{"url_path":"/sec/eltp/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A RISK FACTORS**","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":23863,"has_tables":true,"body_markdown":"**ITEM\n1A. RISK FACTORS**\n\n \n\nAn\ninvestment in the Company’s securities involves a high degree of risk. You should carefully consider the risks described below\nas well as other information provided to you in this report, including information in the section of this document entitled “Forward\nLooking Statements.” The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties\nnot presently known to us or that we currently believe are immaterial may also impair our business operations. If any of the following\nrisks actually occur, our business, financial condition or results of operations could be materially adversely affected, the value of\nour Common Stock could decline, and you may lose all or part of your investment.\n\n \n\nIn\naddition to the other information contained in this report, the following risk factors should be considered carefully in evaluating an\ninvestment in us and in analyzing our forward-looking statements.\n\n \n\n**Risk\nFactor Summary**\n\n \n\nThe\nfollowing is a summary of the risk factors contained in this Annual Report on Form 10-K that could adversely affect our business, ability\nto operate, financial condition, results of operation, equity and cash flows. This summary does not address all of the risks that we\nface and is qualified in its entirety by reference to the more detailed descriptions included below. In addition to this summary, we\nstrongly encourage you to carefully review the full risk factors in their entirety.\n\n \n\nBusiness\nRelated Risks\n\n \n\n \n●\nThe\npharmaceutical industry is highly competitive.\n\n \n\n \n●\nNatural\ndisasters and associated supply chain effects.\n\n \n\n \n●\nInterruptions\nin operations at our sole facility could have a material adverse effect on our business.\n\n \n\n \n●\nWe\nmay sell, withdraw or discontinue manufacture of certain products.\n\n \n\n \n●\nWe\nmay fail to successfully identify, develop, and commercialize new products.\n\n \n\n \n●\nIntroduction\nof generic equivalents of our products by competitors.\n\n \n\n \n●\nOur\noperations could be disrupted by failure of our information systems or cyber-attacks.\n\n \n\n \n●\nArtificial\nintelligence (“AI”) based platforms may present new risks and challenges to our business.\n\n \n\n \n●\nDelays\nin product development may result in failure to achieve adequate return on investment.\n\n \n\n16\n\n \n\n \n\n \n●\nOur\nbusiness is dependent on market acceptance of our products and social and political pressures, including public concern over the\nabuse of certain products, including opioids may adversely affect our business.\n\n \n\n \n●\nUnstable\neconomic conditions may adversely affect our business.\n\n \n\n \n●\nWe\ndepend on qualified scientific and technical personnel and our ability to attract and retained such.\n\n \n\n \n●\nUnsuccessful\ncollaboration or licensing arrangements could limit revenues and product development.\n\n \n\n \n●\nSubstantial\nportion of revenues is derived from a limited number of products.\n\n \n\n \n●\nWe\ndepend to a large extent on third-party suppliers and distributors for the raw materials for our products.\n\n \n\n \n●\nRisks\nrelated to incorrect or inadequate provision for price adjustments and sales allowances\n\n \n\nFinancial\nand Liquidity Related Risks\n\n \n\n \n●\nWe\nhave identified material weaknesses in our internal controls over financial reporting\n\n \n\n \n●\nWhile\nwe currently qualify as a smaller reporting company under SEC regulations, we cannot be certain, if we take advantage of the reduced\ndisclosure requirements applicable to these companies, that we will not make our stock less attractive to investors. Once we lose\nsmaller reporting company status, the costs and demands placed upon our management are expected to increase.\n\n \n\n \n●\nOur\noperating results could fluctuate significantly.\n\n \n\n \n●\nOur\nability to fund operations is uncertain and we may require additional financing to meet objectives.\n\n \n\n \n●\nThere\nis a risk of impairment of significant intangible assets on our balance sheet.\n\n \n\n \n●\nGAAP\nrequires estimates, judgments and assumptions which inherently contain uncertainties.\n\n \n\nLegal\nand Regulatory Risks\n\n \n\n \n●\nThe\npharmaceutical industry is heavily regulated, which creates uncertainty and substantial compliance costs.\n\n \n\n \n●\nDisruptions\nat the FDA, the DEA, the SEC, and other government agencies could negatively impact our business.\n\n \n\n \n●\nOur\nbusiness may be adversely affected by legislation or healthcare regulatory reform and initiatives.\n\n \n\n \n●\nUse\nof generics may be limited through legislative, regulatory or efforts of pharmaceutical companies.\n\n \n\n \n●\nOur\nrevenues and profits from generic products may decline as a result of changes in regulatory policy.\n\n \n\n \n●\nNew\ntariffs and evolving trade policy between the US and other countries may adversely affect our business.\n\n \n\n \n●\nThe\nDEA could limit the availability of active ingredients used in many of our products.\n\n \n\n \n●\nWe\nreceived a CRL from the FDA indicating that the SequestOx™ NDA is not ready for approval.\n\n \n\n \n●\nRegulatory\nfactors may cause us to be unable to manufacture products or face interruptions in our manufacturing process.\n\n \n\n \n●\nAgreements\nbetween branded pharmaceutical companies and generic pharmaceutical companies are facing increased government scrutiny in the United\nStates and internationally.\n\n \n\n \n●\nComplex\nreporting and payment obligations under the Medicaid rebate and other governmental programs.\n\n \n\n \n●\nInvestigations\nand litigation concerning the calculation of average wholesale prices may adversely affect our business\n\n \n\nLitigation\nand Liability Related Risks\n\n \n\n \n●\nWe\nmay not be able to obtain or maintain adequate insurance coverages.\n\n \n\n \n●\nLitigation,\nproduct liability claims, product recalls, government investigations and other significant legal proceedings are common in the pharmaceutical\nindustry.\n\n \n\n \n●\nWe\nare subject to various fraud and abuse laws which could expose us to criminal sanctions, civil penalties, contractual damages, reputational\nharm, and diminished profits and future earnings.\n\n \n\n \n●\nOur\nproducts contain controlled substances which may subject us to increased litigation risk and regulation.\n\n \n\n \n●\nMandatory\nREMS programs could increase the cost, burden, and liability associated with the commercialization of certain products.\n\n \n\n17\n\n \n\n \n\n \n●\nIllegal\ndistribution and third-party sale of counterfeit versions of our products could have a detrimental effect on our reputation and business.\n\n \n\n \n●\nCompetitors\nor other third parties may allege that we are infringing upon their intellectual property.\n\n \n\nIntellectual\nProperty Related Risks\n\n \n\n \n●\nOur\nability to protect intellectual property rights and successfully defend third-party allegations of intellectual property infringement\nis vital to our business and uncertain.\n\n \n\nRisks\nRelated to our Common Shares\n\n \n\n \n●\nDilution\nfrom issuance of shares pursuant to the exercise of warrants and options or the perception that dilution may occur could cause the\nprice per share of common stock to fall.\n\n \n\n \n●\nOur\ncommon stock is a penny stock, quoted on the OTC bulletin board, with rules in place that could limit trading and liquidity of our\nshares, increased transaction costs that could adversely affect our price per share.\n\n \n\n \n●\nShareholder\nactivism could negatively affect us.\n\n \n\n \n●\nOur\nstock price has been volatile.\n\n \n\n \n●\nCapital\nraises through sales of securities may cause substantial dilution to existing shareholders.\n\n \n\n \n●\nIssuance\nof shares of common or preferred stock could make achieving a change of control more difficult.\n\n \n\n \n●\nWe\nhave no plans to pay regular dividends or conduct ordinary share purchases.\n\n \n\n**Business\nRelated Risks**\n\n \n\n**The\npharmaceutical industry is highly competitive.**\n\n \n\nThe\npharmaceutical industry is highly competitive and subject to rapid and significant technological change, and we may be unable to compete\neffectively, which could impair our ability to implement our business model. Competitive factors faced include, without limitation:\n\n \n\n \n●\nIntroduction\nof other generic drug manufacturers’ products in direct competition with our generic drug products;\n\n \n\n \n●\nIntroduction\nof authorized generic drug products in direct competition with our products, particularly during any period of exclusivity;\n\n \n\n \n●\nThe\nability of generic drug product competitors to quickly enter the market after the expiration of patents or exclusivity periods, diminishing\nthe amount and duration of significant profits;\n\n \n\n \n●\nConsolidation\namong distribution outlets through mergers and acquisitions and the formation of buying groups;\n\n \n\n \n●\nThe\nwillingness of generic drug customer, including, without limitation, wholesale and retail customers, to switch among products of\ndifferent generic pharmaceutical manufacturers;\n\n \n\n \n●\nPricing\npressures by competitors and customers, even if similar price savings are not passed on to consumers;\n\n \n\n \n●\nA\ncompany’s reputation as a manufacturer and distributor of quality generic pharmaceutical products;\n\n \n\n \n●\nA\ncompany’s level of service, including, without limitation, maintaining sufficient inventory levels for deliveries consistent\nwith customer expectations;\n\n \n\n \n●\nA\ncompany’s ability to use and integrate technology, including the use and integration of AI;\n\n \n\n \n●\nProduct\nappearance and labeling;\n\n \n\n \n●\nA\ncompany’s breadth of product offerings;\n\n \n\n \n●\nRapid\nand significant technological change;\n\n \n\n \n●\nDevelopment\nand commercialization of advanced or novel drug delivery systems;\n\n \n\n \n●\nAvailability\nof greater financial resources to fund research and development, marketing, human resources and other operational and overhead resources\nand capabilities;\n\n \n\n \n●\nDevelopment\nof new formulations and products, or improvement of existing ones, at higher levels of efficiency; and\n\n \n\n \n●\nWe\ndepend on third-party suppliers and distributors for the raw materials for our products.\n\n \n\n \n●\nOur\nsuccess, if any, will depend in part on our ability to successfully keep pace with these factors.\n\n \n\n18\n\n \n\n \n\nAs\nwe expand our presence in the generic pharmaceuticals market our products may face intense competition from brand-name companies that\nhave taken aggressive steps to thwart competition from generic companies. In particular, brand-name companies continue to sell or license\ntheir products directly or through licensing arrangements or strategic alliances with generic pharmaceutical companies (so-called “authorized\ngenerics”). No significant regulatory approvals are required for a brand-name company to sell directly or through a third-party\nto the generic market, and brand-name companies do not face any other significant barriers to entry into such market. In addition, such\ncompanies continually seek to delay generic introductions and to decrease the impact of generic competition, using tactics which include,\nwithout limitation:\n\n \n\n \n●\nObtaining\nnew patents on drugs whose original patent protection is about to expire;\n\n \n\n \n●\nFiling\npatent applications that are more complex and costly to challenge;\n\n \n\n \n●\nFiling\nsuits for patent infringement that automatically delay approval from the FDA;\n\n \n\n \n●\nFiling\ncitizens’ petitions with the FDA contesting approval of the generic versions of products due to alleged health and safety issues;\n\n \n\n \n●\nDeveloping\ncontrolled-release or other “next-generation” products, which often reduce demand for the generic version of the existing\nproduct for which we may be seeking approval;\n\n \n\n \n●\nChanging\nproduct claims and product labeling;\n\n \n\n \n●\nDeveloping\nand marketing as over-the-counter products those branded products which are about to face generic competition; and,\n\n \n\n \n●\nMaking\narrangements with managed care companies and insurers to reduce the economic incentives to purchase generic pharmaceuticals.\n\n \n\nThese\nstrategies may increase the costs and risks associated with our efforts to introduce our generic products under development and may delay\nor prevent such introduction altogether.\n\n \n\nIn\naddition, sales of our products may be adversely affected by the continuing consolidation within the retail and wholesale pharmaceutical\nmarkets. Our products, whether sold directly by the Company or through third parties that are licensed to market and distribute our products\nare sold in large part to a market that is comprised of a relatively few retail drug chains, wholesalers, and managed care organizations,\nwith such entities continuing to undergo consolidation. Such consolidation may provide these customers or our products with additional\npurchasing leverage, and consequently, may increase the pricing pressures faced by us. Additionally, the emergence of large buying groups\nrepresenting independent retail pharmacies, and the prevalence and influence of managed care organizations and similar institutions,\nenable those groups to extract price discounts on our products and our revenues and quarterly results comparisons may also be affected\nby fluctuations in the buying patterns of retail chains, major distributors, and other trade buyers.\n\n \n\nFurthermore,\npolicies regarding returns, rebates, allowances and chargebacks, and marketing programs adopted by wholesalers may reduce our revenues\nin future fiscal periods. Based on industry practice, generic drug manufacturers have liberal return policies and have been willing to\ngive customers post-sale inventory allowances. Such industry practices apply to the current sales of our products by our marketing partners,\nwhich in turn effect profit splits and license fees received, and they will also affect prospective future sales made directly by Company.\n\n \n\nUnder\nthese arrangements, from time to time, customers are given credits on our generic products that are held by them in inventory after there\nis a decrease in the market prices of the same generic products due to competitive pricing. Therefore, if new competitors enter the marketplace\nand significantly lower the prices of any of their competing products, the price of our products would also likely be reduced. As a result,\nwe, or are marketing partners, would be obligated to provide credits to our customers who are then holding inventories of such products,\nwhich could reduce sales revenue, profit splits, license fees and gross margin for the period the credit is provided. Like most competitors\nin this market, our marketing partners, or us in the case of prospective direct sales made by the Company, also give credits for chargebacks\nto wholesalers that have contracts with our marketing partners, or us, prospectively, for their sales to hospitals, group purchasing\norganizations, pharmacies, or other customers. A chargeback is the difference between the price the wholesaler pays and the price that\nthe wholesaler’s end-customer pays for a product. Although, our marketing partners establish, and prospectively we would also establish\nreserves based on prior experience and best estimates of the impact that these policies may have in subsequent periods, we cannot ensure\nthat such reserves established are adequate or that actual product returns, rebates, allowances, and chargebacks will not exceed estimates.\nDifferences between established reserves and actual amounts of such credits and charges, could result in a material adverse effect on\nour business, financial condition, results of operations, cash flow and stock price.\n\n \n\nThe\nexistence and occurrence of any of the above could have a material adverse effect on our business, financial condition, results of operations,\ncash flow, ability to operate and stock price.\n\n \n\n19\n\n \n\n** **\n\n**Natural\ndisasters could cause closures of our facilities and disrupt our operations.**\n\n \n\nFurthermore,\nthe occurrence of one or more unexpected events, including fires, tornadoes, tsunamis, hurricanes, earthquakes, floods, and other forms\nof severe hazards in the United States or in other countries in which we or our suppliers operate or are located could adversely affect\nour operations and financial performance. We have lost power or had to shut down operations as a result of extreme weather and natural\ndisasters. These types of unexpected events could result in physical damage to and complete or partial closure of one or more of distribution\ncenters or manufacturing facilities, or the temporary or long-term disruption in the supply of products, and/or disruption of our ability\nto deliver products to customers. Further, the long-term effects of climate change on general economic conditions and the pharmaceutical\nmanufacturing and distribution industry in particular are unclear, and changes in the supply, demand or available sources of energy and\nthe regulatory and other costs associated with energy production and delivery may affect the availability or cost of goods and services,\nincluding natural resources, necessary to run our businesses. Existing insurance arrangements may not provide protection for the costs\nthat may arise from such events, particularly if such events are catastrophic in nature or occur in combination. Any long-term disruption\nin our ability to service our customers from one or more distribution centers or outsourcing facilities could have a material adverse\neffect on our operations, our business, results of operations and stock price.\n\n \n\nIn\naddition, outbreaks of contagious diseases and other adverse public health developments affecting us and/or the third parties on which\nwe rely could have a material and adverse effect on our business, financial condition and results of operations. For example, the COVID-19\npandemic, which impacted the operation of healthcare systems, global travel, supply and labor markets and other business and economic\nactivity worldwide, had a disruptive and adverse impact on our financial condition and results of operations and on those of many of\nthe third parties on which we rely.\n\n \n\nAlthough\nthe acute COVID-19 public health emergency has lapsed, we will continue to monitor its long-term impacts, including impacts on market\npractices and on the labor market, and adjust our policies and practices as needed to mitigate any adverse impacts to our business operations\nand financial condition. We will also work with our internal teams and the third-parties on which we rely to assess, and seek to mitigate,\nthe potential impacts on our business operations and financial condition of any future outbreaks of contagious diseases or other adverse\npublic health developments that may emerge from time to time.\n\n \n\n**Interruptions\nin operations at our sole facility could have a material adverse effect on our business.**\n\n \n\nIf\nour manufacturing facility or the facilities of any of our suppliers fail to comply with regulatory requirements or encounter other manufacturing\ndifficulties, it could adversely affect our ability to manufacture and supply products. All facilities and manufacturing processes used\nfor the manufacture of pharmaceutical products are subject to inspection by regulatory agencies at any time and must be operated in conformity\nwith cGMP and, in the case of controlled substances, DEA regulations. Compliance with the FDA’s cGMP and DEA requirements applies\nto both drug products seeking regulatory approval and to approved drug products. In complying with cGMP requirements, pharmaceutical\nmanufacturing facilities must continually expend significant time, money and effort in production, recordkeeping, quality assurance and\nquality control so that their products meet applicable specifications and other requirements for product safety, efficacy and quality.\nFailure to comply with applicable legal requirements subjects us, our manufacturing facilities and the facilities of our third-party\nsuppliers to possible legal or regulatory action, including, without limitation, shutdown, which may adversely affect our ability to\nsupply the product. Additionally, our manufacturing facilities, and those of our third-party suppliers may face other significant disruptions\ndue to labor strikes, failure to reach acceptable agreement with labor unions, infringement of intellectual property rights, vandalism,\nnatural disaster, pandemics, storm or other environmental damage, civil or political unrest, export or import restrictions or other events.\nWere we not able to manufacture products at our manufacturing facilities or were our third-party suppliers unable to manufacture products\nat their facilities because of regulatory, business or any other reasons, the manufacture and marketing of these products would be interrupted.\nThis could have a material adverse impact on our business, results of operation, financial condition, cash flows, competitive position\nand ability to operate.\n\n \n\nFurthermore,\nall of our manufacturing operations are conducted at the Northvale Facility and any delays or unanticipated expenses in connection with\nthe operation at the Northvale Facility, resulting in a significant disruption at this facility, even on a short-term basis, whether\ndue to, without limitation, an adverse quality or compliance observation, including a total or partial suspension of production and/or\ndistribution by regulatory authorities, an act of God, civil or political unrest, force majeure situation or other events could impair\nour ability to produce and ship products on a timely basis, and could, among other consequences, subject us to exposure to claims from\ncustomers. Any of these events could have a material adverse effect on our business, results of operations, financial condition, and\ncash flows.\n\n \n\n20\n\n \n\n** **\n\n**We\nmay sell, withdraw or discontinue manufacture of certain products.**\n\n \n\nWe\nmay discontinue the manufacture and distribution of certain existing products, which may adversely affect our business, results of operations,\nfinancial condition, and cash flows. As part of regular evaluations of product performance, we may determine that it is in our best interest\nto discontinue the manufacture and distribution of certain of our products. We cannot guarantee that we have correctly forecasted, or\nwill correctly forecast in the future, the appropriate products to discontinue or that a decision to discontinue various products is\nprudent if market conditions change. In addition, there can be no assurances that the discontinuance of products will reduce operating\nexpense or not cause the incurrence of material charges associated with such a decision. Furthermore, the discontinuance of existing\nproducts, entails various risks, including, without limitation, the ability to find a purchaser for such products, if there is a decision\nto sell the product, as well as the risk that the purchase price obtained will not be equal to at least the book value of the net assets\nrelating to such products. Other risks associated with a product discontinuance, include, without limitation, managing the expectations\nof and maintaining good relations with our customers who previously purchased a discontinued product from us, and the effects such would\nhave on future sales to these customers. We may also incur significant liabilities and costs associated with our product discontinuance.\n\n \n\nIn\naddition, we may, from time to time, sell and/or withdraw approved ANDAs if we determine that the costs of maintaining such ANDAs is\nexcessive when compared to their actual current value and their perceived value and place in our strategic plans.\n\n \n\nAlthough\nour expectations are to engage only in the sale or withdrawal of ANDAs if they advance or otherwise support our overall strategy, any\nsuch ANDA sale by definition reduces the size and scope of our business, with a direct correlation to opportunities with respect to certain\nmarkets, products or therapeutic categories.\n\n \n\nAll\nof the foregoing could have a material adverse effect on our business, results of operations, financial condition, cash flows and ability\nto operate.\n\n \n\n**We\nmay fail to successfully identify, develop and commercialize new products.**\n\n \n\nElite’s\nproduct pipeline, including the paused development of its abuse-deterrent opioid products, are in various stages of development. Prior\nto commercialization, product development must be completed that could include scale-up, clinical studies, bioequivalence studies, regulatory\nfiling, regulatory review, approval by the FDA, and/or other development steps. Development is subject to risks. We cannot assure you\nthat development will be successful, or that during development unexpected delays might occur or additional costs might be incurred.\n\n \n\nIn\norder to obtain FDA approval to market a new drug product, we must demonstrate proof of safety and effectiveness in humans or bioequivalence\nto the reference listed drug. To meet these requirements, we must conduct extensive preclinical testing and “adequate and well-controlled”\nclinical trials and/or bioequivalence studies. Conducting clinical trials and bioequivalence studies is a lengthy, time-consuming, and\nexpensive process. Completion of necessary clinical trials may take several years or more. Delays associated with product candidates\nfor which we are directly conducting preclinical or clinical trials may cause us to incur additional operating expenses. The commencement\nand rate of completion of clinical trials may be delayed by many factors, including, without limitation, for example:\n\n \n\n \n●\nIneffectiveness\nof our product candidate or perceptions by physicians that the product candidate is not safe or effective for a particular indication;\n\n \n\n \n●\nInability\nto manufacture sufficient quantities of the product candidate for use in clinical trials or bioequivalence studies;\n\n \n\n \n●\nDelay\nor failure in obtaining approval of our clinical trial protocols from the FDA or institutional review boards;\n\n \n\n \n●\nSlower\nthan expected rate of patient recruitment and enrollment;\n\n \n\n \n●\nInability\nto adequately follow and monitor patients after treatment;\n\n \n\n \n●\nDifficulty\nin managing multiple clinical sites;\n\n \n\n \n●\nUnforeseen\nsafety issues;\n\n \n\n \n●\nGovernment\nor regulatory delays, including as a result of staffing reductions at FDA, DEA or other governmental agencies; and,\n\n \n\n \n●\nClinical\ntrial or bioequivalence costs that are greater than we currently anticipate.\n\n \n\nEven\nif we achieve positive interim results in clinical trials and bioequivalence studies, these results do not necessarily predict final\nresults, and positive results in early trials and studies may not be indicative of success in later trials and studies. A number of companies\nin the pharmaceutical industry have suffered significant setbacks in advanced clinical trials, even after achieving promising results\nin earlier trials. Negative or inconclusive results or adverse medical events during a clinical trial could cause us to repeat or terminate\na clinical trial or require us to conduct additional trials. We do not know whether our existing or any future clinical trials or bioequivalence\nstudies will demonstrate safety and efficacy, or bioequivalence to the reference listed drug, sufficiently to result in marketable products.\nOur clinical trials may be suspended at any time for a variety of reasons, including if the FDA or we believe the patients participating\nin our trials are exposed to unacceptable health risks or if the FDA finds deficiencies in the conduct of these trials.\n\n \n\n21\n\n \n\n \n\nFailures\nor perceived failures in our clinical trials or bioequivalence studies will directly delay our product development and regulatory approval\nprocess, damage our business prospects, make it difficult for us to establish collaboration and partnership relationships, and negatively\naffect our reputation and competitive position in the pharmaceutical community.\n\n \n\nOur\nability to sustain current operations, engender business growth, achieve current and future revenues and profitability, significantly\ndepends on our ability to successfully identify, develop, obtain regulatory approval, commercialize and market new pharmaceutical products,\nincluding, without limitation, our own products as well as those that may be developed in partnership with other entities, such as those\nthat were previously developed with Praxgen pursuant to a now terminated product development agreement. As a result, we must continually\ndevelop, test and manufacture new products, which must meet regulatory standards to receive requisite marketing authorizations.\n\n \n\nThe\nprocess of developing and obtaining regulatory approvals for new products is time-consuming, costly and inherently unpredictable. There\nare direct, indirect, known and unknown risks inherent in the development of pharmaceuticals, including, without limitation, product\ncandidates which initially show promise in preliminary pharmacological or marketing studies, but fail to yield the positive results consistent\nwith initial indications. Product candidates we may develop may not receive the marketing authorizations necessary for us to market them\nand, if approved, we may be unable to successfully commercialize them on a timely basis or at all, or if commercialized, revenues and\nprofits achieved from the sale of such products might not reach levels that provide sufficient return on those costs incurred during\nthe commercialization process.\n\n \n\nThe\nsuccessful commercialization of a product is subject to a number of factors, including:\n\n \n\n \n●\nThe\ntimely filing of any NDA, ANDA or other regulatory submission applicable to our product candidates;\n\n \n\n \n●\nAny\nadverse development or perceived adverse development with respect to the applicable regulatory agency’s review of such regulatory\nsubmission and approval for the indication sought;\n\n \n\n \n●\nThe\neffectiveness, ease of use and safety of our products as compared to existing products;\n\n \n\n \n●\nCustomer\ndemand and the willingness of physicians and customers to adopt our products over products with which they may have more loyalty\nor familiarity and overcoming any biases towards our products;\n\n \n\n \n●\nThe\ncost of our product compared to alternative products and the pricing and commercialization strategies of our competitors;\n\n \n\n \n●\nThe\nsuccess of our launch and marketing efforts;\n\n \n\n \n●\nAdverse\npublicity about us, our products, our competitors and their products or the industry as a whole or favorable publicity about competitors;\n\n \n\n \n●\nThe\nadvent of new and innovative alternative products; and\n\n \n\n \n●\nAny\nunforeseen issues or adverse developments in connection with a product and any resulting litigation or regulatory scrutiny and harm\nto our reputation or the reputation or acceptance of the product in the market.\n\n \n\nIn\naddition, there are many risks associated with developing, commercializing and marketing new products that are beyond our control. For\nexample, without limitation, our collaboration partner(s) may decide to make substantial changes to a product’s formulation or\ndesign, may experience financial difficulties or may have limited financial resources. Any of the foregoing may delay the development,\ncommercialization and/or marketing of new products. In addition, if a codeveloper on a new product terminates our collaboration agreement\nor does not perform under the agreement, we may experience delays and additional costs in developing and marketing that product, with\nno assurances of us having the resources that may be required to overcome such delays or additional costs that were beyond our control.\n\n \n\nWe\nconduct research and development to enable us to manufacture and market pharmaceutical products in accordance with specific government\nregulations. Our drug development efforts relating to SequestOx™, which are currently paused, and certain generics are focused\non technically difficult-to-formulate products and/or products that require advanced manufacturing technology. Typically, expenses related\nto research, development, and regulatory approval of compounds for SequestOx™, which is a branded pharmaceutical product, the development\nof which is currently paused, are significantly greater than those expenses associated with generic products. Expanded research and development\nefforts are required, resulting in increased research expenses. Because of the inherent risk associated with research and development\nefforts in the healthcare industry, particularly with respect to new drugs, our research and development expenditures may not result\nin the successful regulatory approval and introduction of new pharmaceutical products and failure in the development of any new product\ncan occur at any point in the process, including late in the process after substantial investment. Also, after we submit a regulatory\napplication, the relevant governmental health authority may require that we conduct additional studies, including, for example, studies\nto assess the product’s interaction with alcohol. As a result, we may be unable to reasonably predict the total research and development\ncosts to develop a particular product and there is a significant risk that the funds we invest in research and development will not generate\nfinancial returns. In addition, our operating results and financial condition may fluctuate as the amount we spend to research and develop,\ncommercialize, acquire or license new products, technologies and businesses changes. Much of the preceding occurred with the development\nof SequestOx™, which has not received marketing approval from the FDA, for which continued development has been paused and with\nmaterial adverse effects on our business, results of operations, financial condition, cash flows and ability to operate resulting in\nthe past, as well as the risk remaining for the future.\n\n \n\n22\n\n \n\n \n\nBecause\nof these risks, our research and development efforts may not result in any commercially viable products. Any delay in, or termination\nof, preclinical or clinical trials will delay the filing of our drug applications with the FDA and, ultimately, our ability to commercialize\nproduct candidates and generate product revenues. If a significant portion of these development efforts are not successfully completed,\nrequired regulatory approvals are not obtained, or any approved products are not commercially successful, our business, financial condition,\nand results of operations may be materially harmed.\n\n \n\n**As\nour competitors introduce their own generic equivalents of our generic drug products, our revenues and gross margin from such products\ngenerally decline, often rapidly.**\n\n \n\nRevenues\nand gross margin derived from generic pharmaceutical products often follow a pattern based on regulatory and competitive factors that\nwe believe are unique to the generic pharmaceutical industry. As the patent(s) for a brand name product or any statutory period of marketing\nexclusivity expires, the first generic manufacturer to receive regulatory approval for a generic equivalent of the product is often able\nto capture a substantial share of the market. However, as other generic manufacturers receive regulatory approvals for their own generic\nversions, that market share, and the price of that product, will typically decline depending on several factors, including, without limitation,\nthe number of competitors, the price of the branded product and the pricing strategy of the new competitors. Significant competition\nin the generic pharmaceutical marketplace is not uncommon with one result of such being significant decline in revenue and gross margins.\nThere can be no assurances of our ability to continue to develop new products or that the number of competitors for any given product\nwill not increase to such an extent that we may stop marketing a generic drug product for which we previously obtained approval, resulting\nin a material adverse effect on our business, financial condition, results of operations, cash flow, ability to operate and stock price.\n\n \n\n**Our\noperations could be disrupted by failure of our information systems or cyber-attacks.**\n\n \n\nSignificant\ndisruptions to our IT systems or breaches of information security could adversely affect our business. In the ordinary course of business,\nwe collect, store and transmit what we consider to be large amounts of confidential information, and it is critical that we do so in\na secure manner to maintain the confidentiality and integrity of such information. Additionally, our IT systems are critical to our ability\nto store electronic and financial information and to manage a variety of business processes and activities, including, without limitation,\nmanufacturing, financial, logistics, sales, marketing and administrative functions. We depend on our IT infrastructure to communicate\ninternally and externally with employees, customers, suppliers and others. We also use IT networks and systems to comply with regulatory,\nlegal and tax requirements. We have outsourced significant elements of our IT infrastructure. As a result, we manage independent vendor\nrelationships with third-parties who are responsible for maintaining significant elements of our IT systems and infrastructure and who\nmay or could have access to our confidential information. The size and complexity of our IT systems, and those of our third-party vendors,\nmake such systems potentially vulnerable to service interruptions and security breaches from inadvertent or intentional actions by our\nemployees, partners or vendors. These systems are also vulnerable to attacks by malicious third-parties, such as phishing or ransomware\nattacks, and may be susceptible to intentional or accidental physical damage to the infrastructure maintained by us or by third parties,\nincluding, without limitation, as a result of extreme weather events, such as fires, floods, hurricanes or tornadoes or as the result\nof the use of AI or other new technologies.\n\n \n\nMaintaining\nthe secrecy of confidential, proprietary, and/or trade secret information is important to our competitive business position. We continually\nassess these threats and make investments to increase internal protection, detection, and response capabilities, as well as ensure our\nthird-party providers have required capabilities and controls, to address these risks. Like other public companies, our computer systems\nand those of our third-party vendors and service providers are regularly subject to, and will continue to be the target of, computer\nviruses, malware or other malicious code (including ransomware), unauthorized access, cyber-attacks or other computer-related penetrations,\nwhich have caused, and may continue to cause, disruptions to our operations. Over time, the sophistication of these threats continues\nto increase. Our reliance on unsupported and vulnerable operating systems and other software in certain cases may increase both the likelihood\nand potential severity of cyber incidents. The preventative actions we take to reduce the risk of cyber incidents and protect our information\nmay be insufficient. Our efforts may not prevent service interruptions or security breaches in our systems or the unauthorized or inadvertent\nwrongful use or disclosure of confidential information that could adversely affect our business operations or result in the loss, dissemination,\nor misuse of critical or sensitive information. A breach of our security measures or the accidental loss, inadvertent disclosure, unapproved\ndissemination, misappropriation or misuse of trade secrets, proprietary information, or other confidential information, whether as a\nresult of theft, hacking, fraud, trickery or other forms of deception, or for any other cause, could enable others to produce competing\nproducts, use our proprietary technology or information, and/or adversely affect our business position. Further, any such interruption,\nsecurity breach, loss or disclosure of confidential information could result in financial, legal, business, and reputational harm to\nus and could have a material adverse effect on our business, financial condition, results of operations, cash flow, ability to operate\nand stock price.\n\n \n\n23\n\n \n\n** **\n\n**Artificial\nintelligence based platforms may present new risks and challenges to our business.**\n\n \n\nAI\ntechnologies may exacerbate existing risks, including risks associated with data privacy, cybersecurity, IP, healthcare fraud and abuse,\ndrug development and manufacturing, and risks to patients or human subjects in clinical trials. AI also introduces new risks, due to\nthe autonomous nature of the technology, which, in some cases, may be deployed to perform tasks, inform decisions, automate decisions,\nand make predictions. AI may amplify biased and discriminatory decision making, perform unreliably and malfunction, generate insights\nwhich are difficult to interpret and explain, and cause direct harm to individuals or groups.\n\n \n\nRegulators\nare proposing, adopting, and implementing new AI laws and regulations. We may be required to change our business practices and policies\nas a result of such laws and regulations and may incur substantial compliance-related costs.\n\n \n\nRegulators\nare also using existing laws and regulations to take enforcement actions related to the deployment of AI in ways that result in non-compliance\nwith current laws and regulations. If we fail to comply with AI laws and regulations, we may be subject to sanctions, fines, and reputational\ndamage, orders to stop certain processing of personal data, orders to delete certain data or destroy AI algorithms derived from data\ncollects, legal action on behalf of impacted individuals or other enforcement or other actions. If we fail to take steps to protect our\nconfidential data, trade secrets, IP and personal data, we may be subject to legal, regulatory, financial, and reputational risks. AI\ntechnologies present significant opportunities and risks to our business. Harnessing AI’s transformative potential may enable us\nto speed up the discovery and development of new drugs, optimize our manufacturing processes, and drive efficiencies. Our failure to\nuse AI technologies in a way that maintains trust, quality and control in our business activities and to capitalize on opportunities\npresented by AI may also place us at a competitive disadvantage. Failure to address AI risks will reduce our ability to deliver strategic\nobjectives. Also, investments in AI may not realize the benefits that were anticipated.\n\n \n\n**Delays\nin generic product development may result in failure to achieve adequate return on investment.**\n\n \n\nThe\ntime necessary to develop generic drugs may adversely affect whether, and the extent to which, we receive a return on our capital. The\ndevelopment process for generic products, including, without limitation, drug formulation, testing, and FDA review and approval, often\ntakes three or more years. We must also successfully address any challenges brought by the owner of the listed patent. This process requires\nthat we expend considerable capital to pursue activities that do not yield an immediate or near-term return. Also, because of the significant\ntime necessary to develop a product, the actual market for a product at the time it is available for sale may be significantly less than\nthe originally projected market for the product. If this were to occur, our potential return on our investment in developing the product,\nif approved for marketing by the FDA, would be adversely affected and we may never receive a return on our investment in the product.\nIt is also possible for the manufacturer of the brand-name product for which we are developing a generic drug to obtain approvals from\nthe FDA to switch the brand-name drug from the prescription market to the OTC market. If this were to occur, we would be prohibited from\nmarketing our product other than as an OTC drug, in which case revenues could be substantially less than we anticipated.\n\n \n\n**Our\nbusiness is dependent on market acceptance of our products and social and political pressures, including public concern over the abuse\nof opioids may adversely affect our business.**\n\n \n\nMarket\nacceptance of our products among physicians, patients, health care payors and the medical community, is a key component of commercial\nsuccess and if such is not achieved, our business will be adversely affected. The degree of market acceptance of any of our approved\nproducts among physicians, patients, health care payors and the medical community will depend on a number of factors, including, without\nlimitation:\n\n \n\n \n●\nAcceptable\nevidence of safety and efficacy;\n\n \n\n \n●\nRelative\nconvenience and ease of administration;\n\n \n\n \n●\nThe\nprevalence and severity of any adverse side effects;\n\n \n\n \n●\nAvailability\nof alternative treatments;\n\n \n\n \n●\nPricing\nand cost effectiveness;\n\n \n\n \n●\nEffectiveness\nof sales and marketing strategies; and\n\n \n\n \n●\nAbility\nto obtain sufficient third-party coverage or reimbursement.\n\n \n\nIf\nwe are unable to achieve market acceptance for our products, then such products will not be commercially successful, and our business\nwill be adversely affected.\n\n \n\n24\n\n \n\n \n\nSome\nof these factors are not within our control, and our products may not achieve expected levels of market acceptance. Additionally, continuing\nand increasingly sophisticated studies of the proper utilization, safety and efficacy of pharmaceutical products are being conducted\nby the industry, government agencies and others which can call into question the utilization, safety, and efficacy of previously marketed\nproducts. In some cases, studies have resulted, and may in the future result, in the discontinuance of product marketing or other risk\nmanagement programs such as the need for a patient registry.\n\n \n\nWe\nmay also experience downward pressure on the price of our products due to social or political pressure to lower the cost of drugs, which\nwould reduce our revenue and future profitability.\n\n \n\nPublic\nconcern over the abuse of opioid medications, including increased legal and regulatory action, could also negatively affect our business.\nCertain governmental and regulatory agencies, as well as state and local jurisdictions, are focused on the abuse of opioid medications\nin the United States. State and local governmental agencies may investigate us as a manufacturer and/or distributor of medicines containing\nopioids or in conjunction with their investigation of other pharmaceutical wholesale distributors, and others in the supply chain that\nhave a direct or indirect connection to our operations in relation to the distribution of opioid medications. In addition, multiple lawsuits\nhave been filed against other pharmaceutical manufacturers and distributors alleging, among other claims, that they failed to provide\neffective controls and procedures to guard against the diversion of controlled substances, acted negligently by distributing controlled\nsubstances to pharmacies that serve individuals who abuse controlled substances, and failed to report suspicious orders of controlled\nsubstances in accordance with regulations. Additional governmental entities have indicated an intent to sue these other manufacturers\nand distributors. While no such actions have been taken against us, the immediate effect on the Company has been an inability to commercialize\nand market three opioid products approved during fiscal years prior to the year ended March 31, 2021 and a cessation of orders for another\ntwo other opioid products that had been marketed by our marketing partners. During the year ended March 31, 2020, we disposed of four\napproved ANDAs for opioid products. We currently hold four approved ANDAs for opioid products. Further, defense against\nany such opioid related lawsuits could be cost-prohibitive resulting in an adverse material effect on our business, financial condition,\nresults of operations, cash flows and stock price. Similar allegations made against us, even without litigation, could also negatively\naffect our business in various ways, including through increased costs and harm to our reputation. In addition, an adverse resolution\nof any lawsuit or investigation could also have a material adverse effect on our business, results of operations, cash flows and stock\nprice.\n\n \n\nMarket\nperceptions of our business are important to us, especially market perceptions of the safety and quality of our products. If any of our\nproducts or similar products that other companies distribute are subject to market withdrawal, recall, or are proven to be, or are claimed\nto be, harmful to consumers, then this could have a material adverse effect on our business, results of operations, financial condition,\nand cash flows. Furthermore, due to the importance of market perceptions, negative publicity associated with product quality, illness\nor other adverse effects resulting from, or perceived to be resulting from, our products, or similar products made by other companies,\ncould have a material adverse effect on our business, results of operations, financial condition, and cash flows.\n\n \n\nAny\nor all of the above could result in a material adverse effect on our business, financial condition, results of operations, cash flow,\nability to operate and stock price.\n\n \n\n**Unstable\neconomic conditions may adversely affect our business.**\n\n \n\nThe\nglobal economy has undergone a period of significant volatility, which has led to diminished credit availability, declines in consumer\nconfidence, and increases in unemployment rates. There remains caution about the stability of the U.S. economy, and we cannot assure\nthat further deterioration in the financial markets will not occur. These economic conditions have resulted in, and could lead to further,\nreduced consumer spending related to healthcare in general and pharmaceutical products in particular.\n\n \n\nIn\naddition, we have exposure to many different industries and counterparties, including our partners under our alliance and collaboration\nagreements, suppliers of raw chemical materials, drug wholesalers and other customers that may be affected by an unstable economic environment.\nAny economic instability may affect these parties’ ability to fulfil their respective contractual obligations to us, cause them\nto limit or place burdensome conditions upon future transactions with us or drive us and our competitors to decrease prices, each of\nwhich could materially and adversely affect our business, results of operations and financial condition, cash flows and stock price.\n\n \n\n**We\ndepend on qualified scientific and technical personnel and our ability to attract and retain such personnel.**\n\n \n\nBecause\nof the specialized scientific nature of our business, we are highly dependent upon our ability to continue to attract and retain qualified\nscientific and technical personnel. We are not aware of any pending, significant losses of scientific or technical personnel. Loss of\nthe services of, or failure to recruit, key scientific and technical personnel, however, would be significantly detrimental to our product\ndevelopment programs. As a result of our small size and limited financial and other resources, it may be difficult for us to attract\nand retain qualified officers and qualified scientific and technical personnel.\n\n \n\n25\n\n \n\n \n\nIn\naddition, marketing of our branded product, SequestOx™, if approved, will require much greater use of a direct sales force compared\nto marketing of our generic products, should we reinstate development and successfully commercialize this product. Our ability to realize\nsignificant revenues from marketing and sales activities depends on our ability or the ability of our partners to attract and retain\nqualified sales personnel. Competition for qualified sales personnel is intense. Any failure to attract or retain qualified sales personnel\ncould negatively impact our sales revenue and have a material adverse effect on our business, results of operations, financial condition,\ncash flows and stock price.\n\n \n\nWe\nhave entered into employment agreements with our executive officers and certain other key employees. We do not maintain “*Key\nMan*” life insurance on any executives.\n\n \n\n**Unsuccessful\ncollaboration or licensing arrangements could limit revenues and product development.**\n\n \n\nWe\nhave entered into several collaborations and licensing arrangements for the development of products. However, there can be no assurance\nthat any of these agreements will result in FDA approvals, or that we will be able to market any such products, if approved, at a profit.\nCollaboration and licensing arrangements pose the following risks:\n\n \n\n \n●\nCollaborations\nand licensing arrangements may be terminated, in which case we will experience increased operating expenses and capital requirements\nif we elect to pursue further development of the related product candidate;\n\n \n\n \n●\nCollaborators\nand licensees may delay clinical trials and prolong clinical development, under-fund a clinical trial program, stop a clinical trial,\nor abandon a product candidate;\n\n \n\n \n●\nExpected\nrevenue might not be generated because milestones may not be achieved, and product candidates may not be developed;\n\n \n\n \n●\nCollaborators\nand licensees could independently develop, or develop with third parties, products that compete with our future products;\n\n \n\n \n●\nThe\nterms of our contracts with current or future collaborators and licensees may not be favorable to us in the future;\n\n \n\n \n●\nA\ncollaborator or licensee with marketing and distribution rights to one or more of our products may not commit enough resources to\nthe marketing and distribution of our products, limiting our potential revenues from the commercialization of a product;\n\n \n\n \n●\nDisputes\nmay arise delaying or terminating the research, development, or commercialization of our product candidates, or result in significant\nand costly litigation or arbitration; and\n\n \n\n \n●\nOne\nor more third-party developers could obtain approval for a similar product prior to the collaborator or licensee resulting in unforeseen\nprice competition in connection with the development product.\n\n \n\nAny\nor all of the above could result in a material adverse effect on our business, financial condition, results of operations, cash flow,\nability to operate and stock price.\n\n \n\n**A\nsubstantial portion of our total revenues is expected to be derived from sales of a limited number of products to a limited number of\ncustomers.**\n\n \n\nWe\nexpect that we will continue to derive a substantial portion of our revenue from sales of a limited number of products. For the year\nended March 31, 2026, our significant product families (defined as the top four products based on active pharmaceutical ingredient) accounted\nfor in excess of 75% of allocated revenues (defined as gross revenues less chargebacks and government rebates processed). The sale of\nour products may be significantly influenced by market conditions, as well as regulatory actions. We may experience decreases in the\nsale of our products in the future as a result of actions taken by our competitors, such as price reductions, or as a result of regulatory\nactions, such as changes in quota, related to our products or to competing products, which could result in a material adverse on our\nbusiness, financial condition, results of operations, cash flow, ability to operate and stock price.\n\n \n\nWe\nalso expect that we will continue to derive a substantial portion of our revenue from sales to a limited number of customers. For the\nyear ended March 31, 2026, our six largest customers accounted for in excess of 75% of revenues. The loss of any one or more of these\ncustomers, without replacement by a customer of similar significance, or the substantial reduction in orders from any one or more of\nthese customers, without replacement of orders of a similar magnitude from other customers, could result in a material adverse effect\non our business, financial condition, results of operations, cash flow, ability to operate and stock price.\n\n \n\n26\n\n \n\n** **\n\n**We\ndepend to a large extent on third-party suppliers and distributors for the raw materials for our products, particularly the chemical\ncompounds comprising the active pharmaceutical ingredients (“API’s”) that we use to manufacture our products, as well\nas for certain finished goods.**\n\n \n\nWe\npurchase the bulk of the raw materials essential to our manufacturing business from third parties. If we experience supply interruptions\nor delays, or if a supplier discontinues the sale of certain products, we may have to obtain substitute materials or products, which\nin turn would require us to obtain amended or additional regulatory approvals, subjecting us to additional expenditures of significant\ntime and resources. In addition, changes in our raw material suppliers could result in significant delays in production, higher raw material\ncosts and loss of sales and customers, because regulatory authorities must generally approve raw material sources for pharmaceutical\nproducts, which may be time consuming. For example, it may take as long as 18 months to find and qualify a new sole-source supplier.\nIf we receive less than one year’s termination notice from a sole-source supplier that intends to cease supplying raw materials,\nit could result in disruption of our ability to produce the drug involved. Any significant interruption could result in a material adverse\non our business, financial condition, results of operations, cash flow, ability to operate and stock price.\n\n \n\n**We\nissue price adjustments and other sales allowances to our customers. Although we may establish reserves based on our estimates of these\namounts, if estimates are incorrect and the reserves are inadequate, it may result in adjustments to these liabilities that may have\na material adverse effect on our financial position and results of operations.**\n\n \n\nBased\non estimates, we establish liabilities for sales allowances, including, without limitation, sales discounts, returns, chargebacks, sales\nvolume rebates, shelf stocks, cash discounts and Medicaid rebate obligations at each reporting period. Although we believe our liabilities\nare adequate as of the date of this report, there can be no assurances given by us that our reserves will ultimately prove to be adequate.\nIncreases in such sales allowances may exceed our estimates for a variety of reasons, including, without limitation, unanticipated competition,\nan unexpected change in one or more contractual relationships or changes in ratios in contractual sales volumes as compared to historical\nratios. We will continue to evaluate the relevant factors upon which our estimates and reserves are calculated and record appropriate\nadjustments if and when deemed necessary. Any failure to establish adequate liabilities with respect to these sales allowances could\nresult in a material adverse effect on our business, financial position, results of operations, cash flows, ability to operate and cash\nflows.\n\n \n\n**Financial\nand Liquidity Risks**\n\n \n\n**We\nhave identified material weaknesses in our internal control over financial reporting which could, if not remediated, adversely affect\nour ability to report our financial condition, cash flows and results of operations in a timely and fairly stated manner and/or increase\nthe risk of future misstatements, which could have a material adverse effect on our business, financial condition, cash flows and results\nof operations and could cause the market value of our common shares and/or debt securities to decline.**\n\n \n\nOur\nmanagement is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule\n13a-15(f) under the Exchange Act. Based on reviews conducted by management and specific guidance from third-party subject matter experts\nengaged by the Company, we have concluded that material weaknesses in the Company’s internal controls over financial reporting\nexisted. A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting such that\nthere is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or\ndetected on a timely basis.\n\n \n\nThe\nCompany has identified certain remediation actions and is in the process of implementing them, but such efforts are not complete, most\nlikely require the retention of additional personnel or consultants, both of which are further subject to the Company’s financial\ncondition and financial ability to retain such resources. Although no material misstatement of historical financial statements was identified,\nif we are unable to complete our remediation in a timely manner or if our remedial measures are insufficient to address the material\nweaknesses, or if additional material weaknesses in our internal controls are discovered or occur in the future, it may adversely affect\nour ability to report our financial condition and results of operations in a timely and accurate manner and there will continue to be\nan increased risk of future misstatements. In our periodic review and evaluation of internal control systems to allow management to assess\nthe effectiveness of our internal controls over financial reporting, we may discover additional weaknesses in our internal controls over\nfinancial reporting or disclosure controls and procedures. The next time we evaluate our internal controls over financial reporting and\ndisclosure controls and procedures, if we identify one or more new material weaknesses or have been unable to timely remediate our existing\nmaterial weaknesses, we would be unable to conclude that our internal controls over financial reporting or disclosure controls and procedures\nare effective. If we are unable to conclude that our internal controls over financial reporting or our disclosure controls and procedures\nare effective or, if required to issue such an opinion, our independent registered public accounting firm expresses an opinion that our\ninternal controls over financial reporting is ineffective, we may not be able to report our financial condition and results of operations\nin a timely and accurate manner, which could have a material adverse effect on our business, financial condition, cash flows and results\nof operations and could cause the market value of our common shares to decline. In addition, any potential future restatements could\nsubject us to additional adverse consequences, including sanctions by the SEC, shareholder litigation and other adverse actions. Moreover,\nwe may be the subject of further negative publicity focusing on such financial statement adjustments and resulting restatement and negative\nreactions from our shareholders, creditors or others with whom we do business. The occurrence of any of the foregoing could have a material\nadverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common\nshares to decline. Please see Item 9A “*Controls and Procedures*” in Part II.\n\n \n\n27\n\n \n\n** **\n\n**While\nwe currently qualify as a smaller reporting company under SEC regulations, we cannot be certain, if we take advantage of the reduced\ndisclosure requirements applicable to these companies, that we will not make our stock less attractive to investors. Once we lose smaller\nreporting company status, the costs and demands placed upon our management are expected to increase.**\n\n \n\nThe\nSEC’s rules exempt smaller reporting companies, like us, from various reporting requirements applicable to public companies that\nare not smaller reporting companies. As long as we qualify as a smaller reporting company based on our public float and report less than\n$100 million in annual revenues in a fiscal year, we are permitted, and we intend, to omit the auditor’s attestation on internal\ncontrol over financial reporting that would otherwise be required by the Sarbanes-Oxley Act. This Annual Report on Form 10-K reports annual revenues for the fiscal year ended March 31, 2026 in excess of $100\nmillion. We therefore expect to no longer qualify for smaller reporting company status in the near future.\n\n \n\nUntil\nsuch time that we lose smaller reporting company status, it is unclear if investors will find our stock less attractive because we may\nrely on certain disclosure exemptions. If some investors find our stock less attractive as a result, there may be a less active trading\nmarket for the stock, and our stock price may be more volatile and could cause our stock price to decline. Even if we remain a smaller\nreporting company, if our public float exceeds $75 million and we report $100 million or more in annual revenues in a fiscal year, we\nwill become subject to the provisions of Section 404(b) of the Sarbanes-Oxley Act, requiring our independent registered public accounting\nfirm to provide an attestation report on the effectiveness of our internal control over financial reporting, making the public reporting\nprocess more costly.\n\n \n\n**Our\noperating results could fluctuate significantly.**\n\n \n\nOur\nrevenues and operating results may vary significantly from year-to-year and quarter-to-quarter as well as in comparison to the corresponding\nquarter of the preceding year. Variations may result from one or more factors, including, without limitation:\n\n \n\n \n●\nTiming\nof approval of applications filed with the FDA;\n\n \n\n \n●\nTiming\nof process validation, product launches and market acceptance of products launched;\n\n \n\n \n●\nChanges\nin the amounts spent to research, develop, acquire, license or promote new and existing products;\n\n \n\n \n●\nResults\nof clinical trial programs;\n\n \n\n \n●\nSerious\nor unexpected health or safety concerns with our products, brand products which we have genericized, products currently under development\nor any other product candidates;\n\n \n\n \n●\nIntroduction\nof new products by others that render our products obsolete or non-competitive;\n\n \n\n \n●\nThe\nability to maintain selling prices and gross margin on our products;\n\n \n\n \n●\nMix\nof product manufactured and sold due to each product having different gross margins;\n\n \n\n \n●\nThe\ncost and outcome of litigation, in the event that such occurs in relation to, without limitation, IP issues, regulatory or other\nmatters;\n\n \n\n \n●\nThe\nability to comply with complex and numerous governmental regulations and regulatory authorities which oversee and regulate many aspects\nof our business and operations;\n\n \n\n \n●\nChanges\nin coverage and reimbursement policies of health plans and other health insurers, including changes to Medicare, Medicaid, and similar\nstate programs, especially in relation to those products that are currently manufactured, under development or identified for future\ndevelopment by the Company;\n\n \n\n \n●\nIncreases\nin the cost of raw materials contained within our products;\n\n \n\n \n●\nManufacturing\nand supply interruptions, including product rejections or recalls due to failure to comply with manufacturing specifications;\n\n \n\n \n●\nTiming\nof revenue recognition relating to our licensing and other agreements;\n\n \n\n \n●\nThe\nability to avoid infringing the intellectual property of others;\n\n \n\n \n●\nThe\nability to protect our intellectual property from being acquired by other entities;\n\n \n\n \n●\nOur\nability to manage growth and integrate acquired products and assets successfully; and\n\n \n\n \n●\nThe\naddition or loss of customers.\n\n \n\n28\n\n \n\n \n\nA\nnegative variation in one, many or all of the above factors could, may or will have a material adverse effect on Elite’s business,\nresults of operations, financial condition, and cash flow and ability to operate in the future, depending on the nature and magnitude\nof the variation.\n\n \n\nIn\naddition, we have been in operation since 1990, and were not profitable until the fiscal year ended March 31, 2021. In certain years\nprior to the fiscal year ended March 31, 2021, the auditor’s opinion on our financial statements was qualified with respect to\nthere being substantial doubt as to the Company’s ability to continue as a going concern due to continued losses not being sufficiently\noffset by operating revenues. There can be no assurances of our ability to sustain current profitability and a failure to generate sufficient\nrevenues to offset related costs of operations will have a material adverse effect on our business, results of operations, financial\ncondition, cash flow and ability to operate.\n\n \n\nFurthermore,\nour business model is likely to continue to evolve as we attempt to expand our product offerings and our presence in the generic pharmaceutical\nmarket. As a result, our potential for future profitability must be considered in view of the risks, uncertainties, expenses, and difficulties\nfrequently encountered by companies that are attempting to move into new markets and continuing to innovate with new and unproven technologies.\nSome of these risks relate to our potential inability to:\n\n \n\n \n●\nDevelop\nnew products;\n\n \n\n \n●\nObtain\nregulatory approval of our products;\n\n \n\n \n●\nManage\nour growth, control expenditures and align costs with revenues and\n\n \n\n \n●\nAttract,\nretain, and motivate qualified personnel; and respond to competitive developments.\n\n \n\nIf\nwe do not effectively address the risks we face, our business model may become unworkable and we may not achieve or sustain profitability\nor successfully develop any products, resulting in a material adverse effect on Elite’s business, results of operations, financial\ncondition, and cash flow and ability to operate in the future.\n\n \n\n**Our\nability to fund and grow operations is uncertain and we may require additional financing to meet objectives.**\n\n \n\nOur\nability to fund current operations, maintain liquidity and execute growth plans is reliant on resources generated from our operations,\nwhich are subject to significant risks and uncertainties. We rely mainly on cash generated by operations and have also in the past accessed\nfinancial markets and equipment financings, to fund our commercial, product development and other operations, maintain liquidity and\nmeet our financial obligations.\n\n \n\nAs\nof March 31, 2026, we had cash on hand of approximately $30 million and a working capital of approximately $95 million, and for the\nyear ended March 31, 2026, we generated income from operations totaling approximately $49 million, net other income totaling\napproximately $8 million and a net tax expense of approximately $12 million, resulting in a net income of approximatley $45 million.\nThere can be no assurances of the continuation of revenues being earned from the current generic product line, nor Elite’s\nsuccessful commercialization of other products in our development pipeline. In addition, there can be no assurances of Elite being\nable to raise additional funds in a timely manner, on acceptable terms, if needed to support commercial operations, implement\nnecessary facility upgrades or finance the execution of strategic growth initiatives, resulting in a material detrimental effect on\nElite’s operations and profits as well as having a material adverse effect on our business, results of operations, financial\ncondition, and cash flow.\n\n \n\nOur\noperations are also subject to many significant risks and uncertainties, as described, without limitation, in this “*Risk Factors*”\nsection, including, without limitation, competition in the markets in which we operate, litigation risks, government investigations,\nincluding those related to our sale, marketing and/or distribution of prescription opioid medications in prior periods, and others. Any\nnegative development or outcome in connection with any or all of these risks and uncertainties could result in significant consequences,\nincluding, without limitation, one or more of the following:\n\n \n\n \n●\nThe\ndedication of a substantial portion of our cash flows from operations to the payment of legal or related expenses, resulting in these\nsame funds being unavailable for other purposes, including, without limitation, debt service, operations, capital expenditures, product\ndevelopment and future business opportunities;\n\n \n\n \n●\nA\nlimitation in our ability to adjust to changing market conditions, causing us to be more vulnerable to periods of negative or impaired\ngrowth in the general economy or in our business, resulting in the Company being put at a competitive disadvantage as a result of a\ndecreased or unavailable ability to engage in capital spending and take all other actions that would otherwise be required to ensure\ngrowth and competitiveness;\n\n \n\n \n●\nA\nlimitation in our ability to attract and retain key personnel;\n\n \n\n \n●\nA\ndecrement in our debt service and compliance obligations related to certain of our outstanding debt obligations, exposing us to events\nof default and reduced credit ratings, which in turn lead to increased capital costs and potential unavailability of capital and\n\n \n\n \n●\nAn\noverall inability to fund our operations and liquidity needs.\n\n \n\n29\n\n \n\n \n\nThe\noccurrence or possibility of one or more of these or similar events may cause us to pursue one or more significant corporate transactions\nas well as other remedial measures, including refinancing all or part of our then-existing indebtedness, selling assets, reducing, delaying\nor eliminating capital expenditures, seeking to raise additional capital or pursuing internal reorganizations, restructuring activities,\nstrategic alliances, or cost-saving initiatives. Any refinancing of indebtedness could be at significantly higher interest rates, which\nwill depend on both the conditions of the market as well as the Company’s finances at such time, and may also require our compliance\nwith covenants that could be more onerous than current, which in turn could result in the further restriction of our business operations.\nAny refinancing may also increase the amount of our secured indebtedness. In addition, the terms of existing or future debt agreements\nmay restrict us from adopting any of the alternatives. Internal reorganizations, restructuring activities, asset sales and cost saving\ninitiatives may also be complex and could entail significant costs and charges or could otherwise negatively impact shareholder value.\nThere can also be no assurance that we will be able to accomplish any of these alternatives on terms acceptable to us, or at all, or\nthat even if accomplished, that the intended results and benefits would be realized.\n\n \n\n**There\nis a risk of impairment of significant intangible assets on our balance sheet.**\n\n \n\nWe\nhave significant intangible assets on our balance sheet. Consequently, potential impairment of intangible assets may have an adverse\nmaterial effect on our profitability.\n\n \n\nIntangible\nassets represent a material asset on our balance sheet. As of March 31, 2026, intangible assets were approximately $4.8 million.\n\n \n\nGenerally\naccepted accounting principles in the United States (“GAAP”) requires that intangible assets be subject to regular impairment\nanalysis to determine if changes in circumstances indicate that the value of the asset as recorded may not be recoverable. Such events\nor changes in circumstances are an inherent risk in the pharmaceutical industry and often cannot be predicted. However, should a change\nin circumstance occur, requiring the impairment of an intangible asset, the result of such an impairment may have an adverse material\neffect on our business, financial condition, results of operations, cash flows and stock price. During the year ended March 31, 2026,\nwe recorded impairment of approximately $1 million related to our ANDA and patent intangible assets.\n\n \n\n**GAAP\nrequires estimates, judgments and assumptions which inherently contain uncertainties.**\n\n \n\nThere\nare inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance\nwith GAAP. Any future changes in estimates, judgments and assumptions used or necessary revisions to prior estimates, judgments or assumptions\ncould lead to a restatement of our results.\n\n \n\nThe\nconsolidated financial statements included in this Annual Report on Form 10-K are prepared in accordance with GAAP. This involves making\nestimates, judgments and assumptions that affect reported amounts of assets (including intangible assets), liabilities, mezzanine equity,\nstockholders’ equity, operating revenues, costs of sales, operating expenses, other income, and other expenses. Estimates, judgments,\nand assumptions are inherently subject to change in the future and any necessary revisions to prior estimates, judgments or assumptions\ncould lead to a restatement. Any such changes could result in corresponding changes to the amounts of assets (including goodwill and\nother intangible assets), liabilities, mezzanine equity, stockholders’ equity, operating revenues, costs of sales, operating expenses,\nother income and other expenses.\n\n \n\n**Legal\nand Regulatory Risks**\n\n \n\n**The\npharmaceutical industry is heavily regulated which creates uncertainty and substantial compliance costs.**\n\n \n\nThe\npharmaceutical industry is heavily regulated, which creates uncertainty about our ability to bring new products to market and imposes\nsubstantial compliance costs on our business in relation to product development as well as commercial operations.\n\n \n\nGovernmental\nauthorities such as the FDA impose substantial requirements on the development, manufacture, holding, labelling, marketing, advertising,\npromotion, distribution and sale of therapeutic pharmaceutical products through lengthy and detailed laboratory and clinical testing\nand other costly and time-consuming procedures. In addition, before obtaining regulatory approvals for certain generic products, we must\nconduct limited bioequivalence studies and other research to show comparability to the branded products. A failure to obtain satisfactory\nresults in required pre-marketing trials may prevent us from obtaining required regulatory approvals. The FDA may also require companies\nto conduct post-approval studies and companies are subject to post-approval surveillance regarding their drug products and to report\nadverse events. The FDA also can require companies to formulate approved (REMS) to help ensure that a drug’s benefits outweigh\nits risks.\n\n \n\nWe\nmay seek FDA approval for certain product candidates through the 505(b)(2) regulatory pathway. Even if we receive approval for an NDA\nunder Section 505(b)(2), the FDA may not take timely enforcement action against companies marketing unapproved versions of the drug;\ntherefore, we cannot be sure that that we will receive the benefit of any de facto exclusive marketing period or that we will fully recoup\nthe expenses incurred to obtain an approval. In addition, certain competitors and others have objected to the FDA’s interpretation\nof Section 505(b)(2). If the FDA’s interpretation of Section 505(b)(2) is successfully challenged, this could delay or even prevent\nthe FDA from approving any NDA that we submit under Section 505(b)(2).\n\n \n\n30\n\n \n\n \n\nMoreover,\neven if our product candidates are approved under Section 505(b)(2), the approval may be subject to limitations on the indicated uses\nfor which the products may be marketed or to other conditions of approval or may contain requirements for costly post-marketing testing\nand surveillance to monitor the safety or efficacy of the products.\n\n \n\nThe\nANDA approval process for a new product varies in time, is difficult to estimate and can vary significantly, from as little as 10 months\nfrom the date of application, to several years or more. Furthermore, ANDA approvals, if granted, may not include all indications for\nwhich the Company may seek to market each product.\n\n \n\nFurther,\nonce a product is approved or cleared for marketing, failure to comply with applicable regulatory requirements can result in, among other\nthings, suspensions or withdrawals of approvals or clearances, seizures or recalls of products, injunctions against the manufacture,\nholding, distribution, marketing and sale of a product, and civil and criminal sanctions. Furthermore, changes in existing regulations\nor the adoption of new regulations could prevent us from obtaining, or affect the timing of, future regulatory approvals or clearances.\nMeeting regulatory requirements and evolving government standards may delay marketing of our new products for a considerable period of\ntime, impose costly procedures upon our activities and result in a competitive advantage to larger companies that compete against us.\n\n \n\nEven\nif regulatory approval is obtained for a particular product candidate, the FDA and foreign regulatory authorities may, nevertheless,\nimpose significant restrictions on the indicated uses or marketing of such products, or impose ongoing requirements for post-approval\nstudies. Following any regulatory approval of our product candidates, we will be subject to continuing regulatory obligations, such as\nsafety reporting requirements, and additional post-marketing obligations, including regulatory oversight of the promotion and marketing\nof our products. If we become aware of previously unknown problems with any of our product candidates here or overseas or at our contract\nmanufacturers’ facilities, a regulatory agency may impose restrictions on our products, our contract manufacturers or on us, including\nrequiring us to reformulate our products, conduct additional clinical trials, make changes in the labelling of our products, implement\nchanges to or obtain re-approvals of our contract manufacturers’ facilities or withdraw the product from the market. In addition,\nwe may experience a significant drop in the sales of the affected products, our reputation in the marketplace may suffer and we may become\nthe target of lawsuits, including class action suits. Moreover, if we fail to comply with applicable regulatory requirements, we may\nbe subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions,\nand criminal prosecution. Any of these events could harm or prevent sales of the affected products or could substantially increase the\ncosts and expenses of commercializing and marketing these products.\n\n \n\nCompliance\nwith federal and state and local law regulations, including compliance with any newly enacted regulations, requires substantial expenditures\nof time, money, and effort to ensure full compliance. Failure to comply with the FDA, DEA, EPA and other governmental regulations can\nresult in fines, disgorgement, unanticipated compliance expenditures, recall or seizure of products, exposure to product liability claims,\ntotal or partial suspension of production or distribution, suspension of the FDA’s review of NDAs or ANDAs, enforcement actions,\ninjunctions and civil or criminal prosecution, any of which could have a material and adverse effect on our business, results of operations\nand financial condition.\n\n \n\n**Disruptions\nat the FDA, the DEA, the SEC and other government agencies could negatively impact our business.**\n\n \n\nDisruptions\nat, without limitation, the FDA, the DEA, and other regulatory agencies, including\ndue to changes in government or significant changes in leadership or personnel, could increase the time required for new products to\nbe reviewed and approved, or otherwise cause delays to the regulatory approval or post-approval processes for our products, which could\nadversely affect our business. The ability of the FDA, the DEA or other regulatory agencies to review and approve new products or manage\npost-approval requirements for marketed products can be affected by a variety of factors, including government budget and funding levels,\nability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, political and policy changes.\nAverage review times for product submissions have fluctuated in recent years as a result. In addition, government funding of the SEC\nand other government agencies on which our operations may rely is subject to the impacts of political events, which are inherently fluid\nand unpredictable.\n\n \n\nFor\nexample, over the last several years, the U.S. government has shut down several times, including the fall of 2025, and certain regulatory\nagencies, such as the FDA, the DEA and the SEC, have had to furlough critical employees and stop critical\nactivities. If a prolonged government shutdown occurs, or if other global, political or economic conditions impact the regulatory agencies\nwith which we interact, it could significantly impact the ability of the FDA, the DEA, the SEC and other agencies to timely review and\nprocess our submissions, which could have a material and adverse effect on our business, results of operations and financial condition.\n\n \n\n31\n\n \n\n** **\n\n**Our\nbusiness may be adversely affected by legislation or healthcare regulatory reform and initiatives.**\n\n \n\nThere\nhave been, and there will continue to be, legislative, regulatory and third-party payor proposals to change the healthcare system in\nways that could impact our ability to commercialize our products profitably. We anticipate that the federal and state legislatures and\nthe private sector will continue to consider and may adopt and implement healthcare policies, such as the IRA and the Patient Protection\nand Affordable Care Act enacted in 2010 (“ACA”), intended to curb rising healthcare costs. These cost-containment measures\nmay include, among other measures: requirements for pharmaceutical companies to negotiate prescription drug prices with government healthcare\nprograms; controls on government-funded reimbursement for drugs; new or increased requirements to pay prescription drug rebates to government\nhealthcare programs, including if drug prices increase at a higher rate than inflation; controls on healthcare providers; challenges\nto or limits on the pricing of drugs, including pricing controls or limits or prohibitions on reimbursement for specific products through\nother means; requirements to try less expensive products or generics before a more expensive branded product; and public funding for\ncost effectiveness research, which may be used by government and private third-party payors to make coverage and payment decisions.\n\n \n\nFor\nexample, the ACA includes numerous provisions that affect pharmaceutical companies, including provisions intended to expand healthcare\ncoverage to the uninsured through private health insurance reforms and an expansion of Medicaid. The ACA also imposes substantial costs\non pharmaceutical manufacturers, such as an increase in liability for rebates paid to Medicaid, new drug discounts that must be offered\nto certain enrollees in the Medicare prescription drug benefit and an annual fee imposed on all manufacturers of brand prescription drugs\nin the U.S. The ACA also requires increased disclosure obligations and an expansion of an existing program requiring pharmaceutical discounts\nto certain types of hospitals and federally subsidized clinics and contains cost-containment measures that could reduce reimbursement\nlevels for pharmaceutical products. The ACA also includes provisions known as the Physician Payments Sunshine Act, which require manufacturers\nof drugs, biologics, devices and medical supplies covered under Medicare and Medicaid to record any transfers of value to certain U.S.\nhealthcare providers (including, but not limited to, physicians, physician assistants, nurse practitioners, dentists, optometrists, podiatrists,\nchiropractors and other healthcare providers) and teaching hospitals and to report this data to the CMS annually for subsequent public\ndisclosure. Similar reporting requirements have also been enacted on the state level domestically, and an increasing number of countries\nworldwide either have adopted or are considering similar laws requiring transparency of interactions with healthcare professionals. Failure\nto report appropriate data may result in civil or criminal fines and/or penalties.\n\n \n\nIn\naddition, the IRA contains provisions intended to lower beneficiary drug spending. The IRA enables Medicare to negotiate prescription\ndrug prices with manufacturers of certain high-cost drugs for the first time. A separate provision requires drug manufacturers to pay\nrebates to Medicare if their drug prices increase at a higher rate than the rate of inflation (the so-called inflation rebate provision).\nAdditionally, beginning in 2024, the IRA eliminated the 5% coinsurance for catastrophic coverage under Medicare Part D; and in 2025,\nthe IRA capped the beneficiary annual out-of-pocket expenditure and required new mandatory manufacturer discounts. Since its enactment,\nCMS has taken steps to implement various provisions of the IRA, including negotiating and publishing maximum fair prices for drugs selected\nunder the IRA’s negotiation framework. The ultimate impact of the IRA’s drug pricing provisions on the pharmaceutical industry,\nincluding on pricing, reimbursement, and market dynamics, remains uncertain.\n\n \n\nLegislative\nand regulatory efforts to implement drug pricing reforms, including MFN models, can adversely affect our business, if implemented. These reforms\ncreate uncertainty for our business, and they remain subject to change through potential legal challenges or subsequent rulemaking or\nsub-regulatory guidance. While we are unable to predict whether any pending or future reforms may be adopted, if such reforms are adopted\nthey could lower our pricing, which would have a material negative impact on our competitive position in the market, our sales levels\nand our profitability.\n\n \n\nIn\naddition, while we are not currently engaged in clinical trials at this time, if that changes and we are unable to adapt to changes in\nexisting requirements or the adoption of new requirements or policies governing clinical trials, our development plans may be impacted.\nFor example, in December 2022, with the passage of Food and Drug Omnibus Reform Act (“FDORA”), Congress required sponsors\nto develop and submit a Diversity Action Plan (“DAP”) for each Phase 3 clinical trial or any other “pivotal study”\nof a new drug or biological product. These plans are meant to encourage the enrollment of more diverse patient populations in late-stage\nclinical trials of FDA-regulated products. In June 2024, as mandated by FDORA, the FDA issued draft guidance outlining the general requirements\nfor DAPs. Unlike most guidance documents issued by the FDA, the DAP guidance when finalized will have the force of law because FDORA\nspecifically dictates that the form and manner for submission of DAPs are specified in FDA guidance. In January 2025, in response to\nan Executive Order issued by the President of the United States on Diversity, Equity and Inclusion programs, the FDA removed this draft\nguidance from its website. This action raises questions about the applicability of statutory obligations to submit DAPs and the agency’s\ncurrent thinking on best practices for clinical development.\n\n \n\n32\n\n \n\n \n\nAny\nnew laws or regulations that have the effect of imposing additional costs or regulatory burden on pharmaceutical manufacturers, or otherwise\nnegatively affect the industry, could adversely affect our ability to successfully commercialize our products and any future product\ncandidates, if approved. The implementation of any price controls, caps on prescription drugs or price transparency requirements, whether at the federal\nlevel or state level, could have a material adverse effect on our business, ability to operate as a going concern, financial condition,\nresults of operations and cash flow.\n\n \n\n**Use\nof generics may be limited through legislative, regulatory or efforts of pharmaceutical companies.**\n\n \n\nMany\npharmaceutical companies increasingly have used state and federal legislative and regulatory means to delay generic competition, which,\nif successful, could limit the use of generic pharmaceuticals. These efforts have included:\n\n \n\n \n●\nPursuing\nnew patents for existing products which may be granted just before the expiration of earlier patents, which could extend patent protection\nfor additional years;\n\n \n\n \n●\nUsing\nthe Citizen Petition process (for example, under 21 C.F.R. Sections 10.30) to request amendments to FDA standards;\n\n \n\n \n●\nAttempting\nto use the legislative and regulatory process to have drugs reclassified or rescheduled or to set definitions of abuse-deterrent\nformulations to protect patents and profits; and\n\n \n\n \n●\nEngaging\nin state-by-state initiatives to enact legislation that restricts the substitution of some generic drugs.\n\n \n\n \n●\nSeeking\nchanges to U.S. Pharmacopeia, an organization that publishes industry recognized compendia of drug standards;\n\n \n\n \n●\nAttaching\npatent extension amendments to non-related federal legislation;\n\n \n\n \n●\nPersuading\nregulatory bodies to withdraw the approval of brand-name drugs for which the patents are about to expire and converting the market\nto another product of the brand company on which longer patent protection exists;\n\n \n\n \n●\nEntering\ninto agreements whereby other generic companies will begin to market an authorized generic at the same time or after generic competition\ninitially enters the market;\n\n \n\n \n●\nFiling\nsuits for patent infringement and other claims that may delay or prevent regulatory approval, manufacture and/or scale of generic\nproducts; and\n\n \n\n \n●\nIntroducing\n“next generation” products prior to the expiration of market exclusivity for the reference product, which often materially\nreduces demand for the generic or the reference product for which we seek regulatory approval for a generic equivalent.\n\n \n\nIf\npharmaceutical companies or other third parties are successful in limiting the use of generic products through these or other means,\nour sales of generic products and our growth prospects may decline. A material decline in generic product sales will have a material\nadverse effect on our results of operations, financial condition, cash flows and our ability to operate.\n\n \n\n**Our\nrevenues and profits from generic products may decline as a result of changes in regulatory policy.**\n\n \n\nThe\nIRA contains substantial drug pricing reforms, including the establishment of a drug price negotiation program within the HHS that would\nrequire manufacturers to charge a negotiated “maximum fair price” for certain selected drugs or pay an excise tax for noncompliance,\nthe establishment of rebate payment requirements on manufacturers of certain drugs payable under Medicare Parts B and D to penalize price\nincreases that outpace inflation, and requires manufacturers to provide discounts on Part D drugs. Substantial penalties can be assessed\nfor noncompliance with the drug pricing provisions.\n\n \n\nDrugs\nwith an available generic or biosimilar, certain drugs that represent a limited portion of Medicare program spending, drugs with an orphan\ndesignation as their only FDA approved indication, and all plasma-derived products are exempt from direct negotiation. The number of\nnegotiated products will be phased in between 2026 and 2029, and the law sets a maximum fair price the manufacturer can charge based\non the number of years the product has been on the market. The law allows HHS to levy an excise and civil monetary penalties against\nnon-compliant manufacturers or those who refuse to negotiate.\n\n \n\n33\n\n \n\n \n\nThe\nIRA also imposes rebate requirements on manufacturers of single-source generics and other drugs covered under Medicare Part B and Part\nD where the price of the drug increases faster than inflation. Multisource generics and all products with an average manufacturer’s\nprice of less than $100 per year, per individual, are exempt from rebate requirements. Beginning on October 1, 2022 for Part D products\nand on January 1, 2023 for Part B products, CMS will monitor for products with price increases higher than the rate of inflation on a\nquarterly basis. Rebates will be calculated as the total number of units sold by the amount the product exceeds the inflation-adjusted\nprice, with 2021 as the base year to measure cumulative changes relative to inflation. Noncompliant manufacturers will be subject to\na civil monetary penalty of at least 125% of the calculated rebate amount.\n\n \n\nThe\neffect of the IRA on our business, generic manufacturers, and the pharmaceutical industry in general is not yet known.\n\n \n\nOn\nMay 12, 2025, President Trump issued an executive order implementing the concept of MFN pricing. Under this order, the\nDepartment of Health and Human Services would direct federal health insurers to pay no more than the lowest price paid by other high-income\ncountries for medications covered by such insurers, including Medicare and Medicaid. Under the order, MFN pricing will\napply only to brand products without generic or biosimilar competition. The effect of this order on our business and the generic pharmaceutical\nindustry in general is not yet known.\n\n \n\n**New\ntariffs, evolving trade policy, and geopolitical factors and military conflicts between the US and other countries may adversely affect our business.**\n\n \n\nNew\ntariffs and evolving trade policy between the United States and other countries, including China and Mexico, may have an adverse effect\non our sourcing of critical raw materials from suppliers located outside of the United States and corresponding adverse effects on our\nbusiness and results of operations.\n\n \n\nSome\nof our suppliers, including those of critical active pharmaceutical ingredients are located outside of the United States. There is uncertainty\nabout the future relationship between the U.S. and various other countries, including China, with respect to trade policies, treaties,\ngovernment regulations and tariffs.\n\n \n\nChanges\ncould potentially disrupt our existing supply chains and impose additional costs on our business, including costs with respect to raw\nmaterials upon which our business depends. Furthermore, if tariffs, trade restrictions or trade barriers are placed on products such\nas ours by foreign governments, it could cause us to raise prices for our products, which may result in the loss of customers. If we\nare unable to pass along increased costs to our customers, our margins could be adversely affected. Additionally, it is possible that\nfurther tariffs may be imposed that could affect imports of APIs and other materials used in our products, or our business may be adversely\nimpacted by retaliatory trade measures taken by other countries, including restricted access to APIs or other materials used in our products,\ncausing us to raise prices or make changes to our products. Further, the continued threats of tariffs, trade restrictions, retaliatory\nactions and trade barriers could have a generally disruptive impact on the global economy and, therefore, negatively impact our sales.\nGiven the volatility and uncertainty regarding the scope and duration of these tariffs and other aspects of U.S. international trade\npolicy, the impact on our operations and results is uncertain and could be significant. Further governmental action related to tariffs,\nadditional taxes, regulatory changes or other retaliatory trade measures could occur in the future. Any of these factors could have a\nmaterial adverse effect on our business, financial condition, results of operations and cash flows.\n\n \n\nFurther, recent global\nevents may adversely affect workforces, organizations, economies, and financial markets globally, leading to economic downturns, inflation,\nand increased market volatility. Military conflicts and wars (such as the ongoing conflicts between the US and Iran, Russia and Ukraine,\nand Israel and Hamas), terrorist attacks, other geopolitical events, high inflation, increasing interest rates, bank failures and associated\nfinancial instability and crises, and supply chain and logistics issues can cause exacerbated volatility and disruptions to various aspects\nof the global economy. The uncertain nature, magnitude, and duration of hostilities stemming from such conflicts, including the potential\neffects of sanctions and counter-sanctions, or retaliatory cyber-attacks on the world economy and markets, have contributed to increased\nmarket volatility and uncertainty, which could have an adverse impact on macroeconomic factors that affect our business and operations.\n\n \n\n**The\nDEA could limit the availability of active ingredients used in many of our products.**\n\n \n\nThe\nDEA limits the availability of the active ingredients used in many of our current products and products in development, as well as the\nproduction and distribution of these products, and, as a result, our procurement, production, and distribution quotas may not be sufficient\nto meet commercial demand or complete clinical trials.\n\n \n\nThe\nDEA regulates chemical compounds as Schedule I, II, III, IV or V substances, with Schedule I substances considered to present the highest\nrisk of substance abuse and Schedule V substances the lowest risk. The active ingredients in some of our current products and products\nin development, including, without limitation, hydromorphone, methadone, phentermine, phendimetrazine and oxycodone, are listed by the\nDEA as Scheduled substances under the Controlled Substances Act of 1970. Consequently, their manufacture, shipment, storage, sale, and\nuse are subject to a high degree of regulation. Furthermore, the DEA limits the availability of the active ingredients used in many of\nour current products and products in development and we and/or our contract customers and suppliers, must annually apply to the DEA for\nprocurement quotas in order to obtain and distribute these substances. As a result, our procurement and production quotas may not be\nsufficient to meet commercial demand or to complete any clinical trials we may conduct. Moreover, the DEA may adjust these quotas from\ntime to time during the year, although the DEA has substantial discretion in whether or not to make such adjustments. Any delay or refusal\nby the DEA in establishing our quotas, or modification of our quotas, for controlled substances could delay or result in the stoppage\nof our clinical trials or product launches or could cause trade inventory disruptions for those products that already been launched,\nwhich could have a material adverse effect on our business, financial position, cash flows and stock price.\n\n \n\n34\n\n \n\n** **\n\n**We\nreceived a CRL from the FDA indicating that the SequestOx™ NDA is not ready for approval**.\n\n \n\nWe\nreceived a CRL from the FDA that indicated that our SequestOx™ NDA is not ready for approval in its present form. We have paused\nfurther development of this product and we cannot assure that development will restart. If we are unable to obtain approval for SequestOx™\nor if we incur significant costs or delays in obtaining such approval, our return on investment in SequestOx™ will be materially\nadversely affected.\n\n \n\nIn\nJuly 2016, the FDA issued a Complete Response Letter, or CRL, regarding the NDA. The CRL stated that the review cycle for the SequestOx™\nNDA is complete and the application is not ready for approval in its present form. On December 21, 2016, we met with the FDA for an end-of-review\nmeeting to discuss steps that we could take to obtain approval of SequestOx™. Based on the FDA response, we believe there is a\npath forward to address the issues cited in the CRL, with such path forward including modification of the SequestOx™ formulation,\nand the successful completion of in vitro and in vivo studies. If we are unable to modify the formulation or if we are unable to successfully\ncomplete the required studies, we will not meet the requirements specified by the FDA for resubmission of the NDA. Furthermore, there\ncan be no assurances given that the FDA will eventually approve our NDA. If we are unable to obtain approval for SequestOx™, we\nwill be unable to commercialize the product. Furthermore, in the event that the Company does receive marketing approval for SequestOx™,\nthere can be no assurances of the Company realizing future revenues or profits related to this product, or that any such future revenues\nand profits would be in amounts that provide adequate return on the significant investments made to secure this marketing authorization.\nThe Company has currently paused further development of SequestOx™ due to the prohibitive cost of such and attendant risks related\nthereto.\n\n \n\n**Regulatory\nfactors may cause us to be unable to manufacture products or face interruptions in our manufacturing process.**\n\n \n\nOur\nmanufacturing operations as well as our suppliers’ manufacturing operations are subject to establishment registration by the FDA\nand periodic inspections by the FDA to assure compliance regarding the manufacturing of our products. If we or our suppliers do not maintain\nthe current registrations or if we or our partners receive notices of manufacturing and quality-related observations following inspections\nby the FDA, our operating results would be materially negatively impacted.\n\n \n\nOur\nfacilities, as well as those of applicable suppliers, rely on maintaining current FDA, and DEA if applicable, registration and other\nlicense to produce and develop generic drugs and raw materials used in such operations. If we, or one of our suppliers does not successfully\nrenew and maintain current FDA, DEA and other required licenses, our operations and financial results would be negatively impacted. We\nand our suppliers are subject to periodic inspection by the FDA, DEA and other regulatory agencies, as applicable, to assure regulatory\ncompliance regarding the manufacture and distribution of pharmaceutical products and raw materials. These regulatory bodies impose stringent\nmandatory requirements on the manufacture and distribution of pharmaceutical products to ensure their safety and efficacy. If we or any\nof our third-party suppliers receive notices of manufacturing and quality-related observations and are unable to satisfactorily resolve\nthe issues and observations identified in a timely fashion, there could be a material adverse effect on our business, financial condition,\nresults of operations, cash flow and stock price.\n\n \n\n**Agreements\nbetween branded pharmaceutical companies and generic pharmaceutical companies are facing increased government scrutiny in the United\nStates and Internationally.**\n\n \n\nThere\nare numerous and continuing litigation in which generic companies challenge the validity or enforceability of an innovator products patents\nand/or the applicability of such patents to a generic applicant’s products. Settlement of such litigation is a common outcome,\nwith review of such agreements by the U.S. Federal Trade Commission (the “FTC”) and the Antitrust Division of the DOJ being\nrequired by law. The FTC has stated publicly its view that some of these settlement agreements violate antitrust laws and has commenced\nactions against the branded and generic companies that are parties to these agreements. Accordingly, in the event of the Company being\nparty to a settlement agreement, either as the branded, innovator product owner, or as the generic applicant, we may receive formal or\ninformal requests from the FTC for information about a settlement agreement and there is a risk of the FTC or DOJ alleging a violation\nof antitrust laws and commencing an action against us.\n\n \n\nAny\nsuch action could have an adverse effect on the Company’s business, operations and financial condition.\n\n \n\n**Our\nreporting and payment obligations under the Medicaid rebate program and other governmental purchasing and rebate programs are complex\nand may involve subjective decisions. Any determination that we have failed to comply with those obligations could subject us to penalties\nand sanctions which could have a material adverse effect on our business.**\n\n \n\nWe\nparticipate in, without limitation, the Medicaid Drug Rebate Program, the 340B program, the U.S. Department of Veterans Affairs’\nFSS pricing program and other governmental purchasing and rebate programs and have obligations to report the average sales price for\ncertain of our drugs.\n\n \n\nPricing\nand rebate calculations vary across products and programs, are complex and are often subject to interpretations by us, governmental or\nregulatory agencies and the courts, which can change and evolve over time. In the case of our Medicaid pricing data, if we become aware\nthat our reporting for a prior quarter was incorrect, or has changed as a result of recalculation of the pricing data, we are generally\nobligated to resubmit the corrected data for up to three years after those data were originally due. Such restatements and recalculations\nincrease our costs for complying with the laws and regulations governing the Medicaid Drug Rebate Program and could result in an adjustment\nto our rebate liability for past quarters. Price recalculations also may affect the ceiling price at which we are required to offer our\nproducts under the 340B program and give rise to an obligation to refund entities participating in the 340B program for overcharges during\npast quarters by a price recalculation.\n\n \n\n35\n\n \n\n \n\nCivil\nmonetary penalties can be applied if we are found to have knowingly submitted any false price or product information to the government,\nif we are found to have made a misrepresentation in the reporting of our average sales price, if we fail to submit the required price\ndata on a timely basis, or if we are found to have charged 340B covered entities more than the statutorily mandated ceiling price. CMS\ncould also decide to terminate our Medicaid drug rebate agreement, in which case federal payments may not be available under Medicaid\nor Medicare Part B for our covered outpatient drugs. We cannot assure you that our submissions will not be found by CMS to be incomplete\nor incorrect.\n\n \n\nOur\nfailure to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program and other governmental programs could\nnegatively impact our financial results. CMS issued a final regulation, which became effective in April 2016, to implement the changes\nto the Medicaid Drug Rebate Program under the Affordable Care Act. Since that time, CMS has issued multiple proposed and final rules\nthat change the Medicaid Drug Rebate Program. Regulatory and legislative changes, and judicial rulings relating to the Medicaid Drug\nRebate Program and related policies have increased and will continue to increase our costs and the complexity of compliance, have been\nand will continue to be time-consuming to implement, and could have a material adverse effect on our results of operations, particularly\nif CMS or another agency challenges the approach we take in our implementation.\n\n \n\nHealth Resources and Service Administration (“HRSA”)\nissued a final regulation regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers\nthat knowingly and intentionally overcharge covered entities, which became effective in January 2019.\n\n \n\nImplementation\nof this regulation could affect our obligations and potential liability under the 340B program in ways we cannot anticipate. We are also\nrequired to report the 340B ceiling prices for our covered outpatient drugs to HRSA, which then publishes them to 340B covered entities.\nAny charge by HRSA that we have violated this regulation or other requirements of the program could negatively impact our financial results.\nMoreover, HRSA has established an administrative dispute resolution (“ADR”) process, which is governed by a final regulation\neffective June 2024, for claims by covered entities that a manufacturer engaged in overcharging, including claims that a manufacturer\nlimited the ability of a covered entity to purchase the manufacturer’s drugs at the 340B ceiling price, and by manufacturers that\na covered entity violated the prohibitions against diversion or duplicate discounts. Such claims are to be resolved through an ADR panel\nof government officials rendering a decision that could be appealed only in federal court. An ADR proceeding could potentially subject\nus to discovery by covered entities and other onerous procedural requirements and could result in additional liability. HRSA could also\ndecide to terminate a manufacturer’s agreement to participate in the 340B program for a violation of that agreement or other good\ncause shown, in which case the manufacturer’s covered outpatient drugs may no longer be eligible for federal payment under the\nMedicaid or Medicare Part B program.\n\n \n\nFurther,\nlegislation may be introduced that, if passed, would, among other things, further expand the 340B program to include additional\ncovered entities or would require participating manufacturers to agree to provide 340B discounted pricing on drugs used in an\ninpatient setting, and any additional future changes to the definition of average manufacturer price or the Medicaid rebate amount\ncould affect our 340B ceiling price calculations and negatively impact our results of operations. Additionally, we have implemented\na policy governing the eligibility of covered entities to purchase our products at the 340B price for shipment to a contract\npharmacy. We implemented this policy out of concern that contract pharmacy arrangements are diverting the benefits of the 340B\nprogram from patients to contract pharmacies and contributing to the pervasive lack of transparency within the 340B program,\nrendering it difficult to identify inappropriate duplicate discounts and product diversion. Certain pharmaceutical manufacturers and\nthe industry group, Pharmaceutical Research and Manufacturers of America (“PhRMA”) are involved in ongoing litigation\nwith the HRSA regarding manufacturer initiatives that restrict covered entities’ ability to purchase products at the 340B\nprogram price for shipment through an unlimited number of contract pharmacies. Additionally, several states have enacted, and many\nother states are considering, laws that prohibit manufacturer restrictions on contract pharmacies. Certain pharmaceutical\nmanufacturers and PhRMA have initiated litigation challenging these state laws. The outcome of pending judicial proceedings and the\npotential impact on the way in which manufacturers extend discounts to covered entities through contract pharmacies remain uncertain\nand negative legal rulings, or the passage of legislation in respect of this topic, may materially adversely impact our results of\noperations.\n\n \n\nWe\nhave obligations to report the average sales price for certain of our drugs to the Medicare program. In addition, we are required to\nreport the best price for our drugs, as defined under the Medicaid Drug Rebate Program, to CMS. Statutory or regulatory changes or changes\nin CMS guidance could affect the average sales price or best price calculations for our products and the resulting Medicare payment rate\nor rebates we owe to state Medicaid programs. Such changes could negatively impact our results of operations.\n\n \n\n36\n\n \n\n \n\nPursuant\nto applicable law, knowing provision of false information in connection with price reporting under the U.S. Department of Veterans Affairs,\nFSS or Tricare programs can subject a manufacturer to civil monetary penalties. These program obligations also contain extensive disclosure\nand certification requirements. If we overcharge the government in connection with our arrangements with FSS or Tricare, we are required\nto refund the difference to the government. Failure to make necessary disclosures and/or to identify contract overcharges can result\nin allegations against us under the False Claims Act and other laws and regulations. Unexpected refunds to the government, and responding\nto a government investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect\non our business, financial condition, results of operations and growth prospects.\n\n \n\n**Investigations\nand litigation concerning the calculation of average wholesale prices may adversely affect our business**\n\n \n\nMany\ngovernment and third-party payers, including Medicare, Medicaid, HMOs and others, reimburse doctors and others for the purchase of certain\nprescription drugs based on a drug’s average wholesale price (“AWP”). In the past several years, state and federal\ngovernment agencies have conducted ongoing investigations of manufacturers’ reporting practices with respect to AWP, as a result\nof which certain agencies have suggested that reporting of inflated AWPs by manufacturers has led to excessive payments for prescription\ndrugs. Numerous pharmaceutical companies have been named as defendants in actions brought by various State Attorneys General and have\nfaced state law *qui tam*actions brought on behalf of various states, alleging generally that the defendants defrauded state Medicaid\nsystems by purportedly reporting or causing the reporting of AWP and/or “Wholesale Acquisition Costs” that exceeded the actual\nselling price of the defendants’ prescription drugs. These cases generally seek some combination of actual damages, and/or double\ndamages, treble damages, compensatory damages, statutory damages, civil penalties, disgorgement of excessive profits, restitution, disbursements,\ncounsel fees and costs, litigation expenses, investigative costs, injunctive relief, punitive damages, imposition of a constructive trust,\naccounting of profits or gains derived through the alleged conduct, expert fees, interest and other relief that the court may have deemed\nproper.\n\n \n\nWe\ncan give no assurance that we will be able to settle current or future actions on terms that we deem reasonable, or that such settlements\nor adverse judgments, if entered, will not exceed the amount of any liability we have recorded. Accordingly, such actions could adversely\naffect us and may have a material adverse effect on our business, results of operations, financial condition, cash flows ability to operate\nand stock price.\n\n \n\n**Litigation\nand Liability Related Risks**\n\n \n\n**We\nmay not be able to obtain or maintain adequate insurance coverages.**\n\n \n\nThe\ncost of insurance, including directors and officers insurance, workers compensation, product liability for products containing opioids\nand products not containing opioids, truck and general liability insurance have increased significantly in recent years and may continue\nto increase in the future. We have increased deductibles and/or decreased coverages to mitigate some of these costs. These insurance\npremium increases, as well as our increased risk due to reduced coverage and increased deductibles could have an adverse material effect\non our business, financial condition, results of operations, cash flows and stock price.\n\n \n\nWe\nmay not have and may be unable to obtain or maintain in the future insurance, on acceptable terms, that provide adequate coverage against\npotential liabilities or other losses, such as the cost of a recall or defense against claims, if any claim is brought against us, for\nany reason, regardless of the merits, success or failure of such claim. In past years, as a result of product liability and securities\nlitigation in the general marketplace, and a threatened claim of action against us in relation to the shareholder vote conducted in December\n2019, our insurance premiums have increased significantly, while also providing no greater, and in most cases, lower levels of coverage.\n\n \n\nThe\namount of our insurance coverage is accordingly limited by our financial resources and greatly impacted by the significant premium increases\nof the past year and reasonably expected further increases in the near to mid-term due to the global pandemic. Furthermore, even where\nclaims are submitted to insurance carriers for defenses and indemnity that are within coverage limits, there can be no assurance that\nsuch claims will be fully covered by insurance or that the indemnitors or insurers will remain financially viable to provide reimbursement\nconsistent with coverage maintained.\n\n \n\nAny\nfailure by us, to obtain sufficient insurance coverage, with reimbursement of claims being provided and generate sufficient cash flow,\nif needed, above insurance coverage, to pay amounts due in relation to potential claims, will have a material adverse effect on our business,\nfinancial condition, results of operations, cash flow and ability to operate as a going concern.\n\n \n\n37\n\n \n\n** **\n\n**Litigation,\nproduct liability claims, product recalls, government investigations and other significant legal proceedings are common in the pharmaceutical\nindustry.**\n\n \n\nLitigation,\nproduct liability claims, other significant legal proceedings, government investigations and product recalls are common in the pharmaceutical\nindustry and can be protracted and expensive and could delay and/or prevent entry of our products into the market, which, in turn, could\nhave a material adverse effect on our business.\n\n \n\nAs\na business that operates in the pharmaceutical industry, we are inherently exposed to significant potential risks from lawsuits, product\nliability claims, patent and proprietary rights claims, other significant proceedings, government investigations or product recalls,\nincluding, without limitation, such matters associated with the testing, manufacturing, marketing and sale of our products. While no\nsuch judgements have been made against us to date, some plaintiffs have received substantial damage awards or settlements against other\nhealthcare companies based upon various legal theories, including, without limitation, claims for injuries allegedly caused by use of\ntheir products. Our business continues to be inherently exposed to the risk of being subject to product liability cases, as well as other\nsignificant legal proceedings and government investigations.\n\n \n\nFor\nexample, we have been a manufacturer of prescription opioid medications in the past, and while we have not been subject to lawsuits,\nother manufacturers of such products, as well as distributors and other sellers of such medications, have been subjects of subject of\nlawsuits and have received subpoenas and other requests for information from various federal, state and local government agencies regarding\nthe sale, marketing and/or distribution of prescription opioid medications. Numerous claims against opioid manufacturers, have been and\nmay continue to be filed by or on behalf of states, counties, cities, Native American tribes, other government-related persons or entities,\nhospitals, health systems, unions, health and welfare funds, other third-party payers and/or individuals. In these cases, plaintiffs\nseek various remedies, including without limitation declaratory and/or injunctive relief; compensatory, punitive and/or treble damages;\nrestitution, disgorgement, civil penalties, abatement, attorneys’ fees, costs and/or other relief. Settlement demands may seek\nsignificant monetary and other remedies, or otherwise be on terms that would result in material adverse effects on our business and ability\nto operate as a going concern. The precedent of awards against and settlements by our competitors could also incentivize parties to bring\nadditional claims against us. In addition to the risks of direct expenditures for defense costs, settlements and/or judgments in connection\nwith these claims, proceedings and investigations, there is a possibility of loss of revenues, injunctions and disruption of business.\nFurthermore, we and other manufacturers of prescription opioid medications have been, and will likely continue to be, subject to negative\npublicity and press, which could harm our brand and the demand for our products. In addition, current or future regulatory and legislative\nproposals could impact us and other manufacturers of prescription opioid medications. See the risk factor “Our business and financial\ncondition may be adversely affected by legislation” for more information.\n\n \n\nIn\naddition, our current and former products may cause or appear to cause serious adverse side effects or potentially dangerous drug interactions\nif misused or improperly prescribed or as a result of faulty surgical technique. Any failure to effectively identify, analyze, report\nand protect adverse event data and/or to fully comply with relevant laws, rules and regulations around adverse event reporting could\nexpose the Company to legal proceedings, penalties, fines and/or reputational damage.\n\n \n\nAlso,\nthrough the use of social media, plaintiff’s attorneys have a wide variety of tools to advertise their services and solicit new\nclients for litigation, including using judgments and settlements obtained in litigation against us or other pharmaceutical companies\nas an advertising tool. For these or other reasons, any significant product liability or mass tort litigation in which we are a defendant\ncould have a larger number of plaintiffs than such actions have seen historically and we could also see an increase in the number of\ncases filed against us because of the increasing use of widespread and media-varied advertising. Furthermore, a ruling against other\npharmaceutical companies in product liability or mass tort litigation in which we are not a defendant could have a negative impact on\npending litigation where we are a defendant.\n\n \n\nIn\naddition, in certain circumstances, such as in the case of products that do not meet approved specifications or for which subsequent\ndata demonstrate such products may be unsafe, ineffective or misused, it may be necessary for us to initiate voluntary or mandatory recalls\nor withdraw such products from the market. Any such recall or withdrawal could result in adverse publicity, costs connected to the recall\nand loss of revenue. Adverse publicity could also result in an increased number of additional product liability claims, whether or not\nthese claims have a basis in scientific fact. See the risk factor “*Our business is dependent on market perceptions, social and\npolitical pressures, including public concern over the abuse of opioids*” for more information.\n\n \n\nWe\nare also inherently exposed to litigation concerning patents and proprietary rights which can be protracted and expensive. Companies\nroutinely bring litigation against applicants and allege patent infringement or other violations of intellectual property rights as the\nbasis for filing suit against an applicant. Elite develops, owns, and/or manufactures generic and branded pharmaceutical products and\nsuch drug products may be subject to such litigation. Litigation often involves significant expense and can delay or prevent introduction\nor sale of our products.\n\n \n\nThere\nmay also be situations where we use our business judgment and decide to market and sell products, notwithstanding the fact that allegations\nof patent infringement have not been finally resolved by the courts. The risk involved in doing so can be substantial because the remedies\navailable to the owner of a patent for infringement include, among other things, damages measured by the profits lost by the patent owner\nand not by the profits earned by the infringer. In the case of a willful infringement, the definition of which is subjective, such damages\nmay be trebled. Moreover, because of the discount pricing typically involved with bioequivalent products, patented brand products generally\nrealize a substantially higher profit margin than bioequivalent products. An adverse decision in a case such as this or in other similar\nlitigation could have a material adverse effect on our business, financial position and results of operations and could cause the market\nvalue of our Common Stock to decline.\n\n \n\n38\n\n \n\n \n\nIf\nwe are found liable in any lawsuits, including patent infringement, violation of proprietary rights, product liability claims or actions\nrelated to our manufacture, sales, marketing or pricing practices or the sale, marketing and/or distribution of prescription opioid medications,\nor if we are subject to government investigations or product recalls, it could result in the imposition of damages, including punitive\ndamages, fines, reputational harm, civil lawsuits, criminal penalties, interruptions of business, modification of business practices,\nequitable remedies and other sanctions against us or our personnel as well as significant legal and other costs. We may also voluntarily\nsettle cases even if we believe that we have meritorious defenses because of the significant legal and other costs that may be required\nto defend such actions. Any judgments, claims, settlements and related costs could be well in excess of any applicable insurance. As\na result, we may experience significant negative impacts on our operations. To satisfy judgments or settlements, we also may need to\nseek financing, which may not be available on terms acceptable to us, or at all, when required. Judgments also could cause defaults under\nour debt agreements and/or restrictions on our product use and we could incur losses as a result. Any of the risks above could have a\nmaterial adverse effect on our business, financial condition, results of operations and cash flows and ability to operate as a going\nconcern.\n\n \n\nThe\noccurrence or possibility of any such result may cause us to pursue one or more significant corporate transactions as well as other remedial\nmeasures, including internal reorganizations, restructuring activities, strategic corporate alignments, cost saving initiatives or asset\nsales. See the risk factor “*Our ability to fund our operations, maintain liquidity and meet our financing obligations is reliant\non our operations, which are subject to significant risks and uncertainties*” for more information. Likewise, any internal reorganizations,\nrestructuring activities, strategic corporate alignments, cost-saving initiatives or asset sales may be complex, could entail significant\ncosts and charges or could otherwise negatively impact shareholder value and there can be no assurance that we will be able to accomplish\nany of these alternatives on terms acceptable to us, or at all, or that they will result in their intended benefits.\n\n \n\nWe\nalso may incur significant liability if it is determined that we are promoting or have in the past promoted the “off-label”\nuse of drugs. In jurisdictions including, without limitation, the United States, a company is not permitted to promote drugs for uses\nthat are not described in the product’s labelling and that differ from those that were approved or cleared by the FDA. Such users\nare commonly referred to as “off-label uses”. Under what is known as the “practice of medicine”, physicians and\nother healthcare practitioners may prescribe drug products for off-label or unapproved uses. While the FDA does not regulate a physician’s\nchoice of medications, treatments, or product uses, the FFDCA and FDA regulations significantly restrict permissible communications on\nthe subject of off-label uses of drug products by pharmaceutical companies. The FDA, FTC, the Office of the Inspector General of the\nHHS, the DOJ and various state Attorneys General actively enforce laws and regulations that prohibit the promotion of off-label uses.\nA company that is found to have improperly promoted off-label uses may be subject to significant liability, including civil fines, criminal\nfines and penalties, civil damages, exclusion from federal funded healthcare programs and potential liability under the federal False\nClaims Act and any applicable state false claims act. Conduct giving rise to such liability could also form the basis for private civil\nlitigation by third-party payers or other persons claiming to be harmed by such conduct.\n\n \n\nNotwithstanding\nthe regulatory restrictions on off-label promotion, the FDA’s regulations and judicial case law allows companies to engage in some\nforms of truthful, non-misleading and non-promotional speech concerning the off-label use of products. Elite believes it and its marketing\npartners comply with these restrictions.\n\n \n\nNonetheless,\nthe FDA, HHS, DOJ, and/or state Attorneys General, and *qui tam* relators may take the position that the Company is not in compliance\nwith such requirements, and if such non-compliance is proven, the consequences of such may have an adverse material effect on our business,\nfinancial condition, results of operations, cash flows and stock price.\n\n \n\n**We\nare subject to various fraud and abuse laws which could expose us to criminal sanctions, civil penalties, contractual damages, reputational\nharm and diminished profits and future earnings.**\n\n \n\nOur\nactivities are subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute,\nthe federal civil False Claims Act, and laws and regulations pertaining to limitations on and reporting of healthcare provider payments\n(physician sunshine laws). These laws and regulations are interpreted and enforced by various federal, state and local authorities including\nCMS, the Office of Inspector General for the HHS, DOJ, individual U.S. Attorney offices within the Department of Justice, and state and\nlocal governments. These laws include:\n\n \n\n \n●\nthe\nU.S. federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting,\noffering, receiving or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward\neither the referral of an individual for, or the purchase, lease, order, or arranging for or recommending the purchase, lease or\norder of, any good or service, for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare\nand Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order\nto have committed a violation\n\n \n\n39\n\n \n\n \n\n \n●\nthe\nU.S. civil False Claims Act (which can be enforced through “qui tam,” or whistleblower actions, by private citizens on\nbehalf of the federal government and impose civil and criminal penalties), prohibits any person from, among other things, knowingly\npresenting, or causing to be presented false or fraudulent claims for payment of government funds or knowingly making, using or causing\nto be made or used, a false record or statement material to an obligation to pay money to the government or knowingly and improperly\navoiding, decreasing or concealing an obligation to pay money to the U.S. federal government;\n\n \n\n \n●\nHIPAA,\nwhich imposes criminal liability and amends provisions on the reporting, investigation, enforcement, and penalizing of civil liability\nfor, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit\nprogram, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement,\nin connection with the delivery of, or payment for healthcare benefits, items or services by a healthcare benefit program, which\nincludes both government and privately funded benefits programs; similar to the U.S. federal Anti-Kickback Statute, a person or entity\ndoes not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;\n\n \n\n \n●\nHIPAA,\nas amended by HITECH, and its implementing regulations, which also imposes obligations, including mandatory contractual terms, with\nrespect to safeguarding the privacy, security and transmission of individually identifiable health information without appropriate\nauthorization by covered entities subject to the rule, such as health plans, healthcare clearinghouses and healthcare providers as\nwell as their business associates and their subcontractors that perform certain services for or on their behalf involving the use\nor disclosure of individually identifiable health information;\n\n \n\n \n●\nstate\nlaws and regulations, including state anti-kickback and false claims laws, that may apply to our business practices, including but\nnot limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed\nby any third-party payer, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical\nindustry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government,\nor otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and state laws and\nregulations that require drug manufacturers to file reports relating to pricing and marketing information, which requires tracking\ngifts and other remuneration and items of value provided to healthcare professionals and entities;\n\n \n\n \n●\nthe\nPhysician Payments Sunshine Act, implemented as the Open Payments program, and its implementing regulations, requires certain manufacturers\nof drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health\nInsurance Program to report annually to CMS information related to certain payments made in the preceding calendar year and other\ntransfers of value to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their\nimmediate family members; beginning in 2022, applicable manufacturers are required to report such information regarding payments\nand transfers of value provided, as well as ownership and investment interests held, during the previous year to physician assistants,\nnurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives; and\n\n \n\n \n●\nthe\nFCPA, which generally prohibits offering, promising, giving, or authorizing others to give anything of value, either directly or\nindirectly, to a non-U.S. government official in order to influence official action, or otherwise obtain or retain business. The\nFCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the\ncorporation and to devise and maintain an adequate system of internal accounting controls. Our industry is heavily regulated and\ntherefore involves significant interaction with public officials, including officials of non-U.S. governments. Additionally, in many\nother countries, the health care providers who prescribe pharmaceuticals are employed by their government, and the purchasers of\npharmaceuticals are government entities; therefore, our dealings with these prescribers and purchasers are subject to regulation\nunder the FCPA. Recently, the SEC and DOJ have increased their FCPA enforcement activities with respect to pharmaceutical companies.\n\n \n\nViolations\nof any of these laws or any other governmental regulations that may apply to us, may subject us to significant civil, criminal and administrative\nsanctions including penalties, damages, fines, imprisonment, and exclusion from government funded healthcare programs, such as Medicare\nand Medicaid, and/or adverse publicity. Moreover, government entities and private litigants have asserted claims under state consumer\nprotection statutes against pharmaceutical companies for alleged false or misleading statements in connection with the marketing, promotion\nand/or sale of pharmaceutical products, including state investigations and litigation by certain government entities regarding the marketing\nof opioid products.\n\n \n\n40\n\n \n\n** **\n\n**Our\nproducts contain controlled substances which may subject us to increased litigation risk and regulation.**\n\n \n\nSome\nof our current products and products under development contain controlled substances. Misuse or abuse of such drugs can lead to physical\nor other hard. The FDA and/or the DEA may impose new regulations concerning the manufacture, storage, transportation, distribution, and\nsale of prescription narcotics. Such regulations may include new labelling requirements, the development and implementation of a formal\nREMS, restrictions on prescription and sale of such products and mandatory reformulation in order to make abuse of such products more\ndifficult. In 2007, Congress passed legislation authorizing the FDA to require companies to undertake post-approval studies in order\nto assess known or signaled potential serious safety risks and to make any labelling changes necessary to address safety risks. Congress\nalso empowered the FDA to require companies to formulate REMS to confirm a drug’s benefits exceed its risks. In 2011, the FDA issued\nletters to manufacturers of long-acting and extended-release opioids requiring them to develop and submit to the FDA a post-market REMS\nplan to require that training be provided to prescribers of these products and that information is provided to prescribers that they\ncan use in counselling patients on the risks and benefits of opioid drug use. Elite does not currently own a product that requires a\nREMS plan, but some of the products in our pipeline may require a REMS plan. The federal government has also released a comprehensive\naction plan to reduce prescription drug abuse, which may include proposed legislation to amended existing controlled substances laws\nto require healthcare practitioners who request DEA registration to prescribe controlled substances to receive training on opioid prescribing\npractices as a condition of registration. In addition, state health departments and boards of pharmacy have authority to regulate distribution\nand may modify their regulations with respect to prescription narcotics in an attempt to curb abuse.\n\n \n\n**Mandatory\nREMS programs could increase the cost, burden and liability associated with the commercialization of certain products.**\n\n \n\nThe\nFDA has imposed a class-wide REMS on all IR, ER and long acting opioid drug products (known as the Opioid Analgesic REMS). The FDA continually\nevaluates whether the REMS program is meeting its goal of ensuring that the benefit of these drugs continue to outweigh their risks,\nand whether the goals or elements of the program should be modified. If the FDA determines that additional measures are necessary, the\nmodification of the Opioid Analgesic REMS to impose additional or more burdensome requirements could increase the costs associated with\nmarketing opioid products and/or reduce the willingness of healthcare providers to prescribe those products, both which would have a\nmaterial adverse effect on the ability to successfully commercializing, or to generate sufficient revenue from, such products.\n\n \n\n**Illegal\ndistribution and third-party sale of counterfeit versions of our products could have a detrimental effect on our reputation and business.**\n\n \n\nThird\nparties could illegally distribute and sell counterfeit versions of our products, which do not meet the rigorous manufacturing and testing\nstandards that our products undergo. Counterfeit products are frequently unsafe or ineffective and can be life-threatening. Counterfeit\nmedicines may contain harmful substances, the wrong dose of the active pharmaceutical ingredient or no active pharmaceutical ingredients\nat all. However, to distributors and users, counterfeit products may be visually indistinguishable from the authentic version.\n\n \n\nReports\nof adverse reactions to counterfeit drugs or increased levels of counterfeiting could materially affect patient confidence in the authentic\nproduct. It is possible that adverse events caused by unsafe counterfeit products will mistakenly be attributed to the authentic product.\nIn addition, thefts of inventory at warehouses, plants or while in-transit, which are not properly stored, and which are sold through\nunauthorized channels could adversely impact patient safety, our reputation, and our business.\n\n \n\nPublic\nloss of confidence in the integrity of pharmaceutical products as a result of counterfeiting or theft could have a material adverse effect\non our business, results of operations and financial condition.\n\n \n\n**Our\ncompetitors or other third parties may allege that we are infringing upon their IP, forcing us to expend substantial resources in litigation,\nthe outcome of which is uncertain. Any unfavorable outcome of such litigation, including, without limitation, losses related to “at-risk”\nproduct launches, could have a material effect our business, financial position and results of operations.**\n\n \n\nCompanies\nthat produce branded pharmaceutical products routinely bring litigation against ANDA filers or similar applicants that seek regulatory\napproval to manufacture and market generic forms of their branded products alleging patent infringement or other violations of IP rights.\nPatent holders may also bring patent infringement suits against companies that are currently marketing and selling approved generic products.\nLitigation often involves significant expense and can delay or prevent introduction or sale of our generic and/or biosimilar products.\nIf valid and enforceable patents are infringed by our products, we would need to delay selling the infringing generic product unless\nwe could obtain a license from the patent holder, and, if we were already selling the infringing product, cease selling and potentially\ndestroy existing product stock.\n\n \n\n41\n\n \n\n \n\nThere\nmay be situations in which we may make business and legal judgments to market and sell products that are subject to claims of alleged\npatent infringement prior to final resolution of those claims by the courts, based upon our belief that such patents are invalid, unenforceable,\nor are not infringed by our marketing and sale of such products. This is referred to in the pharmaceutical industry as an “at-risk”\nlaunch. The risk involved in an at-risk launch can be substantial because, if a patent holder ultimately prevails against us, the remedies\navailable to such holder may include, among other things, damages measured by the profits lost by the patent holder or treble damages,\nwhich can be significantly higher than the profits we make from selling the generic version of the product. We may also be harmed by\nthe loss of any value of such inventory that we are unable to market or sell. Any or all of the above could have a material adverse effect\non our business, financial condition, results of operations, cash flow, ability to operate as a going concern and stock price.\n\n \n\n**Intellectual\nProperty Related Risks**\n\n \n\n**Our\nability to protect intellectual property rights and successfully defend against third-party allegations of IP infringement is vital to\nour business and uncertain.**\n\n \n\nOur\nsuccess depends on our ability to protect our current and future products and to defend our IP rights. If we fail to protect our intellectual\nproperty adequately, competitors may manufacture and market products similar to ours.\n\n \n\nWe\ncurrently hold two patents and we may intend to file further patent applications in the future. We cannot be certain that any further\npatent applications will result in the issuance of patents. If patents are issued, third parties may sue us to challenge our patent protection,\nand although we know of no reason why they should prevail, it is possible that they could. In addition to modification or revocation\nof patents in legal proceedings, issued patents may later be modified or revoked by the U.S. Patent and Trademark Office or by analogous\nforeign offices. It is likewise possible that our patent rights may not prevent or limit our present and future competitors from developing,\nusing or commercializing products that are similar or functionally equivalent to our products.\n\n \n\nIn\naddition, we may be required to obtain licenses to patents, or other proprietary rights of third parties, in connection with the development\nand use of our products and technologies as they relate to other persons’ technologies. At such time as we discover a need to obtain\nany such license, we will need to establish whether we will be able to obtain such a license on favorable terms, if at all. The failure\nto obtain the necessary licenses or other rights could preclude the sale, manufacture or distribution of our products.\n\n \n\nWe\nrely particularly on trade secrets, unpatented proprietary expertise and continuing innovation that we seek to protect, in part, by entering\ninto confidentiality agreements with licensees, suppliers, employees, and consultants. We cannot provide assurance that these agreements\nwill not be breached or circumvented. We also cannot be certain that there will be adequate remedies in the event of a breach. Disputes\nmay arise concerning the ownership of intellectual property or the applicability of confidentiality agreements. We cannot be sure that\nour trade secrets and proprietary technology will not otherwise be obtained by other entities, such as government or regulatory authorities,\nor become known, obtained, or independently developed by our competitors or by other entities through means beyond our control. We also\ncannot be sure that, if patents are not issued with respect to products arising from research, we will be able to maintain the confidentiality\nof information relating to these products. In addition, efforts to ensure our intellectual property rights can be costly, time-consuming,\nand/or ultimately unsuccessful.\n\n \n\nFurthermore,\ncompanies that produce branded pharmaceutical products routinely bring litigation against ANDA or similar applicants that seek regulatory\napproval to manufacture and market generic forms of branded products, alleging patent infringement or other violations of intellectual\nproperty rights. Patent holders may also bring patent infringement suits against companies that are currently marketing and selling approved\ngeneric products. Litigation often involves significant expense. Additionally, if the patents of others are held valid, enforceable and\ninfringed by our current products or future product candidates, we would, unless we could obtain a license from the patent holder, need\nto delay selling our corresponding generic product and, if we are already selling our product, cease selling and potentially destroy\nexisting product stock. Additionally, we could be required to pay monetary damages or royalties to license proprietary rights from third\nparties and we may not be able to obtain such licenses on commercially reasonable terms or at all.\n\n \n\nThere\nmay be situations in which we may make business and legal judgments to market and sell products that are subject to claims of alleged\npatent infringement prior to final resolution of those claims by the courts based upon our belief that such patents are invalid, unenforceable\nor are not infringed by our marketing and sale of such products. This is commonly referred to in the pharmaceutical industry as an “at-risk”\nlaunch. The risk involved in an at-risk launch can be substantial because, if a patent holder ultimately prevails against us, the remedies\navailable to such holder may include, among other things, damages calculated based on the profits lost by the patent holder, which can\nbe significantly higher than the profits we make from selling the generic version of the product. Moreover, if a court determines that\nsuch infringement is willful, the damages could be subject to trebling. We could face substantial damages from adverse court decisions\nin such matters. We could also be at risk for the value of such inventory that we are unable to market or sell.\n\n \n\nThe\noccurrence of any of the above could have a material adverse effect on our business, financial condition, results of operations, cash\nflow and stock price.\n\n \n\n42\n\n \n\n** **\n\n**Risks\nRelated to our Common Shares**\n\n \n\n**Dilution\nfrom issuance of shares upon exercise of warrants and options or the perception that dilution may occur could cause the price per share\nof common stock to fall.**\n\n \n\nAs\nof March 31, 2026, there were outstanding warrants to purchase an aggregate of approximately 79.0 million shares of Common Stock at a\ncash exercise price of $0.1521 per share and vested options to purchase an aggregate of approximately 5 million shares at a weighted\naverage cash exercise price of $0.06. Additional shares of Common Stock may be issuable as a result of anti-dilution provisions in the\noutstanding warrants. We may also issue shares from time to time to our directors, officers, employees, and consultants.\n\n \n\nAs\na result of the above discussed potential issuance of securities, such issuances by us could result in substantial dilution to the interests\nof other holders of our common stock, and the subsequent sale of these shares, or the perception that the sale of these shares may occur,\ncould cause the price of our common stock to fall. Additionally, the conversion or exercise of outstanding shares of warrants, or the\nanticipation of such issuances, could make it more difficult for us to sell equity or equity-related securities in the future at a time\nand at a price that we might otherwise wish to effect sales.\n\n \n\n**Our\ncommon stock is a penny stock, quoted on the OTC bulletin board, with rules in place that could limit trading and liquidity of our shares,\nincreased transaction costs that could adversely affect our price per share.**\n\n \n\nOur\ncommon stock is a “low-priced” security or “penny stock” under rules promulgated under the Exchange Act. In accordance\nwith these rules, broker-dealers participating in transactions in low-priced securities must first deliver a risk disclosure document\nwhich describes the risks associated with such stocks, the broker-dealer’s duties in selling the stock, the customer’s rights\nand remedies and certain market and other information. Furthermore, the broker-dealer must make a suitability determination approving\nthe customer for low-priced stock transactions based on the customer’s financial situation, investment experience and objectives.\nBroker-dealers must also disclose these restrictions in writing to the customer, obtain specific written consent from the customer, and\nprovide monthly account statements to the customer. The effect of these restrictions will likely decrease the willingness of broker-dealers\nto make a market in our Common Stock, will decrease liquidity of our Common Stock and will increase transaction costs for sales and purchases\nof our Common Stock as compared to other securities.\n\n \n\nIn\naddition, our Common stock is quoted on the Venture Market (the “OTCQB”), which is a regulated quotation service that displays\nreal-time quotes, last sale prices and volume limitations in over-the-counter securities. Because trades and quotations on the OTCQB\ninvolve a manual process, the market information for such securities cannot be guaranteed. In addition, quote information, or even firm\nquotes, may not be available. The manual execution process may delay order processing and intervening price fluctuations may result in\nthe failure of a limit order to execute or the execution of a market order at a significantly different price. Execution of trades, execution\nreporting and the delivery of legal trade confirmations may be delayed significantly. Consequently, one may not be able to sell shares\nof our Common Stock at the optimum trading prices.\n\n \n\nWhen\nfewer shares of a security are being traded on the OTCQB, volatility of prices may increase, and price movement may outpace the ability\nto deliver accurate quote information. Lower trading volumes in a security may result in a lower likelihood of an individual’s\norders being executed, and current prices may differ significantly from the price one was quoted by the OTCQB at the time of the order\nentry. Orders for OTCQB securities may be cancelled or edited like orders for other securities. All requests to change or cancel an order\nmust be submitted to, received, and processed by the OTCQB. Due to the manual order processing involved in handling OTCQB trades, order\nprocessing and reporting may be delayed, and an individual may not be able to cancel or edit his order. Consequently, one may not be\nable to sell shares of Common Stock at the optimum trading prices.\n\n \n\nThe\ndealer’s spread (the difference between the bid and ask prices) may be large and may result in substantial losses to the seller\nof securities on the OTCQB if the Common Stock or other security must be sold immediately. Further, purchasers of securities may incur\nan immediate “paper” loss due to the price spread. Moreover, dealers trading on the OTCQB may not have a bid price for securities\nbought and sold through the OTCQB. Due to the foregoing, demand for securities that are traded through the OTCQB may be decreased or\neliminated.\n\n \n\n**Shareholder\nactivism could negatively affect us.**\n\n \n\nIn\nrecent years, shareholder activism involving corporate governance, fiduciary duties of directors and officers, strategic direction and\noperations has become increasingly prevalent. If we become the subject of such shareholder activism, their demands may disrupt our business\nand divert the attention of our management, Board and employees. Also, we may incur substantial costs, including legal fees and other\nexpenses, related to such activist shareholder matters. Perceived uncertainties resulting from such activist shareholder matters may\nresult in loss of potential business opportunities with our current and potential customers and business partners, be exploited by our\ncompetitors and make attracting and retaining qualified personnel more difficult. In addition, such shareholder activism may cause significant\nfluctuations in our share price based on temporary or speculative market perceptions, uncertainties or other factors that do not necessarily\nreflect the underlying fundamentals and prospects of our business.\n\n \n\nThe\neffects of shareholder activism pursued against the Company could have an adverse material effect on our business, financial condition,\nresults of operations, cash flows and stock price.\n\n \n\n43\n\n \n\n \n\n**Our\nstock price has been volatile**.\n\n \n\nThe\nmarket price for the publicly traded stock of pharmaceutical companies is generally characterized by high volatility. There has been\nsignificant volatility in the market prices for our Common Stock. For the year ended March 31, 2026, the closing sale price on the OTCQB\nof our Common Stock fluctuated from a high of $0.77 per share to a low of $0.32 per share. The price per share of our Common Stock may\nnot exceed or even remain at current levels in the future. The market price of our Common Stock may be affected by a number of factors,\nincluding, without limitation:\n\n \n\n \n●\nResults\nof our clinical trials;\n\n \n\n \n●\nApproval\nor disapproval of our ANDAs or NDAs;\n\n \n\n \n●\nAnnouncements\nof innovations, new products, or new patents by us or by our competitors;\n\n \n\n \n●\nAnnouncements\nof other material events;\n\n \n\n \n●\nGovernmental\nregulation;\n\n \n\n \n●\nPatent\nor proprietary rights developments;\n\n \n\n \n●\nProxy\ncontests or litigation;\n\n \n\n \n●\nNews\nregarding the efficacy of, safety of or demand for drugs or drug technologies;\n\n \n\n \n●\nEconomic\nand market conditions, generally and related to the pharmaceutical industry;\n\n \n\n \n●\nHealthcare\nlegislation;\n\n \n\n \n●\nChanges\nin third-party reimbursement policies for drugs; and\n\n \n\n \n●\nFluctuations\nin our operating results.\n\n** **\n\n**Capital\nraises through sales of securities may cause substantial dilution to existing shareholders**.\n\n \n\nAny\nadditional financing that involves the further sale of our securities could cause existing holders of our Common Stock to experience\nsubstantial dilution. On the other hand, if we incurred debt, we would be subject to risks associated with indebtedness, including the\nrisk that interest rates might fluctuate, and cash flow would be insufficient to pay principal and interest on such indebtedness.\n\n \n\n**Issuance\nof shares of common or preferred stock could make achieving a change of control more difficult**.\n\n \n\nThe\nissuance of additional shares of our Common Stock, including those shares issued pursuant to conversion of convertible preferred shares,\nor the issuance of shares of an additional series of preferred stock could be used to make a change of control of us more difficult and\nexpensive. Under certain circumstances, such shares could be used to create impediments to, or frustrate persons seeking to cause, a\ntakeover or to gain control of us. Such shares could be sold to purchasers who might side with our Board of Directors in opposing a takeover\nbid that the Board of Directors determines not to be in the best interests of our shareholders. It might also have the effect of discouraging\nan attempt by another person or entity through the acquisition of a substantial number of shares of our Common Stock to acquire control\nof us with a view to consummating a merger, sale of all or part of our assets, or a similar transaction, since the issuance of new shares\ncould be used to dilute the stock ownership of such person or entity.\n\n \n\n**We\nhave no plans to pay regular dividends or conduct share purchases**.\n\n \n\nWe\ndo not intend to pay any cash dividends either currently or in the foreseeable future on our common shares. Additionally, we do not intend\nto conduct share repurchases either currently or in the foreseeable future."}