Financial Analysis

NOTE 9. COMMITMENTS AND CONTINGENCIES Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Companys consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. On August 17, 2023, Elite filed a paragraph IV certification with its ANDA to generic OxyContin and after Elite got acceptance of the ANDA by the FDA on September 19, 2023, Elite sent the patentee and NDA holder a Notice Letter as required under the Hatch-Waxman Act. On November 14, 2023, a patent infringement suit was filed in the District Court of New Jersey by Purdue Pharma. The Parties agreed to a stipulated dismissal of the case and the judge signed the order dismissing the case on June 12, 2026. ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Elites launch of a generic OxyContin will depend on the approval by the FDA and the outcome of various litigation involving Purdue or the expiry of the patents listed on the Orange Book. Operating Leases In October 2020, the Company e …

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NOTE 6. NJEDA BONDS During August 2005, the Company refinanced a prior 1999 bond issue occurring in 1999 through the issuance of Series A and B Notes new tax-exempt bonds (the NJEDA Bonds). The refinancing involved borrowing $ 4,155,000 , evidenced by a 6.5 % Series A Note in the principal amount of $ 3,660,000 maturing on September 1, 2030 and a 9 % Series B Note in the principal amount of $ 495,000 maturing on September 1, 2012 . During July 2014, the Company retired all the outstanding Series B Notes, at par, along with all accrued interest due and owed. In relation to the Series A Notes, the Company is required to maintain a debt service reserve fund. The debt service reserve is classified as restricted cash on the accompanying consolidated balance sheets. The NJEDA Bonds require the Company to make an annual principal payment on September 1st based on the amount specified in the loan documents and semi-annual interest payments on March 1st and September 1st, equal to interest due on the outstanding principal. The annual interest rate on the Series A Note is 6.5 %. The NJEDA Bonds are collateralized by a first lien on the Companys facility and equipment acquired with the proceeds of the original and refinanced bonds. The bonds mature on September 1, 2030. ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following tables summarize the Companys bonds payable liability: SCHEDULE OF BONDS PAYABLE LIABILITY March 31, 2026 March 31, 2025 …

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SCHEDULE OF DISAGGREGATION OF REVENUE 2026 2025 For the Years Ended March 31, 2026 2025 Direct sales to Wholesalers $ 65,273,763 $ 48,008,986 Indirect sales to Wholesalers 82,536,359 33,977,093 Total Manufacturing Fees $ 147,810,122 $ 81,986,079 2026 2025 For the Years Ended March 31, 2026 2025 Scheduled Products Manufacturing Fees $ 141,465,975 $ 74,756,506 Scheduled Products Licensing Fees 465,511 248,789 Unscheduled Products Manufacturing Fees 6,344,147 7,229,573 Unscheduled Products Licensing Fees 594,486 1,809,061 Total Revenue $ 148,870,119 $ 84,043,929 …

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NOTE 12. STOCK-BASED COMPENSATION Under its 2014 Equity Incentive Plan and its 2024 Equity Incentive Plan, the Company did grant and may grant stock options to officers, selected employees, as well as members of the Board of Directors and advisory board members. On July 1, 2024 the Company restated the 2014 Equity Incentive Plan to increase the shares reserved under the option plan by 12,730,000 . Under the 2024 Equity Incentive Plan, 80,000,000 options are available for grant. All options have generally been granted at a price equal to or greater than the fair market value of the Companys Common Stock at the date of the grant. Generally, options are granted with a vesting period of up to three years and expire ten years from the date of grant. The fair value of option awards is estimated on the date of grant using the Black-Scholes option-pricing model. The exercise price of each award is generally not less than the per share fair value in effect as of that award date. The determination of fair value using the Black-Scholes model is affected by the Companys share fair value as well as assumptions regarding a number of complex and subjective variables, including expected price volatility, risk-free interest rate and projected employee share option exercise behaviors. The Company estimates its expected volatility by using a combination of historical share price volatilities of similar companies within the Companys industry. The expected term of the Companys stock options for e …

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NOTE 4. INTANGIBLE ASSETS The following table summarizes the Companys intangible assets as of and for the periods ended March 31, 2026 and 2025: SCHEDULE OF INTANGIBLE ASSETS March 31, 2026 Estimated Useful Life Gross Carrying Amount Additions Impairment losses Accumulated Amortization Net Book Value Patent application costs - * $ 289,039 $ $ (289,039 ) $ $ ANDA acquisition costs Indefinite 5,348,763 - (557,973 ) 4,790,790 $ 5,637,802 $ $ (847,012 ) $ $ 4,790,790 March 31, 2025 Estimated Useful Life Gross Carrying Amount Additions Impairment losses Accumulated Amortization Net Book Value Patent application costs - * $ 289,039 $ $ $ $ 289,039 ANDA acquisition costs Indefinite 6,052,189 900,000 (1,603,426 ) 5,348,763 $ 6,341,228 $ 900,000 $ (1,603,426 ) $ $ 5,637,802 * Patent application costs were incurred in relation to the Companys abuse deterrent opioid technology. Amortization of the patent costs would have begun upon the issuance of marketing authorization by the FDA. During the year ended March 31, 2026, these costs were impaired in full as discussed above. On June 17, 2024, the Company and Nostrum Laboratories Inc. (Nostrum) entered into an Asset Purchase Agreement (the Asset Purchase Agreement), pursuant to which Nostrum was obligated to (i) sell to the Company all of its rights in and to the approved abbreviated new drug applications (ANDAs) for generic Norco (Hydrocodone Bitartrate and Acetaminophen tablets, USP CII), generic Percocet (Oxycodone Hydrochloride and Ace …

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NOTE 16. INCOME TAXES The earnings (loss) before income taxes for the years ended March 31, 2026 and 2025 were $ 56.8 million and $ (0.1) million, respectively. Components of the provision for income taxes were (amounts in thousands): SCHEDULE OF PROVISION FOR INCOME TAXES For the Year Ended March 31 (in thousands) 2026 2025 Current provision (benefit): Federal $ $ State and local 1,399 468 Total current provision 1,399 468 Deferred provision (benefit): Federal 10,335 3,871 State and local 208 (76 ) Total deferred provision 10,543 3,795 Provision for income taxes $ 11,942 $ 4,263 ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A reconciliation between the Companys effective tax rate and the federal statutory rate for the year ended March 31, 2026 is as follows (amounts in thousands of dollars): SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION Amount Percent 2026 Amount Percent U.S. Federal Statutory Tax Rate $ 11,682 21.00 % State and Local Income Taxes, Net of Federal Income Tax Effect (a) 1,313 2.36 % Foreign Tax Effects % Effect of Changes in Tax Law or Rates Enacted in the Current Period % Effect of Cross-Border Tax Laws % Tax Credits % Federal R&D Credits (360 ) (0.65 )% Prior year deferred true-up Changes in Valuation Allowance % Nontaxable or Nondeductible Items % Non-deductible change in fair value of derivative financial instruments (1,650 ) (2.96 )% Non-deductible change in fair value of stock-based liabilities Officers …

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NOTE 7. LOANS PAYABLE On July 1, 2022, the East West Bank (EWB) provided a mortgage loan (EWB Mortgage Loan) in the amount of $ 2.55 million for the purchase of the property at 135-137 Ludlow Avenue, which was formerly a lease held by the Company. The EWB Mortgage Loan matures in 10 years and bears interest at a rate of 4.75% fixed for 5 years then adjustable at the Wall Street Journal Prime Rate (WSJP) plus 0.5% with floor rate of 4.5%. The EWB Mortgage Loan contains customary representations, warranties and covenants. These covenants include maintaining a minimum debt coverage ratio of 1.50 to 1.00 tested annually and a minimum trailing 12-month debt coverage ratio of 1.50 to 1.00. As of the date of this filing, the Company was in compliance with each financial covenant. The Company has entered into a collateralized promissory note with individual lenders (a Promissory Note). As of June 2, 2023, a Promissory Note was placed with Nasrat Hakim, CEO and Chairman of the Board of Directors, for $ 3,000,000 . Refer to Note 8 for information regarding the Promissory Note. Loans payable consisted of the following: SCHEDULE OF LOANS PAYABLE March 31, 2026 March 31, 2025 Mortgage loan payable 4.75 % interest and maturing June 2032 $ 2,245,743 $ 2,334,163 Equipment and insurance financing loans payable, between 5.99 % and 12.02 % interest and maturing between April 2025 and October 2025 32,324 Less: Current portion of loans payable (92,774 ) (120,744 ) Long-term portion of loans payab …

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Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 for the year ended March 31, 2026, and applied the new disclosure requirements prospectively to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. See Note 16 Income Taxes in the accompanying notes to the consolidated financial statements for further detail.

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NOTE 8. RELATED PARTY LOANS PAYABLE The Company has entered into a collateralized promissory note with individual lenders with rates comparable to the mortgage loan, dated July 1, 2022, provided by East West Bank to the Company but with fewer covenants. These covenants include filing timely tax returns and financial statements, and an agreement not to sell, lease, or transfer a substantial portion of the Companys assets during the term of the Hakim Promissory Note. On June 2, 2023, the Company entered into a Promissory Note with Nasrat Hakim, President, Chief Executive Officer and Chairman of the Board of Directors of the Company (the Board), pursuant to which the Company borrowed funds in the aggregate principal amount of $ 3,000,000 (the Hakim Promissory Note). The Hakim Promissory Note had an interest rate of 9 % for the first year and 10 % for an optional second year and the proceeds were used for working capital and other business purposes. The original maturity date of the Hakim Promissory Note was June 2, 2024, with an optional second year extension. The second year extension was exercised pursuant to the terms of the Hakim Promissory Note. For the years ended March 31, 2026 and 2025, interest expense on the Hakim Promissory Note totaled $ 50,000 and $ 292,500 , respectively, recorded on the Consolidated Statements of Operations in interest expense and amortization of debt issuance costs. On June 2, 2025, the Hakim Promissory Note was paid in full and no balance was ou …

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NOTE 14. SEGMENT RESULTS FASB ASC 280-10-50 requires use of the management approach model for segment reporting. The management approach is based on the way a companys management organized segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. Consolidated income from operations, which is reported in the accompanying consolidated statements of operations, is the measure of segment profit or loss that is regularly reviewed by the CODM. This enables the CODM to assess the overall level of available resources and determine how best to deploy these resources across research and development projects in line with the long-term company-wide strategic goals. There are no significant segment expenses or other segment items that are separately provided to the CODM beyond research and development and general and administrative expenses. The CODM does not receive segment level information related to depreciation, amortization, capital expenditures, or other non-cash items, and therefore such items are excluded. The ANDA segment follows the same accounting policies used in the preparation of the Companys consolidated financial statements. The following represents selected information for the Companys reportable segment: SCHEDULE OF SELECTED INFORMATION FOR REPORTABLE SEGMENTS 2026 2025 For …

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NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Overview Elite Pharmaceuticals, Inc. (the Company or Elite) was incorporated on October 1, 1997 under the laws of the State of Delaware, and its wholly-owned subsidiary Elite Laboratories, Inc. (Elite Labs) was incorporated on August 23, 1990 under the laws of the State of Delaware. On January 5, 2012, Elite Pharmaceuticals was reincorporated under the laws of the State of Nevada. Elite Labs engages primarily in researching, developing, licensing, manufacturing, and sales of generic, oral dose pharmaceuticals. The Company is equipped to manufacture controlled-release products on a contract basis for third parties and itself, if and when the product candidates are approved. These products include drugs that cover therapeutic areas for allergy, bariatric, attention deficit and infection. Research and development activities are performed with an objective of developing product candidates that will secure marketing approvals from the United States Food and Drug Administration (FDA), and thereafter, commercially exploiting such products. Basis of Presentation The accompanying audited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and pursuant to the rules and regulations of the SEC. The audited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Elite Labs. All significant intercompany ac …

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NOTE 17. SUBSEQUENT EVENTS On April 2, 2026, the Company announced the commercial launch of our generic methadone hydrochloride 5 mg and 10 mg tablets. The product is marketed and sold under the Elite Labs label. On June 1, 2026, the Company reported that it had filed an Abbreviated New Drug Application with the US Food and Drug Administration for a generic version of an undisclosed drug product in the class of medications called anticoagulants. On June 12, 2026, pursuant to a stipulated dismissal agreed to by both parties, the District Court of New Jersey signed an order dismissing the patent infringement suit filed by Purdue Pharma against the Company in November 2023.

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