What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-02-17 compared with 2025-11-14 · 230 added, 202 removed, 246 unchanged (64% of the section changed)

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

following discussion of our financial condition and results of operations for the six months ended September 30, 2025 and 2024 should

following discussion of our financial condition and results of operations for the nine months ended December 31, 2025 and 2024 should

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

24 unchanged sentences

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

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

Drug Enforcement Agency registered facility for research, development, and manufacturing.

We are also party to an

operating lease for office space at Pompano Beach, Florida.

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.

focus our efforts on the following areas:

28 unchanged sentences

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.

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

1 unchanged sentence

Product Equivalent

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”)

Phentermine HCl 37.5mg tablets (“Phentermine

Phendimetrazine Tartrate 35mg tablets (“Phendimetrazine

November 2012

Phentermine HCl 15mg and 30mg capsules (“Phentermine

15mg” and “Phentermine 30mg”)

Naltrexone HCl 50mg tablets (“Naltrexone

September 2013

Isradipine 2.5mg and 5mg capsules (“Isradipine

2.5mg” and “Isradipine 5mg”)

Cardiovascular

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

Trimipramine Maleate Immediate Release 25mg,

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

Antidepressant

Dextroamphetamine

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

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

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

Nervous System (“CNS”) Stimulant

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

Dextroamphetamine

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

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

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

Nervous System (“CNS”) Stimulant

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

and Loxapine 50mg”)

Dextroamphetamine Saccharate, Amphetamine Aspartate,

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

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

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

Central Nervous System

(“CNS”) Stimulant

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”) Stimulant

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

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

Antipsychotic

Sodium 2.5mg tablets (“Methotrexate 2.5mg”)

Methotrexate Sodium 2.5mg tablets (“Methotrexate

Antimetabolite

Acetaminophen

and Codeine Phosphate 300mg/15mg, 300mg/30mg, 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”)

Acetaminophen and Codeine Phosphate 300mg/15mg,

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

Tylenol® with

Acetaminophen and Hydrocodone Bitartrate 325mg/2.5mg,

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

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

December 2024

Lisdexamfetamine Dimesylate 10mg, 20mg, 30mg,

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

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

December 2024

Oxycodone Hydrochloride and Acetaminophen 5mg/325mg,

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

Under FDA Review

44 unchanged sentences

Hydrochloride Tablets

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.

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

10 unchanged sentences

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.

without limitation, of ANDAs acquired or approved prior to the quarter ended December 31, 2025 and ANDAs acquired or approved during

the quarter ended December 31, 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.

ANDAs with a cost/benefit profile not consistent with management criteria for continuation are identified for disposition and effort

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

The Company did not discontinue or transfer an

ANDAs during the quarter ended December 31, 2025.

Accounting Estimates

38 unchanged sentences

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

2 unchanged sentences

necessarily indicative of future results.

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

months ended December 31, 2025 compared to the three months ended December 31, 2024

Cost of manufacturing and Gross profit:

the Three Months Ended

Manufacturing

the Three Months Ended December 31,

Manufacturing fees

Licensing fees

Total revenue

Cost of manufacturing

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,

Gross profit - percentage

revenues for the three months ended December 31, 2025 increased by $17.2 million or 120%, to $31.6 million, as compared to $14.4 million,

for the corresponding period of the prior year.

Manufacturing

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

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.

fees revenue increased by $17.6 million, or 128%, to $31.4 million primarily due 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 and Elite labeled Naltrexone products, which were commercially launched subsequent to the comparable

period of the prior year and are expected to continue in periods subsequent to December 31, 2025.

fees revenue decreased by $0.4 million, or 67%.

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.

of manufacturing consists of manufacturing and assembly costs.

1 unchanged sentence

million as compared to $8.2 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

These costs have a strong positive correlation

with manufacturing operation and the increase was due to an increased volume of products sold during the three months ended December

31, 2025, as compared to the comparable period of the prior fiscal year, as noted above.

gross profit margin was 41% during the three months ended December 31, 2025 as compared to 43% during the comparable period of the prior

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 year.

the Three Months Ended December 31,

Operating expenses:

and development

and administrative

General and administrative

Non-cash compensation

and amortization

operating expenses

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

$ (1,081,299 )

expenses for the three months ended December 31, 2025 decreased by $1.1 million, or 22%, to $3.9 million as compared to $5.0 million

for the corresponding period in the prior fiscal year, largely due to decreases in research and development and general and

administrative expenses of $0.8 million and $0.3 million, respectively.

and development costs during the three months ended December 31, 2025 were $1.0 million, a decrease of $0.8 million, or 42%, from approximately

$1.8 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 December 31, 2025, as compared to the comparable period of the prior fiscal year.

and administrative expenses for the three months ended December 31, 2025 were $2.5 million, a decrease of $0.3 million or

approximately 9% from the comparable period of the prior fiscal year.

This decrease was due primarily to higher facility utilization

resulting in increased overhead absorption as compared to the comparable period of the prior fiscal year, which had a lower than baseline sell side quantity demand that has not reoccurred.

compensation expense for the three months ended December 31, 2025 and 2024 was less than $0.1 million.

and amortization expenses from the three months ended December 31, 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.

a result of the foregoing, our income from operations during the three months ended December 31, 2025 was $9.0 million, compared to income

from operations of $1.1 million for the comparable period of the prior fiscal year.

income (expense):

the Three Months Ended

the Three Months Ended December 31,

Other income (expenses):

in fair value of derivative financial instruments - warrants

Change in fair

value of derivative financial instruments - warrants

$ (11,729,368 )

expense and amortization of debt issuance costs

Interest expense and amortization

of debt issuance costs

Interest income

income (expenses), net

$ (11,750,575 )

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.

other income (expenses) for the three months ended December 31, 2025 was $11.8 million, an increase in net other income of $23.6 million

from a net other (expense) of $11.8 million for the comparable period of the prior fiscal year.

The increase in net other income was

primarily due to an increase of $23.5 million relating to the change in fair value of derivative financial instruments and an increase

in interest income of $0.1 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

Common Stock as of the end of the period, as compared to the closing price at the beginning of the period.

There is a strong inverse

relationship between changes in the closing price of the Company’s Common Stock and other income or (expense) being recorded.

closing price of the Company’s Common Stock at the end of the three months ended December 31, 2025 was lower than the closing price

of the Company’s Common Stock at the beginning of the three months ended December 31, 2025, resulting in the recording of other

income from the change in fair value of warrant derivative instruments.

The closing price of the Company’s Common Stock at the

end of the comparable period of the prior year was higher than the closing price of the Company’s Common Stock at the beginning

of the comparable period of the prior year, resulting in the recording of other expenses from the change in fair value of warrant derivative

increase in interest income is primarily due to higher interest rates being earned on the Company’s cash balances 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 December 31, 2025 was $20.8 million, compared

to net loss before income taxes of $10.7 million for the comparable period of the prior fiscal year.

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

months ended December 31, 2025 compared to the nine months ended December 31, 2024

Cost of manufacturing and Gross profit:

the Six Months Ended

Manufacturing

the Nine Months Ended December 31,

Manufacturing fees

$ 107,357,701

Licensing fees

Total revenue

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,

Gross profit - percentage

revenues for the nine months ended December 31, 2025 increased by $56.1 million or 108%, to $108.1 million, as compared to $52.0 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 increased by $57.0 million, or 113%, primarily due 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 and Elite labeled Naltrexone products, which were commercially launched subsequent to the comparable period of the prior

year and are expected to continue in periods subsequent to December 31, 2025.

fees revenue decreased by $0.9 million, or 53%.

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.

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.

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

Our cost of manufacturing increased by $24.6 million or 84%, to $53.9

million as compared to $29.3 million for the corresponding period in the prior fiscal year.

These costs have a strong positive correlation

with manufacturing operations and the increase was due to an increased volume of products sold during the nine months ended December

31, 2025, as compared to the comparable period of the prior fiscal year, as noted above.

gross profit margin was 50% during the nine months ended December 31, 2025 as compared to 44% during the comparable period of the prior

The increase is primarily due to sales achieved during the current period 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 nine months ended December

31, 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 gross profit

percentage during the nine months ended December 31, 2025 is higher than that of the three months ended December 31, 2025, as per above,

with such being due to the latter half of the nine months ended December 31, 2025 consisting of an increased proportion of indirect sales

through wholesalers, as compared to the former half of the nine months ended December 31, 2025.

the Nine Months Ended December 31,

Operating expenses:

and development

$ (1,822,488 )

and administrative

General and administrative

Non-cash compensation

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

expenses for the nine months ended December 31, 2025 increased by $1.0 million, or 7%, to $15.3 million as compared to $14.3 million

for the corresponding period in the prior fiscal year, largely due to an increase in general and administrative expenses of $2.9 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

partially offset by a decrease in research and development expenses of $1.8 million.

and development costs during the nine months ended December 31, 2025 were $4.1 million, a decrease of $1.8 million, or 31%, from approximately

$5.9 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 nine

months ended December 31, 2025, as compared to the comparable period of the prior fiscal year.

General and administrative expenses for the nine months ended December 31,

2025 were $9.9 million as compared to $7.0 million for the corresponding period in the prior fiscal year, an increase of $2.9 million

or approximately 42%.

This increase is due primarily to legal and consulting costs incurred during first six months of the fiscal year

ended March 31, 2026 and related to strategic company objectives, as well as increased costs of current expected credit loss expenses

and third party legal and regulatory compliance subject matter experts as compared to the comparable period of the prior fiscal year.

Non-cash compensation expense for the nine months ended December 31, 2025

and 2024 was less than $0.2 million.

and amortization expenses from the nine months ended December 31, 2025 were $1.2 million, essentially flat from $1.3 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

a result of the foregoing, our income from operations during the nine months ended December 31, 2025 was $38.9 million, compared to income

from operations of $8.4 million for the comparable period of the prior fiscal year.

income (expense):

the Six Months Ended

(expense) income:

the Nine Months Ended December 31,

Other (expense) income:

in fair value of derivative financial instruments - warrants

Change in fair

value of derivative financial instruments - warrants

$ (2,772,513 )

$ (27,267,016 )

expense and amortization of debt issuance costs

(expense) income, net

Interest expense and amortization

of debt issuance costs

Interest income

$ (2,966,547 )

$ (27,770,848 )

(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.

other (expense) income for the nine months ended December 31, 2025 was a net other expense of $3.0 million, a decrease of $24.8 million

from a net other expense of $27.8 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

in other expenses of $24.5 million relating to the change in fair value of derivative instruments, a decrease in interest expense and

amortization debt issuance costs of $0.3 million, and an increase in interest income of $0.1 million.

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.

There is a strong inverse

relationship between changes in the closing price of the Company’s Common Stock and other income or (expense) being recorded.

closing price of the Company’s Common Stock at December 31, 2025 was higher than at March 31, 2025, resulting in the recording

of other expenses from the change in fair value of warrant derivative instruments for the nine month period.

The closing price of the

Company’s Common Stock at the end of the comparable period of the prior year was higher than the closing price of the Company’s

Common Stock at the beginning of the comparable period of the prior year, resulting in the recording of other expenses from the change

in fair value of warrant derivative instruments.

decrease in interest expense is primarily related to the Company servicing a lesser principal amount of loans payable during the nine

months ended December 31, 2025 as compared to the comparable period of the prior year

increase in interest income is primarily due to higher interest rates being earned on the Company’s higher cash balances as compared

to the comparable period of the prior year.

a result of the foregoing, our net income before income taxes for the nine months ended December 31, 2025 was $36.0 million, compared

to net loss before income taxes of $19.3 million for the comparable period of the prior fiscal year.

and Capital Resources

$ (1,166,919 )

Current assets

Current liabilities

Working capital

working capital (total current assets less total current liabilities) increased by $37.7 million from $45.9 million as of March 31,

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.

2025 to $83.6 million as of December 31, 2025, with such increase being primarily related to the increase in cash, finished goods

inventory and accounts receivable, associated with increased customer orders and shipments during the nine months ended December 31,

2025 and partially offset by an increase in current liabilities during the same period.

of Cash Flows:

the Six Months Ended

Net cash provided

by operating activities

Net cash used in investing

the Nine Months Ended December 31,

Net cash provided by operating

Net cash used in investing activities

$ (1,645,722 )

Net cash used in financing

Net cash used in financing activities

$ (4,280,787 )

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

cash provided by operating activities for the nine months ended December 31, 2025 was $14.6 million, which included, without limitation,

net income of $26.4 million, increased by fair value of derivative financial instruments - warrants of $2.8 million, and other non-cash

expenses of $2.6 million, deferred tax expenses of $8.0 million, and reduced by increases in operating assets and liabilities totaling

$25.2 million.

cash used in investing activities for the nine months ended December 31, 2025 was comprised of purchases of property and equipment of

approximately $0.5 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.

cash used in financing activities was $4.3 million for the nine months ended December 31, 2025 compared to net cash used in

financing activities of $0.7 million for the corresponding period of the prior year.

Net cash used in financing activities consisted

primarily of payments of bond and related party loan principal totaling $4.1 million and payments on principal on finance lease

obligations of $0.3 million, offset by proceeds received from the exercise of stock options of $0.2 million.

Net cash used in

financing activities of $0.7 million during the prior fiscal year was due to payments of bond and loan principal totaling $0.4

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

3 unchanged sentences

rate of 4.5%.

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

The total transaction costs associated with the EWB Mortgage Loan incurred as of December 31, 2025, were $13,251, which

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

3 unchanged sentences

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

As of December 31, 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.

13 unchanged sentences

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.

of bond issuance costs amounted to $7,089 for the six months ended September 30, 2025.

of bond issuance costs amounted to $10,634 for the nine months ended December 31, 2025.

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

10 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis