What changed in this filing

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Item 1. Financial Statements

2025-08-14 compared with 2025-02-13 · 401 added, 619 removed, 594 unchanged (63% of the section changed)

5 unchanged sentences

Accounts receivable, net

of allowance for expected credit losses of $ 220,000 and $ 236,000 respectively

of allowance for expected credit losses of approximately $ 598,958 and $ 387,533 respectively

expenses and other current assets

9 unchanged sentences

service for NJEDA bonds

$ 111,339,370

LIABILITIES AND SHAREHOLDERS’

2 unchanged sentences

Accrued expenses

Deferred revenue, current

Deferred revenue

Bonds payable, current

7 unchanged sentences

Long-term liabilities:

Deferred revenue, net of

current portion

Bonds payable, net of current

8 unchanged sentences

long-term liabilities

Commitments and Contingencies (Note 8)

Commitments and Contingencies

Shareholders’ equity:

3 unchanged sentences

1,068,463,108

shares issued as of both December 31, 2024 and March 31, 2024;

1,068,273,108 shares outstanding as of both December 31, 2024 and

March 31, 2024

and 1,068,463,108 shares issued as of June 30, 2025 and March 31, 2025, respectively;

1,068,363,108 and 1,068,363,108 shares outstanding

as of June 30, 2025 and March 31, 2025, respectively

Additional paid-in capital

1 unchanged sentence

100,000 shares as of both

December 31, 2024 and March 31, 2024, at cost

June 30, 2025 and March 31, 2025, at cost

Accumulated deficit

3 unchanged sentences

liabilities and shareholders’ equity

$ 111,339,370

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

the Three Months Ended December 31,

the Nine Months Ended December 31,

the Three Months Ended June 30,

Manufacturing

7 unchanged sentences

and amortization

operating expenses

Total operating expenses

Income from operations

4 unchanged sentences

( 2,782,913 )

( 27,267,016 )

( 5,075,489 )

Change in fair value of

stock-based liabilities

( 2,854,556 )

( 4,921,376 )

Interest expense and amortization

of debt issuance costs

Gain from settlement agreements

Interest income

( 11,750,575 )

( 3,626,915 )

( 27,770,848 )

( 8,590,466 )

Loss before income taxes

( 10,652,765 )

Other expense, net

( 22,263,921 )

( 3,016,304 )

Income tax (expense) benefit

(Loss) income before income taxes

Income tax expense

( 5,320,501 )

1 unchanged sentence

$ ( 5,884,715 )

$ ( 21,312,396 )

Basic net (loss) income

Diluted net (loss) income

Basic weighted average

common stock outstanding

1,068,273,108

1,014,768,071

1,068,273,108

1,014,265,162

Diluted weighted average

common stock outstanding

Basic net (loss) income per share attributable

to common shareholders

Diluted net (loss) income per share attributable

to common shareholders

Basic weighted average common stock outstanding

1,068,363,108

1,068,273,108

Diluted weighted average common stock outstanding

1,068,363,108

11 unchanged sentences

$ ( 120,703,926 )

Non-cash compensation through the issuance

of employee stock options

Balance at June 30,

( 5,884,715 )

$ ( 306,841 )

$ ( 115,773,494 )

( 11,036,229 )

Non-cash compensation through the issuance

of employee stock options

Balance at September

1,068,373,108

$ 173,315,207

$ ( 306,841 )

$ ( 126,809,723 )

( 10,891,940 )

Non-cash compensation through the issuance

of employee stock options

Balance at December

Balance at June 30,

1,068,463,108

2 unchanged sentences

$ ( 126,588,641 )

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

5 unchanged sentences

$ ( 116,389,267 )

Non-cash compensation through the issuance

of employee stock options

Balance at June 30,

1,068,373,108

2 unchanged sentences

$ ( 116,389,267 )

Non-cash compensation through the issuance

of employee stock options

Balance at September

1,013,915,081

$ 164,808,757

$ ( 306,841 )

$ ( 120,421,488 )

1,013,915,081

$ 164,808,757

$ ( 306,841 )

$ ( 120,421,488 )

Shares issued in satisfaction of accrued director

Shares issued in satisfaction of accrued consultant

Net income (loss)

1 unchanged sentence

of employee stock options

Balance at December

Balance at June 30,

1,068,373,108

10 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

the Nine Months Ended December 31,

the Three Months Ended June 30,

CASH FLOWS FROM OPERATING

2 unchanged sentences

Adjustments to reconcile net (loss) income

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

to net cash provided by operating activities:

Depreciation and amortization

10 unchanged sentences

derivative financial instruments - warrants

Non-cash compensation accrued

Gain on settlement of Common

Stock to consultant

( 1,761,792 )

Change in fair value of

stock-based liabilities

Deferred tax expense (benefit)

( 18,061,782 )

Deferred tax expense

Non-cash compensation through

8 unchanged sentences

current assets

Security deposits

Accounts payable

Accrued expenses

( 1,582,734 )

Deferred revenue

Lease obligations - operating

Interest expense on finance

lease liability

Net cash provided by (used

in) operating activities

( 5,334,614 )

obligations - operating leases

cash provided by operating activities

CASH FLOWS FROM INVESTING

1 unchanged sentence

Purchase of intangible

Proceeds from disposition

of property and equipment

Net cash used in investing

from disposition of property and equipment

cash used in investing activities

( 1,663,277 )

CASH FLOWS FROM FINANCING

Payment of bond principal

Proceeds from related party

Payments of related party

loans payable

( 4,000,000 )

Payments on principal on

finance lease obligations

Loan payments

Net cash (used in) provided

by financing activities

Net change in cash and restricted cash

cash used in financing activities

( 4,130,684 )

Net change in cash and restricted cash

Cash and restricted cash, beginning of period

Cash and restricted cash, end of period

Cash and restricted

cash, end of period

Supplemental disclosure of cash and non-cash

1 unchanged sentence

Cash paid for interest

Cash paid for income taxes

Finance directors and officers

insurance premium

Recognition of finance

lease right of use asset and lease liabilities entered into

Recognition of operating

lease right of use asset and lease liabilities entered into

Stock issued in satisfaction

of accrued directors salaries and consultant fees

Reconciliation of cash and

restricted cash

Restricted cash - debt

service for NJEDA bonds

Total cash and restricted

cash shown in statement of cash flows

cash - debt service for NJEDA bonds

cash and restricted cash shown in statement of cash flows

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

33 unchanged sentences

The accompanying unaudited condensed consolidated

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 nine months ended December 31, 2024 are not necessarily indicative of the results to be expected for the fiscal year

ending March 31, 2025 or for any future periods.

Reclassification

items in prior condensed consolidated financial statements have been reclassified to conform to the current presentation.

The presentation of the condensed consolidated statements of cash flows has been modified to separately present the

change in the security deposits for the nine months ended December 31, 2023.

Additionally, the

presentation of Note 4 has been modified to separately disclose accrued interest related to the Company’s related party loan.

These reclassifications had no effect on the reported results of operations.

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

These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets

and liabilities at the date of the condensed consolidated financial statements, as well as reported amounts of revenues and expenses

during the reporting period.

Such management estimates and assumptions include, but are not limited to, standalone selling price for

each distinct performance obligation included in customer contracts with multiple performance obligations, the period of benefit for

deferred commissions, valuation of intangible assets, the useful life of property and equipment and identifiable intangible assets, stock-based

compensation expense and income taxes.

financial statements should be read in conjunction with the Company’s Form 10-K as filed with the SEC on June 30, 2025.

results for the three months ended June 30, 2025 are not necessarily indicative of the results to be expected for the fiscal year ending

March 31, 2026 or for any future periods.

Company’s significant accounting policies and recent accounting standards are summarized in Note 1 of the Company’s consolidated

financial statements for the year ended March 31, 2025.

There were no significant changes to these accounting policies during the three

months ended June 30, 2025.

preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make certain

estimates and assumptions.

These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as reported amounts of revenues

and expenses during the reporting period.

Such management estimates and assumptions include, but are not limited to, chargeback liabilities

related to revenue recognition, standalone selling price for each distinct performance obligation included in customer contracts with

multiple performance obligations, warrant derivative liability, valuation of intangible assets, the useful life of property and equipment

and identifiable intangible assets, stock-based compensation expense and income taxes.

The Company continually evaluates its estimates,

which are based on information that is currently available to the Company and on various other assumptions that it believes to be reasonable

under the circumstances.

Actual results could differ from those estimates.

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

The Company paused further development

of NDAs and has not engaged in business activities.

Accordingly, during the three and nine months ended December 31, 2024 and 2023, the

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

The 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.

The Company paused

further development of NDAs and has not engaged in business activities.

Accordingly, during the three months ended June 30, 2025 and

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

are currently no intersegment revenues.

2 unchanged sentences

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

of the Company’s condensed consolidated financial statements.

of the Company’s unaudited condensed consolidated financial statements.

Please see Note 14 for further details.

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its own or by license to other companies) generic and proprietary controlled-release pharmaceutical products.

Company recognizes manufacturing fees related to revenue generated from wholesale customers and from direct sale customers.

represent customers that purchase the Company’s products and sell them to end customers such as hospitals, group purchasing organizations,

institutions, and pharmacies.

Direct sales customers purchase products directly from the Company.

Company provides for chargebacks to wholesalers for sales to various end-customers to include, but not limited to, hospitals, group purchasing

organizations, and pharmacies.

Chargebacks represent the difference between the price the wholesaler pays and the price that the end-customer

pays for a product.

The Company’s estimate for chargebacks is developed based upon management’s assumption of anticipated

claims as well as historical information.

Chargebacks represent variable consideration within the Company’s contracts and therefore

as such, revenue recognized is limited to the amount for which a significant reversal of revenue related to this variable consideration

is not probable.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

2 unchanged sentences

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 to receive in exchange for transferring products to a customer.

and fulfilling the promise to deliver the product and bears risk of loss while the inventory is in-transit to the purchaser or commercial

Revenue is measured as the amount of consideration the Company expects to receive from the sale of its products, including Elite-labeled

pharmaceutical products, and is recorded at net realizable value which consists of gross amounts invoiced reduced by contractual reductions,

including, without limitation, chargebacks, discounts and program rebates, as applicable.

Company enters into licensing and development agreements, which may include multiple revenue generating activities, including milestones

13 unchanged sentences

conditions and internally approved pricing guidelines related to the performance obligations.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company recognizes revenue from non-refundable upfront payments at a point in time, typically upon fulfilling the delivery of the associated

7 unchanged sentences

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

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

expects to complete its performance obligations under the arrangement.

If the Company cannot reasonably estimate when its performance

obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make

such estimates.

Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method.

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

its performance obligations under the arrangement.

If the Company cannot reasonably estimate when its performance obligations either

are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates.

is then recognized over the remaining estimated period of performance using the cumulative catch-up method.

determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before

4 unchanged sentences

None of the Company’s contracts contained a significant financing

component as of December 31, 2024.

component as of June 30, 2025.

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

Sale of product under the Elite label

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

License agreements will remain in place

for select products.

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

at which time the performance obligation is deemed to be completed.

The Company is primarily responsible for fulfilling the promise to

deliver the product and bears risk of loss while the inventory is in-transit to the purchaser.

Revenue is measured as the amount of consideration

earned from the sale of Elite labeled pharmaceutical 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.

Company provides for chargebacks to wholesalers for sales to various end-customers to include, but not limited to, hospitals, group purchasing

organizations, and pharmacies.

Chargebacks represent the difference between the price the wholesaler pays and the price that the end-customer

pays for a product.

The company’s estimate for chargebacks is developed based upon management’s assumption of anticipated

product returns, other rebates, as well as historical information.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Disaggregation

2 unchanged sentences

in time for all performance obligations.

During the nine months ended December 31, 2024 and 2023, the Company had paused further development

During the three months ended June 30, 2025 and 2024, the Company had paused further development

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

Accordingly, during the nine months ended December 31, 2024 and 2023,

Accordingly, during the three months ended June 30, 2025 and 2024,

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 segment:

OF DISAGGREGATION OF REVENUE

the Three Months Ended December 31,

the Nine Months Ended December 31,

revenue with the reportable segments:

SCHEDULE OF DISAGGREGATION OF REVENUE

the Three Months Ended June 30,

Manufacturing fees

Licensing fees

Total ANDA revenue

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

disclosed within Note 14.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of December 31, 2024, and March 31, 2024, the Company had $ 449,216 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.

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.

were no such impairments recorded during the nine months ended December 31, 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.

(“Nostrum”) entered into an Asset Purchase Agreement (the “Asset

Purchase Agreement”), pursuant to which Nostrum was obligated to (i) sell to the Company all of its rights in and to the approved

abbreviated new drug applications (ANDAs) for generic Norco® (Hydrocodone Bitartrate and Acetaminophen tablets, USP CII), generic

Percocet® (Oxycodone Hydrochloride and Acetaminophen, USP CII), and generic Dolophine® (Methadone Hydrochloride tablets), each

a “Product”, and (ii) grant to the Company 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 each

Product in accordance with the applicable ANDA, in exchange for $ 900,000 in cash (the “Transaction”).

The Asset Purchase

Agreement includes customary representations and warranties and various customary covenants.

The closing of the Transaction occurred

on June 21, 2024.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

OF INTANGIBLE ASSETS

Carrying Amount

Patent application costs

ANDA acquisition costs

Carrying Amount

Patent application costs

ANDA acquisition costs

* Patent application

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

Amortization of the patent costs will begin

upon the issuance of marketing authorization by the FDA.

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

of the related patent(s).

of June 30, 2025, and March 31, 2025, the Company had $ 458,318 and $ 453,776 , of restricted cash, respectively, related to debt service

reserve in regard to the New Jersey Economic Development Authority (“NJEDA”) bonds (see Note 6).

taxes are accounted for under the asset and liability method.

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These tax benefits are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.

Company operates in multiple tax jurisdictions within the United States of America.

Company operates in multiple tax jurisdictions within the United States.

The Company remains subject to examination in all

tax jurisdiction until the applicable statutes of limitation expire.

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

subject to examination in our major tax jurisdictions are:

As of June 30, 2025, a summary of the tax years that remain subject

to examination in our major tax jurisdictions are:

United States – Federal, 2021 and forward.

The Company did not record

unrecognized tax positions for the nine months ended December 31, 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

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

In the accompanying financial

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

Stock outstanding during the period.

The Company did not record unrecognized

tax positions for the three months ended June 30, 2025.

Earnings Per Share Attributable to Common Shareholders’

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

In the accompanying financial statements, basic (loss) income per share is computed by dividing net (loss) income by

the weighted average number of shares of Common Stock outstanding during the period.

the Company was in a net loss position for the three months ended June 30, 2025, the potential dilution from the warrants converting

into 79,008,661 shares of Common Stock and the stock options converting into 15,640,000 of Common Stock for these periods have been excluded

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

the average market price of Common Stock for the three months ended June 30, 2024 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.

PHARMACEUTICALS, INC.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the Company was in a net loss position for the three and nine months ended December 31, 2024, the potential dilution from the warrants

converting into 79,008,661 shares of Common Stock and the stock options converting into 15,760,000 shares of Common Stock for these periods

have been excluded from the number of shares used in calculating diluted net (loss) 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

the Three Months Ended December 31,

the Nine Months Ended December 31,

OF EARNINGS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS

the Three Months Ended June 30,

Net (loss) income - basic

$ ( 5,884,715 )

$ ( 21,312,396 )

of dilutive instrument on net income

1 unchanged sentence

$ ( 5,884,715 )

$ ( 21,312,396 )

Weighted average shares of Common Stock outstanding - basic

1 unchanged sentence

1,068,273,108

1,014,265,162

Dilutive effect of stock options and convertible

Dilutive effect of stock

Weighted average shares of Common Stock

2 unchanged sentences

1,076,250,204

1,068,273,108

1,019,511,813

Net (loss) income per share

Value of Financial Instruments

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

with generally accepted accounting principles.

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 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 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.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

on a Recurring Basis

following table presents information about the Company’s liabilities measured at fair value on a recurring basis, aggregated by

the level in the fair value hierarchy within which those measurements fell:

OF LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS

Value Measurement

at Fair Value

Balance as of March 31, 2024

in fair value of derivative financial instruments - warrants

Balance as of December

Value Measurement

at Fair Value

Balance as of March 31, 2023

in fair value of derivative financial instruments - warrants

Balance as of December

Note 10 for specific inputs used in determining fair value.

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, and related party loans payable approximates

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.

Company did not record an impairment charge related to these assets in the periods presented.

Issued Accounting Pronouncements

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 condensed 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.

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

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

November 2024, the FASB issued ASU No.

2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures

December 2023, the FASB issued ASU 2023-09, Income Taxes (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 the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2026.

The Company is

currently evaluating the impact of adopting this guidance on its disclosures.

November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures

(Subtopic 220-40):

Disaggregation of Income Statement Expenses”, that requires public companies to disclose, in interim and reporting

periods, additional information about certain expenses in the financial statements.

For public business entities, it is effective for

annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is

permitted and is effective on either a prospective basis or retrospective basis.

The Company is currently evaluating the impact that

the updated standard will have on the Company’s disclosures within the condensed consolidated financial statements.

Disaggregation of Income Statement Expenses.

In January 2025, the FASB issued ASU No.

2025-01, Income Statement

- Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), Clarifying the Effective Date .

requires public companies to disclose, in interim and reporting periods, additional information about certain expenses in the financial

ASU 2024-03, as clarified by ASU 2025-01, is effective for public entities for annual periods beginning after December 15,

2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted and is effective on either a prospective

basis or retrospective basis.

The Company is currently evaluating the impact that the updated standard will have on the Company’s

disclosures within the unaudited condensed consolidated financial statements.

May 2025, the FASB issued ASU 2025-04, Compensation-Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic

Clarifications to Share-Based Consideration Payable to a Customer to reduce diversity in practice and improve the decision

usefulness and operability of the guidance for share-based consideration payable to a customer in conjunction with selling goods or services.

The ASU is effective for fiscal years beginning after December 15, 2026 with updates to be applied on a retrospective or modified retrospective

Early adoption is permitted.

The Company is evaluating the impact that this standard will have on the Company’s unaudited

condensed consolidated financial statements.

has evaluated recently issued accounting pronouncements outside of those mentioned above and does not believe that any of these pronouncements

will have a significant impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

PHARMACEUTICALS, INC.

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

has evaluated recently issued accounting pronouncements outside of those mentioned above and does not believe that any of these pronouncements

will have a significant impact on the Company’s condensed consolidated financial statements and related disclosures.

consisted of the following:

SCHEDULE OF INVENTORY

Finished goods

3 unchanged sentences

and equipment consisted of the following:

OF PROPERTY AND EQUIPMENT

SCHEDULE OF PROPERTY AND EQUIPMENT

Land, building and improvements

7 unchanged sentences

Property and equipment,

expense was $ 313,060 and $ 336,614 for the three months ended December 31, 2024 and 2023, respectively, and $ 936,007 and $ 992,136 for

the nine months ended December 31, 2024 and 2023, respectively.

and amortization expense was $ 275,413 and $ 322,103 for the three months ended June 30, 2025 and 2024, respectively.

INTANGIBLE ASSETS

following table summarizes the Company’s intangible assets as of and for the periods ended June 30, 2025 and March 31, 2025:

SCHEDULE OF INTANGIBLE ASSETS

Carrying Amount

Patent application costs

ANDA acquisition costs

Carrying Amount

Patent application costs

ANDA acquisition costs

( 1,603,426 )

$ ( 1,603,426 )

* Patent application

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

Amortization of the patent costs will begin

upon the issuance of marketing authorization by the FDA.

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

of the related patent(s).

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

(“Nostrum”) entered into an Asset Purchase Agreement (the “Asset

Purchase Agreement”), pursuant to which Nostrum was obligated to (i) sell to the Company all of its rights in and to the approved

abbreviated new drug applications (ANDAs) for generic Norco® (Hydrocodone Bitartrate and Acetaminophen tablets, USP CII), generic

Percocet® (Oxycodone Hydrochloride and Acetaminophen, USP CII), and generic Dolophine® (Methadone Hydrochloride tablets), each

a “Product”, and (ii) grant to the Company 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 each

Product in accordance with the applicable ANDA, in exchange for $ 900,000 in cash (the “Transaction”).

The Asset Purchase

Agreement includes customary representations and warranties and various customary covenants.

The closing of the Transaction occurred

on June 21, 2024.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

that impairment may have occurred.

Indicators of impairment may include, among others:

a significant decline in expected future cash

a sustained, significant decline in stock price and market capitalization;

a significant adverse change in legal factors or business

unanticipated competition;

and slower growth rates.

No such impairment was recorded during the three months ended June 30, 2025

and the three months ended June 30, 2024.

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

Amortization of the patent

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

Amortization will then be calculated on a straight-line basis

through the expiry of the related patent(s).

ACCRUED EXPENSES

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

OF ACCRUED EXPENSES

of June 30, 2025 and March 31, 2025, the Company’s accrued expenses consisted of the following:

SCHEDULE OF ACCRUED EXPENSES

Co-development profit split

Employee bonuses

Other accrued expenses

Legal and professional expense

Director dues

Consultant contract fees

Salaries and fees payable

Accrued interest - related parties

Other accrued expenses

Director dues

Accrued interest - related

Total accrued expenses

August 2005, the Company refinanced a prior 1999 bond issue occurring in 1999 through the issuance of Series A and B Notes new

tax-exempt bonds (the “NJEDA Bonds” and/or “Bonds”).

The refinancing involved borrowing $ 4,155,000 ,

evidenced by a 6.5 % Series A Note in the principal amount of $ 3,660,000 maturing on September 1, 2030 and a 9 % Series B Note in the

principal amount of $ 495,000 maturing on September 1, 2012 .

During July 2014, the Company retired all the outstanding Series B

Notes, at par, along with all accrued interest due and owed.

relation to the Series A Notes, the Company is required to maintain a debt service reserve fund.

The debt service reserve is classified

as restricted cash on the accompanying unaudited condensed consolidated balance sheets.

The NJEDA Bonds require the Company to make

an annual principal payment on September 1st based on the amount specified in the loan documents and semi-annual interest payments

on March 1st and September 1st, equal to interest due on the outstanding principal.

The annual interest rate on the Series A Note is 6.5 %.

The NJEDA Bonds are collateralized by a first lien on the Company’s facility and equipment acquired with the proceeds of the

original and refinanced bonds.

The bonds mature on September 1, 2030.

PHARMACEUTICALS, INC.

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

“NJEDA Bonds” and/or “Bonds”).

During July 2014, the Company retired all outstanding Series B Notes, at par,

along with all accrued interest due and owed.

relation to the Series A Notes, the Company is required to maintain a debt service reserve.

The debt service reserve is classified as

restricted cash on the accompanying condensed consolidated balance sheets.

The NJEDA Bonds require the Company to make an annual principal

payment on September 1st based on the amount specified in the loan documents and semi-annual interest payments on March 1st and September

1st, equal to interest due on the outstanding principal.

The annual interest rate on the Series A Note is 6.5 %.

The NJEDA Bonds are collateralized

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

following tables summarize the Company’s bonds payable liability:

following tables summarize the NJEDA Bonds’ payable liability:

SCHEDULE OF BONDS PAYABLE LIABILITY

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term portion of bonds payable, net of bond offering costs

expense was $ 3,544 and $ 3,540 for the three months ended December 31, 2024 and 2023, respectively, and $ 10,633 and $ 10,636 for the nine

months ended December 31, 2024 and 2023, respectively.

Interest payable was $ 21,450 and $ 6,067 as of December 31, 2024 and March 31,

2024, respectively.

Interest expense was $ 16,088 and $ 18,200 for the three months ended December 31, 2024 and 2023, respectively, and

$ 51,783 and $ 57,985 for the nine months ended December 31, 2024 and 2023, respectively.

of bonds for the next five years are as follows:

expense was $ 3,545 and $ 3,544 for the three months ended June 30, 2025 and 2024, respectively.

Interest payable was $ 21,450 and $ 5,363

as of June 30, 2025 and March 31, 2025, respectively.

Interest expense was $ 16,087 and $ 18,200 for the three months ended June 30, 2025

and 2024, respectively.

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

SCHEDULE OF MATURITIES OF BONDS

7 unchanged sentences

Equipment and insurance financing loans payable,

between 5.99 % and 12.02 % interest and maturing between April 2025 and October 2025

between 5.99 % and 12.02 % interest and maturing between July 2024 and October 2025

Current portion

2 unchanged sentences

loans payable

interest expense associated with the loans payable was $ 31,089 and $ 30,384 for the three months ended December 31, 2024 and 2023, respectively,

and $ 99,104 and $ 101,478 for the nine months ended December 31, 2024 and 2023, respectively.

interest expense associated with the loans payable was $ 28,797 and $ 34,883 for the three months ended June 30, 2025 and 2024, respectively.

PHARMACEUTICALS, INC.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

principal payments for the next five years are as follows:

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

SCHEDULE OF LOAN PRINCIPAL PAYMENTS

3 unchanged sentences

Total remaining principal

RELATED PARTY LOANS PAYABLE

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

fewer covenants (the “Hakim Promissory Note”).

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 Hakim Promissory

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 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 was June 2, 2024, with an optional second year extension.

The second year extension

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

the three and nine months ended December 31, 2024, interest expense on the Hakim Promissory Note totaled $ 75,000 and $ 217,500 respectively,

and is 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 nine months ended December 31, 2023, interest expense totaled $ 67,500 , and $ 202,500 , respectively, and is 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.

RELATED PARTY LOANS

Company has entered into a collateralized promissory note with individual lenders with rates comparable to the mortgage loan, dated July

1, 2022, provided by East West Bank to the Company but with fewer 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

Hakim Promissory Note.

On June 2, 2023, the Company entered into a Promissory Note with Nasrat Hakim, President, Chief Executive Officer

and Chairman of the Board of Directors of the Company (the “Board”), pursuant to which the Company borrowed funds in the

aggregate principal amount of $ 3,000,000

(the “Hakim Promissory Note”).

Promissory Note had 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 was June 2, 2024, with an optional second year extension.

The second year extension was exercised pursuant

to the terms of the Hakim Promissory Note.

For the three months ended June 30, 2025 and 2024, interest expense on the Hakim Promissory

Note totaled $ 50,000

and $ 67,500 ,

respectively, recorded on the unaudited condensed consolidated statements of operations in interest expense and amortization of debt

issuance costs.

On June 2, 2025, the Hakim Promissory Note was paid in full and no balance was outstanding as of this date.

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.

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

will be used for working capital and other business purposes.

2 unchanged sentences

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

the three and nine months ended December 31, 2024, interest expense on the Caskey Promissory Note totaled $ 25,000 and $ 72,500 respectively,

and is 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 nine months ended December 31, 2023, interest expense totaled $ 22,500 , and $ 67,500 , respectively, and is 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.

For the three months ended June 30, 2025 and 2024, interest expense on the Caskey Promissory Note totaled $ 25,000 and $ 22,500 , respectively,

recorded on the unaudited condensed consolidated statements of operations in interest expense and amortization of debt issuance costs.

On June 26, 2025, the Caskey Promissory Note was paid in full and no balance was outstanding as of this date.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

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 condensed

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.

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

condensed 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.

August 17, 2023, Elite filed a paragraph IV certification with its ANDA to generic Oxycontin and after Elite got acceptance of the ANDA

by the FDA on September 19, 2023, Elite sent the patentee and NDA holder a Notice Letter as required under the Hatch-Waxman Act.

14, 2023, a patent infringement suit was filed in the District Court of New Jersey by Purdue Pharma.

Elite has obtained several agreements

with Purdue to stay the litigation, with the latest being a stipulation and order submitted on March 19, 2025 lifting the existing stipulated

An amended complaint was filed by Purdue on April 18, 2025.

Elite’s launch of a generic Oxycontin will depend on the approval

by the FDA and the outcome of various litigation involving Purdue or the expiry of the patents listed on the Orange Book.

30, 2025, the results of such proceedings cannot be predicted with certainty and are neither probable nor estimable.

PHARMACEUTICALS, INC.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

August 17, 2023, Elite filed a paragraph IV certification with its ANDA to generic Oxycontin and after Elite got acceptance of the

ANDA by the FDA on September 19, 2023, Elite sent the patentee and NDA holder a Notice Letter as required under the Hatch-Waxman

On November 14, 2023, a patent infringement suit was filed in the District Court of New Jersey by Purdue Pharma.

obtained several agreements with Purdue to stay the litigation, with the latest being a stipulation and proposed order submitted by the participants on January 30, 2025 staying

the proceedings for 30 days.

Elite’s launch of a generic Oxycontin will depend on

the approval by the FDA and the outcome of various litigation involving Purdue or the expiry of the patents listed on the Orange

As of December 31, 2024, the results of such proceedings cannot be predicted with certainty and are neither probable nor

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

The Pompano Office Lease is for approximately 1,275 square feet of office space, with the Company taking occupancy on November 1, 2020.

The Pompano Office Lease had a term of three years , ending on October 31, 2023.

The Pompano Office Lease was extended for one additional

year to October 31, 2024.

Accordingly, the Pompano Office Lease expired at the end of the renewal term on October 31, 2024.

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

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

The Company took occupancy on October 1, 2024.

13 unchanged sentences

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

Operating leases are included in operating lease right-of-use assets and lease liabilities in the condensed consolidated balance

Lease expense for operating expense payment is recognized on a straight-line basis over the lease term.

November 2023, the Company entered into a finance lease for equipment (the “Waters Equipment Lease”).

24 unchanged sentences

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.

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

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:

13 unchanged sentences

lease was determined to be a finance lease.

The finance lease is included on the condensed consolidated balance sheets as Finance lease

- right-of-use asset and Lease obligation - finance lease.

The finance lease costs are split between Depreciation and amortization expense

related to the asset and Interest expense and amortization of debt issuance costs on the lease liability, using the effective rate charged

by the lessor.

The finance lease is included on the unaudited condensed consolidated balance sheets as Finance

lease - right-of-use asset and Lease obligation - finance lease.

The finance lease costs are split between Depreciation and amortization

expense related to the asset and Interest expense and amortization of debt issuance costs on the lease liability, using the effective

rate charged by the lessor.

The Company has elected to account for lease and non-lease components separately.

2 unchanged sentences

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

SCHEDULE OF LEASE ASSETS AND LIABILITIES

Classification

Finance lease – right-of-use

Operating lease –

right-of-use asset

leased assets

Lease obligation – finance lease

Lease obligation – operating lease

Lease obligation – finance lease, net

of current portion

Lease obligation –

operating lease, net of current portion

lease liabilities

expense is recorded on the straight-line basis and is recorded in general and administrative expense in the unaudited condensed consolidated

statements of operations.

expense is recorded on the straight-line basis and in cost of manufacturing in the unaudited condensed consolidated statements

of operations.

Rent expense is as follows:

OF RENT EXPENSE STRAIGHT-LINE BASIS

the Three Months Ended December 31,

the Nine Months Ended December 31,

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

Waters Equipment Lease:

SCHEDULE OF RENT EXPENSE STRAIGHT-LINE BASIS

the Three Months Ended June 30,

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

SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS

2 unchanged sentences

Present value of lease

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

weighted-average remaining lease term and the weighted-average discount rate of the Company’s leases were as follows:

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

the Nine Months Ended December 31,

the Three Months Ended June 30,

and Discount Rate

5 unchanged sentences

Finance leases

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PREFERRED STOCK

9 unchanged sentences

described in this note below.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 December 31, 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

Officer of the Company, pursuant to which the Company issued to Hakim 24.0344 shares of its Series J Preferred and warrants to purchase

an aggregate of 79,008,661 shares of its Common Stock (the “Series J Warrants” and, along with the Series J Preferred issued

to Hakim, the “Securities”) in exchange for 158,017,321 shares of Common Stock owned by Hakim.

The fair value of the Series

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

as of June 30, 2025 and March 31, 2025.

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

Executive Officer of the Company, pursuant to which the Company issued to Nasrat Hakim 24.0344

shares of its Series J Preferred and warrants to purchase an aggregate of 79,008,661

shares of its Common Stock (the “Series J Warrants” and, along with the Series J Preferred issued to Nasrat Hakim, the

“Securities”) in exchange for 158,017,321

shares of Common Stock owned by Nasrat Hakim.

The fair value of the Series J Warrants was determined to be $ 6,474,674

upon issuance at April 28, 2017.

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

29 unchanged sentences

derivative financial instruments - warrants

Balance at December 31, 2024

STOCK-BASED COMPENSATION

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, further revised in January 2016, and ceased issuance in November

2023, 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 Stock.

Balance at June 30, 2025

on a Recurring Basis

following table presents information about the Company’s liabilities measured at fair value on a recurring basis, aggregated by

the level in the fair value hierarchy within which those measurements fell:

OF LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS

Amount at Fair

Value Measurement

Balance as of March 31, 2025

in fair value of derivative financial instruments - warrants

Balance as of June

PHARMACEUTICALS, INC.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of December 31, 2024, there was no common stock owed to Directors as the amount outstanding was paid during fiscal year 2024.

of December 31, 2023, the Company accrued director’s fees totaling $ 22,500 , which will be paid via cash payments totaling $ 22,500

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

Issuance of common stock on November 22,

Balance of common stock

owed at December 31, 2023

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 December 31, 2024, the Company accrued no additional salaries owed to the Company’s President, Chief Executive Officer and certain

other employees.

OF STOCK BASED COMPENSATION

Balance of common stock owed at

April 1, 2023

Awarded shares

Change in fair value of stock-based liabilities

Common stock issued

Settlement of non-cash

( 1,761,792 )

Balance of common stock

owed at December 31, 2023

November 6, 2023, the Company entered into a Settlement Agreement with a former executive who was terminated on February 7, 2022.

employment agreement with the former executive included annual compensation of $ 250,000 which was to be paid via the issuance of shares

of Common Stock.

At the date of the former executive’s termination an aggregate of 14,892,580 shares of Common Stock (the “Deferred

Shares”) were due to the former executive, with such number of shares representing an aggregate of $ 1,000,000 in compensation earned

pursuant to the relevant employment agreement at an annual rate of $ 250,000 .

Pursuant to the Settlement Agreement, the former executive

irrevocably elected to relinquish all rights and claims to the Deferred Shares.

The Company is released of any obligation to issue the

Deferred Shares and further acknowledges that no Deferred Shares will be issued to or received by the former employee.

The price of the

Company’s Common Stock on November 6, 2023 was $ 0.1183 per share and the value of the Deferred Shares on this date was $ 1,761,792 .

The Company recorded other income from gain on settlement agreement for this amount on the unaudited Condensed Consolidated Statements

of Operations.

December 29, 2023, the Company issued 2,223,147 shares of Common Stock in satisfaction of accrued consultant fees.

its 2014 Equity Incentive Plan and its 2024 Equity Incentive Plan, the Company did grant and may grant stock options to officers, selected

employees, as well as members of the Board of Directors and advisory board members.

Amount at Fair

Value Measurement

Balance as of March 31, 2024

in fair value of derivative financial instruments - warrants

Balance as of June

STOCK-BASED COMPENSATION

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

its 2014 Equity Incentive Plan and 2024 Equity Incentive Plan, the Company did grant and may grant stock options to officers,

selected employees, as well as members of the Board and advisory board members.

On July 1, 2024 the Company restated the 2014 Equity

Incentive Plan to increase the shares reserved under the option plan by 12,730,000 .

Incentive Plan to increase the shares reserved under the option plan by 12,730,000 shares .

Under the 2024 Equity Incentive Plan, 80,000,000

options are available for grant.

All options have generally been granted at a price equal to or greater than the fair market value of

the Company’s Common Stock at the date of the grant.

Generally, options are granted with a vesting period of up to three years

and expire ten years from the date of grant.

All options have generally been granted at a price equal to or greater than the fair market value

of the Company’s Common Stock at the date of the grant.

Generally, options are granted with a vesting period of up to three

years and expire ten years from the date of grant.

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

4 unchanged sentences

variables, including expected price volatility, risk-free interest rate and projected employee share option exercise behaviors.

estimates its expected volatility by using a combination of historical share price volatilities of similar companies within our industry.

The expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method

for awards, since the Company does not have sufficient exercise history to estimate term of its historical option awards.

The risk-free

interest rate is determined by reference to the U.S.

estimates its expected volatility by using a combination of historical share price volatilities of similar companies within the Company’s

The expected term of the Company’s stock options for employees has been determined utilizing the “simplified”

method for awards, since the Company does not have sufficient exercise history to estimate term of its historical option awards.

risk-free interest rate is determined by reference to the U.S.

Treasury yield curve.

Expected dividend yield is zero based on the fact that the

Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

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

No options were issued the nine months

ended December 31, 2024 and 2023.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

31, 2024 is as follows:

OF STOCK OPTION PLAN

Weighted Average

Expected dividend yield is zero based on the fact

that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

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

SCHEDULE OF STOCK OPTION PLAN

Exercise Price

Remaining Contractual

Term (in years)

Outstanding at March 31, 2025

Expired and Forfeited

Outstanding at December 31, 2024

Exercisable at December 31, 2024

Outstanding at June 30, 2025

Exercisable at June 30, 2025

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 December 31, 2024 of $ 0.54 for those awards with strike prices lower

than the quoted price of the Company’s Common Stock as of December 31, 2024.

As of December 31, 2024, there was $ 280,495

in unrecognized stock based compensation expense that will be recognized over a weighted average 1.48 year period.

and the quoted price of the Company’s Common Stock as of June 30, 2025 of $ 0.73 for those awards with strike prices lower than

the quoted price of the Company’s Common Stock as of June 30, 2025.

As of June 30, 2025, there was $ 175,837 in unrecognized stock

based compensation expense that will be recognized over a weighted average 1.06 year period.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONCENTRATIONS AND CREDIT RISK

customers accounted for approximately 64 % of the Company’s revenues for the nine months ended December 31, 2024.

These two customers

accounted for approximately 41 % and 23 %, of revenues each, respectively.

customers accounted for approximately 57 % of the Company’s revenues for the nine months ended December 31, 2023.

These two customers

accounted for approximately 30 % and 27 %, of revenues each, respectively.

customers accounted for approximately 76 % of the Company’s accounts receivable as of December 31, 2024.

These two customers

accounted for approximately 47 % and 29 % of accounts receivable each, respectively.

customers accounted for approximately 77 % of the Company’s accounts receivable as of December 31, 2023.

customers accounted for approximately 76 % of the Company’s revenues for the three months ended June 30, 2025.

These three customers

accounted for approximately 51 %, 15 %, and 10 % of revenues, respectively.

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

These two customers

accounted for approximately 45 % and 32 % of accounts receivable each, respectively.

suppliers accounted for approximately 71 % of the Company’s purchases of raw materials for the nine months ended December 31, 2024.

These three suppliers accounted for approximately 39 %, 16 %, and 16 %, of purchasing each, respectively.

supplier accounted for approximately 43 % of the Company’s purchases of raw materials for the nine months ended December 31, 2023.

These two customers accounted for approximately 30 % and 13 %, of purchasing each, respectively.

accounted for approximately 44 % and 24 % of revenue, respectively.

customers accounted for approximately 77 %

of the Company’s accounts receivable as of June 30, 2025.

These three customers accounted for approximately 54 %, 12 %,

of the accounts receivable, respectively.

customers accounted for approximately 74 %

of the Company’s accounts receivable as of June 30, 2024.

These two customers accounted for approximately 50 %

of the accounts receivable, respectively.

suppliers accounted for approximately 75 % of the Company’s purchases of raw materials for the three months ended June 30, 2025.

These three suppliers accounted for approximately 31 %, 25 %, and 19 % of purchasing, respectively.

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

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

SEGMENT RESULTS

4 unchanged sentences

management disaggregates a company.

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

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 nine months ended December 31, 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

The reporting segments follow the same accounting policies used in the preparation of the Company’s condensed consolidated

financial statements.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

loss from operations, which is reported in the accompanying unaudited condensed consolidated statements of operations, is the measure

of segment profit or loss that is regularly reviewed by the Chief Operating Decision Maker (“CODM”).

Our CODM is our President and Chief Executive Officer.

This enables the CODM to assess the overall level of available resources

and determine how best to deploy these resources across research and development projects in line with the long-term company-wide strategic

The reporting segments follow the same accounting policies used in the preparation of the Company’s unaudited condensed

consolidated financial statements.

following represents selected information for the Company’s reportable segments:

SCHEDULE OF SELECTED INFORMATION FOR REPORTABLE SEGMENTS

the Three Months Ended December 31,

the Nine Months Ended December 31,

the Three Months Ended June 30,

Income by Segment

Operating income by

Company notes that there was no revenue related to the NDA segment for the three and nine months ended December 31, 2024 and 2023.

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

condensed consolidated statements of operations:

Company notes that there was no revenue related to the NDA segment for the three months ended June 30, 2025 and 2024.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

unaudited condensed consolidated statements of operations:

SCHEDULE OF OPERATING INCOME BY SEGMENT TO INCOME FROM OPERATIONS

the Three Months Ended December 31,

the Nine Months Ended December 31,

the Three Months Ended June 30,

Operating income by segment

2 unchanged sentences

( 1,969,154 )

( 6,967,514 )

( 4,906,187 )

Interest income

2 unchanged sentences

Depreciation and amortization

( 1,278,564 )

Significant non-cash items

3 unchanged sentences

( 2,782,913 )

( 27,267,016 )

( 5,075,489 )

Change in fair value of

stock-based liabilities

( 2,854,556 )

( 4,921,376 )

Gain from settlement agreements

Loss before income taxes

$ ( 10,652,765 )

$ ( 19,324,039 )

(Loss) income before

$ ( 564,214 )

1 unchanged sentence

Pharma, LLC Agreements

May 2020, Praxgen (formerly known as SunGen Pharma LLC), pursuant to an asset purchase agreement, assigned its rights and obligations

under the Praxgen Agreement for Amphetamine IR and Amphetamine ER to Mikah Pharma LLC (“Mikah”).

The ANDAs for Amphetamine

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

Mikah will now be Elite’s partner with respect to Amphetamine

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

Mikah was founded in 2009 by Nasrat Hakim,

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

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

May 2020, Praxgen (formerly known as SunGen Pharma LLC), pursuant to an asset purchase agreement, assigned its rights and

obligations under the Praxgen Agreement for Amphetamine IR and Amphetamine ER to Mikah Pharma LLC (“Mikah”).

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

Mikah will now be Elite’s partner with

respect to Amphetamine IR and Amphetamine ER and assumed all the rights and obligations for these products from Praxgen.

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

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

development, sales and licensing of generic pharmaceutical products.

2 unchanged sentences

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

of December 31, 2024, the Company owes an aggregate of $ 1,858,629 to Mikah in accordance with the agreements, with such amount being

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

of June 30, 2025, the Company owes an aggregate of $ 1,864,456 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

1 unchanged sentence

The Company’s

income tax (expense)/benefit was $ ( 239,175 ) and $ 800,613 for the three months ended December 31, 2024 and 2023, respectively.

The Company’s

income tax (expense)/benefit was $ ( 1,988,357 )

income tax expense was $ 5,320,501

and $ 231,979

for the nine months ended December 31, 2024 and

2023, respectively.

for the three months ended June 30, 2025 and 2024, respectively.

The Company recorded tax expense of approximately ( 943.0 )%

of income before income tax expense, for the three month period ended June 30, 2025 and 2024, respectively.

The increase of the effective

tax rate for the current period as compared to the prior period is primarily due to the nondeductible fair market value change in the

Company’s warrant derivative liabilities.

SUBSEQUENT EVENTS

February 9, 2025, the FDA notified the Company of its approval of the Company’s newly constructed facility at 144 Ludlow Avenue,

Northvale NJ as a commercial packaging site.

July 3, 2025, Douglas Plassche exercised stock options for 2,500,000 shares of Common Stock of the Company at an exercise price of $ 0.03

July 4, 2025, tax legislation known as the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the United States.

The Company is currently evaluating the impact of U.S.

tax law changes introduced by the OBBBA on our consolidated financial

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