10-Q

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UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

WASHINGTON,D.C. 20549

FORM10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FORTHE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FORTHE TRANSITION PERIOD FROM ________ TO ________

COMMISSION FILE NUMBER: 001-15697

ELITE PHARMACEUTICALS, INC.
(Exact<br> Name of Registrant as Specified in Its Charter)
NEVADA	22-3542636
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(State<br> or other jurisdiction of<br><br> incorporation or organization)	(I.R.S.<br> Employer<br><br> Identification No.)
165 LUDLOW AVENUE NORTHVALE, NEW JERSEY	07647
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(Address<br> of principal executive offices)	(Zip<br> Code)
(201) 750-2646
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(Registrant’s<br> telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒      No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒      No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large<br> accelerated filer	☐	Accelerated<br> filer	☐
Non-accelerated<br> filer	☒	Smaller<br> reporting company	☒
		Emerging<br> growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐      No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common<br> Stock, par value $0.001 per share	ELTP	OTCQB

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date: 1,009,276,752 shares of Common Stock were issued, and 1,009,176,752 shares of Common Stock were outstanding as of November 10, 2020.

		PAGE
PART<br> I	FINANCIAL<br> INFORMATION	F-1
ITEM<br> 1.	Financial<br> Statements	F-1
	Condensed<br> Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and March 31, 2020 (Audited)	F-1
	Condensed<br> Consolidated Statement of Operations for the Three and Six Months Ended September 30, 2020 and 2019 (Unaudited)	F-2
	Condensed<br> Consolidated Statement of Changes in Shareholders’ Equity for the Three and Six Months Ended September 30, 2020 and<br> 2019 (Unaudited)	F-3
	Condensed<br> Consolidated Statement of Cash Flows for the Six Months Ended September 30, 2020 and 2019 (Unaudited)	F-5
	Notes<br> to the Unaudited Condensed Consolidated Financial Statements	F-6
ITEM<br> 2.	Management’s<br> Discussion and Analysis of Financial Condition and Results of Operations	1
ITEM<br> 3.	Quantitative<br> and Qualitative Disclosure About Market Risk	9
ITEM<br> 4.	Controls<br> and Procedures	9
PART<br> II	OTHER<br> INFORMATION	10
ITEM<br> 1.	Legal<br> Proceedings	10
ITEM<br> 1A.	Risk<br> Factors	10
ITEM<br> 2.	Unregistered<br> Sales of Equity Securities and Use of Proceeds	10
ITEM<br> 3.	Defaults<br> Upon Senior Securities	10
ITEM<br> 4.	Mine<br> Safety Disclosures	10
ITEM<br> 5.	Other<br> Information	10
ITEM<br> 6.	Exhibits	11
SIGNATURES		12

i

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PARTI - FINANCIAL INFORMATION

ITEM1. FINANCIAL STATEMENTS

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYCONDENSED CONSOLIDATED BALANCE SHEETS

			March<br> 31, <br><br> 2020
			(Audited)
ASSETS
Current<br> assets:
Cash	4,365,667		$	1,131,728
Accounts<br> receivable, net of allowance for doubtful accounts of -0-, respectively	4,075,972			4,106,846
Inventory	4,462,563			4,142,472
Prepaid<br> expenses and other current assets	370,889			870,233
Total<br> current assets	13,275,091			10,251,279
Property<br> and equipment, net of accumulated depreciation of 11,546,074 and 10,957,334, respectively	6,892,376			7,227,648
Intangible<br> assets, net of accumulated depreciation of -0-, respectively	6,634,035			6,634,035
Operating<br> lease - right-of-use asset	263,455			363,282
Other<br> assets:
Restricted<br> cash - debt service for NJEDA bonds	404,994			404,802
Security<br> deposits	135,967			75,534
Total<br> other assets	540,961			480,336
Total<br> assets	27,605,918		$	24,956,580
LIABILITIES<br> AND SHAREHOLDERS’ EQUITY
Current<br> liabilities:
Accounts<br> payable	589,428		$	1,577,860
Accrued<br> expenses	4,508,935			4,821,132
Deferred<br> revenue, current portion	13,333			180,000
Bonds<br> payable, current portion, net of bond issuance costs	95,822			90,822
Loans<br> payable, current portion	386,511			561,550
Lease<br> obligation - operating lease	216,774			208,184
Senior<br> secured promissory note - related party, current portion	1,200,000			1,200,000
Total<br> current liabilities	7,010,803			8,639,548
Long-term<br> liabilities:
Deferred<br> revenue, net of current portion	55,558			58,891
Bonds<br> payable, net of current portion and bond issuance costs	1,233,580			1,336,489
Loans<br> payable, net of current portion	1,558,170			463,902
Lease<br> obligation - operating lease, net of current portion	56,538			167,109
Derivative<br> financial instruments - warrants	3,037,902			3,599,378
Other<br> long-term liabilities	36,519			35,442
Total<br> long-term liabilities	5,978,267			5,661,211
Total<br> liabilities	12,989,070			14,300,759
Shareholders’<br> equity:
Series<br> J convertible preferred stock; par value of 0.01; 50 shares authorized; 0 issued and outstanding as of September 30, 2020<br> and 24.0344 issued and outstanding as of March 31, 2020	—			13,903,960
Common<br> Stock; par value 0.001; 1,445,000,000 shares authorized; 1,009,276,752 shares issued and 1,009,176,752 outstanding as of<br> September 30, 2020; 840,504,367 shares issued and 840,404,367 shares outstanding as of March 31, 2020	1,009,279			840,507
Additional<br> paid-in capital	164,401,909			150,264,605
Treasury<br> stock; 100,000 shares as of September 30, 2020 and March 31, 2020; at cost	(306,841	)		(306,841	)
Accumulated<br> deficit	(150,487,499	)		(154,046,410	)
Total<br> shareholders’ equity	14,616,848			10,655,821
Total<br> liabilities and shareholders’ equity	27,605,918		$	24,956,580

All values are in US Dollars.

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

F-1

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)

	For<br> the Three Months Ended <br><br> September 30,						For<br> the Six Months Ended <br><br> September 30,
	2020			2019			2020			2019
Revenue:
Manufacturing<br> fees	$	6,172,724		$	4,169,346		$	12,809,963		$	7,096,704
Licensing<br> fees		1,227,168			465,641			2,128,673			897,523
Total<br> revenue		7,399,892			4,634,987			14,938,636			7,994,227
Cost<br> of revenue		3,778,496			3,306,256			8,340,846			5,366,542
Gross<br> profit		3,621,396			1,328,731			6,597,790			2,627,685
Operating<br> expenses:
Research<br> and development		1,147,739			637,489			2,091,618			2,045,525
General<br> and administrative		796,966			798,572			1,665,743			1,480,048
Non-cash<br> compensation through issuance of stock options		2,089			15,522			7,610			41,716
Depreciation<br> and amortization		334,345			331,680			661,962			662,633
Total<br> operating expenses		2,281,139			1,783,263			4,426,933			4,229,922
Income<br> (loss) from operations		1,340,257			(454,532	)		2,170,857			(1,602,237	)
Other<br> income (expense):
Interest<br> expense and amortization of debt issuance costs		(79,753	)		(91,465	)		(159,184	)		(189,135	)
Gain<br> on sale of fixed assets		3,400			—			41,490			—
Change<br> in fair value of derivative instruments		1,220,069			(1,053,031	)		561,476			469,000
Interest<br> income		89			5,287			365			8,333
Other<br> income (expense), net		1,143,805			(1,139,209	)		444,147			288,198
Income<br> (loss) from operations before income taxes		2,484,062			(1,593,741	)		2,615,004			(1,314,039	)
Income tax expense		(2,500	)		(2,000	)		(2,500	)		(2,000	)
Net<br> benefit from the sale of state net operating loss credits		—			—			946,407			—
Net<br>income (loss)	$	2,481,562		$	(1,595,741	)	$	3,558,911		$	(1,316,039	)
Basic<br>net income (loss)	$	0.00		$	(0.00	)	$	0.00		$	(0.00	)
Diluted<br>net income (loss)	$	0.00		$	(0.00	)	$	0.00		$	(0.00	)
Basic<br> weighted average Common Stock outstanding		913,544,660			829,394,203			877,180,630			828,466,951
Diluted<br> weighted average Common Stock outstanding		913,576,523			829,394,203			877,212,493			828,466,951

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

F-2

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY(UNAUDITED)

	Series J Preferred Stock						Common Stock				Additional Paid-In			Treasury Stock					Accumulated			Total Shareholders’
	Shares			Amount			Shares		Amount		Capital			Shares		Amount			Deficit			Equity
Balance<br> as of March 31, 2020		24		$	13,903,960			840,504,367	$	840,507	$	150,264,605			100,000	$	(306,841	)	$	(154,046,410	)	$	10,655,821
Net<br> income		—			—			—		—		—			—		—			1,077,349			1,077,349
Non-cash<br> compensation through the issuance of employee stock options		—			—			—		—		5,521			—		—			—			5,521
Shares<br> issued in payment of salaries		—			—			574,597		574		49,426			—		—			—			50,000
Balance<br> at June 30, 2020		24		$	13,903,960			841,078,964	$	841,081	$	150,319,552			100,000	$	(306,841	)	$	(152,969,061	)	$	11,788,691
Net<br> income		—			—			—		—		—			—		—			2,481,562			2,481,562
Conversion<br> of Preferred Stock to Common Stock		(24	)		(13,903,960	)		158,017,321		158,017		13,745,943			—		—			—			—
Initial<br> commitment shares issued pursuant to the 2020 Lincoln Park purchase agreement		—			—			5,975,857		5,976		463,129			—		—			—			469,105
Common<br> Stock sold pursuant to the 2020 Lincoln Park purchase agreement		—			—			640,543		641		41,582			—		—			—			42,223
Common<br> Stock issued as additional commitment shares pursuant to the 2020 Lincoln Park purchase agreement		—			—			10,094		10		722			—		—			—			732
Costs<br> associated with raising capital		—			—			—		—		(469,837	)		—		—			—			(469,837	)
Non-cash<br> compensation through the issuance of employee stock options		—			—			—		—		2,089			—		—			—			2,089
Shares<br> issued in payment of Director fees		—			—			1,550,343		1,551		133,449			—		—			—			135,000
Shares<br> issued in payment of salaries		—			—			71,739		71		6,179			—		—			—			6,250
Shares<br> issued in payment of consulting expenses		—			—			1,931,891		1,932		159,101			—		—			—			161,033
Balance<br> at September 30, 2020		—		$	—			1,009,276,752	$	1,009,279	$	164,401,909			100,000	$	(306,841	)	$	(150,487,499	)	$	14,616,848

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

F-3

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY(UNAUDITED)

	Series J Preferred Stock				Common Stock				Additional Paid-In			Treasury Stock					Accumulated			Total Shareholders’
	Shares		Amount		Shares		Amount		Capital			Shares		Amount			Deficit			Deficit
Balance<br> as of March 31, 2019		—		—		824,946,559	$	824,949	$	148,780,087			100,000	$	(306,841	)	$	(151,806,059	)	$	(2,507,864	)
Net<br> income		—		—		—		—		—			—		—			279,702			279,702
Common<br> Stock sold pursuant to the Lincoln Park purchase agreement		—		—		4,000,000		4,000		336,300			—		—			—			340,300
Common<br> Stock issued as additional commitment shares pursuant to the LPC purchase agreement		—		—		47,136		47		4,153			—		—			—			4,200
Costs<br> associated with raising capital		—		—		—		—		(4,200	)		—		—			—			(4,200	)
Non-cash<br> compensation through the issuance of employee stock options		—		—		—		—		26,194			—		—			—			26,194
Balance<br> at June 30, 2019		—	$	—		828,993,695	$	828,996	$	149,142,534			100,000	$	(306,841	)	$	(151,526,357	)	$	(1,861,668	)
Net<br> loss		—		—		—		—		—			—		—			(1,595,741	)		(1,595,741	)
Common<br> Stock sold pursuant to the Lincoln Park purchase agreement		—		—		3,895,233		3,895		379,692			—		—			—			383,587
Common<br> Stock issued as additional commitment shares pursuant to the LPC purchase agreement		—		—		53,132		53		5,915			—		—			—			5,968
Costs<br> associated with raising capital		—		—		—		—		(5,968	)		—		—			—			(5,968	)
Non-cash<br> compensation through the issuance of employee stock options		—		—		—		—		15,522			—		—			—			15,522
Balance<br> at September 30, 2019		—	$	—		832,942,060	$	832,944	$	149,537,695			100,000	$	(306,841	)	$	(153,122,098	)	$	(3,058,300	)

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

F-4

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)

	For<br> the Six Months Ended <br><br> September 30,
	2020			2019
CASH<br> FLOWS FROM OPERATING ACTIVITIES:
Net<br> income (loss)	$	3,558,911		$	(1,316,039	)
Adjustments<br> to reconcile net income (loss) to net cash provided by (used in) operating
Depreciation<br> and amortization		661,961			662,637
Amortization<br> of operating leases - right-of-use assets		99,827			(93,974	)
Gain<br> on the disposal of property and equipment		(41,490	)		—
Change<br> in fair value of derivative financial instruments - warrants		(561,476	)		(469,000	)
Non-cash<br> compensation accrued		460,490			492,755
Non-cash<br> compensation through the issuance of employee stock options		7,610			41,716
Non-cash<br> rent expense and lease accretion		1,077			1,036
Change<br> in operating assets and liabilities:
Accounts<br> receivable		30,874			(708,250	)
Inventory		(320,091	)		783,501
Prepaid<br> expenses and other current assets		488,912			637,485
Accounts<br> payable, accrued expenses and other current liabilities		(1,408,835	)		199,714
Deferred<br> revenue and customer deposits		(170,000	)		(601,036	)
Lease<br> obligations - operating leases		(99,828	)		93,930
Net<br> cash provided by (used in) operating activities		2,707,942			(275,525	)
CASH<br> FLOWS FROM INVESTING ACTIVITIES:
Purchase<br> of property and equipment		(94,848	)		(3,148	)
Proceeds<br> from disposal of property and equipment		54,675			—
Net<br> cash used in investing activities		(40,173	)		(3,148	)
CASH<br> FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of Common Stock		42,223			723,887
Other<br> loan proceeds		1,013,480			—
Payment<br> of bond principal		(105,000	)		(95,000	)
Other<br> loan payments		(384,341	)		(368,121	)
Net<br> cash provided by financing activities		566,362			260,766
Net<br> change in cash and restricted cash		3,234,131			(17,907	)
Cash<br> and restricted cash, beginning of period		1,536,530			2,675,768
Cash<br> and restricted cash, end of period	$	4,770,661		$	2,657,861
Supplemental<br> disclosure of cash and non-cash transactions:
Cash<br> paid for interest	$	160,266		$	129,649
Financing<br> of equipment purchases and insurance renewal	$	237,936		$	54,462
Stock issued in payment of Directors fees, salaries and consulting<br>expenses	$	352,283		$	—
Commitment<br> shares issued to Lincoln Park Capital	$	469,837		$	10,168
Conversion of preferred stock to Common Stock	$	13,903,960		$	—

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

F-5

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

NOTE1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Overview

Elite Pharmaceuticals, Inc. (the “Company” or “Elite”) was incorporated on October 1, 1997 under the laws of the State of Delaware, and its wholly-owned subsidiary Elite Laboratories, Inc. (“Elite Labs”) was incorporated on August 23, 1990 under the laws of the State of Delaware. On January 5, 2012, Elite Pharmaceuticals was reincorporated under the laws of the State of Nevada. Elite Labs engages primarily in researching, developing, licensing and manufacture 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 products are approved. These products include drugs that cover therapeutic areas for allergy, bariatric, attention deficit and infection. Research and development activities are performed with an objective of developing products that will secure marketing approvals from the United States Food and Drug Administration (“FDA”), and thereafter, commercially exploiting such products.

Principlesof Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Elite Laboratories, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the three and six months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the entire year.

SegmentInformation

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 280 (“ASC 280”), Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments prepared in accordance with GAAP when making decisions about allocating resources and assessing performance of the Company.

The Company has determined that its reportable segments are products whose marketing approvals were secured via an Abbreviated New Drug Applications (“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.

There are currently no intersegment revenues. Asset information by operating segment is not presented below since the chief operating decision maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company’s condensed unaudited consolidated financial statements. Please see Note 15 for further details.

RevenueRecognition

The Company generates revenue primarily from manufacturing and licensing fees. Manufacturing fees include the development of pain management products, manufacturing of a line of generic pharmaceutical products with approved ANDA, through the manufacture of formulations and the development of new products. Licensing fees include the commercialization of products either by license and the collection of royalties, or the expansion of licensing agreements with other pharmaceutical companies, including co-development projects, joint ventures and other collaborations.

Under ASC 606, Revenue from Contacts with Customers (“ASC 606”), the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenues following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenues when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.

F-6

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

Natureof goods and services

The following is a description of the Company’s goods and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each, as applicable:

a) Manufacturing Fees

The Company is equipped to manufacture controlled-release products on a contract basis for third parties, if, and when, the products are approved. These products include products using controlled-release drug technology. The Company also develops and markets (either on its own or by license to other companies) generic and proprietary controlled-release pharmaceutical products.

The Company recognizes revenue when the customer obtains control of the Company’s product based on the contractual shipping terms of the contract. 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.

b) License Fees

The Company enters into licensing and development agreements, which may include multiple revenue generating activities, including milestones payments, licensing fees, product sales and services. The Company analyzes each element of its licensing and development agreements in accordance with ASC 606 to determine appropriate revenue recognition. The terms of the license agreement may include payment to the Company of licensing fees, non-refundable upfront license fees, milestone payments if specified objectives are achieved, and/or royalties on product sales.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

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The Company recognizes revenue from non-refundable upfront payments at a point in time, typically upon fulfilling the delivery of the associated intellectual property to the customer. For those milestone payments which are contingent on the occurrence of particular future events (for example, payments due upon a product receiving FDA approval), the Company determined that these need to be considered for inclusion in the calculation of total consideration from the contract as a component of variable consideration using the most-likely amount method. As such, the Company assesses each milestone to determine the probability and substance behind achieving each milestone. Given the inherent uncertainty of the occurrence of future events, the Company will recognize revenue from the milestone when there is not a high probability of a reversal of revenue, which typically occurs near or upon achievement of the event.

Significant 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.

When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in ASC 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of September 30, 2020.

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

The Company entered into a sales and distribution licensing agreement with Epic Pharma LLC, (“Epic”) dated June 4, 2015 (the “2015 Epic License Agreement”), which has been determined to satisfy the criteria for consideration as a collaborative agreement, and is accounted for accordingly. The 2015 Epic License Agreement expired on June 4, 2020 without renewal.

The Company entered into a Master Development and License Agreement with SunGen Pharma LLC dated August 24, 2016 (the “SunGen Agreement”), which has been determined to satisfy the criteria for consideration as a collaborative agreement, and is accounted for accordingly, in accordance with GAAP. On April 3, 2020, Elite and SunGen mutually agreed to discontinue any further joint product development activities.

F-7

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

Disaggregationof revenue

In the following table, revenue is disaggregated by type of revenue generated by the Company. The table also includes a reconciliation of the disaggregated revenue with the reportable segments:

	For<br> the Three Months Ended <br><br> September 30,				For<br> the Six Months Ended <br><br> September 30,
	2020		2019		2020		2019
NDA:
Licensing<br> fees	$	—	$	250,000	$	166,167	$	500,000
Total<br> NDA revenue		—		250,000		166,167		500,000
ANDA:
Manufacturing<br> fees	$	6,172,724	$	4,169,346	$	12,809,963	$	7,096,704
Licensing<br> fees		1,227,168		215,641		1,962,506		397,523
Total<br> ANDA revenue		7,399,892		4,384,987		14,772,469		7,494,227
Total<br> revenue	$	7,399,892	$	4,634,987	$	14,938,636	$	7,994,227

Cash

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market instruments. The Company places its cash and cash equivalents with high-quality, U.S. financial institutions and, to date has not experienced losses on any of its balances.

RestrictedCash

As of September 30, 2020, and March 31, 2020, the Company had $404,994 and $404,802, of restricted cash, respectively, related to debt service reserve in regard to the New Jersey Economic Development Authority (“NJEDA”) bonds (see Note 5).

AccountsReceivable

Accounts receivable are comprised of balances due from customers, net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances.

Inventory

Inventory is recorded at the lower of cost or market on specific identification by lot number basis.

Long-LivedAssets

The Company periodically evaluates the fair value of long-lived assets, which include property and equipment and intangibles, whenever events or changes in circumstances indicate that its carrying amounts may not be recoverable.

Property and equipment are stated at cost. Depreciation is provided on the straight-line method based on the estimated useful lives of the respective assets which range from three to forty years. Major repairs or improvements are capitalized. Minor replacements and maintenance and repairs which do not improve or extend asset lives are expensed currently.

Upon retirement or other disposition of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is recognized in income.

IntangibleAssets

The Company capitalizes certain costs to acquire intangible assets; if such assets are determined to have a finite useful life they are amortized on a straight-line basis over the estimated useful life. Costs to acquire indefinite lived intangible assets, such as costs related to ANDAs are capitalized accordingly.

The Company tests its intangible assets for impairment at least annually (as of March 31st) and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others and without limitation: a significant decline in the Company’s expected future cash flows; a sustained, significant decline in the Company’s stock price and market capitalization; a significant adverse change in legal factors or in the business climate of the Company’s segments; unanticipated competition; and slower growth rates.

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F-8

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ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

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As of September 30, 2020, the Company did not identify any indicators of impairment.

Please also see Note 4 for further details on intangible assets.

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Researchand Development

Research and development expenditures are charged to expense as incurred.

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Contingencies

Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s condensed consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

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IncomeTaxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Where applicable, the Company records a valuation allowance to reduce any deferred tax assets that it determines will not be realizable in the future.

The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on income tax returns it files if such tax position is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position. These tax benefits are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.

The Company operates in multiple tax jurisdictions within the United States of America. The Company remains subject to examination in all tax jurisdiction until the applicable statutes of limitation expire. As of September 30, 2020, a summary of the tax years that remain subject to examination in our major tax jurisdictions are: United States – Federal, 2016 and forward, and State, 2012 and forward. The Company did not record unrecognized tax positions for the three and six months ended September 30, 2020 and 2019.

Warrantsand Preferred Shares

The accounting treatment of warrants and preferred share series issued is determined pursuant to the guidance provided by ASC 470, Debt, ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, as applicable. Each feature of a freestanding financial instrument including, without limitation, any rights relating to subsequent dilutive issuances, dividend issuances, equity sales, rights offerings, forced conversions, optional redemptions, automatic monthly conversions, dividends and exercise is assessed with determinations made regarding the proper classification in the Company’s financial statements.

Stock-BasedCompensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation. Under the fair value recognition provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, based on the terms of the awards. The cost of the stock-based payments to nonemployees that are fully vested and non-forfeitable as at the grant date is measured and recognized at that date, unless there is a contractual term for services in which case such compensation would be amortized over the contractual term.

In accordance with the Company’s Director compensation policy and certain employment contracts, director’s fees and a portion of employee’s salaries are to be paid via the issuance of shares of the Company’s Common Stock (“Common Stock”), in lieu of cash, with the valuation of such share being calculated on a quarterly basis and equal to the average closing price of the Company’s Common Stock.

Earnings(Loss) Per Share Attributable to Common Shareholders’

The Company follows ASC 260, Earnings Per Share, which requires presentation of basic and diluted earnings (loss) per share (“EPS”) on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of Common Stock outstanding during the period. The computation of diluted net income (loss) per shares does not include the conversion of securities that would have an antidilutive effect.

F-9

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

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

	For the Three Months Ended <br> September 30,						For the Six Months Ended<br> September 30,
	2020			2019			2020			2019
Numerator
Net income (loss) - basic	$	2,481,562		$	(1,595,741	)	$	3,558,911		$	(1,316,039	)
Effect of dilutive instrument on net income		(1,220,069	)		—			(561,476	)		—
Net income (loss) - diluted	$	1,261,493		$	(1,595,741	)	$	2,997,435		$	(1,316,039	)
Denominator
Weighted average shares of Common Stock outstanding - basic		913,544,660			829,394,203			877,180,630			828,466,951
Dilutive effect of stock options and convertible securities		31,863			—			31,863			—
Weighted average shares of Common Stock outstanding - diluted		913,576,523			829,394,203			877,212,493			828,466,951
Net income (loss) per share
Basic	$	0.00		$	(0.00	)	$	0.00		$	(0.00	)
Diluted	$	0.00		$	(0.00	)	$	0.00		$	(0.00	)

FairValue of Financial Instruments

ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) provides a framework for measuring fair value in accordance with generally accepted accounting principles.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820 are described as follows:

●	Level<br> 1 – Unadjusted quoted prices in active markets for identical assets or liabilities<br> that are accessible at the measurement date.
●	Level<br> 2 – Inputs other than quoted prices included within Level 1 that are observable<br> for the asset or liability, either directly or indirectly. Level 2 inputs include quoted<br> prices for similar assets or liabilities in active markets; quoted prices for identical<br> or similar assets or liabilities in markets that are not active; inputs other than quoted<br> prices that are observable for the asset or liability; and inputs that are derived principally<br> from or corroborated by observable market data by correlation or other means.
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●	Level<br> 3 – Inputs that are unobservable for the asset or liability.
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F-10

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ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

Measuredon a Recurring Basis

The following table presents information about our liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fell:

		Amount at	Fair Value Measurement Using
September 30, 2020		Fair Value		Level 1		Level 2		Level 3
Liabilities
Derivative<br> financial instruments - warrants	$	3,037,902	$	—	$	—	$	3,037,902
March<br> 31, 2020
Liabilities
Derivative<br> financial instruments - warrants	$	3,599,378	$	—	$	—	$	3,599,378

See Note 11, for specific inputs used in determining fair value.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments. Based upon current borrowing rates with similar maturities the carrying value of long-term debt approximates fair value.

Non-FinancialAssets that are Measured at Fair Value on a Non-Recurring Basis

Non-financial assets such as intangible assets, and property and equipment are measured at fair value only when an impairment loss is recognized. The Company did not record an impairment charge related to these assets in the periods presented.

TreasuryStock

The Company records treasury stock at the cost to acquire it and includes treasury stock as a component of shareholders’ equity.

RecentlyAdopted Accounting Pronouncements

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In November 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-18, Collaborative Arrangements (ASC 808),Clarifying the Interaction between ASC 808 and ASC 606 (“ASU 2018-18”). The ASU clarifies when transactions between collaborative participants are in the scope of ASC 606. The ASU also provides some guidance on presentation of transactions not in the scope of ASC 606. ASU 2018-18 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years. The Company is not materially impacted by the implementation of this pronouncement.

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RecentlyIssued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses onFinancial Instruments. 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.

Management has evaluated other 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.

F-11

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

NOTE2. INVENTORY

Inventory consisted of the following:

	September<br> 30, <br><br> 2020		March<br> 31,<br><br> 2020
Finished<br> goods	$	51,642	$	138,981
Work-in-progress		796,697		677,824
Raw<br> materials		3,614,224		3,325,667
		4,462,563		4,142,472
Less:<br> Inventory reserve		—		—
	$	4,462,563	$	4,142,472

NOTE3. PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following:

	September<br> 30, <br><br> 2020			March<br> 31, <br><br> 2020
Land,<br> building and improvements	$	5,273,023		$	5,260,524
Laboratory,<br> manufacturing, warehouse and transportation equipment		12,408,722			12,167,754
Office<br> equipment and software		373,601			373,601
Furniture<br> and fixtures		383,103			383,103
		18,438,449			18,184,982
Less:<br> Accumulated depreciation		(11,546,073	)		(10,957,334	)
	$	6,892,376		$	7,227,648

Depreciation expense was $255,118 and $328,140 for the three months ended, and $654,871 and $655,548 for the six months ended September 30, 2020 and 2019, respectively.

NOTE4. INTANGIBLE ASSETS

The following table summarizes the Company’s intangible assets:

	September<br> 30, 2020
	Estimated<br> <br>Useful<br> <br>Life	Gross<br> <br>Carrying<br> <br>Amount		Additions		Reductions		Accumulated<br> <br>Amortization		Net Book<br> <br>Value
Patent<br> application costs	*	$	465,684	$	—	$	—	$	—	$	465,684
ANDA<br> acquisition costs	Indefinite		6,168,351		—		—		—		6,168,351
		$	6,634,035	$	—	$	—	$	—	$	6,634,035
****	March 31, 2020
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	Estimated<br> <br>Useful<br> <br>Life	Gross<br> <br>Carrying<br> <br>Amount		Additions		Reductions		Accumulated<br> <br>Amortization		Net Book<br> <br>Value
Patent<br> application costs	*	$	465,684	$	—	$	—	$	—	$	465,684
ANDA<br> acquisition costs	Indefinite		6,168,351		—		—		—		6,168,351
		$	6,634,035	$	—	$	—	$	—	$	6,634,035
*	Patent<br> application costs were incurred in relation to the Company’s abuse deterrent opioid<br> technology. Amortization of the patent costs will begin upon the issuance of marketing<br> authorization by the FDA. Amortization will then be calculated on a straight-line basis<br> through the expiry of the related patent(s).
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F-12

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ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

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NOTE5. NJEDA BONDS

During August 2005, the Company refinanced a bond issue occurring in 1999 through the issuance of Series A and B Notes tax-exempt bonds (the “NJEDA Bonds” and/or “Bonds”). During July 2014, the Company retired all outstanding Series B Notes, at par, along with all accrued interest due and owed.

In relation to the Series A Notes, the Company is required to maintain a debt service reserve. The debt service reserve is classified as restricted cash on the accompanying unaudited condensed consolidated balance sheets. The NJEDA Bonds require the Company to make an annual principal payment on September 1st based on the amount specified in the loan documents and semi-annual interest payments on March 1st and September 1st, equal to interest due on the outstanding principal. The annual interest rate on the Series A Note is 6.5%. The NJEDA Bonds are collateralized by a first lien on the Company’s facility and equipment acquired with the proceeds of the original and refinanced bonds.

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The following tables summarize the Company’s bonds payable liability:

	September<br> 30, <br><br> 2020			March<br> 31, <br><br> 2020
Gross<br> bonds payable
NJEDA<br> Bonds - Series A Notes	$	1,470,001		$	1,575,000
Less:<br> Current portion of bonds payable (prior to deduction of bond offering costs)		(110,000	)		(105,000	)
Long-term<br> portion of bonds payable (prior to deduction of bond offering costs)	$	1,360,001		$	1,470,000
Bond<br> offering costs	$	354,454		$	354,454
Less:<br> Accumulated amortization		(213,855	)		(206,765	)
Bond<br> offering costs, net	$	140,599		$	147,689
Current<br> portion of bonds payable - net of bond offering costs
Current<br> portions of bonds payable	$	110,000		$	105,000
Less:<br> Bonds offering costs to be amortized in the next 12 months		(14,178	)		(14,178	)
Current<br> portion of bonds payable, net of bond offering costs	$	95,822		$	90,822
Long<br> term portion of bonds payable - net of bond offering costs
Long<br> term portion of bonds payable		1,360,000		$	1,470,000
Less:<br> Bond offering costs to be amortized subsequent to the next 12 months		(126,420	)		(133,511	)
Long<br> term portion of bonds payable, net of bond offering costs	$	1,233,580		$	1,336,489

Amortization expense was $3,545 and $3,540 for the three months ended, and $7,090 and $7,085 for the six months ended September 30, 2020 and 2019, respectively.

NOTE6. LOANS PAYABLE

Loans payable consisted of the following:

	September<br> 30, <br><br> 2020			March<br> 31, <br><br> 2020
Equipment<br> and insurance financing loans payable, between 3.5% and 12.73% interest and maturing between October 2020 and December 2023	$	931,201		$	1,025,452
Loan<br> received pursuant to the Payroll Protection Program Term Note		1,013,480			—
Less:<br> Current portion of loans payable		(386,511	)		(561,550	)
Long-term<br> portion of loans payable	$	1,558,170		$	463,902

The interest expense associated with the loans payable was $20,760 and $20,792 for the three months ended, and $38,640 and $44,879 for the six months ended September 30, 2020 and 2019, respectively.

F-13

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

2020Paycheck Protection Program Term Note

In April 2020, the Company entered into a Paycheck Protection Program Term Note (the “PPP Note”) with TD Bank, NA in the amount of $1,013,480. The PPP Note was issued to the Company pursuant to the Coronavirus, Aid, Relief, and Economic Security Act’s (the “CARES Act”) (P.L. 116-136) Paycheck Protection Program (the “Program”). Under the Program, all or a portion of the PPP Note may be forgiven in accordance with the Program requirements. The PPP Note carries a maturity date of April 2022, at a 1% interest rate. No payments are required for six months from the date of issuance. The amount of the forgiveness shall be calculated (and may be reduced) in accordance with the requirements of the Program, including the provisions of the CARES Act. No more than 25% of the amount forgiven can be attributable to non-payroll costs, as defined in the Program.

NOTE7. RELATED PARTY SECURED PROMISSORY NOTE WITH MIKAH PHARMA, LLC

For consideration of the assets acquired on May 15, 2017, the Company issued a Secured Promissory Note (the “Note”) to Mikah Pharma, LLC (“Mikah”) for the principal sum of $1,200,000. Mikah was founded in 2009 by Nasrat Hakim (“Hakim”), a related party and the Company’s President, Chief Executive Officer and Chairman of the Board. The Note matures on December 31, 2020 at which time the Company shall pay the outstanding principal balance of the Note. Interest shall be computed on the unpaid principal amount at the per annum rate of ten percent (10%); provided, upon the occurrence of an Event of Default as defined within the Note, the principal balance shall bear interest from the date of such occurrence until the date of actual payment at the per annum rate of fifteen percent (15%). All interest payable hereunder shall be computed on the basis of actual days elapsed and a year of 360 days. Installment payments of interest on the outstanding principal shall be paid as follows: quarterly commencing August 1, 2017 and on November 1, February 1, May 1 and August 1 of each year thereafter. No principal or interest payments have been made on the Note since its issuance. All unpaid principal and accrued but unpaid interest shall be due and payable in full on the Maturity Date. The interest expense associated with the Note was $30,000 for the three months ended and $60,000 for the six months ended September 30, 2020 and 2019, respectively. Accrued interest due and owing on this note was $405,000 and $345,000 as of September 30, 2020 and March 31, 2020, respectively.

NOTE8. DEFERRED REVENUE

Deferred revenues in the aggregate amount of $68,891 as of September 30, 2020, were comprised of a current component of $13,333 and a long-term component of $55,558. Deferred revenues in the aggregate amount of $238,891 as of March 31, 2020, were comprised of a current component of $180,000 and a long-term component of $58,891. These line items represent the unamortized amounts of a $200,000 advance payment received for a TAGI Pharma (“TAGI”) licensing agreement with a fifteen-year term beginning in September 2010 and ending in August 2025 and the $5,000,000 advance payment Epic Collaborative Agreement with a five-year term beginning in June 2015 and ending in May 2020. These advance payments were recorded as deferred revenue when received and are earned, on a straight-line basis over the life of the licenses. The current component is equal to the amount of revenue to be earned during the 12-month period immediately subsequent to the balance date and the long-term component is equal to the amount of revenue to be earned thereafter.

NOTE9. COMMITMENTS AND CONTINGENCIES

Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that 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.

OperatingLeases – 135 Ludlow Ave.

The Company entered into an operating lease for a portion of a one-story warehouse, located at 135 Ludlow Avenue, Northvale, New Jersey (the “135 Ludlow Ave. lease”). The 135 Ludlow Ave. lease is for approximately 15,000 square feet of floor space and began on July 1, 2010. During July 2014, the Company modified the 135 Ludlow Ave. lease in which the Company was permitted to occupy the entire 35,000 square feet of floor space in the building (“135 Ludlow Ave. modified lease”).

The 135 Ludlow Ave. modified lease includes an initial term, which expired on December 31, 2016 with two tenant renewal options of five years each, at the sole discretion of the Company. On June 22, 2016, the Company exercised the first of these renewal options, with such option including a term that begins on January 1, 2017 and expires on December 31, 2021.

The 135 Ludlow Ave. property required significant leasehold improvements and qualifications, as a prerequisite, for its intended future use. Manufacturing, packaging, warehousing and regulatory activities are currently conducted at this location. Additional renovations and construction to further expand the Company’s manufacturing resources are in progress.

F-14

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARYNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

The Company assesses whether an arrangement is a lease or contains a lease at inception. For arrangements considered leases or that contain a lease that is accounted for separately, the Company determines the classification and initial measurement of the right-of-use asset and lease liability at the lease commencement date, which is the date that the underlying asset becomes available for use. The Company has elected to account for non-lease components associated with our leases and lease components as a single lease component.

The Company recognizes a right-of-use asset, which represents the Company’s right to use the underlying asset for the lease term, and a lease liability, which represents the present value of the Company’s obligation to make payments arising over the lease term. The present value of the lease payments is calculated using either the implicit interest rate in the lease or an incremental borrowing rate.

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Lease assets and liabilities are classified as follows on the condensed consolidated balance sheet:

Lease	Classification	As<br> of<br><br> September 30,<br><br> 2020
Assets
Operating	Operating<br> lease – right-of-use asset	$	263,455
Total<br> leased assets		$	263,455
Liabilities
Current
Operating	Lease<br> obligation – operating lease	$	216,774
Long-term
Operating	Lease<br> obligation – operating lease, net of current portion		56,538
Total<br> lease liabilities		$	273,312

Rent expense is recorded on the straight-line basis. Rent expense under the 135 Ludlow Ave. modified lease for the three months ended September 30, 2020 and 2019 was $55,986 and $54,888, respectively, and $111,972 and $109,776 for the six months ended September 30, 2020 and 2019, respectively. Rent expense is recorded in general and administrative expense in the unaudited condensed consolidated statements of operations.

The table below show the future minimum rental payments, exclusive of taxes, insurance and other costs, under the 135 Ludlow Ave. modified lease:

Years<br> ending March 31,	Amount
2021	$	113,091
2022		171,315
Total<br> future minimum lease payments		284,406
Less:<br> interest		(11,094	)
Present<br> value of lease payments	$	273,312

The weighted-average remaining lease term and the weighted-average discount rate of our lease was as follows:

Lease<br> Term and Discount Rate	September<br> 30, <br><br> 2020
Remaining<br> lease term (years)
Operating<br> leases		1.3
Discount<br> rate
Operating<br> leases		6	%

The Company has an obligation for the restoration of its leased facility and the removal or dismantlement of certain property and equipment as a result of its business operation in accordance with ASC 410, Asset Retirement and Environmental Obligations– Asset Retirement Obligations . The Company records the fair value of the asset retirement obligation in the period in which it is incurred. The Company increases, annually, the liability related to this obligation. The liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the Company records either a gain or loss. As of September 30, 2020, and March 31, 2020, the Company had a liability of $36,518 and $35,442, respectively, recorded as a component of other long-term liabilities.

---

F-15

---

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARY

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE10. PREFERRED STOCK

SeriesJ convertible preferred stock

On April 28, 2017, the Company created the Series J Convertible Preferred Stock (“Series J Preferred”) in conjunction with the Certificate of Designations (“Series J COD”). A total of 50 shares of Series J Preferred were authorized, zero shares are issued and outstanding, with a stated value of $1,000,000 per share and a par value of $0.01 as of September 30, 2020.

On April 27, 2017, a total of 24.0344 shares of Series J Preferred were issued pursuant to an exchange agreement (the “Exchange Agreement”) with Hakim, a related party and the Company’s President, Chief Executive Officer and Chairman of the Board of Directors. The Exchange Agreement provided for Hakim to exchange 158,017,321 shares of Common Stock for 24.0344 shares of Series J Preferred and warrants to purchase 79,008,661 shares of Common Stock at $0.1521 per share. The aggregate stated value of the Series J Preferred issued was equal to the aggregate value of the shares of Common Stock exchanged, with such value of each share of Common Stock exchanged being equal to the closing price of the Common Stock on April 27, 2017. In connection with the Exchange Agreement, the Company also issued warrants to purchase 79,008,661 shares of Common Stock at $0.1521 per share, and such warrants are classified as liabilities on the accompanying unaudited condensed consolidated balance sheet as of September 30, 2020 (See Note 11).

An amendment to the Company’s Articles of Incorporation to increase the number of shares of Common Stock the Company is authorized to issue from 995,000,000 shares to 1,445,000,000 shares was approved at the Company’s Annual Meeting of Shareholders held on December 4, 2019. Prior to the approval of the increase in the number of authorized shares, there were insufficient authorized shares if the Series J Preferred Stock were converted. As a result, the shares were classified in mezzanine equity. After the approval of the increase in the number of authorized shares, there are now sufficient authorized shares in the event of a full conversion of Series J Preferred Stock. With the approval of the increase in the number of authorized shares, there is no longer the presumption that a cash settlement will be required. Therefore, the Series J Preferred was reclassified from mezzanine equity to permanent equity at its carrying amount of $13,903,960 on the consolidated balance sheet as of March 31, 2020.

On June 23, 2020, the Company held a Special Meeting of Shareholders, with such including a proposal for shareholders to again vote on the above referenced amendment to the Company’s Articles of Incorporation. This proposal was also passed by shareholder vote.

On August 24, 2020, Hakim converted the 24.0344 shares of Series J Preferred into 158,017,321 shares of Common Stock at a conversion price of $0.1521 per share.

NOTE11. DERIVATIVE FINANCIAL INSTRUMENTS – WARRANTS

The Company evaluates and accounts for its freestanding instruments in accordance with ASC 815, Accounting for Derivative Instrumentsand Hedging Activities.

The Company issued warrants, with a term of ten years, to affiliates in connection with an exchange agreement dated April 28, 2017, as further described in this note below.

A summary of warrant activity is as follows:

	September<br> 30, <br><br> 2020				March<br> 31,<br><br> 2020
	Warrant<br> Shares		Weighted<br> Average Exercise Price		Warrant<br> Shares		Weighted<br> Average Exercise Price
Balance<br> at beginning of period		79,008,661	$	0.1521		79,008,661	$	0.1521
Warrants<br> granted pursuant to the issuance of Series J convertible preferred shares		—				—	$	—
Warrants<br> exercised, forfeited and/or expired, net		—				—	$	—
Balance<br> at end of period		79,008,661	$	0.1521		79,008,661	$	0.1521

On April 28, 2017, the Company entered into an Exchange Agreement with Hakim, the Chairman of the Board, President, and Chief Executive Officer of the Company, pursuant to which the Company issued to Hakim 24.0344 shares of its Series J Preferred and warrants to purchase an aggregate of 79,008,661 shares of its Common Stock (the “Series J Warrants” and, along with the Series J Preferred issued to Hakim, the “Securities”) in exchange for 158,017,321 shares of Common Stock owned by Hakim. The fair value of the Series J Warrants was determined to be $6,474,674 upon issuance at April 28, 2017.

F-16

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARY

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Series J Warrants are exercisable for a period of 10 years from the date of issuance, commencing April 28, 2020. The initial exercise price is $0.1521 per share and the Series J Warrants can be exercised for cash or on a cashless basis. The exercise price is subject to adjustment for any issuances or deemed issuances of Common Stock or Common Stock equivalents at an effective price below the then exercise price. Such exercise price adjustment feature prohibits the Company from being able to conclude the warrants are indexed to its own stock and thus such warrants are classified as liabilities and measured initially and subsequently at fair value. The Series J Warrants also provide for other standard adjustments upon the happening of certain customary events.

The fair value of the Series J Warrants was calculated using a Black-Scholes model instead of a Monte Carlo Simulation because the probability with the shareholder approval provisions was no longer a factor. The following assumptions were used in the Black-Scholes model to calculate the fair value of the Series J Warrants:

	September<br> 30, <br><br> 2020			March<br> 31, <br><br> 2020
Fair<br> value of the Company’s Common Stock	$	0.0680		$	0.0720
Volatility		79.77	%		83.81	%
Initial<br> exercise price	$	0.1521		$	0.1521
Warrant<br> term (in years)		6.6			7.1
Risk<br> free rate		0.47	%		0.55	%

The changes in warrants (Level 3 financial instruments) measured at fair value on a recurring basis for the six months ended September 30, 2020 were as follows:

Balance<br> at March 31, 2020	$	3,599,378
Change<br> in fair value of derivative financial instruments - warrants		(561,476	)
Balance<br> at September 30, 2020	$	3,037,902

NOTE12. SHAREHOLDERS’ EQUITY

LincolnPark Capital – May 1, 2017 Purchase Agreement

On May 1, 2017, the Company entered into a purchase agreement (the “2017 LPC Purchase Agreement”), together with a registration rights agreement (the “2017 LPC Registration Rights Agreement”), with Lincoln Park.

Under the terms and subject to the conditions of the 2017 LPC Purchase Agreement, the Company had the right to sell to and Lincoln Park was obligated to purchase up to $40 million in shares of Common Stock, subject to certain limitations, from time to time, over the 36-month period that commenced on June 5, 2017.

The 2017 LPC Agreement expired on July 1, 2020.

During the six months ended September 30, 2020, there were no shares sold to Lincoln Park pursuant to the 2017 LPC Agreement. In addition, there were no shares issued to Lincoln Park as additional commitment shares, pursuant to the 2017 LPC Agreement. During the six months ended September 30, 2019, a total of 7,895,233 shares were sold to Lincoln Park pursuant to the 2017 LPC Agreement for net proceeds totaling $723,887. In addition, 100,268 shares were issued to Lincoln Park as additional commitment shares, pursuant to the 2017 LPC Agreement.

LincolnPark Capital Transaction - July 8, 2020 Purchase Agreement

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

F-17

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARY

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

During the six months ended September 30, 2020 the Company issued an aggregate of 5,975,857 shares of Common Stock in the amount of $469,105 to Lincoln Park as initial commitment shares. The Company sold 640,543 shares of its Common Stock pursuant to the 2020 LPC Purchase Agreement during the six months ended September 30, 2020 for net proceeds totaling $42,223. In addition, 10,094 shares were issued to Lincoln Park as additional commitment shares, pursuant to the 2020 LPC Agreement. The Company did not issue any shares of its Common Stock pursuant to the 2020 LPC Purchase Agreement during the six months ended September 30, 2019. In addition, there were no shares issued to Lincoln Park as additional commitment shares, pursuant to the 2020 LPC Agreement.

NOTE13. STOCK-BASED COMPENSATION

Part of the compensation paid by the Company to its Directors and employees consists of the issuance of Common Stock or via the granting of options to purchase Common Stock.

Stock-basedDirector Compensation

The Company’s Director compensation policy, instituted in October 2009 and further revised in January 2016, includes provisions that a portion of director’s fees are to be paid via the issuance of shares of the Company’s Common Stock, in lieu of cash, with the valuation of such shares being calculated on quarterly basis and equal to the average closing price of the Company’s Common Stock.

During the six months ended September 30, 2020, the Company issued 1,550,343 shares of Common Stock to its Directors in payment of director’s fees totaling an aggregate of $135,000 and with such aggregate director’s fees being earned and accrued over the twenty-seven month period beginning on January 1, 2018 and ending on March 31, 2020. In addition, the Company made cash payments totaling an aggregate of $67,500 in payment of director’s fees earned over the same twenty-seven month period.

During the six months ended September 30, 2020, the Company accrued director’s fees totaling $45,000, which will be paid via cash payments totaling $15,000 and the issuance of 391,574 shares of Common Stock.

As of September 30, 2020, the Company owed its Directors a total of $15,000 in cash payments and 391,574 shares of Common Stock in payment of director fees totaling $45,000 due and owing. The Company anticipates that these shares of Common Stock will be issued prior to the end of the current fiscal year.

Stock-basedEmployee/Consultant Compensation

Employment contracts with the Company’s President and Chief Executive Officer, Chief Financial Officer and certain other employees and engagement contracts with certain consultants include provisions for a portion of each employee’s salaries or consultant’s fees to be paid via the issuance of shares of the Company’s Common Stock, in lieu of cash, with the valuation of such shares being calculated on a quarterly basis and equal to the average closing price of the Company’s Common Stock.

During the six months ended September 30, 2020, the Company issued 646,336 shares of Common Stock in payment of salaries totaling $56,250 pursuant to the employment contract of the Company’s Executive Vice President of Operations and with such salaries being earned and accrued over the thirty month period beginning on January 1, 2018 and ending on June 30, 2020.

During the six months ended September 30, 2020, the Company accrued salaries totaling $396,250 owed to the Company’s President and Chief Executive Officer, Chief Financial Officer and certain other employees which will be paid via the issuance of 5,182,380 shares of Common Stock.

As of September 30, 2020, the Company owed its President and Chief Executive Officer, Chief Financial Officer and certain other employees’ salaries totaling $2,657,500 which will be paid via the issuance of 29,442,712 shares of Common Stock.

During the six months ended September 30, 2020, the Company issued 1,931,891 shares of Common Stock in payment of consulting fees totaling $161,033, pursuant to engagement contracts with a certain consultant, and with such consulting expenses being earned and accrued over the twenty seven month period beginning on January 1, 2018 and ending March 31, 2020.

F-18

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARY

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Options

Under its 2014 Stock Option Plan and prior options plans, the Company may grant stock options to officers, selected employees, as well as members of the Board of Directors and advisory board members. 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. A summary of the activity of Company’s 2014 Stock Option Plan for the six months ended September 30, 2020 is as follows:

	Shares<br><br> Underlying<br> Options			Weighted<br><br> Average<br> Exercise Price		Weighted<br> Average<br> Remaining Contractual<br> Term<br>  (in years)		Aggregate<br> Intrinsic<br> Value
Outstanding<br> at April 1, 2020		5,375,000		$	0.14		4.1	$	6,000
Forfeited<br> and expired		(60,000	)
Outstanding<br> at September 30, 2020		5,315,000		$	0.14		3.8	$	6,000
Exercisable<br> at September 30, 2020		5,220,001		$	0.14		3.8	$	6,000

The aggregate intrinsic value for outstanding options is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s Common Stock as of September 30, 2020 and March 31, 2020 of $0.06 and $0.07, respectively.

NOTE14. CONCENTRATIONS AND CREDIT RISK

Revenues

Two customers accounted for approximately 93% of the Company’s revenues for the six months ended September 30, 2020. These two customers accounted for approximately 78% and 15% of revenues each, respectively. The same two customers accounted for 83% and 11% of revenues each, respectively, for the three months ended September 30, 2020.

Three customers accounted for approximately 87% of the Company’s revenues for the six months ended September 30, 2019. These three customers accounted for approximately 44%, 30%, and 13% of revenues each, respectively. The same three customers accounted for approximately 55%, 23% and 11% of revenues each for three months ended September 30, 2019.

AccountsReceivable

Two customers accounted for approximately 95% of the Company’s accounts receivable as of September 30, 2020. These two customers accounted for approximately 84% and 11% of accounts receivable each, respectively.

Four customers accounted for substantially all the Company’s accounts receivable as of March 31, 2020. These four customers accounted for approximately 73%, 13%, 8%, and 5% of accounts receivable each, respectively.

Purchasing

Four suppliers accounted for more than 83% of the Company’s purchases of raw materials for the six months ended September 30, 2020. These four suppliers accounted for approximately 63%, 11%, 5% and 4% of purchases each, respectively.

Seven suppliers accounted for more than 85% of the Company’s purchases of raw materials for the six months ended September 30, 2019. Included in these seven suppliers were three suppliers accounting for approximately 35%, 18%, and 15% of purchases each, respectively.

NOTE15. SEGMENT RESULTS

FASB ASC 280-10-50 requires use of the “management approach” model for segment reporting. The management approach is based on the way a company’s management organized segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

The Company has determined that its reportable segments are ANDAs for generic products and NDAs for branded products. 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.

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 unaudited condensed consolidated financial statements.

F-19

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARY

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

	For<br> the Three Months Ended <br><br> September 30,				For<br> the Six Months Ended<br><br> September 30,
	2020		2019		2020		2019
Operating<br> Income by Segment
ANDA	$	2,180,670	$	759,049	$	4,050,161	$	106,654
NDA		—		64,041		153,784		271,745
	$	2,180,670	$	823,090	$	4,203,945	$	378,399

The table below reconciles the Company’s operating income by segment to income (loss) from operations before provision for income taxes as reported in the Company’s unaudited condensed consolidated statements of operations.

	For<br> the Three Months Ended <br><br> September 30,						For<br> the Six Months Ended <br><br> September 30,
	2020			2019			2020			2019
Operating<br> income by segment	$	2,180,670		$	823,090		$	4,203,945		$	378,399
Corporate<br> unallocated costs		(276,504	)		(793,672	)		(861,536	)		(1,000,789	)
Interest<br> income		89			5,287			365			8,333
Interest<br> expense and amortization of debt issuance costs		(79,753	)		(91,464	)		(159,184	)		(189,134	)
Depreciation<br> and amortization expense		(334,345	)		(331,680	)		(661,962	)		(662,633	)
Significant<br> non-cash items		(226,164	)		(154,271	)		(468,100	)		(319,215	)
Change<br> in fair value of derivative instruments		1,220,069			(1,053,031	)		561,476			469,000
Income<br> (loss) from operations	$	2,484,062		$	(1,595,741	)	$	2,615,004		$	(1,316,039	)

F-20

ELITEPHARMACEUTICALS, INC. AND SUBSIDIARY

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE16. RELATED PARTY AGREEMENTS WITH MIKAH PHARMA, LLC

On December 3, 2018, the Company executed a development agreement with Mikah pursuant to which Mikah and the Company will collaborate to develop and commercialize generic products including formulation development, analytical method development, bioequivalence studies and manufacture of development batches of generic products. As of the date of this report, the Company has incurred costs which are $229,451 in excess of advanced payments received to date from Mikah. This balance due from Mikah is included in the financial statement line of prepaid expenses and other current assets on the accompanying consolidated balance sheet.

NOTE17. INCOME TAXES

Saleof New Jersey Net Operating Loss

In April 2020, Elite Laboratories Inc., a wholly owned subsidiary of Elite Pharmaceuticals Inc., received final approval from the New Jersey Economic Development Authority for the sale of net tax benefits of $607,635 relating to New Jersey net operating losses and net tax benefits of $338,772, relating to R&D tax credits. The Company sold the net tax benefits approved for sale for total proceeds of $946,407.

NOTE18. COVID-19 UPDATE

In December 2019, the Novel Corona Virus, COVID-19 was reported to have emerged in Wuhan, China. In March 2020, the World Health Organization (“WHO”) declared the COVID-19 outbreak a global pandemic. Governments at the national, state and local level in the United States, and globally, have implemented aggressive actions to reduce the spread of the virus, with such actions including, without limitation, lockdown and shelter in place orders, limitations on non-essential gatherings of people, suspension of all non-essential travel, and ordering certain businesses and governmental agencies to cease non-essential operations at physical locations. The Company’s business is deemed essential and it has continued to operate in all aspects of its pharmaceutical manufacturing, distribution, product development, regulatory compliance and other activities. The Company’s management has developed and implemented a range of measures to address the risks, uncertainties, and operational challenges associated with operating in a COVID-19 environment. The Company is closely monitoring the rapidly evolving and changing situation and are implementing plans intended to limit the impact of COVID-19 on our business so that the Company can continue to manufacture those medicines used by end user patients. Actions the Company has taken to date are, without limitation, further described below.

Workforce

The Company has taken and will continue to take, proactive measures to provide for the well-being of its workforce while continuing to safely produce pharmaceutical products. The Company has implemented alternative working practices, which include, without limitation, modified schedules, shift rotation and work at home abilities for appropriate employees to best ensure adequate social distancing. In addition, the Company increased its already thorough cleaning protocols throughout its facilities and has prohibited visits from non-essential visitors. Certain of these measures have resulted in increased costs.

Manufacturingand Supply Chain

During the three and six months ended September 30, 2020, and as of the date of this Quarterly Report on Form 10-Q, the Company has not experienced material, detrimental issues related to COVID-19 in its manufacturing, supply chain, quality assurance and regulatory compliance activities, and has been able to operate without interruption. The Company has taken, and plans to continue to take, commercially practical measures to keep its facilities open. Company supply chains remain intact and operational, and the Company is in regular communications with its suppliers and third-party partners. A prolonging of the current situation relating to COVID-19 may result in an increased risk of interruption in the Company supply chain in the future, with no assurances given as the materiality of such future interruption on the Company’s business, financial condition, results of operations and cash flows.

NOTE19. SUBSEQUENT EVENTS

The Company has evaluated subsequent events from the condensed consolidated balance sheet date through November 16, 2020 and determined that there were no material subsequent events.

F-21

ITEM2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Thefollowing discussion of our financial condition and results of operations for the three and six months ended September 30, 2020and 2019 should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those statementsthat are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectationsthat involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timingof events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors,including those set forth under Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended March 31,2020. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,”“ongoing,” “expect,” “believe,” “intend,” “may,” “will,”“should,” “could,” and similar expressions to identify forward-looking statements.

Unlessexpressly indicated or the context requires otherwise, the terms “Elite”, the “Company”, “we”,“us”, and “our” refer to Elite Pharmaceuticals, Inc. and subsidiary.

Background

Elite Pharmaceuticals, Inc., a Nevada corporation (the “Company”, “Elite”, “Elite Pharmaceuticals”, the “registrant”, “we”, “us” or “our”) was incorporated on October 1, 1997 under the laws of the State of Delaware, and its wholly-owned subsidiary, Elite Laboratories, Inc. (“Elite Labs”), was incorporated on August 23, 1990 under the laws of the State of Delaware. On January 5, 2012, Elite Pharmaceuticals was reincorporated under the laws of the State of Nevada.

We are a specialty pharmaceutical company principally engaged in the development and manufacture of oral, controlled-release products, using proprietary know-how and technology for the manufacture of generic pharmaceuticals. Our strategy includes developing generic versions of controlled-release drug products with high barriers to entry.

We occupy manufacturing, warehouse, laboratory and office space at 165 Ludlow Avenue and 135 Ludlow Avenue in Northvale, NJ (the “Northvale Facility”). The Northvale Facility operates under Current Good Manufacturing Practice (“cGMP”) and is a United States Drug Enforcement Agency (“DEA”) registered facility for research, development and manufacturing.

Strategy

We focus our efforts on the following areas: (i) manufacturing of a line of generic pharmaceutical products with approved Abbreviated New Drug Applications (“ANDAs”); (ii) development of additional generic pharmaceutical products; (iii) development of the other products in our pipeline including the products with our partners; (iv) commercial exploitation of our products either by license and the collection of royalties, or through the manufacture of our formulations; and (v) development of new products and the expansion of our licensing agreements with other pharmaceutical companies, including co-development projects, joint ventures and other collaborations.

Our focus is on the development of various types of drug products, including branded drug products which require New Drug Applications (“NDAs”) under Section 505(b)(1) or 505(b)(2) of the Drug Price Competition and Patent Term Restoration Act of 1984 (the “Drug Price Competition Act”) as well as generic drug products which require ANDAs.

We believe that our business strategy enables us to reduce its risk by having a diverse product portfolio that includes both branded and generic products in various therapeutic categories and to build collaborations and establish licensing agreements with companies with greater resources thereby allowing us to share costs of development and improve cash-flow.

1

CommercialProducts

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

Product	Branded<br><br> Product<br><br> Equivalent	Therapeutic<br><br> Category	Launch<br><br> Date
Phentermine HCl 37.5mg tablets<br><br> (“Phentermine 37.5mg”)	Adipex-P®	Bariatric	April<br> 2011
Phendimetrazine Tartrate 35mg tablets<br><br> (“Phendimetrazine 35mg”)	Bontril®	Bariatric	November<br> 2012
Phentermine HCl 15mg and 30mg capsules<br><br> (“Phentermine 15mg” and “Phentermine 30mg”)	Adipex-P®	Bariatric	April<br> 2013
Naltrexone HCl 50mg tablets<br><br> (“Naltrexone 50mg”)	Revia®	Addiction Treatment	September<br> 2013
Isradipine 2.5mg and 5mg capsules<br><br> (“Isradipine 2.5mg” and “Isradipine 5mg”)	n/a	Cardiovascular	January<br> 2015
Oxycodone HCl Immediate Release 5mg, 10mg, 15mg,<br> 20mg and 30mg tablets (“OXY IR 5mg”, “Oxy IR 10mg”, “Oxy IR 15mg”, “OXY IR 20mg”<br> and “Oxy IR 30mg”)	Roxycodone®	Pain	March<br> 2016
Trimipramine Maleate Immediate Release 25mg,<br> 50mg and 100mg capsules (“Trimipramine 25mg”, “Trimipramine 50mg”, “Trimipramine 100mg”)	Surmontil®	Antidepressant	May<br> 2017
Dextroamphetamine Saccharate, Amphetamine Aspartate,<br> Dextroamphetamine Sulfate, Amphetamine Sulfate Immediate Release 5mg, 7.5mg, 10mg, 12.5mg, 15mg, 20mg and 30mg tablets (“Amphetamine<br> IR 5mg”, “Amphetamine IR 7.5mg”, “Amphetamine IR 10mg”, “Amphetamine IR 12.5mg”,<br> “Amphetamine IR 15mg”, “Amphetamine IR 20mg” and “Amphetamine IR 30mg”)	Adderall®	Central<br> Nervous System (“CNS”) Stimulant	April<br> 2019
Dantrolene Sodium Capsules 25mg, 50mg and 100mg<br> (“Dantrolene 25mg”, “Dantrolene 50mg”, “Dantrolene 100mg”)	Dantrium®	Muscle<br> Relaxant	June<br> 2019
Dextroamphetamine Saccharate, Amphetamine Aspartate,<br> Dextroamphetamine Sulfate, Amphetamine Sulfate Extended Release 5mg, 10mg, 15mg, 20mg, 25mg, and 30mg capsules (“Amphetamine<br> ER 5mg”, “Amphetamine ER 10mg”, “Amphetamine ER 15mg”, “Amphetamine ER 20mg”, “Amphetamine<br> ER 25mg”, and “Amphetamine ER 30mg”)	Adderall<br> XR®	Central<br> Nervous System (“CNS”) Stimulant	March<br> 2020

2

Products Not Yet Commercialized

SequestOx™

SequestOx™ is our abuse-deterrent candidate for the management of moderate to severe pain where the use of an opioid analgesic is appropriate.

In January 2016, the Company submitted an NDA for SequestOx*™* and on July 15, 2016, the US Food and Drug Administration (“FDA”) issued a Complete Response Letter, (“CRL”), regarding the NDA. The CRL stated that the review cycle for the SequestOx™ NDA is complete and the application was not ready for approval in its present form.

On July 7, 2017, the Company reported topline results from a pivotal bioequivalence fed study for or SequestOx™. The mean Tmax (the amount of time that a drug is present at the maximum concentration in serum) of SequestOx™ was 4.6 hr. with a range of 0.5 hr. to 12 hr. and the mean Tmax of the comparator, Roxicodone®, was 3.4 hr. with a range of 0.5 hr. to 12 hr. A key objective for the study was to determine if the reformulated SequestOx™ had a similar Tmax to the comparator when taken with a high fat meal. Based on these results, the Company paused clinical trials for this formulation of SequestOx™. On January 30, 2018, the Company reported positive topline results from a pilot study conducted for a modified SequestOx™ wherein, based on the results of this pilot study, the modified SequestOx™ formulation is expected to achieve bioequivalence with a Tmax range equivalent to the reference product when conducted in a pivotal trial under fed conditions. The Company has provided the pilot data to the FDA, requesting clarification as to the requirements for resubmission of the NDA. The FDA has provided guidance for repeated bio-equivalence studies in order to bridge the new formulation to the original SequestOx™ studies and also extended our filing fee waiver until July 2020. Due to the prohibitive cost of such repeated bio-equivalence studies and further development of SequestOx, the Company has paused development of this product and, in light of the current market and litigation around opioid products, the Company is evaluating the feasibility of continuing development or the pursuit of any opioid containing products.

OxycodoneHydrochloride extended release (generic version of OxyContin®)

On September 20, 2017, the Company filed an ANDA with the FDA for generic version of OxyContin® (extended release Oxycodone Hydrochloride). OxyContin® is approved for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. The FDA requested additional information relating to this filing. Providing such additional information would require significant resources. Development of this product is currently paused and, in light of the current market and litigation around opioid products,, the Company is evaluating the feasibility of continuing development or the pursuit of any opioid containing products.

Genericversion of an antibiotic product

On January 3, 2019, the Company filed an ANDA with the FDA for a generic version of an antibiotic product. The product is jointly owned by Elite and SunGen Pharma LLC. Upon approval by the FDA of this ANDA, Elite will manufacture and package the product on a cost-plus basis. The ANDA is currently under review by the FDA.

Loxapine(“Loxapine Capsules”)

The FDA approved a transfer for manufacturing of Loxapine Capsules at the Northvale Facility. The approved ANDAs for Loxapine Capsules were acquired from Mikah Pharma. The Company is currently evaluating the timeline for the launch of this product.

Acetaminophenand Codeine Phosphate

The Company received approval from the FDA of an ANDA for a generic version of Tylenol® with Codeine (acetaminophen and codeine phosphate). Acetaminophen with codeine is a combination medication indicated for the management of mild to moderate pain, where treatment with an opioid is appropriate and for which alternative treatments are inadequate. The Company is not pursuing licensing deals for any opioids at this time and, in light of the current market and litigation around opioid products, the Company is evaluation the feasibility of continuing development or the pursuit of any opioid products.

3

CriticalAccounting Policies and Estimates

The preparation of the unaudited condensed consolidated financial statements and related disclosures in conformity with GAAP, and our discussion and analysis of its financial condition and operating results require our management to make judgments, assumptions and estimates that affect the amounts reported in its unaudited condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and such differences may be material.

There were no significant changes during the six months ended September 30, 2020 to the items that we disclosed as our significant accounting policies and estimates described in “Note 1, Summary of Significant Accounting Policies” to the Company’s financial statements as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

Resultsof Operations

The following set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results.

Threemonths ended September 30, 2020 compared to September 30, 2019

Revenue,Cost of revenue and Gross profit:

	For<br> the Three Months Ended<br><br> September 30,						Change
	2020			2019			Dollars		Percentage
Manufacturing<br> fees	$	6,172,724		$	4,169,346		$	2,003,378		48	%
Licensing<br> fees		1,227,168			465,641			761,527		164	%
Total<br> revenue		7,399,892			4,634,987			2,764,905		60	%
Cost<br> of revenue		3,778,496			3,306,256			472,240		14	%
Gross<br> profit	$	3,621,396		$	1,328,731		$	2,292,665		173	%
Gross<br> profit - percentage		49	%		29	%

4

Total revenues for three months ended September 30, 2020 increased by $2.8 million or 60%, to $7.4 million, as compared to $4.6 million for the corresponding period in 2019, primarily due to revenues earned from Amphetamine ER Capsules, which were launched during the current fiscal year, and increased sales of Amphetamine IR Tablets during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019.

Manufacturing fees increased by $2.0 million, or 48%, primarily due to revenues earned from Amphetamine ER Capsules, which were launched during the current fiscal year, and increased sales of Amphetamine IR Tablets during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019.

Licensing fees increased by $0.8 million, or 164%. This increase is primarily due to licensing fees earned from Amphetamine ER Capsules which were launched during the current fiscal year, and increased licensing fees earned from the sale of Amphetamine IR Tablets, Naltrexone and Phentermine during the three months ended September 30, 2020 as compared to the comparable period of the prior fiscal year.

Costs of revenue consists of manufacturing and assembly costs. Our costs of revenue increased by $0.5 million or 14%, to $3.8 million as compared to $3.3 million for the corresponding period in 2019. This increase was due in large part to the increased manufacturing activities and related manufacturing revenues during the three months ended September 30, 2020, as compared to the comparable period of the prior fiscal year, and also due to there being a strong positive correlation of costs of revenue to manufacturing revenues.

Our gross profit margin was 49% during the three months ended September 30, 2020 as compared to 29% during the three months ended September 30, 2019. The increase in gross margin is due to increased manufacturing efficiencies of scale being achieved in relation to increased manufacturing volumes resulting in decreased unit overhead absorption rates, as compared to the comparable period of the prior year, combined with timing of in market sales by our marketing partner of the Amphetamine IR and Dantrolene products resulting in a higher level of related licensing fees during the three months ended September 30, 2020, as compared to the comparable period of the prior fiscal year. Please note that there is a strong positive correlation of licensing fees to in market sales of our products by our marketing partners.

Operatingexpenses:

	For<br> the Three Months Ended <br><br> September 30,				Change
	2020		2019		Dollars			Percentage
Operating<br> expenses:
Research<br> and development	$	1,147,739	$	637,489	$	510,250			80	%
General<br> and administrative		796,966		798,572		(1,606	)		-0.2	%
Non-cash<br> compensation		2,089		15,522		(13,433	)		-87	%
Depreciation<br> and amortization		334,345		331,680		2,665			1	%
Total<br> operating expenses	$	2,281,139	$	1,783,263	$	497,876			28	%

Operating expenses consist of research and development costs, general and administrative, non-cash compensation and depreciation and amortization expenses. Operating expenses for the three months ended September 30, 2020 increased by $0.5 million or 28% to $2.3 million, as compared to $1.8 million for the corresponding period in 2019.

Research and development costs for the three months ended September 30, 2020 were $1.1 million, an increase of $0.5 million, or 80%, from $0.6 million of such costs for the comparable period of the prior year. The increase was a result of the timing and nature of product development activities during the three months ended September 30, 2020 as compared to the comparable period of the prior year.

General and administrative expenses for the three months ended September 30, 2020 were $0.80 million, and remained relatively unchanged from $0.80 million of such costs for the comparable period of the prior year due in large part to increased utilization rates of our manufacturing facility as compared with the comparable period of the prior year, and ongoing cost reduction and control initiatives.

Non-cash compensation expense for the three months ended September 30, 2020 and 2019 was less than $0.1 million.

Depreciation and amortization expenses for the three months ended September 30, 2020 were $0.3 million, and remained relatively unchanged from $0.3 million of such costs for the comparable period of the prior year.

As a result of the foregoing, our income from operations for the three months ended September 30, 2020 was $1.3 million, compared to a loss from operations of $0.1 million for the three months ended September 30, 2019

5

Otherincome (expense):

	For<br> the Three Months Ended <br><br> September 30,						Change
	2020			2019			Dollars			Percentage
Other<br> income (expense):
Interest<br> expense and amortization of debt issuance costs	$	(79,753	)	$	(91,465	)	$	11,712			-13	%
Gain<br> on sale of fixed assets		3,400			—			3,400			n/a
Change<br> in fair value of derivative instruments		1,220,069			(1,053,031	)		2,273,100			-216	%
Interest<br> income		89			5,287			(5,198	)		-98	%
Other<br> income (expense), net	$	1,143,805		$	(1,139,209	)	$	2,283,014			-200	%

Other income, net for the three months ended September 30, 2020 was $1.1 million, an increase in other income, net of $2.3 million from other expense, net of $1.1 million for the comparable period of the prior year. The increase in other income (expense), net was due to income relating to changes in the fair value of our outstanding derivative warrants during the three months ended September 30, 2020. Please note that the change in the fair value of derivative instruments is determined in large part by the change in the closing price of the Company’s Common Stock as of the end of the period, as compared to the closing price at the beginning of the period, with a strong inverse relationship between the fair value of our derivatives instruments and decreases in the closing price of the Company’s Common Stock.

As a result of the foregoing, our net income for the three months ended September 30, 2020 was $2.5 million, compared to a net loss of $1.6 million for the comparable period of the prior year.

Sixmonths ended September 30, 2020 compared to September 30, 2019

Revenue,Cost of revenue and Gross profit:

	For<br> the Six Months Ended <br><br> September 30,						Change
	2020			2019			Dollars		Percentage
Manufacturing<br> fees	$	12,809,963		$	7,096,704		$	5,713,259		81	%
Licensing<br> fees		2,128,673			897,523			1,231,150		137	%
Total<br> revenue		14,938,636			7,994,227			6,944,409		87	%
Cost<br> of revenue		8,340,846			5,366,542			2,974,304		55	%
Gross<br> profit	$	6,597,790		$	2,627,685		$	3,970,105		151	%
Gross<br> profit - percentage		44	%		33	%

Total revenues for the six-month period ended September 30, 2020 increased by $6.9 million or 87%, to $14.9 million, as compared to $8.0 million, for the corresponding period in 2019 primarily due to revenues earned from Amphetamine ER Capsules, which were launched during the current fiscal year, and increased sales of Amphetamine IR Tablets during the six month period ended September 30, 2020 as compared to the comparable period of the prior fiscal year.

Manufacturing fees increased by $5.7 million, or 81%, primarily due to revenues earned from Amphetamine ER Capsules, which were launched during the current fiscal year, and increased sales of Amphetamine IR Tablets during the six month period ended September 30, 2020 as compared to the comparable period of the prior fiscal year.

Licensing fees increased by $1.2 million, or 137%. This increase is primarily due to licensing fees earned from Amphetamine ER Capsules which were launched during the current fiscal year, and increased licensing fees earned from the sale of Amphetamine IR Tablets, Naltrexone and Phentermine during the six months ended September 30, 2020 as compared to the comparable period of the prior fiscal year.

Costs of revenue consists of manufacturing and assembly costs. Our costs of revenue increased by $3.0 million or 55%, to $8.3 million as compared to $5.4 million for the corresponding period in the prior fiscal year. This increase was due in large part in large part to the increased manufacturing activities and related manufacturing revenues during the six months ended September 30, 2020, as compared to the comparable period of the prior fiscal year, and also due to there being a strong positive correlation of costs of revenue to manufacturing revenues.

Our gross profit margin was 44% during the six months ended September 30, 2020 as compared to 33% during the comparable period of the prior fiscal year.

6

Operatingexpenses:

	For<br> the Six Months Ended <br><br> September 30,				Change
	2020		2019		Dollars			Percentage
Operating<br> expenses:
Research<br> and development	$	2,091,618	$	2,045,525	$	46,093			2	%
General<br> and administrative		1,665,743		1,480,048		185,695			13	%
Non-cash<br> compensation		7,610		41,716		(34,106	)		-82	%
Depreciation<br> and amortization		661,962		662,633		(671	)		0	%
Total<br> operating expenses	$	4,426,933	$	4,229,922	$	197,011			5	%

Operating expenses consist of research and development costs, general and administrative, non-cash compensation and depreciation and amortization expenses. Operating expenses for the six months ended September 30, 2020 increased by $0.2 million, or 5%, to $4.4 million as compared to $4.2 million for the corresponding period in the prior fiscal year.

Research and development costs for the six months ended September 30, 2020 were $2.1 million, an increase of $0.1 million, or 2%, from approximately $2.0 million of such costs for the comparable period of the prior year. The increase was a result of the timing and nature of product development activities during the six month period ended September 30, 2020 as compared to the comparable period of the prior fiscal year.

General and administrative expenses for the six months ended September 30, 2020 were $1.7 million, an increase of $0.2 million, or 13% from $1.5 million of such costs for the comparable period of the prior year with such increase being attributed in large part to increased costs and headcounts relating to regulatory compliance and laboratory activities, offset by increased facility utilization rates and ongoing cost reduction initiatives.

Non-cash compensation expense for the six months ended September 30, 2020 and 2019 was less than $0.1 million.

Depreciation and amortization expenses for the six months ended September 30, 2020 were $0.7 million, which was virtually unchanged from $0.7 million in such costs for the comparable period of the prior fiscal year.

As a result of the foregoing, our income from operations for the six months ended September 30, 2020 was $2.2 million, compared to a loss from operations of $1.6 million for the comparable period of the prior fiscal year.

Otherincome (expense):

	For<br> the Six Months Ended <br><br> September 30,						Change
	2020			2019			Dollars			Percentage
Other<br> income (expense):
Interest<br> expense and amortization of debt issuance costs	$	(159,184	)	$	(189,135	)	$	29,951			-16	%
Gain<br> on sale of fixed assets		41,490			—			41,490			n/a
Change<br> in fair value of derivative instruments		561,476			469,000			92,476			20	%
Interest<br> income		365			8,333			(7,968	)		-96	%
Other<br> income, net	$	444,147		$	288,198		$	155,949			54	%

Other income, net for the six months ended September 30, 2020 was $0.4 million, an increase of $0.2 million from the other income, net of $0.3 million for the comparable period of the prior fiscal year. The increase in other income (expense) was due to income relating to changes in the fair value of our outstanding derivative warrants during the six months ended September 30, 2020. Please note that the change in the fair value of derivative instruments is determined in large part by the change in the closing price of the Company’s Common Stock as of the end of the period, as compared to the closing price at the beginning of the period, with a strong inverse relationship between the fair value of our derivatives instruments and decreases in the closing price of the Company’s Common Stock. Please see Note 10 to the Unaudited Condensed Consolidated Financial Statements above.

As a result of the foregoing, our net income before the net benefit from sale of net operating loss credits for the six months ended September 30, 2020 was $3.6 million, compared to net loss $1.3 million for the comparable period of the prior fiscal year.

7

Liquidityand Capital Resources

CapitalResources

	September<br> 30, <br><br> 2020		March<br> 31, <br><br> 2020		Change
Current<br> assets	$	13,275,091	$	10,251,279	$	3,023,812
Current<br> liabilities	$	7,010,803	$	8,639,548	$	(1,628,745	)
Working<br> capital	$	6,264,288	$	1,611,731	$	4,652,557

Our working capital (total current assets less total current liabilities) increased by $4.7 million from $1.6 million as of March 31, 2020 to $6.3 million as of September 30, 2020, with such increase being primarily related to the net income of $3.6 million and a net positive cash flow of $3.2 million achieved during the six months ended September 30, 2020.

Summaryof Cash Flows:

	For<br> the Six Months Ended <br><br> September 30,
	2020			2019
Net<br> cash provided by (used in) operating activities	$	2,707,942		$	(275,525	)
Net<br> cash used in investing activities	$	(40,173	)	$	(3,148	)
Net<br> cash provided by financing activities	$	566,362		$	260,766

Net cash provided by operating activities for the six months ended September 30, 2020 was $2.7 million, which included net income of $3.6 million and increases in non-cash expenses totaling $0.6 million, offset by net increases in assets and decreases in liabilities totaling $1.5 million.

Net cash used in investing activities for the six months ended September 30, 2020 was comprised of purchases of purchases of property and equipment of $0.1 million offset by proceeds from the sale of property and equipment of $0.1 million.

Net cash provided by financing activities was $0.6 million for the six months ended September 30, 2020 which consisted primarily of proceeds from the payroll protection program loan offset by loan payments.

8

LincolnPark Capital – July 8, 2020 Purchase Agreement

On 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.

During the six months ended September 30, 2020 the Company issued an aggregate of 5,975,857 shares of Common Stock in the amount of $469,105 to Lincoln Park as initial commitment shares. The Company sold 640,543 shares of its Common Stock pursuant to the 2020 LPC Purchase Agreement during the six months ended September 30, 2020 for net proceeds totaling $42,223. In addition, 10,094 shares were issued to Lincoln Park as additional commitment shares, pursuant to the 2020 LPC Agreement.

ITEM3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM4. CONTROLS AND PROCEDURES

Evaluationof Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Given the inherent limitations in all systems of controls, no evaluation of controls can provide absolute assurance all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgements in decision making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions over time, controls may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Accordingly, given the inherent limitations in a cost-effective system of internal control, financial statement misstatements due to error or fraud may occur and may not be detected. We conduct periodic evaluations of our systems of controls to enhance, where necessary.

Management’sReport on Internal Control Over Financial Reporting

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by the Quarterly Report on Form 10-Q, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control (“COSO”). Based on that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2020, at the reasonable assurance level, to ensure that information required to be disclosed by our Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures.

Changes in InternalControls

There were no changes, subsequent to those identified in our Annual Report on Form 10-K for the fiscal year ended March 31, 2020 filed with the SEC on June 29, 2020, in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the end of the period covered by this Quarterly Report.

9

PARTII - OTHER INFORMATION

ITEM1. LEGAL PROCEEDINGS

PendingLitigation

We may be subject from time to time to various claims and legal actions arising during the ordinary course of our business. We believe that there are currently no claims or legal actions that would reasonable be expected to have a material adverse effect on our results of operations, financial condition or cash flows.

ITEM1A. RISK FACTORS

There have been no material changes in the risk factors described in our Annual Report on Form 10-K for the year ended March 31, 2020.

ITEM2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM5. OTHER INFORMATION

None.

10

ITEM6. EXHIBITS

Exhibit No.	Description
10.1	Purchase Agreement, dated July 8, 2020, by and between the Company and Lincoln Park Capital Fund, LLC, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated July 8, 2020 and filed with the SEC on July 9, 2020
10.2	Registration Rights Agreement, dated July 8, 2020, by and between the Company and Lincoln Park Capital Fund, LLC, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, dated July 8, 2020 and filed with the SEC on July 9, 2020.
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a)*
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a)*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Schema<br> Document
101.CAL	XBRL<br> Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL<br> Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL<br> Taxonomy Extension Label Linkbase Document
101.PRE	XBRL<br> Taxonomy Extension Presentation Linkbase Document
*	Filed<br> herewith.
---	---
**	Furnished<br> herewith
---	---

11

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ELITE PHARMACEUTICALS, INC.
November 16, 2020	By:	/s/<br> Nasrat Hakim
		Nasrat Hakim<br><br> Chief Executive Officer,<br><br> President and Chairman of the Board of Directors<br><br> (Principal Executive Officer)
November 16, 2020	By:	/s/<br> Carter J. Ward
		Carter J. Ward<br><br> Chief Financial Officer, Treasurer and Secretary<br><br> (Principal Financial and Accounting Officer)

12

Exhibit 31.1

CERTIFICATION BY PRINCIPAL EXECUTIVEOFFICER

I, Nasrat Hakim, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 of<br>Elite Pharmaceuticals, Inc. (the “Registrant”)
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or<br>omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements<br>were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this<br>report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant<br>as of, and for, the periods presented in this report;
---	---
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining<br>disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial<br>reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
---	---
a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures<br>to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated<br>subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being<br>prepared;
---	---
b.	Designed such internal control over financial reporting, or caused such internal control over financial<br>reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting<br>and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
c.	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented<br>in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered<br>by this report based on such evaluation; and
---	---
d.	Disclosed in this report any change in the Registrant’s internal control over financial reporting<br>that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case<br>of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal<br>control over financial reporting.
---	---
5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent<br>evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s<br>board of directors (or persons performing the equivalent functions):
---	---
a.	All significant deficiencies and material weaknesses in the design or operation of internal control<br>over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize<br>and report financial information; and
---	---
b.	Any fraud, whether or not material, that involves management or other employees who have a significant<br>role in the Registrant’s internal control over financial reporting.
---	---
Date: November 16, 2020	/s/ Nasrat Hakim
---	---
	Nasrat Hakim<br><br> <br>Chief Executive Officer, <br><br>President and Chairman of<br>the Board of Directors<br><br> <br>(Principal Executive Officer)

Exhibit31.2

CERTIFICATION BY PRINCIPAL FINANCIALOFFICER

I, Carter J. Ward certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 of<br>Elite Pharmaceuticals, Inc. (the “Registrant”)
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or<br>omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements<br>were made, not misleading with respect to the periods covered by this report;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this<br>report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant<br>as of, and for, the periods presented in this report;
---	---
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining<br>disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial<br>reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have :
---	---
a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures<br>to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated<br>subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being<br>prepared;
---	---
b.	Designed such internal control over financial reporting, or caused such internal control over financial<br>reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting<br>and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
c.	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented<br>in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered<br>by this report based on such evaluation; and
---	---
d.	Disclosed in this report any change in the Registrant’s internal control over financial reporting<br>that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case<br>of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal<br>control over financial reporting.
---	---
5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent<br>evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s<br>board of directors (or persons performing the equivalent functions):
---	---
a.	All significant deficiencies and material weaknesses in the design or operation of internal control<br>over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize<br>and report financial information; and
---	---
b.	Any fraud, whether or not material, that involves management or other employees who have a significant<br>role in the Registrant’s internal control over financial reporting.
---	---
Date: November 16, 2020	/s/ Carter J. Ward
---	---
	Carter J. Ward<br><br> <br>Chief Financial Officer, Treasurer and Secretary<br><br> <br>(Principal Accounting and Financial<br>Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Elite Pharmaceuticals, Inc. (the “Registrant”) on Form 10-Q for the quarter ended September 30, 2020 filed with the Securities and Exchange Commission (the “Report”), I, Nasrat Hakim, Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

Information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: November 16, 2020	/s/ Nasrat Hakim
	Nasrat Hakim<br><br> <br>Chief Executive Officer, <br><br>President and Chairman of<br>the Board of Directors<br><br> <br>(Principal Executive Officer)

This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

A signed original of this written statement required by Section 906 has been provided to Elite Pharmaceuticals, Inc. and will be retained by Elite Pharmaceuticals Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Elite Pharmaceuticals, Inc. (the “Registrant”) on Form 10-Q for the quarter ended September 30, 2020 filed with the Securities and Exchange Commission (the “Report”), I, Carter J Ward, Chief Financial Officer and Treasurer of the Registrant, certify, pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

Information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: November 16, 2020	/s/ Carter J. Ward
	Carter J. Ward<br><br> <br>Chief Financial Officer, Treasurer and Secretary<br><br> <br>(Principal Accounting and Financial<br>Officer)

This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

A signed original of this written statement required by Section 906 has been provided to Elite Pharmaceuticals, Inc. and will be retained by Elite Pharmaceuticals Inc. and furnished to the Securities and Exchange Commission or its staff upon request.