What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-02-13 compared with 2024-11-14 · 233 added, 204 removed, 393 unchanged (53% of the section changed)

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

following discussion of our financial condition and results of operations for the Six Months Ended September 30, 2024 and 2023 should

following discussion of our financial condition and results of operations for the Nine Months Ended December 31, 2024 and 2023 should

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

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registered facility for research, development, and manufacturing.

We are also party to an operating lease for office space at Pompano

Beach, Florida (the “Pompano Office Lease”).

We are also party to an operating lease for office space at North Bay

Village, Florida (the “NBV Office Lease”).

focus our efforts on the following areas:

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product candidates in our pipeline including products co-developed with partners;

(iv) commercial exploitation of our products

either by sales under our own label, license and the collection of royalties, or through the manufacture of our formulations;

development of new products for sale under our own label, and the expansion of our licensing agreements with other pharmaceutical companies,

including co-development projects, joint ventures and other collaborations.

(iv) commercial exploitation of our products either

by sales under our own label, license and the collection of royalties, or through the manufacture of our formulations;

and (v) development

of new products for sale under our own label, and the expansion of our licensing agreements with other pharmaceutical companies, including

co-development projects, joint ventures and other collaborations.

focus is on the development of various types of drug products, including generic drug products which require ANDAs as well as branded

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Methodone Hydrochloride tablets

of the date of filing of this Quarterly report on Form 10-Q, these products have not yet been commercially launched.

of the date of filing of this Quarterly report on Form 10-Q, Oxycodone Hydrochloride and Acetaminophen tablets and Methodone Hydrochloride

tables have not yet been commercially launched.

October 7, 2024, the Company announced the commercial launch of Acetaminophen and Codeine Phosphate 300mg/15mg, 300mg/30mg and 300mg/60mg

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Form 10-Q, these products have not yet been commercially launched.

November 18, 2024, the Company reported that it received approval from the FDA for a generic version of Vyvanse ® (Lisdexamphetamine

Dimesylate) with strengths of 10mg, 20mg, 30mg, 40mg, 50mg, 60mg, and 70mg capsules.

This product is for treatment of attention deficit

hyperactivity disorder (“ADHD”) and is marketed and sold under the Elite Laboratories Inc.

The Company announced

the commercial launch of this product on December 26, 2024.

December 2, 2024, the Company announced the commercial launch of Elite’s generic version of Norco ® (Acetaminophen

and Hydrocodone Bitartrate) 325mg/2.5mg, 325mg/5mg, 325mg/7.5mg and 325mg/10mg tablets.

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

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and Codeine Phosphate 300mg/15mg, 300mg/30mg and 300mg/60mg tablets (“APAP Codeine Tablets”).

Acetaminophen

and Hydrocodone Bitartrate 325mg/2.5mg, 325mg/5mg, 325mg/7.5mg, and 325mg/10mg tablets (“APAP Hydrodocone Tablets”)

Lisdexamphetamine

Dimesylate 10mg, 20mg, 30mg, 40mg, 50mg 60mg and 70mg capsules (“Lisdex Capsules”)

Under FDA Review

39 unchanged sentences

Generic dopamine agonist accepted for review in December 2022

Generic opiate analgesic for pain management accepted for review

in September 2023

Generic central nervous system stimulant accepted for review

in December 2023

Generic opiate analgesic for pain management accepted for review in September

Products Not Yet Commercialized

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owned by Elite and Praxgen Pharmaceuticals LLC, formerly SunGen Pharma LLC, (“Praxgen”).

Bitartrate and Acetaminophen Tablets

June 17, 2024, the Company entered into an asset purchase agreement with Nostrum Laboratories Inc.

(the “Nostrum Asset Purchase

Agreement”), pursuant to which the Company acquired all rights in and to the approved ANDA to this product and a royalty-free,

non-exclusive perpetual license to use the manufacturing technology, proprietary information, processes, techniques, protocols, methods,

know-how and improvements necessary or used to manufacture this product.

Hydrochloride and Acetaminophen Tablets

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without limitation, of ANDAs acquired or approved prior to the fiscal year ended March 31, 2024 (“Fiscal 2024”) and ANDAs

acquired or approved during the quarterly period ending September 30, 2024.

Such evaluations include, without limitation, costs and benefits

relating to each ANDA owned, with such costs including those fees required under the FDA’s Generic Drug User Fee Amendment which

is significantly influenced by the number of ANDAs owned, and other costs and benefits taking into consideration various specific market

factors for each ANDA.

acquired or approved during the quarterly period ending December 31, 2024.

Such evaluations include, without limitation, costs and

benefits relating to each ANDA owned, with such costs including those fees required under the FDA’s Generic Drug User Fee Amendment

which is significantly influenced by the number of ANDAs owned, and other costs and benefits taking into consideration various specific

market factors for each ANDA.

Those ANDAs with a cost/benefit profile not consistent with management criteria for continuation are identified

for disposition and effort is made to determine the optimal course of action to achieve disposition of the ANDA.

Company did not transfer or discontinue any ANDAs during the quarterly period ending September 30, 2024 or Fiscal 2024.

Company did not transfer or discontinue any ANDAs during the quarterly period ending December 31, 2024 or Fiscal 2024.

Accounting Estimates

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regular basis, we review our critical accounting policies and how they are applied in the preparation our financial statements.

Recognition - The Company generates revenue from manufacturing and sales of generic pharmaceuticals

bearing either the Elite label, which are sold to pharmaceutical distributors or the label of a licensing partner, which Elite sells directly

to such licensing partner, and licensing fees.

Revenues earned from the sale of Elite label products are recorded at their net realizable

value which consists of gross amounts invoiced reduced by contractual reductions, including, without limitation, chargebacks, discounts

and program rebates, as applicable.

Licensing fees include the commercialization of products either by license and the collection of royalties,

or the expansion of licensing agreements with other pharmaceutical companies, including co-development projects, joint ventures and other

collaborations.

Recognition - The Company generates revenue from manufacturing and sales of generic pharmaceuticals bearing either the Elite label,

which are sold to pharmaceutical distributors or the label of a licensing partner, which Elite sells directly to such licensing partner,

and licensing fees.

Revenues earned from the sale of Elite label products are recorded at their net realizable value which consists of

gross amounts invoiced reduced by contractual reductions, including, without limitation, chargebacks, discounts and program rebates,

as applicable.

Licensing fees include the commercialization of products either by license and the collection of royalties, or the expansion

of licensing agreements with other pharmaceutical companies, including co-development projects, joint ventures and other collaborations.

of goods and services

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losses in the period incurred.

Expected credit losses stemming from unbilled receivables expected to billed between September 30, 2024

and September 30, 2028 included additional risk premiums estimated based on factors such as projected inflation, projected decreases

in GDP, and projected unemployment.

Expected credit losses stemming from unbilled receivables expected to billed between December 31, 2024

and December 31, 2028 included additional risk premiums estimated based on factors such as projected inflation, projected decreases in

GDP, and projected unemployment.

Taxes - Income taxes are accounted for under the asset and liability method.

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tax jurisdictions until the applicable statutes of limitation expire.

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

remain subject to examination in our major tax jurisdictions are:

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

subject to examination in our major tax jurisdictions are:

United States of America – Federal, 2020 and forward, and State, 2019

2019 and forward.

The Company did not record unrecognized tax positions for the six months ended September 30, 2024.

The Company did not record unrecognized tax positions for the nine months ended December 31, 2024.

Accounting Pronouncements

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necessarily indicative of future results.

months ended September 30, 2024 compared to the three months ended September 30, 2023

Cost of revenue and Gross profit:

For the Three Months Ended September 30,

months ended December 31, 2024 compared to the three months ended December 31, 2023

Cost of manufacturing and Gross profit:

the Three Months Ended December 31,

Manufacturing fees

$ (1,052,979 )

Licensing fees

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Gross profit - percentage

revenues for the three months ended September 30, 2024 increased by $4.7 million or 33%, to $18.9 million, as compared to $14.2 million,

for the corresponding period of the prior year, , primarily due to increased sales of the Elite label products during the current quarter

in comparison to the comparable quarter of the prior fiscal year.

The Elite label products were launched during the prior fiscal year

and the current fiscal year represents their second year in the market.

The additional twelve months of marketing the Elite label products

has had a positive impact on sales, when compared to the sales achieved in the comparable period of the prior year.

revenues for the three months ended December 31, 2024 decreased by $1.2 million or 8%, to $14.4 million, as compared to $15.5

million, for the corresponding period of the prior year, primarily due to decreased sales of the Elite label products during the

current quarter in comparison to the comparable quarter of the prior fiscal year achieved as a result of decreased shipments during

the extended holiday period in the current fiscal year that occurred as a result of the mid-week December and New Years holidays and

allocation of manufacturing/marketing resources to the commercial launch of Lisdex Capsules, which had its full launch in January 2025.

Manufacturing

fees for the three months ended September 30, 2024 revenue increased by $4.7 million, or 35%, primarily due to increased sales of the

Elite label products during the current fiscal year in comparison to the comparable quarter of the prior fiscal year.

The Elite label

products were launched during the prior fiscal year and the current fiscal year represents their second year in the market.

The additional

twelve months of marketing the Elite label products has had a positive impact on sales, when compared to the sales achieved in the comparable

period of the prior year.

fees revenue for the three months ended September 30, 2024 was relatively unchanged, increasing by less than 1% as compared to licensing

fees earned during the comparable period of the prior fiscal year.

fees revenue for the three months ended December 31, 2024 decreased by $1.1 million, or 7%, primarily due to decreased sales of the

Elite label products during the current fiscal year in comparison to the comparable quarter of the prior fiscal year achieved as a

result of decreased shipments during the extended holiday period in the current fiscal year that occurred as a result of the

mid-week December and New Years holidays and allocation of manufacturing/marketing resources to the commercial launch of Lisdex

fees revenue for the three months ended December 31, 2024 decreased by $0.1 million, or 16%, primarily due to the Company’s transitioning

away from licensing products to third parties to marketing of the Elite label, which does not result in revenues from licensing fees.

of manufacturing consists of manufacturing and assembly costs.

Our cost of revenue increased by $3.0 million or 39%, to $10.7 million

as compared to $7.7 million for the corresponding period in the prior fiscal year.

This increase was due to an increased volume of products

sold during the three months ended September 30, 2024, as compared to the comparable period of the prior fiscal year, as noted above.

gross profit margin was 43% during the three months ended September 30, 2024 as compared to 46% during the comparable period of the

Our cost of manufacturing decreased by $0.3 million or 3% primarily due

to these costs being positively correlated to manufacturing revenues as well as product lines having varying gross profit margins.

Changes in the mix of product line revenues result

in variances in overall cost of manufacturing as a percentage of overall revenues.

gross profit margin was 43% during the three months ended December 31, 2024 as compared to 45% during the comparable period of the

prior fiscal year.

The decrease is due to increased labor costs resulting from manufacturing personnel overtime hours incurred to

ensure production and supply of our products in response to increased demand.

In addition, during the three months ended September

30, 2024, manufacturing fees represented a higher proportion of total revenue, as compared to licensing fees.

Manufacturing fees

generate lower gross profit margins as compared to licensing fees, due to it having a related cost of manufacturing, which is not

associated with licensing fees.

The Company is in the process of expanding its manufacturing facilities and capacity to achieve

utilization rates that will yield higher volumes at standard labor rates.

For the Three Months Ended September 30,

The decrease is due to the fixed cost component of manufacturing costs being allocated to a lower revenue base

combined with a product line mix with a higher proportion of lower margin product lines as compared to the product line mix relating

to sales in the comparable period of the prior fiscal year.

the Three Months Ended December 31,

Operating expenses:

Research and development

General and administrative

Non-cash compensation

Depreciation and amortization

Total operating expenses

expenses for the three months ended September 30, 2024 increased by $0.2 million, or 4%, to $4.7 million as compared to $4.5 million

for the corresponding period in the prior fiscal year, largely due to an increase in general and administrative costs of $0.7 million.

and development costs during the three months ended September 30, 2024 were $2.0 million, a decrease of $0.65 million, or 25%, from approximately

and amortization

operating expenses

expenses for the three months ended December 31, 2024 increased by $1.5 million, or 43%, to $5.0 million as compared to $3.5 million

for the corresponding period in the prior fiscal year, largely due to increases in general and administrative costs of $1.0 million and

research and development costs of $0.4 million.

and development costs during the three months ended December 31, 2024 were $1.8 million, an increase of $0.4 million, or 28%, from approximately

$1.4 million of such costs for the comparable period of the prior year.

The decrease was the result of laboratory resources being allocated

more to supporting commercial operations as well as the number, timing and nature of product development activities during the three

months ended September 30, 2024, as compared to the comparable period of the prior fiscal year.

and administrative expenses for the three months ended September 30, 2024 were $2.3 million, an increase of $0.7 million or approximately

The increase was the result of the number, timing and nature

of product development activities conducted during the three months ended December 31, 2024 as compared to the comparable period of the

prior fiscal year.

and administrative expenses for the three months ended December 31, 2024 were $2.7 million, an increase of $1.0 million or approximately

59% from the comparable period of the prior fiscal year, largely due to increased human resource costs resulting from increased headcounts

as well as increased costs of financial and tax reporting compliance as compared to the comparable period of the prior year.

compensation expense for the three months ended September 30, 2024 and 2023 was less than $0.1 million.

and amortization expenses from the three months ended September 30, 2024 were $0.4 million, which increased slightly as a result of

additional capital expenditures and ASC 842 finance assets acquired, from $0.3 million in such costs for the comparable period of

the prior fiscal year.

a result of the foregoing, our income from operations during the three months ended September 30, 2024 was $3.5 million, compared to

income from operations of $1.9 million for the comparable period of the prior fiscal year.

income (expense):

For the Three Months Ended September 30,

Other income (expenses):

Change in fair value of derivative financial instruments - warrants

as well as increased costs of regulatory, financial and tax reporting compliance as compared to the comparable period of the prior year.

compensation expense for the three months ended December 31, 2024 and 2023 was less than $0.1 million.

and amortization expenses from the three months ended December 31, 2024 were $0.4 million, which increased by $0.1 million or 26% for

the corresponding period of the prior fiscal year as a result of additional capital expenditures and ASC 842 finance leases acquired

as compared with such costs for the comparable period of the prior fiscal year.

a result of the foregoing, our income from operations during the three months ended December 31, 2024 was $1.1 million, compared

to income from operations of $3.5 million for the comparable period of the prior fiscal year.

(expense) income:

the Three Months Ended December 31,

Other (expense) income:

Change in fair

value of derivative financial instruments - warrants

$ (11,729,368 )

1 unchanged sentence

$ (9,311,596 )

Change in fair value of stock-based liabilities

Interest expense and amortization of debt issuance costs

Change in fair value of

stock-based liabilities

Interest expense and amortization

of debt issuance costs

Gain from settlement agreements

Interest income

Other expenses, net

(expense) income, net

$ (11,750,575 )

1 unchanged sentence

$ (8,123,660 )

Other income (expenses) for the three months ended September 30, 2024 was a net other (expense) $13.0 million, an increase of $8.3 million from a net

other (expense) of $4.7 million for the comparable period of the prior fiscal year.

The increase was primarily due to an increase of $10.3

million relating to the change in fair value of derivative financial instruments, offset by a decrease of other expenses of $2.1 million

relating to the change in fair value of stock-based liabilities and by a slight increase in other expenses of $0.1 million relating to

the interest expense and amortization of debt issuance costs in the current fiscal year as compared to the comparable period of the prior

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 other income expense recorded from changes in the fair value of our derivatives

instruments and stock-based liabilities and changes in the closing price of the Company’s Common Stock.

The increase in interest

expense associated with the loans payable is due to the Company servicing a larger principal amount of loans payable during the three

months ended September 30, 2024 as compared to the comparable period of the prior fiscal year

a result of the foregoing, our net loss before income taxes for the three months ended September 30, 2024 was $9.5 million, compared

(expense) income for the three months ended December 31, 2024 was a net other (expense) of $11.8 million, an increase of $8.1 million

from a net other (expense) of $3.6 million for the comparable period of the prior fiscal year.

The increase was primarily due to

an increase of $9.3 million in other expenses relating to the change in fair value of derivative financial instruments.

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 other income expense recorded from changes in the fair value of our derivatives instruments

and stock-based liabilities and changes in the closing price of the Company’s Common Stock.

This increase was offset by other income

(expense) recorded in the period ended December 31, 2023, which included the following two line items that did not occur during the period

ended December 31, 2024:

expense of $2.9 million from change in fair value of stock based liabilities and gain from settlement agreements

of $1.8 million.

The change in fair value of stock based liabilities relates to stock based compensation policies that were discontinued

at the end of the fiscal year ended March 31, 2023.

The gain from settlement agreements is a one-time event that occurred during the

period ended December 31, 2023, but not in the period ended December 31, 2024.

Taken together, these two items from the prior fiscal

year contributed a net $1.1 million in other expenses, which were a component of the overall increase in net other expenses of $8.1 million.

a result of the foregoing, our net loss before income taxes for the three months ended December 31, 2024 was $10.7 million, compared

to net loss before income taxes of $0.1 million for the comparable period of the prior fiscal year.

months ended September 30, 2024 compared to the six months ended September 30, 2023

Income Taxes:

The Company recorded

tax (expense)/benefit of approximately (2.2)% and 849.4% of loss before income taxes, for the three months ended December 31, 2024 and

2023, respectively.

The decrease 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 December 31, 2023 and the nondeductible fair market

value change in the Company’s warrant derivative liabilities.

months ended December 31, 2024 compared to the nine months ended December 31, 2023

Cost of revenue and Gross profit:

For the Six Months Ended September 30,

the Nine Months Ended December 31,

Manufacturing fees

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Gross profit - percentage

revenues for the six months ended September 30, 2024 increased by $14.5 million or 63%, to $37.7 million, as compared to $23.1 million,

for the corresponding period of the prior year due to increased sales of the Elite label products during the current fiscal year in comparison

to the comparable quarter of the prior fiscal year.

The Elite label products were launched during the prior fiscal year and the current

fiscal year represents their second year in the market.

The additional twelve months of marketing the Elite label products has had a

positive impact on sales, when compared to the sales achieved in the comparable period of the prior year.

Manufacturing

fees revenue increased by $15.3 million, or 71%, primarily due to increased sales of the Elite label products during the current fiscal

year in comparison to the comparable quarter of the prior fiscal year.

The Elite label products were launched during the prior fiscal

year and the current fiscal year represents their second year in the market.

The additional twelve months of marketing the Elite label

products has had a positive impact on sales, when compared to the sales achieved in the comparable period of the prior year.

revenues for the nine months ended December 31, 2024 increased by $13.4 million or 35%, to $52.0 million, as compared to $38.7 million,

for the corresponding period of the prior year This increase was primarily driven by manufacturing fees revenue which increased

by $14.2 million, or 39%, as compared to the corresponding period of the prior year.

This increase is due to increased sales of the Elite label products during the current fiscal year in comparison to

the comparable period of the prior fiscal year.

The Elite label products were launched during the prior fiscal year and the current fiscal

year represents their second year in the market.

The additional twelve months of marketing the Elite label products has had a positive

impact on sales, on a cumulative basis when compared to the sales achieved in the comparable period of the prior year.

fees revenue decreased by $0.8 million, or 34%.

2 unchanged sentences

dated March 6, 2019 and April 9, 2019 (the “Lannett Agreements”) on March 31,

License fees earned during the six months ended September 30, 2023 included residual amounts earned in relation to the expired

License fees earned during the nine months ended December 31, 2023 included residual amounts earned in relation to the expired

Lannett Agreements.

License fees earned during the six months ended September 30, 2024 did not include such residual amounts.

License fees earned during the nine months ended December 31, 2024 did not include such residual amounts.

the Company is transitioning away from licensing products to third parties to marketing of the Elite label, which does not result in

revenues from licensing fees.

of manufacturing consists of manufacturing and assembly costs.

2 unchanged sentences

This increase was due to an increased volume of products

sold during the six months ended September 30, 2024, as compared to the comparable period of the prior fiscal year, as noted above.

gross profit margin was 44% during the six months ended September 30, 2024 as compared to 48% during the comparable period of the

prior fiscal year.

The decrease is due to increased labor costs resulting from manufacturing personnel overtime hours incurred to

ensure production and supply of our products in response to increased demand.

In addition, during the six months ended September 30,

2024, manufacturing fees represented a higher proportion of total revenue, as compared to licensing fees.

Manufacturing fees

generate lower gross profit margins as compared to licensing fees, due to it having a related cost of manufacturing, which is not

associated with licensing fees.

The Company is in the process of expanding its manufacturing facilities and capacity to achieve

utilization rates that will yield higher volumes at standard labor rates.

For the Six Months Ended September 30,

sold during the nine months ended December 31, 2024, as compared to the comparable period of the prior fiscal year, as noted above.

gross profit margin was 44% during the nine months ended December 31, 2024 as compared to 47% during the comparable period of the prior

The decrease is due to increased labor costs resulting from manufacturing personnel overtime hours incurred to ensure production

and supply of our products in response to increased demand.

In addition, during the nine months ended December 31, 2024, manufacturing

fees represented a higher proportion of total revenue, as compared to licensing fees.

Manufacturing fees generate lower gross profit

margins as compared to licensing fees, due to it having a related cost of manufacturing, which is not associated with licensing fees.

The Company is in the process of expanding its manufacturing facilities and capacity to achieve utilization rates that will yield higher

volumes at standard labor rates.

the Nine Months Ended December 31,

Operating expenses:

Research and development

General and administrative

Non-cash compensation

Depreciation and amortization

Total operating expenses

expenses for the six months ended September 30, 2024 increased by $1.7 million, or 22%, to $9.3 million as compared to $7.7 million for

the corresponding period in the prior fiscal year, largely due to an increase in research and development of $0.4 million and general

and amortization

operating expenses

expenses for the nine months ended December 31, 2024 increased by $3.2 million, or 28%, to $14.3 million as compared to $11.2 million

for the corresponding period in the prior fiscal year, largely due to an increase in research and development of $0.8 million and general

and administrative expenses of $2.1 million.

and development costs during the six months ended September 30, 2024 were $4.1 million, an increase of $0.4 million, or 10%, from approximately

and development costs during the nine months ended December 31, 2024 were $5.9 million, an increase of $0.8 million, or 15%, from approximately

$5.2 million of such costs for the comparable period of the prior year.

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

development activities during the six months ended September 30, 2024 as compared to the comparable period of the prior fiscal year.

and administrative expenses for the six months ended September 30, 2024 were $4.2 million as compared to $3.2 million for the corresponding

period in the prior fiscal year, an increase of $1.0 million or approximately 33%, largely due to increased human resource costs resulting

from increased headcounts as well as increased costs of financial and tax reporting compliance as compared to the comparable period of

the prior year.

compensation expense for the six months ended September 30, 2024 was $0.1 million as compared to $0.06 million for the comparable period

of the prior fiscal year, an increase of $0.05 million or approximately 81%, 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 six months ended September 30, 2024 were $0.8 million, which increased slightly as a result of

additional capital expenditures and ASC 842 finance assets acquired, from $0.7 million in such costs for the comparable period of

the prior fiscal year.

a result of the foregoing, our income from operations during the six months ended September 30, 2024 was $7.3 million, compared to income

from operations of $3.5 million for the comparable period of the prior fiscal year.

income (expense):

For the Six Months Ended September 30,

development activities during the nine months ended December 31, 2024 as compared to the comparable period of the prior fiscal year.

and administrative expenses for the nine months ended December 31, 2024 were $7.0 million as compared to $4.9 million for the corresponding

period in the prior fiscal year, an increase of $2.1 million or approximately 42%, largely due to increased human resource costs

resulting from increased headcounts as well as increased costs of regulatory, financial and tax reporting compliance as compared to the

comparable period of the prior year.

compensation expense for the nine months ended December 31, 2024 was $0.2 million as compared to $0.1 million for the comparable

period of the prior fiscal year, an increase of $0.07 million or approximately 63%, with such increase being attributed to the issuance

to employees of options to purchase Common Stock.

and amortization expenses from the nine months ended December 31, 2024 were $1.3 million as compared to $1.0 million for the corresponding

period of the prior fiscal year, an increase of $0.3 million or 28%, due to additional capital expenditures and ASC 842 finance leases

acquired as compared to the corresponding period from the prior fiscal year.

a result of the foregoing, our income from operations during the nine months ended December 31, 2024 was $8.4 million, compared

to income from operations of $7.1 million for the comparable period of the prior fiscal year.

(expense) income:

the Nine Months Ended December 31,

Other (expense) income:

Change in fair value of derivative financial instruments - warrants

Change in fair

value of derivative financial instruments - warrants

$ (27,267,016 )

1 unchanged sentence

$ (22,191,527 )

Change in fair value of stock-based liabilities

Interest expense and amortization of debt issuance costs

Change in fair value of

stock-based liabilities

Interest expense and amortization

of debt issuance costs

Interest income

Other (expense) income, net

from settlement agreement

(expense) income, net

$ (27,770,848 )

1 unchanged sentence

$ (19,180,382 )

(expense) income for the six months ended September 30, 2024 was a net other expense of $16.0 million, an increase of $11.1 million from

a net other expense of $5.0 million for the comparable period of the prior fiscal year.

The increase was primarily due to an increase

in other expenses of $12.9 million relating to the change in fair value of derivative instruments, offset by a decrease of $2.1 million

in change in fair value of stock-based liabilities, which were all settled during the prior fiscal year.

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 other income expense recorded in relation to the changes in fair value of our derivatives instruments and stock-based liabilities

and changes in the closing price of the Company’s Common Stock.

The increase in interest expense associated with the loans payable

is due to the Company servicing a larger principal amount of loans payable during the six months ended September 30, 2024 as compared

to the comparable period of the prior fiscal year.

a result of the foregoing, our net loss before income taxes for the six months ended September 30, 2024 was $8.7 million, compared to

net loss before income taxes of $1.4 million for the comparable period of the prior fiscal year.

(expense) income for the nine months ended December 31, 2024 was a net other expense of $27.8 million, an increase of $19.2 million

from a net other expense of $8.6 million for the comparable period of the prior fiscal year.

The increase was primarily due to an

increase of $22.2 million in other expenses relating to the change in fair value of derivative financial instruments.

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 other income expense recorded from changes in the fair value of our derivatives instruments and stock-based

liabilities and changes in the closing price of the Company’s Common Stock.

The increase was offset by other income (expense) recorded

in the period ended December 31, 2023, which included the following two line items that did not occur during the period ended December

expense of $4.9 million from change in fair value of stock based liabilities and gain from settlement agreements of $1.8 million

The change in fair value of stock based liabilities relates to stock based compensation policies that were discontinued at the end of

the fiscal year ended March 31, 2023.

The gain from settlement agreements is a one-time event that occurred during the period ended December

31, 2023, but not in the period ended December 31, 2024.

Taken together, these two items from the prior fiscal year contributed a net

$3.2 million in other expenses, which were a component of the overall increase in net other expenses of $19.2 million.

a result of the foregoing, our net loss before income taxes for the nine months ended December 31, 2024 was $19.3 million, compared

to net loss before income taxes of $1.5 million for the comparable period of the prior fiscal year.

Income Taxes:

The Company recorded

tax (expense)/benefit of approximately (10.3)% and 1,196.7% of loss before income tax expense, for the nine months ended December 31,

2024 and 2023, respectively.

The decrease 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 December 31, 2023 and the nondeductible fair

market value change in the Company’s warrant derivative liabilities.

and Capital Resources

September 30, 2024

March 31, 2024

Current assets

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working capital (total current assets less total current liabilities) increased by $6.4 million from $27.0 million as of March 31,

to $32.4 million as of September 30, 2024, with such increase being primarily related to the increase in finished goods inventory and

accounts receivable, associated with increased customer orders during the six months ended September 30, 2024.

2024 to $33.4 million as of December 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 nine months ended December 31, 2024.

of Cash Flows:

For the Six Months Ended September 30,

Net cash provided by (used in) operating activities

the Nine Months Ended December 31,

Net cash provided by (used in)

operating activities

$ (5,334,614 )

2 unchanged sentences

Net cash (used in) provided by financing activities

cash provided by operating activities for the six months ended September 30, 2024 was $4.6 million, which included, without limitation,

net loss of $10.4 million, increased by the change in the change in fair value of derivative financial instruments - warrants of $15.5

million, deferred tax expenses of $1.3 million, and other non-cash expenses of $1.4 million, and reduced by increases in operating assets

and liabilities totaling $3.2 million.

cash used in investing activities for the six months ended September 30, 2024 was comprised of purchases of property and equipment of

approximately $0.9 million and purchases of intangible assets consisting of ANDA products of approximately $0.9 million.

cash used in financing activities was $0.5 million for the six months ended September 30, 2024 compared to net cash provided by financing

cash provided by operating activities for the nine months ended December 31, 2024 was $3.5 million compared to net cash used in operating

activities of $5.3 million for the corresponding period of the prior year.

Net cash provided by operating activities included, without

limitation, net loss of $21.3 million, increased by the change in the change in fair value of derivative financial instruments - warrants

of $27.3 million, deferred tax expenses of $1.5 million, and other non-cash expenses of $1.9 million, and reduced by increases in operating

assets and liabilities totaling $5.8 million.

Net cash used in operating activities during the prior fiscal year included, without limitation,

net income of $16.8 million, increased by depreciation and other non-cash expenses totaling $10.1 million and reduced by increases in

accounts receivable and inventory totaling $17.9 million.

cash used in investing activities for the nine months ended December 31, 2024 was $1.6 million compared to net cash used in investing

activities of $0.4 million for the corresponding period of the prior year.

Net cash used in investing activities was comprised of purchases

of property and equipment of approximately $0.9 million and purchases of intangible assets consisting of ANDA products of approximately

$0.9 million.

Net cash used in investing activities during the prior fiscal year was comprised of purchases of property and equipment

of approximately $0.4 million.

cash used in financing activities was $0.7 million for the nine months ended December 31, 2024 compared to net cash provided by financing

activities of $3.7 million for the corresponding period of the prior year.

Net cash used in financing activities consisted primarily

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The total transaction costs associated

with the EWB Mortgage Loan incurred as of September 30, 2024, were $13,251, which are being amortized on a monthly basis over ten years,

beginning in July 2022.

with the EWB Mortgage Loan incurred as of December 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 September 30, 2024, and through the date of filing of this quarterly report on Form 10-Q, the Company is not aware of the existence

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

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

As of December 31, 2024, and through the date of filing of this quarterly report on Form 10-Q, the Company is not aware

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

Park Capital – July 8, 2020 Purchase Agreement

4 unchanged sentences

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

the three and six months ended September 30, 2024 and 2023, the Company did not issue any shares of Common Stock to Lincoln Park.

the three and nine months ended December 31, 2024 and 2023, the Company did not issue any shares of Common Stock to Lincoln Park.

August 31, 2005, the Company successfully completed a refinancing of a prior 1999 bond issue through the issuance of new tax-exempt bonds

13 unchanged sentences

Amortization of bond issuance

costs amounted to $7,089 for the six months ended September 30, 2024.

costs amounted to $10,633 for the nine months ended December 31, 2024.

NJEDA Bonds require the Company to make an annual principal payment on September 1st of varying amounts as specified in the loan documents

10 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis