from operations during the three months ended December 31, 2022 was $2.0 million, compared to income

from operations of $1.8 million for the comparable period of the prior fiscal year.

income (expense):

For the Three Months Ended

September 30,

For the Three Months Ended December 31,

Other income (expense):

1 unchanged sentence

Interest expense and amortization of debt issuance costs

Gain on sale of ANDA

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

income (expense) for the three months ended December 31, 2022 was $1.1 million, an increase of $0.6 million from the other income (expense)

of $0.5 million for the comparable period of the prior fiscal year.

The increase was due to the gain on sale of ANDA, offset by an increase

in interest expense and amortization of debt issuance costs during the three months ended December 31, 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.

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 December

31, 2022 was $3.0 million, compared to net income $2.3 million for the comparable period of the prior fiscal year.

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

months ended December 31, 2022 compared to December 31, 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,

the Nine Months Ended December 31,

Manufacturing

of manufacturing

profit - percentage

revenues for the nine months period ended December 31, 2022 increased by $0.9 million or 4%, to $25.5 million, as compared to $24.6 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 six months ended September 30, 2022 as compared to the comparable period of the prior fiscal year.

during the nine months ended December 31, 2022 as compared to the comparable period of the prior fiscal year.

Manufacturing

fees increased by $0.7 million, or 3%, primarily due to increased sales of Amphetamine IR Tablets and Amphetamine ER Capsules during

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

the nine months ended December 31, 2022 as compared to the comparable period of the prior fiscal year.

fees increased by $0.3 million, or 6%.

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.

and Amphetamine IR Tablets during the nine months ended December 31, 2022 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 $0.2 million or 2%, to $8.4 million as compared

Our costs of revenue decreased by $0.8 million or 6%, to $12.4 million as compared

to $13.2 million for the corresponding period in the prior fiscal year.

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 six months ended September 30, 2022, as compared to the comparable

period of the prior fiscal year.

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,

This decrease was due to an improved margin on products sold

during the nine months ended December 31, 2022, as compared to the comparable period of the prior fiscal year.

gross profit margin was 52% during the nine months ended December 31, 2022 as compared to 46% during the comparable period of the prior

For the Nine Months Ended December 31,

Operating expenses:

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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

Operating expenses for the nine months ended December 31, 2022 increased by $1.9 million, or 27%, to $9.1 million as compared

to $7.2 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

and development costs during the nine months ended December 31, 2022 were $3.8 million, an increase of $0.5 million, or 14%, from approximately

$3.3 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 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

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

development activities during the nine months ended December 31, 2022 as compared to the comparable period of the prior fiscal year.

and administrative expenses for the nine months ended December 31, 2022 were $4.4 million, an increase of $1.4 million, or 49% from $2.9

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

compensation expense for the nine months ended December 31, 2022 and December 31, 2021 was less than $0.1 million.

and amortization expenses from the nine months ended December 31, 2022 were $0.9 million, which was virtually unchanged from $0.9 million

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

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

a result of the foregoing, our income from operations during the nine months ended December 31, 2022 was $4.1 million, compared to income

from operations of $4.2 million for the comparable period of the prior fiscal year.

income (expense):

For the Six Months Ended

September 30,

For the Nine Months Ended December 31,

Other income (expense):

1 unchanged sentence

Interest expense and amortization of debt issuance costs

Gain on sale of ANDA

Interest income

Other (expense) income, net

$ (1,216,174 )

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

income (expense) for the nine months ended December 31, 2022 was $0.8 million, a decrease of $0.6 million from $1.4 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

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

warrants and increased interest expense and amortization of debt issuance costs, offset by the gain on sale of ANDA during the nine months

ended December 31, 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 nine months ended December

31, 2022 was $4.8 million, compared to net income $5.6 million for the comparable period of the prior fiscal year.

and Capital Resources

September 30, 2022

December 31, 2022

March 31, 2022

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working capital (total current assets less total current liabilities) increased by $14.3 million from $12.2 million as of March 31, 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.

to $26.5 million as of December 31, 2022, with such increase being primarily related to the cash proceeds of $14.6 million from the new

loan during the nine months ended December 31, 2022.

of Cash Flows:

For the Six Months Ended September 30,

For the Nine Months Ended December 31,

Net cash provided by operating activities

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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

cash provided by operating activities for the nine months ended December 31, 2022 was $0.4 million, which included net income of $4.8

million and increases in non-cash expenses totaling $0.9 million, offset by net changes in assets and liabilities totaling $5.3 million.

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

cash used in investing activities for the nine months ended December 31, 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

cash provided by financing activities was $14.2 million for the nine months ended December 31, 2022 which proceeds from loan issuances

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

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Purchase Agreement, at the Company’s direction.

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

the nine months ended December 31, 2022 and December 31, 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

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

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

2 unchanged sentences

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