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Item 1. Financial Statements

2026-08-13 compared with 2026-02-17 · 328 added, 499 removed, 584 unchanged (59% of the section changed)

FINANCIAL STATEMENTS

December 31, 2025

PHARMACEUTICALS, INC.

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

June 30, 2026

March 31, 2026

13 unchanged sentences

$ 139,669,132

$ 138,289,840

LIABILITIES AND SHAREHOLDERS’ EQUITY

2 unchanged sentences

Accrued expenses

Deferred revenue

Bonds payable, current portion, net of bond issuance costs

Loans payable, current portion

Related party loans payable

Lease obligation - finance lease, current portion

Lease obligation - operating lease, current portion

Derivative financial instruments - warrants

Total current liabilities

1 unchanged sentence

Bonds payable, net of current portion and bond issuance costs

Loans payable, net of current portion

Loans payable, net of current portion and loan costs

Lease obligation - finance lease, net of current portion

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1,445,000,000 shares authorized;

1,074,596,442 and 1,068,463,108 shares issued as of December 31, 2025 and March 31, 2025, respectively;

1,074,496,442 and 1,068,363,108 shares outstanding as of December 31, 2025 and March 31, 2025, respectively

1,077,236,442 and 1,077,196,442 shares issued as of June 30, 2026 and March 31, 2026, respectively;

1,077,136,442 and 1,077,096,442 shares outstanding as of June 30, 2026 and March 31, 2026 respectively

Additional paid-in capital

Treasury stock;

100,000 shares as of both December 31, 2025 and March 31, 2025, at cost

100,000 shares as of both June 30, 2026 and March 31, 2026 at cost

Accumulated deficit

4 unchanged sentences

$ 139,669,132

$ 138,289,840

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended December 31,

For the Nine Months Ended December 31,

Manufacturing fees

$ 107,357,701

Licensing fees

Total revenue

For the Three Months Ended June 30,

Cost of manufacturing

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( 22,109,537 )

( 2,772,513 )

( 27,267,016 )

Interest expense and amortization of debt issuance costs

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( 22,263,921 )

( 2,966,547 )

( 27,770,848 )

Income (loss) before income taxes

( 10,652,765 )

( 19,324,039 )

Income tax expense

1 unchanged sentence

( 5,320,501 )

( 1,988,357 )

Net income (loss)

$ ( 5,884,715 )

$ ( 21,312,396 )

Basic net income (loss) per share

3 unchanged sentences

1,068,363,108

1,071,508,501

1,068,273,108

Diluted weighted average common stock outstanding

1 unchanged sentence

1,068,363,108

1,121,540,293

1,068,273,108

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Series J Preferred Stock

Preferred Stock

Additional Paid-In

Treasury Stock

Shareholders’

Total Shareholders’

Balance as of March 31, 2026

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$ ( 75,831,240 )

( 5,884,715 )

Non-cash compensation through the issuance of employee stock options

Balance at June 30, 2025

1,068,463,108

$ 173,509,658

$ ( 306,841 )

$ ( 126,588,641 )

Shares issued pursuant to exercise of employee stock options

Non-cash compensation through the issuance of employee stock options

Balance at September 30, 2025

1,073,463,108

$ 173,704,576

$ ( 306,841 )

Balance at June 30, 2026

1,077,236,442

Shares issued pursuant to exercise of employee stock options

Non-cash compensation through the issuance of employee stock options

Balance at December 31, 2025

$ 173,976,332

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$ 104,826,056

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

PHARMACEUTICALS, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Series J Preferred Stock

Preferred Stock

Additional Paid-In

6 unchanged sentences

$ ( 120,703,926 )

Non-cash compensation through the issuance of employee stock options

Balance at June 30, 2024

1,068,463,108

4 unchanged sentences

( 5,884,715 )

Non-cash compensation through the issuance of employee stock options

Balance at September 30, 2024

1,068,373,108

$ 173,315,207

$ ( 306,841 )

$ ( 126,809,723 )

1,068,373,108

$ 173,315,207

$ ( 306,841 )

$ ( 126,809,723 )

( 10,891,940 )

Net income (loss)

2 unchanged sentences

Non-cash compensation through the issuance of employee stock options

Balance at December 31, 2024

Balance at June 30, 2025

1,068,463,108

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

the Three Months Ended June 30

FLOWS FROM OPERATING ACTIVITIES:

income (loss)

$ ( 5,884,715 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

to reconcile net income (loss) to net cash provided by operating activities:

and amortization

provision for losses on accounts receivable

Amortization of operating leases - right-of-use assets

Amortization of finance leases - right-of-use assets

Amortization of debt discount - bonds offering costs

Loss on asset disposal

Change in fair value of derivative financial instruments - warrants

Deferred tax expense

Non-cash compensation through the issuance of employee stock options

Change in operating assets and liabilities:

Accounts receivable

( 20,206,888 )

( 8,858,759 )

of operating leases - right-of-use assets

of finance leases - right-of-use assets

of debt discount - bonds offering costs

in fair value of derivative financial instruments - warrants

compensation through the issuance of employee stock options

in operating assets and liabilities:

( 7,223,068 )

Prepaid expenses and other current assets

( 2,940,490 )

Security deposits

Accounts payable

Accrued expenses

( 3,116,352 )

Deferred revenue

Lease obligations - operating leases

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

Purchase of intangible assets

Proceeds from disposition of property and equipment

Net cash used in investing activities

expenses and other current assets

( 3,764,422 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of bond principal

Payments of related party loans payable

obligations - operating leases

cash provided by operating activities

FLOWS FROM INVESTING ACTIVITIES:

of property and equipment

cash used in investing activities

FLOWS FROM FINANCING ACTIVITIES:

of related party loans payable

( 4,000,000 )

Payments on principal on finance lease obligations

Proceeds from exercise of stock options

Loan payments

Net cash used in financing activities

on principal on finance lease obligations

from exercise of stock options

cash used in financing activities

( 4,130,684 )

Net change in cash and restricted cash

Cash and restricted cash, beginning of period

Cash and restricted cash, end of period

Supplemental disclosure of cash and non-cash transactions:

Cash paid for interest

Cash paid for income taxes

Finance directors and officers insurance premium

Recognition of finance lease right of use asset and lease liabilities entered into

Recognition of operating lease right of use asset and lease liabilities entered into

Reconciliation of cash and restricted cash

Restricted cash - debt service for NJEDA bonds

Total cash and restricted cash shown in statement of cash flows

change in cash and restricted cash

and restricted cash, beginning of period

and restricted cash, end of period

disclosure of cash and non-cash transactions:

paid for interest

paid for income taxes

Reconciliation

of cash and restricted cash

cash - debt service for NJEDA bonds

cash and restricted cash shown in statement of cash flows

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

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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.

(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

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.

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.

of Presentation

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financial statements should be read in conjunction with the Company’s Form 10-K as filed with the SEC on June 29, 2026.

results for the nine months ended December 31, 2025 are not necessarily indicative of the results to be expected for the fiscal year

ending March 31, 2026 or for any future periods.

results for the three months ended June 30, 2026 are not necessarily indicative of the results to be expected for the fiscal year ending

March 31, 2027 or for any future periods.

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

financial statements for the year ended March 31, 2026.

There were no significant changes to these accounting policies during the

nine months ended December 31, 2025.

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

months ended June 30, 2026.

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

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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 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.

related to revenue recognition, valuation of intangible assets, the useful life of property and equipment and identifiable intangible

assets, stock-based compensation expense and income taxes.

The Company continuously evaluates its estimates, which are based on the information

that is currently available to the Company and on various other assumptions that it believes to be reasonable under the circumstances.

Actual results could differ from those estimates.

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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.

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.

about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”),

or decision-making group, in deciding how to allocate resources and in assessing performance.

PHARMACEUTICALS, INC.

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 nine months ended December

31, 2025 and 2024, the Company has only engaged in business activities in a single operating segment.

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.

Company’s CODM 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.

Company identifies its operating and reportable segments based on the financial information regularly reviewed by its CODM for purposes of assessing operating performance, allocating resources, and making strategic decisions.

The Company’s operations consist of its generic pharmaceuticals product portfolio whose marketing approvals were secured via an

Abbreviated New Drug Application (“ANDA”).

The CODM evaluates the business, manages resources, and reviews financial results

of the Company on a consolidated basis.

Additionally, the Company’s ANDA products share similar economic characteristics, operating

processes, and regulatory environments, and are managed as a single business unit.

Accordingly, as of June 30, 2026, the Company has

determined that it operates in a 1 single operating and reportable segment.

information by operating segment is not presented below since the chief operating decision maker does not review this information by

The ANDA segment follows the same accounting policies used in the preparation of the Company’s consolidated financial

Please see Note 14 for further details.

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.

Company primarily generates revenue from manufacturing 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.

also generates revenue from licensing fees from 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.

ASC 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when the customer obtains

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of goods and services

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

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

Manufacturing Fees

Company is equipped to manufacture controlled-release products on a contract basis for third parties, if, and when, the products are

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discounts and program rebates, as applicable.

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

payments, licensing fees, product sales and services.

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

accordance with ASC 606 to determine appropriate revenue recognition.

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

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

product sales.

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

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

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

The Company determines standalone

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

If the standalone selling price is not observable

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

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

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

intellectual property to the customer.

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

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

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

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

Given the inherent

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

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

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

its performance obligations under the arrangement.

If the Company cannot reasonably estimate when its performance obligations either

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

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

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

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 December 31, 2025.

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

Disaggregation

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 nine months ended December 31, 2025 and 2024, the Company had paused further development of NDAs and has not engaged in business

activities in that segment.

Accordingly, during the nine months ended December 31, 2025 and 2024, the Company has only engaged in business

activities in a single operating segment.

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

disclosed within Note 14.

the following table, revenue is disaggregated by type of revenue generated by the Company.

The Company recognizes revenue at a point

in time for all performance obligations.

information on the Company’s reportable segment and the reconciliation of operating income by segment to income from operations

and to income (loss) before income taxes are disclosed within Note 14.

Company disaggregates manufacturing fees revenue by sales channel, consisting of revenues from direct and indirect wholesalers, which

have different cash flows and contract economics as margins generated differ between direct and indirect revenues.

Additionally, although

the underlying arrangements are substantially similar, pricing to direct wholesalers yields higher margins than pricing to indirect wholesalers,

while the timing and uncertainty of cash flows do not differ materially.

Additionally,

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

payments, licensing fees, product sales and services.

following table summarizes manufacturing fees by sales channel and revenues from licensing fees for the three months ended June 30, 2026

SCHEDULE OF DISAGGREGATION OF REVENUE

For the Three Months Ended June 30,

Direct sales to Wholesalers

Indirect sales to Wholesalers

Total ANDA revenue

Licensing Fees

Total revenue

Company’s revenue-generating products consist of two categories:

(i) products containing an active ingredient listed by the United

States Drug Enforcement Agency as a scheduled substance under the Controlled Substances Act of 1970 (“Scheduled Products”)

and (ii) products not containing such a scheduled active ingredient (“Unscheduled Products”).

The following table summarizes

the breakdown of revenues by product category for the three months ended June 30, 2026 and 2025:

For the Three Months Ended June 30,

Scheduled Products - Manufacturing Fees

Scheduled Products - Licensing Fees

Unscheduled Products - Manufacturing Fees

Unscheduled Products - Licensing Fees

Total Revenue

PHARMACEUTICALS, INC.

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of December 31, 2025, and March 31, 2025, the Company had $ 467,575 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).

of June 30, 2026 and March 31, 2026, the Company had $ 475,441 and $ 471,520 , of restricted cash, respectively, related to debt service

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

taxes are accounted for under the asset and liability method.

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those temporary differences are expected to be recovered or settled.

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.

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.

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

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tax jurisdiction until the applicable statutes of limitation expire.

As of December 31, 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 nine months ended December 31, 2025.

As of June 30, 2026, a summary of the tax years that remain subject

to examination in the Company’s major tax jurisdictions are:

United States – Federal, 2022 and forward, and State, 2022 and

The Company did not have any unrecognized tax positions for the three months ended June 30, 2026 and 2025.

(Loss) Per Share

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and warrants if the effect is dilutive.

The assumed exercise of the Series J Warrants was dilutive for the three months ended December

31, 2025, and is therefore included in the diluted EPS calculation for that period.

However, for the nine months ended December 31, 2025,

the assumed exercise of the Series J Warrants would have an antidilutive effect and is therefore excluded from the diluted EPS calculation.

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

J Warrants converting into 79,008,661 shares of Common Stock and the stock options converting into 15,760,000 shares of Common Stock

for these periods have been excluded from the number of shares used in calculating diluted net 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 nine

months ended December 31, 2024.

The assumed exercise of the Series J Warrants and stock options were dilutive for the three months

ended June 30, 2026, and are therefore included in the diluted EPS calculation for that period.

For the three months ended June 30, 2026,

there were no potentially diluted shares excluded from the calculation of diluted EPS.

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

into 79,008,661 shares of Common Stock and the stock options converting into 15,640,000 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.

PHARMACEUTICALS, INC.

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following is the computation of net income (loss) per share applicable to common shareholders for the periods indicated:

OF EARNINGS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS

For the Three Months Ended December 31,

For the Nine Months Ended December 31,

SCHEDULE OF EARNINGS (LOSS) PER SHARE APPLICABLE TO COMMON SHAREHOLDERS

For the Three Months Ended June 30,

Net income (loss) - basic

$ ( 5,884,715 )

$ ( 21,312,396 )

Effect of dilutive instrument on net income

( 11,817,375 )

Net income (loss) - diluted

$ ( 5,884,715 )

$ ( 21,312,396 )

Weighted average shares of Common Stock outstanding - basic

1 unchanged sentence

1,068,363,108

1,071,508,501

1,068,273,108

Dilutive effect of stock options and convertible securities

2 unchanged sentences

1,068,363,108

1,121,540,293

1,068,273,108

Net income (loss) per share

Issued Accounting Pronouncements

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.

Issued Accounting Pronouncements - Adopted

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

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.

The Company adopted the ASU during the three months ending June

30, 2026 and the adoption did not have a material impact on the unaudited condensed consolidated financial statements.

Issued Accounting Pronouncements - Not Yet Adopted

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

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condensed consolidated financial statements.

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

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.

PHARMACEUTICALS, INC.

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disclosure of material events occurring after the last annual reporting period but before interim financial statements are issued.

ASU does not create new disclosure requirements but improves clarity and consistency in presentation.

The ASU is effective for interim

periods within fiscal years beginning after December 15, 2027.

ASU is effective for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact

this standard will have on the Company’s unaudited condensed consolidated financial statements.

is currently evaluating the impact this standard will have on the Company’s unaudited condensed consolidated financial statements.

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

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SCHEDULE OF INVENTORY

December 31, 2025

June 30, 2026

March 31, 2026

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SCHEDULE OF PROPERTY AND EQUIPMENT

December 31, 2025

June 30, 2026

March 31, 2026

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Property and equipment, net

expense was $ 268,662 and $ 313,060 for the three months ended December 31, 2025 and 2024, respectively, and $ 819,466 and $ 936,007 for

the nine months ended December 31, 2025 and 2024, respectively.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

expense was $ 252,975 and $ 275,413 for the three months ended June 30, 2026 and 2025, respectively.

INTANGIBLE ASSETS

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

following table summarizes the Company’s intangible assets as of and for the periods ended June 30, 2026 and March 31, 2026:

SCHEDULE OF INTANGIBLE ASSETS

December 31, 2025

June 30, 2026

Estimated Useful Life

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Net Book Value

Patent application costs

ANDA acquisition costs

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2026

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Patent application costs

ANDA acquisition costs

$ ( 289,039 )

ANDA acquisition costs

$ ( 847,012 )

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

Amortization of the patent costs will begin

upon the issuance of marketing authorization by the FDA.

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

of the related patent(s).

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

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

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

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.

Amortization of the patent costs would have

begun upon the issuance of marketing authorization by the FDA.

During the year ended March 31, 2026, these costs were impaired in full.

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

6 unchanged sentences

and slower growth rates.

No such impairment was recorded during the nine months ended December 31,

2025 or 2024.

No such impairment was recorded during the three months ended June 30, 2026

* 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).

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Amortization of the patent costs would have begun upon the issuance of marketing authorization by the FDA.

During the year ended March 31, 2026, these costs were impaired in full.

ACCRUED EXPENSES

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

of June 30, 2026 and March 31, 2026, the Company’s accrued expenses consisted of the following:

SCHEDULE OF ACCRUED EXPENSES

December 31, 2025

June 30, 2026

March 31, 2026

5 unchanged sentences

Other accrued expenses

Accrued interest - related parties

Total accrued expenses

14 unchanged sentences

The bonds mature on September 1, 2030.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

following tables summarize the Company’s bonds payable liability:

SCHEDULE OF BONDS PAYABLE LIABILITY

December 31, 2025

June 30, 2026

March 31, 2026

14 unchanged sentences

Long term portion of bonds payable, net of bond offering costs

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

expense was $ 3,545 and $ 3,544 for the three months ended December 31, 2025 and 2024, respectively, and $ 10,634 and $ 10,633 for the nine

months ended December 31, 2025 and 2024, respectively.

Interest payable was $ 18,417 and $ 5,363 as of December 31, 2025 and March 31,

2025, respectively.

Interest expense was $ 13,812 and $ 16,088 for the three months ended December 31, 2025 and 2024, respectively, and

$ 45,229 and $ 51,783 for the nine months ended December 31, 2025 and 2024, respectively.

expense was $ 3,544 and $ 3,545 for the three months ended June 30, 2026 and 2025, respectively.

Interest payable was $ 18,417 and $ 4,604

as of June 30, 2026 and March 31, 2026, respectively.

Interest expense was $ 13,813 and $ 16,087 for the three months ended June 30, 2026

and 2025, respectively.

of bonds for the next five years are as follows:

5 unchanged sentences

SCHEDULE OF LOANS PAYABLE

December 31, 2025

June 30, 2026

March 31, 2026

Mortgage loan payable 4.75 % interest and maturing June 2032

Equipment and insurance financing loans payable, between 5.99 % and 12.02 % interest and maturing between July 2024 and October 2025

Loans payable

Current portion of loans payable

Long-term portion of loans payable

interest expense associated with the loans payable was $ 27,471 and $ 31,089 for the three months ended December 31, 2025 and 2024, respectively,

and $ 84,506 and $ 99,104 for the nine months ended December 31, 2025 and 2024, respectively.

interest expense associated with the loans payable was $ 27,170 and $ 28,797 for the three months ended June 30, 2026 and 2025, respectively.

PHARMACEUTICALS, INC.

8 unchanged sentences

RELATED PARTY LOANS

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

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

These covenants include filing timely tax returns and financial

statements, and an agreement not to sell, lease, or transfer a substantial portion of the Company’s assets during the term of the

Hakim Promissory Note.

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

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

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

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 %

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 December 31, 2025 and 2024, interest expense

on the Hakim Promissory Note totaled $ 0 and $ 75,000 , respectively.

For the nine months ended December 31, 2025 and 2024, interest expense

on the Hakim Promissory Note totaled $ 50,000 and $ 217,500 , respectively, recorded on the unaudited condensed consolidated statements

of operations in interest expense and amortization of debt issuance costs.

On June 2, 2025, the Hakim Promissory Note was paid in full

and no balance was outstanding as of this date.

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

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

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

will be used for working capital and other business purposes.

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 December 31, 2025 and 2024, interest expense on the Caskey Promissory Note totaled $ 0 and $ 25,000 , respectively.

For the nine months ended December 31, 2025 and 2024, interest expense on the Caskey Promissory Note totaled $ 25,000 and $ 72,500 , 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.

for the first year and 10 %

for an optional second year and the proceeds were used for working capital and other business purposes.

For the three months ended

June 30, 2026 there was no interest expense on the Hakim Promissory Note.

For the three months ended June 30, 2025, interest

expense on the Hakim Promissory Note totaled $ 50,000

and was 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 June 2,

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

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.

For the three months ended June 30, 2026 there was no interest expense on the Caskey Promissory

For the three months ended June 30, 2025, interest on the Caskey Promissory Note totaled $25,000 and was recorded on the

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

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

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated.

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

consolidated financial statements.

Contingencies are inherently unpredictable, and the assessments of the value can involve a series

of complex judgments about future events and can rely heavily on estimates and assumptions.

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

financial statements.

Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments

about future events and can rely heavily on estimates and assumptions.

August 17, 2023, Elite filed a paragraph IV certification with its ANDA to generic OxyContin ® and after Elite got acceptance

1 unchanged sentence

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.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

of December 31, 2025, the results of such proceedings cannot be predicted with certainty and are neither probable nor estimable.

The Parties agreed

to a stipulated dismissal of the case and the judge signed the order dismissing the case on June 12, 2026.

launch of a generic OxyContin ® will depend on the approval by the FDA.

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

14 unchanged sentences

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

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

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

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

9 unchanged sentences

during February 2024.

The Warehouse Equipment Lease has a term of two years , ending in February 2026 .

The Company had the option to purchase

the asset at the end of the lease term for the amount of $ 1 , which the Company exercised.

The Warehouse Equipment Lease had a term of two years , which ended in February 2026 .

The Company had the option

to purchase the asset at the end of the lease term for the amount of $ 1 , which the Company exercised.

February 2024, the Company entered into a finance lease for equipment (the “February 2024 Equipment Lease”).

4 unchanged sentences

retain ownership of the equipment at lease termination.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

144 Ludlow Avenue, Northvale NJ with an aggregate acquisition cost of $ 1,085,177 .

Each of the separate leases included in the March 2024

2024 Equipment Leases have a term of five years , ending in March 2029 .

The Company will retain ownership of all related assets at lease

Equipment Leases has a term of five years , ending in March 2029 .

The Company will retain ownership of all related assets at lease termination.

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 .

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.

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of the July 2024 Equipment Leases has a term of five years , ending in July 2029 , and the other lease has a term of two years, ending

in July 2026 .

The Company will retain ownership of all related assets at lease terminations.

lease is classified as a finance lease if any of the following criteria are met:

13 unchanged sentences

lease was determined to be a finance lease.

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

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

The finance lease costs are split between Depreciation and amortization expense

related to the asset and interest expense 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.

The finance lease is included on the 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.

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

1 unchanged sentence

SCHEDULE OF RENT EXPENSE STRAIGHT-LINE BASIS

For the Three Months Ended December 31,

For the Nine Months Ended December 31,

For the Three Months Ended June 30,

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

1 unchanged sentence

Years ending March 31,

Operating Lease Amount

Financing Lease Amount

Remainder of 2027

Total future minimum lease payments

Present value of lease payments

1 unchanged sentence

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

For the Nine Months Ended

For the Three Months Ended June 30,

Lease Term and Discount Rate

5 unchanged sentences

Finance leases

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PREFERRED STOCK

4 unchanged sentences

a stated value of $ 1,000,000 per share and a par value of $ 0.01 .

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DERIVATIVE FINANCIAL INSTRUMENTS – WARRANTS

2 unchanged sentences

Company issued warrants, with a term of ten years , to affiliates in connection with an exchange agreement dated April 28, 2017.

are exercisable from the date of issuance, commencing April 28, 2020.

Company has 79,008,661 total warrants to purchase shares of Common Stock outstanding with a weighted average exercise price of $ 0.1521

as of December 31, 2025 and March 31, 2025.

as of June 30, 2026 and March 31, 2026.

a result of the net cash settlement at the option of the holder, such warrants are classified as liabilities and measured initially and

4 unchanged sentences

SCHEDULE OF FAIR VALUE OF WARRANTS ISSUED

December 31, 2025

June 30, 2026

March 31, 2026

4 unchanged sentences

changes in warrants (Level 3 financial instruments) measured at fair value on a recurring basis were as follows for the periods ended

December 31, 2025 and 2024:

three months ended June 30, 2026 and 2025:

SCHEDULE OF CHANGES IN WARRANTS MEASURED AT FAIR VALUE ON A RECURRING BASIS

2 unchanged sentences

Balance at June 30, 2025

Change in fair value of derivative financial instruments - warrants

( 7,519,649 )

Balance at September 30, 2025

Change in fair value of derivative financial instruments - warrants

( 11,817,375 )

Balance at December 31, 2025

Balance at March 31, 2026

Change in fair value of derivative financial instruments - warrants

Balance at June 30, 2024

Change in fair value of derivative financial instruments - warrants

Balance at September 30, 2024

Change in fair value of derivative financial instruments - warrants

Balance at December 31, 2024

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

in fair value of derivative financial instruments - warrants

at June 30, 2026

on a Recurring Basis

3 unchanged sentences

Fair Value Measurement

Amount at Fair Value

at Fair Value

Balance as of March 31, 2026

Change in fair value of derivative financial instruments - warrants

Balance as of December 31, 2025

Balance as of June 30, 2026

Fair Value Measurement

Amount at Fair Value

at Fair Value

Balance as of March 31, 2025

Change in fair value of derivative financial instruments - warrants

Balance as of December 31, 2024

Balance as of June 30, 2025

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STOCK-BASED COMPENSATION

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

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

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

On July 1, 2024 the Company restated the 2014 Equity Incentive

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

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

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

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 .

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.

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

11 unchanged sentences

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

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

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

30, 2026 is as follows:

1 unchanged sentence

Outstanding at March 31, 2026

( 6,133,334 )

Expired and Forfeited

Outstanding at December 31, 2025

Exercisable at December 31, 2025

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Outstanding at June 30, 2026

Exercisable at June 30, 2026

aggregate intrinsic value for outstanding options is calculated as the difference between the exercise price of the underlying awards

and the quoted price of the Company’s Common Stock as of December 31, 2025 of $ 0.49 for those awards with strike prices lower than

the quoted price of the Company’s Common Stock as of December 31, 2025.

As of December 31, 2025, there was $ 80,823 in unrecognized

stock-based compensation expense that will be recognized over a weighted average 0.72 year period.

and the quoted price of the Company’s Common Stock as of June 30, 2026 of $ 0.37 for those awards with strike prices lower than

the quoted price of the Company’s Common Stock as of June 30, 2026.

As of June 30, 2026, there was $ 23,183 in unrecognized stock-based

compensation expense that will be recognized over a weighted average 0.27 year period.

CONCENTRATIONS AND CREDIT RISK

customer accounted for approximately 64 % of the Company’s revenues for the nine months ended December 31, 2025.

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

These two customers

customers accounted for approximately 73 % of the Company’s revenues for the three months ended June 30, 2026.

These customers

accounted for approximately 60 % and 13 % of revenues, respectively.

customer accounted for approximately 70 % of the Company’s accounts receivable as of December 31, 2025.

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

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

These three customers

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

PHARMACEUTICALS, INC.

AND SUBSIDIARY

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

customers accounted for approximately 76 % of the Company’s accounts receivable as of June 30, 2026.

These two customers accounted

for approximately 66 % and 10 % of receivables, respectively.

customers accounted for approximately 77 % of the Company’s accounts receivable as of June 30, 2025.

These three customers accounted

for approximately 54 %, 12 % and 11 % of accounts receivable, respectively.

suppliers accounted for approximately 75 % of the Company’s purchases of raw materials for the nine months ended December 31, 2025.

suppliers accounted for approximately 78 % of the Company’s purchases of raw materials for the three months ended June 30, 2026.

These three suppliers accounted for approximately 32 %, 31 %, and 14 % of purchasing, respectively.

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

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

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

5 unchanged sentences

management disaggregates a company.

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.

income from operations, which is reported in the accompanying consolidated statements of operations, is the measure of segment profit

or loss that is regularly reviewed by the CODM.

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.

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

There are no significant segment expenses or other segment items that are separately provided to the CODM beyond research and development

and general and administrative expenses.

The CODM does not receive segment level information related to depreciation, amortization, capital

expenditures, or other non-cash items, and therefore such items are excluded.

The ANDA segment follows the same accounting policies used

in the preparation of the Company’s consolidated financial statements.

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

SCHEDULE OF SELECTED INFORMATION FOR REPORTABLE SEGMENTS

For the Three Months Ended

For the Nine Months Ended

Income by Segment

Operating income by

Company notes that there was no revenue related to the NDA segment for the three and nine months ended December 31, 2025 and 2024.

ELITE PHARMACEUTICALS, INC.

the Three Months Ended June 30,

Operating Income by Segment

Operating income by Segment

PHARMACEUTICALS, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

condensed consolidated statements of operations:

SCHEDULE OF OPERATING INCOME BY SEGMENT TO INCOME FROM OPERATIONS

For the Three Months Ended

For the Nine Months Ended

the Three Months Ended June 30,

Operating income by segment

2 unchanged sentences

( 3,404,084 )

( 9,899,618 )

( 6,967,514 )

Depreciation and amortization expense

Non-cash compensation through issuance of stock options

Income from operations

Interest income

Interest expense and amortization

of debt issuance costs

Depreciation and amortization

( 1,177,885 )

( 1,278,564 )

Non-cash compensation through

issuance of stock options

Change in fair value of

derivative instruments

( 11,729,368 )

( 2,772,513 )

( 27,267,016 )

Income (loss) before

Interest expense and amortization of debt issuance costs

Change in fair value of derivative instruments

( 22,109,537 )

Income (loss) before income taxes

$ ( 564,214 )

5 unchanged sentences

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.

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

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

Mikah was founded in 2009 by Nasrat Hakim,

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

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

3 unchanged sentences

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

of December 31, 2025, the Company owes an aggregate of $ 2,968,030 to Mikah in accordance with the agreements, with such amount being

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

of March 31, 2025, the Company owed an aggregate of $ 2,617,210 to Mikah in accordance with the agreements, with such amount being recorded

as an accrued expense on the consolidated balance sheets.

of June 30, 2026 and March 31, 2026, the Company owed an aggregate of $ 2,776,060 and $ 2,616,950 , respectively, to Mikah in accordance

with the agreements, with such amount being recorded as an accrued expense on the unaudited condensed consolidated balance sheets.

determination of income tax expense in the accompanying unaudited condensed consolidated statements of income is based on the effective

1 unchanged sentence

The Company’s

income tax expense was $ 2,239,910 and $ 239,175 for the three months ended December 31, 2025 and 2024, respectively.

The Company’s

income tax expense was $ 9,548,351 and $ 1,988,357 for the nine months ended December 31, 2025 and 2024

Company recorded tax expense of approximately 10.8 % and ( 2.2 ) % of income before income tax expense, for the three months ended December

income tax expense was $ 1,805,977 and $ 5,320,501 for the three months ended June 30, 2026 and 2025, respectively.

Company recorded tax expense of approximately 23.4 % and ( 943.0 )% of income before income tax expense, for the three months ended June

30, 2026 and 2025, respectively.

The Company recorded tax expense of approximately 26.6 % and ( 10.3 ) % of income before income tax expense,

for the nine months ended December 31, 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.

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

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.

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.

SUBSEQUENT EVENTS

January 9, 2026, Doug Plassche exercised stock options for 2,500,000 shares of Common Stock of the Company at an exercise price of $ 0.03

August 4, 2026, the Company issued a press release to announce the launch of Elite’s generic version of Requip XL® (Ropinirole

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

Ropinirole belongs to a class of drugs known

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

This product is marketed and sold under the Elite Laboratories,

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

What changed 10-Q

Item 1. Financial Statements