{"url_path":"/sec/eltp/10-k/2026/item-16","section_key":"item-16","section_title":"Item 16 FORM 10-K SUMMARY**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-29","source_url":"https://www.sec.gov/Archives/edgar/data/1053369/0001493152-26-031070-index.html","accession_number":"0001493152-26-031070","cik":"0001053369","ticker":"ELTP","issuer_name":"ELITE PHARMACEUTICALS INC /NV/","edgar_url":"https://www.sec.gov/Archives/edgar/data/1053369/0001493152-26-031070-index.html","primary_entity_key":"0001053369","primary_entity_name":"ELITE PHARMACEUTICALS INC /NV/"},"word_count":13590,"has_tables":true,"body_markdown":"**ITEM\n16. FORM 10-K SUMMARY**\n\n** **\n\nNone.\n\n \n\n67\n\n \n\n \n\n**SIGNATURES**\n\n \n\nPursuant\nto the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by\nthe undersigned, thereunto duly authorized.\n\n \n\n \n**ELITE\nPHARMACEUTICALS, INC.**\n\n \n \n \n\n6/29/2026\nBy:\n*/s/\nNasrat Hakim*\n\n \n \n\nNasrat\nHakim\n\nChief\nExecutive Officer, President and Chairman of the Board of Directors\n\n(Principal\nExecutive Officer)\n\n \n \n \n\n6/29/2026\nBy:\n*/s/\nCarter Ward*\n\n \n \n\nCarter\nWard\n\nChief\nFinancial Officer\n\n(Principal\nAccounting Officer and Principal Financial Officer)\n\n \n\nPursuant\nto the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant\nand in the capacities and on the dates indicated.\n\n \n\n**Signature**\n** **\n**Title**\n** **\n**Date**\n\n \n \n \n \n \n\n*/s/\nNasrat Hakim*\n \nChief\nExecutive Officer, President and Chairman of the Board of Directors\n \nJune\n29, 2026\n\nNasrat\nHakim\n \n(Principal\nExecutive Officer)\n \n \n\n \n \n \n \n \n\n*/s/\nCarter Ward*\n \nChief\nFinancial Officer\n \nJune\n29, 2026\n\nCarter\nWard\n \n(Principal\nAccounting Officer and Principal Financial Officer)\n \n \n\n \n \n \n \n \n\n*/s/\nBarry Dash*\n \nDirector\n \nJune\n29, 2026\n\nBarry\nDash\n \n \n \n \n\n \n \n \n \n \n\n*/s/\nJeffrey Whitnell*\n \nDirector\n \nJune\n29, 2026\n\nJeffrey\nWhitnell\n \n \n \n \n\n \n \n \n \n \n\n*/s/\nDavis Caskey*\n \nDirector\n \nJune\n29, 2026\n\nDavis\nCaskey\n \n \n \n \n\n \n\n68\n\n \n\n** **\n\n**ELITE\nPHARMACEUTICALS, INC. AND SUBSIDIARIES**\n\n** **\n\n**CONSOLIDATED\nFINANCIAL STATEMENTS**\n\n** **\n\n**FOR\nTHE YEARS ENDED MARCH 31, 2026 AND 2025**\n\n** **\n\n**TABLE\nOF CONTENTS**\n\n \n\n \n**PAGE**\n\n[REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM](#fx_001) (Forvis Mazars, LLP, Iselin, NJ #686)\nF-1\n\n \n \n\n[CONSOLIDATED BALANCE SHEETS](#fx_002)\nF-2\n\n \n \n\n[CONSOLIDATED STATEMENTS OF OPERATIONS](#fx_003)\nF-3\n\n \n \n\n[CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY](#fx_004)\nF-4\n\n \n \n\n[CONSOLIDATED STATEMENTS OF CASH FLOWS](#fx_005)\nF-5\n\n \n \n\n[NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](#fx_006)\nF-6\n\n \n\n69\n\n \n\n** **\n\n**Report\nof Independent Registered Public Accounting Firm**\n\n** **\n\nTo\nthe Shareholders, Board of Directors, and Audit Committee\n\n \n\nElite\nPharmaceuticals, Inc.\n\n \n\nOpinion\non the Consolidated Financial Statements\n\n \n\nWe\nhave audited the accompanying consolidated balance sheets of Elite Pharmaceuticals, Inc. (the “Company”) as of March 31,\n2026 and 2025, the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the\nyears in the two-year period ended March 31, 2026, and the related notes (collectively referred to as the “financial\nstatements”). In our opinion, the financial statements referred to above present fairly, in all material\nrespects, the financial position of the Company as of March 31, 2026 and 2025, and the results of its operations and its cash flows\nfor each of the years in the two-year period ended March 31, 2026, in conformity with accounting principles generally accepted in\nthe United States of America.\n\n \n\nBasis\nfor Opinion\n\n \n\nThese\nfinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s\nfinancial statements based on our audits.\n\n \n\nWe\nare a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and\nare required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules\nand regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe\nconducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain\nreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company\nis not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,\nwe are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion\non the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur\naudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error\nor fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding\nthe amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant\nestimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits\nprovides a reasonable basis for our opinion.\n\n \n\nCritical\nAudit Matter\n\n \n\nThe\ncritical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated\nor required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial\nstatements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter\ndoes not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit\nmatter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.\n\n \n\nChargeback\nReserve\n\n \n\nAs\ndescribed in Note 1 to the financial statements, the Company recognizes revenue from the sale of generic pharmaceutical products under\nthe Elite label at their net realizable value, which includes reductions for variable consideration such as chargebacks. A chargeback\nrepresents the difference between the price the wholesaler pays and the price that the wholesaler’s end-customer pays for a product.\nThe Company provides for chargebacks to wholesalers for sales to various end-customers, including hospitals, group purchasing organizations,\ninstitutions, and pharmacies. The Company’s estimate for chargebacks is developed based on management’s assumptions regarding\nanticipated product returns, other rebates, and historical information.\n\n \n\nWe\nidentified the chargeback reserve as a critical audit matter due to the subjectivity involved in management’s assumptions used\nto estimate the reserve, including the reliance on historical chargeback data and the variability in the wholesaler’s end-customer\npricing arrangements. These factors required a high degree of auditor judgment in evaluating the reasonableness of the estimate.\n\n \n\nThe\nprimary procedures we performed to address this critical audit matter included:\n\n \n\n●Obtaining\nan understanding of management’s process for developing the chargeback reserve, including\nthe methods and assumptions used;\n\n   \n\n●Testing\nthe completeness and accuracy of the underlying data used in the estimate, including historical\nchargeback activity and customer arrangements;\n\n   \n\n●Developing\nan independent expectation of the chargeback reserve using relevant historical chargeback\ndata to assess the reasonableness of management’s estimate;\n\n   \n\n●Assessed\nthe relevance and reliability of the data from external sources utilized in determination\nof the independent expectation of the chargeback reserve.\n\n \n\n/s/\nForvis Mazars, LLP\n\n \n\nWe\nhave served as the Company’s auditor since 2024.\n\n \n\nIselin,\nNew Jersey\n\nJune\n29, 2026\n\n****\n\n \n\nF-1\n\n \n\n \n\n**ELITE\nPHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**CONSOLIDATED\nBALANCE SHEETS**\n\n** **\n\n  \nMarch 31, 2026  \nMarch 31, 2025 \n\nASSETS \n    \n   \n\nCurrent assets: \n    \n   \n\nCash \n$29,797,800  \n$11,315,385 \n\nAccounts receivable, net of allowance for expected credit losses of $1,441,523 and $387,533 respectively \n 59,715,676  \n 29,207,028 \n\nInventory \n 21,259,898  \n 16,240,376 \n\nPrepaid expenses and other current assets \n 1,333,177  \n 976,358 \n\nTotal current assets \n 112,106,551  \n 57,739,147 \n\n  \n    \n   \n\nProperty and equipment, net of accumulated depreciation of $18,100,243 and $17,028,700 respectively \n 10,181,328  \n 10,327,245 \n\nIntangible assets \n 4,790,790  \n 5,637,802 \n\nFinance lease - right-of-use asset, net of accumulated amortization of $984,801 and $508,470, respectively \n 1,295,163  \n 1,771,494 \n\nOperating lease - right-of-use asset \n 1,529,468  \n 2,000,284 \n\nDeferred income tax asset \n 7,823,039  \n 18,365,748 \n\nOther assets: \n    \n   \n\nRestricted cash - debt service for NJEDA bonds \n 471,520  \n 453,776 \n\nSecurity deposits \n 91,981  \n 91,981 \n\nTotal other assets \n 563,501  \n 545,757 \n\nTotal assets \n$138,289,840  \n$96,387,477 \n\n  \n    \n   \n\nLIABILITIES AND SHAREHOLDERS’ EQUITY \n    \n   \n\nCurrent liabilities: \n    \n   \n\nAccounts payable \n$6,053,444  \n$2,957,584 \n\nAccrued expenses \n 10,194,222  \n 3,795,227 \n\nDeferred revenue \n —  \n 5,556 \n\nBonds payable, current portion, net of bond issuance costs \n 135,822  \n 125,822 \n\nLoans payable, current portion \n 92,774  \n 120,744 \n\nRelated party loans payable (Note 8) \n —  \n 4,000,000 \n\nLease obligation - finance lease, current portion \n 378,775  \n 363,112 \n\nLease obligation - operating lease, current portion \n 536,427  \n 472,390 \n\nTotal current liabilities \n 17,391,464  \n 11,840,435 \n\n  \n    \n   \n\nLong-term liabilities: \n    \n   \n\nBonds payable, net of current portion and bond issuance costs \n 651,559  \n 787,381 \n\nLoans payable, net of current portion and loan costs \n 2,152,969  \n 2,245,743 \n\nLease obligation - finance lease, net of current portion \n 851,640  \n 1,247,621 \n\nLease obligation - operating lease, net of current portion \n 1,015,647  \n 1,552,075 \n\nDerivative financial instruments - warrants \n 17,343,586  \n 25,199,193 \n\nTotal long-term liabilities \n 22,015,401  \n 31,032,013 \n\nTotal liabilities \n 39,406,865  \n 42,872,448 \n\n  \n    \n   \n\nCommitments and Contingencies (Note 9) \n -  \n - \n\n  \n    \n   \n\nShareholders’ equity: \n    \n   \n\nCommon Stock; par value $0.001; 1,445,000,000 shares authorized; 1,077,196,442 and 1,068,463,108 shares issued as of March 31, 2026 and March 31, 2025, respectively; 1,077,096,442 and 1,068,363,108 shares outstanding as of March 31, 2026 and March 31, 2025, respectively \n 1,077,200  \n 1,068,467 \n\nAdditional paid-in capital \n 173,943,856  \n 173,457,329 \n\nTreasury stock; 100,000 shares as of both March 31, 2026 and March 31, 2025, at cost \n (306,841) \n (306,841)\n\nAccumulated deficit \n (75,831,240) \n (120,703,926)\n\n**Total\nshareholders’ equity** \n 98,882,975  \n 53,515,029 \n\nTotal liabilities and shareholders’ equity \n$138,289,840  \n$96,387,477 \n\n \n\n**The\naccompanying notes are an integral part of these consolidated financial statements.**\n\n \n\nF-2\n\n \n\n \n\n**ELITE\nPHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**CONSOLIDATED\nSTATEMENTS OF OPERATIONS**\n\n \n\n  \n2026  \n2025 \n\n  \nFor the Years Ended March 31, \n\n  \n2026  \n2025 \n\nRevenue: \n    \n   \n\nManufacturing fees \n$147,810,122  \n$81,986,079 \n\nLicensing fees \n 1,059,997  \n 2,057,850 \n\nTotal revenue \n 148,870,119  \n 84,043,929 \n\nCost of manufacturing \n 73,845,784  \n 43,957,274 \n\nGross profit \n 75,024,335  \n 40,086,655 \n\n  \n    \n   \n\nOperating expenses: \n    \n   \n\nResearch and development \n 5,742,955  \n 7,964,837 \n\nGeneral and administrative \n 17,596,803  \n 9,001,930 \n\nNon-cash compensation through issuance of stock options \n 176,507  \n 227,565 \n\nImpairment of intangible assets \n 847,012  \n 1,603,426 \n\nDepreciation and amortization \n 1,547,874  \n 1,688,429 \n\nTotal operating expenses \n 25,911,151  \n 20,486,187 \n\n  \n    \n   \n\nIncome from operations \n 49,113,184  \n 19,600,468 \n\n  \n    \n   \n\nOther income (expense): \n    \n   \n\nChange in fair value of derivative financial instruments - warrants \n 7,855,607  \n (18,901,185)\n\nInterest expense and amortization of debt issuance costs \n (396,664) \n (772,367)\n\nInterest income \n 207,857  \n 20,944 \n\nOther income \n 34,500  \n — \n\nOther income (expense), net \n 7,701,300  \n (19,652,608)\n\n  \n    \n   \n\nIncome (loss) before income taxes \n 56,814,484  \n (52,140)\n\n  \n    \n   \n\nIncome tax expense \n (11,941,798) \n (4,262,519)\n\n  \n    \n   \n\nNet income (loss) \n$44,872,686  \n$(4,314,659)\n\n  \n    \n   \n\nBasic net income (loss) per share \n$0.04  \n$(0.00)\n\nDiluted net income (loss) per share \n$0.03  \n$(0.00)\n\n  \n    \n   \n\nBasic weighted average common stock outstanding \n 1,072,837,856  \n 1,068,290,368 \n\nDiluted weighted average common stock outstanding \n 1,138,368,235  \n 1,068,290,368 \n\n** **\n\n**The accompanying notes are an integral part of\nthese consolidated financial statements.**\n\n** **\n\nF-3\n\n \n\n** **\n\n**ELITE\nPHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**CONSOLIDATED\nSTATEMENTS OF SHAREHOLDERS’ EQUITY**\n\n \n\n  \nShares  \nAmount  \nShares  \nAmount  \nCapital  \nShares  \nAmount  \nDeficit  \nEquity \n\n** **** **\n**Series J Preferred Stock**** **** **\n**Common Stock**** **** **\n**Additional Paid-In**** **** **\n**Treasury Stock**** **** **\n**Accumulated**** **** **\n\n**Total**\n\n**Shareholders’**\n** **\n\n  \nShares  \nAmount  \nShares  \nAmount  \nCapital  \nShares  \nAmount  \nDeficit  \nEquity \n\nBalance as of March 31, 2024 \n —  \n$—  \n 1,068,373,108  \n$1,068,377  \n$173,210,549  \n 100,000  \n$(306,841) \n$(116,389,267) \n$57,582,818 \n\nNet loss \n —  \n —  \n —  \n —  \n —  \n —  \n —  \n (4,314,659) \n (4,314,659)\n\nNon-cash compensation through the issuance of employee stock options \n —  \n —  \n —  \n —  \n 227,565  \n —  \n —  \n —  \n 227,565 \n\nShares issued in payment of consultants \n —  \n —  \n 90,000  \n 90  \n 19,215  \n —  \n —  \n —  \n 19,305 \n\nBalance as of March 31, 2025 \n —  \n$—  \n 1,068,463,108  \n$1,068,467  \n$173,457,329  \n 100,000  \n$(306,841) \n$(120,703,926) \n$53,515,029 \n\nBalance \n —  \n$—  \n 1,068,463,108  \n$1,068,467  \n$173,457,329  \n 100,000  \n$(306,841) \n$(120,703,926) \n$53,515,029 \n\nNet income \n —  \n —  \n —  \n —  \n —  \n —  \n —  \n 44,872,686  \n 44,872,686 \n\nNet income (loss) \n —  \n —  \n —  \n —  \n —  \n —  \n —  \n 44,872,686  \n 44,872,686 \n\nNon-cash compensation through the issuance of employee stock options \n —  \n —  \n —  \n —  \n 176,507  \n —  \n —  \n —  \n 176,507 \n\nShares issued pursuant to exercise of employee stock options \n —  \n —  \n 8,733,334  \n 8,733  \n 310,020  \n —  \n —  \n —  \n 318,753 \n\nBalance as of March 31, 2026 \n —  \n$—  \n 1,077,196,442  \n$1,077,200  \n$173,943,856  \n 100,000  \n$(306,841) \n$(75,831,240) \n$98,882,975 \n\nBalance \n —  \n$—  \n 1,077,196,442  \n$1,077,200  \n$173,943,856  \n 100,000  \n$(306,841) \n$(75,831,240) \n$98,882,975 \n\n \n\n**The accompanying notes\nare an integral part of these consolidated financial statements.**\n\n \n\nF-4\n\n \n\n \n\n**ELITE\nPHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**CONSOLIDATED\nSTATEMENTS OF CASH FLOWS**\n\n \n\n  \n2026  \n2025 \n\n  \nFor the Years Ended March 31, \n\n  \n2026  \n2025 \n\nCASH FLOWS FROM OPERATING ACTIVITIES: \n    \n   \n\nNet income (loss) \n$44,872,686  \n$(4,314,659)\n\nAdjustments to reconcile net income (loss) to net cash provided by operating activities: \n    \n   \n\nDepreciation and amortization \n 1,071,543  \n 1,226,399 \n\nProvision for losses on accounts receivable \n 1,053,990  \n 151,258 \n\nImpairment of intangible assets \n 847,012  \n 1,603,426 \n\nAmortization of operating leases - right-of-use assets \n 470,816  \n 433,914 \n\nAmortization of finance leases - right-of-use assets \n 476,331  \n 462,030 \n\nAmortization of debt discount - bonds offering costs \n 14,178  \n 14,178 \n\nLoss on asset disposal \n —  \n 121,481 \n\nChange in fair value of derivative financial instruments - warrants \n (7,855,607) \n 18,901,185 \n\nDeferred tax expense \n 10,542,709  \n 3,795,147 \n\nNon-cash compensation through the issuance of employee stock options \n 176,507  \n 227,565 \n\nChange in operating assets and liabilities: \n    \n   \n\nAccounts receivable \n (31,562,638) \n (9,904,985)\n\nInventory \n (5,019,522) \n (3,309,912)\n\nPrepaid expenses and other current assets \n (356,819) \n (253,739)\n\nSecurity deposits \n —  \n 2,259 \n\nAccounts payable \n 3,095,860  \n 243,278 \n\nAccrued expenses \n 6,398,995  \n (1,506,520)\n\nDeferred revenue \n (5,556) \n (13,333)\n\nLease obligations - operating leases \n (472,391) \n (423,333)\n\nNet cash provided by operating activities \n 23,748,094  \n 7,455,639 \n\n  \n    \n   \n\nCASH FLOWS FROM INVESTING ACTIVITIES: \n    \n   \n\nPurchase of property and equipment \n (925,626) \n (1,625,082)\n\nPurchase of intangible assets \n —  \n (900,000)\n\nProceeds from disposition of property and equipment \n —  \n 125,250 \n\nNet cash used in investing activities \n (925,626) \n (2,399,832)\n\n  \n    \n   \n\nCASH FLOWS FROM FINANCING ACTIVITIES: \n    \n   \n\nPayment of bond principal \n (140,000) \n (130,000)\n\nPayments of related party loans payable \n (4,000,000) \n — \n\nPayments on principal on finance lease obligations \n (380,318) \n (336,189)\n\nProceeds from exercise of stock options \n 318,753  \n 19,305 \n\nLoan payments \n (120,744) \n (378,856)\n\nNet cash used in financing activities \n (4,322,309) \n (825,740)\n\n  \n    \n   \n\nNet change in cash and restricted cash \n 18,500,159  \n 4,230,067 \n\nCash and restricted cash, beginning of period \n 11,769,161  \n 7,539,094 \n\nCash and restricted cash, end of period \n$30,269,320  \n$11,769,161 \n\n  \n    \n   \n\nSupplemental disclosure of cash and non-cash transactions: \n    \n   \n\nCash paid for interest \n$246,118  \n$672,409 \n\nCash paid for income taxes \n$1,150,785  \n$612,085 \n\nFinance directors and officers insurance premium \n$—  \n$198,457 \n\nRecognition of finance lease right of use asset and lease liabilities entered into \n$—  \n$153,870 \n\nRecognition of operating lease right of use asset and lease liabilities entered into \n$—  \n$78,997 \n\n  \n    \n   \n\nReconciliation of cash and restricted cash \n    \n   \n\nCash \n$29,797,800  \n$11,315,385 \n\nRestricted cash - debt service for NJEDA bonds \n 471,520  \n 453,776 \n\nTotal cash and restricted cash shown in statement of cash flows \n$30,269,320  \n$11,769,161 \n\n \n\n**The accompanying notes\nare an integral part of these consolidated financial statements.**\n\n** **\n\nF-5\n\n \n\n** **\n\n**ELITE\nPHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**NOTE\n1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**\n\n** **\n\n**Overview**\n\n** **\n\nElite\nPharmaceuticals, Inc. (the “Company” or “Elite”) was incorporated on October 1, 1997 under the laws of the State\nof Delaware, and its wholly-owned subsidiary Elite Laboratories, Inc. (“Elite Labs”) was incorporated on August 23, 1990\nunder the laws of the State of Delaware. On January 5, 2012, Elite Pharmaceuticals was reincorporated under the laws of the State of\nNevada. Elite Labs engages primarily in researching, developing, licensing, manufacturing, and sales of generic, oral dose pharmaceuticals.\nThe Company is equipped to manufacture controlled-release products on a contract basis for third parties and itself, if and when the\nproduct candidates are approved. These products include drugs that cover therapeutic areas for allergy, bariatric, attention deficit\nand infection. Research and development activities are performed with an objective of developing product candidates that will secure\nmarketing approvals from the United States Food and Drug Administration (“FDA”), and thereafter, commercially exploiting\nsuch products.\n\n \n\n**Basis\nof Presentation**\n\n** **\n\nThe\naccompanying audited consolidated financial statements have been prepared in accordance with generally accepted accounting principles\nin the United States (“GAAP”) and pursuant to the rules and regulations of the SEC. The audited consolidated financial statements\ninclude the accounts of the Company and its wholly-owned subsidiary, Elite Labs. All significant intercompany accounts and transactions\nhave been eliminated in consolidation. The preparation of financial statements in accordance with GAAP requires management to make certain\nestimates and assumptions affecting amounts reported in the Company’s consolidated financial statements.\n\n \n\n**Use\nof Estimates**\n\n** **\n\nThe\npreparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions.\nThese estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities\nat the date of the consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period.\nSuch management estimates and assumptions include, but are not limited to, chargeback liabilities related to revenue recognition, valuation\nof intangible assets, the useful life of property and equipment and identifiable intangible assets, stock-based compensation expense,\nand income taxes. The Company continuously evaluates its estimates, which are based on the information that is currently available to\nthe Company and on various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from\nthose estimates.\n\n \n\n**Segment\nInformation**\n\n** **\n\nFinancial\nAccounting Standards Board (“FASB”) Accounting Standards Codification 280 (“ASC 280”), *Segment Reporting*,\nestablishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise\nabout which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”),\nor decision-making group, in deciding how to allocate resources and in assessing performance.\n\n \n\nThe\nCompany’s CODM is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments\nprepared in accordance with GAAP when making decisions about allocating resources and assessing performance of the Company.\n\n \n\nThe\nCompany previously determined that its reportable segments were products whose marketing approvals were secured via an Abbreviated New\nDrug Application (“ANDA”) and products whose marketing approvals were secured via a New Drug Application (“NDA”).\nANDA products are referred to as generic pharmaceuticals and NDA products are referred to as branded pharmaceuticals. The Company identifies\nits reporting segments based on the marketing authorization relating to each and the financial information used by its chief operating\ndecision maker to make decisions regarding the allocation of resources to and the financial performance of the reporting segments. The\nCompany has paused further development of NDAs and has not engaged in business activities for several years, and does not intend to engage\nin business activities related to the development of NDAs for the foreseeable future. Therefore, as of March 31, 2026, the Company has\ndetermined that it operates in a 1single operating and reportable segment.\n\n \n\nAsset\ninformation by operating segment is not presented below since the chief operating decision maker does not review this information by\nsegment. The ANDA segment follows the same accounting policies used in the preparation of the Company’s consolidated financial\nstatements. Please see Note 14 for further details.\n\n \n\n**Revenue\nRecognition**\n\n \n\nThe\nCompany generates revenue from manufacturing and licensing fees and direct sales to pharmaceutical distributors for pharmacies and institutions.\nManufacturing fees include the development of pain management products, manufacturing of a line of generic pharmaceutical products with\napproved ANDA, through the manufacture of formulations and the development of new products. Licensing fees include the commercialization\nof products either by license and the collection of royalties, or the expansion of licensing agreements with other pharmaceutical companies,\nincluding co-development projects, joint ventures and other collaborations.\n\n \n\nF-6\n\n \n\n \n\n**ELITE\nPHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nUnder\nASC 606, *Revenue from Contracts with Customers* (“ASC 606”), the Company recognizes revenue when the customer obtains\ncontrol of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for\nthose goods or services. The Company recognizes revenues following the five-step model prescribed under ASC 606: (i) identify contract(s)\nwith a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the\ntransaction price to the performance obligation(s) in the contract; and (v) recognize revenues when (or as) the Company satisfies a performance\nobligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration\nit is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined\nto be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that\nare performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the\namount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is\nsatisfied. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.\n\n \n\n**Nature\nof goods and services**\n\n** **\n\nThe\nfollowing is a description of the Company’s goods and services from which the Company generates revenue, as well as the nature,\ntiming of satisfaction of performance obligations, and significant payment terms for each, as applicable:\n\n \n\na)\nManufacturing Fees\n\n \n\nThe\nCompany is equipped to manufacture controlled-release products on a contract basis for third parties, if, and when, the products are\napproved. These products include products using controlled-release drug technology. The Company also develops and markets (either on\nits own or by license to other companies) generic and proprietary controlled-release pharmaceutical products.\n\n \n\nThe\nCompany recognizes manufacturing fees related to revenue generated from wholesale customers and from direct sale customers. Wholesalers\nrepresent customers that purchase the Company’s products and sell them to end customers such as hospitals, group purchasing organizations,\ninstitutions, and pharmacies. Direct sales customers purchase products directly from the Company.\n\n \n\nThe\nCompany provides for chargebacks to wholesalers for sales to various end-customers to include, but not limited to, hospitals, group purchasing\norganizations, and pharmacies. Chargebacks represent the difference between the price the wholesaler pays and the price that the end-customer\npays for a product. The Company’s estimate for chargebacks is developed based upon management’s assumption of anticipated\nclaims as well as historical information. Chargebacks represent variable consideration within the Company’s contracts and therefore\nas such, revenue recognized is limited to the amount for which a significant reversal of revenue related to this variable consideration\nis not probable.\n\n \n\nThe\nCompany recognizes revenue when the customer obtains control of the Company’s product based on the contractual shipping terms of\nthe contract, at which time the performance obligation is deemed to be completed. The Company is primarily responsible for ensuring that\nthe product is produced in accordance with the related supply agreement, and fulfilling the promise to deliver the product and bearing\nthe risk of loss while the inventory is in-transit to the purchaser or commercial partner. Revenue is measured as the amount of consideration\nthe Company expects to receive from the sale of its products, including Elite-labeled pharmaceutical products, and is recorded at net\nrealizable value which consists of gross amounts invoiced reduced by contractual reductions, including, without limitation, chargebacks,\ndiscounts and program rebates, as applicable.\n\n \n\nb)\nLicense Fees\n\n \n\nThe\nCompany enters into licensing and development agreements, which may include multiple revenue generating activities, including milestones\npayments, licensing fees, product sales and services. The Company analyzes each element of its licensing and development agreements in\naccordance with ASC 606 to determine appropriate revenue recognition. The terms of the license agreement may include payment to the Company\nof licensing fees, non-refundable upfront license fees, milestone payments if specified objectives are achieved, and/or royalties on\nproduct sales.\n\n \n\nIf\nthe contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.\nContracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative\nstandalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone\nselling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable\nthrough past transactions, the Company estimates the standalone selling price taking into account available information such as market\nconditions and internally approved pricing guidelines related to the performance obligations.\n\n \n\nF-7\n\n \n\n \n\n**ELITE\nPHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nThe\nCompany recognizes revenue from non-refundable upfront payments at a point in time, typically upon fulfilling the delivery of the associated\nintellectual property to the customer. For those milestone payments which are contingent on the occurrence of particular future events\n(for example, payments due upon a product receiving FDA approval), the Company determined that these need to be considered for inclusion\nin the calculation of total consideration from the contract as a component of variable consideration using the most-likely amount method.\nAs such, the Company assesses each milestone to determine the probability and substance behind achieving each milestone. Given the inherent\nuncertainty of the occurrence of future events, the Company will recognize revenue from the milestone when there is not a high probability\nof a reversal of revenue, which typically occurs near or upon achievement of the event.\n\n \n\nJudgment\nis required to determine the level of effort required under an arrangement and the period over which the Company expects to complete\nits performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations either\nare completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue\nis then recognized over the remaining estimated period of performance using the cumulative catch-up method.\n\n \n\nWhen\ndetermining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before\nor significantly after performance, resulting in a significant financing component. Applying the practical expedient in ASC 606-10-32-18,\nthe Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations\nunder the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing\ncomponent as of March 31, 2026.\n\n \n\nIn\naccordance with ASC 606-10-55-65, royalties are recognized when the subsequent sale of the customer’s products occurs.\n\n \n\n**Disaggregation\nof revenue**\n\n** **\n\nIn\nthe following table, revenue is disaggregated by type of revenue generated by the Company. The Company recognizes revenue at a point\nin time for all performance obligations. During the fiscal years ended March 31, 2026 and 2025, the Company has paused further development\nof NDAs and has not engaged in business activities in that segment. Accordingly during the fiscal years ended March 31, 2026 and 2025,\nthe Company has only engaged in business activities in a single operating segment.\n\n \n\nSelected\ninformation on reportable segments and the reconciliation of operating income by segment to income from operation and to income (loss)\nbefore income taxes are disclosed within Note 14.\n\n \n\nThe\nCompany disaggregates manufacturing fees revenue by sales channel, consisting of revenues from direct and indirect wholesalers, which\nhave different cash flows and contract economics as margins generated differ between direct and indirect revenues. Additionally, although\nthe underlying arrangements are substantially similar, pricing to direct wholesalers yields higher margins than pricing to indirect wholesalers,\nwhile the timing and uncertainty of cash flows do not differ materially. The following table summarizes manufacturing fees by sales channel\nfor the fiscal years ended March 31, 2026 and 2025:\n\n SCHEDULE OF DISAGGREGATION OF REVENUE\n\n  \n2026  \n2025 \n\n  \nFor the Years Ended March 31, \n\n  \n2026  \n2025 \n\nDirect sales to Wholesalers \n$65,273,763  \n$48,008,986 \n\nIndirect sales to Wholesalers \n 82,536,359  \n 33,977,093 \n\nTotal Manufacturing Fees \n$147,810,122  \n$81,986,079 \n\n \n\nThe\nCompany’s revenue-generating products consist of two categories: (i) products containing an active ingredient listed by the United\nStates Drug Enforcement Agency as a scheduled substance under the Controlled Substances Act of 1970 (“Scheduled Products”)\nand (ii) products not containing such a scheduled active ingredient (“Unscheduled Products”). The following table summarizes\nthe breakdown of revenues by product category for the fiscal years ended March 31, 2026 and 2025:\n\n \n\n  \n2026  \n2025 \n\n  \nFor the Years Ended March 31, \n\n  \n2026  \n2025 \n\nScheduled Products – Manufacturing Fees \n$141,465,975  \n$74,756,506 \n\nScheduled Products – Licensing Fees \n 465,511  \n 248,789 \n\nUnscheduled Products – Manufacturing Fees \n6,344,147  \n 7,229,573 \n\nUnscheduled Products – Licensing Fees \n594,486  \n 1,809,061 \n\nTotal Revenue \n$148,870,119  \n$84,043,929 \n\n** **\n\nF-8\n\n \n\n** **\n\n**ELITE\nPHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Cash**\n\n \n\nCash\nconsists of cash on deposit with banks and money market instruments. The Company places its cash with high-quality, U.S. financial institutions\nand, to date has not experienced losses on any of its balances.\n\n \n\n**Restricted\nCash**\n\n** **\n\nAs\nof March 31, 2026 and 2025, the Company had $471,520 and $453,776, of restricted cash, respectively, related to debt service reserve\nin regard to the New Jersey Economic Development Authority (“NJEDA”) bonds (see Note 6).\n\n \n\n**Accounts\nReceivable and Allowance for Expected Credit Losses**\n\n** **\n\nAccounts\nreceivable are comprised of balances due from customers, net of estimated allowances for expected credit losses, and other contractual\ndeductions, including, without limitation, chargebacks, discounts and program rebates. In determining collectability, historical trends\nare evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances.\n\n \n\nThe\nallowance for expected credit losses is based on the probability of future collection under the current expected credited loss (“CECL”)\nimpairment model under Accounting Standards Update (“ASU”) 2016-13, *Financial Instruments - Credit Losses (Topic 326),\nMeasurement of Credit Losses on Financial Assets*. Under the CECL impairment model, the Company determines its allowance by applying\na loss-rate method based on an aging schedule using the Company’s historical loss rate. The Company also considers reasonable and\nsupportable current information in determining its estimated loss rates, such as external forecasts, macroeconomic trends or other factors\nincluding customers’ credit risk and historical loss experience. The adequacy of the allowance is evaluated on a regular basis.\nAccount balances are written off after all means of collection are exhausted and the balance is deemed uncollectible. Subsequent recoveries\nare credited to the allowance. Changes in the allowance are recorded as adjustments to credit losses in the period incurred.\n\n \n\nThe\nCompany’s quantitative allowance for credit loss estimates under CECL was determined using the loss rate method, which is impacted\nby certain forecasted economic factors. In addition to the Company’s quantitative allowance for credit losses, the Company also\nincorporates qualitative adjustments that may relate to unique risks, changes in current economic conditions that may not be reflected\nin quantitatively derived results, or other relevant factors to further inform the Company’s estimate of the allowance for credit\nlosses.\n\n \n\nAdditionally,\ndue to the expansion of the time horizon over which the Company is required to estimate future credit losses, the Company may experience\nincreased volatility in its future provisions for credit losses. Factors that could contribute to such volatility include, but are not\nlimited to, changes in the composition and credit quality of customer base, economic conditions and forecasts, the allowance for credit\nloss models that are used, the data that is included in the models, the associated qualitative allowance framework, and the Company’s\nestimation techniques.\n\n \n\nDuring\nthe fiscal years ended March 31, 2026 and 2025, the Company incurred bad debt expenses of $1,053,990 and $151,258, respectively. As of\nMarch 31, 2026 and 2025, the Company’s allowance for credit losses was $1,441,523 and $387,533, respectively.\n\n \n\n**Inventory**\n\n** **\n\nInventory\nis recorded at the lower of cost or net realizable value on specific identification by lot number basis.\n\n \n\n**Long-Lived\nAssets**\n\n** **\n\nThe\nCompany periodically evaluates the fair value of long-lived assets, which include property and equipment and intangibles, whenever events\nor changes in circumstances indicate that its carrying amounts may not be recoverable.\n\n \n\nProperty\nand equipment are stated at cost. Depreciation is provided on the straight-line method based on the estimated useful lives of the respective\nassets which range from 3three to forty years. Major repairs or improvements are capitalized. Minor replacements and maintenance and repairs\nwhich do not improve or extend asset lives are expensed currently.\n\n \n\nUpon\nretirement or other disposition of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting\ngain or loss, if any, is recognized in income.\n\n \n\nF-9\n\n \n\n \n\n**ELITE\nPHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**Intangible\nAssets**\n\n** **\n\nThe\nCompany capitalizes certain costs to acquire intangible assets; if such assets are determined to have a finite useful life they are amortized\non a straight-line basis over the estimated useful life. Costs to acquire indefinite lived intangible assets, such as costs related to\nANDAs are capitalized accordingly.\n\n \n\nThe\nCompany tests its intangible assets for impairment at least annually (as of March 31st) and whenever events or circumstances change that\nindicate impairment may have occurred. Judgment is involved in determining if an indicator of impairment has occurred. Such indicators\nmay include, among others and without limitation: a significant decline in the Company’s expected future cash flows; a sustained,\nsignificant decline in the Company’s stock price and market capitalization; a significant adverse change in legal factors or in\nthe business climate of the Company’s segments; unanticipated competition; and slower growth rates.\n\n \n\n**Research\nand Development**\n\n** **\n\nResearch\nand development expenditures are charged to expenses as incurred.\n\n \n\n**Income\nTaxes**\n\n** **\n\nIncome\ntaxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future\ntax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and\ntheir respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which\nthose temporary differences are expected to be recovered or settled. Where applicable, the Company records a valuation allowance to reduce\nany deferred tax assets that it determines will not be realizable in the future.\n\n \n\nThe\nCompany recognizes the benefit of an uncertain tax position that it has taken or expects to take on income tax returns it files if such\ntax position is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position.\nThese tax benefits are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.\n\n \n\nThe\nCompany operates in multiple tax jurisdictions within the United States of America. The Company remains subject to examination in all\ntax jurisdiction until the applicable statutes of limitation expire. As of March 31, 2026, a summary of the tax years that remain subject\nto examination in the Company’s major tax jurisdictions are: United States – Federal, 2022 and forward, and State, 2021 and\nforward. The Company did not have any unrecognized tax positions for the years ended March 31, 2026 and 2025.\n\n \n\n**Warrants\nand Preferred Shares**\n\n** **\n\nThe\naccounting treatment of warrants and preferred share series issued is determined pursuant to the guidance provided by ASC 470, *Debt*,\nASC 480, *Distinguishing Liabilities from Equity*, and ASC 815, *Derivatives and Hedging*, as applicable. Each feature of a\nfreestanding financial instrument including, without limitation, any rights relating to subsequent dilutive issuances, dividend issuances,\nequity sales, rights offerings, forced conversions, optional redemptions, automatic monthly conversions, dividends and exercise is assessed\nwith determinations made regarding the proper classification in the Company’s financial statements.\n\n \n\n**Stock-Based\nCompensation**\n\n** **\n\nThe\nCompany accounts for stock-based compensation in accordance with ASC 718, *Compensation-Stock Compensation*. Under the fair value\nrecognition provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized\nas 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\npayments to nonemployees that are fully vested and non-forfeitable as at the grant date is measured and recognized at that date, unless\nthere is a contractual term for services in which case such compensation would be amortized over the contractual term. The Company accounts\nfor forfeitures as they occur.\n\n \n\n**Earnings\n(Loss) Per Share**\n\n** **\n\nThe\nCompany follows ASC 260, *Earnings Per Share*, which requires presentation of basic and diluted income (loss) per share (“EPS”)\non the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and\ndenominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial\nstatements, basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of Common\nStock outstanding during the period. The computation of diluted net income (loss) per share includes the assumed exercise of options\nand warrants if the effect is dilutive. The assumed exercise of the Series J Warrants was dilutive for the year ended March 31, 2026,\nand is therefore included in the diluted EPS calculation for that period.\n\n \n\nF-10\n\n \n\n \n\n**ELITE\nPHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nAs\nthe Company was in a net loss position for the year ended March 31, 2025, the potential dilution from the Series J Warrants converting\ninto 79,008,661 shares of Common Stock and the stock options being exercised for 15,640,000 shares of Common Stock for these periods\nhave been excluded from the number of shares used in calculating diluted net income (loss) per share as their inclusion would have been\nantidilutive.\n\n \n\nThe\nfollowing is the computation of earnings per share applicable to common shareholders for the periods indicated:\n\n SCHEDULE OF EARNINGS (LOSS) PER SHARE APPLICABLE TO COMMON SHAREHOLDERS\n\n  \n2026  \n2025 \n\n  \nFor the Years Ended March 31, \n\n  \n2026  \n2025 \n\nNumerator \n    \n   \n\nNet income (loss) - basic \n$44,872,686  \n$(4,314,659)\n\nEffect of dilutive instrument on net income - warrants \n (7,855,607) \n — \n\nNet income (loss) - diluted \n$37,017,079  \n$(4,314,659)\n\n  \n    \n   \n\nDenominator \n    \n   \n\nWeighted average shares of Common Stock outstanding - basic \n 1,072,837,856  \n 1,068,290,368 \n\nDilutive effect of stock options and convertible securities \n 65,530,379  \n — \n\nWeighted average shares of Common Stock outstanding - diluted \n 1,138,368,235  \n 1,068,290,368 \n\n  \n    \n   \n\nNet income (loss) per share \n    \n   \n\nBasic \n$0.04  \n$(0.00)\n\nDiluted \n$0.03  \n$(0.00)\n\n** **\n\n**Fair\nValue of Financial Instruments**\n\n** **\n\nASC\n820, *Fair Value Measurements and Disclosures* (“ASC 820”) provides a framework for measuring fair value in accordance\nwith generally accepted accounting principles.\n\n \n\nASC\n820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction\nbetween market participants at the measurement date. ASC 820 establishes a fair value hierarchy that distinguishes between (1) market\nparticipant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s\nown assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable\ninputs).\n\n \n\nThe\nfair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for\nidentical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value\nhierarchy under ASC 820 are described as follows:\n\n \n\n●Level\n1 – Unadjusted quoted prices in active markets for identical assets or liabilities\nthat are accessible at the measurement date.\n\n \n\n●Level\n2 – Inputs other than quoted prices included within Level 1 that are observable for\nthe asset or liability, either directly or indirectly. Level 2 inputs include quoted prices\nfor similar assets or liabilities in active markets; quoted prices for identical or similar\nassets or liabilities in markets that are not active; inputs other than quoted prices that\nare observable for the asset or liability; and inputs that are derived principally from or\ncorroborated by observable market data by correlation or other means.\n\n \n\n●Level\n3 – Inputs that are unobservable for the asset or liability.\n\n \n\nThe\ncarrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and other\ncurrent assets, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.\nBased upon current borrowing rates with similar maturities the carrying value of long-term debt, and related party loans payable approximates\nfair value.\n\n \n\nF-11\n\n \n\n \n\n**ELITE\nPHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n*Non-Financial\nAssets that are Measured at Fair Value on a Non-Recurring Basis*\n\n* *\n\nNon-financial\nassets such as intangible assets and property and equipment are measured at fair value only when an impairment loss is recognized.\n\n \n\nSee\nNote 4 for additional information for the impairment loss recorded in relation to the Company’s intangible assets.\n\n \n\n**Treasury\nStock**\n\n** **\n\nThe\nCompany records treasury stock at the cost to acquire it and includes treasury stock as a component of shareholders’ equity.\n\n \n\n**Right-of-Use\nAsset and Lease Liability**\n\n** **\n\nThe\nCompany accounts for leases in accordance with ASC 842, *Leases (Topic 842)* (“ASC 842”).\n\n \n\nA\nlessee should recognize the lease liability to make lease payments and the right-of-use asset representing its right to use the underlying\nasset for the lease term. For operating leases and finance leases, a right-of-use asset and a lease liability are initially measured\nat the present value of the lease payments by discount rates. The Company’s lease discount rates are generally based on its incremental\nborrowing rate, as the discount rates implicit in the Company’s leases is readily determinable. Operating leases are included in\noperating lease right-of-use assets and lease liabilities in the consolidated balance sheets. Finance leases are included in property\nand equipment and lease liability in the Company’s consolidated balance sheets. Lease expense for operating expense payments is\nrecognized on a straight-line basis over the lease term. Interest and amortization expenses are recognized for finance leases on a straight-line\nbasis over the lease term.\n\n \n\nFor\nthe leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset\nnot to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases\ngenerally on a straight-line basis over the lease term.\n\n \n\n**Recently\nAdopted Accounting Pronouncements**\n\n** **\n\nIn\nDecember 2023, the FASB issued ASU 2023-09, *Income Taxes (Topic 740): Improvements to Income Tax Disclosures*, which requires public\nentities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income\ntaxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption\npermitted. The Company adopted ASU 2023-09 for the year ended March 31, 2026, and applied the new disclosure requirements prospectively\nto the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. See Note 16\nIncome Taxes in the accompanying notes to the consolidated financial statements for further detail.\n\n** **\n\n**Recently\nIssued Accounting Pronouncements**\n\n** **\n\nIn\nNovember 2024, the FASB issued ASU 2024-03, *Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures\n(Subtopic 220-40): Disaggregation of Income Statement Expenses.*In January 2025, the FASB issued ASU No. 2025-01, *Income Statement\n- Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), Clarifying the Effective Date*(“ASU-2024-03”).\nASU 2024-03 requires public companies to disclose, in interim and reporting periods, additional information about certain expenses in\nthe financial statements. ASU 2024-03, as clarified by ASU 2025-01, is effective for public entities for annual periods beginning after\nDecember 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either\na prospective basis or retrospective basis. The Company is currently evaluating the impact that the updated standard will have on the\nCompany’s disclosures within the consolidated financial statements.\n\n \n\nIn\nMay 2025, the FASB issued ASU 2025-04, *Compensation-Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic\n606): Clarifications to Share-Based Consideration Payable to a Customer* to reduce diversity in practice and improve the decision\nusefulness and operability of the guidance for share-based consideration payable to a customer in conjunction with selling goods or services.\nThe ASU is effective for fiscal years beginning after December 15, 2026 with updates to be applied on a retrospective or modified retrospective\nbasis. Early adoption is permitted. The Company is evaluating the impact that this standard will have on the Company’s consolidated\nfinancial statements.\n\n \n\nIn\nJuly 2025, the FASB issued ASU 2025-05, *Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts\nReceivable and Contract Assets*. The ASU introduces a practical expedient and an accounting policy election to simplify the estimation\nof expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC\n606. The practical expedient allows entities to assume that conditions at the balance sheet date remain unchanged for the asset’s\nremaining life when preparing forecasts as part of estimating expected credit losses. The ASU is effective for fiscal years beginning\nafter December 15, 2025, and is to be adopted on a prospective basis. Early adoption is permitted. The Company is currently evaluating\nthe impact of this standard on its consolidated financial statements.\n\n \n\nIn\nDecember 2025, the FASB issued ASU 2025-11, *Interim Reporting (Topic 270)—Narrow-Scope Improvements*. The ASU clarifies the\nscope of interim reporting guidance, reorganizes disclosure requirements for ease of navigation, and introduces a principle requiring\ndisclosure of material events occurring after the last annual reporting period but before interim financial statements are issued. The\nASU does not create new disclosure requirements but improves clarity and consistency in presentation. The ASU is effective for interim\nperiods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact\nthis standard will have on the Company’s consolidated financial statements.\n\n \n\nF-12\n\n \n\n \n\n**ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nManagement\nhas evaluated recently issued accounting pronouncements outside of those mentioned above and does not believe that any of these pronouncements\nwill have a significant impact on the Company’s consolidated financial statements and related disclosures.\n\n \n\n**NOTE\n2. INVENTORY**\n\n** **\n\nInventory\nconsisted of the following:\n\n SCHEDULE OF INVENTORY\n\n  \nMarch 31, 2026  \nMarch 31, 2025 \n\nFinished goods \n$5,389,291  \n$4,816,458 \n\nWork-in-progress \n 3,267,705  \n 1,422,005 \n\nRaw materials \n 12,602,902  \n 10,001,913 \n\nInventory \n$21,259,898  \n$16,240,376 \n\n \n\n**NOTE\n3. PROPERTY AND EQUIPMENT, NET**\n\n** **\n\nProperty\nand equipment consisted of the following:\n\n SCHEDULE OF PROPERTY AND EQUIPMENT\n\n  \nMarch 31, 2026  \nMarch 31, 2025 \n\nLand, building and improvements \n$11,649,918  \n$11,649,918 \n\nLaboratory, manufacturing, warehouse and transportation equipment \n 15,701,634  \n 14,776,008 \n\nOffice equipment and software \n 373,601  \n 373,601 \n\nFurniture and fixtures \n 556,418  \n 556,418 \n\nProperty and equipment, gross \n 28,281,571  \n 27,355,945 \n\nLess: Accumulated depreciation \n (18,100,243) \n (17,028,700)\n\nProperty and equipment, net \n$10,181,328  \n$10,327,245 \n\n \n\nDepreciation\nexpense was $1,071,543 and $1,226,399 for the years ended March 31, 2026 and 2025, respectively.\n\n \n\n**NOTE\n4. INTANGIBLE ASSETS**\n\n** **\n\nThe\nfollowing table summarizes the Company’s intangible assets as of and for the periods ended March 31, 2026 and 2025:\n\n SCHEDULE OF INTANGIBLE ASSETS\n\n  \nMarch 31, 2026\n\n  \n\nEstimated\n\nUseful Life\n \n\nGross Carrying\n\nAmount\n  \nAdditions  \n\nImpairment\n\nlosses\n  \n\nAccumulated\n\nAmortization\n  \n\nNet Book\n\nValue\n \n\nPatent application costs \n-* \n$289,039  \n$—  \n$(289,039) \n$—  \n$— \n\nANDA acquisition costs \nIndefinite \n 5,348,763  \n -  \n (557,973) \n —  \n 4,790,790 \n\n  \n  \n$5,637,802  \n$—  \n$(847,012) \n$—  \n$4,790,790 \n\n \n\n  \nMarch 31, 2025\n\n  \n\nEstimated\n\nUseful Life\n \n\nGross Carrying\n\nAmount\n  \nAdditions  \n\nImpairment\n\nlosses\n  \n\nAccumulated\n\nAmortization\n  \n\nNet Book\n\nValue\n \n\nPatent application costs \n-* \n$289,039  \n$—  \n$—  \n$—  \n$289,039 \n\nANDA acquisition costs \nIndefinite \n 6,052,189  \n 900,000  \n (1,603,426) \n —  \n 5,348,763 \n\n  \n  \n$6,341,228  \n$900,000  \n$(1,603,426) \n$—  \n$5,637,802 \n\n \n\n*Patent application costs were incurred in relation to the Company’s abuse deterrent\nopioid technology. Amortization of the patent costs would have begun upon the issuance of marketing authorization by the FDA. During\nthe year ended March 31, 2026, these costs were impaired in full as discussed above.\n\nOn\nJune 17, 2024, the Company and Nostrum Laboratories Inc. (“Nostrum”) entered into an Asset Purchase Agreement (the “Asset\nPurchase Agreement”), pursuant to which Nostrum was obligated to (i) sell to the Company all of its rights in and to the approved\nabbreviated new drug applications (ANDAs) for generic Norco® (Hydrocodone Bitartrate and Acetaminophen tablets, USP CII), generic\nPercocet® (Oxycodone Hydrochloride and Acetaminophen, USP CII), and generic Dolophine® (Methadone Hydrochloride tablets), each\na “Product”, and (ii) grant to the Company a royalty-free, non-exclusive perpetual license to use the manufacturing technology,\nproprietary information, processes, techniques, protocols, methods, know-how, and improvements necessary or used to manufacture each\nProduct in accordance with the applicable ANDA, in exchange for $900,000 in cash (the “Transaction”). The Asset Purchase\nAgreement includes customary representations and warranties and various customary covenants. The closing of the Transaction occurred\non June 21, 2024.\n\n \n\nF-13\n\n \n\n \n\n**ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\nDuring\nthe year ended March 31, 2026, the Company determined indicators of impairment occurred related to the Loxapine intangible asset, an\nANDA product, and recorded impairment expense of $557,973. Additionally, the patent related to the Company’s abuse deterrent opioid\ntechnology expired during the year ended March 31, 2026, before marketing authorization was obtained from the FDA, and as such the Company\nimpaired this intangible asset in full in the amount of $289,039.\n\n \n\nDuring\nthe year ended March 31, 2025, the Company determined indicators of impairment occurred related to the Dantrolene and Phentermine intangible\nassets, both ANDA products, and recorded impairment expense of $1,603,426.\n\n \n\n*\nPatent application costs were incurred in relation to the Company’s abuse deterrent opioid technology. Amortization of the patent\ncosts would have begun upon the issuance of marketing authorization by the FDA. During the year ended March 31, 2026, these costs were\nimpaired in full as discussed above.\n\n \n\n**NOTE\n5. ACCRUED EXPENSES**\n\n** **\n\nAccrued\nexpenses consisted of the following:\n\n SCHEDULE OF ACCRUED EXPENSES\n\n  \nMarch 31, 2026  \nMarch 31, 2025 \n\nCo-development profit split \n$2,616,950  \n$2,617,210 \n\nIncome tax \n 594,181  \n 340,614 \n\nEmployee bonuses \n 5,285,256  \n 121,885 \n\nAudit fees \n 500,000  \n 75,000 \n\nLegal and professional expense \n 282,672  \n 55,000 \n\nDirector dues \n 22,500  \n 22,500 \n\nSalaries and fees payable \n 273,059  \n 172,655 \n\nAccrued interest - related parties \n —  \n 100,000 \n\nOther accrued expenses \n 619,604  \n 290,363 \n\nTotal accrued expenses \n$10,194,222  \n$3,795,227 \n\n** **\n\n**NOTE\n6. NJEDA BONDS**\n\n** **\n\nDuring\nAugust 2005, the Company refinanced a prior 1999 bond issue occurring in 1999 through the issuance of Series A and B Notes new tax-exempt\nbonds (the “NJEDA Bonds”). The refinancing involved borrowing $4,155,000, evidenced by a 6.5% Series A Note in the principal\namount of $3,660,000 maturing on September 1, 2030 and a 9% Series B Note in the principal amount of $495,000 maturing on September 1,\n2012. During July 2014, the Company retired all the outstanding Series B Notes, at par, along with all accrued interest due and owed.\n\n \n\nIn\nrelation to the Series A Notes, the Company is required to maintain a debt service reserve fund. The debt service reserve is classified\nas restricted cash on the accompanying consolidated balance sheets. The NJEDA Bonds require the Company to make an annual principal payment\non September 1st based on the amount specified in the loan documents and semi-annual interest payments on March 1st and September 1st,\nequal to interest due on the outstanding principal. The annual interest rate on the Series A Note is 6.5%. The NJEDA Bonds are collateralized\nby a first lien on the Company’s facility and equipment acquired with the proceeds of the original and refinanced bonds. The bonds\nmature on September 1, 2030.\n\n \n\nF-14\n\n \n\n \n\n**ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nThe\nfollowing tables summarize the Company’s bonds payable liability:\n\n SCHEDULE OF BONDS PAYABLE LIABILITY\n\n  \nMarch 31, 2026  \nMarch 31, 2025 \n\nGross bonds payable \n    \n   \n\nNJEDA Bonds - Series A Notes \n$850,000  \n$990,000 \n\nLess: Current portion of bonds payable (prior to deduction of bond offering costs) \n (150,000) \n (140,000)\n\nLong-term portion of bonds payable (prior to deduction of bond offering costs) \n$700,000  \n$850,000 \n\n  \n    \n   \n\nBond offering costs \n$354,454  \n$354,454 \n\nLess: Accumulated amortization \n (291,835) \n (277,657)\n\nBond offering costs, net \n$62,619  \n$76,797 \n\n  \n    \n   \n\nCurrent portion of bonds payable - net of bond offering costs \n    \n   \n\nCurrent portions of bonds payable \n$150,000  \n$140,000 \n\nLess: Bonds offering costs to be amortized in the next 12 months \n (14,178) \n (14,178)\n\nCurrent portion of bonds payable, net of bond offering costs \n$135,822  \n$125,822 \n\n  \n    \n   \n\nLong term portion of bonds payable - net of bond offering costs \n    \n   \n\nLong term portion of bonds payable \n$700,000  \n$850,000 \n\nLess: Bond offering costs to be amortized subsequent to the next 12 months \n (48,441) \n (62,619)\n\nLong term portion of bonds payable, net of bond offering costs \n$651,559  \n$787,381 \n\n \n\nAmortization\nexpense was $14,178 and $14,178 for the years ended March 31, 2026 and 2025, respectively. Interest payable was $4,604 and $5,363 as\nof March 31, 2026 and 2025, respectively. Interest expense was $59,042 and $67,871 for the years ended March 31, 2026 and 2025, respectively.\n\n \n\nMaturities\nof bonds for the next five years are as follows:\n\n SCHEDULE OF MATURITIES OF BONDS\n\nYears ending March 31, \nAmount \n\n2027 \n$150,000 \n\n2028 \n 160,000 \n\n2029 \n 170,000 \n\n2030 \n 180,000 \n\n2031 \n 190,000 \n\nTotal \n$850,000 \n\n \n\n**NOTE\n7. LOANS PAYABLE**\n\n** **\n\nOn\nJuly 1, 2022, the East West Bank (“EWB”) provided a mortgage loan (“EWB Mortgage Loan”) in the amount of $2.55\nmillion for the purchase of the property at 135-137 Ludlow Avenue, which was formerly a lease held by the Company. The EWB Mortgage Loan\nmatures in 10 years and bears interest at a rate of 4.75% fixed for 5 years then adjustable at the Wall Street Journal Prime Rate (“WSJP”)\nplus 0.5% with floor rate of 4.5%. The EWB Mortgage Loan contains customary representations, warranties and covenants. These covenants\ninclude maintaining a minimum debt coverage ratio of 1.50 to 1.00 tested annually and a minimum trailing 12-month debt coverage ratio\nof 1.50 to 1.00. As of the date of this filing, the Company was in compliance with each financial covenant.\n\n \n\nThe\nCompany has entered into a collateralized promissory note with individual lenders (a “Promissory Note”). As of June 2, 2023,\na Promissory Note was placed with Nasrat Hakim, CEO and Chairman of the Board of Directors, for $3,000,000. Refer to Note 8 for information\nregarding the Promissory Note.\n\n \n\nLoans\npayable consisted of the following:\n\n SCHEDULE OF LOANS PAYABLE\n\n  \nMarch 31, 2026  \nMarch 31, 2025 \n\nMortgage loan payable 4.75% interest and maturing June 2032 \n$2,245,743  \n$2,334,163 \n\nEquipment and insurance financing loans payable, between 5.99% and 12.02% interest and maturing between April 2025 and October 2025 \n —  \n 32,324 \n\nLess: Current portion of loans payable \n (92,774) \n (120,744)\n\nLong-term portion of loans payable \n$2,152,969  \n$2,245,743 \n\n \n\nF-15\n\n \n\n \n\n**ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nThe\ninterest expense associated with the loans payable was $111,361 and $128,234 for the years ended March 31, 2026 and 2025, respectively.\n\n \n\nLoan\nprincipal payments for the next five years are as follows:\n\n SCHEDULE OF LOAN PRINCIPAL PAYMENTS\n\nFuture principal balances \n  \n\nYears ending March 31, \nAmount \n\n2027 \n$92,774 \n\n2028 \n 94,433 \n\n2029 \n 98,447 \n\n2030 \n 103,817 \n\n2031 \n 109,482 \n\nThereafter \n 1,746,790 \n\nTotal remaining principal balance \n$2,245,743 \n\n \n\n**NOTE\n8. RELATED PARTY LOANS PAYABLE**\n\n** **\n\nThe\nCompany has entered into a collateralized promissory note with individual lenders with rates comparable to the mortgage loan, dated July\n1, 2022, provided by East West Bank to the Company but with fewer covenants. These covenants include filing timely tax returns and financial\nstatements, and an agreement not to sell, lease, or transfer a substantial portion of the Company’s assets during the term of the\nHakim Promissory Note. On June 2, 2023, the Company entered into a Promissory Note with Nasrat Hakim, President, Chief Executive Officer\nand Chairman of the Board of Directors of the Company (the “Board”), pursuant to which the Company borrowed funds in the\naggregate principal amount of $3,000,000 (the “Hakim Promissory Note”). The Hakim Promissory Note had an interest rate of\n9% for the first year and 10% for an optional second year and the proceeds were used for working capital and other business purposes.\nThe original maturity date of the Hakim Promissory Note was June 2, 2024, with an optional second year extension. The second year extension\nwas exercised pursuant to the terms of the Hakim Promissory Note. For the years ended March 31, 2026 and 2025, interest expense on the\nHakim Promissory Note totaled $50,000 and $292,500, respectively, recorded on the Consolidated Statements of Operations in interest expense\nand amortization of debt issuance costs. On June 2, 2025, the Hakim Promissory Note was paid in full and no balance was outstanding as\nof this date.\n\n \n\nOn\nJune 30, 2023, the Company entered into a collateralized promissory note with Davis Caskey (the “Caskey Promissory Note”).\nThe Caskey Promissory Note has a principal balance of $1,000,000 and an interest rate of 9% for the first year and 10% for an optional\nsecond year. The Caskey Promissory Note is subject to the same covenants as are contained in the Hakim Promissory Note. The proceeds\nwill be used for working capital and other business purposes. The original maturity date of the Caskey Promissory Note was June 30, 2024,\nwith an optional second year extension. The second year extension was exercised pursuant to the terms of the Caskey Promissory Note.\nFor the years ended March 31, 2026 and 2025, interest expense on the Caskey Promissory Note totaled $25,000 and $100,000, respectively,\nrecorded on the Consolidated Statements of Operations in interest expense and amortization of debt issuance costs. On June 26, 2025,\nthe Caskey Promissory Note was paid in full and no balance was outstanding as of this date.\n\n** **\n\n**NOTE\n9. COMMITMENTS AND CONTINGENCIES**\n\n** **\n\nOccasionally,\nthe Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision\nfor a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated.\nIf these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated\nfinancial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments\nabout future events and can rely heavily on estimates and assumptions.\n\n \n\nOn\nAugust 17, 2023, Elite filed a paragraph IV certification with its ANDA to generic OxyContin® and after Elite got acceptance\nof the ANDA by the FDA on September 19, 2023, Elite sent the patentee and NDA holder a Notice Letter as required under the Hatch-Waxman\nAct. On November 14, 2023, a patent infringement suit was filed in the District Court of New Jersey by Purdue Pharma. The Parties agreed to a stipulated dismissal of the case and the judge signed the order dismissing the case on June\n12, 2026.\n\n \n\nF-16\n\n \n\n \n\n**ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nElite’s\nlaunch of a generic OxyContin® will depend on the approval by the FDA and the outcome of various litigation involving\nPurdue or the expiry of the patents listed on the Orange Book.\n\n \n\n**Operating\nLeases**\n\n** **\n\nIn\nOctober 2020, the Company entered into an operating lease for office space in Pompano Beach, Florida (the “Pompano Office Lease”).\nThe Pompano Office Lease was for approximately 1,275 square feet of office space, with the Company taking occupancy on November 1, 2020.\nThe Pompano Office Lease had a term of three years, ending on October 31, 2023. The Pompano Office Lease was extended for one additional\nyear to October 31, 2024. Accordingly, the Pompano Office Lease expired at the end of the renewal term on October 31, 2024.\n\n \n\nThe\nCompany entered into an operating lease for office space in North Bay Village, Pompano FL (the “NBV Pompano Office Lease”).\nThe Company took occupancy on October 1, 2024. The NBV Pompano Office Lease has a term of three years, ending on September 30, 2027.\n\n \n\nThe\nCompany entered into a lease agreement for a portion of a one-story warehouse, located at 144 Ludlow Avenue, Northvale, New Jersey (the\n“144 Ludlow Ave. Lease”). The lease agreement began on January 22, 2024, and has a term of five years. The 144 Ludlow Ave.\nLease will expire on December 31, 2028.\n\n \n\nThe\nCompany assesses whether an arrangement is a lease or contains a lease at inception. For arrangements considered leases or that contain\na lease that is accounted for separately, the Company determines the classification and initial measurement of the right-of-use asset\nand lease liability at the lease commencement date, which is the date that the underlying asset becomes available for use. The Company\nhas elected to account for non-lease components associated with its leases and lease components as a single lease component.\n\n \n\nThe\nCompany recognizes a right-of-use asset, which represents the Company’s right to use the underlying asset for the lease term, and\na lease liability, which represents the present value of the Company’s obligation to make payments arising over the lease term.\nThe present value of the lease payments is calculated using either the implicit interest rate in the lease or an incremental borrowing\nrate. Operating leases are included in operating lease right-of-use assets and lease liabilities in the consolidated balance sheets.\nLease expense for operating expense payment is recognized on a straight-line basis over the lease term.\n\n \n\n**Finance\nLeases**\n\n** **\n\nIn\nNovember 2023, the Company entered into a finance lease for equipment (the “Waters Equipment Lease”). The Waters Equipment\nLease is related to lab equipment with an acquisition cost of $499,775, with the Company taking ownership of the asset on December 1,\n2023. The Waters Equipment Lease has a term of five years, ending on November 29, 2028. The Company also has the option to purchase the\nasset at the end of the lease term for the amount of $1, which is probable to be exercised.\n\n** **\n\nIn\nFebruary 2024, the Company entered into a finance lease for warehouse equipment (the “Warehouse Equipment Lease”). The Warehouse\nEquipment Lease is related to warehouse equipment with an acquisition cost of $37,500, with the Company taking ownership of the asset\nduring February 2024. The Warehouse Equipment Lease had a term of two years, which ended in February 2026. The Company had the option\nto purchase the asset at the end of the lease term for the amount of $1, which the Company exercised.\n\n \n\nIn\nFebruary 2024, the Company entered into a finance lease for equipment (the “February 2024 Equipment Lease”). The February\n2024 Equipment Lease is related to manufacturing equipment with an acquisition cost of $455,000, with the Company taking ownership of\nthe asset during February 2024. The February 2024 Equipment Lease has a term of five years, ending in February 2029. The Company will\nretain ownership of the equipment at lease termination.\n\n \n\nIn\nMarch 2024, the Company entered into three separate finance leases for manufacturing assets (the “March 2024 Equipment Leases”).\nThe March 2024 Equipment Leases are related to manufacturing equipment and vault installed at the Company’s facility located at\n144 Ludlow Avenue, Northvale NJ with an aggregate acquisition cost of $1,085,177. Each of the separate leases included in the March 2024\nEquipment Leases have a term of five years, ending in March 2029. The Company will retain ownership of all related assets at lease termination.\n\n \n\nIn\nJuly 2024, the Company entered into two separate finance leases for manufacturing assets (the “July 2024 Equipment Leases”).\nThe July 2024 Equipment Leases are related to warehouse and laboratory equipment with an aggregate acquisition cost of $153,745. One\nof the July 2024 Equipment Leases has a term of five years, ending in July 2029, and the other lease has a term of two years, ending\nin July 2026. The Company will retain ownership of all related assets at lease terminations.\n\n \n\nF-17\n\n \n\n \n\n**ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nA\nlease is classified as a finance lease if any of the following criteria are met: (i) ownership of the underlying asset transfers to the\nCompany by the end of the lease term; (ii) the lease contains an option to purchase the underlying asset that the Company is reasonably\nexpected to exercise; (iii) the lease term is for a major part of the remaining economic life of the underlying asset; (iv) the present\nvalue of the sum of lease payments and any residual value guaranteed by the Company equals or exceeds substantially all of the fair value\nof the underlying asset; or (v) the underlying asset is of a specialized nature that it is expected to have no alternative use to the\nlessor at the end of the lease term. A lease that does not meet any of the criteria to be classified as a finance lease is classified\nas an operating lease. As the Company expects to exercise the option to purchase the asset at the end of the lease term, the Waters equipment\nlease was determined to be a finance lease. The finance lease is included on the consolidated balance sheets as Finance lease - right-of-use\nasset and Lease obligation - finance lease. The finance lease costs are split between Depreciation and amortization expense related to\nthe asset and interest expense on the lease liability, using the effective rate charged by the lessor. The Company has elected to account\nfor lease and non-lease components separately.\n\n \n\nRent\nexpense is recorded on the straight-line basis and is recorded in cost of manufacturing and general and administrative expense in the\nconsolidated statements of operations. Rent expense is as follows:\n\n SCHEDULE OF RENT EXPENSE STRAIGHT-LINE BASIS\n\nLease \n2026  \n2025 \n\n  \nFor the Years Ended March 31, \n\nLease \n2026  \n2025 \n\nLudlow-144 \n$633,269  \n$610,409 \n\nPompano-2311 \n —  \n 18,870 \n\nNBV-610 \n 18,249  \n 14,605 \n\nRent expense \n 18,249  \n 14,605 \n\n \n\nThe\ntable below shows the future minimum rental payments, exclusive of taxes, insurance and other costs:\n\n SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS\n\nYears ending March 31, \nOperating Lease Amount  \nFinancing Lease Amount  \nTotal \n\n2027 \n 667,307  \n 484,151  \n 1,151,458 \n\n2028 \n 666,207  \n 479,337  \n 1,145,544 \n\n2029 \n 440,159  \n 438,045  \n 878,204 \n\n2030 \n —  \n 13,740  \n 13,740 \n\nLess: interest \n (221,599) \n (184,858) \n (406,457)\n\nPresent value of lease payments \n$1,552,074  \n$1,230,415  \n$2,782,489 \n\n \n\nThe\nweighted-average remaining lease term and the weighted-average discount rate of the Company’s leases were as follows:\n\n SCHEDULE OF WEIGHTED -AVERAGE REMAINING TERM AND THE WEIGHTED-AVERAGE DISCOUNT RATE\n\n  \nFor the Years Ended March 31, \n\nLease Term and Discount Rate \n2026  \n2025 \n\nRemaining lease term (years) \n    \n   \n\nOperating leases \n 2.6  \n 3.6 \n\nFinance leases \n 2.9  \n 3.8 \n\nDiscount rate \n    \n   \n\nOperating leases \n 10.0% \n 10.0%\n\nFinance leases \n 9.5% \n 9.5%\n\n \n\n**NOTE\n10. PREFERRED STOCK**\n\n** **\n\n**Series\nJ convertible preferred stock**\n\n** **\n\nOn\nApril 28, 2017, the Company created the Series J Convertible Preferred Stock (“Series J Preferred”) in conjunction with the\nCertificate of Designations. A total of 50 shares of Series J Preferred were authorized, zero shares are issued and outstanding, with\na stated value of $1,000,000 per share and a par value of $0.01.\n\n \n\n**NOTE\n11. DERIVATIVE FINANCIAL INSTRUMENTS – WARRANTS**\n\n** **\n\nThe\nCompany evaluates and accounts for its freestanding instruments in accordance with ASC 815, *Accounting for Derivative Instruments\nand Hedging Activities*.\n\n \n\nThe\nCompany issued warrants, with a term of ten years, to affiliates in connection with an exchange agreement dated April 28, 2017, as further\ndescribed in this note below.\n\n \n\nF-18\n\n \n\n \n\n**ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nThe\nCompany has 79,008,661 total warrants to purchase shares of Common Stock outstanding with a weighted average exercise price of $0.1521\nas of March 31, 2026 and 2025.\n\n \n\nOn\nApril 28, 2017, the Company entered into an Exchange Agreement with Hakim, the Chairman of the Board, President, and Chief Executive\nOfficer of the Company, pursuant to which the Company issued to Hakim 24.0344 shares of its Series J Preferred and warrants to purchase\nan aggregate of 79,008,661 shares of its Common Stock (the “Series J Warrants” and, along with the Series J Preferred issued\nto Hakim, the “Securities”) in exchange for 158,017,321 shares of Common Stock owned by Hakim. The fair value of the Series\nJ Warrants was determined to be $6,474,674 upon issuance at April 28, 2017.\n\n \n\nThe\nSeries J Warrants are exercisable for a period of 10 years from the date of issuance, commencing April 28, 2020. The initial exercise\nprice is $0.1521 per share and the Series J Warrants can be exercised for cash or on a cashless basis, including a provision within that\nprovides the holder a choice of net cash settlement or settlement in shares upon a cashless exercise. The net cash settlement amount\nis the cash value obtained by subtracting the then exercise price from the closing price of the Company’s Common Stock (provided\nsuch closing price is higher than the exercise price) and multiplying the difference by the number of shares exercised. As this event\nis at the holder’s option, it is considered outside of the Company’s control. As a result of the net cash settlement at the\noption of the holder, such warrants are classified as liabilities and measured initially and subsequently at fair value.\n\n \n\nThe\nexercise price is subject to adjustment for any issuances or deemed issuances of Common Stock or Common Stock equivalents at an effective\nprice below the then exercise price. The Series J Warrants also provide for other standard adjustments upon the happening of certain\ncustomary events.\n\n \n\nThe\nfair value of the Series J Warrants was calculated using a Black-Scholes model. The following assumptions were used in the Black-Scholes\nmodel to calculate the fair value of the Series J Warrants:\n\n SCHEDULE OF FAIR VALUE OF WARRANTS ISSUED\n\n  \nMarch 31, 2026  \nMarch 31, 2025 \n\nFair value of the Company’s Common Stock \n$0.3601  \n$0.4350 \n\nVolatility \n 63.96% \n 82.80%\n\nInitial exercise price \n$0.1521  \n$0.1521 \n\nWarrant term (in years) \n 1.1  \n 2.1 \n\nRisk free rate \n 3.47% \n 3.89%\n\n \n\nThe\nchanges in warrants (Level 3 financial instruments) measured at fair value on a recurring basis were as follows:\n\n SCHEDULE OF CHANGES IN WARRANTS MEASURED AT FAIR VALUE ON A RECURRING BASIS\n\nBalance at March 31, 2024 \n$6,298,008 \n\nChange in fair value of derivative financial instruments - warrants \n 18,901,185 \n\nBalance at March 31, 2025 \n$25,199,193 \n\nChange in fair value of derivative financial instruments - warrants \n (7,855,607)\n\nBalance at March 31, 2026 \n$17,343,586 \n\n* *\n\n*Measured\non a Recurring Basis*\n\n* *\n\nThe\nfollowing table presents information about the Company’s liabilities measured at fair value on a recurring basis, aggregated by\nthe level in the fair value hierarchy within which those measurements fell:\n\n SCHEDULE OF LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS\n\n  \nAmount at Fair Value  \nLevel 1  \nLevel 2  \nLevel 3 \n\nBalance as of March 31, 2025 \n$25,199,193  \n$—  \n$—  \n$25,199,193 \n\nChange in fair value of derivative financial instruments - warrants \n (7,855,607) \n —  \n —  \n (7,855,607)\n\nBalance as of March 31, 2026 \n$17,343,586  \n$—  \n$—  \n$17,343,586 \n\n \n\n  \nAmount at Fair Value  \nLevel 1  \nLevel 2  \nLevel 3 \n\nBalance as of March 31, 2024 \n$6,298,008  \n$—  \n$—  \n$6,298,008 \n\nChange in fair value of derivative financial instruments - warrants \n 18,901,185  \n —  \n —  \n 18,901,185 \n\nBalance as of March 31, 2025 \n$25,199,193  \n$—  \n$—  \n$25,199,193 \n\n \n\nF-19\n\n \n\n** **\n\n**ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**NOTE\n12. STOCK-BASED COMPENSATION**\n\n** **\n\nUnder\nits 2014 Equity Incentive Plan and its 2024 Equity Incentive Plan, the Company did grant and may grant stock options to officers, selected\nemployees, as well as members of the Board of Directors and advisory board members. On July 1, 2024 the Company restated the 2014 Equity\nIncentive Plan to increase the shares reserved under the option plan by 12,730,000. Under the 2024 Equity Incentive Plan, 80,000,000\noptions are available for grant. All options have generally been granted at a price equal to or greater than the fair market value of\nthe Company’s Common Stock at the date of the grant. Generally, options are granted with a vesting period of up to three years\nand expire ten years from the date of grant.\n\n \n\nThe\nfair value of option awards is estimated on the date of grant using the Black-Scholes option-pricing model. The exercise price of each\naward is generally not less than the per share fair value in effect as of that award date. The determination of fair value using the\nBlack-Scholes model is affected by the Company’s share fair value as well as assumptions regarding a number of complex and subjective\nvariables, including expected price volatility, risk-free interest rate and projected employee share option exercise behaviors. The Company\nestimates its expected volatility by using a combination of historical share price volatilities of similar companies within the Company’s\nindustry. The expected term of the Company’s stock options for employees has been determined utilizing the “simplified”\nmethod for awards, since the Company does not have sufficient exercise history to estimate term of its historical option awards. The\nrisk-free interest rate is determined by reference to the U.S. Treasury yield curve. Expected dividend yield is zero based on the fact\nthat the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.\n\n \n\nA\nsummary of the activity of Company’s 2024 Equity Incentive plan and prior equity incentive plans for the year ended March 31, 2026\nis as follows:\n\n SCHEDULE OF STOCK OPTION PLAN\n\n  \n\nShares\n\nUnderlying Options\n  \n\nWeighted\nAverage\n\nExercise Price\n  \n\nWeighted Average\nRemaining Contractual\n\nTerm (in years)\n  \n\nAggregate Intrinsic\n\nValue\n \n\nOutstanding at March 31, 2025 \n 15,640,000  \n$0.05  \n 7.8  \n$6,000,552 \n\nGranted \n —  \n —  \n —  \n$— \n\nExercised \n (8,733,334) \n 0.04  \n —  \n$— \n\nExpired and Forfeited \n —  \n —  \n —  \n$— \n\nOutstanding at March 31, 2026 \n 6,906,666  \n$0.07  \n 6.8  \n$2,002,996 \n\nExercisable at March 31, 2026 \n 5,440,000  \n$0.06  \n 6.6  \n$1,610,856 \n\n \n\nThe\naggregate intrinsic value for outstanding options is calculated as the difference between the exercise price of the underlying awards\nand the quoted price of the Company’s Common Stock as of March 31, 2026 of $0.36 for those awards with strike prices lower than\nthe quoted price of the Company’s Common Stock as of March 31, 2026. As of March 31, 2026, there was $51,659 in unrecognized stock\nbased compensation expense that will be recognized over a weighted average 0.49 year period.\n\n \n\nThe\ntotal intrinsic value of options exercised during the year ended March 31, 2026 was $2,826,120.\n\n \n\n**NOTE\n13. CONCENTRATIONS AND CREDIT RISK**\n\n** **\n\n**Revenues**\n\n** **\n\nTwo\ncustomers accounted for approximately 74% of the Company’s revenues for the year ended March 31, 2026. These two customers accounted\nfor approximately 64% and 10% of revenues each, respectively.\n\n \n\nTwo\ncustomers accounted for approximately 58% of the Company’s revenues for the year ended March 31, 2025. These two customers accounted\nfor approximately 39% and 19% of revenue each, respectively.\n\n \n\nF-20\n\n \n\n \n\n**ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**Accounts\nReceivable**\n\n** **\n\nOne\ncustomer accounted for approximately 69% of the Company’s accounts receivable as of March 31, 2026.\n\n \n\nThree\ncustomers accounted for approximately 75% of the Company’s accounts receivable as of March 31, 2025. These three customers accounted\nfor approximately 46%, 19%, and 10% of accounts receivable each, respectively.\n\n \n\n**Purchasing**\n\n** **\n\nThree\nsuppliers accounted for approximately 73% of the Company’s purchases of raw materials for the year ended March 31, 2026. These\nthree customers accounted for approximately 36%, 24%, and 13% of purchasing each, respectively.\n\n \n\nThree\nsuppliers accounted for approximately 69% of the Company’s purchases of raw materials for the year ended March 31, 2025. These\nthree customers accounted for approximately 43%, 13%, and 13%, of purchasing each, respectively.\n\n \n\n**NOTE\n14. SEGMENT RESULTS**\n\n** **\n\nFASB\nASC 280-10-50 requires use of the “management approach” model for segment reporting. The management approach is based on\nthe way a company’s management organized segments within the company for making operating decisions and assessing performance.\nReportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which\nmanagement disaggregates a company.\n\n \n\nConsolidated\nincome from operations, which is reported in the accompanying consolidated statements of operations, is the measure of segment profit\nor loss that is regularly reviewed by the CODM. This enables the CODM to assess the overall level of available resources and determine\nhow best to deploy these resources across research and development projects in line with the long-term company-wide strategic goals.\nThere are no significant segment expenses or other segment items that are separately provided to the CODM beyond research and development\nand general and administrative expenses. The CODM does not receive segment level information related to depreciation, amortization, capital\nexpenditures, or other non-cash items, and therefore such items are excluded. The ANDA segment follows the same accounting policies used\nin the preparation of the Company’s consolidated financial statements.\n\n \n\nThe\nfollowing represents selected information for the Company’s reportable segment:\n\n SCHEDULE OF SELECTED INFORMATION FOR REPORTABLE SEGMENTS\n\n  \n2026  \n2025 \n\n  \nFor the Years Ended March 31, \n\n  \n2026  \n2025 \n\nOperating Income by Segment \n    \n   \n\nANDA \n$69,281,380  \n$32,121,818 \n\nOperating income by Segment \n$69,281,380  \n$32,121,818 \n\n \n\nThe\ntable below reconciles the Company’s operating income by segment to income from operations and to income (loss) before income taxes\nas reported in the Company’s consolidated statements of operations:\n\n SCHEDULE OF OPERATING INCOME BY SEGMENT TO INCOME FROM OPERATIONS\n\n  \n2026  \n2025 \n\n  \nFor the Years Ended March 31, \n\n  \n2026  \n2025 \n\nOperating income by segment \n$69,281,380  \n$32,121,818 \n\nCorporate unallocated costs \n (17,596,803) \n (9,001,930)\n\nImpairment of intangible assets \n (847,012) \n (1,603,426)\n\nDepreciation and amortization expense \n (1,547,874) \n (1,688,429)\n\nSignificant non-cash items \n (176,507) \n (227,565)\n\n  \n    \n   \n\nIncome from operations \n 49,113,184  \n 19,600,468 \n\n  \n    \n   \n\nChange in fair value of derivative instruments \n 7,855,607  \n (18,901,185)\n\nInterest expense and amortization of debt issuance costs \n (396,664) \n (772,367)\n\nInterest income \n 207,857  \n 20,944 \n\nOther income \n 34,500  \n — \n\nIncome (loss) before income taxes \n$56,814,484  \n$(52,140)\n\n \n\nF-21\n\n \n\n \n\n**ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**NOTE\n15. RELATED PARTY AGREEMENTS**\n\n** **\n\n**Mikah\nPharma, LLC Agreements**\n\n** **\n\nIn\nMay 2020, Praxgen (formerly known as SunGen Pharma LLC), pursuant to an asset purchase agreement, assigned its rights and obligations\nunder the Praxgen Agreement for Amphetamine IR and Amphetamine ER to Mikah Pharma LLC (“Mikah”). The ANDAs for Amphetamine\nIR and Amphetamine ER are now registered under Elite’s name. Mikah will now be Elite’s partner with respect to Amphetamine\nIR and ER and will assume all the rights and obligations for these products from Praxgen. Mikah was founded in 2009 by Nasrat Hakim,\na related party and the Company’s President, Chief Executive Officer and Chairman of the Board.\n\n \n\nIn\nJune 2021, the Company entered into a development and license agreement with Mikah, pursuant to which Mikah will engage in the research,\ndevelopment, sales and licensing of generic pharmaceutical products. In addition, Mikah will collaborate to develop and commercialize\ngeneric products including formulation development, analytical method development, manufacturing, sales and marketing of generic products.\nInitially two generic products were identified for the parties to develop.\n\n \n\nAs\nof March 31, 2026 and 2025, the Company owed an aggregate of $2,616,950 and $2,617,210, respectively, to Mikah in accordance with the\nagreements, with such amounts being recorded as an accrued expense on the consolidated balance sheets.\n\n \n\n**NOTE\n16. INCOME TAXES**\n\n \n\nThe\nearnings (loss) before income taxes for the years ended March 31, 2026 and 2025 were $56.8 million and $(0.1) million, respectively.\n\n \n\nComponents\nof the provision for income taxes were (amounts in thousands):\n\n SCHEDULE OF PROVISION FOR INCOME TAXES\n\nFor the Year Ended March 31 (in thousands) \n2026  \n2025 \n\nCurrent provision (benefit): \n    \n   \n\nFederal \n$—  \n$— \n\nState and local \n 1,399  \n 468 \n\nTotal current provision \n 1,399  \n 468 \n\n  \n    \n   \n\nDeferred provision (benefit): \n    \n   \n\nFederal \n 10,335  \n 3,871 \n\nState and local \n 208  \n (76)\n\nTotal deferred provision \n 10,543  \n 3,795 \n\n  \n    \n   \n\nProvision for income taxes \n$11,942  \n$4,263 \n\n \n\nF-22\n\n \n\n \n\n**ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nA\nreconciliation between the Company’s effective tax rate and the federal statutory rate for the year ended March 31, 2026 is as\nfollows (amounts in thousands of dollars):\n\n SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION\n\n  \nAmount  \nPercent \n\n  \n2026 \n\n  \nAmount  \nPercent \n\nU.S. Federal Statutory Tax Rate \n$11,682  \n 21.00%\n\nState and Local Income Taxes, Net of Federal Income Tax Effect (a) \n 1,313  \n 2.36%\n\nForeign Tax Effects \n —  \n —%\n\nEffect of Changes in Tax Law or Rates Enacted in the Current Period \n —  \n —%\n\nEffect of Cross-Border Tax Laws \n —  \n —%\n\nTax Credits \n —  \n —%\n\nFederal R&D Credits \n (360) \n (0.65)%\n\nPrior year deferred true-up \n    \n   \n\nChanges in Valuation Allowance \n —  \n —%\n\nNontaxable or Nondeductible Items \n —  \n —%\n\nNon-deductible change in fair value of derivative financial instruments \n (1,650) \n (2.96)%\n\nNon-deductible change in fair value of stock-based liabilities \n    \n   \n\nOfficer’s compensation \n 1,143  \n 2.05%\n\nOther \n (186) \n (0.33)%\n\nOther permanent items \n    \n   \n\nChanges in Unrecognized Tax Benefits \n —  \n —%\n\nOther Adjustments \n —  \n —%\n\nOther \n —  \n —%\n\nEffective Tax Rate \n$11,942  \n 21.47%\n\n \n\n(a)State taxes in\nNew Jersey and Florida made up the majority (greater than 50 percent) of the tax effect in this category.\n\n \n\nA\nreconciliation between the Company’s effective tax rate and the federal statutory rate for the year ended March 31, 2025 is as\nfollows:\n\n \n\nFor the Year Ended March 31 (in thousands) \n2025 \n\nFederal income tax rate \n$(11)\n\nU.S. Federal Statutory Tax Rate \n$(11)\n\nState and local taxes, net of federal benefit \n 293 \n\nState and Local Income Taxes, Net of Federal Income Tax Effect \n 293 \n\nNon-deductible change in fair value of derivative financial instruments \n 3,969 \n\nNon-deductible change in fair value of stock-based liabilities \n — \n\nOther permanent items \n 17 \n\nPrior year deferred true-up \n 110 \n\nTax credits \n (115)\n\nFederal R&D Credits \n (115)\n\nChange in valuation allowance \n — \n\nChanges in Valuation Allowance \n — \n\nEffective tax rate \n$4,263 \n\nEffective Tax Rate \n$4,263 \n\n \n\nF-23\n\n \n\n \n\n**ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY**\n\n**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nThe\nmajor components of deferred tax assets and liabilities as of March 31, 2026 and 2025 are as follows (amounts in thousands of dollars):\n\n SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES\n\nAs of March 31 (in thousands) \n2026  \n2025 \n\nDeferred tax assets: \n    \n   \n\nLease Liability \n$659  \n$865 \n\nSec. 174 R&E Capitalization \n 123  \n 3,104 \n\nAllowance for Expected Credit Losses \n 352  \n 92 \n\nNet Operating Loss \n 2,489  \n 10,664 \n\nR&D Credit \n 5,708  \n 5,348 \n\nDeferred tax assets \n 9,331  \n 20,073 \n\n  \n    \n   \n\nDeferred tax liabilities: \n    \n   \n\nFixed Assets \n (218) \n (98)\n\nRight of Use Asset \n (669) \n (898)\n\nIntangible Assets \n (621) \n (711)\n\nDeferred tax liabilities \n (1,508) \n (1,707)\n\n  \n    \n   \n\nNet deferred tax asset \n$7,823  \n$18,366 \n\n \n\nThe\nCompany’s income tax expense was $11.9 million and $4.3 million for the years ended March 31, 2026 and 2025, respectively.\n\n \n\nAs\nof March 31, 2026, the Company has a federal net operating loss carry forward of $11.9 million of which $10 million can be carried forward\nindefinitely with limitation of 80% of taxable income and the remaining $1.9 million will expire in 2037 and has no limitation. As of\nMarch 31, 2026, the Company’s has a federal research credits carryforward of $5.7 million which will begin to expire in 2032. As\nof March 31, 2026, the Company’s federal and state income taxes due were $0 and $1.4 million, respectively.\n\n \n\nThe\nCompany’s policy for recording interest and penalties associated with unrecognized tax benefits is to record such interest and\npenalties as a component of income tax expense. There were no amounts accrued for interest or penalties for the year ended March 31,\n2026. Management does not expect any material changes in its unrecognized tax benefits in the next year.\n\n \n\nThere\nare currently no federal or state income tax examinations underway. The Company’s federal tax returns are open to examination from\n2022 and its state tax returns are open to examination from 2021.\n\n \n\nOn\nJuly 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA permanently extends certain\nprovisions of the Tax Cuts and Jobs Act, modifies aspects of the international tax framework, and restores favorable tax treatment for\ncertain business provisions, including the immediate expensing of domestic research and development expenditures. resulting in a decrease\nin our deferred tax assets of approximately $3.1 million, primarily due to the immediate expensing of domestic research and development\nexpenditures.\n\n \n\nThe\namounts of cash income taxes paid by the Company were as follows:\n\n SCHEDULE\nOF INCOME TAXES PAID\n\n(in thousands) \nMarch 31, 2026 \n\nFederal \n$— \n\nState and Local: \n   \n\nFlorida \n 435 \n\nNew Jersey \n 575 \n\nNew York \n 108 \n\nAll Other States \n 33 \n\nIncome taxes, net of amounts refunded \n$1,151 \n\n \n\n**NOTE\n17. SUBSEQUENT EVENTS**\n\n** **\n\nOn\nApril 2, 2026, the Company announced the commercial launch of our generic methadone hydrochloride 5 mg and 10 mg tablets. The product\nis marketed and sold under the Elite Labs label.\n\n \n\nOn\nJune 1, 2026, the Company reported that it had filed an Abbreviated New Drug Application with the US Food and Drug Administration for\na generic version of an undisclosed drug product in the class of medications called anticoagulants.\n\n \n\nOn June 12, 2026, pursuant\nto a stipulated dismissal agreed to by both parties, the District Court of New Jersey signed an order dismissing the patent infringement\nsuit filed by Purdue Pharma against the Company in November 2023.\n\n \n\nF-24"}