ELTP 10-K & 10-Q changes, risk factors and insider trading
Elite Pharmaceuticals Inc. · OTC · Pharmaceutical Preparations · CIK 1053369 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Disruptions at the FDA, the DEA, the SEC and other government agencies could negatively impact our business.”
Removed heading “We most likely will require additional financing to meet our business objectives.”
Removed heading “We have substantial indebtedness which may adversely affect our financial condition.”
Largest changes
“Further, recent global events may adversely affect workforces, organizations, economies, and financial markets globally, leading to economic downturns, inflation, and increased market volatility. …”see in full comparison
“The regulations applicable to us regarding reporting and payment obligations with respect to Medicaid reimbursement and rebates and other governmental programs are complex. Our calculations and methodologies are subject to review and challenge by the applicable governmental agencies, and it is possible that such reviews could adversely affect us and our business. …”see in full comparison
“Employers may seek to reduce costs by reducing or eliminating employer group healthcare plans or by transferring a greater portion of their healthcare costs to their employees. Job losses, or other economic hardships may also result in reduced levels of coverage for some individuals, potentially resulting in lower healthcare coverage for themselves or their families. …”see in full comparison
“Pursuant to applicable law, knowing provision of false information in connection with price reporting under the U.S. Department of Veterans Affairs, FSS or Tricare programs can subject a manufacturer to civil monetary penalties. These program obligations also contain extensive disclosure and certification requirements. If we overcharge the government in connection with our arrangements with FSS or Tricare, we are required to refund the difference to the government. …”see in full comparison
“Pricing and rebate calculations vary across products and programs, are complex and are often subject to interpretations by us, governmental or regulatory agencies and the courts, which can change and evolve over time. In the case of our Medicaid pricing data, if we become aware that our reporting for a prior quarter was incorrect, or has changed as a result of recalculation of the pricing data, we are generally obligated to resubmit the corrected data for up to three years after those data were originally due. …”see in full comparison
“For example, the ACA includes numerous provisions that affect pharmaceutical companies, including provisions intended to expand healthcare coverage to the uninsured through private health insurance reforms and an expansion of Medicaid. The ACA also imposes substantial costs on pharmaceutical manufacturers, such as an increase in liability for rebates paid to Medicaid, new drug discounts that must be offered to certain enrollees in the Medicare prescription drug benefit and an annual fee imposed on all manufacturers of brand prescription drugs in the U.S. …”see in full comparison
Full comparison: every changed paragraph (54)
In addition, outbreaks of contagious diseases and other adverse public health developments affecting us and/or the third parties on which we rely could have a material and adverse effect on our business, financial condition and results of operations. For example, the COVID-19 pandemic, which impacted the operation of healthcare systems, global travel, supply and labor markets and other business and economic activity worldwide, had a disruptive and adverse impact on our financial condition and results of operations and on those of many of the third parties on which we rely.
Although the acute COVID-19 public health emergency has lapsed, we will continue to monitor its long-term impacts, including impacts on market practices and on the labor market, and adjust our policies and practices as needed to mitigate any adverse impacts to our business operations and financial condition. We will also work with our internal teams and the third-parties on which we rely to assess, and seek to mitigate, the potential impacts on our business operations and financial condition of any future outbreaks of contagious diseases or other adverse public health developments that may emerge from time to time.
Revenues
and gross margin derived from generic pharmaceutical products often follow a pattern based on regulatory and competitive factors that
we believe are unique to the generic pharmaceutical industry. As the patent(s) for a brand name product or any statutory period of marketing
exclusivity expires, the first generic manufacturer to receive regulatory approval for a generic equivalent of the product is often able
to capture a substantial share of the market. However, as other generic manufacturers receive regulatory approvals for their own generic
versions, that market share, and the price of the that product, will typically decline depending on several factors, including, without limitation,
limitation, the number of competitors, the price of the branded product and the pricing strategy of the new competitors. Significant competition
competition in the generic pharmaceutical marketplace is not uncommon with one result of such being significant decline in revenue and
gross margins.
There can be no assurances of our ability to continue to develop new products or that the number of competitors for any
given product
will not increase to such an extent that we may stop marketing a generic drug product for which we previously obtained
approval, resulting
in a material adverse effect on our business, financial condition, results of operations, cash flow, ability to operate
and stock price.
Significant
disruptions to our IT systems or breaches of information security could adversely affect our business. In the ordinary course of business,
we collect, store and transmit what we consider to be large amounts of confidential information, and it is critical that we do so in
a secure manner to maintain the confidentiality and integrity of such information. Additionally, our IT systems are critical to our ability
to store electronic and financial information and to manage a variety of business processes and activities, including, without limitation,
manufacturing, financial, logistics, sales, marketing and administrative functions. We depend on our IT infrastructure to communicate
internally and externally with employees, customers, suppliers and others. We also use IT networks and systems to comply with regulatory,
legal and tax requirements. We have outsourced significant elements of our IT infrastructure. As a result, we manage independent vendor
relationships with third-parties who are responsible for maintaining significant elements of our IT systems and infrastructure and who
may or could have access to our confidential information. The size and complexity of our IT systems, and those of our third-party vendors,
make such systems potentially vulnerable to service interruptions and security breaches from inadvertent or intentional actions by our
employees, partners or vendors. These systems are also vulnerable to attacks by malicious third parties,third-parties, such as phishing or ransomware
attacks, and may be susceptible to intentional or accidental physical damage to the infrastructure maintained by us or by third parties,
including, without limitation, as a result of extreme weather events, such as fires, floods, hurricanes or tornadoes or as the result
of the use of AI or other new technologies.
Public
concern over the abuse of opioid medications, including increased legal and regulatory action, could also negatively affect our business.
business. Certain governmental and regulatory agencies, as well as state and local jurisdictions, are focused on the abuse of opioid medications
medications in the United States. State and local governmental agencies may investigate us as a manufacturer and/or distributor of
medicines containing
opioids or in conjunction with their investigation of other pharmaceutical wholesale distributors, and others
in the supply chain that
have a direct or indirect connection to our operations in relation to the distribution of opioid
medications. In addition, multiple lawsuits
have been filed against other pharmaceutical manufacturers and distributors alleging,
among other claims, that they failed to provide
effective controls and procedures to guard against the diversion of controlled
substances, acted negligently by distributing controlled
substances to pharmacies that serve individuals who abuse controlled
substances, and failed to report suspicious orders of controlled
substances in accordance with regulations. Additional governmental
entities have indicated an intent to sue these other manufacturers
and distributors. While no such actions have been taken against
us, the immediate effect on the Company has been an inability to commercialize
and market three opioid products approved during
fiscal years prior to the year ended March 31, 2021 and a cessation of orders for another
two other opioid products that had been
marketed by our marketing partners. During the year ended March 31, 2020, we disposed of four
approved ANDAs for opioid products. We
currently hold four approved ANDAs for opioid products, with three of these being commercially sold and one to be commercially
launched within a timeframe that is beneficial to the Company’s interests.products. Further, defense against
any such opioid related
lawsuits could be cost-prohibitive resulting in an adverse material effect on our business, financial condition,
results of
operations, cash flows and stock price. Similar allegations made against us, even without litigation, could also negatively
affect affect
our business in various ways, including through increased costs and harm to our reputation. In addition, an adverse resolution
of of
any lawsuit or investigation could also have a material adverse effect on our business, results of operations, cash flows and stock
price.
The
SEC’s rules exempt smaller reporting companies, like us, from various reporting requirements applicable to public companies that
are are
not smaller reporting companies. As long as we qualify as a smaller reporting company based on our public float and report less than
$100 million in annual revenues in a fiscal year, we are permitted, and we intend, to omit the auditor’s attestation on internal
control 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
million. We therefore expect to no longer qualify for smaller reporting company status in the near future.
WeOur
have a relatively limited operating history and our operating results could fluctuate significantly.
In
addition, although we have been in operation since 1990, weand havewere anot relativelyprofitable short operating history, have only achieved profitability
for the first time duringuntil the fiscal year ended March 31, 20212021. and limited financial data upon which you may evaluate our business and
prospects. There can be no assurances of our ability to sustain current profitability. Additionally, inIn certain years
prior to the fiscal year
ended March 31, 2021, the auditor’s opinion on our financialsfinancial statements was qualified with respect to
there being substantial doubt as to
the Company’s ability to continue as a going concern due to continued losses not being sufficiently
offset by operating revenues.
A There can be no assurances of our ability to sustain current profitability and a failure to generate sufficient
revenues to offset related costs of operations will have a material adverse effect on our business,
results of operations, financial
condition, cash flow and ability to operate.
Our ability to fund and grow operations is uncertain and we may require additional financing to meet objectives.
Our
ability to fund ourcurrent operations, maintain liquidity and meetexecute ourgrowth financing obligationsplans is reliant on resources generated from our operations,
which are subject
to significant risks and uncertainties. We rely mainly on cash generated by operations asand wellhave asalso accessin tothe past accessed
financial markets and equipment
financings, to fund our commercial, product development and other operations, maintain liquidity and
meet our financial obligations.
There can be no assurances of our ability to secure equipment financing, resulting in an increased risk of our inability to achieve critical
or necessary facility upgrades.
As of March 31, 2026, we had cash on hand of approximately $30 million and a working capital of approximately $95 million, and for the year ended March 31, 2026, we generated income from operations totaling approximately $49 million, net other income totaling approximately $8 million and a net tax expense of approximately $12 million, resulting in a net income of approximatley $45 million. There can be no assurances of the continuation of revenues being earned from the current generic product line, nor Elite’s successful commercialization of other products in our development pipeline. In addition, there can be no assurances of Elite being able to raise additional funds in a timely manner, on acceptable terms, if needed to support commercial operations, implement necessary facility upgrades or finance the execution of strategic growth initiatives, resulting in a material detrimental effect on Elite’s operations and profits as well as having a material adverse effect on our business, results of operations, financial condition, and cash flow.
The
occurrence or possibility of one or more of these or similar events may cause us to pursue one or more significant corporate transactions
as well as other remedial measures, including refinancing all or part of our then-existing indebtedness, selling assets, reducing, delaying
or eliminating capital expenditures, seeking to raise additional capital or pursuing internal reorganizations, restructuring activities,
strategic alliances, or cost-saving initiatives. Any refinancing of our substantial indebtedness could be at significantly higher interest
rates, which
will depend on both the conditions of the market as well as the Company’s finances at such time, and may also require
our compliance
with covenants that could be more onerous than current, which in turn could result in the further restriction of our business operations.
operations. Any refinancing may also increase the amount of our secured indebtedness. In addition, the terms of existing or future debt agreements
agreements may restrict us from adopting any of the alternatives. Internal reorganizations, restructuring activities, asset sales and
cost saving
initiatives may also be complex and could entail significant costs and charges or could otherwise negatively impact shareholder value.
value. There 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
or that even if accomplished, that the intended results and benefits would be realized.
We
most likely will require additional financing to meet our business objectives.
We
most likely will need additional funding to accomplish our plans to conduct the clinical development and commercialization of a range
of multiple abuse-deterrent opioids or initiate, continue or complete the development of additional generic products already identified
for development or currently in development.
As
of March 31, 2025, we had cash on hand of approximately $11.3 million and a working capital surplus of $45.9 million, and for the year
ended March 31, 2025, we generated income from operations totaling $19.6 million, net other expenses totaling $19.7 million and a net
tax expense of $4.3 million, resulting in a net loss of $4.3 million.
While
growth in our current generic product line, consisting of Phentermine Tablets, Phendimetrazine Tablets, Naltrexone Tablets, Isradipine
Capsules, Trimipramine Capsules, Loxapine capsules, Amphetamine IR Tablets, Amphetamine ER Capsules, Methotrexate Tablets, APAP Codeine
Tablets, APAP Hydrocodone Tablets, Lisdex Capsules and successful commercialization of other products in our product development pipeline,
may lead to increased profitability, there can be no assurances of Elite increasing profits or achieving profitable operations in the
future. Furthermore, there can be no assurances of the continuation of revenues being earned from the current generic product line, nor Elite’s successful commercialization of other products in our development pipeline. In addition, there can be no
assurances of Elite being able to raise additional funds in a timely manner, on acceptable terms, if needed to support commercial operations
resulting in a material detrimental effect on Elite’s operations and profits as well as having a material adverse effect on our
business, results of operations, financial condition, and cash flow.
To
sustain operations and meet our business objectives we must be able to commercialize our products and other products or pipeline opportunities.
If we are unable to timely obtain additional financing, if necessary, and/or we are unable to timely generate greater revenues from our
operations, we will be required to reduce and, possibly, cease operations and liquidate our assets. No assurance can be given that we
will be able to commercialize the new opportunities or consummate such other financing or strategic alternative in the time necessary
to avoid the cessation of our operations and liquidation of our assets.
Furthermore,
the capital and credit markets have experienced extreme volatility. Disruptions in the credit markets make it harder and more expensive
to obtain funding. In the event current resources do not satisfy our needs, we may have to seek additional financing. The availability
of additional financing will depend on a variety of factors such as market conditions and the general availability of credit. Future
debt financing may not be available to us when required or may not be available on acceptable terms, and as a result we may be unable
to grow our business, take advantage of business opportunities, or respond to competitive pressures.
We
have substantial indebtedness which may adversely affect our financial condition.
We
currently have substantial indebtedness. Total liabilities as of March 31, 2025, were $42.9 million, with such amount including, without
limitation, $10.9 million in various loans, leases, bonds payable and deferred revenues, $25.2 million in derivative liabilities and
$6.8 million in current payables and accruals. The consequences of this substantial indebtedness could include:
In
addition, a notice of default was issued by the New Jersey Economic Development Authority in relation to prior obligations of our
tax-exempt bonds (the “NJEDA Bonds”). Although we are current in our payments under these bonds, if the principal balances due under these bonds are
accelerated pursuant to the notice of default, our ability to operate in the future will be materially and adversely
affected.
For
more information on the NJEDA Bonds, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition
and Results of Operations; Liquidity and Capital Resources; NJEDA Bonds.”
Intangible
assets represent a significantmaterial portionasset ofon our assets.balance sheet. As of March 31, 2025,2026, intangible assets were approximately $5.6$4.8 million, or approximately
6% of our assets.million.
Generally
accepted accounting principles in the United States (“GAAP”) requires that intangible assets be subject to regular impairment
impairment analysis to determine if changes in circumstances indicate that the value of the asset as recorded may not be
recoverable. Such events
or changes in circumstances are an inherent risk in the pharmaceutical industry and often cannot be
predicted. However, should a change
in circumstance occur, requiring the impairment of an intangible asset, the result of such an
impairment may have an adverse material
effect on our business, financial condition, results of operations, cash flows and stock
price. During the yearsyear ended March 31, 2025 and 2024, 2026,
we recorded impairment of approximately $1.6$1 million and $0.0 million,
respectively, related to our ANDA and patent intangible assets.
GAAP
requires estimates, judgementsjudgments and assumptions which inherently contain uncertainties.
Disruptions at the FDA, the DEA, the SEC and other government agencies could negatively impact our business.
Disruptions at, without limitation, the FDA, the DEA, and other regulatory agencies, including due to changes in government or significant changes in leadership or personnel, could increase the time required for new products to be reviewed and approved, or otherwise cause delays to the regulatory approval or post-approval processes for our products, which could adversely affect our business. The ability of the FDA, the DEA or other regulatory agencies to review and approve new products or manage post-approval requirements for marketed products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, political and policy changes. Average review times for product submissions have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely is subject to the impacts of political events, which are inherently fluid and unpredictable.
For example, over the last several years, the U.S. government has shut down several times, including the fall of 2025, and certain regulatory agencies, such as the FDA, the DEA and the SEC, have had to furlough critical employees and stop critical activities. If a prolonged government shutdown occurs, or if other global, political or economic conditions impact the regulatory agencies with which we interact, it could significantly impact the ability of the FDA, the DEA, the SEC and other agencies to timely review and process our submissions, which could have a material and adverse effect on our business, results of operations and financial condition.
There have been, and there will continue to be, legislative, regulatory and third-party payor proposals to change the healthcare system in ways that could impact our ability to commercialize our products profitably. We anticipate that the federal and state legislatures and the private sector will continue to consider and may adopt and implement healthcare policies, such as the IRA and the Patient Protection and Affordable Care Act enacted in 2010 (“ACA”), intended to curb rising healthcare costs. These cost-containment measures may include, among other measures: requirements for pharmaceutical companies to negotiate prescription drug prices with government healthcare programs; controls on government-funded reimbursement for drugs; new or increased requirements to pay prescription drug rebates to government healthcare programs, including if drug prices increase at a higher rate than inflation; controls on healthcare providers; challenges to or limits on the pricing of drugs, including pricing controls or limits or prohibitions on reimbursement for specific products through other means; requirements to try less expensive products or generics before a more expensive branded product; and public funding for cost effectiveness research, which may be used by government and private third-party payors to make coverage and payment decisions.
For example, the ACA includes numerous provisions that affect pharmaceutical companies, including provisions intended to expand healthcare coverage to the uninsured through private health insurance reforms and an expansion of Medicaid. The ACA also imposes substantial costs on pharmaceutical manufacturers, such as an increase in liability for rebates paid to Medicaid, new drug discounts that must be offered to certain enrollees in the Medicare prescription drug benefit and an annual fee imposed on all manufacturers of brand prescription drugs in the U.S. The ACA also requires increased disclosure obligations and an expansion of an existing program requiring pharmaceutical discounts to certain types of hospitals and federally subsidized clinics and contains cost-containment measures that could reduce reimbursement levels for pharmaceutical products. The ACA also includes provisions known as the Physician Payments Sunshine Act, which require manufacturers of drugs, biologics, devices and medical supplies covered under Medicare and Medicaid to record any transfers of value to certain U.S. healthcare providers (including, but not limited to, physicians, physician assistants, nurse practitioners, dentists, optometrists, podiatrists, chiropractors and other healthcare providers) and teaching hospitals and to report this data to the CMS annually for subsequent public disclosure. Similar reporting requirements have also been enacted on the state level domestically, and an increasing number of countries worldwide either have adopted or are considering similar laws requiring transparency of interactions with healthcare professionals. Failure to report appropriate data may result in civil or criminal fines and/or penalties.
In addition, the IRA contains provisions intended to lower beneficiary drug spending. The IRA enables Medicare to negotiate prescription drug prices with manufacturers of certain high-cost drugs for the first time. A separate provision requires drug manufacturers to pay rebates to Medicare if their drug prices increase at a higher rate than the rate of inflation (the so-called inflation rebate provision). Additionally, beginning in 2024, the IRA eliminated the 5% coinsurance for catastrophic coverage under Medicare Part D; and in 2025, the IRA capped the beneficiary annual out-of-pocket expenditure and required new mandatory manufacturer discounts. Since its enactment, CMS has taken steps to implement various provisions of the IRA, including negotiating and publishing maximum fair prices for drugs selected under the IRA’s negotiation framework. The ultimate impact of the IRA’s drug pricing provisions on the pharmaceutical industry, including on pricing, reimbursement, and market dynamics, remains uncertain.
Legislative and regulatory efforts to implement drug pricing reforms, including MFN models, can adversely affect our business, if implemented. These reforms create uncertainty for our business, and they remain subject to change through potential legal challenges or subsequent rulemaking or sub-regulatory guidance. While we are unable to predict whether any pending or future reforms may be adopted, if such reforms are adopted they could lower our pricing, which would have a material negative impact on our competitive position in the market, our sales levels and our profitability.
In addition, while we are not currently engaged in clinical trials at this time, if that changes and we are unable to adapt to changes in existing requirements or the adoption of new requirements or policies governing clinical trials, our development plans may be impacted. For example, in December 2022, with the passage of Food and Drug Omnibus Reform Act (“FDORA”), Congress required sponsors to develop and submit a Diversity Action Plan (“DAP”) for each Phase 3 clinical trial or any other “pivotal study” of a new drug or biological product. These plans are meant to encourage the enrollment of more diverse patient populations in late-stage clinical trials of FDA-regulated products. In June 2024, as mandated by FDORA, the FDA issued draft guidance outlining the general requirements for DAPs. Unlike most guidance documents issued by the FDA, the DAP guidance when finalized will have the force of law because FDORA specifically dictates that the form and manner for submission of DAPs are specified in FDA guidance. In January 2025, in response to an Executive Order issued by the President of the United States on Diversity, Equity and Inclusion programs, the FDA removed this draft guidance from its website. This action raises questions about the applicability of statutory obligations to submit DAPs and the agency’s current thinking on best practices for clinical development.
Any new laws or regulations that have the effect of imposing additional costs or regulatory burden on pharmaceutical manufacturers, or otherwise negatively affect the industry, could adversely affect our ability to successfully commercialize our products and any future product candidates, if approved. The implementation of any price controls, caps on prescription drugs or price transparency requirements, whether at the federal level or state level, could have a material adverse effect on our business, ability to operate as a going concern, financial condition, results of operations and cash flow.
Our
business and financial condition may be adversely affected by legislation or regulatory reform of the healthcare system in the United
States. We cannot predict with any certainty how existing laws may be applied or how laws or legal standards may change in the future.
Current or future legislation, whether state or federal, or in any of the non-U.S. jurisdictions with authority over our suppliers, customers
or operations, may have a material effect on our business, ability to operate, financial condition, results of operations and cash flows.
Employers
may seek to reduce costs by reducing or eliminating employer group healthcare plans or by transferring a greater portion of their healthcare
costs to their employees. Job losses, or other economic hardships may also result in reduced levels of coverage for some individuals,
potentially resulting in lower healthcare coverage for themselves or their families. Furthermore, increased instability in the insurance
marketplace or an increase in uninsured Americans or others living and working in the USA may result from the Tax Cuts and Jobs Act of
2017, elimination of the Tax Cuts and Jobs Act of 2017, elimination of the Patient Protection and Affordable Care Act (“PPACA”)
requirement that individuals maintain health insurance or incur a financial penalty and other steps taken by various governmental and
other organizations to limit or end subsidies to such individuals at comparatively lower income levels. These economic conditions may
affect an individual’s ability to afford healthcare as a result of increased premiums, co-pay or deductible obligations, greater
cost sensitivity to existing co-pay or deductible obligations, lost healthcare coverage or for other reasons. It is possible that such
conditions could lead to changes in patient behavior and spending patterns that could negatively affect prescription and usage of certain
or all of our products, including, without limitation, delaying of treatment, rationing of prescription medications, non-filling of prescriptions,
reduction in the frequency of visits to healthcare facilities, utilizing alternative therapies or foregoing healthcare insurance coverage
altogether. Such changes may result in the reduced demand for any or all of our products, which could have a material adverse effect
on our business, results of operations, financial condition, cash flows and ability to operate as a going concern.
Furthermore,
our ability to commercialize and generate revenues and profit splits relating to the sale of our products depends, in part, on the extent
to which reimbursement for the costs of these products is available from third-party payors, including government healthcare programs,
such as Medicaid and Medicare, private health insurers and other payors. We cannot be certain that, over time, third-party reimbursements
for our products will be adequate for us to maintain price levels sufficient for realization of an appropriate return on our investment.
Government payers, private insurers and other third-party payers are increasingly attempting to contain healthcare costs by: (i) limiting
both coverage and the level of reimbursement (including adjusting co-pays) for drugs, (ii) refusing, in some cases, to provide any coverage
for certain uses for drugs, (iii) requiring rebates, in the case of government healthcare programs, for net sales amounts above statutorily
defined ceilings, with such ceilings being potentially below production costs and (iv) requiring or encouraging, through more favorable
reimbursement levels or otherwise, the substitution of generic alternatives to branded drugs. For example, government agencies or third-party
payers could attempt to reduce reimbursement for physician administered products through their interpretation of complex government price
reporting obligations and payment and reimbursement coding rules, and could attempt to reduce reimbursement for separate physician administered
products that share an active ingredient by requiring the blending of sales and pricing information in the same payment and reimbursement
code.
The
unavailability of, or reduction in, the reimbursement of our products could have a material adverse effect on our business, ability to
operate as a going concern, financial condition, results of operations and cash flow.
On
May 12, 2025, President Trump issued an executive order implementing the concept of most-favored nationMFN pricing. Under this order, the
Department of Health and Human Services would direct federal health insurers to pay no more than the lowest price paid by other high-income
countries for medications covered by such insurers, including Medicare and Medicaid. Under the order, most-favored nationMFN pricing will
apply only to brand products without generic or biosimilar competition. The effect of this order on our business and the generic pharmaceutical
industry in general is not yet known.
New
tariffs andtariffs, evolving trade policypolicy, and geopolitical factors and military conflicts between the US and other countries may adversely affect our business.
Further, recent global events may adversely affect workforces, organizations, economies, and financial markets globally, leading to economic downturns, inflation, and increased market volatility. Military conflicts and wars (such as the ongoing conflicts between the US and Iran, Russia and Ukraine, and Israel and Hamas), terrorist attacks, other geopolitical events, high inflation, increasing interest rates, bank failures and associated financial instability and crises, and supply chain and logistics issues can cause exacerbated volatility and disruptions to various aspects of the global economy. The uncertain nature, magnitude, and duration of hostilities stemming from such conflicts, including the potential effects of sanctions and counter-sanctions, or retaliatory cyber-attacks on the world economy and markets, have contributed to increased market volatility and uncertainty, which could have an adverse impact on macroeconomic factors that affect our business and operations.
We participate in, without limitation, the Medicaid Drug Rebate Program, the 340B program, the U.S. Department of Veterans Affairs’ FSS pricing program and other governmental purchasing and rebate programs and have obligations to report the average sales price for certain of our drugs.
Pricing and rebate calculations vary across products and programs, are complex and are often subject to interpretations by us, governmental or regulatory agencies and the courts, which can change and evolve over time. In the case of our Medicaid pricing data, if we become aware that our reporting for a prior quarter was incorrect, or has changed as a result of recalculation of the pricing data, we are generally obligated to resubmit the corrected data for up to three years after those data were originally due. Such restatements and recalculations increase our costs for complying with the laws and regulations governing the Medicaid Drug Rebate Program and could result in an adjustment to our rebate liability for past quarters. Price recalculations also may affect the ceiling price at which we are required to offer our products under the 340B program and give rise to an obligation to refund entities participating in the 340B program for overcharges during past quarters by a price recalculation.
Civil monetary penalties can be applied if we are found to have knowingly submitted any false price or product information to the government, if we are found to have made a misrepresentation in the reporting of our average sales price, if we fail to submit the required price data on a timely basis, or if we are found to have charged 340B covered entities more than the statutorily mandated ceiling price. CMS could also decide to terminate our Medicaid drug rebate agreement, in which case federal payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs. We cannot assure you that our submissions will not be found by CMS to be incomplete or incorrect.
Our failure to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program and other governmental programs could negatively impact our financial results. CMS issued a final regulation, which became effective in April 2016, to implement the changes to the Medicaid Drug Rebate Program under the Affordable Care Act. Since that time, CMS has issued multiple proposed and final rules that change the Medicaid Drug Rebate Program. Regulatory and legislative changes, and judicial rulings relating to the Medicaid Drug Rebate Program and related policies have increased and will continue to increase our costs and the complexity of compliance, have been and will continue to be time-consuming to implement, and could have a material adverse effect on our results of operations, particularly if CMS or another agency challenges the approach we take in our implementation.
Health Resources and Service Administration (“HRSA”) issued a final regulation regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities, which became effective in January 2019.
Implementation of this regulation could affect our obligations and potential liability under the 340B program in ways we cannot anticipate. We are also required to report the 340B ceiling prices for our covered outpatient drugs to HRSA, which then publishes them to 340B covered entities. Any charge by HRSA that we have violated this regulation or other requirements of the program could negatively impact our financial results. Moreover, HRSA has established an administrative dispute resolution (“ADR”) process, which is governed by a final regulation effective June 2024, for claims by covered entities that a manufacturer engaged in overcharging, including claims that a manufacturer limited the ability of a covered entity to purchase the manufacturer’s drugs at the 340B ceiling price, and by manufacturers that a covered entity violated the prohibitions against diversion or duplicate discounts. Such claims are to be resolved through an ADR panel of government officials rendering a decision that could be appealed only in federal court. An ADR proceeding could potentially subject us to discovery by covered entities and other onerous procedural requirements and could result in additional liability. HRSA could also decide to terminate a manufacturer’s agreement to participate in the 340B program for a violation of that agreement or other good cause shown, in which case the manufacturer’s covered outpatient drugs may no longer be eligible for federal payment under the Medicaid or Medicare Part B program.
Further, legislation may be introduced that, if passed, would, among other things, further expand the 340B program to include additional covered entities or would require participating manufacturers to agree to provide 340B discounted pricing on drugs used in an inpatient setting, and any additional future changes to the definition of average manufacturer price or the Medicaid rebate amount could affect our 340B ceiling price calculations and negatively impact our results of operations. Additionally, we have implemented a policy governing the eligibility of covered entities to purchase our products at the 340B price for shipment to a contract pharmacy. We implemented this policy out of concern that contract pharmacy arrangements are diverting the benefits of the 340B program from patients to contract pharmacies and contributing to the pervasive lack of transparency within the 340B program, rendering it difficult to identify inappropriate duplicate discounts and product diversion. Certain pharmaceutical manufacturers and the industry group, Pharmaceutical Research and Manufacturers of America (“PhRMA”) are involved in ongoing litigation with the HRSA regarding manufacturer initiatives that restrict covered entities’ ability to purchase products at the 340B program price for shipment through an unlimited number of contract pharmacies. Additionally, several states have enacted, and many other states are considering, laws that prohibit manufacturer restrictions on contract pharmacies. Certain pharmaceutical manufacturers and PhRMA have initiated litigation challenging these state laws. The outcome of pending judicial proceedings and the potential impact on the way in which manufacturers extend discounts to covered entities through contract pharmacies remain uncertain and negative legal rulings, or the passage of legislation in respect of this topic, may materially adversely impact our results of operations.
We have obligations to report the average sales price for certain of our drugs to the Medicare program. In addition, we are required to report the best price for our drugs, as defined under the Medicaid Drug Rebate Program, to CMS. Statutory or regulatory changes or changes in CMS guidance could affect the average sales price or best price calculations for our products and the resulting Medicare payment rate or rebates we owe to state Medicaid programs. Such changes could negatively impact our results of operations.
Pursuant to applicable law, knowing provision of false information in connection with price reporting under the U.S. Department of Veterans Affairs, FSS or Tricare programs can subject a manufacturer to civil monetary penalties. These program obligations also contain extensive disclosure and certification requirements. If we overcharge the government in connection with our arrangements with FSS or Tricare, we are required to refund the difference to the government. Failure to make necessary disclosures and/or to identify contract overcharges can result in allegations against us under the False Claims Act and other laws and regulations. Unexpected refunds to the government, and responding to a government investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
The
regulations applicable to us regarding reporting and payment obligations with respect to Medicaid reimbursement and rebates and other
governmental programs are complex. Our calculations and methodologies are subject to review and challenge by the applicable governmental
agencies, and it is possible that such reviews could adversely affect us and our business. In addition, because our processes for these
calculations and the judgments involved in making these calculations involve, and will continue to involve, subjective decisions and
complex methodologies, these calculations are subject to the risk of error and misjudgment. Any governmental agencies that have commenced
(or that may commence) an investigation of us could impose, based on a claim of violation of anti-fraud and false claims laws
or otherwise, civil and/or criminal sanctions, including fines, penalties and possible exclusion from federal health care programs (including
Medicaid and Medicare). Some of the applicable laws may impose liability even in the absence of specific intent to defraud. Furthermore,
should there be ambiguity with respect to how to properly calculate and report payments, and even in the absence of any such ambiguity,
a governmental authority may take a position contrary to a position that we have taken and may impose civil and/or criminal sanctions
on us. Any such penalties, sanctions, or exclusion from federal health care programs could have a material adverse effect on our business,
financial position, results of operation, ability to operate and stock price.
The
cost of insurance, including directors and officers insurance, workers compensation, product liability for products containing opioids
and products not containing opioids, truck and general liability insurance have increaseincreased significantly in recent years and may continue
to increase in the future. We have increased deductibles and/or decreased coverages to mitigate some of these costs. These insurance
premium increases, as well as our increased risk due to reduced coverage and increased deductibles could have an adverse material effect
on our business, financial condition, results of operations, cash flows and stock price.
We
currently hold threetwo patents and we may intend to file further patent applications in the future. We cannot be certain that any further
patent applications will result in the issuance of patents. If patents are issued, third parties may sue us to challenge our patent protection,
and although we know of no reason why they should prevail, it is possible that they could. In addition to modification or revocation
of patents in legal proceedings, issued patents may later be modified or revoked by the U.S. Patent and Trademark Office or by analogous
foreign offices. It is likewise possible that our patent rights may not prevent or limit our present and future competitors from developing,
using or commercializing products that are similar or functionally equivalent to our products.
Dilution
from issuance of shares to Directors, Officers, Employees, Consultants or upon exercise of warrants and options or the perception
that dilution may occur could cause the price per share
of common stock to fall.
Management's Discussion & Analysis (MD&A)
Removed heading “Hakim Promissory Note”
Removed heading “Caskey Promissory Note”
Largest changes
“The Company has entered into a collateralized promissory note with individual lenders with rates comparable to the EWB Term Loan but with fewer restrictive 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 Company’s assets during the term of the note. …”see in full comparison
“On June 30, 2023, the Company entered into a collateralized promissory note with Davis Caskey, a member of the Board of Directors (the “Caskey Promissory Note”). The Caskey Promissory Note has a principal balance of $1,000,000 and an interest rate of 9% for the first year and 10% for an optional second year. The Caskey Promissory Note is subject to the same covenants as are contained in the Hakim Promissory Note. The proceeds were used for working capital and other business purposes. …”see in full comparison
“Impairment of intangible assets for the year ended March 31, 2026 was $0.8 million as compared to $1.6 million for the prior fiscal year, a decrease of $0.8 million or approximately 47%. This decrease is related to impairments of ANDAs for Loxapine Capsules and patent development costs during the current year being less than the impairments recorded during the comparable period of the prior year. Impairments of intangible assets are recorded when, after assessments and evaluation, an entity concludes that the fair value of an indefinite lived intangible asset is more likely than not impaired.”see in full comparison
“Impairment of intangible assets for the year ended March 31, 2025 was $1.6 million related to the impairment of the Dantrolene intangible asset, an ANDA product, as a result of the Company choosing to abandon the Dantrolene capsules based on reassessments of the expected future cash flows for these products and its withdrawal of the ANDA for Phentermine 37.5 mg capsules. No impairment of intangible assets were recorded for the prior fiscal year.”see in full comparison
Full comparison: every changed paragraph (37)
Revenue,
Cost of revenuemanufacturing and Gross profit:
Total
revenues for the year ended March 31, 20252026 increased by $27.4$64.8 million or 48%,77%, to $84.0$148.9 million, as compared to $56.6$84.0 million, for
the the
comparable period of the prior year. This increase is primarily due to fourrevenue productfrom launchessales of Oxy APAP tablets launched during
the current fiscal year, Naltrexone Tablets and Phentermine Tablets which the Company began selling exclusively under the Elite Labs
label during the last half of the current fiscal year combinedand with full year contributions of the four products launched during the
withprior fiscal year, most notable Lisdex capsules, which was launched during the last quarter of the prior fiscal year and increased sales
from the rest of theexisting Elite Label product line, as compared to the comparable period of the prior year.
Manufacturing
fees revenue increased by $27.9$65.8 million, or 51%,80%, as compared to the comparable period of the prior year. This increase is primarily due
to fourrevenue productcontributions launchesfrom three products launched during the current fiscal year, combined with the full year contributions from
four products launched during the during the middle and end of the prior fiscal year and increased sales from the rest of theexisting Elite Label
product line,
as compared to the comparable period of the prior year.
Cost
of manufacturing consists of manufacturing and assembly costs. Our cost of manufacturing increased by $13.7$29.9 million or 45%,68%, to $44.0$73.8
million as compared to $30.3$44.0 million for the comparable period of the prior year. This increase was due to the cost of manufacturing
having a strong positive correlation with manufacturing fees, combined with an increased volume of products
sold during the year ended
March 31, 2025,2026, as compared to the prior fiscal year, as noted above.
Our gross profit margin was 50% during the year ended March 31, 2026 as compared to 48% during the prior fiscal year. The increase is due to product mix in the current fiscal year including greater proportion of higher margin products.
Our
gross profit margin was 48% during the year ended March 31, 2025 as compared to 47% during the prior fiscal year. The increase is due
to increased manufacturing volumes resulting in decreased unit costs due to efficiencies of scale being achieved on the increased manufacturing
volume as well as the products launched during the current fiscal year having a higher proportion of direct sales as compared to product
sales during the comparable period of the prior year, resulting in lower transaction costs being charged to revenue (please note that
transaction costs are higher with indirect sales as compared to those of direct sales).
Operating
expenses for the year ended March 31, 20252026 increased by $4.9$5.4 million, or 32%,26%, to $20.5$25.9 million as compared to $15.6$20.5 million for the prior
fiscal year, largely due to increases in research and development expenses of $1.1 million, general and administrative expenses of $1.9$8.6 million, offset by decreases in research and development
of $2.2 million, non-cash compensation of $0.1 million, depreciation and amortization of $0.1 million and impairment of intangible asset
expense of $1.6$0.8 million.
Research
and development costs during the year ended March 31, 20252026 were $8.0$5.7 million, ana increasedecrease of $1.1$2.2 million, or 16%,28%, from approximately
$6.9$8.0 million of such costs for the prior year. The increasedecrease was a result of greater proportion of laboratory and regulatory resources
being allocated to supporting increasing commercial operations as well as the timing and nature of product development activities, which
which consist primarily of material consumption, internal and external lab costs, human resource costs and analytical studies, during
the year
ended March 31, 20252026 as compared to the prior fiscal year.
General
and administrative expenses during the year ended March 31, 20252026 were $9.0$17.6 million as compared to $7.1$9.0 million for the prior fiscal
year, an
increase of $1.9$8.6 million or approximately 26%,95%, largely due to increased employee headcounts and compensation rates and bonuses as compared
to the
prior fiscal year as well higher operational support and infrastructure costs related to the four commercialproduct launches during the current
fiscal year and expansion of product line distribution activities achievedand increases in technology, legal, audit and consulting costs during the current fiscalyear as compared to the
comparable period
of the prior year.
Non-cash
compensation expenseexpenses forduring the year ended March 31, 20252026 was $0.2$0.18 million as compared to $0.2$0.23 million for the prior fiscal year, ana
decrease increase
of $0.1$0.05 million or approximately 42%,22%, with such increasedecrease being attributed to the current year including full year amortization
of non-cash
compensation from employee stock options issued during the prior year, as compared to the comparable period of the prior
which included
partial year periods amortization of non-cash compensation encompassing only that part of the year subsequent to the grant
date of each
employee option.
Depreciation
and amortization expenses fromduring the year ended March 31, 20252026 were $1.7$1.55 million as compared to $1.4$1.69 million for the prior fiscal year,
ana increasedecrease of $0.3$0.14 million or approximately 22%.8%. This increasedecrease is due to depreciation expensecharges beingrelating recordedto oncurrent anfiscal increasedyear fixed asset
baseadditions being less than depreciation charges for investments made in prior periods which resultedachieved fromfull additionaldepreciation investmentsduring inthe capitalcurrent
fiscal manufacturing facilities.year.
Impairment of intangible assets for the year ended March 31, 2026 was $0.8 million as compared to $1.6 million for the prior fiscal year, a decrease of $0.8 million or approximately 47%. This decrease is related to impairments of ANDAs for Loxapine Capsules and patent development costs during the current year being less than the impairments recorded during the comparable period of the prior year. Impairments of intangible assets are recorded when, after assessments and evaluation, an entity concludes that the fair value of an indefinite lived intangible asset is more likely than not impaired.
Impairment
of intangible assets for the year ended March 31, 2025 was $1.6 million related to the impairment of the Dantrolene intangible asset,
an ANDA product, as a result of the Company choosing to abandon the Dantrolene capsules based on reassessments of the expected future
cash flows for these products and its withdrawal of the ANDA for Phentermine 37.5 mg capsules. No impairment of intangible assets were recorded for the prior fiscal year.
Other income (expense) for the year ended March 31, 2026 was an other income of $7.7 million, an increase in net other income (expense) of $27.4 million from other (expense) of $19.7 million for the comparable period of the prior year. The increase was primarily due to increases in other income of $26.8 million relating to the change in warrant derivative instruments. The change in the fair value of derivative instruments and stock-based liabilities is determined in large part by the change in the closing price of the Company’s Common Stock as of the end of the period, as compared to the closing price at the beginning of the period. There is a strong correlation between changes in the closing price of the Company’s Common Stock and other income or (expense) recorded, with increases in the closing price of Common Stock resulting in other expenses and decreases in the closing price of Common Stock resulting in other income. The closing price of the Company’s Common Stock at the end of the fiscal year ended March 31, 2026 of $0.36 per share was lower than the comparable price at the end of the fiscal year ended March 31, 2025 of $0.44 per share, resulting in the Company recording net other income of $7.9 million for the fiscal year ended March 31, 2026. This compares with the closing price of the Company’s Common stock at the end of the fiscal year ended March 31, 2025 of $0.44 per share being greater than the comparable price at the end of the fiscal ended March 31, 2024 of $0.15 per share, resulting in the Company recording a net other (expense) of $18.9 million for the fiscal year ended March 31, 2025. Interest expense decreased by $0.4 million or 49% from $0.8 million in the prior fiscal year to $0.4 million in the current fiscal year. This decrease in interest expense is due to the decreased loan principal balances existing during the current fiscal as compared to the comparable period of the prior fiscal year, which resulted from the Company’s payment of outstanding loan principal amounts in accordance with the terms of the underlying loans.
Other
income (expense) for the year ended March 31, 2025 was an other expense of $19.7 million, an increase in net other (expense) of $9.3
million from other (expense) of $10.3 million for the comparable period of the prior year. The increase was primarily due to increases
in other expenses of $13.1 million relating to the change in fair value of warrant derivative instruments, $1.8 million relating to
gain from settlement agreements that were recorded in the prior year, but not the current year, offset by a net decrease in other income
(expense) of $5.7 million relating to a change in fair value of stock based liabilities that was recorded as an other expense in the
prior year and not in the current year. The change in the fair value of derivative instruments and stock-based liabilities is determined
in large part by the change in the closing price of the Company’s Common Stock as of the end of the period, as compared to the
closing price at the beginning of the period, with a strong inverse relationship between the fair value of the Company’s derivative
instruments and stock-based liabilities and decreases in the closing price of the Company’s Common Stock. The increase in interest
expense associated with the loans payable is due in large part to the current year including additional loan principal amounts in the
current year, as compared to the comparable period of the prior year and relating to financing of facility expansion as well as the current
year results of operations including full year interest expense on financings executed during the prior year, with the prior year incurring
partial year interest expense on such financings.
As
a result of the foregoing, our net lossincome before income taxes for the year ended March 31, 20252026 was $0.1$56.8 million, compared to net incomeloss
before income taxes of $0.5$0.1 million for the comparable period of the prior year.
The
Company recorded tax (expense)/benefit of approximately 8,175%(21)% and 4,242%8,175% of income (loss) income before income tax expense, for the years
ended March
31, 20252026 and 2024,2025, respectively. The decrease of the effective tax rate for the current period as compared to the prior
period is primarily
due to the release of the valuation allowance on the Company’s deferred tax assets as of March 31, 2024
2025 and the nondeductible fair
market value change in the Company’s warrant derivative liabilities.
Income tax expense for the year ended March 31, 2026 was $11.9 million as compared to $4.3 million for the year ended March 31, 2025, an increase of $7.6 million or 180%. The increase was due to the Company’s net income before income taxes being approximately $56.9 million greater this year than the comparable period of the prior year, combined with there being a strong positive correlation between net income before taxes and income tax expense. Please also note that income tax expense includes certain non-deductible expenses and non-taxable income items, including, without limitation income and expenses relating to the change in fair value of derivative liabilities.
The
Company considers cash and working capital balances as several of the factors the Company uses in evaluating its performance. As of March
31, 2025,2026, the Company had cash on hand of $11.3$29.8 million and accounts receivable to be collected within expected operating cycles of $29.2$59.7
million. The Company believes that the working capital surplus of $45.9$94.7 million, which includes these cash and accounts receivable resources,
and the continuation of ongoing operations, are sufficient to fund operations through the next twelve months. For the year ended March
31, 2025,2026, the Company had income from operations totaling $19.6$49.1 million, net other expenseincome totaling $19.7$7.7 million and a net lossincome attributable
to common shareholders of $4.3$44.9 million. The Company’s other income (expense) and net lossincome attributable to common shareholders are significantly
significantly influenced by the fluctuations in the fair value of warrant derivativesderivatives, as noted above, with suchthere fair value bearingbeing a strong inversecorrelation correlationbetween changes in
to the market share price of Common Stock and other income or expenses recorded in relation to the Company’schange Commonin Stock.fair value of the warrant derivatives.
Our
working capital (total current assets less total current liabilities) increased by $18.9$48.8 million from $27.0 million as of March 31, 2024
to $45.9 million as of March 31,
2025 2025,to $94.7 million as of March 31, 2026, with such increase being primarily related to the increases in cash of $18.5 million,
inventory of $5.0 million, and accounts receivable of $30.5 million, offset by increases in current liabilities of $5.6 million, as
compared to the comparable balances as of March 31, 2025. The increase in finishedcash, goods inventoryinventory, and accounts receivable are primarily due
receivable, associated withto increased customer orders and revenues achieved during the year ended March 31, 20252026 andas acompared decreaseto the comparable period of $1.2the
prior millionyear. The increase in totalcurrent current
liabilities overis the same period,primarily due to decreasesincreased intrade accruedaccounts expenses, primarily driven by a decrease in the accrual of the co-development
profit splitpayables as of March 31, 20252026 as
compared to theMarch prior31, year.2025 resulting from increased commercial operations and increased accrued expenses, as of March 31, 2026
compared to March 31, 2025 resulting from increases in accruals for employee bonuses, taxes, audit, legal and professional fees,
salaries and other similar expenses.
Net cash provided by operating activities for the year ended March 31, 2026 was $23.7 million, which included a net income of $44.9 million, offset by depreciation and other non-cash expenses totaling $6.8 million and reduced by the change in operating assets and liabilities totaling $27.9 million, Net cash provided by operating activities for the year ended March 31, 2025 was $7.5 million, which included a net loss of $4.3 million, offset by depreciation and other non-cash expenses totaling $26.9 million and reduced by the change in operating assets and liabilities totaling $15.2 million.
Net cash used in investing activities for the year ended March 31, 2026 was comprised of purchases of property and equipment of approximately $0.9 million.
Net
cash provided by operating activities for the year ended March 31, 2025 was $7.5 million, which included a net loss of $4.3 million,
offset by depreciation and other non-cash expenses totaling $26.9 million and reduced by the change in operating assets and liabilities
totaling $15.2 million, Net
cash used in operating activities for the year ended March 31, 2024 was $3.2 million, which included net income of $20.1 million, increased
by depreciation and other non-cash expenses totaling $11.4 million and reduced by the change in operating assets and liabilities totaling
$11.9 million and tax benefit of $20.0 million.
Net
cash used in investing activities for the year ended March 31, 2024 was comprised of purchases of property and equipment of approximately
$0.8 million.
Net
cash used in financing activities was $0.8$4.3 million for the year ended March 31, 20252026 which consisted primarily of payments of bond,bond loan,and
related party loan principal totaling $4.3 million and payments on principal on finance lease principal.obligations of $0.4 million, offset by
proceeds received from the exercise of stock options of $0.3 million.
Net
cash providedused byin financing activities was $3.3$0.8 million for the year ended March 31, 20242025 which consisted primarily of proceeds from related
party loans payable totaling $4.0 million offset by payments of bond, loan,bond and
loan principal totaling $0.5 million and payments on principal of finance lease principalobligations totalingof $0.7$0.3 million.
Hakim
Promissory Note
The
Company has entered into a collateralized promissory note with individual lenders with rates comparable to the EWB Term Loan but with
fewer restrictive 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 Company’s assets during the term of the note. On June 2, 2023, the Company entered
into a Promissory Note with Nasrat Hakim, CEO and Chairman of the Board of Directors, pursuant to which the Company borrowed funds in
the aggregate principal amount of $3,000,000 (the “Hakim Promissory Note”). The Hakim Promissory Note has 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 is June 2, 2024, with an optional second year extension. The second year extension
of the Hakim Promissory Note was agreed to by both parties, with the maturity date being extended to June 2, 2025. The Hakim Promissory
Note was paid in full on June 2, 2025, in accordance with its terms and conditions.
Caskey
Promissory Note
On
June 30, 2023, the Company entered into a collateralized promissory note with Davis Caskey, a member of the Board of Directors (the
“Caskey Promissory Note”). The Caskey Promissory Note has a principal balance of $1,000,000 and an interest rate of 9%
for the first year and 10% for an optional second year. The Caskey Promissory Note is subject to the same covenants as are contained
in the Hakim Promissory Note. The proceeds were used for working capital and other business purposes. The original maturity date of
the Caskey Promissory Note is June 30, 2024, with an optional second year extension. The second year extension of the Caskey
Promissory Note was agreed to by both parties, with the maturity date being extended to June 30, 2025. The Caskey Promissory Note
was paid in full on June 26, 2025, in accordance with its terms and conditions.
On
August 31, 2005, the Company successfully completed a refinancing of a prior 1999 bond issue through the issuance of new tax-exempt bonds
(the “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, 2012.2030. The
net proceeds, after payment of issuance costs, were used (i) to redeem the outstanding tax-exempt Bonds originally issued by the Authority
on September 2, 1999, (ii) refinance other equipment financing and (iii) for the purchase of certain equipment to be used in the manufacture
of pharmaceutical products. As of March 31, 2016,2026, all of the proceeds were utilized by the Company for such stated purposes.
In
addition, the Company had previously received Notices of Default from the Trustee of the NJEDA Bonds as a result of the utilization of
the debt service reserve being used to pay interest payments as well as the company’s failure to make scheduled principal payments.
All monetary defaults were cured during Fiscal 2015 and the Company is current on all NJEDA Bond interest and principal payments. See
the Risk Factor in Part I, Item 1A entitled “We have substantial indebtedness which may adversely affect our financial condition
NJEDA Bonds”.
As
of the date of filing of this Annual Report on Form 10-K, there are no interest or principal amounts in arrears. The Series B Notes were
retired at par in July 2014.
On April 2, 2026, we 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 and represents an expansion of the Company’s generic product portfolio.
On June 1, 2026, we 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.
On
April 30, 2025, the Company announced the commercial launch of its generic version of Percocet® (Oxy APAP Tablets). Oxy
APAP Tablets are indicated for the relief of moderate to moderately severe pain.
What changed in the latest 10-Q
Risk Factors
There have been no material changes in the risk factors described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
No wording changes found in this section (only numbers or dates changed in 1 paragraph).
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Removed heading “Methadone Hydrochloride Tablets”
Removed heading “Ropinirole Extended-Release Tablets USP”
Removed heading “Nine months ended December 31, 2025 compared to the nine months ended December 31, 2024”
Removed heading “Revenue, Cost of manufacturing and Gross profit:”
Removed heading “Operating expenses:”
Removed heading “Other (expense) income:”
Largest changes
“Nine months ended December 31, 2025 compared to the nine months ended December 31, 2024”see in full comparison
Full comparison: every changed paragraph (59)
The
following discussion of our financial condition and results of operations for the ninethree months ended DecemberJune 31,30, 2026 and 2025 andshould 2024 shouldbe
be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those statements that are included
elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of a number of factors, including those set forth under Item 1A. Risk Factors
appearing in our Annual Report on Form 10-K for the year ended March 31, 2025.2026. We use words such as “anticipate,” “estimate,”
“plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,”
“intend,” “may,” “will,” “should,” “could,” and similar expressions to identify
forward-looking statements.
On
April 30,2, 20252026, the Companywe announced the commercial launch of itsour generic versionmethadone hydrochloride 5 mg and 10 mg tablets. The product is marketed
and sold under the Elite Labs label and represents an expansion of Percocet® (Oxycodone hydrochloride and acetaminophen
tablets, “Oxy APAP”). Oxy APAP is indicated for the reliefCompany’s ofgeneric moderateproduct to moderately severe pain.portfolio.
On June 1, 2026, we 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.
On June 15, 2026, we reported positive results from a pivotal bioequivalence study for an undisclosed anticonvulsant generic drug product.
On
June 16, 2025, the Company reported positive results from a pivotal bioequivalence study for an undisclosed anticoagulant generic drug
problem. IQVIA, a legal global provider of advanced analytics, technology solutions, and clinical research services to the life sciences
industry, reported branded product sales of Percocet® for the twelve months ending April 2025 of $27 billion. There is no generic
product on the market, and the brand has an unexpired patent listed in the Orange Book. Commercialization of a generic product depends
on successful filing, United States Food and Drug Administration (“FDA”) approval, and addressing the unexpired patent. The
studies conducted were open-label, randomized, balanced, single oral dose, two-treatment, two-period, two-sequence, crossover bioequivalence
studies in normal, healthy, adult, human subjects under fasting conditions. The results indicated that the generic product is bioequivalent
to the branded product. The Company is compiling the data for this product to file an ANDA with the FDA.
On
NovemberAugust 12,4, 2025,2026, the Company announcedissued thata itpress receivedrelease approvalto fromannounce the FDAlaunch forof an ANDA for aElite’s generic version of Requip XL®
(Ropinirole
Extended-Release Tablets USP), with strengths of 2mg,2 4mg,mg, 6mg,4 8mgmg, 6 mg, 8 mg, and 12mg12 mg tablets. Ropinirole belongs to a class of drugs known
knownas asa non-ergoline dopamine agonist used to treat symptoms of Parkinson’s disease. This product will beis marketed and sold under
the Elite Laboratories,
Inc. label.
Approved
ProductsProduct Not Yet Commercialized
Methadone
Hydrochloride Tablets
Pursuant
to the Nostrum Asset Purchase Agreement, dated June 17, 2024, by and between the Company and Nostrum Laboratories Inc., the Company acquired
all rights in and to the approved ANDA for Methadone Hydrochloride Tablets and a royalty-free, non-exclusive perpetual license to use
the manufacturing technology, proprietary information, processes, techniques, protocols, methods, know-how and improvements necessary
or used to manufacture this product.
Ropinirole
Extended-Release Tablets USP
On
November 12, 2025, the Company announced, that it received approval from the FDA for a generic version of Requip XL® (Ropinirole
Extended-Release Tablets USP), with strengths of 2 mg, 4 mg, 6 mg, 8 mg, and 12 mg tablets. Ropinirole belongs to a class of drugs known
as a non-ergoline dopamine agonist used to treat symptoms of Parkinson’s disease. This product will be marketed and sold under
the Elite Laboratories, Inc. label.
There
can be no assurances in relation to any of the above approved products not yet commercialized, that there will be future revenues ofor
profits, or that any such future revenues or profits would be in amounts that provide adequate return on the significant investmentsinvestment
made to secure thesethe marketing authorizations.
As
part of standard operating practices, the Company, from time to time, as relevant, conducts evaluations of all ANDAs owned, consisting,
without limitation, of ANDAs acquired or approved prior to the quarter ended DecemberJune 31,30, 20252026 and ANDAs acquired or approved during the
the quarter ended DecemberJune 31,30, 2025.2026. Such evaluations include, without limitation, costs and benefits analyses relating to each ANDA
owned, with
such costs including those fees required under the FDA’s Generic Drug User Fee Amendment which is significantly influenced
by the
number of ANDAs owned, and other costs and benefits taking into consideration various specific market factors for each ANDA. Those ANDAs
ANDAs with a cost/benefit profile not consistent with management criteria for continuation are identified for disposition and effort
is made
to determine the optimal course of action to achieve disposition of the ANDA. The Company did not discontinue or transfer an
ANDAsany ANDA during
the quarter ended DecemberJune 31,30, 2025.2026.
Threethree
months ended DecemberJune 31,30, 20252026 compared to the three months ended DecemberJune 31,30, 20242025
Total revenues for the three months ended June 30, 2026 decreased by $7.9 million or 20%, to $32.4 million, as compared to $40.2 million, for the corresponding period of the prior year. This decrease is primarily due to a decrease in manufacturing fees revenue of $7.6 million, primarily due to increased market competition, as compared to the comparable period of the prior year, resulting in decreased average net prices being achieved from the sales of Elite label products, including, without limitation lower net sales prices of the Lisdexamfetamine product line. Additionally, licensing fees revenue decreased by $0.2 million, primarily due to the comparable period of the prior year including licensing fee revenues from the Precision Dose License agreement which expired in September 2025 and accordingly had no material effect on license fees revenues during the three months ended June 30, 2026.
Total
revenues for the three months ended December 31, 2025 increased by $17.2 million or 120%, to $31.6 million, as compared to $14.4 million,
for the corresponding period of the prior year.
Manufacturing
fees revenue increased by $17.6 million, or 128%, to $31.4 million primarily due to increased revenues from the Elite label products
that were commercialized in both the current period and comparable period of the prior year as well as sales of new products, including,
without limitation, the Lisdexamfetamine and Elite labeled Naltrexone products, which were commercially launched subsequent to the comparable
period of the prior year and are expected to continue in periods subsequent to December 31, 2025.
Licensing
fees revenue decreased by $0.4 million, or 67%. This decrease is primarily due to the Company’s transitioned focus on marketing
of the Elite label products, which does not result in license fee revenues.
Cost
of manufacturing consists of manufacturing and assembly costs. Our cost of manufacturing increased by $10.4$5.9 million or 126%,45%, to $18.6$18.8 million
million as compared to $8.2$13.0 million for the corresponding period in the prior fiscal year. These costs have a strong positive correlation with
with manufacturing operationoperations and the increase was due to an increased volume of products sold during the three months ended DecemberJune 30, 2026,
31, 2025, as compared to the comparable period of the prior fiscal year, asespecially notedand above.without limitation in sales volumes generated by Elite’s
Lisdexamfetamine, Amphetamine IR and Amphetamine ER product lines.
Our
gross profit margin was 41%42% during the three months ended DecemberJune 31,30, 20252026 as compared to 43%68% during the comparable period of the prior
fiscal year. The decrease is primarily due to salesthe decrease in average net prices resulting from increased market competition during the
three currentmonths quarterended consistingJune of30, a higher proportion of indirect sales through
wholesalers, which yield lower gross profit margins2026, as compared to direct sales to pharmaceutical chains, as compared to the proportion
of indirect sales through wholesalers achieved during the comparable period of the prior year.
Operating
expenses for the three months ended DecemberJune 31,30, 20252026 decreasedincreased by $1.1$0.5 million, or 22%,8%, to $3.9$6.0 million as compared to $5.0$5.5 million
for the
corresponding period in the prior fiscal year, largely due to decreasesincreases in research and development expenses of $0.4 million and general
and and
administrative expenses of $0.8$0.1 million and $0.3 million, respectively.million.
Research
and development costs during the three months ended DecemberJune 31,30, 20252026 were $1.0$2.0 million, aan decreaseincrease of $0.8$0.4 million, or 42%,21 %, from approximately
$1.8$1.7 million of such costs for the comparable period of the prior year. The decreaseincrease was the result of morecosts laboratoryincurred resourcesin being
allocatedrelation to
the supportingsuccessful commercialpivotal operationsbio asequivalence wellstudy asand ANDA filed during the three months ended June 30, 2026. In addition, the number, timing
and nature of product development activities always has a significant effect on research and development expenses incurred during the threeany
months ended December 31, 2025, as compared to the comparable period of the prior fiscal year.period.
General
and administrative expenses for the three months ended DecemberJune 31,30, 20252026 were $2.5$3.5 million,million aas decreasecompared to $3.4 million for the corresponding
period in the prior fiscal year, an increase of $0.3$0.1 million or
approximately 9%4 from%. This increase is due primarily to general increases
in costs of human resources, legal, consulting, regulatory, other professional services and overhead operating costs as compared to the
comparable period of the prior fiscal year. This decrease was due primarily to higher facility utilization
resulting in increased overhead absorption as compared to the comparable period of the prior fiscal year, which had a lower than baseline sell side quantity demand that has not reoccurred.
Non-cash
compensation expense for the three months ended December 31, 2025 and 2024 was less than $0.1 million.
Depreciation
and amortization expenses from the three months ended December 31, 2025 were $0.4 million, essentially flat as compared to $0.4 million
for the comparable period in the prior fiscal year.
As
a result of the foregoing, our income from operations during the three months ended DecemberJune 31,30, 20252026 was $9.0$7.5 million, compared to income
from operations of $1.1$21.7 million for the comparable period of the prior fiscal year.
Net
other income (expenses) for the three months ended DecemberJune 31,30, 20252026 was $11.8a net other income of $0.2 million, an increase in net other income
of $23.6$22.5 million
from a net other (expense) of $11.8$22.3 million for the comparable period of the prior fiscal year. The increase in net other
income was
primarily due to anincreases increasein ofother $23.5 millionincome relating to the change in fair value of derivative financial instruments of $22.3
million and aninterest increase
income of $0.2 million, and decreases in interest incomeexpense of $0.1 million, as compared to the comparable period
of the prior year.
The
change in the fair value of derivative instruments is determined in large part by the change in the closing price of the Company’s
Common Stock as of the end of the period, as compared to the closing price at the beginning of the period. There is a strong inversecorrelation
relationship between changes in the closing price of the Company’s Common Stock and other income or (expense) beingrecorded, recorded.with increases in the closing
price resulting in other expenses and decreases in closing price resulting in other income. The
closing price of the Company’s
common Commonstock Stock at the endas of theJune three30, months ended December 31, 20252026 was loweressentially thanunchanged from the closing price
of the Company’s Common Stock at the beginning of the three months ended DecemberJune 31,30,
2026, 2025,therefore, resulting inreflecting the recordingimpact of other
income fromfactors, the changeresulted in faira valuesmall ofother warrantincome derivativebeing instruments.recorded, Thewhile the closing price as
of theJune Company’s30, Common Stock at the
end of the comparable period of the prior year2025 was $0.30 higher than the closing price of the Company’s Common Stock at the beginning
of the comparable period of the priorthree year,month period ended June 30, 2025, resulting in
a the recording oflarge other expensesexpense frombeing the change in fair value of warrant derivative
instruments.recorded.
The
increase in interest income is primarily due to higher interest rates being earned on the Company’s cash balances as compared to
the comparable period of the prior year.
As
a result of the foregoing, our net income before income taxes for the three months ended December 31, 2025 was $20.8 million, compared
to net loss before income taxes of $10.7 million for the comparable period of the prior fiscal year.
Nine
months ended December 31, 2025 compared to the nine months ended December 31, 2024
Revenue,
Cost of manufacturing and Gross profit:
Total
revenues for the nine months ended December 31, 2025 increased by $56.1 million or 108%, to $108.1 million, as compared to $52.0 million,
for the corresponding period of the prior year.
Manufacturing
fees revenue increased by $57.0 million, or 113%, primarily due to increased revenues from the Elite label products that were commercialized
in both the current period and comparable period of the prior year as well as sales of new products, including, without limitation, the
Lisdexamfetamine and Elite labeled Naltrexone products, which were commercially launched subsequent to the comparable period of the prior
year and are expected to continue in periods subsequent to December 31, 2025.
Licensing
fees revenue decreased by $0.9 million, or 53%. This decrease is primarily due to the Company’s transitioned focus on marketing
of the Elite label, which does not result in license fee revenues.
Cost
of manufacturing consists of manufacturing and assembly costs. Our cost of manufacturing increased by $24.6 million or 84%, to $53.9
million as compared to $29.3 million for the corresponding period in the prior fiscal year. These costs have a strong positive correlation
with manufacturing operations and the increase was due to an increased volume of products sold during the nine months ended December
31, 2025, as compared to the comparable period of the prior fiscal year, as noted above.
Our
gross profit margin was 50% during the nine months ended December 31, 2025 as compared to 44% during the comparable period of the prior
fiscal year. The increase is primarily due to sales achieved during the current period being comprised of a greater proportion of higher
margin products as compared to sales achieved during the comparable period of the prior year and sales during the nine months ended December
31, 2025 consisting of a greater proportion of direct sales to pharmaceutical chains, which yield higher gross profit margins as compared
to indirect sales to wholesalers, as compared to the comparable period of the prior year. It should be noted that the gross profit
percentage during the nine months ended December 31, 2025 is higher than that of the three months ended December 31, 2025, as per above,
with such being due to the latter half of the nine months ended December 31, 2025 consisting of an increased proportion of indirect sales
through wholesalers, as compared to the former half of the nine months ended December 31, 2025.
Operating
expenses:
Operating
expenses for the nine months ended December 31, 2025 increased by $1.0 million, or 7%, to $15.3 million as compared to $14.3 million
for the corresponding period in the prior fiscal year, largely due to an increase in general and administrative expenses of $2.9 million,
partially offset by a decrease in research and development expenses of $1.8 million.
Research
and development costs during the nine months ended December 31, 2025 were $4.1 million, a decrease of $1.8 million, or 31%, from approximately
$5.9 million of such costs for the comparable period of the prior year. The decrease was the result of more laboratory resources being
allocated to supporting commercial operations as well as the number, timing and nature of product development activities during the nine
months ended December 31, 2025, as compared to the comparable period of the prior fiscal year.
General and administrative expenses for the nine months ended December 31,
2025 were $9.9 million as compared to $7.0 million for the corresponding period in the prior fiscal year, an increase of $2.9 million
or approximately 42%. This increase is due primarily to legal and consulting costs incurred during first six months of the fiscal year
ended March 31, 2026 and related to strategic company objectives, as well as increased costs of current expected credit loss expenses
and third party legal and regulatory compliance subject matter experts as compared to the comparable period of the prior fiscal year.
Non-cash compensation expense for the nine months ended December 31, 2025
and 2024 was less than $0.2 million.
Depreciation
and amortization expenses from the nine months ended December 31, 2025 were $1.2 million, essentially flat from $1.3 million for the
comparable period of the prior year.
As
a result of the foregoing, our income from operations during the nine months ended December 31, 2025 was $38.9 million, compared to income
from operations of $8.4 million for the comparable period of the prior fiscal year.
Other
(expense) income:
Net
other (expense) income for the nine months ended December 31, 2025 was a net other expense of $3.0 million, a decrease of $24.8 million
from a net other expense of $27.8 million for the comparable period of the prior fiscal year. The decrease was primarily due to a decrease
in other expenses of $24.5 million relating to the change in fair value of derivative instruments, a decrease in interest expense and
amortization debt issuance costs of $0.3 million, and an increase in interest income of $0.1 million.
The
change in the fair value of derivative instruments is determined in large part by the change in the closing price of the Company’s
Common Stock as of the end of the period, as compared to the closing price at the beginning of the period. There is a strong inverse
relationship between changes in the closing price of the Company’s Common Stock and other income or (expense) being recorded. The
closing price of the Company’s Common Stock at December 31, 2025 was higher than at March 31, 2025, resulting in the recording
of other expenses from the change in fair value of warrant derivative instruments for the nine month period. The closing price of the
Company’s Common Stock at the end of the comparable period of the prior year was higher than the closing price of the Company’s
Common Stock at the beginning of the comparable period of the prior year, resulting in the recording of other expenses from the change
in fair value of warrant derivative instruments.
The
decrease in interest expense is primarily related to the Company servicing a lesser principal amount of loans payable during the ninethree
months ended DecemberJune 31,30, 20252026 as compared to the comparable period of the prior year The
increase in interest income is primarily due to higher interest rates being earned on the Company’s higher cash balances as compared
to the comparable period of the prior year.
As
a result of the foregoing, our net income before income taxes for the ninethree months ended DecemberJune 31,30, 20252026 was $36.0$7.7 million, compared to
to net loss before income taxes of $19.3$0.6 million for the comparable period of the prior fiscal year.
Our
working capital (total current assets less total current liabilities) increaseddecreased by $37.7$10.7 million from $45.9$94.7 million as of March 31, 2026
2025 to $83.6$84.0 million as of DecemberJune 31,30, 2025,2026, with such increasedecrease being primarily relateddue to the increasereclassification inof cash,derivative finishedfinancial goodsinstruments - warrants,
inventoryvalued andat accounts$17.3 receivable,million, associatedfrom withnon-current increasedliabilities customeras ordersof and shipments during the nine months ended DecemberMarch 31,
2025 and2026 partially offset by an increase into current liabilities duringas theof sameJune period.30, 2026.
Net
cash provided by operating activities for the ninethree months ended DecemberJune 31,30, 20252026 was $14.6$10.1 million, which included, without limitation,
net income of $26.4$5.9 million, decreased by the change in fair value of derivative financial instruments-warrants of $0.1 million, recovery
for losses on accounts receivable of $0.2 million, decrease in deferred tax of $1.3 million, increased by other non-cash expenses totaling
$0.3 million and increased by changes in operating assets and liabilities totaling $2.6 million. Net cash provided by operating activities
during the comparable period in the prior fiscal year was $14.8 million, which included, without limitation, net loss of $5.9 million,
increased by the change in fair value of derivative financial instruments - warrants of $2.8 million, and other non-cash
expenses of $2.6$22.1 million, deferred tax expenses of $8.0 $4.9
million, and reduced by increasesthe change in operating assets and liabilities totaling
$25.2 $7.1 million.
Net
cash used in investing activities for the ninethree months ended DecemberJune 31,30, 20252026 was comprised of purchases of property and equipment of approximately
$0.8 million. Net cash used in investing activities during the comparable period in the prior fiscal year was comprised of purchases
of property and equipment of approximately $0.5$0.2 million.
Net
cash used in financing activities was $4.3$0.1 million for the ninethree months ended DecemberJune 31,30, 20252026, primarily related to payments on finance
lease obligations, compared to net cash used in
financing activities of $0.7$4.1 million for the corresponding period of the prior year.
Net cash used in financing activities consisted
primarily of payments of bond and related party loan principal totaling $4.1 million and payments on principal on finance lease
obligations of $0.3 million, offset by proceeds received from the exercise of stock options of $0.2 million. Net cash used in
financing activities of $0.7 million during the prior fiscal year was due to payments of bond and loan principal totaling $0.4$4.0
million and payments on principal on finance lease obligations of $0.2$0.1 million.
On
July 1, 2022, 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 ten years and bears interest at a fixed rate of 4.75% fixed for the first five years then adjustable at WSJP plus 0.5% with floor
rate of 4.5%. The total transaction costs associated with the EWB Mortgage Loan incurred as of DecemberJune 31,30, 2025,2026, were $13,251, which are
are being amortized on a monthly basis over ten years, beginning in July 2022. 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 DecemberJune 31,30, 2025,2026, and through the date of filing of this Quarterly Report on
on Form 10-Q, the Company was not aware of the existence of any violations of financial covenants included in the EWB Mortgage Loan.
On
August 31, 2005, the Company successfully completed a refinancing of a prior 1999 bond issue (the “1999 Bonds”) through
the the
issuance of new tax-exempt bonds (the “NJEDA Bonds”). The refinancing involved borrowing $4,155,000, evidenced by a
6.5% 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, 2012.2030. The net proceeds, after payment of issuance
costs, were used (i) to redeem the outstanding tax-exempt
1999 Bonds originally issued by the New Jersey Economic Development
Authority on September 2, 1999, (ii) to refinance other equipment
financing and (iii) for the purchase of certain equipment to be
used in the manufacture of pharmaceutical products. As of MarchJune 31,30, 2016,
2026, all of the proceeds were utilized by the Company for such
stated purposes.
Interest is payable semi-annually on March 1 and September 1. The NJEDA Bonds are collateralized by a first lien on the Company’s facility and equipment acquired with the proceeds of the 1999 Bonds and NJEDA Bonds. The related Indenture requires the maintenance of a debt service reserve fund of $366,000 in relation to the Series A Notes.
Bond
issue costs of $354,454 were paid from the proceeds of the NJEDA Bonds and are being amortized over the life of the NJEDA bonds. Amortization
of bond issuance costs amounted to $10,634$3,544 for the ninethree months ended DecemberJune 31,30, 2025.2026.
As
of the date of filing of this Quarterly Report on Form 10-Q, there are no interest or principal amounts in arrears. The Series B Notes
were retired, at par in July 2014.
ELTP insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 30,000 shares, about $8.7K) and open-market sales in 0 filings. Net open-market shares: 30,000 (purchases minus sales); net value about $8.7K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-19 | Dash Barry H |
Open-market purchase | 30,000 | $0.29 | $8.7K |
Well-known investors holding ELTP (13F)
None of the 59 investors we track reported a position in their latest 13F.