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Item 1. Financial Statements

2024-11-14 compared with 2024-08-14 · 336 added, 218 removed, 775 unchanged (42% of the section changed)

FINANCIAL STATEMENTS

June 30, 2024

March 31, 2024

PHARMACEUTICALS, INC.

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

receivable, net of allowance for expected credit losses of $ 261,000 and $ 236,000 respectively

expenses and other current assets

current assets

Accounts receivable, net of allowance for expected credit losses of approximately $ 233,000 and $ 236,000 respectively

Prepaid expenses and other current assets

Total current assets

Property and equipment, net of accumulated depreciation of $ 16,197,891 and $ 15,906,853 respectively

Intangible assets

Finance lease - right-of-use asset

Operating lease - right-of-use asset

Deferred income tax asset

Other assets:

Restricted cash - debt service for NJEDA bonds

Security deposits

Total other assets

LIABILITIES AND SHAREHOLDERS’ EQUITY

and equipment, net of accumulated depreciation of $ 16,425,248 and $ 15,906,853 respectively

lease - right-of-use asset

income tax asset

cash - debt service for NJEDA bonds

AND SHAREHOLDERS’ EQUITY

revenue, current portion

payable, current portion, net of bond issuance costs

payable, current portion

party loans payable (Note 7)

obligation - finance lease, current portion

obligation - operating lease, current portion

current liabilities

Accounts payable

Accrued expenses

Deferred revenue, current portion

Bonds payable, current portion, net of bond issuance costs

Loans payable, current portion

Related party loans payable (Note 7)

Lease obligation - finance lease, current portion

Lease obligation - operating lease, current portion

Total current liabilities

revenue, net of current portion

payable, net of current portion and bond issuance costs

payable, net of current portion and loan costs

obligation - finance lease, net of current portion

obligation - operating lease, net of current portion

financial instruments - warrants

long-term liabilities

Deferred revenue, net of current portion

Bonds payable, net of current portion and bond issuance costs

Loans payable, net of current portion and loan costs

Lease obligation - finance lease, net of current portion

Lease obligation - operating lease, net of current portion

Derivative financial instruments - warrants

Total long-term liabilities

Total liabilities

Shareholders’ equity:

Common Stock;

Shareholders’

par value $ 0.001 ;

1,445,000,000 shares authorized;

1,068,373,108 and 1,068,373,108 shares issued as of June 30, 2024 and March 31, 2024, respectively;

1,068,273,108 and 1,068,273,108 shares outstanding as of June 30, 2024 and March 31, 2024, respectively

Additional paid-in capital

Treasury stock;

100,000 shares as of June 30, 2024 and March 31, 2024, respectively, at cost

Accumulated deficit

1,068,373,108 shares issued as of both September 30, 2024 and March 31,

1,068,273,108 shares outstanding as of both September 30, 2024 and March 31, 2024

paid-in capital

100,000 shares as of both September 30, 2024 and March 31, 2024, at cost

( 126,809,723 )

( 116,389,267 )

Total shareholders’ equity

Total liabilities and shareholders’ equity

shareholders’ equity

liabilities and shareholders’ equity

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended June 30,

Manufacturing fees

Licensing fees

Total revenue

Cost of manufacturing

the Three Months Ended September 30,

the Six Months Ended September 30,

Manufacturing

of manufacturing

and development

and administrative

compensation through issuance of stock options

and amortization

operating expenses

Research and development

General and administrative

Non-cash compensation through issuance of stock options

Depreciation and amortization

Total operating expenses

Income from operations

Other (expense) income:

Change in fair value of derivative financial instruments - warrants

from operations

(expense) income:

in fair value of derivative financial instruments - warrants

( 12,754,735 )

Interest expense and amortization of debt issuance costs

Interest income

Other expense, net

( 2,468,350 )

Income before income taxes

Income tax expense

Basic net income per share attributable to common shareholders

Diluted net income per share attributable to common shareholders

Basic weighted average Common Stock outstanding

( 15,537,648 )

( 2,657,717 )

Diluted weighted average Common Stock outstanding

in fair value of stock-based liabilities

( 2,066,820 )

expense and amortization of debt issuance costs

( 13,003,969 )

( 4,658,288 )

( 16,020,273 )

( 4,963,551 )

before income taxes

( 9,519,026 )

( 2,732,783 )

( 8,671,274 )

( 1,436,022 )

tax (expense) benefit

( 1,517,203 )

( 1,749,182 )

(loss) income attributable to common shareholders

$ ( 11,036,229 )

$ ( 10,420,456 )

net (loss) income per share attributable to common shareholders

weighted average Common Stock outstanding

1,068,273,108

1,013,915,081

1,068,273,108

1,013,915,081

weighted average Common Stock outstanding

1,068,273,108

1,019,316,919

1,068,273,108

1,016,944,870

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Series J Preferred Stock

Treasury Stock

J Preferred Stock

Shareholders’

Balance as of March 31, 2024

as of March 31, 2024

1,068,373,108

2 unchanged sentences

$ ( 116,389,267 )

Non-cash compensation through the issuance of employee stock options

Balance at June 30, 2024

compensation through the issuance of employee stock options

at June 30, 2024

1,068,373,108

2 unchanged sentences

$ ( 115,773,494 )

Series J Preferred Stock

Additional Paid-In

Treasury Stock

( 11,036,229 )

compensation through the issuance of employee stock options

at September 30, 2024

1,068,373,108

$ 173,315,207

$ ( 306,841 )

$ ( 126,809,723 )

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

PHARMACEUTICALS, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

J Preferred Stock

Shareholders’

Balance as of March 31, 2023

as of March 31, 2023

1,013,915,081

2 unchanged sentences

$ ( 136,497,898 )

compensation through the issuance of employee stock options

at June 30, 2023

1,013,915,081

2 unchanged sentences

$ ( 135,356,089 )

Non-cash compensation through the issuance of employee stock options

Balance at June 30, 2023

1,013,915,081

2 unchanged sentences

$ ( 135,356,089 )

income (loss)

compensation through the issuance of employee stock options

at September 30, 2023

1,013,915,081

2 unchanged sentences

$ ( 120,421,488 )

1,013,915,081

$ 164,808,757

$ ( 306,841 )

$ ( 120,421,488 )

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended June 30,

For the Six Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Net (loss) income

$ ( 10,420,456 )

Adjustments to reconcile net loss (income) to net cash provided by (used in) operating activities:

Depreciation and amortization

3 unchanged sentences

Amortization of debt discount - bonds offering costs

Loss on asset disposal

Change in fair value of derivative financial instruments - warrants

Change in fair value of stock-based liabilities

Deferred tax expense

( 17,261,347 )

Non-cash compensation through the issuance of employee stock options

Non-cash rent expense and lease accretion

Non-cash loss on asset disposal

Change in operating assets and liabilities:

3 unchanged sentences

( 1,234,481 )

( 5,673,668 )

Prepaid expenses and other current assets

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CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of bond principal

Proceeds from related party loans payable

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Finance directors and officers insurance premium

Recognition of finance lease right of use asset and lease liabilities entered into

Reconciliation of cash and restricted cash

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financial statements should be read in conjunction with the Company’s Form 10-K as filed with the SEC on July 1, 2024.

results for the three months ended June 30, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending

March 31, 2025 or for any future periods.

results for the six months ended September 30, 2024 are not necessarily indicative of the results to be expected for the fiscal year

ending March 31, 2025 or for any future periods.

preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and

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of NDAs and has not engaged in business activities.

Accordingly, during the three months ended June 30, 2024 and 2023, the Company has

only engaged in business activities in a single operating segment.

Accordingly, during the three and six months ended September 30, 2024 and 2023, the

Company has only engaged in business activities in a single operating segment.

are currently no intersegment revenues.

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None of the Company’s contracts contained a significant financing

component as of June 30, 2024.

component as of September 30, 2024.

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

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for select products.

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

with revenues from sales of Elite labeled pharmaceutical products to distributors for pharmacies and institutions.

With this transition, however, a large portion of the manufacturing and license fees have been replaced with revenues

from sales of Elite labeled pharmaceutical products to distributors for pharmacies and institutions.

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

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in time for all performance obligations.

During the three months ended June 30, 2024 and 2023, the Company had paused further

development of NDAs and has not engaged in business activities in that segment.

Accordingly, during the three months ended June 30,

2024 and 2023, the Company has only engaged in business activities in a single operating segment.

The table also includes a

reconciliation of the disaggregated revenue with the reportable segments:

During the six months ended September 30, 2024 and 2023, the Company had paused further development

of NDAs and has not engaged in business activities in that segment.

Accordingly, during the six months ended September 30, 2024 and 2023,

the Company has only engaged in business activities in a single operating segment.

The table also includes a reconciliation of the disaggregated

revenue with the reportable segments:

OF DISAGGREGATION OF REVENUE

For the Three Months Ended June 30,

For the Three Months Ended September 30,

For the Six Months Ended September 30,

Manufacturing fees

Licensing fees

Total ANDA revenue

Total revenue

information on reportable segments and reconciliation of operating income by segment to income from operations before income taxes are

disclosed within Note 13.

of June 30, 2024, and March 31, 2024, the Company had $ 438,222 and $ 432,832 , of restricted cash, respectively, related to debt service

of September 30, 2024, and March 31, 2024, the Company had $ 444,124 and $ 432,832 , of restricted cash, respectively, related to debt service

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

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.

PHARMACEUTICALS, INC.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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and slower growth rates.

were no such impairments recorded during the three months ended June 30, 2024 and three months ended June 30, 2023.

The Company notes

that none of its patents relate to any of the Company’s revenue producing activities.

were no such impairments recorded during the six months ended September 30, 2024 and 2023.

The Company notes that none of its patents

relate to any of the Company’s revenue producing activities.

June 17, 2024, the Company and Nostrum Laboratories Inc.

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on June 21, 2024.

following table summarizes the Company’s intangible assets as of and for the periods ended June 30, 2024 and March 31, 2024:

following table summarizes the Company’s intangible assets as of September 30, 2024 and March 31, 2024:

OF INTANGIBLE ASSETS

June 30, 2024

September 30, 2024

Estimated Useful Life

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those temporary differences are expected to be recovered or settled.

Where applicable, the Company records a valuation allowance to reduce

any deferred tax assets that it determines will not be realizable in the future.

Due to temporary differences in the timing of recognition of items

included in income for accounting and tax purposes, deferred tax assets or liabilities are recorded to reflect the impact arising from

these differences on future tax payments.Where applicable, the Company records a valuation allowance to reduce any deferred tax assets

that it determines will not be realizable in the future.

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

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tax jurisdiction until the applicable statutes of limitation expire.

As of June 30, 2024, a summary of the tax years that remain subject

to examination in our major tax jurisdictions are:

United States – Federal, 2020 and forward, and State, 2019 and forward.

Company’s policy for recording interest and penalties associated with unrecognized tax benefits is to record such interest and

penalties as a component of income tax expense.

The Company did not have any unrecognized tax positions as of June 30, 2024 and March

Per Share Attributable to Common Shareholders’

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

As of September 30, 2024, a summary of the tax years that remain

subject to examination in our major tax jurisdictions are:

United States – Federal, 2020 and forward.

The Company did not record

unrecognized tax positions for the six months ended September 30, 2024.

Income Per Share Attributable to Common Shareholders’

Company follows ASC 260, Earnings Per Share , which requires presentation of basic and diluted (loss) income 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

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In the accompanying financial

statements, basic earnings per share is computed by dividing net income by the weighted average number of shares of Common Stock outstanding

during the period.

The computation of diluted net income per share does not include the change in fair value of derivative instruments

or the conversion of securities that would have an antidilutive effect.

the average market price of Common Stock for the three months ended June 30, 2024 and 2023 did not exceed the exercise price of the warrants,

the potential dilution from the warrants converting into 79,008,661 shares of Common Stock for all periods have been excluded from the

number of shares used in calculating diluted net income per share as their inclusion would have been antidilutive.

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

outstanding during the period.

The computation of diluted net (loss) income per share does not include the change in fair value of derivative

instruments or the conversion of securities that would have an antidilutive effect.

the Company was in a net loss position for the three and six months ended September 30, 2024, the potential dilution from the warrants

converting into 79,008,661 shares of Common Stock and the stock options converting into 15,670,000 shares of Common Stock for these periods

has been excluded from the number of shares used in calculating diluted net income per share as their inclusion would have been antidilutive.

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

OF EARNINGS (LOSS) PER SHARE APPLICABLE TO COMMON SHAREHOLDERS

For the Three Months Ended June 30,

Net income - basic

For the Three Months Ended September 30,

For the Six Months Ended September 30,

Net (loss) income - basic

$ ( 11,036,229 )

$ ( 10,420,456 )

Effect of dilutive instrument on net income

Net income - diluted

Net (loss) income - diluted

$ ( 11,036,229 )

$ ( 10,420,456 )

Weighted average shares of Common Stock outstanding - basic

1 unchanged sentence

1,013,915,081

Dilutive effect of stock options

1,068,273,108

1,013,915,081

Dilutive effect of stock options and convertible securities

Weighted average shares of Common Stock outstanding - diluted

1 unchanged sentence

1,019,316,919

Net income per share

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1,068,273,108

1,016,944,870

Net (loss) income per share

Value of Financial Instruments

1 unchanged sentence

with generally accepted accounting principles.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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Change in fair value of derivative financial instruments - warrants

Balance as of June 30, 2024

Balance as of September 30, 2024

Fair Value Measurement

2 unchanged sentences

Change in fair value of derivative financial instruments - warrants

Balance as of June 30, 2023

Balance as of September 30, 2023

Note 10 for specific inputs used in determining fair value.

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Early adoption is permitted.

The Company does not expect that the requirements of ASU 2023 – 07 will

have a material impact on its condensed consolidated financial statements.

The Company does not expect that the requirements of ASU 2023 –

07 will have a material impact on its condensed consolidated financial statements.

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

1 unchanged sentence

consisted of the following:

June 30, 2024

September 30, 2024

March 31, 2024

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OF PROPERTY AND EQUIPMENT

June 30, 2024

September 30, 2024

March 31, 2024

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Property and equipment, net

and amortization expense was $ 322,103 and $ 328,282 for the three months ended June 30, 2024 and 2023, respectively.

expense was $ 227,356 and $ 327,240 for the three months ended September 30, 2024 and 2023, respectively, and $ 622,947 and $ 655,522 for

the six months ended September 30, 2024 and 2023, respectively.

ACCRUED EXPENSES

of June 30, 2024 and March 31, 2024, the Company’s accrued expenses consisted of the following:

of September 30, 2024 and March 31, 2024, the Company’s accrued expenses consisted of the following:

OF ACCRUED EXPENSES

June 30, 2024

September 30, 2024

March 31, 2024

1 unchanged sentence

Employee bonuses

Other accrued expenses

Legal and professional expense

Salaries and fees payable

Director dues

Consultant contract fees

Salaries and fees payable

Other accrued expenses

Total accrued expenses

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SCHEDULE OF BONDS PAYABLE LIABILITY

June 30, 2024

September 30, 2024

March 31, 2024

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

expense was $ 3,544 and $ 3,548 for the three months ended June 30, 2024 and 2023, respectively.

Interest payable was $ 24,267 and $ 6,067

as of June 30, 2024 and March 31, 2024, respectively.

Interest expense was $ 18,200 and $ 20,232 for the three months ended June 30, 2024

and 2023, respectively.

of bonds for the next five years and thereafter are as follows:

expense was $ 3,545 and $ 3,548 for the three months ended September 30, 2024 and 2023, respectively, and $ 7,089 and $ 7,096 for the six

months ended September 30, 2024 and 2023, respectively.

Interest payable was $ 5,363 and $ 6,067 as of September 30, 2024 and March 31,

2024, respectively.

Interest expense was $ 18,200 and $ 19,553 for the three months ended September 30, 2024 and 2023, respectively, and

$ 39,785 and $ 39,785 for the six months ended September 30, 2024 and 2023, respectively.

of bonds for the next five years are as follows:

SCHEDULE OF MATURITIES OF BONDS

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SCHEDULE OF LOANS PAYABLE

June 30, 2024

September 30, 2024

March 31, 2024

Mortgage loan payable 4.75 % interest and maturing June 2032

Equipment and insurance financing loans payable, between 5.99 % and 12.02 % interest and maturing between July 2024 and October 2025

Equipment and insurance financing loans payable, between 5.99 % and 12.02 % interest and maturing between October 2024 and October 2025

Current portion of loans payable

Long-term portion of loans payable

interest expense associated with the loans payable was $ 34,883 and $ 77,238 for the three months ended June 30, 2024 and 2023, respectively.

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

interest expense associated with the loans payable was $ 33,135 and $ 93,832 for the three months ended September 30, 2024 and 2023, respectively,

and $ 68,017 and $ 171,070 for the six months ended September 30, 2024 and 2023, respectively.

principal payments for the next five years are as follows:

SCHEDULE OF LOAN PRINCIPAL PAYMENTS

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was exercised pursuant to the terms of the Hakim Promissory Note.

For the three months ended June 30, 2024, interest expense on the Hakim

Promissory Note totaled $ 67,500 , recorded on the Condensed Consolidated Balance Sheets in accrued expenses and on the Condensed Consolidated

Statements of Operations in interest expense and amortization of debt issuance costs.

the three and six months ended September 30, 2024, interest expense on the Hakim Promissory Note totaled $ 75,000 and $ 142,500 respectively,

recorded Condensed Consolidated Balance Sheets in accrued expenses and on the Condensed Consolidated Statements of Operations in interest

expense and amortization of debt issuance costs.

the three and six months ended September 30, 2023, interest expense totaled $ 67,500 , recorded on the Condensed Consolidated Balance Sheets

in accrued expenses and on the Condensed Consolidated Statements of Operations in interest expense and amortization of debt issuance

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

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The second year extension was exercised pursuant to the terms of the Caskey Promissory Note.

For the three months ended June 30, 2024, interest expense on the Caskey Promissory Note totaled $ 22,500 , recorded on the Condensed Consolidated

Balance Sheets in accrued expenses and on the Condensed Consolidated Statements of Operations in interest expense and amortization of

debt issuance costs.

the three and six months ended September 30, 2024, interest expense on the Caskey Promissory Note totaled $ 25,000 and $ 47,500 respectively,

recorded on the Condensed Consolidated Balance Sheets in accrued expenses and on the Condensed Consolidated Statements of Operations

in interest expense and amortization of debt issuance costs.

the three and six months ended September 30, 2023, interest expense totaled $ 22,500 , recorded on the Condensed Consolidated Balance Sheets

in accrued expenses and on the Condensed Consolidated Statements of Operations in interest expense and amortization of debt issuance

interest is included on the Condensed Consolidated Statements of Operations in the line item titled “interest expense and amortization

of debt issuance costs”.

As of September 30, 2024, the portion of this interest expense which was accrued and owing to Mr.

totaled $ 255,000 , with such amount being included on the Condensed Consolidated Balance Sheet in the line item titled “accrued

the three and six months ended September 30, 2023, interest expense on the Caskey Promissory Note totaled $ 22,500 recorded on the Condensed

Consolidated Balance Sheets in accrued expenses and on the Condensed Consolidated Statements of Operations in interest expense and amortization

of debt issuance costs.

PHARMACEUTICALS, INC.

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Elite’s launch of a generic Oxycontin will depend on the approval by the FDA and the outcome

of various litigations involving Purdue or the expiry of the patents listed on the Orange Book.

As of June 30, 2024, the results of such

proceedings cannot be predicted with certainty and are neither probable nor estimable.

of various litigation involving Purdue or the expiry of the patents listed on the Orange Book.

As of September 30, 2024, the results

of such proceedings cannot be predicted with certainty and are neither probable nor estimable.

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

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year to October 31, 2024.

Company entered into an operating lease for new office space in North Bay Village, Pompano FL (the “NBV Pompano Office Lease”).

The Company takes occupancy on October 1, 2024.

The NBV Pompano Office Lease has a term of three years, ending on September 30, 2027.

Company entered into a lease agreement for a portion of a one-story warehouse, located at 144 Ludlow Avenue, Northvale, New Jersey (the

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The February 2024 Equipment Lease has a term of five years , ending in February 2029.

The Company will retain

ownership of the equipment at lease termination .

The Company will

retain ownership of the equipment at lease termination.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 2024, the Company entered into three separate finance leases for manufacturing assets (the “March 2024 Equipment Leases”).

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2024 Equipment Leases have a term of five years , ending in March 2029.

The Company will retain ownership of all related assets at lease termination.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company will retain ownership of all related assets at lease

July 2024, the Company entered into two separate finance leases for manufacturing assets (the “July 2024 Equipment Leases”).

The July 2024 Equipment Leases are related related warehouse and laboratory equipment with an aggregate acquisition cost of $153,745.

Each of the separate leases included in the July 2024 Equipment Lease have a term of five years, ending in July 2029.

The Company will

retain ownership of all related assets at lease terminations.

lease is classified as a finance lease if any of the following criteria are met:

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Classification

June 30, 2024

September 30, 2024

March 31, 2024

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Rent expense under the Pompano Office Lease was $ 8,087 and $ 6,519 for the three months

ended June 30, 2024 and 2023, respectively.

Rent expense under the 144 Ludlow lease was $ 151,515 and $ 0 for the three months ended June

30, 2024 and 2023, respectively.

Rent expense is recorded in general and administrative expense in the condensed consolidated statements of operations.

ended September 30, 2024 and 2023, respectively, and $ 16,175 and $ 13,038 for the six months ended September 30, 2024 and 2023, respectively.

Rent expense under the 144 Ludlow lease was $ 151,515 and $ 0 for the three months ended September 30, 2024 and 2023, respectively, and

$ 303,030 and $ 0 for the six months ended September 30, 2024 and 2023, respectively.

Rent expense is recorded in general and administrative

expense in the unaudited condensed consolidated statements of operations.

PHARMACEUTICALS, INC.

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

For the Three Months Ended June 30,

For the Six Months Ended September 30,

Lease Term and Discount Rate

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Company has 79,008,661 total warrants to purchase shares of Common Stock outstanding with a weighted average exercise price of $ 0.1521

as of June 30, 2024 and March 31, 2024.

as of September 30, 2024 and March 31, 2024.

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

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option of the holder, such warrants are classified as liabilities and measured initially and subsequently at fair value.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

exercise price is subject to adjustment for any issuances or deemed issuances of Common Stock or Common Stock equivalents at an effective

2 unchanged sentences

customary events.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

fair value of the Series J Warrants was calculated using a Black-Scholes model.

2 unchanged sentences

SCHEDULE OF FAIR VALUE OF WARRANTS ISSUED

June 30, 2024

September 30, 2024

March 31, 2024

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Change in fair value of derivative financial instruments - warrants

Balance at June 30, 2024

Balance at September 30, 2024

STOCK-BASED COMPENSATION

of the compensation paid by the Company to employees consists of the granting of

options to purchase Common Stock.

of the compensation paid by the Company to employees consists of the granting of options to purchase Common Stock.

Director Compensation

Company’s Director compensation policy, instituted in October 2009 and further revised in January 2016, includes provisions that

a portion of director’s fees are to be paid via the issuance of shares of the Company’s Common Stock, in lieu of cash, with

the valuation of such shares being calculated on quarterly basis and equal to the average closing price of the Company’s Common

the six months ended September 30, 2023, the Company accrued director’s fees totaling $ 227,915 , which will be paid via cash payments

totaling $ 75,000 and the issuance of shares of Common Stock, with the valuation of such shares being calculated on a quarterly basis

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

SCHEDULE OF STOCK BASED COMPENSATION

Balance of common stock owed at April 1, 2023

Awarded shares

Change in fair value of stock-based liabilities

Balance of common stock owed at September 30, 2023

the three and six months ended September 30, 2024, there was no common stock owed to Directors as the amount outstanding was paid during

fiscal year 2024.

Employee/Consultant Compensation

contracts with the Company’s President and Chief Executive Officer and certain other employees and engagement contracts with certain

consultants include provisions for a portion of each employee’s salaries or consultant’s fees to be paid via the issuance

of shares of the Company’s Common Stock, in lieu of cash, with the valuation of such shares being calculated on a quarterly basis

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

OF STOCK BASED COMPENSATION

Balance of common stock owed at April 1, 2023

Awarded shares

Change in fair value of stock-based liabilities

Balance of common stock owed at September 30, 2023

the three and six months ended September 30, 2024, the Company accrued no additional salaries owed to the Company’s President,

Chief Executive Officer and certain other employees.

PHARMACEUTICALS, INC.

24 unchanged sentences

grant date fair value of option awards is determined using the Black Scholes option-pricing model.

No options were issued for the three

months ended June 30, 2024 and 2023.

summary of the activity of Company’s 2024 Equity Incentive plan and prior equity incentive plans for the three months ended June

No options were issued the six months

ended September 30, 2024 and 2023.

summary of the activity of Company’s 2024 Equity Incentive plan and prior equity incentive plans for the six months ended September

30, 2024 is as follows:

SCHEDULE OF STOCK OPTION PLAN

OF STOCK OPTION PLAN

Underlying Options

Exercise Price

Term (in years)

Weighted Average

Remaining Contractual Term (in years)

Intrinsic Value

Outstanding at March 31, 2024

Expired and Forfeited

Outstanding at June 30, 2024

Exercisable at June 30, 2024

Outstanding at September 30, 2024

Exercisable at September 30, 2024

aggregate intrinsic value for outstanding options is calculated as the difference between the exercise price of the underlying awards

and the quoted price of the Company’s Common Stock as of June 30, 2024 of $ 0.20 for those awards with strike prices lower than

the quoted price of the Company’s Common Stock as of June 30, 2024.

As of June 30, 2024, there was $ 385,592 in unrecognized stock

based compensation expense that will be recognized over a weighted average 1.94 year period.

and the quoted price of the Company’s Common Stock as of September 30, 2024 of $ 0.39 for those awards with strike prices lower

than the quoted price of the Company’s Common Stock as of September 30, 2024.

As of September 30, 2024, there was $ 333,263 in unrecognized

stock based compensation expense that will be recognized over a weighted average 1.73 year period.

CONCENTRATIONS AND CREDIT RISK

customers accounted for approximately 68 % of the Company’s revenues for the three months ended June 30, 2024.

These two customers

customers accounted for approximately 72 % of the Company’s revenues for the six months ended September 30, 2024.

These three customers

accounted for approximately 42 %, 22 %, and 8 % of revenues each, respectively.

customers accounted for approximately 76 % of the Company’s revenues for the three months ended June 30, 2023.

These five customers

accounted for approximately 21 %, 16 %, 15 %, 14 %, and 10 % of revenue each, respectively.

customers accounted for approximately 74 % of the Company’s accounts receivable as of June 30, 2024.

customers accounted for approximately 67 % of the Company’s revenues for the six months ended September 30, 2023.

These three customers

accounted for approximately 35 %, 22 %, and 10 % of revenues each, respectively.

customers accounted for approximately 70 % of the Company’s accounts receivable as of September 30, 2024.

These two customers accounted

for approximately 46 % and 24 % of accounts receivable each, respectively.

customers accounted for approximately 56 % of the Company’s accounts receivable as of June 30, 2023.

These three customers accounted

customers accounted for approximately 78 % of the Company’s accounts receivable as of September 30, 2023.

These two customers accounted

for approximately 41 % and 37 % of accounts receivable each, respectively.

suppliers accounted for approximately 60 % of the Company’s purchases of raw materials for the six months ended September 30, 2024.

These two suppliers accounted for approximately 43 %, and 17 %, of purchasing each, respectively.

supplier accounted for approximately 37 % of the Company’s purchases of raw materials for the six months ended September 30, 2023.

PHARMACEUTICALS, INC.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

suppliers accounted for approximately 61 % of the Company’s purchases of raw materials for the three months ended June 30, 2024.

These two customers accounted for approximately 39 % and 22 % of purchasing each, respectively.

supplier accounted for approximately 39 % of the Company’s purchases of raw materials for the three months ended June 30, 2023.

SEGMENT RESULTS

5 unchanged sentences

Company has historically determined that its reportable segments are ANDAs for generic products and NDAs for branded products.

Company identified its reporting segments based on the marketing authorization relating to each and the financial information used

by its chief operating decision maker to make decisions regarding the allocation of resources to and the financial performance of

the reporting segments.

During fiscal years ended March 31, 2024 and 2023, the Company had paused further development of NDAs and

has not engaged in business activities in that segment.

Accordingly, during the three months ended June 30, 2024 and 2023, the Company has only engaged in business activities in a single operating segment.

identified its reporting segments based on the marketing authorization relating to each and the financial information used by its chief

operating decision maker to make decisions regarding the allocation of resources to and the financial performance of the reporting segments.

During fiscal years ended March 31, 2024 and 2023, the Company had paused further development of NDAs and has not engaged in business

activities in that segment.

Accordingly, during the six months ended September 30, 2024 and 2023, the Company has only engaged in business

activities in a single operating segment.

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

3 unchanged sentences

SCHEDULE OF SELECTED INFORMATION FOR REPORTABLE SEGMENTS

For the Three Months Ended June 30,

For the Three Months Ended September 30,

For the Six Months Ended September 30,

Operating Income by Segment

Operating income by Segment

Company notes that there was no revenue related to the NDA segment for the three months ended June 30, 2024 and 2023.

Company notes that there was no revenue related to the NDA segment for the three and six months ended September 30, 2024 and 2023.

table below reconciles the Company’s operating income by segment to income before income taxes as reported in the Company’s

1 unchanged sentence

SCHEDULE OF OPERATING INCOME BY SEGMENT TO INCOME FROM OPERATIONS

For the Three Months Ended June 30,

For the Three Months Ended September 30,

For the Six Months Ended September 30,

Operating income by segment

2 unchanged sentences

( 1,533,208 )

( 4,242,898 )

( 3,194,912 )

Interest income

4 unchanged sentences

( 12,754,735 )

Income before income taxes

( 2,468,350 )

( 15,537,648 )

( 2,657,717 )

Change in fair value of stock-based liabilities

( 2,066,820 )

Loss before income taxes

$ ( 9,519,026 )

$ ( 2,732,783 )

$ ( 8,671,274 )

$ ( 1,436,022 )

PHARMACEUTICALS, INC.

16 unchanged sentences

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

of June 30, 2024, the Company owes an aggregate of $ 4,435,536 to Mikah in accordance with the agreements, with such amount being recorded

as an accrued expense on the condensed consolidated balance sheets.

of September 30, 2024, the Company owes an aggregate of $ 4,008,074 to Mikah in accordance with the agreements, with such amount being

recorded as an accrued expense on the unaudited condensed consolidated balance sheets.

determination of income tax expense in the accompanying unaudited condensed consolidated statements of income is based on the effective

tax rate for the year, adjusted for the impact of any discrete items which are accounted for in the period in which they occur.

The Company’s

income tax expense was $ 231,979 and

$ 154,975 for the three months ended June 30, 2024 and June 30, 2023, respectively.

The Company recorded tax expense of approximately

27.4 % and 11.9 % of income before income tax expense, for each of the three-month period ended June 30, 2024 and 2023, respectively.

increase of the effective tax rate for the current period as compared to the prior period is primarily due to the release of the valuation

allowance on the Company’s deferred tax assets as of March 31, 2024.

Company’s income tax (Expense)/Benefit was $ ( 1,749,182 ) and $ 17,512,432 for the six months ended September 30, 2024 and 2023, respectively.

The Company’s income tax (Expense)/Benefit was $ ( 1,517,203 ) and $ 17,667,384 for the three months ended September 30, 2024 and 2023,

respectively.

SUBSEQUENT EVENTS

launch of Acetaminophen and Codeine Phosphate Tablets

October 7, 2024, the Company announced the commercial launch of its generic version of Tylenol ® with Codeine (acetaminophen

and codeine phosphate) 300mg/15mg, 300mg/30mg and 300mg/60mg tablets.

Acetaminophen and Codeine Phosphate tablets are indicated for the

management of mild to moderated pain, where treatment with an opioid is appropriate and for which alternative treatments are inadequate.

This product is marketed and sold under the Elite Laboratories, Inc.

Adderall ® receives marketing approval from the Israeli Ministry of Health

October 10, 2024, the Company announced the Israeli Ministry of Health approval for its generic version of Adderall ® ,

an immediate-release mixed salt of a single entity Amphetamine product (Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine

Sulfate, Amphetamine Sulfate) with strengths of 10mg, 20mg and 30mg tablets.

The Company will supply the product to Dexcel Pharma (Or

Akiva, Israel), the Company’s exclusive distributor for the the Israeli market.

The product is a central nervous system stimulant

indicated for the treatment of Attention Deficit Hyper Activity Disorder (“ADHD”) and Narcolepsy.

As of the date of filing

of this quarterly report on Form 10-Q, this product has not been commercially launched in Israel.

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

What changed 10-Q

Item 1. Financial Statements