What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-14 · 301 added, 229 removed, 147 unchanged (78% 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 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

following discussion of our financial condition and results of operations for the six months ended September 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.

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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 (“cGMP”) and is a United States

Drug Enforcement Agency (“DEA”) registered facility for research, development, and manufacturing.

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

operating lease for office space at Pompano Beach, Florida.

focus our efforts on the following areas:

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

(iv) commercial exploitation of our products

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

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

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

(iv) commercial exploitation of our products either

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

and (v) development

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

co-development projects, joint ventures and other collaborations.

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”).

Act of 1984 as well as generic drug products which require ANDAs.

believe that our business strategy enables us to reduce our 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

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

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 billion.

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.

studies 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 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.

On November 12, 2025,

the Company announced that it received approval from the FDA for an ANDA for a generic version of Requip XL ® (Ropinirole

Extended-Release Tablets USP), with strengths of 2mg, 4mg, 6mg, 8mg and 12mg tablets.

Ropinirole belongs to a class of drugs known as

non-ergoline dopamine agonist used to treat symptoms of Parkinson’s disease.

This product will be marketed and sold under the Elite

Laboratories, Inc.

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

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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”)

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”)

Cardiovascular

Trimipramine Maleate Immediate Release 25mg,

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

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

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”)

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”)

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”)

Antipsychotic

Methotrexate Sodium 2.5mg tablets (“Methotrexate

Sodium 2.5mg tablets (“Methotrexate 2.5mg”)

Antimetabolite

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”)

Acetaminophen

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

and “APAP Codeine 300mg/60mg”)

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”)

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”)

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

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of oxycodone into capsules.

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 (“PDUFA”)

of July 14, 2016.

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

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 (“PDUFA”) of July 14, 2016.

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

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the Company has filed the following ANDA’s which have been accepted for review by the FDA:

Generic dopamine agonist accepted for review in December 2022

Generic opiate analgesic for pain management accepted for review in September 2023

dopamine agonist accepted for review in December 2022

opiate analgesic for pain management accepted for review in September 2023

Products Not Yet Commercialized

3 unchanged sentences

Hydrochloride Tablets

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.

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

the Company acquired all rights in and to the approved ANDA for Methadone Hydrochloride 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.

Extended-Release Tablets USP

November 12, 2025, the Company announced, that it received approval from the FDA for a generic version of Requip XL® (Ropinirole

Extended-Release Tablets USP), with strengths of 2 mg, 4 mg, 6 mg, 8 mg, and 12 mg tablets.

Ropinirole belongs to a class of drugs known

as a non-ergoline dopamine agonist used to treat symptoms of Parkinson’s disease.

This product will be marketed and sold under

the Elite Laboratories, Inc.

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

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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 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

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 September 30, 2025 and ANDAs acquired or approved during the

quarter ended September 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.

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.

The Company did not discontinue or transfer an ANDAs during the quarter ended September 30, 2025.

Accounting Estimates

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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.

The preparation of our condensed 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

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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

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.

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 stock price.

taxes are accounted for under the asset and liability method.

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

On July 4, 2025, tax

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

The Company has evaluated the

impact of U.S.

tax law changes introduced by OBBBA on our consolidated financial statements and the impact to the current year’s

financial statements is not material.

of Operations

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necessarily indicative of future results.

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

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

Cost of manufacturing and Gross profit:

For the Three Months

Ended June 30,

Manufacturing fees

Licensing fees

Total revenue

the Three Months Ended

Manufacturing

Cost of manufacturing

Gross profit - percentage

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,

profit - percentage

revenues for the three months ended September 30, 2025 increased by $17.4 million or 92%, to $36.3 million, as compared to $18.9 million,

for the corresponding period of the prior year.

Manufacturing

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,

fees revenue increased by $18.0 million, or 99%, to $36.2 million primarily due to revenues relating to increased revenues from the Elite label products that were commercialized in both the current period and comparable

period of the prior year as well as sales of 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.

year and are expected to continue in periods subsequent to September 30, 2025.

fees revenue decreased by $529,705, or 81%.

This decrease is primarily due to the Company’s transitioned focus on marketing of

the Elite label products, which does not result in license fee revenues.

The Company’s last remaining licensing agreement

expired in accordance with its terms on September 10, 2025.

Accordingly, other than minimal residual licensing fees that may be

received prospectively, there is no contractual framework in place for achieving license fees revenues going forward.

of manufacturing consists of manufacturing and assembly costs.

Our cost of manufacturing increased by $11.6 million or 108%, to $22.2

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

million as compared to $10.7 million for the corresponding period in the prior fiscal year.

This increase was due to an increased volume

of products sold during the three months ended September 30, 2025, as compared to the comparable period of the prior fiscal year, as

gross profit margin was 39% during the three months ended September 30, 2025 as compared to 43% during the comparable period of the

prior fiscal year.

The decrease is primarily due to sales in the current quarter consisting of a higher proportion of indirect sales

through wholesalers, which yield lower gross profit margins as compared to direct sales to pharmaceutical chains, as

compared to the proportion of indirect sales through wholesalers achieved during the comparable period of the prior

the Three Months Ended

Operating expenses:

General and administrative

Non-cash compensation

and development

and administrative

and amortization

operating expenses

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 Three Months

Other (expense) income:

Change in fair

value of derivative financial instruments - warrants

expenses for the three months ended September 30, 2025 increased by $1.1 million, or 24%, to $5.9 million as compared to $4.7 million

for the corresponding period in the prior fiscal year, largely due to an increase in general and administrative costs of $1.8 million,

offset by a decrease in research and development expenses of $0.6 million

and development costs during the three months ended September 30, 2025 were $1.4 million, a decrease of $0.6 million, or 30%, from

approximately $2.0 million of such costs for the comparable period of the prior year.

The decrease was the result of more laboratory

resources being allocated to supporting commercial operations as well as the number, timing and nature of product development

activities during the three months ended September 30, 2025, as compared to the comparable period of the prior fiscal

and administrative expenses for the three months ended September 30, 2025 were $4.0 million, an increase of $1.8 million or approximately

77% from the comparable period of the prior fiscal year.

This increase is due to largely due to increased human resource costs resulting from increased headcounts

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

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

and amortization expenses from the three months ended September 30, 2025 were $0.4 million, essentially flat as compared to $0.4 million

for the comparable period in the prior fiscal year.

a result of the foregoing, our income from operations during the three months ended September 30, 2025 was $8.2 million, compared to

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

income (expense):

the Three Months Ended

Other income (expenses):

in fair value of derivative financial instruments - warrants

$ (12,754,735 )

expense and amortization of debt issuance costs

income (expenses), net

$ (13,003,969 )

income (expenses) for the three months ended September 30, 2025 was $7.5 million, an increase in net other income

of $20.5 million from a net other (expense) of $13.0 million for the comparable period of the prior fiscal year.

The increase in net

other income was primarily due to an increase of $20.3 million relating to the change in fair value of derivative financial instruments

and a decrease in interest expense of $0.2 million, as compared to the comparable period of the prior year.

change in the fair value of derivative instruments 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 other income or (expense) being recorded.

The decrease in

interest expense is primarily related to the Company servicing a lesser principal amount of loans payable during the three months

ended September 30, 2025 as compared to the comparable period of the prior year.

a result of the foregoing, our net income before income taxes for the three months ended September 30, 2025 was $15.7 million, compared

to net loss before income taxes of $9.5 million for the comparable period of the prior fiscal year.

months ended September 30, 2025 compared to the six months ended September 30, 2024

Cost of manufacturing and Gross profit:

the Six Months Ended

Manufacturing

Cost of manufacturing

profit - percentage

revenues for the six months ended September 30, 2025 increased by $38.8 million or 103%, to $76.5 million, as compared to $37.7 million,

for the corresponding period of the prior year.

Manufacturing

fees revenue increased by $39.3 million, or 107%, primarily due to revenues relating to increased revenues from the Elite label products that were commercialized in both the current period and comparable

period of the prior year as well as sales of new products, including, without limitation,

the Lisdexamfetamine products, which were commercially launched subsequent to the comparable period of the prior year and are expected to continue in periods subsequent to September 30, 2025.

fees revenue decreased by $0.5 million, or 45%.

This decrease is primarily due to the Company’s transitioned focus on

marketing of the Elite label, which does not result in license fee revenues.

The Company’s last remaining licensing agreement

expired in accordance with its terms on September 10, 2025.

Accordingly, other than minimal residual licensing fees that may be

received prospectively, there is no contractual framework in place for achieving license fees revenues going forward.

of manufacturing consists of manufacturing and assembly costs.

Our cost of manufacturing increased by $14.2 million or 68%, to $35.2 million

as compared to $21.0 million for the corresponding period in the prior fiscal year.

This increase was due to an increased volume of products

sold during the six months ended September 30, 2025, as compared to the comparable period of the prior fiscal year, as noted above.

gross profit margin was 54% during the six months ended September 30, 2025 as compared to 44% during the comparable period of the prior

The increase is primarily due to sales achieved during the current quarter being comprised of a greater proportion of higher

margin products as compared to sales achieved during the comparable period of the prior year and sales during the six month period ended September 30, 2025 consisting of a greater proportion of direct

sales to pharmaceutical chains, which yield higher gross profit margins as compared to indirect sales to wholesalers, as compared to the

comparable period of the prior year.

It should be noted that the higher gross profit percentage during the six months ended September 30,

2025 is higher that that of the three months ended September 30, 2025, as per above, with such being due to the latter half of the

six month period ended September 30, 2025 consisting of an increased proportion of indirect sales through wholesalers, as compared

to the former half of the six month period ended September 30, 2025.

the Six Months Ended

Operating expenses:

and development

$ (1,069,351 )

Interest expense and amortization

of debt issuance costs

Interest income

and administrative

and amortization

operating expenses

expenses for the six months ended September 30, 2025 increased by $2.1 million, or 22%, to $11.4 million as compared to $9.3 million

for the corresponding period in the prior fiscal year, largely due to an increase in general and administrative expenses of $3.2 million,

offset by a decrease in research and development expenses of $1.1 million.

and development costs during the six months ended September 30, 2025 were $3.1 million, a decrease of $1.1 million, or 26%, from

approximately $4.1 million of such costs for the comparable period of the prior year.

The decrease was the result of more laboratory

resources being allocated to supporting commercial operations as well as the number, timing and nature of product development

activities during the six months ended September 30, 2025, as compared to the comparable period of the prior fiscal year.

and administrative expenses for the six months ended September 30, 2025 were $7.4 million as compared to $4.2 million for the corresponding

period in the prior fiscal year, an increase of $3.2 million or approximately 75% .

This increase is largely due to increased human resource costs resulting

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

period of the prior year.

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

and amortization expenses from the six months ended September 30, 2025 were $0.8 million, essentially flat from $0.8 million for the

comparable period of the prior year.

a result of the foregoing, our income from operations during the six months ended September 30, 2025 was $29.9 million, compared to income

from operations of $7.3 million for the comparable period of the prior fiscal year.

income (expense):

the Six Months Ended

Other expense (income):

in fair value of derivative financial instruments - warrants

$ (14,589,888 )

$ (15,537,648 )

expense and amortization of debt issuance costs

(expense) income, net

$ (14,787,320 )

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.

$ (16,020,273 )

(expense) income for the six months ended September 30, 2025 was a net other expense of $14.8 million, a decrease of $1.2 million from

a net other expense of $16.0 million for the comparable period of the prior fiscal year.

The decrease was primarily due to a decrease

in other expenses of $0.9 million relating to the change in fair value of derivative instruments and a decrease in interest expense and

amortization debt issuance costs of $0.3 million.

The change in the fair value of derivative instruments 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 other income or (expense) being recorded.

The decrease in interest expense is primarily related to the Company servicing a

lesser principal amount of loans payable during the six months ended September 30, 2025 as compared to the comparable period of the prior

a result of the foregoing, our net income before income taxes for the six months ended September 30, 2025 was $15.1 million, compared

to net loss before income taxes of $8.7 million for the comparable period of the prior fiscal year.

and Capital Resources

Current assets

Current liabilities

$ (1,166,919 )

Working capital

working capital (total current assets less total current liabilities) increased by $29.2 million from $45.9 million as of March 31, 2025

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.

to $75.1 million as of September 30, 2025, with such increase being primarily related to the increase cash, finished goods inventory

and accounts receivable, associated with increased customer orders and shipments during the six months ended September 30, 2025 and a

decrease in current liabilities during the same period.

of Cash Flows:

the Three Months Ended June 30,

Net cash provided by operating

Net cash used in investing activities

the Six Months Ended

Net cash provided

by operating activities

Net cash used in investing

$ (1,645,722 )

Net cash used in financing activities

Net cash used in financing

$ (4,247,152 )

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 $0.8 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

cash provided by operating activities for the six months ended September 30, 2025 was $19.9 million, which included, without limitation,

net income of $7.8 million, increased by fair value of derivative financial instruments - warrants of $14.6

million, and other non-cash expenses of $1.9 million, deferred tax expenses of $6.6 million, and reduced by increases in operating assets

and liabilities totaling $11.0 million.

cash used in investing activities for the six months ended September 30, 2025 was comprised of purchases of property and equipment of

approximately $0.3 million.

cash used in financing activities was $4.2 million for the six months ended September 30, 2025 compared to net cash used in financing

activities of $0.5 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 $4.1 million and payments on principal on finance lease obligations of $0.2 million.

Net cash used in financing activities of $0.5 million during the prior fiscal year was due to payments of bond and loan principal

totaling $0.3 million and payments on principal on finance lease obligations of $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

The total transaction costs associated with the EWB Mortgage Loan incurred as of September 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 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 September 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%

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.

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.

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 products.

As of March 31, 2016,

all of the proceeds were utilized by the Company for such stated purposes.

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

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.

of bond issuance costs amounted to $7,089 for the six months ended September 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 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.

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

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

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

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What changed 10-Q

Item 2. Management’s Discussion and Analysis