What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-02-13 · 259 added, 509 removed, 117 unchanged (87% 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 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

following discussion of our financial condition and results of operations for the three months ended June 30, 2025 and 2024 should be

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

elsewhere in this report.

23 unchanged sentences

occupy manufacturing, warehouse, laboratory and office space at 135, 144 and 165 Ludlow Avenue in Northvale, NJ (the “Northvale

The Northvale Facility operates under Current Good Manufacturing Practice and is a United States Drug Enforcement Agency

registered facility for research, development, and manufacturing.

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

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

The Northvale Facility operates under Current Good Manufacturing Practice (“cGMP”) and is a United States

Drug Enforcement Agency (“DEA”) 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”).

focus our efforts on the following areas:

4 unchanged sentences

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;

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

drug products which require New Drug Applications (“NDAs”) under Section 505(b)(1) or 505(b)(2) of the Drug Price Competition

and Patent Term Restoration Act of 1984.

believe that our business strategy enables us to reduce its risk by having a diverse product portfolio that includes generic products

in various therapeutic categories and to build collaborations and establish licensing agreements with companies with greater resources

thereby allowing us to share costs of development and improve cash-flow.

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

(“Generic Methotrexate”).

Methotrexate Sodium belongs to a class of drugs known as antimetabolites and will be sold under

the Elite Laboratories Inc.

Generic Methotrexate was launched commercially on August 27, 2024.

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 ANDAs as well as royalty free, non-exclusive

perpetual licenses to use the manufacturing technology, proprietary information, processes, techniques, protocols, methods, know-how

and improvements necessary to manufacture the following products:

Hydrocodone Bitartrate and Acetaminophen tablets

Oxycodone Hydrochloride and Acetaminophen tablets

Methodone Hydrochloride tablets

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

tablets (“APAP Codeine Tablets”).

APAP Codeine Tablets are indicated for the management of mild to moderate pain, where treatment

with and opioid is appropriate and for which alternate treatments are inadequate.

APAP Codeine Tablets are marketed and sold under the

Elite Laboratories label.

October 10, 2024, the Company announced the Israeli Ministry of Health approval of Elite’s generic version of Adderall ®

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

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

The product is a central nervous system stimulant indicated

for the treatment of attention deficit hyper activity disorder (ADHD) and narcolepsy.

The Company will supply the product to Dexcel Pharma

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

As of the date of filing of this quarterly report on

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.

(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.

continue to evaluate opportunities for the development of various types of drug products, including branded drug products which require

New Drug Applications (“NDAs”) under Section 505(b)(1) or 505(b)(2) of the Drug Price Competition and Patent Term Restoration

Act of 1984 (the “Drug Price Competition Act”) as well as generic drug products which require ANDAs.

believe that our business strategy enables us to reduce its risk by having a diverse product portfolio.

April 30, 2025 the Company announced the commercial launch of its generic version of Percocet ® (Oxycodone hydrochloride

and acetaminophen tablets, “Oxy APAP”).

Oxy APAP is indicated for the relief of moderate to moderately severe pain.

June 16, 2025, the Company reported positive results from a pivotal bioequivalence study for an undisclosed anticoagulant generic

drug problem.

IQVIA, a legal global provider of advanced analytics, technology solutions, and clinical research services to the life

sciences industry, reported branded product sales of Percocet ® for the twelve months ending April 2025 of $27

There is no generic product on the market, and the brand has an unexpired patent listed in the Orange Book.

Commercialization of a generic product depends on successful filing, United States Food and Drug Administration (“FDA”) approval, and addressing the unexpired patent.

conducted were open-label, randomized, balanced, single oral dose, two-treatment, two-period, two-sequence, crossover bioequivalence

studies in normal, healthy, adult, human subjects under fasting conditions.

The results indicated that the generic product is

bioequivalent to the branded product.

The Company is compiling the data for this product to file an ANDA with the FDA.

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

commercial sale:

HCl 37.5mg tablets (“Phentermine 37.5mg”)

Phendimetrazine

Tartrate 35mg tablets (“Phendimetrazine 35mg”)

HCl 15mg and 30mg capsules (“Phentermine 15mg” and “Phentermine 30mg”)

HCl 50mg tablets (“Naltrexone 50mg”)

2.5mg and 5mg capsules (“Isradipine 2.5mg” and “Isradipine 5mg”)

Product Equivalent

Phentermine HCl 37.5mg tablets (“Phentermine

Phendimetrazine Tartrate 35mg tablets (“Phendimetrazine

November 2012

Phentermine HCl 15mg and 30mg capsules (“Phentermine

15mg” and “Phentermine 30mg”)

Naltrexone HCl 50mg tablets (“Naltrexone

September 2013

Isradipine 2.5mg and 5mg capsules (“Isradipine

2.5mg” and “Isradipine 5mg”)

Cardiovascular

Maleate Immediate Release 25mg, 50mg and 100mg capsules (“Trimipramine 25mg”, “Trimipramine 50mg”, “Trimipramine

Trimipramine Maleate Immediate Release 25mg,

50mg and 100mg capsules (“Trimipramine 25mg”, “Trimipramine 50mg”, “Trimipramine 100mg”)

Antidepressant

Dextroamphetamine

Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate Immediate Release 5mg, 7.5mg, 10mg, 12.5mg, 15mg,

20mg and 30mg tablets (“Amphetamine IR 5mg”, “Amphetamine IR 7.5mg”, “Amphetamine IR 10mg”, “Amphetamine

IR 12.5mg”, “Amphetamine IR 15mg”, “Amphetamine IR 20mg” and “Amphetamine IR 30mg”)

Nervous System (“CNS”) Stimulant

Sodium Capsules 25mg, 50mg and 100mg (“Dantrolene 25mg”, “Dantrolene 50mg”, “Dantrolene 100mg”)

Dextroamphetamine

Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate Extended Release 5mg, 10mg, 15mg, 20mg, 25mg, and

30mg capsules (“Amphetamine ER 5mg”, “Amphetamine ER 10mg”, “Amphetamine ER 15mg”, “Amphetamine

ER 20mg”, “Amphetamine ER 25mg”, and “Amphetamine ER 30mg”)

Nervous System (“CNS”) Stimulant

Succinate 5mg, 10mg, 25mg and 50gm capsules (“Loxapine 5mg”, “Loxapine 10mg”, “Loxapine 25mg”,

and Loxapine 50mg”)

Dextroamphetamine Saccharate, Amphetamine Aspartate,

Dextroamphetamine Sulfate, Amphetamine Sulfate Immediate Release 5mg, 7.5mg, 10mg, 12.5mg, 15mg, 20mg and 30mg tablets (“Amphetamine

IR 5mg”, “Amphetamine IR 7.5mg”, “Amphetamine IR 10mg”, “Amphetamine IR 12.5mg”, “Amphetamine

IR 15mg”, “Amphetamine IR 20mg” and “Amphetamine IR 30mg”)

Central Nervous System (“CNS”)

Dantrolene Sodium Capsules 25mg, 50mg and 100mg

(“Dantrolene 25mg”, “Dantrolene 50mg”, “Dantrolene 100mg”)

Muscle Relaxant

Dextroamphetamine Saccharate, Amphetamine Aspartate,

Dextroamphetamine Sulfate, Amphetamine Sulfate Extended Release 5mg, 10mg, 15mg, 20mg, 25mg, and 30mg capsules (“Amphetamine

ER 5mg”, “Amphetamine ER 10mg”, “Amphetamine ER 15mg”, “Amphetamine ER 20mg”, “Amphetamine

ER 25mg”, and “Amphetamine ER 30mg”)

Central Nervous System (“CNS”)

Loxapine Succinate 5mg, 10mg, 25mg and 50gm

capsules (“Loxapine 5mg”, “Loxapine 10mg”, “Loxapine 25mg”, and Loxapine 50mg”)

Antipsychotic

Sodium 2.5mg tablets (“Methotrexate 2.5mg”)

Methotrexate Sodium 2.5mg tablets (“Methotrexate

Antimetabolite

Acetaminophen

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”)

Acetaminophen and Codeine Phosphate 300mg/15mg,

300mg/30mg, 300mg/60mg tablets (“APAP Codeine 300mg/15mg”, “APAP Codeine 300mg/30mg”, and “APAP Codeine

Tylenol® with Codeine

Acetaminophen and Hydrocodone Bitartrate 325mg/2.5mg,

325mg/5mg, 325mg/7.5mg and 325mg/10mg tablets (“APAP Hydrocodone 325mg/2.5mg”, “APAP Hydrocodone 325mg/5mg”,

APAP Hydrocodone 325mg/7.5mg and APAP Hydrocodone 325mg/10mg”)

December 2024

Lisdexamfetamine Dimesylate 10mg, 20mg, 30mg,

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

40mg”, “Lisdex 50mg”, “Lisdex 60mg” and “Lisdex 70mg”)

December 2024

Oxycodone Hydrochloride and Acetaminophen 5mg/325mg,

7.5mg/325mg and 10mg/325mg tablets (“Oxy APAP 5/325”, “Oxy APAP 7.5/325” and “Oxy APAP 10/325”)

Under FDA Review

3 unchanged sentences

of oxycodone into capsules.

January 2016, the Company submitted a 505(b)(2) New Drug Application for SequestOx™, after receiving a waiver of the $2.3 million

January 2016, the Company submitted a 505(b)(2) NDA for SequestOx™, after receiving a waiver of the $2.3 million

filing fee from the FDA.

In March 2016, the Company received notification of the FDA’s acceptance of this filing and that such

filing has been granted priority review by the FDA with a target action under the Prescription Drug User Fee Act of July 14, 2016.

July 15, 2016, the FDA issued a Complete Response Letter, or CRL, regarding the NDA.

The CRL stated that the review cycle for the SequestOx™

NDA is complete and the application is not ready for approval in its present form.

July 7, 2017, the Company reported topline results from a pivotal bioequivalence fed study for or SequestOx™.

The mean Tmax (the

amount of time that a drug is present at the maximum concentration in serum) of SequestOx™ was 4.6 hr.

filing has been granted priority review by the FDA with a target action under the Prescription Drug User Fee Act (“PDUFA”)

of July 14, 2016.

July 15, 2016, the FDA issued a Complete Response Letter, (“CRL”), regarding the NDA.

The CRL stated that the review cycle

for the SequestOx™ NDA was complete and the application is not ready for approval in its present form.

July 7, 2017, the Company reported topline results from a pivotal bioequivalence fed study for SequestOx™.

The mean Tmax (the amount

of time that a drug is present at the maximum concentration in serum) of SequestOx™ was 4.6 hr.

with a range of 0.5 hr.

1 unchanged sentence

with a range of 0.5 hr.

A key objective for the

study was to determine if the reformulated SequestOx™ had a similar Tmax to the comparator when taken with a high fat meal.

on these results, the Company paused clinical trials for this formulation of SequestOx™.

On January 30, 2018, the Company reported

positive topline results from a pilot study conducted for a modified SequestOx™ wherein, based on the results of this pilot study,

the modified SequestOx™ formulation is expected to achieve bioequivalence with a Tmax range equivalent to the reference product

when conducted in a pivotal trial under fed conditions.

The Company has provided the pilot data to the FDA, requesting clarification

as to the requirements for resubmission of the NDA.

The FDA has provided guidance for repeated bio-equivalence studies in order to bridge

the new formulation to the original SequestOx™ studies and also extended our filing fee waiver until July 2023.

Due to the prohibitive

cost of such repeated bio-equivalence studies and the uncertain commercial viability given the regulatory and competitive landscape,

the Company has paused development of this product candidate.

A key objective for the study was

to determine if the reformulated SequestOx™ had a similar Tmax to the comparator when taken with a high fat meal.

Based on these

results, the Company paused clinical trials for this formulation of SequestOx™.

On January 30, 2018, the Company reported positive

topline results from a pilot study conducted for a modified SequestOx™ wherein, based on the results of this pilot study, the modified

SequestOx™ formulation is expected to achieve bioequivalence with a Tmax range equivalent to the reference product when conducted

in a pivotal trial under fed conditions.

The Company has provided the pilot data to the FDA, requesting clarification as to the requirements

for resubmission of the NDA.

The FDA has provided guidance for repeated bio-equivalence studies in order to bridge the new formulation

to the original SequestOx™ studies.

Due to the prohibitive cost of such repeated bio-equivalence studies and the uncertain commercial

viability given the regulatory and competitive landscape, the Company has paused development of this product candidate.

can be no assurances of the Company conducting future clinical trials, or if such trials are conducted, there can be no assurances of

10 unchanged sentences

Hyclate Tablets

Company received approval in April 2022 from the FDA of an ANDA for a generic version of an antibiotic product.

The product is jointly

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

Hydrochloride and Acetaminophen Tablets

to the Nostrum Asset Purchase Agreement, 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.

Company received approval in April 2022 from the FDA of an ANDA for a generic version of an antibiotic product, Doxycycline Hyclate Tablets.

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

Hydrochloride Tablets

to the Nostrum Asset Purchase Agreement, 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.

can be no assurances in relation to any of the above approved products not yet commercialized, that there will be future revenues or

to the Nostrum Asset Purchase Agreement, dated June 17, 2024, by and between the Company and Nostrum Laboratories Inc., pursuant to

which the Company acquired all rights in and to the approved ANDA for Methadone Hyrochloride Tablets 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.

can be no assurances in relation to any of the above approved products not yet commercialized, that there will be future revenues of

profits, or that any such future revenues or profits would be in amounts that provide adequate return on the significant investments

1 unchanged sentence

and Transferred Products

part of standard operating practices, the Company, from time to time, as relevant, conducts evaluations of all ANDAs owned, consisting,

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 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

part of standard operating practices, the Company, from time to time, as relevant, conducts evaluations of all ANDAs owned,

consisting, without limitation, of ANDAs acquired or approved prior to the quarter ended June 30, 2025 and ANDAs acquired or

approved during the quarter ended June 30, 2025.

Such evaluations include, without limitation, costs and benefits analyses 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 December 31, 2024 or Fiscal 2024.

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

Accounting Estimates

preparation of the unaudited condensed consolidated financial statements and related disclosures in conformity with GAAP, and our discussion

and analysis of the Company’s financial condition and operating results require our management to make judgments, assumptions and

estimates that affect the amounts reported in the Company’s unaudited condensed consolidated financial statements and accompanying

Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the

circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Actual results

may differ from these estimates and such differences may be material.

We have identified below the critical accounting policies, which

are assumptions made by management about matters that are highly uncertain and that are of critical importance in the presentation of

our financial position, results of operations and cash flows.

Due to the need to make estimates about the effect of matters that are

inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions.

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.

of goods and services

following is a description of the Company’s goods and services from which the Company generates revenue, as well as the nature,

timing of satisfaction of performance obligations, and significant payment terms for each, as applicable:

Manufacturing Fees

Company is equipped to manufacture immediate and controlled-release products marketed under the Elite label, or manufactured on a contract

basis for third parties.

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

contractual shipping terms of the contract, at which time the performance obligation is deemed to be completed.

The Company is primarily

responsible for fulfilling the promise to provide the product, is responsible to ensure that the product is produced in accordance with

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

Revenue is measured

as the amount of consideration the Company expects to receive in exchange for transferring products to a customer.

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

payments, licensing fees, product sales and services.

The Company analyzes each element of its licensing and development agreements in

accordance with ASC 606 to determine appropriate revenue recognition.

The terms of the license agreement may include payment to the Company

of licensing fees, non-refundable upfront license fees, milestone payments if specified objectives are achieved, and/or royalties on

product sales.

the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.

Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative

standalone selling prices of the promised products or services underlying each performance obligation.

The Company determines standalone

selling prices based on the price at which the performance obligation is sold separately.

If the standalone selling price is not observable

through past transactions, the Company estimates the standalone selling price taking into account available information such as market

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

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

intellectual property to the customer.

For those milestone payments which are contingent on the occurrence of particular future events

(for example, payments due upon a product receiving FDA approval), the Company determined that these need to be considered for inclusion

in the calculation of total consideration from the contract as a component of variable consideration using the most-likely amount method.

As such, the Company assesses each milestone to determine the probability and substance behind achieving each milestone.

Given the inherent

uncertainty of the occurrence of future events, the Company will recognize revenue from the milestone when there is not a high probability

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.

Receivable and Allowance for Expected Credit Losses – Accounts receivable are comprised of balances due from customers, net

of estimated allowances for expected credit losses, and other contractual deductions, including, without limitation, chargebacks, discounts

and program rebates.

In determining collectability, historical trends are evaluated, and specific customer issues are reviewed on a periodic

basis to arrive at appropriate allowances.

allowance for expected credit losses is based on the probability of future collection under the current expected credit loss (“CECL”)

impairment model under Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement

of Credit Losses on Financial Assets, which was adopted by the Company on April 1, 2023.

Under the CECL impairment model, the Company

determines its allowance by applying a loss-rate method based on an aging schedule using the Company’s historical loss rate.

Company also considers reasonable and supportable current information in determining its estimated loss rate, such as external forecasts,

macroeconomic trends or other factors, including customers’ credit risk and historical loss experience.

The adequacy of the allowance

is evaluated on a regular basis.

Account balances are written off after all means of collection are exhausted and the balance is deemed

to be uncollectible.

Subsequent recoveries are credited to the allowance.

Changes in the allowance are recorded as adjustments to credit

losses in the period incurred.

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.

Deferred tax assets and liabilities are recognized for

the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets

and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using the enacted tax rates in effect

for the year in which those temporary differences are expected to be recovered or settled.

Where applicable, the Company records a valuation

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

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

tax position is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position.

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.

The Company remains subject to examination in all

tax jurisdictions 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:

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

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

Accounting Pronouncements

a description of recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our financial

statements, see “Note 1.

Summary of Significant Accounting Polices:

Recently Issued Accounting Pronouncements” in Part II,

Item 1 of this Form 10-Q.

management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial

statements, which have been prepared in accordance with United States generally accepted accounting principles (“GAAP”).

The preparation

of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect

the reported amount of assets, liabilities, costs and expenses and related disclosures.

Our critical accounting estimates are those estimates

that involve a significant level of uncertainty at the time the estimate was made, and changes in them have had or are reasonably likely

to have a material effect on our financial condition or results of operations.

Accordingly, actual results could differ materially from

our estimates.

The following discussion addresses our most critical accounting estimates, which are those that are both important to

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

Recognition - Manufacturing Fees

Company’s revenues are offset by variable consideration, which may include, without limitation, chargebacks, distribution fees,

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

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

The Company’s

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

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

historical trends.

most competitors in this market, our marketing partners also give credits for chargebacks to wholesalers that have contracts with

our marketing partners, prospectively, for their sales to hospitals, group purchasing organizations, pharmacies, or other customers.

We do the same in the case of prospective direct sales made by us.

A chargeback is the difference between the price the wholesaler

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

Although, our marketing partners establish, and

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

have in subsequent periods, we cannot ensure that such reserves established are adequate or that actual product returns, rebates,

allowances, and chargebacks will not exceed estimates.

Differences between established reserves and actual amounts of such credits

and charges, could result in a material adverse effect on our business, financial condition, results of operations, cash flow and

taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized for the estimated future

tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and

their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which

those temporary differences are expected to be recovered or settled.

Where applicable, the Company records a valuation allowance to reduce

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

of Operations:

2 unchanged sentences

necessarily indicative of future results.

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

months ended June 30, 2025 compared to the three months ended June 30, 2024

Cost of manufacturing and Gross profit:

the Three Months Ended December 31,

For the Three Months

Ended June 30,

Manufacturing fees

$ (1,052,979 )

Licensing fees

2 unchanged sentences

Gross profit - percentage

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.

revenues for the three months ended June 30, 2025 increased by $21.4 million or 114%, to $40.2 million, as compared to $18.8 million,

for the corresponding period of the prior year.

Manufacturing

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 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 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:

General and administrative

Non-cash compensation

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 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 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 )

$ (2,417,772 )

$ (9,311,596 )

Change in fair value of

stock-based liabilities

Interest expense and amortization

of debt issuance costs

Gain from settlement agreements

Interest income

(expense) income, net

$ (11,750,575 )

$ (3,626,915 )

$ (8,123,660 )

(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.

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:

the Nine Months Ended December 31,

Manufacturing fees

Licensing fees

Total revenue

Cost of manufacturing

Gross profit - percentage

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%.

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

between the Company and Lannett Company, Inc.

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

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 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.

fees revenue increased by $21.3 million, or 116%, primarily due to the Elite label products achieving greater sales fifteen months

after their launch, as compared to the comparable period of the prior year which was the period in which the Elite label was

initially launched combined with the fact that the three months ended June 30, 2025 included sales from new products, including,

without limitation the Lisdexamfetamine products, which were commercially launched subsequent to the comparable period of the prior

fees revenue increased by $0.1 million, or 21%.

This increase is primarily due to higher profit achieved by the Company’s

third-party license during the three months ended June 30, 2025, as compared to the comparable period of the prior year.

that the Company is transitioning away from licensing products to third parties and focusing on marketing of the Elite label, which

does not result in license fee revenue.

of manufacturing consists of manufacturing and assembly costs.

Our cost of revenue increased by $8.8 million or 43%, to $29.3 million

as compared to $20.4 million for the corresponding period in the prior fiscal year.

This increase was due to an increased volume of products

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,

Our cost of manufacturing increased by $2.7 million or 26%, to $13.0

million as compared to $10.3 million for the comparable period of the prior fiscal year.

This increase was primarily due to an

increased volume of products sold during the three months ended June 30, 2025, as compared to the comparable period of the prior

year, as noted above.

gross profit margin was 68% during the three months ended June 30, 2025 as compared to 45% for the corresponding period in the prior

The increase is primarily due to sales achieved during the three months ended June 30, 2025 being comprised of a greater

proportion of higher margin products, combined with a greater proportion of direct sales (as opposed to indirect sales), as compared to the product mix of sales achieved during the comparable period of the prior

the Three Months

Operating expenses:

3 unchanged sentences

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 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 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.

expenses for the three months ended June 30, 2025 increased by $0.9 million, or 20%, to $5.5 million as compared to $4.6 million for

the corresponding period in the prior year, largely due to an increase in general and administrative expenses of $1.4 million, offset

by a decrease in research and development of $0.5 million.

and development costs during the three months ended June 30, 2025 were $1.7 million, a decrease of $0.5 million, or 23%, from approximately

$2.2 million for the prior year.

The decrease was a result of the number, timing and nature of product development activities

during the three months ended June 30, 2025 as compared to the comparable period in the prior fiscal year, with the three months ended

June 30, 2024 requiring increased product development resources related to the product approvals achieved in subsequent periods.

and administrative expenses for the three months ended June 30, 2025 were $3.4 million as compared to $2.0 million for the comparable

period in the prior year, an increase of $1.4 million or approximately 73%, largely due to an increased human resource headcount, regulatory

compliance and consulting costs as compared to the corresponding period in the prior year.

compensation expense for the three months ended June 30, 2025 and 2024 was less than $0.1 million.

and amortization expenses from the three months ended June 30, 2025 were $0.4 million flat to the comparable

period in the prior fiscal year.

a result of the foregoing, our income from operations during the three months ended June 30, 2025 was $21.7 million, compared to income

from operations of $3.9 million for the comparable period in the prior fiscal year.

(expense) income:

the Nine Months Ended December 31,

the Three Months

Other (expense) income:

4 unchanged sentences

$ (19,326,624 )

Change in fair value of

stock-based liabilities

Interest expense and amortization

1 unchanged sentence

Interest income

from settlement agreement

(expense) income, net

$ (22,263,921 )

1 unchanged sentence

$ (19,247,617 )

(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.

expense, net for the three months ended June 30, 2025 was $22.3 million, an increase of $19.2 million as compared to the

corresponding period in the prior year.

The increase was primarily due to a net increase of $19.3 million relating to the change in

fair value of warrant derivative instruments, offset by a $0.1 million relating decrease in interest expense and

amortization of debt issuance costs.

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 changes in the closing

price of the Company’s Common Stock and amounts recorded as other expenses on the statement of operations.

The decrease in

interest expense is primarily due to reduced principal amounts outstanding during the three months ended June 30, 2025 as compared

to the comparable period of the prior year.

a result of the foregoing, our net loss before income taxes for the three months ended June 30, 2025 was $0.6 million, compared to net

income before income taxes of $0.8 million for the comparable period in the prior year.

Company recorded tax expense of approximately (943.0)% and 27.4% of income before income tax expense, for each of the three-month period

ended June 30, 2025 and 2024, respectively.

Our effective tax rate is subject to volatility as changes in the fair value adjustments

in our derivative liabilities significantly impact pre-tax earnings.

These valuation shifts have a disproportionate impact on pre-tax

income, thereby amplifying the effective tax rate for the current period.

The fair value adjustment of derivatives decreased the effective

tax rate by 967.69% for the three-month period ended June 30, 2025.

and Capital Resources

1 unchanged sentence

Current liabilities

$ (1,077,778 )

Working capital

working capital (total current assets less total current liabilities) increased by $21.2 million from $45.9 million as of March 31, 2025

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.

to $67.1 million as of June 30, 2025, with such increase being primarily related to the increase in finished goods inventory and accounts

receivable, associated with increased customer orders during the three months ended June 30, 2025 and an increase in cash balances, paired

with a decrease in total current liabilities over the same period.

of Cash Flows:

the Nine Months Ended December 31,

Net cash provided by (used in)

operating activities

$ (5,334,614 )

the Three Months Ended June 30,

Net cash provided by operating

Net cash used in investing activities

$ (1,663,277 )

Net cash (used in) provided by financing activities

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

Net cash used in financing activities

$ (4,130,684 )

cash provided by operating activities for the three months ended June 30, 2025 was $14.8 million, which included, without

limitation, net loss of $5.9 million, increased by the change in fair value of derivative financial instruments - warrants of $22.1

million, deferred tax expenses of $4.9 million, and reduced by the change in operating assets and liabilities totaling $7.1 million.

Net cash provided by operating activities during comparable period in the prior fiscal year included, without limitation, net income

of $0.6 million increased by depreciation and other non-cash expenses totaling $3.5 million and reduced by the change in operating

activities and liabilities totaling $0.9 million.

cash used in investing activities for the three months ended June 30, 2025 was comprised of purchases of property and equipment of approximately

$0.2 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

of payments of bond and loan principal totaling $0.4 million and payments on principal on finance lease obligations of $0.2 million.

Net cash provided by financing activities of $3.7 million during the prior fiscal year was due to $4.0 million in proceeds from related

party loan, offset by $0.3 million in other debt repayments.

Promissory Note

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

fewer restrictive covenants.

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

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

On June 2, 2023, the Company entered

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

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

The Hakim Promissory Note has an interest rate

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

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

The second year extension

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

Promissory Note

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

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

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

were used for working capital and other business purposes.

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

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

The Caskey Promissory Note

has a current maturity date of June 30, 2025.

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

West Bank (“EWB”).

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

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

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

As of March 31,

2023, the principal and interest on the EWB Term Loan has been paid in full by the Company and the EWB Loan Agreement is terminated.

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

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

The EWB Mortgage Loan matures in 10 years and bears interest

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

The total transaction costs associated

with the EWB Mortgage Loan incurred as of 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

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

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

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

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

Purchase Agreement, at the Company’s direction.

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

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

(the “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.

net proceeds, after payment of issuance costs, were used (i) to redeem the outstanding tax-exempt Bonds originally issued by the Authority

on September 2, 1999, (ii) refinance other equipment financing and (iii) for the purchase of certain equipment to be used in the manufacture

of pharmaceutical products.

of approximately $0.8 million and purchase of intangible assets of $0.9 million.

cash used in financing activities was $4.1 million for the three months ended June 30, 2025 was mainly comprised of payments of loan

principal on related party loans totaling $4.0 million.

Net cash used in financing activities of $0.2 million for the prior fiscal year

was for payments of loan principal and finance lease obligations totaling $0.2 million.

July 1, 2022, East West Bank (“EWB”) provided a mortgage loan (“EWB Mortgage Loan”) in the amount of $2.55

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

The EWB Mortgage

Loan matures in ten years and bears interest at a fixed rate of 4.75% fixed for the first five years then adjustable at WSJP plus 0.5% with floor

rate of 4.5%.

The total transaction costs associated with the EWB Mortgage Loan incurred as of June 30, 2025, were $13,251, which

are being amortized on a monthly basis over ten years, beginning in July 2022.

The EWB Mortgage Loan contains customary

representations, warranties and covenants.

These covenants include maintaining a minimum debt coverage ratio of 1.50 to 1.00 tested

annually and a minimum trailing 12-month debt coverage ratio of 1.50 to 1.00.

As of June 30, 2025, and through the date of filing of

this Quarterly Report on Form 10-Q, the Company was not aware of the existence of any violations of financial covenants included in

the EWB Mortgage Loan.

August 31, 2005, the Company successfully completed a refinancing of a prior 1999 bond issue (the “1999 Bonds”) through

the issuance of new tax-exempt bonds (the “NJEDA 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.

The net proceeds, after payment of issuance costs, were used (i) to redeem the

outstanding tax-exempt 1999 Bonds originally issued by the New Jersey Economic Development Authority on September 2, 1999, (ii) to

refinance other equipment financing and (iii) for the purchase of certain equipment to be used in the manufacture of pharmaceutical

As of March 31, 2016, all of the proceeds were utilized by the Company for such stated purposes.

is payable semi-annually on March 1 and September 1 of each year.

The 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 NJEDA Bonds are collateralized by a first lien on the Company’s

facility and equipment acquired with the proceeds of the 1999 Bonds and NJEDA Bonds.

The related Indenture requires the maintenance

of a debt service reserve fund of $366,000 in relation to the Series A Notes.

issue costs of $354,454 were paid from the bond proceeds and are being amortized over the life of the bonds.

Amortization of bond issuance

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

issue costs of $354,454 were paid from the proceeds of the NJEDA Bonds and are being amortized over the life of the NJEDA bonds.

Amortization of bond issuance costs amounted to $3,545 for the three months ended June 30, 2025.

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

1 unchanged sentence

rate for the semi-annual period just ended.

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

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

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

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

of the debt service reserve fund being used to pay interest payments as well as the Company’s failure to make scheduled

principal payments.

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

and principal payments.

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

4 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