What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-13 compared with 2026-02-17 · 153 added, 264 removed, 212 unchanged (66% of the section changed)

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

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

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

following discussion of our financial condition and results of operations for the three months ended June 30, 2026 and 2025 should be

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

elsewhere in this report.

42 unchanged sentences

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

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

tablets, “Oxy APAP”).

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

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

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

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

There is no generic

product on the market, and the brand has an unexpired patent listed in the Orange Book.

Commercialization of a generic product depends

on successful filing, United States Food and Drug Administration (“FDA”) approval, and addressing the unexpired patent.

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

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

The results indicated that the generic product is bioequivalent

to the branded product.

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

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.

April 2, 2026, we announced the commercial launch of our generic methadone hydrochloride 5 mg and 10 mg tablets.

The product is marketed

and sold under the Elite Labs label and represents an expansion of the Company’s generic product portfolio.

June 1, 2026, we filed an Abbreviated New Drug Application with the US Food and Drug Administration for a generic version of an undisclosed

drug product in the class of medications called anticoagulants.

June 12, 2026, pursuant to a stipulated dismissal agreed to by both parties, the District Court of New Jersey signed an order dismissing

the patent infringement suit filed by Purdue Pharma against the Company in November 2023.

June 15, 2026, we reported positive results from a pivotal bioequivalence study for an undisclosed anticonvulsant generic drug product.

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,

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

commercial sale:

Product Equivalent

Phentermine HCl 37.5mg tablets (“Phentermine

3 unchanged sentences

15mg” and “Phentermine 30mg”)

Naltrexone HCl 50mg tablets (“Naltrexone

Naltrexone HCl 50mg tablets (“Naltrexone 50mg”)

September 2013

2 unchanged sentences

Cardiovascular

Trimipramine Maleate Immediate Release 25mg,

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

Trimipramine Maleate Immediate Release 25mg, 50mg and

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

Antidepressant

3 unchanged sentences

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”)

Central Nervous System (“CNS”)

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

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

Muscle Relaxant

3 unchanged sentences

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”)

Central Nervous System (“CNS”)

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

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

Antipsychotic

1 unchanged sentence

Antimetabolite

Acetaminophen and Codeine Phosphate 300mg/15mg,

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

Tylenol® with

Acetaminophen and Codeine Phosphate 300mg/15mg, 300mg/30mg,

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

Tylenol® with Codeine

Acetaminophen and Hydrocodone Bitartrate 325mg/2.5mg,

2 unchanged sentences

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”)

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

1 unchanged sentence

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

Methadone Hydrochloride 5mg and 10mg tablets (“Methadone

5mg” and “Methadone 10mg”)

Ropinirole Extended Release 2mg, 4mg, 6mg and 12mg

tablets (“Ropinirole 2mg”, “Ropinirole 4mg”, “Ropinirole 6mg” and “Ropinirole 12mg”)

Non-Ergoline Dopamine Agonist

Under FDA Review

39 unchanged sentences

opiate analgesic for pain management accepted for review in September 2023

Products Not Yet Commercialized

Product Not Yet Commercialized

Hyclate Tablets

1 unchanged sentence

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

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.

Extended-Release Tablets USP

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

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

Ropinirole belongs to a class of drugs known

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

This product will be marketed and sold under

the Elite Laboratories, Inc.

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

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

made to secure these marketing authorizations.

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

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

made to secure the marketing authorizations.

and Transferred Products

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

without limitation, of ANDAs acquired or approved prior to the quarter ended 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.

without limitation, of ANDAs acquired or approved prior to the quarter ended June 30, 2026 and ANDAs acquired or approved during the

quarter ended June 30, 2026.

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 any ANDA during

the quarter ended June 30, 2026.

Accounting Estimates

42 unchanged sentences

necessarily indicative of future results.

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

Cost of manufacturing and Gross profit:

the Three Months Ended December 31,

Manufacturing fees

Licensing fees

Total revenue

Cost of manufacturing

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 $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.

Our cost of manufacturing increased by $10.4 million or 126%, to $18.6

million as compared to $8.2 million for the corresponding period in the prior fiscal year.

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:

General and administrative

Non-cash compensation

and amortization

operating expenses

$ (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 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 December 31,

Other income (expenses):

Change in fair

value of derivative financial instruments - warrants

$ (11,729,368 )

Interest expense and amortization

of debt issuance costs

Interest income

income (expenses), net

$ (11,750,575 )

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.

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

months ended June 30, 2026 compared to the three months ended June 30, 2025

Cost of manufacturing and Gross profit:

the Nine Months Ended December 31,

Manufacturing fees

the Three Months Ended June 30,

$ (7,855,814 )

Licensing fees

Total revenue

Cost of manufacturing

$ (13,718,425 )

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 $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.

revenues for the three months ended June 30, 2026 decreased by $7.9 million or 20%, to $32.4 million, as compared to $40.2 million, for

the corresponding period of the prior year.

This decrease is primarily due to a decrease in manufacturing fees revenue of $7.6 million,

primarily due to increased market competition, as compared to the comparable period of the prior year, resulting in decreased average

net prices being achieved from the sales of Elite label products, including, without limitation lower net sales prices of the Lisdexamfetamine

product line.

Additionally, licensing fees revenue decreased by $0.2 million, primarily due to the comparable period of the prior year

including licensing fee revenues from the Precision Dose License agreement which expired in September 2025 and accordingly had no material

effect on license fees revenues during the three months ended June 30, 2026.

of manufacturing consists of manufacturing and assembly costs.

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,

Our cost of manufacturing increased by $5.9 million or 45%, to $18.8 million

as compared to $13.0 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 three months ended June 30, 2026,

as compared to the comparable period of the prior fiscal year, especially and without limitation in sales volumes generated by Elite’s

Lisdexamfetamine, Amphetamine IR and Amphetamine ER product lines.

gross profit margin was 42% during the three months ended June 30, 2026 as compared to 68% during the comparable period of the prior

The decrease is primarily due to the decrease in average net prices resulting from increased market competition during the

three months ended June 30, 2026, as compared to the comparable period of the prior year.

the Three Months Ended June 30,

Operating expenses:

$ (1,822,488 )

Research and development

General and administrative

Non-cash compensation

and amortization

operating expenses

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,

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

Depreciation and amortization

Total operating expenses

expenses for the three months ended June 30, 2026 increased by $0.5 million, or 8%, to $6.0 million as compared to $5.5 million for the

corresponding period in the prior fiscal year, largely due to increases in research and development expenses of $0.4 million and general

and administrative expenses of $0.1 million.

and development costs during the three months ended June 30, 2026 were $2.0 million, an increase of $0.4 million, or 21 %, from approximately

$1.7 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

The increase was the result of costs incurred in relation to

the successful pivotal bio equivalence study and ANDA filed during the three months ended June 30, 2026.

In addition, the number, timing

and nature of product development activities always has a significant effect on research and development expenses incurred during any

and administrative expenses for the three months ended June 30, 2026 were $3.5 million as compared to $3.4 million for the corresponding

period in the prior fiscal year, an increase of $0.1 million or approximately 4 %.

This increase is due primarily to general increases

in costs of human resources, legal, consulting, regulatory, other professional services and overhead operating costs as compared to the

comparable period of the prior year.

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

a result of the foregoing, our income from operations during the three months ended June 30, 2026 was $7.5 million, compared to income

from operations of $21.7 million for the comparable period of the prior fiscal year.

(expense) income:

the Nine Months Ended December 31,

Other (expense) income:

Change in fair

value of derivative financial instruments - warrants

$ (2,772,513 )

income (expense):

the Three Months Ended June 30,

Other income (expense):

Change in fair value of derivative financial instruments - warrants

$ (22,109,537 )

Interest expense and amortization

of debt issuance costs

Interest expense and amortization of debt issuance costs

Interest income

$ (2,966,547 )

Other income (expense), net

$ (22,263,921 )

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 $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.

other income (expenses) for the three months ended June 30, 2026 was a net other income of $0.2 million, an increase in other income

of $22.5 million from a net other expense of $22.3 million for the comparable period of the prior fiscal year.

The increase in other

income was primarily due to increases in other income relating to the change in fair value of derivative financial instruments of $22.3

million and interest income of $0.2 million, and decreases in interest expense 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.

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.

There is a strong correlation

between changes in the closing price of the Company’s Common Stock and other income (expense) recorded, with increases in the closing

price resulting in other expenses and decreases in closing price resulting in other income.

The closing price of the Company’s

common stock as of June 30, 2026 was essentially unchanged from the closing price at the beginning of the three months ended June 30,

2026, therefore, reflecting the impact of other factors, resulted in a small other income being recorded, while the closing price as

of June 30, 2025 was $0.30 higher than the closing price at the beginning of the three month period ended June 30, 2025, resulting in

a large other expense being recorded.

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

months ended June 30, 2026 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 June 30, 2026 was $7.7 million, compared to

net loss before income taxes of $0.6 million for the comparable period of the prior fiscal year.

and Capital Resources

June 30, 2026

March 31, 2026

Current assets

$ 114,487,702

$ 112,106,551

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,

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.

$ (10,668,999 )

working capital (total current assets less total current liabilities) decreased by $10.7 million from $94.7 million as of March 31, 2026

to $84.0 million as of June 30, 2026, with such decrease being due to the reclassification of derivative financial instruments - warrants,

valued at $17.3 million, from non-current liabilities as of March 31, 2026 to current liabilities as of June 30, 2026.

of Cash Flows:

the Nine Months Ended December 31,

Net cash provided by operating

the Three Months Ended June 30,

Net cash provided by operating activities

Net cash used in investing activities

$ (1,645,722 )

Net cash used in financing activities

$ (4,130,684 )

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

cash provided by operating activities for the three months ended June 30, 2026 was $10.1 million, which included, without limitation,

net income of $5.9 million, decreased by the change in fair value of derivative financial instruments-warrants of $0.1 million, recovery

for losses on accounts receivable of $0.2 million, decrease in deferred tax of $1.3 million, increased by other non-cash expenses totaling

$0.3 million and increased by changes in operating assets and liabilities totaling $2.6 million.

Net cash provided by operating activities

during the comparable period in the prior fiscal year was $14.8 million, which included, without limitation, net loss of $5.9 million,

increased by the change in fair value of derivative financial instruments - warrants of $22.1 million, deferred tax expenses of $4.9

million, and reduced by the change in operating assets and liabilities totaling $7.1 million.

cash used in investing activities for the three months ended June 30, 2026 was comprised of purchases of property and equipment of approximately

$0.8 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 $4.3 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

Net cash used in investing activities during the comparable period in the prior fiscal year was comprised of purchases

of property and equipment of approximately $0.2 million.

cash used in financing activities was $0.1 million for the three months ended June 30, 2026, primarily related to payments on finance

lease obligations, compared to net cash used in financing activities of $4.1 million for the corresponding period of the prior year.

Net cash used in financing activities of $4.1 million during the prior fiscal year was due to payments of loan principal totaling $4.0

million and payments on principal on finance lease obligations of $0.1 million.

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rate of 4.5%.

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.

The total transaction costs associated with the EWB Mortgage Loan incurred as of June 30, 2026, were $13,251, which are

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

The EWB Mortgage Loan contains customary representations,

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trailing 12-month debt coverage ratio of 1.50 to 1.00.

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.

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

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

As of June 30, 2026, and through the date of filing of this Quarterly Report on

Form 10-Q, the Company was not aware of the existence of any violations of financial covenants included in the EWB Mortgage Loan.

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

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

The refinancing involved borrowing $4,155,000, evidenced by a

Series A Note in the principal amount of $3,660,000 maturing on September 1, 2030 and a 9% Series B Note in the principal amount of $495,000

maturing on September 1, 2012.

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

1999 Bonds originally issued by the New Jersey Economic Development Authority on September 2, 1999, (ii) to refinance other equipment

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

As of March 31, 2016,

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

NJEDA Bonds are collateralized by a first lien on the Company’s facility and equipment acquired with the proceeds of the 1999 Bonds

and NJEDA Bonds.

The related Indenture requires the maintenance of a debt service reserve fund of $366,000 in relation to the Series

6.5% Series A Note in the principal amount of $3,660,000 maturing on September 1, 2030.

The net proceeds, after payment of issuance

costs, were used (i) to redeem the outstanding tax-exempt 1999 Bonds originally issued by the New Jersey Economic Development

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

used in the manufacture of pharmaceutical products.

As of June 30, 2026, all of the proceeds were utilized by the Company for such

stated purposes.

is payable semi-annually on March 1 and September 1.

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

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

The related Indenture requires the maintenance

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

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

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

of bond issuance costs amounted to $3,544 for the three months ended June 30, 2026.

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

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

The Series B Notes

were retired, at par in July 2014.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-Q

Item 2. Management’s Discussion and Analysis