What changed in this filing

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Item 9A. Controls and Procedures

2023-06-29 compared with 2022-06-29 · 440 added, 853 removed, 1183 unchanged (52% of the section changed)

61 unchanged sentences

OTHER INFORMATION

Effective as of June 28, 2023, Mark Pellegrino ceased to be employed by

The Company has begun a search for a new chief financial officer.

Nasrat Hakim, the Company’s President and Chief Executive

Officer, will serve as the Company’s Principal Financial Officer and Principal Accounting Officer until a new chief financial officer

is identified and hired.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

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Chief Executive Officer and Director

Financial Officer, Secretary and Treasurer

Chief Commercial Officer

September 2022

Vice President of Operations

principal occupations and employment of each Director and executive officer during the past five years is set forth below.

each instance in which dates are not provided in connection with an individual’s business experience, such individual

has held the position indicated for at least the past five years.

to our recently amended and restated bylaws, our Board of Directors is now classified into three separate classes of directors.

Each director currently holds office until the expiration of the term of his class (each for three years) and until his successor

is duly elected and qualified, or until such director’s death, resignation, or removal.

In each instance

in which dates are not provided in connection with an individual’s business experience, such individual has held the position indicated

for at least the past five years.

to our amended and restated bylaws, our Board of Directors is classified into three separate classes of directors.

director currently holds office until the expiration of the term of his class (each for three years) and until his successor is duly

elected and qualified, or until such director’s death, resignation, or removal.

Hakim has served as a Director, President, and Chief Executive officer since August 2013.

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he is qualified to serve as a director.

Whitnell has served as a Director since October 23, 2009, Chairman of the Audit Committee, member of the Compensation Committee since

October 2009 and designated by the Board as an “audit committee financial expert” as defined under applicable rules under

the Exchange Act.

Whitnell has served as a Director since October 23, 2009, Chairman of the Audit Committee, member of the Compensation Committee

since October 2009 and designated by the Board as an “audit committee financial expert” as defined under applicable

rules under the Exchange Act.

Since April 2015, Mr.

Whitnell has provided financial advisory services, primarily to the healthcare industry, including

Southside Master, where he served as Chief Financial Officer from September 2018 to present.

Whitnell served as Vice President,

Finance and Controller for LifeWatch Services and other Private Equity-backed portfolio companies.

Whitnell has provided financial advisory services, primarily to the healthcare

industry, including LifeWatch Services, where he served as the Vice President, Finance & Controller.

From June 2010 to March

Whitnell was the Chief Financial Officer for ReliefBand Medical Technologies, a medical device company.

From June 2009 to June 2010,

Whitnell provided financial advisory services to various healthcare companies, including ReliefBand Medical Technologies.

2004 to June 2009, Mr.

Whitnell was Chief Financial Officer and Senior Vice President of Finance at Akorn, Inc.

From June 2002 to June

Whitnell was Vice President of Finance and Treasurer for Ovation Pharmaceuticals.

From June 2009 to

June 2010, Mr.

Whitnell provided financial advisory services to various healthcare companies, including ReliefBand Medical

Technologies.

From June 2004 to June 2009, Mr.

Whitnell was Chief Financial Officer and Senior Vice President of Finance at Akorn,

From June 2002 to June 2004, Mr.

Whitnell was Vice President of Finance and Treasurer for Ovation Pharmaceuticals (acquired by

From 1997 to 2001, Mr.

Whitnell was Vice

President of Finance and Treasurer for MediChem Research.

Whitnell was Vice President of Finance and Treasurer for MediChem Research (acquired by deCODE

Prior to 1997, Mr.

Whitnell held various finance positions at Akzo Nobel and

Whitnell began his career as an auditor with Arthur Andersen & Co.

He is a certified public accountant and holds an

in Finance from the University of Chicago Booth School of Business and a B.S.

Whitnell held various finance positions at Akzo Nobel and Motorola.

Whitnell began his career as

an auditor with Arthur Andersen & Co.

He is a certified public accountant and holds an M.B.A.

in Finance from the University of

Chicago Booth School of Business and a B.S.

in Accounting from the University of Illinois.

Whitnell’s qualifications as an accounting and audit expert led to the conclusion that he is qualified to serve as a director.

Whitnell’s qualifications as an

accounting and audit expert led to the conclusion that he is qualified to serve as a director.

Caskey has served as a Director since April 2016, and a member of the Audit Committee, the nominating Committee and the Compensation

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and this experience led to the conclusion that he is qualified to serve as a director.

Caskey attended the University of Texas

(Austin) and Lamar University, and holds bachelor’s and master’s degrees.

Chen has served as Chief Financial Officer, Secretary, and Treasurer of the Company since May 5, 2022.

Chen joins Elite with

broad experience in financial and operational leadership for life science companies, both private and public, ranging from preclinical

development to commercial operations.

Caskey attended the University of Texas (Austin)

and Lamar University, and holds bachelor’s and master’s degrees.

Kirkov joined

Elite in September 2022, as an accomplished and multi-faceted leader with more than twenty years of in-depth business development

skills across international pharmaceutical organizations.

Before joining Elite, Mr.

Chen served as Vice President for KBP Biosciences from December

2020 to February 2022.

From July 2019 to October 2020, Mr.

Chen was the Chief Financial Officer at Victory Commercial Management.

During 2019, Mr.

Chen served as Sr.

Director of Finance for WuXi Advanced Therapies.

Kirkov served as General Manager of Vertice

Pharma, a specialty generics pharmaceutical company, from February 2020 to present.

From April 2008 to February 2020, Mr.

Kirkov was employed by Sandoz and served in positions of increasing responsibilities beginning with Country Head & Managing

Director of Bulgaria from 2008 to 2011.

From 2011 to 2013, Mr.

Chen was the Sr.

of Finance at Taiho Oncology.

Chen held various other financial positions in the life sciences sector with increasing responsibilities.

Chen is a certified public accountant and began his career with Price Waterhouse and served as an Industrial Financial Analyst.

Chen brings with him extensive and diversified financial leadership background in the areas of financial reporting, including manufacturing,

financial and cost accounting, SEC, GAAP and IFRS, as well as financial planning and analysis, and this experience led to the conclusion

that he is qualified to serve as a director.

Chen has a Bachelor of Science in Business Administration, Accounting, and a Master

of Professional Accountancy degree from the University of Southern Mississippi.

He is a Certified Public Accountant (CPA).

Kirkov served as Sandoz’s Business Unit Head, Branded

Prescription Generics in Russia, and most recently, from January 2013 to February 2020, served as Sandoz’s Executive Director,

Commercial Operations.

Kirkov brings with him a broad range of experience in the areas of business development, operationalization of commercial strategy, and implementation of retail and wholesale channel sales operations, having overseen sales portfolios consisting of 400+

product families, and 1,500+ SKUs covering both generic and branded products.

Mr.Kirkov has a

Bachelor of Science in Mechanical Engineering/Engineering Management from

the University of Ottawa, two Masters of Science degrees respectively in Naval Architecture and Ocean Systems Management from the Massachusetts

Institute of Technology, a Master of Science in Applied Positive Psychology and Coaching from the University of

East London, and an MBA from the University of Durham.

Plassche has served as Executive Vice President of Operations since August 2013.

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Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating Committee.

the year ended March 31, 2022, the members of the Audit Committee were Jeffrey Whitnell (Chairman of the Audit Committee), Dr.

Dash, Davis Caskey and Nasrat Hakim.

members of the Audit Committee are Jeffrey Whitnell (Chairman of the Audit Committee), Dr.

Barry Dash, Davis Caskey and Nasrat Hakim.

The Board of Directors has determined that Messrs.

Whitnell, Dash, and Caskey to be independent

Whitnell to be qualified as an audit committee financial expert.

Whitnell, Dash, and Caskey are independent and Mr.

Whitnell is qualified as an audit

committee financial expert.

The Board of Directors has determined that Messrs.

Dash and Caskey are independent directors as (i) defined in Rule 10A-3(b)(1)(ii) under the Exchange Act and (ii) under Sections 803A(2)

and 803B(2)(a) of the NYSE American LLC Company Guide (although our securities are not listed on the NYSE American LLC or any other national

the year ended March 31, 2022, the members of the Nominating Committee were Nasrat Hakim (Chairman of the Nominating Committee), Dr.

Whitnell, Dash and Caskey are independent directors as

(i) defined in Rule 10A-3(b)(1)(ii) under the Exchange Act and (ii) under Sections 803A(2) and 803B(2)(a) of the NYSE American LLC Company

Guide (although our securities are not listed on the NYSE American LLC or any other national exchange).

The members of the Nominating Committee are Nasrat Hakim (Chairman of the Nominating Committee), Dr.

Barry Dash, and Davis Caskey.

1 unchanged sentence

Board of Directors since the filing of our last Annual Report on Form 10-K.

the year ended March 31, 2022, the members of the Compensation Committee were Dr.

The members of the Compensation Committee are Dr.

Barry Dash (Chairman of the Compensation Committee),

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than ten percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they file.

solely on its review of copies of such reports and upon written representations from each of the Company’s officers and directors,

the Company believes that, for the year ended March 31, 2022, all Section 16(a) filing requirements applicable to the Company’s

officers, directors and greater than ten percent stockholders were complied with on a timely basis, except for one Form 4 filed on July

7, 2021 to report an award of options to Marc Bregman on May 17, 2021 that was late due to an administrative error.

Based solely on its review of copies of such reports and upon written representations

from each of the Company’s officers and directors, the Company believes that, for the year ended March 31, 2023, all Section 16(a)

filing requirements applicable to the Company’s officers, directors and greater than ten percent stockholders were complied with

on a timely basis, except for one Form 3 filed on June 3, 2022 by Robert Chen, which was late due to a filing code issue, and one Form

4 filed on June 26, 2023 to report an award of options to Doug Plassche on January 3, 2023, which was late due to an administrative error.

of Conduct and Ethics

5 unchanged sentences

EXECUTIVE COMPENSATION

of the Compensation Committee

Company formed the Compensation Committee in June 2007.

Since the formation of the Compensation Committee all elements of the executives’

compensation are determined by the Compensation Committee, which currently is comprised of three independent non-employee directors,

and one director who is also the Company’s Chief Executive Officer.

However, the Compensation Committee’s decisions

concerning the compensation of the Company’s Chief Executive Officer are subject to ratification by the independent directors of

the Board of Directors.

The members of the Compensation Committee are Dr.

Barry Dash (Chairman of the Compensation Committee), Jeffrey

Whitnell, Davis Caskey and Nasrat Hakim.

The Committee operates pursuant to a charter.

Under the Compensation Committee charter, the

Compensation Committee has authority to retain compensation consultants, outside counsel, and other advisors that the committee deems

appropriate, in its sole discretion, to assist it in discharging its duties, and to approve the terms of retention and fees to be paid

to such consultants.

During the fiscal year ended March 31, 2022, the Compensation Committee did not engage any advisors.

Executive Officers

named executive officers for the fiscal year ended March 31, 2022 were:

Hakim, Chief Executive Officer, and President for the full year;

Bregman, Chief Financial Officer, Secretary, and Treasurer from May 17, 2021 through April 29, 2022;

Plassche, Executive Vice President for the full year.

individuals are referred to collectively as the “Named Executive Officers”.

executive compensation program

approach to executive compensation, one of the most important and complex aspects of corporate governance, is influenced by our belief

in rewarding people for consistently strong execution and performance.

We believe that the ability to attract and retain qualified executive

officers and other key employees is essential to our long-term success.

Our plan to obtain and retain highly skilled employees is to

provide significant incentive compensation opportunities and market competitive salaries.

We strive to link individual employee objectives

with overall company strategies and results, and to reward executive officers and significant employees for their individual contributions

to those strategies and results.

Furthermore, we believe that equity ownership serves to align the interests of our executives with those

of our stockholders.

As such, equity is a key component of our compensation program.

primary elements of our executive compensation program are base salary, incentive cash and stock bonus opportunities and equity incentives

typically in the form of stock option grants or stock awards.

Although we provide other types of compensation, these three elements are

the principal means by which we provide the Named Executive Officers with compensation opportunities.

of our executive compensation program

pay a base salary to certain of the Named Executive Officers, with such payments being made in either cash, Common Stock or a combination

of cash and Common Stock.

In general, base salaries for the Named Executive Officers are determined by evaluating the responsibilities

of the executive’s position, the executive’s experience, and the competitive marketplace.

Base salary adjustments are considered

and take into account changes in the executive’s responsibilities, the executive’s performance, and changes in the competitive

We believe that the base salaries of the Named Executive Officers are appropriate within the context of the compensation

elements provided to the executives and because they are at a level which remains competitive in the marketplace.

the section below entitled “ Agreements with Named Executive Officers ”, we describe the breakdown between compensation

paid in cash and in equity for each Named Executive Officer during the fiscal year ended March 31, 2022.

Executive Officers may earn discretionary bonuses, which are awarded by the Compensation Committee in its discretion after the end of

a fiscal year based on its assessment of factors including Company and individual performance.

Pursuant to his employment agreement,

Hakim was eligible to earn an annual bonus for the fiscal year ended March 31, 2022 up to 100% of his base salary ($500,000

for fiscal 2022), which he earned in full.

In addition, as described in the section below entitled “ Agreements with Named Executive

Officers ,” Mr.

Plassche was entitled to earn an annual bonus for the fiscal year ended March 31, 2022 up to 30% of his base

salary $78,493 for fiscal 2022.

Plassche was awarded an $83,600 bonus for the fiscal year ended March 31, 2022.

was entitled to earn an annual bonus for the fiscal year ended March 31, 2022 up to 20% of his base salary $37,400 for fiscal

2022, which he earned in full.

noted above, certain components of our Named Executive Officers’ fiscal year 2022 base salary and bonuses were payable in shares

of Common Stock.

In addition, Mr.

Plassche is entitled to an annual grant of shares of Common Stock, as described in the section entitled

“ Agreements with Named Executive Officers ” below.

During the fiscal year ended March 31, 2022, this amount was

$18,750 worth of fully vested shares for Mr.

Plassche, which he elected to take as a cash bonus payment.

Plassche’s annual

grant of shares of Common Stock in lieu of salary was terminated on December 31, 2021.

time to time, we also grant stock options to our Named Executive Officers which generally vest over time, obtainment of a corporate goal

or a combination of the two.

Bregman was granted stock options to purchase 300,000 shares of Common Stock with the strike price

being closing price of the Company’s stock as traded on the OTC Bulletin Board (symbol ELTP) on the first day of employment.

options were to vest over a three-year period commencing one year from the date of issuance.

Bregman resigned prior to any of the

options vesting.

We did not grant any other stock options to our named executive officers during the fiscal year ended March

maintain a tax-qualified retirement plan under Section 401(k) of the Code.

The plan allows employees to defer compensation on a pre-tax

basis subject to certain limits;

however, Elite does not provide a matching contribution to its participants.

Hakim receives a monthly car allowance of up to $1,500 pursuant to the terms of his employment agreement.

Plassche receives a monthly

car allowance of up to $500.

Hakim is also entitled to a monthly housing allowance up to $5,000.

The value of the perquisites we

provide are taxable to the Named Executive Officers and the incremental cost to us of providing these perquisites are reflected

in the Summary Compensation Table.

The Board of Directors believes that the perquisites provided are reasonable and appropriate.

Company generally covers life insurance premiums for its employee population, including its Named Executive Officers.

For more information

on perquisites provided to the Named Executive Officers, please see the “ All Other Compensation ” column of the Summary

Compensation Table.

with Named Executive Officers

to his August 2013 employment agreement, as amended on January 12, 2016 (the “Hakim Employment Agreement”), Mr.

Hakim receives

an annual salary of $500,000 per year.

The Salary is paid in shares of the Company’s Common Stock pursuant to the Company’s

current procedures for paying Company executives in Stock.

He also is entitled to an annual bonus equal to up to 100% of his annual salary,

payable in accordance with the Company’s payroll practices.

The Board may also award discretionary bonuses in its sole discretion.

Hakim is entitled to employee benefits (e.g., health, vacation, employee benefit plans and programs) consistent with other Company

employees of his seniority and a car allowance of up to $1,500 per month.

The Hakim Employment Agreement contains confidentiality,

non-competition and other standard restrictive covenants.

Hakim’s employment is terminable by the Company for cause (as defined in the Hakim Employment Agreement).

The Hakim Employment

Agreement also may be terminated by the Company upon at least 30 days written notice due to disability (as defined in the Hakim Employment

Agreement) or without cause.

Hakim can terminate the Hakim Employment Agreement by resigning, provided he gives notice at least 60

days prior to the effective resignation date.

Hakim is terminated for cause or he resigns, he only is entitled to accrued and unpaid annual salary, accrued vacation time and any

reasonable and necessary business expenses, all through the date of termination and payable in stock (“Basic Termination Benefits”).

Hakim is terminated because of disability or death, in addition to Basic Termination Benefits, he is entitled to a pro rata annual

bonus through the date of termination (payable in Stock), payable in a lump sum.

In addition, in the event of the termination of Mr.

Hakim’s employment due to his disability, he will be entitled to a lump sum payment within 60 days of the termination date equal

to one year of his base salary (payable in Stock), subject to his execution of a release.

If the Company terminates Mr.

Hakim without

cause, in addition to Basic Termination Benefits, Mr.

Hakim is entitled to his pro rata annual bonus through the date of termination

and an amount equal to two years’ annual salary (all payable in Stock in a lump sum within 60 days of the termination date), and

12 months of continued health insurance continuation under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),

at active employee rates, subject to his execution of a release and his continued compliance with applicable restrictive covenants.

a termination of employment in connection with a Change of Control (as defined below), in addition to Basic Termination Benefits, Mr.

Hakim is entitled to a pro rata annual bonus and payment in an amount equal to two year’s base annual salary in effect upon the

Date of Termination, less applicable deductions, and withholdings, payable in Stock in a lump sum within 60 days, and two years of health

care continuation benefits.

In addition, all outstanding unvested equity held by Mr.

Hakim will then vest.

the Hakim Employment Agreement:

means (1) Mr.

Hakim’s failure or refusal to perform the services required under the agreement, (2) the material breach by Mr.

of any of the terms of the agreement, or (3) Mr.

Hakim’s conviction of a crime that results in imprisonment or involves embezzlement,

dishonest or activities injurious to the Company or its reputation.

of Control” means generally (1) an acquisition or merger resulting in the holders of the Company’s voting stock immediately

prior to the transaction holding less than fifty (50%) percent of the combined voting power after the transaction;

(2) the sale of all

or substantially all of the assets or capital stock of the Company;

or (3) the securities of the Company representing greater than fifty

(50%) percent of the combined voting power of the Company’s then outstanding voting securities are acquired in a single transaction

or series of related transactions.

means that Mr.

Hakim is prevented by illness, accident or other disability (mental or physical) from performing the essential functions

of his position for one or more periods cumulatively totaling 3 months during any consecutive 12 month period.

April 26, 2021, the Company entered into an employment agreement with Mr.

Marc Bregman (the “Bregman Employment Agreement”).

Pursuant to the terms of the Bregman Employment Agreement, Mr.

Bregman served as an at-will employee of the Company as its Chief Financial

Bregman received a base salary of $187,000, payable in accordance with the Company’s payroll practices.

also eligible for an annual bonus, equal to up to 20% of his base salary.

Bregman was granted

stock options to purchase 300,000 shares of Common Stock.

The options were to vest over a three-year period, commencing one year from

the date of issuance.

Bregman was entitled generally to the same employee benefits offered to other employees of the Company, subject to applicable

eligibility requirements.

Bregman subsequently resigned as CFO of the Company, effective April 29, 2022.

July 20, 2013, the Company entered into an employment agreement with Mr.

Douglas Plassche (the “Plassche Employment Agreement”).

Pursuant to the Plassche Employment Agreement, Mr.

Plassche serves as an at-will employee, in the position of Vice President of Operations,

commencing on August 12, 2013.

The Plassche Employment Agreement includes an initial base salary of $205,000 being paid in accordance

with the Company’s payroll practices and an additional $25,000 being paid by the issuance of shares of Common Stock.

The Common Stock component of Mr.

Plassche’s compensation is to be computed on an annual basis, with the number of shares issued

being equal to the quotient of the annual amount due, divided by the average daily closing price of the Company’s Common Stock

for the calendar year just ended.

Plassche is also eligible for an annual bonus in cash and/or equity-based awards for up to an equivalent of 30% of base salary, with

such annual bonus being awarded based upon the achievement of agreed milestones and at the discretion of the Company and its

Chief Executive Officer.

In addition, pursuant to the Plassche Employment Agreement, Mr.

Plassche was initially granted

options to purchase 3,000,000 shares of Common Stock, at a price of $ 0.07 per share, (the closing price of the Common Stock on the

date of the Plassche Employment Agreement).

The options were issued pursuant to the 2004 Employee Stock Option Plan and vested over

a period of three years with the vesting period commencing one year from the date of issuance.

entitled to a monthly automobile allowance of $500.

Plassche’s employment is terminable by either party.

If the Company terminates Mr.

Plassche without cause, Mr.

Plassche is entitled

to an amount equal to six months of base annual salary in effect upon the date of termination.

his tenure, Mr.

Plassche’s compensation was increased from time to time by the Board.

April 1, 2020, Mr.

Plassche’s compensation was adjusted to include a total base compensation of $272,530, consisting of $247,530

being paid in cash in accordance with the Company’s payroll practices and $25,000 being paid by the issuance of shares of Common Stock in lieu of cash.

Plassche is party to two retention agreements with the Company.

On June 21, 2019, he entered into an agreement as an incentive for his

continued employment and cooperation during a transitional period for the Company, which provided a retention bonus of $253,552, subject

to his continued employment through June 30, 2021.

This amount was earned during fiscal 2022 and is reflected in the Summary Compensation

February 18, 2022, Mr.

Plassche entered into a subsequent retention agreement with the Company (the “Plassche Retention

Agreement”), also as an incentive for his continued employment and cooperation during a transitional period for the Company.

Pursuant to the Plassche Retention Agreement, Mr.

Plassche is entitled to a $150,000 retention payment on each of October 31,

2022 and June 30, 2023, subject in each case to his continued employment through such date.

March 1, 2022, Mr.

Plassche’s compensation was adjusted to include a total base compensation package of $300,000 payable in accordance

with the Company’s payroll practices.

Payments Upon Termination or Change of Control

Hakim and Plassche are entitled to certain benefits upon a termination event (and in the case of Mr.

Hakim, in connection with a change

of control), as described in the section entitled “Agreements with Named Executive Officers” above.

We do not presently provide

the Named Executive Officers with any plan or arrangement, other than those that may be contained in the employment contracts disclosed

above, in connection with any termination, including, without limitation, through retirement, resignation, severance, or constructive

termination (including a change in responsibilities) of such Named Executive Officer’s employment with the Company.

part of the Company’s efforts to ensure the retention and continuity of key employees, officers, and directors in the event of

a change of control of the ownership of the Company, unless otherwise stated in applicable employment contracts, key executives would

receive an amount not to exceed twelve months of such executive’s salary, and certain Directors and managers would receive an amount

equal to six months of such Director’s or manager’s fees or salaries, as applicable.

In addition, any outstanding and unvested

options would immediately vest, in the event of a change of control.

do not permit the Named Executive Officers to “hedge” ownership by engaging in short sales or trading in any options contracts

involving securities.

Compensation Table

Name and Principal Position

Option Awards

All Other Compensation ($)

Nasrat Hakim, President, Chief Executive Officer and Chairman of the Board of Directors

Marc Bregman, Chief Financial Officer

Douglas Plassche, Executive Vice President

salary earned by Mr.

Hakim pursuant to the Hakim Employment Agreement for Fiscal 2022, with such amounts to be paid via the issuance

of Common Stock in lieu of cash.

No shares of Common Stock have been issued to Mr.

Hakim in payment of salaries due for Fiscal 2022.

A total of 11,570,858 shares of Common Stock are due and owing to Mr.

Hakim in payment of salaries earned during Fiscal 2022.

total of 7,388,707 shares of Common Stock are due and owing to Mr.

Hakim in payment of salaries earned during Fiscal 2021.

aggregate, a total of $2,625,000 is accrued, due and owing to Mr.

Hakim for salaries earned during Fiscal 2022, Fiscal 2021, and the

forty-eight months ended March 31, 2020, but not paid.

This amount is to be paid via the issuance of 35,913,602 shares of Common

Stock, with the date of such issuance of shares of Common Stock being undetermined.

bonus earned by Mr.

Hakim for fiscal 2022.

Bonuses earned by Mr.

Hakim during Fiscal 2022 were paid in accordance with the

Company’s payroll practices during Fiscal 2022.

Hakim was also paid $187,500 during Fiscal 2022 for bonuses earned and

accrued during the twelve months ended March 31, 2019, and not paid previously.

Hakim was also paid $375,000 during Fiscal 2022

for bonuses earned and accrued during the twelve months ended March 31, 2020, and not previously paid.

Hakim accordingly was

paid a total of $1,062,000 during Fiscal 2022, with such amount representing bonuses earned during Fiscal 2022 and the twenty-four

month period ending March 31, 2020, and not previously paid.

A total of $500,000 of bonus earned by Mr.

Hakim during Fiscal 2021 was

paid in accordance with the Company’s payroll practices.

Hakim was also paid a total of $750,000 of bonuses earned and

accrued during the twenty-four month period ending March 31, 2019 and not previously paid.

Represents $18,000 amounts paid for auto allowance and $60,000 for housing allowances.

Represents salaries earned by Mr.

Bregman pursuant to the Bregman Employment Agreement.

Represents bonus earned by Mr.

Bregman during fiscal 2022.

salaries earned by Mr.

Plassche pursuant to the Plassche Employment Agreement.

Fiscal 2022 salaries consist of $261,644 being paid

in accordance with the Company’s payroll practices.

Represents the bonus of $83,600 earned by Mr.

Plassche for fiscal 2022 pursuant to the Plassche Employment Agreement, $18,750

of salaries earned during Fiscal 2022 which Mr.

Plassche has elected to receive in cash instead of the issuance of common stock, and

$291,552 as retention bonus under the June 2019 retention agreement.

Represents amounts paid for auto allowances.

Equity Awards at March 31, 2022

Unexercisable

Equity Incentive Plan

Number of securities

underlying unexercised

unearned options

Douglas Plassche

following table sets forth information concerning director compensation for the year ended March 31, 2022:

Jeffrey Whitnell

refer to the section below titled “Director Fee Compensation” for details on the Company’s director fee compensation

No directors held unexercised or unvested stock awards as of March 31, 2022.

represent Director fees earned during the fiscal year ended March 31, 2022 which are to be paid in cash.

These fees were accrued

and unpaid as of March 31, 2022, with a payment date being undetermined.

In aggregate, Directors fees totaling $30,000 ($10,000 for

each of the Company’s three non-employee Directors) is accrued, due and owing for Director fees earned during Fiscal 2022.

equity compensation for the fiscal year ended March 31, 2022 consists of an entitlement to 295,570 shares of Common Stock for each

Whitnell and Mr.

Caskey each receiving 295,570 shares of Common Stock.

Fee Compensation

Company’s policy regarding director fees is as follows:

(i) Directors who are employees or consultants of the Company (and/or any

of its subsidiaries) receive no additional remuneration for serving as directors or members of committees of the Board;

(ii) all Directors

are entitled to reimbursement for out-of-pocket expenses incurred by them in connection with their attendance at the Board or committee

(iii) Directors who are not employees or consultants of the Company (and/or any of its subsidiaries) receive a $30,000 annual

retainer fee, with $20,000 of this amount being paid via the issuance of Common Stock, and the remaining $10,000 being paid in

(iv) Directors do not receive any additional compensation for attendance at or chairing of any meetings.

Equity Compensation

described above, members of the Board of Directors are paid a portion of their annual retainer fees via the issuance

of shares of Common Stock of the Company.

The number of shares to be issued to each Director is equal to

the quotient of the quarterly amount due to each Director, divided by the average daily closing price

of the Company’s stock for the quarter just ended.

of the Board of Directors during the fiscal year ended March 31, 2022 did not receive any additional equity compensation for serving

as directors.

Company’s Articles of Incorporation provide for the indemnification of each of the Company’s directors to the fullest extent

permitted under Nevada General Corporation Law.

Portions of the Proxy Statement for the registrant’s 2023 Annual

Meeting of Shareholders which is to be filed subsequent to the date hereof are incorporated by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth certain information, as of June 23, 2022 (except as otherwise indicated), regarding beneficial ownership

of our Common Stock by (i) each person who is known by us to own beneficially more than 5% of each such class, (ii) each of our directors,

following table sets forth certain information, as of June 23, 2023 (except as otherwise indicated), regarding beneficial ownership of

our Common Stock by (i) each person who is known by us to own beneficially more than 5% of each such class, (ii) each of our directors,

(iii) each of our executive officers and (iv) all our directors and executive officers as a group.

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shares of Common Stock outstanding (exclusive of 0.1 million treasury shares).

On any matter presented to the holders of our

Common Stock for their action or consideration at any meeting of our Shareholders, each share of Common Stock entitles the holder to

On any matter presented to the holders of our Common Stock

for their action or consideration at any meeting of our Shareholders, each share of Common Stock entitles the holder to one vote.

used in the table below and elsewhere in this report, the term beneficial ownership with respect to a security consists of sole or shared

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including a right to acquire such power(s) during the 60 days immediately following June 23, 2023.

Except as otherwise indicated,

the Shareholders listed in the table have sole voting and investment powers with respect to the shares indicated.

Name and Address of Beneficial Owner of Common Stock

Percent (%) of

Voting Securities

Nasrat Hakim, President, Chief Executive Officer and Chairman of the Board of Directors*

Except as otherwise indicated, the

Shareholders listed in the table have sole voting and investment powers with respect to the shares indicated.

and Address of Beneficial Owner of Common Stock

Hakim, President, Chief Executive Officer and Chairman of the Board of Directors*

295,824,820 (1)

Barry Dash, Director*

Dash, Director*

3,235,555 (2)

Jeffrey Whitnell, Director*

Whitnell, Director*

3,187,020 (3)

Davis Caskey, Director*

Caskey, Director*

2,049,436 (4)

Douglas Plassche, Executive Vice President *

Plassche, Executive Vice President *

4,133,932 (5)

All Directors and Officers as a group

Mark Pellegrino

Directors and Officers as a group

308,430,763 (6)

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practicable date) Date for Directors fees accrued as of such date.

1,133,932 shares of Common Stock held 357,552 shares of Common Stock due and owing to Mr.

Plassche as of March 31, 2022 (the latest

practicable date) for salaries earned pursuant to Mr.

Plassche’s employment agreement with the Company, and shares of Common

Stock issuable upon cash exercise of vested options to purchase 3,000,000 shares of Common Stock.

1,133,932 shares of Common Stock held and shares of Common

Stock issuable upon cash exercise of vested options to purchase 3,000,000 shares of Common Stock and excludes 7,500,000 shares issuable upon exercise of options not vested or not

exercisable within the next 60 days.

only to current directors and officers.

Includes 176,399,066 shares of Common Stock held, 37,757,762 shares of Common Stock

due and owing as of March 31, 2022 (the latest practicable date) for director’s fees and salaries accrued as of such date,

3,000,000 shares of Common Stock issuable upon cash exercise of vested options and 79,008,661 shares of Common Stock issuable upon

cash exercise of warrants at an exercise price of $0.1521 per share of Common Stock.

Includes 175,077,854 shares of Common Stock held, 51,344,248 shares of Common Stock due and

owing as of March 31, 2023 (the latest practicable date) for director’s fees and salaries accrued as of such date, 3,000,000

shares of Common Stock issuable upon cash exercise of vested options and 79,008,661 shares of Common Stock issuable upon cash exercise

of warrants at an exercise price of $0.1521 per share of Common Stock, and excludes 7,500,000 shares issuable upon exercise of options not vested or not exercisable within the next 60

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related Person Transactions

May 2020, Praxgen , under an asset purchase agreement, assigned its rights and obligations

under the Praxgen Agreement for Amphetamine IR and Amphetamine ER to Mikah.

for Amphetamine IR and Amphetamine ER are now registered under Elite’s name.

Mikah is now Elite’s partner with respect

to Amphetamine IR and ER and Mikah will assume all the rights and obligations for these products from Praxgen .

May 2020, Praxgen, under an asset purchase agreement, assigned its rights and obligations under the Praxgen Agreement for Amphetamine

IR and Amphetamine ER to Mikah.

The ANDAs for Amphetamine IR and Amphetamine ER are now registered under Elite’s name.

now be Elite’s partner with respect to Amphetamine IR and ER and will assume all the rights and obligations for these products

from Praxgen.

Mikah was founded in 2009 by Nasrat Hakim.

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following are filed as part of this Annual Report on Form 10-K

financial statements and schedules required to be filed by Item 8 of this Annual Report on Form 10-K and listed in the Index to Consolidated

The financial statements and schedules required to be filed by Item 8 of this Annual Report on Form 10-K and listed in the Index to Consolidated

Financial Statements.

Exhibits required by Item 601 of Regulation S-K and listed below in the “Index to Exhibits required by Item 601 of Regulation S-K.”

The Exhibits required by Item 601 of Regulation S-K and listed below in the “Index to Exhibits required by Item 601 of Regulation

Exhibits are filed with or incorporated by reference in this Annual Report on Form 10-K

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June 4, 2015 License Agreement with Epic Pharma LLC, incorporated by reference to Exhibit 10.85 to Amendment No.

1 to the Annual Report on Form 10-K for the fiscal year ended March 31, 2015 and filed with the SEC on June 15, 2015.

1 to the Annual Report on Form 10-K for the fiscal year ended March 31, 2015 and filed with the SEC on July 11, 2016.

(Confidential Treatment granted with respect to portions of the Agreement).

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(Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

License, Supply And Distribution Agreement effective March 6, 2019 by and between Elite Pharmaceuticals, Inc., and Elite Laboratories, Inc.

and Lannett Company, Inc., USA, incorporated by reference to Exhibit 10.45 to the Quarterly Report on Form 10-Q, for the period ended December 31, 2019 and filed with the SEC on February 10, 2020.

(Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

License, Supply and Distribution Agreement effective April 9, 2019 by and between Elite Pharmaceuticals, Inc., and Elite Laboratories, Inc.

and Lannett Company, Inc., USA, incorporated by reference to Exhibit 10.49 to the Annual Report on Form 10-K for the period ended March 31, 2019 and filed with the SEC on June 21, 2019 (portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

License, Supply and Distribution Agreement effective March 6, 2019 by and between Elite Pharmaceuticals, Inc., and Elite Laboratories, Inc.

and Lannett Company, Inc., USA, incorporated by reference to Exhibit 10.50 to the Annual Report on Form 10-K for the period ended March 31, 2019 and filed with the SEC on June 21, 2019 (portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

Development Agreement effective December 3, 2018 by and between Mikah Pharma LLC and Elite Laboratories, Inc., incorporated by reference to Exhibit 10.51 to the Annual Report on Form 10-K for the period ended March 31, 2019 and filed with the SEC on June 21, 2019 (portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

Asset Purchase Agreement dated November 13, 2019 by and between the Company and Nostrum Laboratories Inc.

, incorporated by reference to Exhibit 10.49 to the Quarterly Report on Form 10-Q, for the period ended December 31, 2019 and filed with the SEC on February 10, 2020.

Asset Purchase Agreement dated November 13, 2019 by and between the Company and Nostrum Laboratories Inc., incorporated by reference to Exhibit 10.49 to the Quarterly Report on Form 10-Q, for the period ended December 31, 2019 and filed with the SEC on February 10, 2020.

January 2, 2020 Amendment to the Glenmark Pharmaceuticals Inc.

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Employment Agreement with Douglas Plassche, incorporated by reference to Exhibit 10.52 to the Annual Report on Form 10-K, filed with the SEC on June 14, 2021.

July 29, 2019 Amendment To The License, Supply And Distribution Agreement Between Elite Pharmaceuticals, Inc./Elite Laboratories, Inc.

And Lannett Company, Inc.

(Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)), incorporated by reference to Exhibit 10.54 to the Annual Report on Form 10-K, filed with the SEC on June 14, 2021.

Master Development and License Agreement for Products Between Elite Pharmaceuticals, Inc.

and Mikah Pharma LLC, effective as of June 10, 2021.(Portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10), incorporated by reference to the 10-Q for the period ended June 30, 2021 and filed with the SEC on August 16, 2021.

License, Supply, and Distribution Agreement by and between Elite Pharmaceuticals, Inc.

and Lannett Company, Inc, dated October 18, 2021.*

License, Supply, and Distribution Agreement by and between Elite Pharmaceuticals, Inc.

and Lannett Company, Inc, dated October 18, 2021.*

License and Distribution Agreement by and between Elite Pharmaceuticals, Inc.

and Dexcel Ltd.

(Or Akiva, Israel), dated December 6, 2021.*

February 18, 2022 Retention Agreement with Douglas Plassche.*

License, Supply, and Distribution

Agreement by and between Elite Pharmaceuticals and Lannett, Inc., dated July 20, 2021*

(Or Akiva, Israel), dated December 6, 2021, incorporated by reference to Exhibit 10.57 to the Annual Report on Form 10-K for the period ended March 31, 2022, filed with the SEC on June 29, 2022.

February 18, 2022 Retention Agreement with Douglas Plassche, incorporated by reference to Exhibit 10.58 to the Annual Report on Form 10-K for the period ended March 31, 2022, filed with the SEC on June 29, 2022.

Agreement for Sale and Purchase of Real Estate, dated April 8, 2022, by and between Clyde Wesp and Margaret Wesp as trustees of the Wesp Family Joint Living Trust UTD November 19, 2015 and the Company, incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, for the period ended June 30, 2022 and filed with the SEC on August 15, 2022.

Loan and Security Agreement, dated April 1, 2022, by and among East West Bank, Elite Pharmaceuticals, Inc.

and Elite Laboratories, Inc., incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q, for the period ended June 30, 2022 and filed with the SEC on August 15, 2022.

Employment Agreement, dated September 5, 2022, between Elite Pharmaceuticals, Inc.

and Kirko Kirkov, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on September 7, 2022.

of the Company, incorporated by reference to Exhibit 21 to the Annual Report on Form 10-K, for the period ended March 31, 2019 and

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Consent of Buchbinder Tunick & Company LLP, Independent Registered Public Accounting Firm*

Certification

of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a)*

Certification

of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a)*

Certification

of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

Certification

of Chief Financial Officer pursuant to 18 U.S.C.

Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a)*

Certification of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

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June 29, 2023

Financial Officer

June 29, 2022

to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant

and in the capacities and on the dates indicated.

Executive Officer, President and Chairman of the Board of Directors (Principal Executive Officer)

Financial Officer, Secretary, and Treasurer

Executive Officer, President and Chairman of the

Board of Directors (Principal

Executive Officer, Principal Financial Officer, and Principal Accounting Officer)

/s/ Barry Dash

June 29, 2023

Jeffrey Whitnell

PHARMACEUTICALS, INC.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARIES

FINANCIAL STATEMENTS

THE YEARS ENDED MARCH 31, 2022 AND 2021

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Buchbinder Tunick & Company # 6189 )

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MARCH 31, 2023 AND 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Buchbinder Tunick & Company #6189)

CONSOLIDATED BALANCE SHEETS

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Elite Pharmaceuticals, Inc., and Subsidiary

Opinion on the Financial Statements

We have audited the accompanying consolidated balance

sheets of Elite Pharmaceuticals, Inc.

and Subsidiary (the “Company”) as of March 31, 2022 and 2021, and the related consolidated

statements of operations, stockholders’ equity, and cash flows for each of the years in the two year period ended March 31, 2022,

and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated

financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2022 and 2021 and

the results of its operations and its cash flows for each of the years in the two year period ended March 31, 2022 in conformity with

accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements

based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards

of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal

control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

the Board of Directors and

of Elite Pharmaceuticals, Inc., and Subsidiary

on the Financial Statements

have audited the accompanying consolidated balance sheets of Elite Pharmaceuticals, Inc.

and Subsidiary (the “Company”) as

of March 31, 2023 and 2022, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each

of the years in the two year period ended March 31, 2023, and the related notes (collectively referred to as the “consolidated

financial statements”).

Our audits also included evaluating the accounting principles used and significant estimates made by management,

as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable

basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a

matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit

committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially

challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on

the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions

on the critical audit matter or on the accounts or disclosures to which they relate.

Intangible Assets — Refer to Notes 1 and 4 to

the consolidated financial statements

Critical Audit Matter Description

As described in Note 1 and 4 to

the consolidated financial statements, the Company has capitalized costs of $6,168,351 for ANDAs and $465,684 for patents.

evaluates its intangible assets for impairment annually during the fourth quarter in accordance with ASC Topic 350, Intangibles, Goodwill

and Other, and whenever events or circumstances change that indicate impairment may have occurred.

Management performs a qualitative assessment of each

intangible assets prior to performing a quantitative impairment test.

Qualitative factors management considers include, the current project

status, cost factors of raw material and labor, current cash flows, legal and regulatory factors and industry and market considerations.

If the qualitative assessment indicates the fair value is more likely than not less than the carrying value a quantitative test is performed.

The management performed a quantitative test on certain intangible assets using a discounted cash flow methodology and market approach.

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated

financial position of the Company as of March 31, 2023 and 2022 and the results of its operations and its cash flows for each of the

years in the two year period ended March 31, 2023 in conformity with accounting principles generally accepted in the United States of

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used

and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated

or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Assets — Refer to Notes 1 and 4 to the consolidated financial statements

Audit Matter Description

described in Note 1 and 4 to the consolidated financial statements, the Company has capitalized costs of $6,052,189 for ANDAs and $289,039

The Company evaluates its intangible assets for impairment annually during the fourth quarter in accordance with ASC Topic

350, Intangibles, Goodwill and Other, and whenever events or circumstances change that indicate impairment may have occurred.

performs a qualitative assessment of each intangible asset prior to performing a quantitative impairment test.

Qualitative factors management

considers include, the current revenue, cost factors of raw material and labor, current cash flows, legal and regulatory factors and

industry and market considerations.

If the qualitative assessment indicates the fair value is more likely than not less than the carrying

value a quantitative test is performed.

Management performed a quantitative test on certain intangible assets using a discounted cash

flow methodology.

The methods used to estimate the fair value of intangible assets involve significant assumptions.

The significant assumptions applied

by management in estimating the fair value of intangible assets included income projections and discount rates.

The significant assumptions

applied by management in estimating the fair value of intangible assets included income projections and discount rates.

Due to the significant

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and an increased extent of effort.

How We Addressed the Matter in Our Audit

The primary procedures we performed to address this

critical audit matter included:

We obtained an understanding and evaluated

the design and implementation of controls over the intangible valuation process.

This included management’s review over the assessment

of the methodology, significant inputs and assumptions included in the fair value estimate, as well as management’s review around

the completeness, accuracy and reasonableness of the data used in this estimate.

Our audit procedures assessed whether the

valuation methodology used was appropriate and tested the mathematical accuracy of the valuation model.

We evaluated whether the assumptions used

were reasonable by considering the past performance, and discount rates, and whether such assumptions were consistent with evidence obtained

in other areas of the audit.

/s/ Buchbinder Tunick & Company LLP

We Addressed the Matter in Our Audit

primary procedures we performed to address this critical audit matter included:

obtained an understanding and evaluated the design and implementation of controls over the intangible valuation process.

This included

management’s review over the assessment of the methodology, significant inputs and assumptions included in the fair value estimate,

as well as management’s review around the completeness, accuracy and reasonableness of the data used in this estimate.

audit procedures assessed whether the valuation methodology used was appropriate and tested the mathematical accuracy of the valuation

evaluated whether the assumptions used were reasonable by considering the historical revenue, current customer contracts, gross profit

percentage and cost of debt discount rates, and whether such assumptions were consistent with evidence obtained in other areas of the

Buchbinder Tunick & Company LLP

We have served as the Company’s auditor since 2010.

Little Falls, New Jersey 07424

June 29, 2022

ELITE PHARMACEUTICALS,

Buchbinder Tunick & Company LLP

have served as the Company’s auditor since 2010.

Falls, New Jersey 07424

PHARMACEUTICALS, INC.

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

BALANCE SHEETS

March 31, 2023

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Total current assets

Property and equipment, net of accumulated depreciation of

and $ 12,153,626 ,

Property and equipment, net of accumulated depreciation of $ 14,586,335 and $ 13,348,565 , respectively

Intangible assets

Operating lease - right-of-use asset

Deferred income tax asset

Deferred income tax benefit

Other assets:

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

ELITE PHARMACEUTICALS,

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

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Non-cash compensation through issuance of stock options

Impairment of intangible assets

Depreciation and amortization

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Interest expense and amortization of debt issuance costs

Gain on sale of fixed assets

( 1,112,707 )

Gain on sale of ANDA

Interest income

PPP loan forgiveness

Other income, net

Income from operations before income taxes

Income tax benefit

Income before income taxes

Income tax (expense) benefit

Net benefit for sale of state net operating losses and credits

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1,012,911,346

1,010,607,713

Diluted weighted average Common Stock outstanding

1,012,911,346

1,010,607,713

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

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STATEMENTS OF SHAREHOLDERS' EQUITY

Preferred Stock

Series J Preferred Stock

Treasury Stock

Total Shareholders’

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$ ( 306,841 )

Conversion of Preferred Stock to Common Stock

$ ( 148,957,989 )

Initial commitment shares issued pursuant to the 2020 Lincoln Park purchase

Common Stock sold pursuant to the 2020 Lincoln Park purchase agreement

Common Stock issued as additional commitment shares pursuant to the 2020

Lincoln Park purchase agreement

Costs associated with raising capital

Non-cash compensation through the issuance of employee stock options

Shares issued in payment of Director fees

Shares issued in payment of salaries

Shares issued in payment of consulting expenses

Balance as of March 31, 2022

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Shares issued in payment of salaries

Shares issued in payment of consultants

Balance at March 31, 2023

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

ELITE PHARMACEUTICALS,

PHARMACEUTICALS, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

STATEMENTS OF CASH FLOWS

For the Years Ended March 31,

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Amortization of operating leases - right-of-use assets

Gain on sale of fixed assets

Impairment of intangible assets

Change in fair value of derivative financial instruments - warrants

( 1,425,409 )

( 1,237,132 )

PPP loan forgiveness

( 1,013,480 )

Deferred income tax asset

Deferred income tax benefit

( 2,171,821 )

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( 2,809,546 )

( 1,728,268 )

Prepaid expenses and other current assets

Accounts payable, accrued expenses and other current liabilities

( 1,768,862 )

Deferred revenue and customer deposits

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Purchase of property and equipment

Proceeds from disposal of property and equipment

( 5,736,618 )

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from PPP loan

Proceeds from the issuance of Common Stock

Payment of related party note payable

( 5,736,618 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of bond principal

Payments of loans and mortgage payable

( 12,240,111 )

Proceeds from loans and mortgage payable, net of transaction costs

Other loan payments

Net cash used in financing activities

Net cash provided by (used in) financing activities

Net change in cash and restricted cash

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Cash paid for interest

Cash paid for income taxes

Financing of equipment purchases and insurance renewal

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

Commitment shares issued to Lincoln Park Capital

Conversion of preferred stock to Common Stock

Reconciliation of cash and restricted cash

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

ELITE PHARMACEUTICALS, INC.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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On January 5, 2012, Elite Pharmaceuticals was reincorporated under the laws of the State of

Elite Labs engages primarily in researching, developing, licensing and manufacture of generic, oral dose pharmaceuticals.

Elite Labs engages primarily in researching, developing, licensing, manufacturing, and sales of generic, oral dose pharmaceuticals.

Company is equipped to manufacture controlled-release products on a contract basis for third parties and itself, if and when the products

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Please see Note 15 for further details.

Company generates revenue primarily from manufacturing and licensing fees.

Company generates revenue from manufacturing and licensing fees and direct sales to pharmaceutical distributors for pharmacies and institutions.

Manufacturing fees include the development of pain management

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collaborations.

ELITE PHARMACEUTICALS, INC.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

ELITE PHARMACEUTICALS, INC.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

Company entered into a sales and distribution licensing agreement with Epic Pharma LLC, (“Epic”) dated June 4, 2015 (the

“2015 Epic License Agreement”), which has been determined to satisfy the criteria for consideration as a collaborative agreement,

and is accounted for accordingly.

The 2015 Epic License Agreement expired on June 4, 2020 without renewal.

Company entered into a Master Development and License Agreement with Praxgen, formerly known

as SunGen Pharma LLC dated August 24, 2016 (the “SunGen Agreement”), which has been determined to satisfy the

criteria for consideration as a collaborative agreement, and is accounted for accordingly.

On April 3, 2020, Elite and Praxgen

mutually agreed to discontinue any further joint product development activities.

Company will begin direct sales of products under the Company’s own label beginning on April 1, 2023.

License agreements will remain

in place for select products.

With this transition, however, a large portion of the manufacturing and license fees now reported will

be replaced with revenues from direct sales of pharmaceutical products to distributors for pharmacies and institutions.

Disaggregation

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For the Years Ended March 31,

Manufacturing fees

Licensing fees

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

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of March 31, 2023, and March 31, 2022, the Company had $ 412,434 and $ 405,039 , of restricted cash, respectively, related to debt service

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

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

receivable are comprised of balances due from customers, net of estimated allowances for uncollectible accounts.

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

is recorded at the lower of cost or market on specific identification by lot number basis.

is recorded at the lower of cost or net realizable value on specific identification by lot number basis.

Company periodically evaluates the fair value of long-lived assets, which include property and equipment and intangibles, whenever events

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

ANDAs are capitalized accordingly.

ANDAs and patents are capitalized accordingly.

Company tests its intangible assets for impairment at least annually (as of March 31st) and whenever events or circumstances change that

8 unchanged sentences

and slower growth rates.

of March 31, 2022, the Company did not identify any indicators of impairment.

the year ended March 31, 2023, the Company determined indicators of impairment have occurred and recorded impairment expense of $ 292,807 on its ANDAs and patents.

also see Note 4 for further details on intangible assets.

1 unchanged sentence

and development expenditures are charged to expense as incurred.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contingencies

7 unchanged sentences

of complex judgments about future events and can rely heavily on estimates and assumptions.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

taxes are accounted for under the asset and liability method.

10 unchanged sentences

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, 2022, a summary of the tax years that remain subject

to examination in our major tax jurisdictions are:

United States – Federal, 2016 and forward, and State, 2013 and forward.

Company did not record unrecognized tax positions for the years ended March 31, 2022 and 2021.

ELITE PHARMACEUTICALS, INC.

The Company remains subject to examination in

all tax jurisdiction until the applicable statutes of limitation expire.

As of March 31, 2023, a summary of the tax years that

remain subject to examination in our major tax jurisdictions are:

United States – Federal, 2019 and forward, and State, 2016

The Company did not record unrecognized tax positions for the years ended March 31, 2023

PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

and Preferred Shares

16 unchanged sentences

Company’s Common Stock.

the year ended March 31, 2023, the Company entered into an agreement with Pyros Pharmaceuticals, Inc.

(“Pyros”) 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 such rights to Pyros for $ 1,000,000 , which was recorded as gain on sale of ANDA during the year

ended March 31, 2023.

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

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).

Per Share Attributable to Common Shareholders ’

6 unchanged sentences

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

ELITE PHARMACEUTICALS, INC.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

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

1 unchanged sentence

For the Years Ended March 31,

Net income - basic

Net income attributable to common shareholders - basic

Effect of dilutive instrument on net income

( 1,425,409 )

( 1,237,132 )

Net income - diluted

1 unchanged sentence

1,012,911,346

1,010,607,713

Dilutive effect of stock options and convertible securities

1 unchanged sentence

1,012,911,346

1,010,607,713

Net income per share

11 unchanged sentences

hierarchy under ASC 820 are described as follows:

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

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

or indirectly.

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

quoted prices for identical

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

inputs other than quoted prices that are observable for the asset

or liability;

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

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

that are accessible at the measurement date.

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

the asset or liability, either directly or indirectly.

Level 2 inputs include quoted prices

for similar assets or liabilities in active markets;

quoted prices for identical or similar

assets or liabilities in markets that are not active;

inputs other than quoted prices that

are observable for the asset or liability;

and inputs that are derived principally from or

corroborated by observable market data by correlation or other means.

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

ELITE PHARMACEUTICALS, INC.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

on a Recurring Basis

3 unchanged sentences

Fair Value Measurement Using

Amount at Fair Value

March 31, 2023

33 unchanged sentences

Raw materials

ELITE PHARMACEUTICALS, INC.

Inventory, net

PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

PROPERTY AND EQUIPMENT, NET

7 unchanged sentences

Furniture and fixtures

Property and equipment, gross

Accumulated depreciation

1 unchanged sentence

( 13,348,565 )

Property and equipment, net

expense was $ 1,237,770 and $ 1,194,939 for the years ended March 31, 2023 and 2022, respectively.

1 unchanged sentence

following table summarizes the Company’s intangible assets:

SCHEDULE OF INTANGIBLE ASSETS

OF INTANGIBLE ASSETS

March 31, 2023

4 unchanged sentences

Patent application costs

$ ( 176,645 )

ANDA acquisition costs

$ ( 292,807 )

March 31, 2022

5 unchanged sentences

ANDA acquisition costs

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

Amortization of the patent

costs will begin upon the issuance of marketing authorization by the FDA.

Amortization will then be calculated on a straight-line

basis through the expiry of the related patent(s).

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

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

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

of the related patent(s).

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

ACCRUED EXPENSES

of March 31, 2023 and 2022, the Company’s accrued expenses consisted of the following:

OF ACCRUED EXPENSES

March 31, 2023

March 31, 2022

Salaries and fees payable in common stock

Consultant contract fees

Director dues

Employee bonuses

Other accrued expenses

Total accrued expenses

August 2005, the Company refinanced a bond issue occurring in 1999 through the issuance of Series A and B Notes tax-exempt bonds (the

11 unchanged sentences

by a first lien on the Company’s facility and equipment acquired with the proceeds of the original and refinanced bonds.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

following tables summarize the Company’s bonds payable liability:

4 unchanged sentences

NJEDA Bonds - Series A Notes

Current portion of bonds payable (prior to deduction

of bond offering costs)

Long-term portion of bonds payable (prior to deduction of

bond offering costs)

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

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

Bond offering costs

7 unchanged sentences

Long term portion of bonds payable

Bond offering costs to be amortized subsequent to the

next 12 months

Long term portion of bonds payable, net of bond offering

expense was $ 14,180 and $ 14,179 for the years ended March 31, 2022 and 2021, respectively.

As of March 31, 2022 and March 31, 2021, interest

payable was $ 7,367 and $ 7,963 , respectively.

Bond offering costs to be amortized subsequent to the next 12 months

Long term portion of bonds payable, net of bond offering costs

expense was $ 14,178

for the years ended March 31, 2023 and 2022,

respectively.

As of March 31, 2023 and March 31, 2022, interest payable was $ 6,744 and $ 7,367 ,

respectively.

Interest expense was $ 6,744 and $ 7,367 for the years ended March 31, 2023 and 2022, respectively.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

of bonds for the next five years are as follows:

SCHEDULE OF MATURITIES OF BONDS FOR THE NEXT FIVE YEARS

OF MATURITIES OF BONDS

Years ending March 31,

LOANS PAYABLE

April 2, 2022, the Company and Elite Labs entered into a Loan and Security Agreement (the “EWB Loan Agreement”) with East

West Bank (“EWB”).

Pursuant to the EWB Loan Agreement, the Company and Elite Labs received one term loan for a principal

amount of $ 12,000,000 (the “EWB Term Loan”) and a revolving line of credit up to $ 2,000,000 (the “EWB Revolver,”

together with the “EWB Term Loan,” the EWB Loans”), each of which shall be used for working capital.

The EWB Term Loan

bears interest at a rate of 9.73 % ( 1.73 % plus the prime rate (“Prime”)) and is repayable over five years , maturing on May

The EWB Revolver bears interest at a rate of ( 8.87 % ( 0.87 % plus Prime)) and matures on May 1, 2027 .

The total transaction costs

associated with the EWB Term Loan incurred as of March 31, 2023, were $ 40,120 , which are being amortized on a monthly basis over five years,

beginning in April 2022.

The EWB Loans are secured by a security interest in the personal property of the Company and Elite Labs.

EWB Loan Agreement contains customary representations, warranties and covenants.

These covenants include, but are not limited to, maintaining

maximum leverage ratios of 3.50 to 1.00, minimum liquidity of $5,000,000, minimum cash of $1,000,000, a fixed charge coverage ratio of

1.25 to 1.00 and restrictions on mergers or sales of assets and debt borrowings.

As of March 31, 2023, the principal and interest

on the EWB Term Loan has been paid in full by the Company and the EWB Loan Agreement is terminated.

In place of the EWB Term Loan, the Company has entered into a collateralized promissory note with individual lenders

with rates comparable to the EWB Term Loan but with less restrictive covenants (a “Promissory Note”).

As of June 2, 2023,

a Promissory Note was placed with Nasrat Hakim, CEO and Chairman of the Board of Directors, for $ 3,000,000 .

The Promissory Note has an

interest rate of 9% for the first year and 10% for an optional second year and the proceeds will be used for working capital and other

business purposes .

July 1, 2022, the EWB provided a mortgage loan (“EWB Mortgage Loan”) in the amount of $ 2.55 million for the purchase of the

property at 135-137 Ludlow Avenue, which was formerly a lease held by the Company.

The EWB Mortgage Loan matures in 10 years and bears

interest at a rate of 4.75% fixed for 5 years then adjustable at WSJP plus 0.5% with floor rate of 4.5% .

The total transaction costs

associated with the EWB Mortgage Loan incurred as of March 31, 2023, were $ 13,251 , which are being amortized on a monthly basis over

ten years, beginning in July 2022.

The EWB Mortgage Loan contains customary representations, warranties and covenants.

These covenants

include maintaining a minimum debt coverage ratio of 1.50 to 1.00 tested annually and a minimum trailing 12-month debt coverage ratio

of 1.50 to 1.00.

As of March 31, 2023, the Company was in compliance with each financial covenant.

payable consisted of the following:

SCHEDULE OF LOANS PAYABLE

OF LOANS PAYABLE

March 31, 2023

March 31, 2022

Equipment and insurance financing loans payable, between 3.30 % and 12.02 % interest and maturing between October 2022 and October 2025

Mortgage loan payable 4.75% interest and maturing June 2032

Equipment and insurance financing loans payable, between 7.10 % and 12.02 % interest and maturing between September 2023 and October 2025

Current portion of loans payable

Long-term portion of loans payable

ELITE PHARMACEUTICALS, INC.

interest expense associated with the loans and mortgage payable was $ 1,013,874

for the years ended March 31, 2023 and 2022, respectively.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

interest expense associated with the loans payable was $ 62,845 and $ 77,218 for the years ended March 31, 2022 and 2021, respectively.

principal payments for the next five years are as follows:

SCHEDULE OF LOAN PRINCIPAL PAYMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

and mortgage principal payments for the next five years are as follows:

OF LOAN PRINCIPAL PAYMENTS

Years ending March 31,

Paycheck Protection Program Term Note

April 2020, the Company entered into a Paycheck Protection Program Term Note (the “PPP Note”) with TD Bank, NA in the amount

of $ 1,013,480 .

The PPP Note was issued to the Company pursuant to the Coronavirus, Aid, Relief, and Economic Security Act’s (the

“CARES Act”) (P.L.

116-136) Paycheck Protection Program (the “Program”).

Under the Program, all or a portion

of the PPP Note may be forgiven in accordance with the Program requirements.

January 12, 2021, the Company received notification that the United States Small Business Administration (“SBA”), had approved,

in full, the Company’s application for forgiveness of amounts received pursuant to the CARES Act and the Program.

RELATED PARTY SECURED PROMISSORY NOTE WITH MIKAH PHARMA, LLC

consideration of the assets acquired on May 15, 2017, the Company issued a Secured Promissory Note (the “Mikah Note”) to

Mikah Pharma, LLC (“Mikah”) for the principal sum of $ 1,200,000 .

Mikah was founded in 2009 by Nasrat Hakim (“Hakim”),

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

The Mikah Note matured on December

31, 2020 and was retired at par in March 2021.

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

expense associated with the Note was $ 90,000 for the year ended March 31, 2021.

A total of $ 435,000 in accrued interest expense, representing

interest expense accrued during the life of the Mikah Note, was due and owing as of the maturity date of the Mikah Note.

Of the $ 435,000

accrued interest due at maturity, $ 435,000 of accrued interest was satisfied by offset against amounts due from Mikah pursuant to the

development agreement between the Company and Mikah, dated December 3, 2018 (see Note 16).

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2028 and thereafter

DEFERRED REVENUE

17 unchanged sentences

of complex judgments about future events and can rely heavily on estimates and assumptions.

Leases – 135 Ludlow Ave.

Company entered into an operating lease for a portion of a one-story warehouse, located at 135 Ludlow Avenue, Northvale, New Jersey (the

16 unchanged sentences

Manufacturing, packaging, warehousing and regulatory activities are currently conducted at this location.

Additional renovations

and construction to further expand the Company’s manufacturing resources are in progress.

The Ludlow Ave.

lease was terminated on July 1, 2022, when the Company purchased the underlying property.

October 2020, the Company entered into an operating lease for office space in Pompano Beach, Florida (the “Pompano Office Lease”).

6 unchanged sentences

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

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

Company recognizes a right-of-use asset, which represents the Company’s right to use the underlying asset for the lease term, and

1 unchanged sentence

The present value of the lease payments is calculated using either the implicit interest rate in the lease or an incremental borrowing

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

SCHEDULE OF LEASE ASSETS AND LIABILITIES

OF LEASE ASSETS AND LIABILITIES

Classification

9 unchanged sentences

and 2022 was $ 58,248 and $ 229,563 , respectively.

Rent expense under the Pompano Office Lease for the year ended March 31, 2022 was $ 23,430 .

There was no rent expense under the Pompano Office lease for the year ended March 31, 2021 as there was a rent abatement period from

November 2020 through February 2021.

Rent expense under the Pompano Office Lease for the years ended March 31, 2023 and 2022

was $ 25,638 and $ 23,430 , respectively.

Rent expense is recorded in general and administrative expense in the audited consolidated statements

of operations.

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

lease and the Pompano Office Lease:

table below shows the future minimum rental payments, exclusive of taxes, insurance and other costs, under the Pompano Office Lease:

OF FUTURE MINIMUM RENTAL PAYMENTS

3 unchanged sentences

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

SCHEDULE OF WEIGHTED-AVERAGE

REMAINING LEASE TERM AND THE WEIGHTED-AVERAGE DISCOUNT RATE

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

Lease Term and Discount Rate

14 unchanged sentences

of other long-term liabilities.

ELITE PHARMACEUTICALS, INC.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

PREFERRED STOCK

29 unchanged sentences

of $ 0.1521 per share.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DERIVATIVE FINANCIAL INSTRUMENTS – WARRANTS

3 unchanged sentences

described in this note below.

summary of warrant activity is as follows:

SCHEDULE OF WARRANT ACTIVITY

March 31, 2022

March 31, 2021

Warrant Shares

Weighted Average Exercise Price

Warrant Shares

Weighted Average Exercise Price

Balance at beginning of period

Warrants granted pursuant to the issuance of Series J convertible preferred shares

Warrants exercised, forfeited and/or expired, net

Balance at end of period

Company has 79,008,661 total warrant shares outstanding with a weighted average exercise price of $ 0.1521 as of March 31, 2023 and 2022.

April 28, 2017, the Company entered into an Exchange Agreement with Hakim, the Chairman of the Board, President, and Chief Executive

4 unchanged sentences

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

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

Series J Warrants are exercisable for a period of 10 years from the date of issuance, commencing April 28, 2020.

18 unchanged sentences

Risk free rate

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

changes in warrants (Level 3 financial instruments) measured at fair value on a recurring basis for the year ended March 31, 2023 were

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

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

Balance at March 31, 2021

3 unchanged sentences

Change in fair value of derivative financial instruments - warrants

( 1,425,409 )

Balance at March 31, 2023

5 unchanged sentences

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

Company did not issue any shares of its Common Stock pursuant to the 2020 LPC Purchase Agreement during the year ended March 31, 2022.

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

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 shares.

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.

ELITE PHARMACEUTICALS, INC.

Company did not issue any shares of its Common Stock pursuant to the 2020 LPC Purchase Agreement during the years ended March 31,

2023 and 2022.

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

The 2020 LPC Purchase Agreement will expire on August 1, 2023.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

of Common Stock Activity

the years ended March 31, 2022 and 2021, the Company issued 2,105,236 and 168,772,385 shares of Common Stock, respectively, with such

issuances of Common Stock being summarized as follows:

the years ended March 31, 2023 and 2022, the Company issued 2,633,093 and 2,105,236 shares of Common Stock, respectively, with such issuances

of Common Stock being summarized as follows:

SCHEDULE OF COMMON STOCK ACTIVITY

1 unchanged sentence

1,011,381,988

Common stock converted from Preferred Stock

Common Stock sold pursuant to the Lincoln Park Capital Purchase Agreements, with net proceeds of such shares totaling $ - and $ 42,223 for the years ended March 31, 2022 and 2021, respectively.

Common Stock issued as initial and additional commitment shares pursuant to the Lincoln Park Capital Purchase Agreements

1,009,276,752

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

12 unchanged sentences

$ 30,000 and the issuance of 1,753,686 shares of Common Stock.

of March 31, 2022, the Company owed its Directors a total of $ 30,000 in cash payments and 1,378,608 shares of Common Stock in payment

of director fees totaling $ 90,000 due and owing.

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

end of the current fiscal year.

Employee/Consultant Compensation

3 unchanged sentences

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

the year ended March 31, 2022, the Company issued 1,218,526 shares of Common Stock in payment of salaries totaling $ 97,500 pursuant to

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

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

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the year ended March 31, 2023, the Company accrued salaries totaling $ 540,000 owed

to a certain other employees which will be paid via the issuance of 14,105,665 shares

to the Company’s President, Chief Executive Officer and certain other employees which will be paid via the issuance of 14,956,851 shares

of Common Stock.

of March 31, 2022, the Company owed its President and Chief Executive Officer and certain other employees’ salaries totaling $ 3,625,000

which will be paid via the issuance of 50,190,779 shares of Common Stock.

As of March 31, 2023, the Company owed its President, Chief Executive Officer and certain other employees’

salaries totaling $ 4,335,000 which

will be paid via the issuance of 68,264,667 shares

of Common Stock.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

its 2014 Stock Option Plan and prior options plans, the Company may grant stock options to officers, selected employees, as well as members

27 unchanged sentences

for approximately 84 % and 11 % of revenues each, respectively.

customer accounted for approximately 96 % of the Company’s accounts receivable as of March 31, 2023.

customers accounted for approximately 91 % of the Company’s accounts receivable as of March 31, 2022.

1 unchanged sentence

for approximately 78 % and 13 % of accounts receivable each, respectively.

customers accounted for substantially all the Company’s accounts receivable as of March 31, 2021.

These three customers accounted

for approximately 73 %, 15 % and 10 % of accounts receivable each, respectively.

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

suppliers accounted for approximately 69 % of the Company’s purchases of raw materials for the year ended March 31, 2022.

four suppliers accounted for approximately 51 %, 7 %, 6 % and 5 % of purchases each, respectively.

supplier accounted for approximately 34 % of the Company’s purchases of raw materials for the year ended March 31, 2023.

suppliers accounted for more than 69 % of the Company’s purchases of raw materials for the year ended March 31, 2022.

suppliers accounted for approximately 51 %, 7 %, 6 %, and 5 % of purchases each, respectively.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT RESULTS

18 unchanged sentences

reported in the Company’s audited consolidated statement of operations:

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

OF OPERATING INCOME BY SEGMENT TO INCOME FROM OPERATIONS

For the Years Ended March 31,

5 unchanged sentences

Interest expense and amortization of debt issuance costs

( 1,112,707 )

Impairment of intangible assets

Depreciation and amortization expense

2 unchanged sentences

Significant non-cash items

PPP loan forgiveness

Change in fair value of derivative instruments

Income from operations before income taxes

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income before income taxes

RELATED PARTY AGREEMENTS WITH MIKAH PHARMA, LLC

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

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

manufacture of development batches of generic products.

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

of advanced payments received to date from Mikah.

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

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

May 2020, Praxgen , pursuant to an asset purchase agreement, assigned its rights and

obligations under the Praxgen Agreement for Amphetamine IR and Amphetamine ER to

Mikah Pharmaceuticals.

The ANDAs for Amphetamine IR and Amphetamine ER are now registered under Elite’s name.

Mikah will now be

Elite’s partner with respect to Amphetamine IR and ER and will assume all the rights and obligations for these products from Praxgen .

Mikah Pharmaceuticals was founded in 2009 by Nasrat Hakim, a related party and the Company’s President, Chief Executive Officer

and Chairman of the Board.

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

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

In addition, Mikah Pharma LLC will collaborate

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

and marketing of generic products.

May 2020, Praxgen, pursuant to an asset purchase agreement, assigned its rights and obligations under the Praxgen Agreement for Amphetamine

IR and Amphetamine ER to Mikah Pharma LLC (“Mikah”).

The ANDAs for Amphetamine IR and Amphetamine ER are now registered under

Elite’s name.

Mikah will now be Elite’s partner with respect to Amphetamine IR and ER and will assume all the rights and

obligations for these products from Praxgen.

Mikah was founded in 2009 by Nasrat Hakim, a related party and the Company’s President,

Chief Executive Officer and Chairman of the Board.

June 2021, the Company entered into a development and license agreement with Mikah, pursuant to which Mikah will engage in the research,

development, sales and licensing of generic pharmaceutical products.

In addition, Mikah will collaborate to develop and commercialize

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

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

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

components of the income taxes benefit (expense) are as follows:

OF COMPONENTS OF CREDIT FOR INCOME TAXES

OF COMPONENTS OF INCOME TAXES BENEFIT (EXPENSE)

Year Ended March 31,

Income tax benefit

Benefit of net operating loss carryforward

( 1,160,715 )

Income tax (expense) benefit

$ ( 424,028 )

Benefit from sale of state net operating loss credits

5 unchanged sentences

Valuation allowance

Deferred tax assets and

Deferred tax assets and liabilities

Net operating loss carry forward

1 unchanged sentence

Deferred tax assets and

ELITE PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 and 2022, a 90 %

valuation allowance is provided, as it is uncertain if the deferred tax assets will provide any future benefits because of the uncertainty

about the Company’s ability to generate the future taxable income necessary to use the net operating loss carry forwards.

and 90 % valuation allowance is provided, respectively, as it is uncertain if the deferred tax assets will provide total future

benefits because of the uncertainty about the Company’s ability to generate the future taxable income necessary to use the net

operating loss carry forwards.

company believes that temporary timing differences between accrual and payment of income taxes are not material to the financial position

of the Company.

of March 31, 2022, Elite has a federal net operating loss carry forward of $ 100.8

million, which do not expire and net operating

loss carry forward in state tax jurisdictions of $ 8.4

million some of which will begin to expire

During 2022, the Company was able

to release a portion of its valuation allowance as it determined future profits will offset a portion of its valuation allowance.

2022, the Company recorded a tax benefit of $ 2.2

million as a result of this change in

Absent the above mentioned allowance, at March 31, 2022, the Company’s federal and state income taxes due were $ 0.0

million and $ 0.4

million, respectively.

of New Jersey Net Operating Loss

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

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

The Company sold

the net tax benefits approved for sale for total proceeds of $ 946,407 during the year ended March 31, 2021.

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

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

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

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

dollar and incurred transaction fees of $ 12,861 , resulting in net proceeds to the Company of $ 857,379 , during the year ended March 31,

COVID-19 UPDATE

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

In March 2020, the World Health Organization

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

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

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

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

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

Under current and applicable

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

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

The Company’s management has developed

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

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

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

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

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

produce pharmaceutical products.

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

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

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

Certain of these measures have resulted in increased costs.

Manufacturing

and Supply Chain

the year ended March 31, 2022, and as of the date of this Annual Report on Form 10-K, the Company has not experienced material, detrimental

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

to operate without interruption.

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

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

and third-party partners.

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

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

business, financial condition, results of operations and cash flows.

SUBSEQUENT EVENTS

April 2, 2022, the Company entered into a loan and security agreement with East West Bank, pursuant to which the Company was granted

by the Bank a term loan of $ 12,000,000 for

a duration of five

years and an asset-based Revolving Line of

Credit up to $ 2,000,000 .

The Company has received the proceeds of $ 11,959,880 out

of the term loan net of applicable professional changes, and it will be used for general working capital purpose.

In return for the term loan, the Company is required to meet certain financial terms and

On April 8, 2022, the Company

entered into an Asset Purchase Agreement to purchase the building located at 135-137 Ludlow Avenue in Northvale NJ and is currently in

The Company has leased the entire 35,000 square feet of floor space since 2014.

This property is occupied by the Company’s

Quality Assurance department, commercial manufacturing, packaging, and warehouse.

The closing date is expected to take place in July

On June 27, 2022, the Company

received notification from the US Food and Drug Administration (FDA) for the approval of the Company’s Abbreviated New Drug Application

(ANDA) for a generic version of Sabril® (Vigabatrin USP) 500 mg powder for solution packet.

Company, Inc.

has an exclusive license to market and distribute the product in the U.S.

and territories.

Elite will exclusively manufacture

and package the product for sale for an agreed-upon transfer price.

The companies will share in product net profits.

of March 31, 2023, Elite has a federal net operating loss carry forward of $ 83.9 million,

which have not expired.

During 2022, the Company was able to release a portion of its valuation allowance as it determined future

profits will offset a portion of its valuation allowance.

During 2022, the Company recorded a tax benefit of $ 2.2 million

as a result of this change in judgment.

There is no change in the net deferred tax asset for 2023.

Absent the above mentioned

allowance, at March 31, 2023, the Company’s federal and state income taxes due were $ 0.0 million

and $ 0.4 million,

respectively.

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 9A. Controls and Procedures