What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-06-30 compared with 2024-07-01 · 129 added, 280 removed, 156 unchanged (72% of the section changed)

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revenues for the year ended March 31, 2025 increased by $27.4 million or 48%, to $84.0 million, as compared to $56.6 million, for the

of the prior fiscal year, primarily due to the launch of the Elite label during the current fiscal year which achieved increased sales

for the year ended March 31, 2024, as compared to the prior year, which did not include any sales of Elite label products.

comparable period of the prior year.

This increase is primarily due to four product launches during the current fiscal year combined

with increased sales from the rest of the Elite Label product line, as compared to the comparable period of the prior year.

Manufacturing

fees revenue increased by $24.9 million, or 85%, primarily due to the launch of the Elite label during the current fiscal year which

achieved increased sales for the year ended March 31, 2024, as compared to the prior year, which did not include any sales of Elite label

fees revenue decreased by $2.5 million, or 50%.

This decrease is primarily due to the expiration of the marketing alliance agreements

between the Company and Lannett Company, Inc.

(the “Lannett Agreements”) on March 31, 2023.

The revenue streams that were

generated during periods ending on or prior to March 31, 2023 and attributed to the Lannett Agreements, included profit splits on the

sale by Lannett of Amphetamine IR and Amphetamine ER.

Since April 1, 2023, these products are now sold by the Company under its own label,

with revenues being recorded as manufacturing revenues instead of licensing fees going forward.

of revenue consists of manufacturing and assembly costs.

Our cost of revenue increased by $12.7 million or 72%, to $30.3 million as compared

to $17.6 million for the prior fiscal year.

This increase was due to an increased volume of products sold during the year ended March

31, 2024, as compared to the prior fiscal year, as noted above.

fees revenue increased by $27.9 million, or 51%, as compared to the comparable period of the prior year.

This increase is primarily due

to four product launches during the current fiscal year, combined with increased sales from the rest of the Elite Label product line,

as compared to the comparable period of the prior year.

fees revenue decreased by $0.4 million, or 18% as compared to the comparable period of the prior year.

This decrease is primarily due

to the Company’s transitioning away from licensing product to third parties to marketing of the Elite label, which does not result

in revenues earned from licensing fees.

of manufacturing consists of manufacturing and assembly costs.

Our cost of manufacturing increased by $13.7 million or 45%, to $44.0

million as compared to $30.3 million for the comparable period of the prior year.

This increase was due to an increased volume of products

sold during the year ended March 31, 2025, as compared to the prior fiscal year, as noted above.

gross profit margin was 48% during the year ended March 31, 2025 as compared to 47% during the prior fiscal year.

The decrease is due

The increase is due

to increased manufacturing volumes resulting in decreased unit costs due to efficiencies of scale being achieved on the increased manufacturing

In addition, the commercial launch of the Elite label and expiration of the Lannett Agreements resulted in higher net revenues

per unit being achieved.

Both of these factors had the effect of increased gross profit margin.

volume as well as the products launched during the current fiscal year having a higher proportion of direct sales as compared to product

sales during the comparable period of the prior year, resulting in lower transaction costs being charged to revenue (please note that

transaction costs are higher with indirect sales as compared to those of direct sales).

For the Years Ended March 31,

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Non-cash compensation

Impairment of intangible assets

Depreciation and amortization

Impairment of intangible assets

Total operating expenses

expenses consist of research and development costs, general and administrative costs, non-cash compensation and depreciation and amortization

Operating expenses for the year ended March 31, 2024 increased by $2.7 million, or 21%, to $15.6 million as compared to $12.9

million for the prior fiscal year, largely due to an increase in research and development of $0.7 million and general and administrative

expenses of $2.0 million.

expenses for the year ended March 31, 2025 increased by $4.9 million, or 32%, to $20.5 million as compared to $15.6 million for the prior

fiscal year, largely due to increases in research and development expenses of $1.1 million, general and administrative expenses of $1.9

million, and impairment of intangible asset expense of $1.6 million.

and development costs during the year ended March 31, 2025 were $8.0 million, an increase of $1.1 million, or 16%, from approximately

$6.9 million of such costs for the prior year.

The increase was a result of the timing and nature of product development activities during

The increase was a result of the timing and nature of product development activities,

which consist primarily of material consumption, internal and external lab costs, human resource costs and analytical studies, during

the year ended March 31, 2025 as compared to the prior fiscal year.

and administrative expenses for the year ended March 31, 2024 were $7.1 million as compared to $5.1 million for the prior fiscal year,

an increase of $2.0 million or approximately 39%, largely due to an increased human resource headcount and costs as compared to the prior

fiscal year as well as infrastructure costs related to Elite label commercial activities resulting from the commercial launch of the

Elite label product line during the year ended March 31, 2024.

and administrative expenses the year ended March 31, 2025 were $9.0 million as compared to $7.1 million for the prior fiscal year, an

increase of $1.9 million or approximately 26%, largely due to increased employee headcounts and compensation rates as compared to the

prior fiscal year as well higher operational support and infrastructure costs related to the four commercial launches during the current

fiscal year and expansion of product line distribution activities achieved during the current fiscal as compared to the comparable period

of the prior year.

compensation expense for the year ended March 31, 2025 was $0.2 million as compared to $0.2 million for the prior fiscal year, an increase

of $0.1 million or approximately 307%, with such increase being attributed to the issuance to employees of options to purchase Common

Stock during the current fiscal year.

of $0.1 million or approximately 42%, with such increase being attributed to the current year including full year amortization of non-cash

compensation from employee stock options issued during the prior year, as compared to the comparable period of the prior which included

partial year periods amortization of non-cash compensation encompassing only that part of the year subsequent to the grant date of each

employee option.

and amortization expenses from the year ended March 31, 2025 were $1.7 million as compared to $1.4 million for the prior fiscal year,

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base which resulted from additional investments in capital manufacturing facilities.

of intangible assets for the year ended March 31, 2025 was $1.6 million related to the impairment of the Dantrolene intangible asset,

an ANDA product, as a result of the Company choosing to abandon the Dantrolene capsules based on reassessments of the expected future

cash flows for these products and its withdrawal of the ANDA for Phentermine 37.5 mg capsules.

No impairment of intangible assets were recorded for the prior fiscal year.

a result of the foregoing, our income from operations during the year ended March 31, 2025 was $19.6 million, compared to income from

operations of $3.7 million for the prior fiscal year.

operations of $10.8 million for the comparable period of the prior year.

income (expense):

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$ (5,776,297 )

$ (13,124,888 )

Change in fair value of stock-based liabilities

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Gain from settlement agreements

Gain on sale of ANDA

Interest income

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$ (10,325,677 )

income (expense) for the year ended March 31, 2024 was an other expense of $10.3 million, a decrease of $10.6 million from other income

of $0.3 million for the prior fiscal year.

The decrease was primarily due to a net increases in other expenses totaling $12.9 million

and consisting of increased other expenses of $6.2 million relating to the change in fair value of warrant derivative instruments, $5.7

million relating to the change in fair value of stock-based liabilities and $1.0 million relating to gain on sale of ANDA, offset by

increases in other income totaling $2.3 million and consisting of $1.8 million gain from settlement agreements, $0.5 million relating

to decreased interest expense and amortization of debt issuance, and $0.01 million increase in interest income.

The change in the fair

value of derivative instruments and stock-based liabilities is determined in large part by the change in the closing price of the Company’s

Common Stock as of the end of the period, as compared to the closing price at the beginning of the period, with a strong inverse relationship

between the fair value of the Company’s derivative instruments and stock-based liabilities and decreases in the closing price of

the Company’s Common Stock.

The decrease in interest expense associated with the loans payable is due in large part to the Company

paying off the principal balance of the EWB loan during the fiscal year ended March 31, 2023, resulting in no interest on the EWB loan

incurred for the year ended March 31, 2024.

The increased other income from gain from settlement agreements is the result of there being

a settlement agreement during the fiscal year ended March 31, 2024 as compared to there being no settlement agreement during the comparable

period of the prior fiscal year.

The decrease in other income relating to gain of sale of ANDA is the result of there being a sale of

an ANDA during the fiscal year ended March 31, 2023 as compared to no sales of ANDA occurring during the fiscal year ended March 31,

a result of the foregoing, our net income before income taxes for the year ended March 31, 2024 was $0.5 million, compared to net income

before income taxes of $4.0 million for the prior fiscal year.

$ (9,326,931 )

income (expense) for the year ended March 31, 2025 was an other expense of $19.7 million, an increase in net other (expense) of $9.3

million from other (expense) of $10.3 million for the comparable period of the prior year.

The increase was primarily due to increases

in other expenses of $13.1 million relating to the change in fair value of warrant derivative instruments, $1.8 million relating to

gain from settlement agreements that were recorded in the prior year, but not the current year, offset by a net decrease in other income

(expense) of $5.7 million relating to a change in fair value of stock based liabilities that was recorded as an other expense in the

prior year and not in the current year.

The change in the fair value of derivative instruments and stock-based liabilities is determined

in large part by the change in the closing price of the Company’s Common Stock as of the end of the period, as compared to the

closing price at the beginning of the period, with a strong inverse relationship between the fair value of the Company’s derivative

instruments and stock-based liabilities and decreases in the closing price of the Company’s Common Stock.

The increase in interest

expense associated with the loans payable is due in large part to the current year including additional loan principal amounts in the

current year, as compared to the comparable period of the prior year and relating to financing of facility expansion as well as the current

year results of operations including full year interest expense on financings executed during the prior year, with the prior year incurring

partial year interest expense on such financings.

a result of the foregoing, our net loss before income taxes for the year ended March 31, 2025 was $0.1 million, compared to net income

before income taxes of $0.5 million for the comparable period of the prior year.

Company recorded tax (expense)/benefit of approximately 8,175% and 4,242% of (loss) income before income tax expense, for the years

ended March 31, 2025 and 2024, respectively.

The decrease of the effective tax rate for the current period as compared to the prior

period is primarily due to the release of the valuation allowance on the Company’s deferred tax assets as of March 31, 2024

and the nondeductible fair market value change in the Company’s warrant derivative liabilities.

and Capital Resources

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Current liabilities

$ (1,209,329 )

Working capital

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31, 2025, the Company had cash on hand of $11.3 million and accounts receivable to be collected within expected operating cycles of $29.2

The Company believes that such resources, combined with the working capital surplus of $27.0 million and the continuation of

ongoing operations, are sufficient to fund operations through the next twelve months.

For the year ended March 31, 2024, the Company

had income from operations totaling $10.8 million, net other expense totaling $10.3 million and a net income attributable to common shareholders

of $20.1 million.

The Company’s other income (expense) and net income attributable to common shareholders are significantly influenced

by the fluctuations in the fair value of warrant derivatives with such fair value bearing a strong inverse correlation to the market

share price of the Company’s Common Stock as well as the recording of a discrete tax benefit of $17.3 million related to the Company’s release of the

valuation allowance against deferred tax assets related to U.S.

federal net operating loss carryforwards and research and development

tax credits, which are expected to be realized based on demonstrated current profitability and the Company’s expectations of forecasted

The Company believes that the working capital surplus of $45.9 million, which includes these cash and accounts receivable resources,

and the continuation of ongoing operations, are sufficient to fund operations through the next twelve months.

For the year ended March

31, 2025, the Company had income from operations totaling $19.6 million, net other expense totaling $19.7 million and a net loss attributable

to common shareholders of $4.3 million.

The Company’s other income (expense) and net loss attributable to common shareholders are

significantly influenced by the fluctuations in the fair value of warrant derivatives with such fair value bearing a strong inverse correlation

to the market share price of the Company’s Common Stock.

working capital (total current assets less total current liabilities) increased by $18.9 million from $27.0 million as of March 31, 2024

to $45.9 million as of March 31, 2025, with such increase being primarily related to the increase in finished goods inventory and accounts

receivable, associated with increased customer orders during the year ended March 31, 2024 exceeding the increase in total current liabilities

over the same period.

receivable, associated with increased customer orders during the year ended March 31, 2025 and a decrease of $1.2 million in total current

liabilities over the same period, due to decreases in accrued expenses, primarily driven by a decrease in the accrual of the co-development

profit split as of March 31, 2025 compared to the prior year.

of Cash Flows:

For the Years Ended March 31,

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities

$ (3,235,115 )

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$ (2,399,832 )

Net cash provided by financing activities

Net cash (used in) provided by financing activities

cash provided by operating activities for the year ended March 31, 2025 was $7.5 million, which included a net loss of $4.3 million,

offset by depreciation and other non-cash expenses totaling $26.9 million and reduced by the change in operating assets and liabilities

totaling $15.2 million,

cash used in operating activities for the year ended March 31, 2024 was $3.2 million, which included net income of $20.1 million, increased

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$11.9 million and tax benefit of $20.0 million.

cash provided by operating activities for the year ended March 31, 2023 was $3.3 million, which included net income of $3.6 million,

offset by non-cash (income) expenses totaling $1.8 million and net increases in assets and decreases in liabilities totaling $2.0 million.

cash used in investing activities for the year ended March 31, 2025 was comprised of purchases of property and equipment of approximately

$1.6 million and purchases of intangible assets consisting of ANDA products of approximately $0.9 million.

cash used in investing activities for the year ended March 31, 2024 was comprised of purchases of property and equipment of approximately

$0.8 million.

cash used in investing activities for the year ended March 31, 2023 was comprised of purchases of property and equipment of $5.7 million.

cash used in financing activities was $0.8 million for the year ended March 31, 2025 which consisted primarily of payments of bond, loan,

and finance lease principal.

cash provided by financing activities was $3.3 million for the year ended March 31, 2024 which consisted primarily of proceeds from related

party loans payable totaling $4.0 million offset by payments of bond and loan principal totaling $0.3 million.

cash provided by financing activities was $1.7 million for the year ended March 31, 2023 which contained proceeds and loan payments related

to the EWB mortgage loan and equipment loans.

party loans payable totaling $4.0 million offset by payments of bond, loan, and finance lease principal totaling $0.7 million.

Promissory Note

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of the Hakim Promissory Note was agreed to by both parties, with the maturity date being extended to June 2, 2025.

The Hakim Promissory

Note was paid in full on June 2, 2025, in accordance with its terms and conditions.

Promissory Note

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

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

were used for working capital and other business purposes.

The original maturity date of the Caskey Promissory Note is June 30, 2024,

with both parties agreeing to the optional second year extension, as provided in the Caskey Promissory Note.

June 30, 2023, the Company entered into a collateralized promissory note with Davis Caskey, a member of the Board of Directors (the

“Caskey Promissory Note”).

The Caskey Promissory Note has a principal balance of $1,000,000 and an interest rate of 9%

for the first year and 10% for an optional second year.

The Caskey Promissory Note is subject to the same covenants as are contained

in the Hakim Promissory Note.

The proceeds were used for working capital and other business purposes.

The original maturity date of

the Caskey Promissory Note is June 30, 2024, with an optional second year extension.

The second year extension of the Caskey

Promissory Note was agreed to by both parties, with the maturity date being extended to June 30, 2025.

The Caskey Promissory Note

has a current maturity date of June 30, 2025.

April 2, 2022, the Company and Elite Labs entered into a Loan and Security Agreement (the “EWB Loan Agreement”) with East

West Bank (“EWB”).

Pursuant to the EWB Loan Agreement, the Company and Elite Labs received one term loan for a principal

amount of $12,000,000 (the “EWB Term Loan”) and a revolving line of credit up to $2,000,000 (the “EWB Revolver,”

together with the “EWB Term Loan,” the EWB Loans”), each of which shall be used for working capital.

As of March 31,

2023, the principal and interest on the EWB Term Loan has been paid in full by the Company and the EWB Loan Agreement is terminated.

was paid in full on June 26, 2025, in accordance with its terms and conditions.

July 1, 2022, EWB provided a mortgage loan (“EWB Mortgage Loan”) in the amount of $2.55 million for the purchase of the property

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a minimum debt coverage ratio of 1.50 to 1.00 tested annually and a minimum trailing 12-month debt coverage ratio of 1.50 to 1.00.

of March 31, 2024, 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.

Park Capital – July 8, 2020 Purchase Agreement

July 8, 2020, the Company entered into a purchase agreement (the “2020 LPC Purchase Agreement”), and a registration rights

agreement, with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park has committed to purchase

up to $25.0 million of the Company’s Common Stock, $0.001 par value per share, from time to time over the term of the 2020 LPC

Purchase Agreement, at the Company’s direction.

The 2020 LPC Purchase Agreement expired on August 1, 2023.

the years ended March 31, 2024 and 2023, the Company did not issue any shares of Common Stock to Lincoln Park.

of March 31, 2025, and through the date of filing of this Annual Report on Form 10-K, 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 through the issuance of new tax-exempt bonds

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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 bond proceeds and are being amortized over the life of the bonds.

Amortization of bond issuance

costs amounted to $14,185 for the fiscal year ended March 31, 2024.

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

Amortization of

Bond issuance costs amounted to $14,178 for the fiscal year ended March 31, 2025.

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

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retired at par in July 2014.

May 20, 2024, the Company reported that it received approval for the FDA for a generic version of Methotrexate Sodium 2.5mg tablets.

Methotrexate Sodium belongs to a class of drugs known as antimetabolites and will be sold under the Elite Laboratories Inc.

of the date of filing of this Annual Report on Form 10-K, this product had not yet been commercially launched.

April 30, 2025, the Company announced the commercial launch of its generic version of Percocet ® (Oxy APAP Tablets).

APAP Tablets are indicated for the relief of moderate to moderately severe pain.

Sheet Arrangements

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that inflation risk is material to our business or our consolidated financial position, results of operations, or cash flows.

Accounting Policies and Estimates

significant accounting policies are disclosed in Note 1 of our Consolidated Financial Statements included elsewhere in this Annual Report

on Form 10-K.

The following discussion addresses our most critical accounting policies, which are those that are both important to the

Accounting Estimates

management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial

statements, which have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”).

The preparation

of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect

the reported amount of assets, liabilities, costs and expenses and related disclosures.

Our critical accounting estimates are those estimates

that involve a significant level of uncertainty at the time the estimate was made, and changes in them have had or are reasonably likely

to have a material effect on our financial condition or results of operations.

Accordingly, actual results could differ materially from

our estimates.

The following discussion addresses our most critical accounting estimates, which are those that are both important to the

portrayal of our financial condition and results of operations and that require significant judgment or use of complex estimates.

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting

Actual results could differ from those estimates.

Company generates revenue from the development of pain management products, manufacturing of a line of generic pharmaceutical products

with approved ANDA, commercialization of products either by license and the collection of royalties, or through the manufacture of formulations

and the development of new products and the expansion of licensing agreements with other pharmaceutical companies, including co-development

projects, joint ventures and other collaborations.

The Company also generates revenue through its focus on the development of various

types of drug products, including branded drug products which require NDAs.

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

of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods

The Company recognizes revenues following the five-step model prescribed under ASC 606:

(i) identify contract(s) with a

(ii) identify the performance obligation(s) in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction

price to the performance obligation(s) in the contract;

and (v) recognize revenues when (or as) the Company satisfies a performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled

to in exchange for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within

the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance

obligations and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the

transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

value add, and other taxes collected on behalf of third parties are excluded from revenue.

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 immediate release and controlled release products that are sold under the Elite Laboratories Inc.

label (the “Elite Label”).

The Company recognizes revenue when its customers obtain control of the Elite Labeled products.

These revenues are offset by variable consideration, which may include, without limitation, chargebacks, distribution fees, rebates,

group purchasing organization fees, prompt payment cash discounts, consideration payable to the customer, billbacks, Medicaid and other

government pricing programs, price protection and shelf stock adjustments, sales returns and profit shares.

The Company’s estimates

for variable consideration are adjusted as required at each reporting period for specific known developments that may result in a change

in the amount of total consideration it expects to receive as well as updating estimate assumptions to reflect current and/or historical

Recognition - Manufacturing Fees

The Company’s

revenues are offset by variable consideration, which may include, without limitation, chargebacks, distribution fees, rebates, group

purchasing organization fees, prompt payment cash discounts, consideration payable to the customer, billbacks, Medicaid and other government

pricing programs, price protection and shelf stock adjustments, sales returns and profit shares.

The Company’s estimates for variable

consideration are adjusted as required at each reporting period for specific known developments that may result in a change in the amount

of total consideration it expects to receive as well as updating estimate assumptions to reflect current and/or historical trends.

most competitors in this market, our marketing partners, or us in the case of prospective direct sales made by the Company, also give

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material adverse effect on our business, financial condition, results of operations, cash flow and stock price.

Company is also equipped to manufacture immediate release and controlled-release products on a contract basis for third parties, if and

when the products are approved.

These products include products using immediate release technology, controlled-release drug technology

and products utilizing abuse deterrent technologies.

The Company also develops and markets (either on its own or by license to other

companies) generic and proprietary controlled-release and abuse deterrent pharmaceutical products.

Company recognizes revenue when the customer obtains control of the Company’s product

based on the contractual shipping terms of the contract.

Revenue on product are presented

gross because the Company is primarily responsible for fulfilling the promise to provide

the product, is responsible to ensure that the product is produced in accordance with the

related supply agreement and bears risk of loss while the inventory is in-transit to the

commercial partner.

Revenue is measured as the amount of consideration the Company expects

to receive in exchange for transferring products to a customer.

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 not recognize revenue from the milestone until there is not a high probability

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

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

expects to complete its performance obligations under the arrangement.

If the Company cannot reasonably estimate when its performance

obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make

such estimates.

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

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 March 31, 2024.

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

Receivable and Allowance for Expected Credit Losses

receivable are comprised of balances due from customers, net of estimated allowances for expected credit losses, and other contractual

deductions, including, without limitation, chargebacks, discounts and program rebates.

In determining collectability, historical trends

are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances.

allowance for expected credit losses is based on the probability of future collection under

the current expected credited loss (“CECL”) impairment model under Accounting

Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic

326), Measurement of Credit Losses on Financial Assets, which was adopted by the Company

on April 1, 2023, as discussed below within Recently Adopted Accounting Pronouncements.

the CECL impairment model, the Company determines its allowance by applying a loss-rate method

based on an aging schedule using the Company’s historical loss rate.

The Company also

considers reasonable and supportable current information in determining its estimated loss

rates, such as external forecasts, macroeconomic trends or other factors including customers’

credit risk and historical loss experience.

The adequacy of the allowance is evaluated on

a regular basis.

Account balances are written off after all means of collection are exhausted

and the balance is deemed uncollectible.

Subsequent recoveries are credited to the allowance.

Changes in the allowance are recorded as adjustments to credit losses in the period incurred.

to April 1, 2023, trade receivables were presented net of allowance for expected credit losses based on the credit risk of specific clients,

past collection history, and management’s evaluation of other risks.

Expected credit losses stemming from unbilled receivables

expected to be billed between March 31, 2024 and March 31, 2028 include additional risk premiums estimated based on factors such as projected

inflation, projected decreases in GDP, and projected unemployment.

taxes are accounted for under the asset and liability method.

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

Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on income tax returns it files if such

tax position is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position.

These tax benefits are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.

Company operates in multiple tax jurisdictions within the United States of America.

The Company remains subject to examination in all

tax jurisdiction until the applicable statutes of limitation expire.

As of March 31, 2024, a summary of the tax years that remain

subject to examination in our major tax jurisdictions are:

United States – Federal, 2014 and forward, and State, 2010 and forward.

The Company did not have any unrecognized tax positions for the years ended March 31, 2024 and 2023.

Issued Accounting Pronouncements

June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial

This update requires immediate recognition of management’s estimates of current expected credit losses (“CECL”).

Under the prior model, losses were recognized only as they were incurred.

The new model is applicable to all financial instruments that

are not accounted for at fair value through net income.

The standard is effective for fiscal years beginning after December 15, 2022

for public entities qualifying as smaller reporting companies.

Early adoption is permitted.

The Company is currently assessing the impact

of this update on the consolidated financial statements and does not expect a material impact on the consolidated financial statements.

December 2023, the FASB issued ASU 2023-09 (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 annual

periods beginning after December 15, 2024.

Early adoption is permitted and should be applied prospectively.

The Company is currently

evaluating the effect of adopting this guidance on its consolidated financial statements.

November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segments,” which aims

to improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public

entities to enable investors to develop more decision-useful financial analyses.

Currently, Topic 280 requires that a public entity disclose

certain information about its reportable segments.

Topic 280 also requires other specified segment items and amounts to be disclosed

under certain circumstances.

The amendments in this ASU do not change or remove those disclosure requirements and do not change how a

public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine

its reportable segments.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal

years beginning after December 15, 2024.

Early adoption is permitted.

We do not expect that the requirements of ASU 2023 – 07 will

have a material impact on our consolidated financial statements.

has evaluated recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant

impact on our consolidated financial statements and related disclosures.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-K

Item 7. Management’s Discussion and Analysis