ELITE PHARMACEUTICALS INC /NV/ 10-Q

ITEM 1. FINANCIAL STATEMENTS September 30, 2025 March 31, 2025 (Unaudited) ASSETS Current assets: Cash $ 26,617,346 $ 11,315,385 Accounts receivable, net of allowance for expected credit losses of $ 1,240,555 and $ 387,533 respectively 40,871,924 29,207,028 Inventory 18,164,934 16,240,376 Prepaid expenses and other current assets 139,494 976,358 Total current assets 85,793,698 57,739,147 Property and equipment, net of accumulated depreciation of $ 17,579,504 and $ 17,028,700 respectively 10,097,979 10,327,245 Intangible assets 5,637,802 5,637,802 Finance lease - right-of-use asset, net of accumulated depreciation of $ 740,487 and $ 501,541 respectively 1,532,547 1,771,494 Operating lease - right-of-use asset 1,770,693 2,000,284 Deferred income tax asset 11,804,166 18,365,748 Other assets: Restricted cash - debt service for NJEDA bonds 463,240 453,776 Security deposits 147,686 91,981 Total other assets 610,926 545,757 Total assets $ 117,247,811 $ 96,387,477 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 3,424,625 $ 2,957,584 Accrued expenses 6,152,304 3,795,227 Deferred revenue — 5,556 Bonds payable, current portion, net of bond issuance costs 135,822 125,822 Loans payable, current portion 95,529 120,744 Related party loans payable — 4,000,000 Lease obligation - finance lease, current portion 361,723 363,112 Lease obligation - operating lease, current portion 503,513 472,390 Total current liabilities 10,673,516 11,840,435 Long-term liabilities: Bonds payable, net of current portion and bond issuance costs 644,470 787,381 Loans payable, net of current portion and loan costs 2,200,343 2,245,743 Lease obligation - finance lease, net of current portion 1,062,473 1,247,621 Lease obligation - operating lease, net of current portion 1,292,960 1,552,075 Derivative financial instruments - warrants 39,789,081 25,199,193 Total long-term liabilities 44,989,327 31,032,013 Total liabilities 55,662,843 42,872,448 Commitments and Contingencies (Note 9) - Shareholders’ equity: Common Stock; par value $ 0.001 ; 1,445,000,000 shares authorized; 1,073,463,108 and 1,068,463,108 shares issued as of September 30, 2025 and March 31, 2025, respectively; 1,073,363,108 and 1,068,363,108 shares outstanding as of September 30, 2025 and March 31, 2025, respectively 1,073,467 1,068,467 Additional paid-in capital 173,704,576 173,457,329 Treasury stock; 100,000 shares as of both September 30, 2025 and March 31, 2025, at cost ( 306,841 ) ( 306,841 ) Accumulated deficit ( 112,886,234 ) ( 120,703,926 ) Total shareholders’ equity 61,584,968 53,515,029 Total liabilities and shareholders’ equity $ 117,247,811 $ 96,387,477 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 1 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) 2025 2024 2025 2024 For the Three Months Ended September 30, For the Six Months Ended September 30, 2025 2024 2025 2024 Revenue: Manufacturing fees $ 36,196,254 $ 18,225,190 $ 75,974,017 $ 36,669,108 Licensing fees 125,450 655,155 558,784 1,014,300 Total revenue 36,321,704 18,880,345 76,532,801 37,683,408 Cost of manufacturing 22,248,671 10,682,917 35,233,798 21,011,202 Gross profit 14,073,033 8,197,428 41,299,003 16,672,206 Operating expenses: Research and development 1,385,306 1,966,094 3,060,270 4,129,621 General and administrative 4,029,199 2,273,744 7,433,283 4,242,898 Non-cash compensation through issuance of stock options 49,918 52,329 102,247 104,658 Depreciation and amortization 394,864 420,318 789,750 846,030 Total operating expenses 5,859,287 4,712,485 11,385,550 9,323,207 Income from operations 8,213,746 3,484,943 29,913,453 7,348,999 Other income (expense): Change in fair value of derivative financial instruments - warrants 7,519,649 ( 12,754,735 ) ( 14,589,888 ) ( 15,537,648 ) Interest expense and amortization of debt issuance costs ( 82,470 ) ( 255,136 ) ( 241,396 ) ( 505,917 ) Interest income 4,922 5,902 9,464 11,292 Other income 34,500 — 34,500 12,000 Other income (expense), net 7,476,601 ( 13,003,969 ) ( 14,787,320 ) ( 16,020,273 ) Income (loss) before income taxes 15,690,347 ( 9,519,026 ) 15,126,133 ( 8,671,274 ) Income tax expense ( 1,987,940 ) ( 1,517,203 ) ( 7,308,441 ) ( 1,749,182 ) Net income (loss) attributable to common shareholders $ 13,702,407 $ ( 11,036,229 ) $ 7,817,692 $ ( 10,420,456 ) Basic net income (loss) per share attributable to common shareholders $ 0.01 $ ( 0.01 ) $ 0.01 $ ( 0.01 ) Diluted net income (loss) per share attributable to common shareholders $ 0.01 $ ( 0.01 ) $ 0.01 $ ( 0.01 ) Basic weighted average Common Stock outstanding 1,071,897,174 1,068,273,108 1,070,180,140 1,068,273,108 Diluted weighted average Common Stock outstanding 1,141,536,381 1,068,273,108 1,081,817,730 1,068,273,108 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 2 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) Shares Amount Shares Amount Capital Shares Amount Deficit Equity Series J Preferred Stock Common Stock Additional Paid-In Treasury Stock Accumulated Total Shareholders’ Shares Amount Shares Amount Capital Shares Amount Deficit Equity Balance as of March 31, 2025 — — 1,068,463,108 $ 1,068,467 $ 173,457,329 100,000 $ ( 306,841 ) $ ( 120,703,926 ) $ 53,515,029 Net loss — — — — — — — ( 5,884,715 ) ( 5,884,715 ) Non-cash compensation through the issuance of employee stock options — — — — 52,329 — — — 52,329 Balance at June 30, 2025 — $ — 1,068,463,108 $ 1,068,467 $ 173,509,658 100,000 $ ( 306,841 ) $ ( 126,588,641 ) $ 47,682,643 Shares issued pursuant to exercise of employee stock options — — 5,000,000 5,000 145,000 — — — 150,000 Net income — — — — — — — 13,702,407 13,702,407 Non-cash compensation through the issuance of employee stock options — — — — 49,918 — — — 49,918 Balance at September 30, 2025 — $ — 1,073,463,108 $ 1,073,467 $ 173,704,576 100,000 $ ( 306,841 ) $ ( 112,886,234 ) $ 61,584,968 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 3 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) Series J Preferred Stock Common Stock Additional Paid-In Treasury Stock Accumulated Total Shareholders’ Shares Amount Shares Amount Capital Shares Amount Deficit Equity Balance as of March 31, 2024 — $ — 1,068,373,108 $ 1,068,377 $ 173,210,549 100,000 $ ( 306,841 ) $ ( 116,389,267 ) $ 57,582,818 Net income — — — — — — — 615,773 615,773 Non-cash compensation through the issuance of employee stock options — — — — 52,329 — — — 52,329 Balance at June 30, 2024 — $ — 1,068,373,108 $ 1,068,377 $ 173,262,878 100,000 $ ( 306,841 ) $ ( 115,773,494 ) $ 58,250,920 Balance — $ — 1,068,373,108 $ 1,068,377 $ 173,262,878 100,000 $ ( 306,841 ) $ ( 115,773,494 ) $ 58,250,920 Net loss — — — — — — — ( 11,036,229 ) ( 11,036,229 ) Net income (loss) — — — — — — — ( 11,036,229 ) ( 11,036,229 ) Non-cash compensation through the issuance of employee stock options — — — — 52,329 — — — 52,329 Balance at September 30, 2024 — $ — 1,068,373,108 $ 1,068,377 $ 173,315,207 100,000 $ ( 306,841 ) $ ( 126,809,723 ) $ 47,267,020 Balance — $ — 1,068,373,108 $ 1,068,377 $ 173,315,207 100,000 $ ( 306,841 ) $ ( 126,809,723 ) $ 47,267,020 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 4 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 2025 2024 For the Six Months Ended September 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 7,817,692 $ ( 10,420,456 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 550,804 622,947 Provision for losses on accounts receivable 750,075 24,584 Amortization of operating leases - right-of-use assets 229,592 266,177 Amortization of finance leases - right-of-use assets 238,946 223,088 Amortization of debt discount - bonds offering costs 7,089 7,089 Loss on asset disposal — 121,481 Change in fair value of derivative financial instruments - warrants 14,589,888 15,537,648 Deferred tax expense 6,561,582 1,317,391 Non-cash compensation through the issuance of employee stock options 102,247 104,658 Change in operating assets and liabilities: Accounts receivable ( 12,414,971 ) ( 2,014,838 ) Inventory ( 1,924,558 ) ( 1,234,481 ) Prepaid expenses and other current assets 836,864 587,233 Security deposits ( 55,705 ) — Accounts payable 467,041 ( 731,026 ) Accrued expenses 2,357,077 401,717 Deferred revenue ( 5,556 ) ( 6,667 ) Lease obligations - operating leases ( 227,992 ) ( 205,238 ) Net cash provided by operating activities 19,880,115 4,601,307 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment ( 321,538 ) ( 870,972 ) Purchase of intangible assets — ( 900,000 ) Proceeds from disposition of property and equipment — 125,250 Net cash used in investing activities ( 321,538 ) ( 1,645,722 ) CASH FLOWS FROM FINANCING ACTIVITIES: Payment of bond principal ( 140,000 ) ( 130,000 ) Payments of related party loans payable ( 4,000,000 ) — Payments on principal on finance lease obligations ( 186,537 ) ( 158,179 ) Proceeds from exercise of stock options 150,000 — Loan payments ( 70,615 ) ( 207,413 ) Net cash used in financing activities ( 4,247,152 ) ( 495,592 ) Net change in cash and restricted cash 15,311,425 2,459,993 Cash and restricted cash, beginning of period 11,769,161 7,539,094 Cash and restricted cash, end of period $ 27,080,586 $ 9,999,087 Supplemental disclosure of cash and non-cash transactions: Cash paid for interest $ 128,920 $ 367,135 Cash paid for income taxes $ 796,101 $ 496,262 Finance directors and officers insurance premium $ — $ 198,457 Recognition of finance lease right of use asset and lease liabilities entered into $ — $ 153,870 Reconciliation of cash and restricted cash Cash $ 26,617,346 $ 9,554,963 Restricted cash - debt service for NJEDA bonds 463,240 444,124 Total cash and restricted cash shown in statement of cash flows $ 27,080,586 $ 9,999,087 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 5 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Overview Elite Pharmaceuticals, Inc. (the “Company” or “Elite”) was incorporated on October 1, 1997 under the laws of the State of Delaware, and its wholly-owned subsidiary Elite Laboratories, Inc. (“Elite Labs”) was incorporated on August 23, 1990 under the laws of the State of Delaware. On January 5, 2012, Elite Pharmaceuticals was reincorporated under the laws of the State of Nevada. Elite Labs engages primarily in researching, developing, licensing, manufacturing, and sales of generic, oral dose pharmaceuticals. The Company is equipped to manufacture controlled-release products on a contract basis for third parties and itself, if and when the product candidates are approved. These products include drugs that cover therapeutic areas for allergy, bariatric, attention deficit, infection, and Parkinson’s disease. Research and development activities are performed with an objective of developing product candidates that will secure marketing approvals from the United States Food and Drug Administration (“FDA”), and thereafter, commercially exploiting such products. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Elite Labs. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain information or footnote disclosures normally included in condensed financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Form 10-K as filed with the SEC on June 30, 2025. The interim results for the six months ended September 30, 2025 are not necessarily indicative of the results to be expected for the fiscal year ending March 31, 2026 or for any future periods. The Company’s significant accounting policies and recent accounting standards are summarized in Note 1 of the Company’s consolidated financial statements for the year ended March 31, 2025. There were no significant changes to these accounting policies during the six months ended September 30, 2025. Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Such management estimates and assumptions include, but are not limited to, chargeback liabilities related to revenue recognition, standalone selling price for each distinct performance obligation included in customer contracts with multiple performance obligations, warrant derivative liability, valuation of intangible assets, the useful life of property and equipment and identifiable intangible assets, stock-based compensation expense and income taxes. The Company continually evaluates its estimates, which are based on information that is currently available to the Company and on various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates. Segment Information Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 280 (“ASC 280”), Segment Reporting , establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments prepared in accordance with GAAP when making decisions about allocating resources and assessing performance of the Company. The Company has determined that its reportable segments are products whose marketing approvals were secured via an Abbreviated New Drug Application (“ANDA”) and products whose marketing approvals were secured via a New Drug Application (“NDA”). ANDA products are referred to as generic pharmaceuticals and NDA products are referred to as branded pharmaceuticals. The Company identified its reporting segments based on the marketing authorization relating to each and the financial information used by its chief operating decision maker to make decisions regarding the allocation of resources to and the financial performance of the reporting segments. The Company paused further development of NDAs and has not engaged in business activities. Accordingly, during the three and six months ended September 30, 2025 and 2024, the Company has only engaged in business activities in a single operating segment. F- 6 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) There are currently no intersegment revenues. Asset information by operating segment is not presented below since the chief operating decision maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company’s condensed consolidated financial statements. Please see Note 14 for further details. Revenue Recognition The Company generates revenue from manufacturing and licensing fees and direct sales to pharmaceutical distributors for pharmacies and institutions. Manufacturing fees include the development of pain management products, manufacturing of a line of generic pharmaceutical products with approved ANDA, through the manufacture of formulations and the development of new products. 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. Under ASC 606, Revenue from Contacts with Customers (“ASC 606”), the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenues following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenues when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue. Nature of goods and services The 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: a) Manufacturing Fees The Company is equipped to manufacture controlled-release products on a contract basis for third parties, if, and when, the products are approved. These products include products using controlled-release drug technology. The Company also develops and markets (either on its own or by license to other companies) generic and proprietary controlled-release pharmaceutical products. The Company recognizes manufacturing fees related to revenue generated from wholesale customers and from direct sale customers. Wholesalers represent customers that purchase the Company’s products and sell them to end customers such as hospitals, group purchasing organizations, institutions, and pharmacies. Direct sales customers purchase products directly from the Company. The Company provides for chargebacks to wholesalers for sales to various end-customers to include, but not limited to, hospitals, group purchasing organizations, and pharmacies. Chargebacks represent the difference between the price the wholesaler pays and the price that the end-customer pays for a product. The Company’s estimate for chargebacks is developed based upon management’s assumption of anticipated claims as well as historical information. Chargebacks represent variable consideration within the Company’s contracts and therefore as such, revenue recognized is limited to the amount for which a significant reversal of revenue related to this variable consideration is not probable. 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 ensuring that the product is produced in accordance with the related supply agreement, and fulfilling the promise to deliver the product and bearing the risk of loss while the inventory is in-transit to the purchaser or commercial partner. Revenue is measured as the amount of consideration the Company expects to receive from the sale of its products, including Elite-labeled pharmaceutical products, and is recorded at net realizable value which consists of gross amounts invoiced reduced by contractual reductions, including, without limitation, chargebacks, discounts and program rebates, as applicable. F- 7 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) b) License Fees The 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. If 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. The 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. 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. When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in ASC 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of September 30, 2025. In accordance with ASC 606-10-55-65, royalties are recognized when the subsequent sale of the customer’s products occurs. Disaggregation of revenue Revenue is disaggregated by type of revenue generated by the Company. The Company recognizes revenue at a point in time for all performance obligations. During the six months ended September 30, 2025 and 2024, the Company had paused further development of NDAs and has not engaged in business activities in that segment. Accordingly, during the six months ended September 30, 2025 and 2024, the Company has only engaged in business activities in a single operating segment. Selected information on reportable segments and reconciliation of operating income by segment to income from operations before income taxes are disclosed within Note 14. Restricted Cash As of September 30, 2025, and March 31, 2025, the Company had $ 463,240 and $ 453,776 , of restricted cash, respectively, related to debt service reserve in regard to the New Jersey Economic Development Authority (“NJEDA”) bonds (see Note 6). Income 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 enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Due to temporary differences in the timing of recognition of items included in income for accounting and tax purposes, deferred tax assets or liabilities are recorded to reflect the impact arising from these differences on future tax payments. Where applicable, the Company records a valuation allowance to reduce any deferred tax assets that it determines will not be realizable in the future. F- 8 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The 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 . The Company operates in multiple tax jurisdictions within the United States of America. The Company remains subject to examination in all tax jurisdiction until the applicable statutes of limitation expire. As of September 30, 2025, a summary of the tax years that remain subject to examination in our major tax jurisdictions is: United States – Federal, 2021 and forward. The Company did not record unrecognized tax positions for the six months ended September 30, 2025. Earnings (Loss) Per Share Attributable to Common Shareholders’ The Company follows ASC 260, Earnings Per Share , which requires presentation of basic and diluted income (loss) per share (“EPS”) on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of Common Stock outstanding during the period. The computation of diluted net income (loss) per share includes the assumed exercise of options and warrants if the effect is dilutive. The assumed exercise of the Series J Warrants was dilutive for the three months ended September 30, 2025, and is therefore included in the diluted EPS calculation for that period. However, for the six months ended September 30, 2025, the assumed exercise of the Series J Warrants would have an antidilutive effect and is therefore excluded from the diluted EPS calculation. As the Company was in a net loss position for the three and six months ended September 30, 2024, the potential dilution from the Series J Warrants converting into 79,008,661 shares of Common Stock and the stock options converting into 10,640,000 shares of Common Stock for these periods have been excluded from the number of shares used in calculating diluted net income (loss) per share as their inclusion would have been antidilutive. The assumed exercise of the Series J Warrants would have an antidilutive effect for the three and six months ended September 30, 2024. The following is the computation of net income (loss) per share applicable to common shareholders for the periods indicated: SCHEDULE OF EARNINGS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS 2025 2024 2025 2024 For the Three Months Ended September 30, For the Six Months Ended September 30, 2025 2024 2025 2024 Numerator Net income (loss) - basic $ 13,702,407 $ ( 11,036,229 ) $ 7,817,692 $ ( 10,420,456 ) Effect of dilutive instrument on net income ( 7,519,649 ) — — — Net income (loss) - diluted $ 6,182,758 $ ( 11,036,229 ) $ 7,817,692 $ ( 10,420,456 ) Denominator Weighted average shares of Common Stock outstanding - basic 1,071,897,174 1,068,273,108 1,070,180,140 1,068,273,108 Dilutive effect of stock options and convertible securities 69,639,207 — 11,637,590 — Weighted average shares of Common Stock outstanding - diluted 1,141,536,381 1,068,273,108 1,081,817,730 1,068,273,108 Net income (loss) per share Basic $ 0.01 $ ( 0.01 ) $ 0.01 $ ( 0.01 ) Diluted $ 0.01 $ ( 0.01 ) $ 0.01 $ ( 0.01 ) F- 9 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to income tax disclosures , which enhances the disclosure requirements for the income tax rate reconciliation, domestic and foreign income taxes paid, requiring disclosure of disaggregated income taxes paid by jurisdiction, unrecognized tax benefits, and modifies other income tax-related disclosures. The amendments are effective for the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2026. The Company is currently evaluating the impact of adopting this guidance on its disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. In January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), Clarifying the Effective Date (“ASU-2024-03”). ASU 2024-03 requires public companies to disclose, in interim and reporting periods, additional information about certain expenses in the financial statements. ASU 2024-03, as clarified by ASU 2025-01, is effective for public entities for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. The Company is currently evaluating the impact that the updated standard will have on the Company’s disclosures within the unaudited condensed consolidated financial statements. In May 2025, the FASB issued ASU 2025-04, Compensation-Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer to reduce diversity in practice and improve the decision usefulness and operability of the guidance for share-based consideration payable to a customer in conjunction with selling goods or services. The ASU is effective for fiscal years beginning after December 15, 2026 with updates to be applied on a retrospective or modified retrospective basis. Early adoption is permitted. The Company is evaluating the impact that this standard will have on the Company’s unaudited condensed consolidated financial statements. In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets . The ASU introduces a practical expedient and an accounting policy election to simplify the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. The practical expedient allows entities to assume that conditions at the balance sheet date remain unchanged for the asset’s remaining life when preparing forecasts as part of estimating expected credit losses. The ASU is effective for fiscal years beginning after December 15, 2025, and is to be adopted on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its unaudited condensed consolidated financial statements. Management has evaluated recently issued accounting pronouncements outside of those mentioned above and does not believe that any of these pronouncements will have a significant impact on the Company’s unaudited condensed consolidated financial statements and related disclosures. NOTE 2. INVENTORY Inventory consisted of the following: SCHEDULE OF INVENTORY September 30, 2025 March 31, 2025 Finished goods $ 5,342,146 $ 4,816,458 Work-in-progress 2,262,444 1,422,005 Raw materials 10,560,344 10,001,913 Inventory $ 18,164,934 $ 16,240,376 NOTE 3. PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following: SCHEDULE OF PROPERTY AND EQUIPMENT September 30, 2025 March 31, 2025 Land, building and improvements $ 11,649,918 $ 11,649,918 Laboratory, manufacturing, warehouse and transportation equipment 15,097,546 14,776,008 Office equipment and software 373,601 373,601 Furniture and fixtures 556,418 556,418 Property and equipment, gross 27,677,483 27,355,945 Less: Accumulated depreciation ( 17,579,504 ) ( 17,028,700 ) Property and equipment, net $ 10,097,979 $ 10,327,245 Depreciation expense was $ 275,391 and $ 227,356 for the three months ended September 30, 2025 and 2024, respectively, and $ 550,804 and $ 622,947 for the six months ended September 30, 2025 and 2024, respectively. F- 10 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 4. INTANGIBLE ASSETS The following table summarizes the Company’s intangible assets as of and for the periods ended September 30, 2025 and March 31, 2025: SCHEDULE OF INTANGIBLE ASSETS September 30, 2025 Estimated Useful Life Gross Carrying Amount Additions Impairment losses Accumulated Amortization Net Book Value Patent application costs - * $ 289,039 $ — $ — $ — $ 289,039 ANDA acquisition costs Indefinite 5,348,763 — — — 5,348,763 $ 5,637,802 $ — $ — $ — $ 5,637,802 March 31, 2025 Estimated Useful Life Gross Carrying Amount Additions Impairment losses Accumulated Amortization Net Book Value Patent application costs - * $ 289,039 $ — $ — $ — $ 289,039 ANDA acquisition costs Indefinite 6,052,189 900,000 ( 1,603,426 ) — 5,348,763 $ 6,341,228 $ 900,000 $ ( 1,603,426 ) $ — $ 5,637,802 * Patent application costs were incurred in relation to the Company’s abuse deterrent opioid technology. Amortization of the patent costs will begin upon the issuance of marketing authorization by the FDA. Amortization will then be calculated on a straight-line basis through the expiry of the related patent(s). On June 17, 2024, the Company and Nostrum Laboratories Inc. (“Nostrum”) entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”), pursuant to which Nostrum was obligated to (i) sell to the Company all of its rights in and to the approved ANDAs for generic Norco® (Hydrocodone Bitartrate and Acetaminophen tablets, USP CII), generic Percocet® (Oxycodone Hydrochloride and Acetaminophen, USP CII), and generic Dolophine® (Methadone Hydrochloride tablets), each a “Product”, and (ii) grant to the Company a royalty-free, non-exclusive perpetual license to use the manufacturing technology, proprietary information, processes, techniques, protocols, methods, know-how, and improvements necessary or used to manufacture each Product in accordance with the applicable ANDA, in exchange for $ 900,000 in cash (the “Transaction”). The Asset Purchase Agreement includes customary representations and warranties and various customary covenants. The closing of the Transaction occurred on June 21, 2024. The Company tests its intangible assets for impairment at least annually (as of March 31st) and whenever events or circumstances indicate that impairment may have occurred. Indicators of impairment may include, among others: a significant decline in expected future cash flows; a sustained, significant decline in stock price and market capitalization; a significant adverse change in legal factors or business climate; unanticipated competition; and slower growth rates. No such impairment was recorded during the six months ended September 30, 2025 or the six months ended September 30, 2024. * Patent application costs were incurred in relation to the Company’s abuse deterrent opioid technology. Amortization of the patent costs will begin upon the issuance of marketing authorization by the FDA. Amortization will then be calculated on a straight-line basis through the expiry of the related patent(s). F- 11 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 5. ACCRUED EXPENSES As of September 30, 2025 and March 31, 2025, the Company’s accrued expenses consisted of the following: SCHEDULE OF ACCRUED EXPENSES September 30, 2025 March 31, 2025 Co-development profit split $ 4,263,410 $ 2,617,210 Employee bonuses 498,837 121,885 Income tax 268,311 340,614 Legal and professional expense 279,013 55,000 Audit fees 250,000 75,000 Director dues 22,500 22,500 Salaries and fees payable 180,628 172,655 Other accrued expenses 389,605 290,363 Accrued interest - related parties — 100,000 Total accrued expenses $ 6,152,304 $ 3,795,227 NOTE 6. NJEDA BONDS During August 2005, the Company refinanced a prior 1999 bond issue occurring in 1999 through the issuance of Series A and B Notes new tax-exempt bonds (the “NJEDA Bonds”). The refinancing involved borrowing $ 4,155,000 , evidenced by a 6.5 % Series A Note in the principal amount of $ 3,660,000 maturing on September 1, 2030 and a 9 % Series B Note in the principal amount of $ 495,000 maturing on September 1, 2012 . During July 2014, the Company retired all the outstanding Series B Notes, at par, along with all accrued interest due and owed. In relation to the Series A Notes, the Company is required to maintain a debt service reserve fund. The debt service reserve is classified as restricted cash on the accompanying unaudited condensed consolidated balance sheets. The NJEDA Bonds require the Company to make an annual principal payment on September 1st based on the amount specified in the loan documents and semi-annual interest payments on March 1st and September 1st, equal to interest due on the outstanding principal. The annual interest rate on the Series A Note is 6.5 %. The NJEDA Bonds are collateralized by a first lien on the Company’s facility and equipment acquired with the proceeds of the original and refinanced bonds. The bonds mature on September 1, 2030. The following tables summarize the Company’s bonds payable liability: SCHEDULE OF BONDS PAYABLE LIABILITY September 30, 2025 March 31, 2025 Gross bonds payable NJEDA Bonds - Series A Notes $ 850,000 $ 990,000 Less: Current portion of bonds payable (prior to deduction of bond offering costs) ( 150,000 ) ( 140,000 ) Long-term portion of bonds payable (prior to deduction of bond offering costs) $ 700,000 $ 850,000 Bond offering costs $ 354,454 $ 354,454 Less: Accumulated amortization ( 284,746 ) ( 277,657 ) Bond offering costs, net $ 69,708 $ 76,797 Current portion of bonds payable - net of bond offering costs Current portions of bonds payable $ 150,000 $ 140,000 Less: Bonds offering costs to be amortized in the next 12 months ( 14,178 ) ( 14,178 ) Current portion of bonds payable, net of bond offering costs $ 135,822 $ 125,822 Long term portion of bonds payable - net of bond offering costs Long term portion of bonds payable $ 700,000 $ 850,000 Less: Bond offering costs to be amortized subsequent to the next 12 months ( 55,530 ) ( 62,619 ) Long term portion of bonds payable, net of bond offering costs $ 644,470 $ 787,381 F- 12 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Amortization expense was $ 3,545 and $ 3,545 for the three months ended September 30, 2025 and 2024, respectively, and $ 7,089 and $ 7,089 for the six months ended September 30, 2025 and 2024, respectively. Interest payable was $ 4,604 and $ 5,363 as of September 30, 2025 and March 31, 2025, respectively. Interest expense was $ 15,329 and $ 18,200 for the three months ended September 30, 2025 and 2024, respectively, and $ 31,417 and $ 39,785 for the six months ended September 30, 2025 and 2024, respectively. Maturities of bonds for the next five years are as follows: SCHEDULE OF MATURITIES OF BONDS Years ending March 31, Amount Remainder of 2026 $ — 2027 150,000 2028 160,000 2029 170,000 2030 180,000 Thereafter 190,000 Total $ 850,000 NOTE 7. LOANS PAYABLE Loans payable consisted of the following: SCHEDULE OF LOANS PAYABLE September 30, 2025 March 31, 2025 Mortgage loan payable 4.75 % interest and maturing June 2032 $ 2,290,931 $ 2,334,163 Equipment and insurance financing loans payable, between 5.99 % and 12.02 % interest and maturing between July 2024 and October 2025 4,941 32,324 Less: Current portion of loans payable ( 95,529 ) ( 120,744 ) Long-term portion of loans payable $ 2,200,343 $ 2,245,743 The interest expense associated with the loans payable was $ 28,237 and $ 33,135 for the three months ended September 30, 2025 and 2024, respectively, and $ 57,034 and $ 68,017 for the six months ended September 30, 2025 and 2024, respectively. F- 13 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Loan principal payments for the next five years are as follows: SCHEDULE OF LOAN PRINCIPAL PAYMENTS Future principal balances Years ending March 31, Amount Remainder of 2026 $ 50,130 2027 92,772 2028 94,433 2029 98,447 2030 103,817 Thereafter 1,856,273 Total remaining principal balance $ 2,295,872 NOTE 8. RELATED PARTY LOANS The Company has entered into a collateralized promissory note with individual lenders with rates comparable to the mortgage loan, dated July 1, 2022, provided by East West Bank to the Company but with fewer covenants. These covenants include filing timely tax returns and financial statements, and an agreement not to sell, lease, or transfer a substantial portion of the Company’s assets during the term of the Hakim Promissory Note. On June 2, 2023, the Company entered into a Promissory Note with Nasrat Hakim, President, Chief Executive Officer and Chairman of the Board of Directors of the Company (the “Board”), pursuant to which the Company borrowed funds in the aggregate principal amount of $ 3,000,000 (the “Hakim Promissory Note”). The Hakim Promissory Note had an interest rate of 9 % for the first year and 10 % for an optional second year and the proceeds were used for working capital and other business purposes. The original maturity date of the Hakim Promissory Note was June 2, 2024, with an optional second year extension. The second year extension was exercised pursuant to the terms of the Hakim Promissory Note. For the three months ended September 30, 2025 and 2024, interest expense on the Hakim Promissory Note totaled $ 0 and $ 75,000 , respectively. For the six months ended September 30, 2025 and 2024, interest expense on the Hakim Promissory Note totaled $ 50,000 and $ 142,500 , respectively, recorded on the unaudited condensed consolidated statements of operations in interest expense and amortization of debt issuance costs. On June 2, 2025, the Hakim Promissory Note was paid in full and no balance was outstanding as of this date. On June 30, 2023, the Company entered into a collateralized promissory note with Davis Caskey (the “Caskey Promissory Note”). The Caskey Promissory Note had a principal balance of $ 1,000,000 and an interest rate of 9 % for the first year and 10 % for an optional second year. The Caskey Promissory Note was subject to the same covenants as are contained in the Hakim Promissory Note. The proceeds will be used for working capital and other business purposes. The original maturity date of the Caskey Promissory Note was June 30, 2024, with an optional second year extension. The second year extension was exercised pursuant to the terms of the Caskey Promissory Note. For the three months ended September 30, 2025 and 2024, interest expense on the Caskey Promissory Note totaled $ 0 and $ 25,000 , respectively. For the six months ended September 30, 2025 and 2024, interest expense on the Caskey Promissory Note totaled $ 25,000 and $ 47,500 , respectively, recorded on the unaudited condensed consolidated statements of operations in interest expense and amortization of debt issuance costs. On June 26, 2025, the Caskey Promissory Note was paid in full and no balance was outstanding as of this date. NOTE 9. COMMITMENTS AND CONTINGENCIES Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s condensed consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. On August 17, 2023, Elite filed a paragraph IV certification with its ANDA to generic Oxycontin and after Elite got acceptance of the ANDA by the FDA on September 19, 2023, Elite sent the patentee and NDA holder a Notice Letter as required under the Hatch-Waxman Act. On November 14, 2023, a patent infringement suit was filed in the District Court of New Jersey by Purdue Pharma. Elite has obtained several agreements with Purdue to stay the litigation, with the latest being a stipulation and order submitted on March 19, 2025 lifting the existing stipulated stay. An amended complaint was filed by Purdue on April 18, 2025. On June 17, 2025 Elite filed a Motion to Dismiss Purdue’s First Amended Complaint and on July 3, 2025 Purdue filed a Second Amended Complaint. Elite filed a Motion to Dismiss Purdue’s Second Amended Complaint on August 7, 2025. On September 2, 2025 Purdue filed an Opposition to Defendants’ Motion to Dismiss Plantiffs’ Second Amended Complaint and Cross-Motion to Extend the 30-Month Stay. On September 29, 2025 Elite filed a Reply memorandum in Support of their Motion to Dismiss and in Opposition to Plantiffs’ Cross Motion to Extend the 30-Month Stay. Elite’s launch of a generic Oxycontin will depend on the approval by the FDA and the outcome of various litigation involving Purdue or the expiry of the patents listed on the Orange Book. As of September 30, 2025, the results of such proceedings cannot be predicted with certainty and are neither probable nor estimable. F- 14 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Operating Leases The Company entered into an operating lease for office space in North Bay Village, Pompano FL (the “NBV Pompano Office Lease”). The Company took occupancy on October 1, 2024. The NBV Pompano Office Lease has a term of three years , ending on September 30, 2027 . The Company entered into a lease agreement for a portion of a one-story warehouse, located at 144 Ludlow Avenue, Northvale, New Jersey (the “144 Ludlow Ave. Lease”). The lease agreement began on January 22, 2024, and has a term of five years . The 144 Ludlow Ave. Lease will expire on December 31, 2028 . The Company assesses whether an arrangement is a lease or contains a lease at inception. For arrangements considered leases or that contain a lease that is accounted for separately, the Company determines the classification and initial measurement of the right-of-use asset and lease liability at the lease commencement date, which is the date that the underlying asset becomes available for use. The Company has elected to account for non-lease components associated with its leases and lease components as a single lease component. The Company recognizes a right-of-use asset, which represents the Company’s right to use the underlying asset for the lease term, and a lease liability, which represents the present value of the Company’s obligation to make payments arising over the lease term. The present value of the lease payments is calculated using either the implicit interest rate in the lease or an incremental borrowing rate. Operating leases are included in operating lease right-of-use assets and lease liabilities in the condensed consolidated balance sheets. Lease expense for operating expense payment is recognized on a straight-line basis over the lease term. Finance Leases In November 2023, the Company entered into a finance lease for equipment (the “Waters Equipment Lease”). The Waters Equipment Lease is related to lab equipment with an acquisition cost of $ 499,775 , with the Company taking ownership of the asset on December 1, 2023. The Waters Equipment Lease has a term of five years , ending on November 29, 2028 . The Company also has the option to purchase the asset at the end of the lease term for the amount of $ 1 , which is probable to be exercised. In February 2024, the Company entered into a finance lease for warehouse equipment (the “Warehouse Equipment Lease”). The Warehouse Equipment Lease is related to warehouse equipment with an acquisition cost of $ 37,500 , with the Company taking ownership of the asset during February 2024. The Warehouse Equipment Lease has a term of two years , ending in February 2026 . The Company also has the option to purchase the asset at the end of the lease term for the amount of $ 1 , which is probable to be exercised. In February 2024, the Company entered into a finance lease for equipment (the “February 2024 Equipment Lease”). The February 2024 Equipment Lease is related to manufacturing equipment with an acquisition cost of $ 455,000 , with the Company taking ownership of the asset during February 2024. The February 2024 Equipment Lease has a term of five years , ending in February 2029 . The Company will retain ownership of the equipment at lease termination . In March 2024, the Company entered into three separate finance leases for manufacturing assets (the “March 2024 Equipment Leases”). The March 2024 Equipment Leases are related to manufacturing equipment and vault installed at the Company’s facility located at 144 Ludlow Avenue, Northvale NJ with an aggregate acquisition cost of $ 1.1 million. Each of the separate leases included in the March 2024 Equipment Leases have a term of five years , ending in March 2029 . The Company will retain ownership of all related assets at lease termination . In July 2024, the Company entered into two separate finance leases for manufacturing assets (the “July 2024 Equipment Leases”). The July 2024 Equipment Leases are related to warehouse and laboratory equipment with an aggregate acquisition cost of $ 153,745 . Each of the separate leases included in the July 2024 Equipment Lease have a term of five years , ending in July 2029 . The Company will retain ownership of all related assets at lease terminations . A lease is classified as a finance lease if any of the following criteria are met: (i) ownership of the underlying asset transfers to the Company by the end of the lease term; (ii) the lease contains an option to purchase the underlying asset that the Company is reasonably expected to exercise; (iii) the lease term is for a major part of the remaining economic life of the underlying asset; (iv) the present value of the sum of lease payments and any residual value guaranteed by the Company equals or exceeds substantially all of the fair value of the underlying asset; or (v) the underlying asset is of a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term . A lease that does not meet any of the criteria to be classified as a finance lease is classified as an operating lease. As the Company expects to exercise the option to purchase the asset at the end of the lease term, the Waters equipment lease was determined to be a finance lease. The finance lease is included on the condensed consolidated balance sheets as Finance lease - right-of-use asset and Lease obligation - finance lease. The finance lease costs are split between Depreciation and amortization expense related to the asset and interest expense on the lease liability, using the effective rate charged by the lessor. The Company has elected to account for lease and non-lease components separately. F- 15 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Rent expense is recorded on the straight-line basis and in cost of manufacturing in the unaudited condensed consolidated statements of operations. Rent expense is as follows: SCHEDULE OF RENT EXPENSE STRAIGHT-LINE BASIS Lease 2025 2024 2025 2024 For the Three Months Ended September 30, For the Six Months Ended September 30, Lease 2025 2024 2025 2024 Ludlow-144 158,317 151,515 316,634 303,030 Pompano-2311 — 8,087 — 16,175 NBV-610 4,562 — 9,125 — Rent expense 4,562 — 9,125 — The table below shows the future minimum rental payments, exclusive of taxes, insurance and other costs: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS Years ending March 31, Operating Lease Amount Financing Lease Amount Total Remainder of 2026 $ 328,934 $ 257,773 $ 586,707 2027 667,307 484,151 1,151,458 2028 666,207 479,337 1,145,544 2029 440,159 438,045 878,204 2030 — 13,740 13,740 Less: interest ( 306,134 ) ( 248,850 ) ( 554,984 ) Present value of lease payments $ 1,796,473 $ 1,424,196 $ 3,220,669 The weighted-average remaining lease term and the weighted-average discount rate of our leases were as follows: SCHEDULE OF WEIGHTED -AVERAGE REMAINING TERM AND THE WEIGHTED-AVERAGE DISCOUNT RATE For the Six Months Ended September 30, Lease Term and Discount Rate 2025 2024 Remaining lease term (years) Operating leases 3.1 4.2 Finance leases 3.4 4.3 Discount rate Operating leases 10.0 % 10.0 % Finance leases 9.5 % 9.5 % NOTE 10. PREFERRED STOCK Series J convertible preferred stock On April 28, 2017, the Company created the Series J Convertible Preferred Stock (“Series J Preferred”) in conjunction with the Certificate of Designations. A total of 50 shares of Series J Preferred were authorized, zero shares are issued and outstanding, with a stated value of $ 1,000,000 per share and a par value of $ 0.01 . NOTE 11. DERIVATIVE FINANCIAL INSTRUMENTS – WARRANTS The Company evaluates and accounts for its freestanding instruments in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities . The Company issued warrants, with a term of ten years , to affiliates in connection with an exchange agreement dated April 28, 2017. The Company has 79,008,661 total warrants to purchase shares of Common Stock outstanding with a weighted average exercise price of $ 0.1521 as of September 30, 2025 and March 31, 2025. F- 16 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) As a result of the net cash settlement at the option of the holder, such warrants are classified as liabilities and measured initially and subsequently at fair value. The fair value of the Series J Warrants was calculated using a Black-Scholes model. The following assumptions were used in the Black-Scholes model to calculate the fair value of the Series J Warrants: SCHEDULE OF FAIR VALUE OF WARRANTS ISSUED September 30, 2025 March 31, 2025 Fair value of the Company’s Common Stock $ 0.6401 $ 0.4350 Volatility 77.30 % 82.80 % Initial exercise price $ 0.1521 $ 0.1521 Warrant term (in years) 1.6 2.1 Risk free rate 3.60 % 3.89 % The changes in warrants (Level 3 financial instruments) measured at fair value on a recurring basis were as follows for the periods ended September 30, 2025 and 2024: SCHEDULE OF CHANGES IN WARRANTS MEASURED AT FAIR VALUE ON A RECURRING BASIS Balance at March 31, 2025 $ 25,199,193 Change in fair value of derivative financial instruments - warrants 22,109,537 Balance at June 30, 2025 47,308,730 Change in fair value of derivative financial instruments - warrants ( 7,519,649 ) Balance at September 30, 2025 $ 39,789,081 Balance at March 31, 2024 $ 6,298,008 Change in fair value of derivative financial instruments - warrants 2,782,913 Balance at June 30, 2024 9,080,921 Change in fair value of derivative financial instruments - warrants 12,754,735 Balance at September 30, 2024 $ 21,835,656 Measured on a Recurring Basis The following table presents information about the Company’s liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fell: SCHEDULE OF LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS Amount at Fair Value Measurement Fair Value Level 1 Level 2 Level 3 Balance as of March 31, 2025 $ 25,199,193 $ — $ — $ 25,199,193 Change in fair value of derivative financial instruments - warrants 14,589,888 — — 14,589,888 Balance as of September 30, 2025 $ 39,789,081 $ — $ — $ 39,789,081 Amount at Fair Value Measurement Fair Value Level 1 Level 2 Level 3 Balance as of March 31, 2024 $ 6,298,008 $ — $ — $ 6,298,008 Change in fair value of derivative financial instruments - warrants 15,537,648 — — 15,537,648 Balance as of September 30, 2024 $ 21,835,656 $ — $ — $ 21,835,656 NOTE 12. STOCK-BASED COMPENSATION Part of the compensation paid by the Company to employees consists of the granting of options to purchase Common Stock. Options Under its 2014 Equity Incentive Plan and 2024 Equity Incentive Plan, the Company did grant and may grant stock options to officers, selected employees, as well as members of the Board and advisory board members. On July 1, 2024 the Company restated the 2014 Equity Incentive Plan to increase the shares reserved under the option plan by 12,730,000 shares. Under the 2024 Equity Incentive Plan, 80,000,000 options are available for grant. All options have generally been granted at a price equal to or greater than the fair market value of the Company’s Common Stock at the date of the grant. Generally, options are granted with a vesting period of up to three years and expire ten years from the date of grant. F- 17 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The fair value of option awards is estimated on the date of grant using the Black-Scholes option-pricing model. The exercise price of each award is generally not less than the per share fair value in effect as of that award date. The determination of fair value using the Black-Scholes model is affected by the Company’s share fair value as well as assumptions regarding a number of complex and subjective variables, including expected price volatility, risk-free interest rate and projected employee share option exercise behaviors. The Company estimates its expected volatility by using a combination of historical share price volatilities of similar companies within the Company’s industry. The expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards, since the Company does not have sufficient exercise history to estimate term of its historical option awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. A summary of the activity of Company’s 2024 Equity Incentive plan and prior equity incentive plans for the six months ended September 30, 2025 is as follows: SCHEDULE OF STOCK OPTION PLAN Weighted Weighted Average Aggregate Shares Average Remaining Contractual Intrinsic Underlying Options Exercise Price Term (in years) Value Outstanding at March 31, 2025 15,640,000 $ 0.05 7.8 $ 6,000,552 Granted — — — $ — Exercised ( 5,000,000 ) 0.03 — $ — Expired and Forfeited — — — $ — Outstanding at September 30, 2025 10,640,000 $ 0.06 7.3 $ 6,157,816 Exercisable at September 30, 2025 6,400,001 $ 0.07 7.2 $ 3,678,662 The aggregate intrinsic value for outstanding options is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s Common Stock as of September 30, 2025 of $ 0.64 for those awards with strike prices lower than the quoted price of the Company’s Common Stock as of September 30, 2025. As of September 30, 2025, there was $ 125,919 in unrecognized stock-based compensation expense that will be recognized over a weighted average 0.88 year period. NOTE 13. CONCENTRATIONS AND CREDIT RISK Revenues Three customers accounted for approximately 81 % of the Company’s revenues for the six months ended September 30, 2025. These three customers accounted for approximately 64 %, 9 %, and 8 % of revenues, respectively. Three customers accounted for approximately 72 % of the Company’s revenues for the six months ended September 30, 2024. These three customers accounted for approximately 42 %, 22 %, and 8 % of revenues, respectively. Accounts Receivable Three customers accounted for approximately 88 % of the Company’s accounts receivable as of September 30, 2025. These three customers accounted for approximately 76 %, 8 %, and 4 % of accounts receivable, respectively. Two customers accounted for approximately 70 % of the Company’s accounts receivable as of September 30, 2024. These two customers accounted for approximately 46 % and 24 % of accounts receivable, respectively. Purchasing Three suppliers accounted for approximately 73 % of the Company’s purchases of raw materials for the six months ended September 30, 2025. These three suppliers accounted for approximately 38 %, 21 %, and 14 % of purchasing, respectively. Two suppliers accounted for approximately 60 % of the Company’s purchases of raw materials for the six months ended September 30, 2024. These two suppliers accounted for approximately 43 %, and 17 %, of purchasing, respectively. NOTE 14. SEGMENT RESULTS FASB ASC 280-10-50 requires use of the “management approach” model for segment reporting. The management approach is based on the way a company’s management organized segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. F- 18 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Consolidated loss from operations, which is reported in the accompanying unaudited condensed consolidated statements of operations, is the measure of segment profit or loss that is regularly reviewed by the Chief Operating Decision Maker (“CODM”). The Company’s CODM is the President and Chief Executive Officer. This enables the CODM to assess the overall level of available resources and determine how best to deploy these resources across research and development projects in line with the long-term company-wide strategic goals. The reporting segments follow the same accounting policies used in the preparation of the Company’s unaudited condensed consolidated financial statements. The following represents selected information for the Company’s reportable segments: SCHEDULE OF SELECTED INFORMATION FOR REPORTABLE SEGMENTS 2025 2024 2025 2024 For the Three Months Ended September 30, For the Six Months Ended September 30, 2025 2024 2025 2024 Operating Income by Segment ANDA $ 12,687,727 $ 6,231,334 $ 38,238,733 $ 12,542,585 Operating income by Segment $ 12,687,727 $ 6,231,334 $ 38,238,733 $ 12,542,585 The Company notes that there was no revenue related to the NDA segment for the three and six months ended September 30, 2025 and 2024. The table below reconciles the Company’s operating income by segment to income before income taxes as reported in the Company’s condensed consolidated statements of operations: SCHEDULE OF OPERATING INCOME BY SEGMENT TO INCOME FROM OPERATIONS 2025 2024 2025 2024 For the Three Months Ended September 30, For the Six Months Ended September 30, 2025 2024 2025 2024 Operating income by segment $ 12,687,727 $ 6,231,334 $ 38,238,733 $ 12,542,585 Corporate unallocated costs ( 4,029,199 ) ( 2,273,744 ) ( 7,433,283 ) ( 4,242,898 ) Interest income 4,922 5,902 9,464 11,292 Interest expense and amortization of debt issuance costs ( 82,470 ) ( 255,136 ) ( 241,396 ) ( 505,917 ) Depreciation and amortization expense ( 394,864 ) ( 420,318 ) ( 789,750 ) ( 846,030 ) Non-cash compensation through issuance of stock options ( 49,918 ) ( 52,329 ) ( 102,247 ) ( 104,658 ) Change in fair value of derivative instruments 7,519,649 ( 12,754,735 ) ( 14,589,888 ) ( 15,537,648 ) Other income 34,500 — 34,500 12,000 Income (loss) before income taxes $ 15,690,347 $ ( 9,519,026 ) $ 15,126,133 $ ( 8,671,274 ) NOTE 15. RELATED PARTY AGREEMENTS Mikah Pharma, LLC Agreements In May 2020, Praxgen (formerly known as SunGen Pharma LLC), pursuant to an asset purchase agreement, assigned its rights and obligations under the Praxgen Agreement for Amphetamine IR and Amphetamine ER to Mikah Pharma LLC (“Mikah”). The ANDAs for Amphetamine IR and Amphetamine ER are now registered under Elite’s name. Mikah has agreed to be Elite’s partner with respect to Amphetamine IR and ER and has agreed to assume all the rights and obligations for these products from Praxgen. Mikah was founded in 2009 by Nasrat Hakim, a related party and the Company’s President, Chief Executive Officer and Chairman of the Board. In June 2021, the Company entered into a development and license agreement with Mikah, pursuant to which Mikah will engage in the research, development, sales and licensing of generic pharmaceutical products. In addition, Mikah will collaborate to develop and commercialize generic products including formulation development, analytical method development, manufacturing, sales and marketing of generic products. Initially two generic products were identified for the parties to develop. As of September 30, 2025, the Company owes an aggregate of $ 4,263,410 to Mikah in accordance with the agreements, with such amount being recorded as an accrued expense on the unaudited condensed consolidated balance sheets. NOTE 16. INCOME TAXES The determination of income tax expense in the accompanying unaudited condensed consolidated statements of income is based on the effective tax rate for the year, adjusted for the impact of any discrete items which are accounted for in the period in which they occur. The Company’s income tax expense was $ 1,987,940 and $ 1,517,203 for the three months ended September 30, 2025 and 2024, respectively. The Company’s income tax expense was $ 7,308,441 and $ 1,749,182 for the six months ended September 30, 2025 and 2024 The Company recorded tax expense of approximately 12.7 % and ( 15.9 ) % of income before income tax expense, for the three months ended September 30, 2025 and 2024, respectively. The Company recorded tax expense of approximately 48.3 % and ( 20.2 ) % of income before income tax expense, for the six months ended September 30, 2025 and 2024, respectively. The Company’s effective tax rate is subject to volatility as changes in the fair value adjustments in the Company’s derivative liabilities significantly impact pre-tax earnings. 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 its consolidated financial statements and the impact to the current year’s financial statements is not material. NOTE 17. SUBSEQUENT EVENTS FDA approval for generic Requip XL ® 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. label. F- 19