What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-07-01 compared with 2023-06-29 · 240 added, 236 removed, 196 unchanged (71% of the section changed)

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of Operations:

ended March 31, 2023 compared to March 31, 2022

Cost of manufacturing and Gross profit:

the Years Ended March 31, 2024 and 2023

Cost of revenue and Gross profit:

For the Years Ended March 31,

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Gross profit - percentage

revenues for the year ended March 31, 2023 increased by $1.9 million or 6%, to $34.2 million, as compared to $32.3 million for the prior

year, primarily due to increased revenues from Amphetamine ER Capsules and Phentermine as compared to prior year.

revenues for the year ended March 31, 2024 increased by $22.5 million or 66%, to $56.6 million, as compared to $34.2 million, for the

of the prior fiscal year, primarily due to the launch of the Elite label during the current fiscal year which achieved increased sales

for the year ended March 31, 2024, as compared to the prior year, which did not include any sales of Elite label products.

Manufacturing

fees increased by $2.2 million, or 8%, primarily due to manufacturing revenues increased from Amphetamine ER Capsules, as compared to

the fiscal year ended March 31, 2022.

fees decreased by $0.3 million, or 6%.

This decrease was primarily due to licensing fees decreasing from the sales of Amphetamine IR Tablets, Naltrexone Tablets, and Isradipine as compared to the fiscal year ended March 31, 2022.

of manufacturing consist of manufacturing and assembly costs.

Our costs of revenue increased by $0.1 million or 1%, to $17.6 million as compared

fees revenue increased by $24.9 million, or 85%, primarily due to the launch of the Elite label during the current fiscal year which

achieved increased sales for the year ended March 31, 2024, as compared to the prior year, which did not include any sales of Elite label

fees revenue decreased by $2.5 million, or 50%.

This decrease is primarily due to the expiration of the marketing alliance agreements

between the Company and Lannett Company, Inc.

(the “Lannett Agreements”) on March 31, 2023.

The revenue streams that were

generated during periods ending on or prior to March 31, 2023 and attributed to the Lannett Agreements, included profit splits on the

sale by Lannett of Amphetamine IR and Amphetamine ER.

Since April 1, 2023, these products are now sold by the Company under its own label,

with revenues being recorded as manufacturing revenues instead of licensing fees going forward.

of revenue consists of manufacturing and assembly costs.

Our cost of revenue increased by $12.7 million or 72%, to $30.3 million as compared

to $17.6 million for the prior fiscal year.

This increase was due to the increased manufacturing activities and related manufacturing

revenues during the year ended March 31, 2023, as compared to the prior year.

The increase in cost of revenues of 1%, compared with the increase in manufacturing fees of 8% is due to efficiencies

gained in the manufacturing and sale of Amphetamine ER Capsules, which were launched during fiscal year 2021.

gross profit margin was 49% during the year ended March 31, 2023 as compared to 46% during the comparable prior fiscal year.

This increase was due to an increased volume of products sold during the year ended March

31, 2024, as compared to the prior fiscal year, as noted above.

gross profit margin was 47% during the year ended March 31, 2024 as compared to 49% during the prior fiscal year.

The decrease is due

to increased manufacturing volumes resulting in decreased unit costs due to efficiencies of scale being achieved on the increased manufacturing

In addition, the commercial launch of the Elite label and expiration of the Lannett Agreements resulted in higher net revenues

per unit being achieved.

Both of these factors had the effect of increased gross profit margin.

For the Years Ended March 31,

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Total operating expenses

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

amortization expenses.

Operating expenses totaled for $12.9 million the year ended March 31, 2023, which increased approximately

$3.2 million, or 33%, from the prior year, largely due to increases of $2.1 million in research and development costs, $0.7 million in general and administrative

expenses, and $0.3 million in impairment of intangible assets.

The changes in balance of each line item from the prior year are outlined

and development costs for the year ended March 31, 2023 were $6.2 million, an increase of $2.1 million, or 53%, from $4.1 million of such

costs for the prior year.

The increase was a result of the timing and nature of product development activities during the year ended

March 31, 2023 as compared to the prior year.

and administrative expenses for the year ended March 31, 2023 were $5.1 million, an increase of $0.7 million, or 15%, from $4.5 million

of such costs for the prior year.

The increase was due in large part to the increase in payroll-related expense and professional expense.

compensation expense for the years ended March 31, 2023 and 2022 was less than $0.1 million.

Impairment of intangible assets the year ended March 31, 2023 was $0.3 million, compared with $0.0 in the prior

The increase was due to impairment of ANDA and patent intangible assets.

and amortization expenses for the year ended March 31, 2023 were $1.3 million, and remained relatively unchanged from $1.2 million of

such costs for the prior year.

a result of the foregoing, our income from operations for the year ended March 31, 2023 was $3.7 million, compared to income from operations

of $5.1 million for the prior year.

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

Operating expenses for the year ended March 31, 2024 increased by $2.7 million, or 21%, to $15.6 million as compared to $12.9

million for the prior fiscal year, largely due to an increase in research and development of $0.7 million and general and administrative

expenses of $2.0 million.

and development costs during the year ended March 31, 2024 were $6.9 million, an increase of $0.7 million, or 11%, from approximately

$6.2 million of such costs for the prior year.

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

the year ended March 31, 2024 as compared to the prior fiscal year.

and administrative expenses for the year ended March 31, 2024 were $7.1 million as compared to $5.1 million for the prior fiscal year,

an increase of $2.0 million or approximately 39%, largely due to an increased human resource headcount and costs as compared to the prior

fiscal year as well as infrastructure costs related to Elite label commercial activities resulting from the commercial launch of the

Elite label product line during the year ended March 31, 2024.

compensation expense for the year ended March 31, 2024 was $0.2 million as compared to $0.04 million for the prior fiscal year, an increase

of $0.1 million or approximately 307%, with such increase being attributed to the issuance to employees of options to purchase Common

Stock during the current fiscal year.

and amortization expenses from the year ended March 31, 2024 were $1.4 million as compared to $1.3 million for the prior fiscal year,

an increase of $0.1 million or approximately 9%.

This increase is due to depreciation expense being recorded on an increased fixed asset

base which resulted from additional investments in capital manufacturing facilities.

a result of the foregoing, our income from operations during the year ended March 31, 2024 was $10.8 million, compared to income from

operations of $3.7 million for the prior fiscal year.

income (expense):

For the Years Ended March 31,

Other income, net:

Change in fair value of derivative instruments

Other income (expense):

Change in fair value of derivative financial instruments - warrants

$ (5,776,297 )

$ (6,191,423 )

Change in fair value of stock-based liabilities

Interest expense and amortization of debt issuance costs

Gain from settlement agreements

Gain on sale of ANDA

Interest income

Other income, net

income, net for the year ended the year ended March 31, 2023 was $0.3 million, a reduction of $0.9 million from the prior year.

decrease in other income, net was due to the recognition of gain of $1,000,000 related to the sale of ANDA during the year ended

March 31, 2023.

Additionally, change in fair value of derivative instruments decreased by approximately $1.0 million.

expense and amortization of debt issuance costs increased by approximately $0.9 million.

The change in fair value of derivative instruments is largely due to decreases in

the Company’s stock price during the year ended March 31, 2023 compared with the prior year.

The change in interest expense

and amortization of debt issuance costs is largely due to interest incurred on the EWB loan of approximately $12.0 million and EWB

mortgage loan of approximately $2.6 million, entered into in April and July, 2022, respectively.

a result of the foregoing, our income before income taxes for the year ended March 31, 2023 was $4.0 million, compared to $6.3 million

for the prior year.

Other (expense) income, net

$ (10,325,677 )

$ (10,635,549 )

income (expense) for the year ended March 31, 2024 was an other expense of $10.3 million, a decrease of $10.6 million from other income

of $0.3 million for the prior fiscal year.

The decrease was primarily due to a net increases in other expenses totaling $12.9 million

and consisting of increased other expenses of $6.2 million relating to the change in fair value of warrant derivative instruments, $5.7

million relating to the change in fair value of stock-based liabilities and $1.0 million relating to gain on sale of ANDA, offset by

increases in other income totaling $2.3 million and consisting of $1.8 million gain from settlement agreements, $0.5 million relating

to decreased interest expense and amortization of debt issuance, and $0.01 million increase in interest income.

The change in the fair

value of derivative instruments and stock-based liabilities is determined in large part by the change in the closing price of the Company’s

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

between the fair value of the Company’s derivative instruments and stock-based liabilities and decreases in the closing price of

the Company’s Common Stock.

The decrease in interest expense associated with the loans payable is due in large part to the Company

paying off the principal balance of the EWB loan during the fiscal year ended March 31, 2023, resulting in no interest on the EWB loan

incurred for the year ended March 31, 2024.

The increased other income from gain from settlement agreements is the result of there being

a settlement agreement during the fiscal year ended March 31, 2024 as compared to there being no settlement agreement during the comparable

period of the prior fiscal year.

The decrease in other income relating to gain of sale of ANDA is the result of there being a sale of

an ANDA during the fiscal year ended March 31, 2023 as compared to no sales of ANDA occurring during the fiscal year ended March 31,

a result of the foregoing, our net income before income taxes for the year ended March 31, 2024 was $0.5 million, compared to net income

before income taxes of $4.0 million for the prior fiscal year.

and Capital Resources

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The Company believes that such resources, combined with the working capital surplus of $27.0 million and the continuation of

ongoing operations, are sufficient to fund operations through the current operating cycle.

ongoing operations, are sufficient to fund operations through the next twelve months.

For the year ended March 31, 2024, the Company

had income from operations totaling $3.7 million, net other income totaling $0.3 million and a net income of $3.6 million.

The Company’s

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

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

had income from operations totaling $10.8 million, net other expense totaling $10.3 million and a net income attributable to common shareholders

of $20.1 million.

The Company’s other income (expense) and net income attributable to common shareholders are significantly influenced

by the fluctuations in the fair value of warrant derivatives with such fair value bearing a strong inverse correlation to the market

share price of the Company’s Common Stock as well as the recording of a discrete tax benefit of $17.3 million related to the Company’s release of the

valuation allowance against deferred tax assets related to U.S.

federal net operating loss carryforwards and research and development

tax credits, which are expected to be realized based on demonstrated current profitability and the Company’s expectations of forecasted

working capital (total current assets less total current liabilities) increased by $13.3 million from $13.7 million as of March 31, 2023

to $13.7 million as of March 31, 2023, with such increase being primarily related to the net income of $3.6 million and a net positive

operating cash flows of $3.3 million achieved during the year ended March 31, 2023.

to $27.0 million as of March 31, 2024, with such increase being primarily related to the increase in finished goods inventory and accounts

receivable, associated with increased customer orders during the year ended March 31, 2024 exceeding the increase in total current liabilities

over the same period.

of Cash Flows:

For the Years Ended March 31,

Net cash provided by operating activities

Net cash (used in) provided by operating activities

$ (3,281,558 )

Net cash used in investing activities

$ (5,736,618 )

Net cash provided by (used in) financing activities

cash provided by operating activities for the year ended March 31, 2023 was $3.3 million, which included net income of $3.6 million,

offset by non-cash (income) expenses totaling $1.8 million and net increases in assets and decreases in liabilities totaling $2.0 million.

Net cash provided by financing activities

cash used in operating activities for the year ended March 31, 2024 was $3.3 million, which included net income of $20.1 million, increased

by depreciation and other non-cash expenses totaling $11.5 million and reduced by the change in operating assets and liabilities totaling

$11.9 million and tax benefit of $20.0 million.

cash provided by operating activities for the year ended March 31, 2023 was $3.3 million, which included net income of $3.6 million,

offset by non-cash (income) expenses totaling $1.8 million and net increases in assets and decreases in liabilities totaling $2.0 million.

cash used in investing activities for the year ended March 31, 2023 was comprised of purchases of property and equipment of $5.7 million.

cash used in investing activities for the year ended March 31, 2024 was comprised of purchases of property and equipment of approximately

$0.8 million.

cash used in investing activities for the year ended March 31, 2023 was comprised of purchases of property and equipment of $5.7 million.

cash provided by financing activities was $3.4 million for the year ended March 31, 2024 which consisted primarily of proceeds from related

party loans payable totaling $4.0 million offset by payments of bond and loan principal totaling $0.3 million.

cash provided by financing activities was $1.7 million for the year ended March 31, 2023 which contained proceeds and loan payments related

to the EWB mortgage loan and equipment loans.

cash used in financing activities was $0.7 million for the year ended March 31, 2022 which was offset primarily by loan payments.

Nasrat Promissory Note

In place of the EWB Term

Loan, the Company has entered into a collateralized promissory note with an individual lender 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.

East West Bank

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

with East West Bank (“EWB”).

Promissory Note

Company has entered into a collateralized promissory note with individual lenders with rates comparable to the EWB Term Loan but with

fewer restrictive covenants.

These covenants include filing timely tax returns and financial statements, and an agreement not to sell,

lease, or transfer a substantial portion of the Company’s assets during the term of the note.

On June 2, 2023, the Company entered

into a Promissory Note with Nasrat Hakim, CEO and Chairman of the Board of Directors, pursuant to which the Company borrowed funds in

the aggregate principal amount of $3,000,000 (the “Hakim Promissory Note”).

The Hakim Promissory Note has an interest rate

of 9% for the first year and 10% for an optional second year and the proceeds were used for working capital and other business purposes.

The original maturity date of the Hakim Promissory Note is June 2, 2024, with an optional second year extension.

The second year extension

of the Hakim Promissory Note was agreed to by both parties, with the maturity date being extended to June 2, 2025.

Promissory Note

June 30, 2023, the Company entered into a collateralized promissory note with Davis Caskey (the “Caskey Promissory Note”).

The Caskey Promissory Note has a principal balance of $1,000,000 and an interest rate of 9% for the first year and 10% for an optional

The Caskey Promissory Note is subject to the same covenants as are contained in the Hakim Promissory Note.

were used for working capital and other business purposes.

The original maturity date of the Caskey Promissory Note is June 30, 2024,

with both parties agreeing to the optional second year extension, as provided in the Caskey Promissory Note.

The Caskey Promissory Note

has a current maturity date of June 30, 2025.

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

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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.

Lincoln Park Capital

8, 2020 Purchase Agreement

July 1, 2022, 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, 2024, 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.

of March 31, 2024, and through the date of filing of this quarterly report on Form 10-Q, the Company was not aware of the existence of

any violations of financial covenants included in the EWB Mortgage Loan.

Park Capital – July 8, 2020 Purchase Agreement

July 8, 2020, the Company entered into a purchase agreement (the “2020 LPC Purchase Agreement”), and a registration rights

agreement (the “2020 LPC Registration Rights Agreement”), with Lincoln Park Capital Fund, LLC (“Lincoln Park”),

pursuant to which Lincoln Park has committed to purchase up to $25.0 million of the Company’s Common Stock, $0.001 par value per

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

The 2020 LPC Purchase Agreement expires on August 1, 2023.

agreement, with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park has committed to purchase

up to $25.0 million of the Company’s Common Stock, $0.001 par value per share, from time to time over the term of the 2020 LPC

Purchase Agreement, at the Company’s direction.

The 2020 LPC Purchase Agreement expired on August 1, 2023.

the years ended March 31, 2024 and 2023, the Company did not issue any shares of Common Stock to Lincoln Park.

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rate for the semi-annual period just ended.

addition, the Company had previously received Notices of Default from the Trustee of the NJEDA Bonds as a result of the utilization of

the debt service reserve being used to pay interest payments as well as the company’s failure to make scheduled principal payments.

All monetary defaults were cured during Fiscal 2015 and the Company is current on all NJEDA Bond interest and principal payments.

the Risk Factor in Part I, Item 1A entitled “ We have substantial indebtedness which may adversely affect our financial condition

NJEDA Bonds ”.

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

1 unchanged sentence

retired, at par in July 2014.

On July 1, 2022, the East West Bank 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 leased 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 the Wall Street Journal Prime Rate (“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.

May 20, 2024, the Company reported that it received approval for the FDA for a generic version of Methotrexate Sodium 2.5mg tablets.

Methotrexate Sodium belongs to a class of drugs known as antimetabolites and will be sold under the Elite Laboratories Inc.

of the date of filing of this Annual Report on Form 10-K, this product had not yet been commercially launched.

Sheet Arrangements

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

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

standards for reporting information about operating segments.

Operating segments are defined as components of an enterprise about which

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

in deciding how to allocate resources and in assessing performance.

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

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

making decisions about allocating resources and assessing performance of the Company.

Company has determined that its reportable segments are products whose marketing approvals were secured via an Abbreviated New Drug Applications

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

ANDA products

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

are currently no intersegment revenues.

Asset information by operating segment is not presented since the chief operating decision maker

does not review this information by segment.

The reporting segments follow the same accounting policies used in the preparation of the

Company’s audited consolidated financial statements.

Please see note 15 for further details.

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting

Actual results could differ from those estimates.

Company generates revenue from the development of pain management products, manufacturing of a line of generic pharmaceutical products

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Manufacturing Fees

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

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

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

pharmaceutical products.

Company recognizes revenue when the customer obtains control of the Company’s product based on the contractual shipping terms of

the contract.

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

the product, is responsible to ensure that the product is produced in accordance with the related supply agreement and bears risk of

loss while the inventory is in-transit to the commercial partner.

Company is equipped to manufacture immediate release and controlled release products that are sold under the Elite Laboratories Inc.

label (the “Elite Label”).

The Company recognizes revenue when its customers obtain control of the Elite Labeled products.

These revenues are offset by variable consideration, which may include, without limitation, chargebacks, distribution fees, rebates,

group purchasing organization fees, prompt payment cash discounts, consideration payable to the customer, billbacks, Medicaid and other

government pricing programs, price protection and shelf stock adjustments, sales returns and profit shares.

The Company’s estimates

for variable consideration are adjusted as required at each reporting period for specific known developments that may result in a change

in the amount of total consideration it expects to receive as well as updating estimate assumptions to reflect current and/or historical

most competitors in this market, our marketing partners, or us in the case of prospective direct sales made by the Company, also give

credits for chargebacks to wholesalers that have contracts with our marketing partners, or us, prospectively, for their sales to hospitals,

group purchasing organizations, pharmacies, or other customers.

A chargeback is the difference between the price the wholesaler pays

and the price that the wholesaler’s end-customer pays for a product.

Although, our marketing partners establish, and prospectively

we would also establish reserves based on prior experience and best estimates of the impact that these policies may have in subsequent

periods, we cannot ensure that such reserves established are adequate or that actual product returns, rebates, allowances, and chargebacks

will not exceed estimates.

Differences between established reserves and actual amounts of such credits and charges, could result in a

material adverse effect on our business, financial condition, results of operations, cash flow and stock price.

Company is also equipped to manufacture immediate release and controlled-release products on a contract basis for third parties, if and

when the products are approved.

These products include products using immediate release technology, controlled-release drug technology

and products utilizing abuse deterrent technologies.

The Company also develops and markets (either on its own or by license to other

companies) generic and proprietary controlled-release and abuse deterrent pharmaceutical products.

Company recognizes revenue when the customer obtains control of the Company’s product

based on the contractual shipping terms of the contract.

Revenue on product are presented

gross because the Company is primarily responsible for fulfilling the promise to provide

the product, is responsible to ensure that the product is produced in accordance with the

related supply agreement and bears risk of loss while the inventory is in-transit to the

commercial partner.

Revenue is measured as the amount of consideration the Company expects

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

Collaborative

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

parties to the contract must actively participate in the joint operating activity;

joint operating activity must expose the parties to the possibility of significant risk and rewards, based on whether or not the

activity is successful.

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

Cash and cash

equivalents consist of cash on deposit with banks and money market instruments.

The Company places its cash and cash equivalents with

high-quality, U.S.

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

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

In determining

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

is recorded at the lower of cost or net realizable value on a 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

or changes in circumstances indicate that its carrying amounts may not be recoverable.

and equipment are stated at cost.

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

assets which range from three to forty years.

Major repairs or improvements are capitalized.

Minor replacements and maintenance and repairs

which do not improve or extend asset lives are expensed currently.

retirement or other disposition of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting

gain or loss, if any, is recognized in income.

Company capitalizes certain costs to acquire intangible assets;

if such assets are determined to have a finite useful life they are amortized

on a straight-line basis over the estimated useful life.

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

ANDAs are capitalized accordingly.

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

indicate impairment may have occurred.

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

Such indicators may include, among others and without limitation:

a significant decline in the Company’s expected future

a sustained, significant decline in the Company’s stock price and market capitalization;

a significant adverse change

in legal factors or in the business climate of the Company’s segments;

unanticipated competition;

and slower growth rates.

During the year ended March 31, 2023, the Company determined that circumstances occurred which indicated that impairment

of intangible assets may have occurred.

The circumstances included a decrease in the Company’s stock price during the year ended March

31, 2023, compared with the prior year.

The Company recorded impairment of approximately $0.3 million on its ANDA and patent intangible

assets during the year ended March 31, 2023.

and Development

and development expenditures are charged to expense as incurred.

Company assesses whether an arrangement is a lease or contains a lease at inception.

For arrangements considered leases or that contain

a lease that is accounted for separately, the Company determines the classification and initial measurement of the right-of-use asset

and lease liability at the lease commencement date, which is the date that the underlying asset becomes available for use.

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

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

a lease liability, which represents the present value of the Company’s obligation to make payments arising over the lease term.

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

Contingencies

Occasionally,

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

The Company records a provision

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

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

financial statements.

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

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

Receivable and Allowance for Expected Credit Losses

receivable are comprised of balances due from customers, net of estimated allowances for expected credit losses, and other contractual

deductions, including, without limitation, chargebacks, discounts and program rebates.

In determining collectability, historical trends

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

allowance for expected credit losses is based on the probability of future collection under

the current expected credited loss (“CECL”) impairment model under Accounting

Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic

326), Measurement of Credit Losses on Financial Assets, which was adopted by the Company

on April 1, 2023, as discussed below within Recently Adopted Accounting Pronouncements.

the CECL impairment model, the Company determines its allowance by applying a loss-rate method

based on an aging schedule using the Company’s historical loss rate.

The Company also

considers reasonable and supportable current information in determining its estimated loss

rates, such as external forecasts, macroeconomic trends or other factors including customers’

credit risk and historical loss experience.

The adequacy of the allowance is evaluated on

a regular basis.

Account balances are written off after all means of collection are exhausted

and the balance is deemed uncollectible.

Subsequent recoveries are credited to the allowance.

Changes in the allowance are recorded as adjustments to credit losses in the period incurred.

to April 1, 2023, trade receivables were presented net of allowance for expected credit losses based on the credit risk of specific clients,

past collection history, and management’s evaluation of other risks.

Expected credit losses stemming from unbilled receivables

expected to be billed between March 31, 2024 and March 31, 2028 include additional risk premiums estimated based on factors such as projected

inflation, projected decreases in GDP, and projected unemployment.

taxes are accounted for under the asset and liability method.

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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:

As of March 31, 2024, a summary of the tax years that remain

subject to examination in our major tax jurisdictions are:

United States – Federal, 2014 and forward, and State, 2010 and forward.

Company did not have any unrecognized tax positions for the years ended March 31, 2023 and 2022.

and Preferred Shares

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

ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, as applicable.

Each feature of a freestanding

financial instruments including, without limitation, any rights relating to subsequent dilutive issuances, dividend issuances, equity

sales, rights offerings, forced conversions, optional redemptions, automatic monthly conversions, dividends and exercise are assessed

with determinations made regarding the proper classification in the Company’s financial statements.

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

Under the fair value

recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award

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

of the stock-based payments to nonemployees that are fully vested and non-forfeitable as at the grant date is measured and recognized

at that date, unless there is a contractual term for services in which case such compensation would be amortized over the contractual

accordance with the Company’s Director compensation policy and certain employment contracts, director’s fees and a portion

of employee’s salaries are to be paid via the issuance of shares of the Company’s common stock, in lieu of cash, with the

valuation of such share being calculated on a quarterly basis and equal to the simple average closing price of the Company’s common

(Loss) Per Share Applicable to Common Shareholders’

Company follows ASC 260, Earnings Per Share, which requires presentation of basic and diluted earnings (loss) per share (“EPS”)

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

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

In the accompanying financial

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

stock outstanding during the period.

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

Value of Financial Instruments

Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides a framework for measuring fair value in accordance

with generally accepted accounting principles.

Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date.

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

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

own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable

fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for

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

The three levels of the fair value

hierarchy under ASC Topic 820 are described as follows:

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.

carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and other

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

Based upon current borrowing rates with similar maturities the carrying value of long-term debt approximates fair value.

Non-Financial

Assets that are Measured at Fair Value on a Non-Recurring Basis

Non-financial

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

The Company recorded impairment of approximately $0.3 million on its ANDA and patent intangible assets during the year ended March 31, 2023.

Company records treasury stock at the cost to acquire it and includes treasury stock as a component of shareholders’ equity (deficit).

The Company did not have any unrecognized tax positions for the years ended March 31, 2024 and 2023.

Issued Accounting Pronouncements

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of this update on the consolidated financial statements and does not expect a material impact on the consolidated financial statements.

has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant

December 2023, the FASB issued ASU 2023-09 (Topic 740), Improvements to income tax disclosures, which enhances the disclosure requirements

for the income tax rate reconciliation, domestic and foreign income taxes paid, requiring disclosure of disaggregated income taxes paid

by jurisdiction, unrecognized tax benefits, and modifies other income tax-related disclosures.

The amendments are effective for annual

periods beginning after December 15, 2024.

Early adoption is permitted and should be applied prospectively.

The Company is currently

evaluating the effect of adopting this guidance on its consolidated financial statements.

November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segments,” which aims

to improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public

entities to enable investors to develop more decision-useful financial analyses.

Currently, Topic 280 requires that a public entity disclose

certain information about its reportable segments.

Topic 280 also requires other specified segment items and amounts to be disclosed

under certain circumstances.

The amendments in this ASU do not change or remove those disclosure requirements and do not change how a

public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine

its reportable segments.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal

years beginning after December 15, 2024.

Early adoption is permitted.

We do not expect that the requirements of ASU 2023 – 07 will

have a material impact on our consolidated financial statements.

has evaluated recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant

impact on our consolidated financial statements and related disclosures.

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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 7. Management’s Discussion and Analysis