ELITE PHARMACEUTICALS INC /NV/ (Form: 10-Q, Received: 02/10/2020 16:15:36)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2019

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

FOR THE TRANSITION PERIOD FROM _______________ TO _______________

COMMISSION FILE NUMBER: 001-15697

ELITE PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in Its Charter)

NEVADA

22-3542636

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

165 LUDLOW AVENUE

NORTHVALE, NEW JERSEY

07647

(Address of principal executive offices)

(Zip Code)

(201) 750-2646

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 839,290,672 shares of common stock were issued, and 839,190,670 shares of common stock were outstanding as of February 4, 2020

		PAGE
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of December 31, 2019 (Unaudited) and March 31, 2019 (Audited)	F-1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2019 and 2018 (Unaudited)	F-3
	Condensed Consolidated Statement of Changes in Shareholders’ Equity (Deficit) for the Three and Nine Months Ended December 31, 2019 and 2018 (Unaudited)	F-4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2019, and 2018 (Unaudited)	F-6
	Notes to the Unaudited Condensed Consolidated Financial Statements	F-7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
ITEM 3.	Quantitative and Qualitative Disclosure About Market Risk	22
ITEM 4.	Controls and Procedures	23

PART II	OTHER INFORMATION	24

ITEM 1.	Legal Proceedings	24
ITEM 1A.	Risk Factors	24
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
ITEM 3.	Defaults Upon Senior Securities	24
ITEM 4.	Mine Safety Disclosures	24
ITEM 5.	Other Information	24
ITEM 6.	Exhibits	25

SIGNATURES		29

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

	December 31, 2019		March 31, 2019
	(Unaudited)		(Audited)
ASSETS
Current assets:
Cash	$	1,870,080	$	2,277,643
Accounts receivable, net of allowance for doubtful accounts of $-0-, respectively		2,565,323		1,321,805
Inventory		3,810,401		4,515,723
Prepaid expenses and other current assets		796,496		741,371
Total current assets		9,042,300		8,856,542

Property and equipment, net of accumulated depreciation of $10,634,174 and $9,651,718, respectively		7,519,003		8,443,849

Intangible assets, net of accumulated amortization of $-0-, respectively		6,634,035		6,634,035

Operating lease - right to use asset		412,063		-

Other assets:
Restricted cash - debt service for NJEDA bonds		403,575		398,125
Security deposits		75,534		69,383
Total other assets		479,109		467,508

Total assets	$	24,086,510	$	24,401,934

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current liabilities:
Accounts payable	$	986,016	$	1,375,347
Accrued expenses		4,423,761		3,713,601
Deferred revenue, current portion		430,000		1,013,333
Bonds payable, current portion, net of bond issuance costs		90,822		80,822
Loans payable, current portion		356,137		573,029
Lease obligation - operating lease		203,984		-
Customer deposits		55,652		150,000
Senior secured promissory note - related party		1,200,000		-
Total current liabilities		7,746,372		6,906,132

Long-term liabilities:
Deferred revenue, net of current portion		62,224		238,890
Bonds payable, net of current portion and bond issuance costs		1,332,945		1,427,315
Senior secured promissory note - related party		-		1,200,000
Loans payable, net current portion		530,480		699,269
Lease obligation - operating lease, net of current portion		221,166		-
Derivative financial instruments - warrants		5,078,525		2,487,830
Other long-term liabilities		34,916		46,402
Total long-term liabilities		7,260,256		6,099,706

Total liabilities		15,006,628		13,005,838

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

F-1

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(continued)

	December 31, 2019			March 31, 2019
	(Unaudited)			(Audited)
Mezzanine equity

Series J convertible preferred stock; par value $0.01; 50 shares authorized, 24.0344 issued and outstanding as of March 31, 2019		-			13,903,960

Shareholders’ equity (deficit):
Series J convertible preferred stock; par value of $0.01; 50 shares authorized; 24.0344 issued and outstanding as of December 31, 2019		13,903,960			-
Common stock; par value $0.001; 1,445,000,000 shares authorized, 833,953,570 shares issued and 833,853,570 outstanding as of December 31, 2019; 995,000,000 shares authorized, 824,946,559 shares issued and 824,846,559 shares outstanding as of March 31, 2019		833,956			824,949
Additional paid-in capital		149,631,585			148,780,087
Treasury stock; 100,000 shares as of December 31, 2019 and March 31, 2019; at cost		(306,841	)		(306,841	)
Accumulated deficit		(154,982,778	)		(151,806,059	)
Total shareholders’ equity (deficit)		9,079,882			(2,507,864	)
Total liabilities, mezzanine equity and shareholders’ equity (deficit)	$	24,086,510		$	24,401,934

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

F-2

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	2019			2018			2019			2018
Manufacturing fees	$	3,754,721		$	2,108,487		$	10,851,425		$	4,456,832
Licensing fees		1,300,392			585,479			2,197,915			1,767,881
Total revenue		5,055,113			2,693,966			13,049,340			6,224,713
Cost of revenue		2,163,376			1,771,136			7,529,918			3,890,086
Gross profit		2,891,737			922,830			5,519,422			2,334,627

Operating expenses:
Research and development		986,832			2,454,098			3,032,357			6,236,192
General and administrative		878,540			748,151			2,358,588			2,245,900
Non-cash compensation through issuance of stock options		11,802			36,547			53,518			109,641
Depreciation and amortization		323,368			321,164			986,001			891,390
Total operating expenses		2,200,542			3,559,960			6,430,464			9,483,123

Income (loss) from operations		691,195			(2,637,130	)		(911,042	)		(7,148,496	)

Other (expense) income:
Interest expense		(94,514	)		(89,897	)		(283,649	)		(279,037	)
Change in fair value of derivative instruments - warrants		(3,059,695	)		380,976			(2,590,695	)		807,347
Proceeds from sale of ANDAs		600,000			-			600,000			-
Interest income		2,334			1,733			10,667			4,570
Other (expense) income, net		(2,551,875	)		292,812			(2,263,677	)		532,880

Loss from operations before income tax		(1,860,680	)		(2,344,318	)		(3,174,719	)		(6,615,616	)

Income tax provision		-			-			(2,000	)		-

Net loss attributable to common shareholders	$	(1,860,680	)	$	(2,344,318	)	$	(3,176,719	)	$	(6,615,616	)

Basic net loss per share attributable to common shareholders	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)

Diluted net loss per share attributable to common shareholders	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)

Basic weighted average Common Stock outstanding		829,394,203			819,412,807			828,466,951			811,603,678

Diluted weighted average Common Stock outstanding		829,394,203			819,468,881			828,466,951			811,659,752

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

F-3

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

	Series J Preferred Stock				Common Stock				Additional Paid-In			Treasury Stock					Accumulated			Total Shareholders’ Equity
	Shares		Amount		Shares		Amount		Capital			Shares		Amount			Deficit			(Deficit)
Balance as of March 31, 2019		-	$	-		824,946,559	$	824,949	$	148,780,087			100,000	$	(306,841	)	$	(151,806,059	)	$	(2,507,864	)

Net income		-		-		-		-		-			-		-			279,702			279,702

Common Stock sold pursuant to the Lincoln Park purchase agreement		-		-		4,000,000		4,000		336,300			-		-			-			340,300

Common Stock issued as additional commitment shares pursuant to the LPC purchase agreement		-		-		47,136		47		4,153			-		-			-			4,200

Costs associated with raising capital		-		-		-		-		(4,200	)		-		-			-			(4,200	)

Non-cash compensation through the issuance of employee stock options		-		-		-		-		26,194			-		-			-			26,194

Balance at June 30, 2019		-	$	-		828,993,695	$	828,996	$	149,142,534			100,000	$	(306,841	)	$	(151,526,357	)	$	(1,861,668	)

Net loss		-		-		-		-		-			-		-			(1,595,741	)		(1,595,741	)

Common Stock sold pursuant to the Lincoln Park purchase agreement		-		-		3,895,233		3,895		379,692			-		-			-			383,587

Common Stock issued as additional commitment shares pursuant to the LPC purchase agreement		-		-		53,132		53		5,915			-		-			-			5,968

Costs associated with raising capital		-		-		-		-		(5,968	)		-		-			-			(5,968	)

Non-cash compensation through the issuance of employee stock options		-		-		-		-		15,522			-		-			-			15,522

Balance at September 30, 2019		-	$	-		832,942,060	$	832,944	$	149,537,695			100,000	$	(306,841	)	$	(153,122,098	)	$	(3,058,300	)

Net loss		-		-		-		-		-			-		-			(1,860,680	)		(1,860,680	)

Common Stock sold pursuant to the Lincoln Park purchase agreement		-		-		1,000,000		1,000		82,100			-		-			-			83,100

Common Stock issued as additional commitment shares pursuant to the LPC purchase agreement		-		-		11,510		12		1,030			-		-			-			1,042

Costs associated with raising capital		-		-		-		-		(1,042	)		-		-			-			(1,042	)

Non-cash compensation through the issuance of employee stock options		-		-		-		-		11,802			-		-			-			11,802

Reclassification of mezzanine equity to permanent equity		24	$	13,903,960		-		-		-			-		-			-			13,903,960

Balance at December 31, 2019		24	$	13,903,960		833,953,570	$	833,956	$	149,631,585			100,000	$	(306,841	)	$	(154,982,778	)	$	9,079,882

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

F-4

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

(continued)

	Series J Preferred Stock				Common Stock							Treasury Stock
	Shares		Amount		Shares		Amount		Additional Paid-In Capital			Shares		Amount			Accumulated Deficit			Total Shareholders' Equity
Balance as of March 31, 2018		-	$	-		802,626,761	$	802,629	$	146,602,502			100,000	$	(306,841	)	$	(142,526,738	)	$	4,571,552

Net loss		-		-		-		-		-			-		-			(1,687,766	)		(1,687,766	)

Common Stock sold pursuant to the Lincoln Park purchase agreement		-		-		2,000,000		2,000		166,170			-		-			-			168,170

Common Stock issued as additional commitment shares pursuant to the LPC purchase agreement		-		-		23,297		23		2,161			-		-			-			2,184

Costs associated with raising capital		-		-		-		-		(2,161	)		-		-			-			(2,161	)

Non-cash compensation through the issuance of employee stock options		-		-		-		-		36,549			-		-			-			36,549

Balance at June 30, 2018		-	$	-		804,650,058	$	804,652	$	146,805,221			100,000	$	(306,841	)	$	(144,214,504	)	$	3,088,528

Net loss		-		-		-		-		-			-		-			(2,583,532	)		(2,583,532	)

Common Stock sold pursuant to the Lincoln Park purchase agreement		-		-		12,142,083		12,142		1,215,972			-		-			-			1,228,114

Common Stock issued as additional commitment shares pursuant to the LPC purchase agreement		-		-		170,108		171		17,962			-		-			-			18,133

Costs associated with raising capital		-		-		-		-		(18,160	)		-		-			-			(18,160	)

Non-cash compensation through the issuance of employee stock options		-		-		-		-		36,545			-		-			-			36,545

Balance at September 30, 2018		-	$	-		816,962,249	$	816,965	$	148,057,540			100,000	$	(306,841	)	$	(146,798,036	)	$	1,769,628

Net loss		-		-		-		-		-			-		-			(2,344,318	)		(2,344,318	)

Common Stock sold pursuant to the Lincoln Park purchase agreement		-		-		3,500,000		3,500		270,045			-		-			-			273,545

Common Stock issued as additional commitment shares pursuant to the LPC purchase agreement		-		-		37,890		37		3,099			-		-			-			3,136

Costs associated with raising capital		-		-		-		-		(3,132	)		-		-			-			(3,132	)

Non-cash compensation through the issuance of employee stock options		-		-		-		-		36,547			-		-			-			36,547

Balance at December 31, 2018		-	$	-		820,500,139	$	820,502	$	148,364,099			100,000	$	(306,841	)	$	(149,142,354	)	$	(264,594	)

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

F-5

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Nine Months Ended December 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,176,719	)	$	(6,615,616	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		993,086			941,814
Amortization of operating leases - right to use assets		(142,025	)		-
Change in fair value of derivative financial instruments - warrants		2,590,695			(807,347	)
Non-cash compensation accrued		723,720			1,365,000
Non-cash compensation through the issuance of employee stock options		53,518			109,641
Non-cash rent expense and lease accretion		1,555			4,738
Change in operating assets and liabilities:
Accounts receivable		(1,243,518	)		15,436
Inventory		705,322			705,616
Prepaid expenses and other current assets		21,849			(144,849	)
Accounts payable, accrued expenses and other current liabilities		(402,759	)		528,805
Deferred revenue and customer deposits		(854,368	)		(760,000	)
Lease obligations - operating leases		141,960			-
Net cash used in operating activities		(587,684	)		(4,656,762	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(3,148	)		(19,130	)
Net cash used in investing activities		(3,148	)		(19,130	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of stock		806,987			1,669,829
Payment of bond principal		(95,000	)		(90,000	)
Other loan payments		(523,268	)		(398,046	)
Net cash provided by financing activities		188,719			1,181,783

Net change in cash and restricted cash		(402,113	)		(3,494,109	)

Cash and restricted cash, beginning of period		2,675,768			7,570,803

Cash and restricted cash, end of period	$	2,273,655		$	4,076,694

Supplemental disclosure of cash and non-cash transactions:
Cash paid for interest	$	168,560		$	151,754
Financing of equipment purchases and insurance renewal	$	54,462		$	477,116
Commitment shares issued to Lincoln Park Capital	$	11,098		$	23,453
Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets	$	554,088		$	-

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

F-6

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Overview

Elite Pharmaceuticals, Inc. (the “Company” or “Elite”) was incorporated on October 1, 1997 under the laws of the State of Delaware, and its wholly-owned subsidiary Elite Laboratories, Inc. (“Elite Labs”) which was incorporated on August 23, 1990 under the laws of the State of Delaware. On January 5, 2012, Elite Pharmaceuticals was reincorporated under the laws of the State of Nevada. Elite Labs engages primarily in researching, developing and licensing proprietary orally administered, controlled-release drug delivery systems and products with abuse deterrent capabilities and the manufacture of generic, oral dose pharmaceuticals. The Company is equipped to manufacture controlled-release products on a contract basis for third parties and itself, if and when the products are approved. These products include drugs that cover therapeutic areas for pain, allergy, bariatric and infection. Research and development activities are done so with an objective of developing products that will secure marketing approvals from the United States Food and Drug Administration (“FDA”), and thereafter, commercially exploiting such products.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and in conformity with the instructions on Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Elite Laboratories, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the three and nine months ended December 31, 2019 are not necessarily indicative of the results that may be expected for the entire year.

Going Concern

At December 31, 2019, the Company had unrestricted cash balances totaling $1,870,080. The Company has incurred losses and negative cash flows from operations, including operating income of $691,195 and loss of $2,637,130 for the three months ended December 31, 2019 and 2018, and operating losses of $911,042 and $7,148,496 for the nine months ended December 31, 2019 and 2018, respectively. In addition, overall working capital, defined as current assets minus current liabilities decreased by $654,482 as of December 31, 2019.

Based on the foregoing, the Company has determined that there did appear to be evidence of substantial doubt of its ability to continue as a going concern. To continue as a going concern, the Company will need to do some or all of the following, without limitation: obtain additional financing, increase sales of existing products, bring additional products in the pipeline to market and/or reduce expenses. The successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The financial statements included herein do not reflect any adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

Segment Information

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC 280”), Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments prepared in accordance with GAAP when making decisions about allocating resources and assessing performance of the Company.

F-7

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company has determined that its reportable segments are products whose marketing approvals were secured via an Abbreviated New Drug Applications (“ANDA”) and products whose marketing approvals were secured via a New Drug Application (“NDA”). ANDA products are referred to as generic pharmaceuticals and NDA products are referred to as branded pharmaceuticals.

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

Revenue Recognition

The Company generates revenue from the development of pain management products, manufacturing of a line of generic pharmaceutical products with approved ANDA, commercialization of products either by license and the collection of royalties, or through the manufacture of formulations and the development of new products and the expansion of licensing agreements with other pharmaceutical companies, including co-development projects, joint ventures and other collaborations. The Company also generates revenue through its focus on the development of various types of drug products, including branded drug products which require NDAs.

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

Nature of goods and services

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

a) Manufacturing Fees

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

The Company recognizes revenue when the customer obtains control of the Company’s product based on the contractual shipping terms of the contract. Revenue on product are presented gross because the Company is primarily responsible for fulfilling the promise to provide the product, is responsible to ensure that the product is produced in accordance with the related supply agreement and bears risk of loss while the inventory is in-transit to the commercial partner. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to a customer.

b) License Fees

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

F-8

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

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

Significant management judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method.

When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in ASC 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of December 31, 2019.

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

Disaggregation of revenue

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

	For the Three Months Ended December 31,				For the Nine Months Ended December 31,
	2019		2018		2019		2018
NDA:
Licensing fees	$	250,000	$	250,000	$	750,000	$	750,000
Total NDA revenue		250,000		250,000		750,000		750,000
ANDA:
Manufacturing fees	$	3,754,721	$	2,108,487	$	10,851,425	$	4,456,832
Licensing fees		1,050,392		335,479		1,447,915		1,017,881
Total ANDA revenue		4,805,113		2,443,966		12,299,340		5,474,713
Total revenue	$	5,055,113	$	2,693,966	$	13,049,340	$	6,224,713

Collaborative Arrangements

Contracts are considered to be collaborative arrangements when they satisfy the following criteria defined in ASC 808, Collaborative Arrangements:

	●	The parties to the contract must actively participate in the joint operating activity; and,

	●	The joint operating activity must expose the parties to the possibility of significant risk and rewards, based on whether or not the activity is successful.

F-9

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company entered into a sales and distribution licensing agreement with Epic Pharma LLC, (“Epic”) dated June 4, 2015 (the “2015 Epic License Agreement”), which has been determined to satisfy the criteria for consideration as a collaborative agreement, and is accounted for accordingly, in accordance with GAAP.

The Company entered into a Master Development and License Agreement with SunGen Pharma LLC dated August 24, 2016 (the “SunGen Agreement”), which has been determined to satisfy the criteria for consideration as a collaborative agreement, and is accounted for accordingly, in accordance with GAAP.

Cash

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

Restricted Cash

As of December 31, 2019, and March 31, 2019, the Company had $403,575 and $398,125 of restricted cash, respectively, related to debt service reserve in regard to the New Jersey Economic Development Authority (“NJEDA”) bonds (see Note 5).

Accounts Receivable

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

Inventory

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

Long-Lived Assets

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

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

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

Intangible Assets

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

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

As of December 31, 2019, the Company did not identify any indicators of impairment.

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

F-10

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Research and Development

Research and development expenditures are charged to expense as incurred.

Contingencies

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

Income Taxes

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

Warrants and Preferred Shares

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

Stock-Based Compensation

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

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

Earnings (Loss) Per Share Attributable to Common Shareholders’

The Company follows ASC 260, Earnings Per Share, which requires presentation of basic and diluted earnings (loss) per share (“EPS”) on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted EPS excluded all potential dilutive shares if their effect was anti-dilutive.

F-11

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	2019			2018			2019			2018
Numerator
Net loss attributable to common shareholders – basic	$	(1,860,680	)	$	(2,344,318	)	$	(3,176,719	)	$	(6,615,616	)
Effect of dilutive instrument on net loss		-			(380,976	)		-			(807,347	)
Net loss attributable to common shareholders - diluted	$	(1,860,680	)	$	(2,725,924	)	$	(3,176,719	)	$	(7,422,963	)

Denominator
Weighted average shares of common stock outstanding - basic		829,394,203			819,412,807			828,446,951			811,603,678

Dilutive effect of stock options, warrants and convertible securities		-			56,074			-			56,074

Weighted average shares of common stock outstanding – diluted		829,394,203			819,468,881			828,466,951			811,659,752

Net loss per share attributable to common shareholders
Basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)

Fair Value of Financial Instruments

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

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

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

●

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

●

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

●

Level 3 – Inputs that are unobservable for the asset or liability.

Measured on a Recurring Basis

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

			Fair Value Measurement Using
	Amount at Fair Value		Level 1		Level 2		Level 3
December 31 2019
Liabilities
Derivative financial instruments – warrants	$	5,078,525	$	-	$	-	$	5,078,525

March 31, 2019
Liabilities
Derivative financial instruments – warrants	$	2,487,830	$	-	$	-	$	2,487,830

F-12

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

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

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

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

Treasury Stock

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

Recently Adopted Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) in February 2016 and subsequent ASUs in 2018 and 2019 (collectively referred to as “Topic 842”) on the treatment of leases, which guidance is effective for annual reporting periods beginning after December 15, 2019 and early adoption is permitted. Under Topic 842, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and 2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Entities are allowed to apply Topic 842 using a modified retrospective approach either (1) retrospectively to each reporting period presented in the financial statements with the cumulative effect adjustment recognized at the beginning of the earliest comparative period; or (2) retrospectively at the beginning of the period of adoption through a cumulative-effective adjustment. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply.

On April 1, 2019, the Company adopted Topic 842 using the modified retrospective basis with a cumulative-effect adjustment at the beginning of the period of adoption and therefore did not revise prior period information or disclosure. Further, the Company elected the package of practical expedients upon transition that allows the Company not to reassess the lease classification for expired and existing leases, whether initial direct costs qualify for capitalization for any expired or existing leases or whether any expired contracts are or contain leases. The adoption of ASU 2016-02 resulted in the recognition of operating leases and lease liabilities of approximately $0.6 million on the condensed consolidated balance sheet as of April 1, 2019. The operating leases and lease liabilities relate to a real estate lease.

The impact of the adoption of Topic 842 on the accompanying condensed consolidated balance sheet as of April 1, 2019 was as follows:

	March 31, 2019		Adoption Adjustment			April 1, 2019
Operating lease - right of use	$	-	$	554,088		$	554,088
Deferred rent liability	$	13,022	$	(13,022	)	$	-
Lease obligation - operating lease	$	-	$	191,817		$	191,817
Lease obligation - operating lease, net of current portion	$	-	$	375,293		$	375,293

See additional lease disclosures in Note 9.

F-13

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Recently Issued Accounting Pronouncements

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808), Clarifying the Interaction between Topic 808 and Topic 606. The ASU clarifies when transactions between collaborative participants are in the scope of ASC 606. The ASU also provides some guidance on presentation of transactions not in the scope of ASC 606. ASU 2018-18 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years. The Company is currently evaluating the impact the standard will have on our condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently evaluating the impact the standard will have on our condensed consolidated financial statements. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The ASU changes the effective date of ASU 2016-13, Financial Instruments - Credit Losses, to fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In May 2019, the FASB issued ASU 2019-05, Financial Instruments - Credit Losses (Topic 326), Targeted Transition Relief. The ASU allows companies to elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that were previously recorded at amortized cost and are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10. The ASU is effective when the entity adopts ASU 2016-13. In October 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842). The ASU amends and defers the effective dates of credit losses, derivatives and leases standards for certain companies. The ASU allows deferral of the credit losses standard to January 1, 2023 for SEC filers considered small reporting companies. The ASU allows deferral of the derivatives and hedging and leasing standards to January 1, 2021 for non-public entities. In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses. The ASU amends ASU 2016-13 and extends the recovery guidance to purchased financial assets with credit deterioration. The ASU is effective when the entity adopts ASU 2016-13. The Company is currently evaluating the impact the standard will have on our condensed consolidated financial statements.

Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on our condensed consolidated financial statements and related disclosures.

NOTE 2. INVENTORY

Inventory consisted of the following:

	December 31, 2019		March 31, 2019
Finished goods	$	55,521	$	575,699
Work-in-progress		238,052		189,069
Raw materials		3,516,828		3,750,955
		3,810,401		4,515,723
Less: Inventory reserve		-		-
	$	3,810,401	$	4,515,723

F-14

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 3. PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following:

	December 31, 2019			March 31, 2019
Land, building and improvements	$	5,260,523		$	5,260,523
Laboratory, manufacturing, warehouse and transportation equipment		12,135,950			12,078,340
Office equipment and software		373,601			373,601
Furniture and fixtures		383,103			383,103
		18,153,177			18,095,567
Less: Accumulated depreciation		(10,634,174	)		(9,651,718	)
	$	7,519,003		$	8,443,849

Depreciation expense was $326,908 and $317,618 for the three months, and $982,456 and $931,180 for the nine months, ended December 31, 2019 and 2018, respectively.

NOTE 4. INTANGIBLE ASSETS

The following table summarizes the Company’s intangible assets:

	December 31 2019
	Estimated	Gross
	Useful	Carrying							Accumulated		Net Book
	Life	Amount		Additions		Reductions			Amortization		Value
Patent application costs	*	$	465,684	$	-	$	-		$	-	$	465,684
ANDA acquisition costs	Indefinite		6,168,351		-		-			-		6,168,351
		$	6,634,035	$	-	$	-		$	-	$	6,634,035

	March 31, 2019
	Estimated	Gross
	Useful	Carrying							Accumulated		Net Book
	Life	Amount		Additions		Reductions			Amortization		Value
Patent application costs	*	$	465,684	$	-	$	-		$	-	$	465,684
ANDA acquisition costs	Indefinite		7,247,317		-		(1,078,966	)		-		6,168,351
		$	7,713,001	$	-	$	(1,078,966	)	$	-	$	6,634,035

Patent application costs were incurred in relation to the Company’s abuse deterrent opioid technology. Amortization of the patent costs will begin upon the issuance of marketing authorization by the FDA. Amortization will then be calculated on a straight-line basis through the expiry of the related patent(s).

NOTE 5. NJEDA BONDS

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

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

F-15

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

	December 31, 2019			March 31, 2019
Gross bonds payable
NJEDA Bonds - Series A Notes	$	1,575,000		$	1,670,000
Less: Current portion of bonds payable (prior to deduction of bond offering costs)		(105,000	)		(95,000	)
Long-term portion of bonds payable (prior to deduction of bond offering costs)	$	1,470,000		$	1,575,000

Bond offering costs	$	354,454		$	354,453
Less: Accumulated amortization		(203,221	)		(192,591	)
Bond offering costs, net	$	151,233		$	161,862

Current portion of bonds payable - net of bond offering costs
Current portions of bonds payable	$	105,000		$	95,000
Less: Bonds offering costs to be amortized in the next 12 months		(14,178	)		(14,178	)
Current portion of bonds payable, net of bond offering costs	$	90,822		$	80,822

Long term portion of bonds payable - net of bond offering costs
Long term portion of bonds payable	$	1,470,000		$	1,575,000
Less: Bond offering costs to be amortized subsequent to the next 12 months		(137,055	)		(147,685	)
Long term portion of bonds payable, net of bond offering costs	$	1,332,945		$	1,427,315

Amortization expense was $3,545 and $3,544 for the three months, and $10,630 and $10,636 for the nine months, ended December 31, 2019 and 2018, respectively.

NOTE 6. LOANS PAYABLE

Loans payable consisted of the following:

	December 31, 2019			March 31, 2019
Equipment and insurance financing loans payable, between 3.5% and 12.73% interest and maturing between March 2019 and July 2024	$	886,817		$	1,272,298
Less: Current portion of loans payable		(356,137	)		(573,029	)
Long-term portion of loans payable	$	530,480		$	699,269

The interest expense associated with the loans payable was $18,291 and $28,025 for the three months, and $63,170 and $86,765 for the nine months, ended December 31, 2019 and 2018, respectively.

NOTE 7. RELATED PARTY SECURED PROMISSORY NOTE WITH MIKAH PHARMA LLC

For consideration of the assets acquired on May 15, 2017, the Company issued a Secured Promissory Note (the “Note”) to Mikah for the principal sum of $1,200,000. The Note matures on December 31, 2020 in which the Company shall pay the outstanding principal balance of the Note. Interest shall be computed on the unpaid principal amount at the per annum rate of ten percent (10%); provided, upon the occurrence of an Event of Default as defined within the Note, the principal balance shall bear interest from the date of such occurrence until the date of actual payment at the per annum rate of fifteen percent (15%). All interest payable hereunder shall be computed on the basis of actual days elapsed and a year of 360 days. Installment payments of interest on the outstanding principal shall be paid as follows: quarterly commencing August 1, 2017 and on November 1, February 1, May 1 and August 1 of each year thereafter. No principal or interest payments have been made on the Note since its issuance. All unpaid principal and accrued but unpaid interest shall be due and payable in full on the Maturity Date. The interest expense associated with the Note was $30,000 for the three months and $90,000 for the nine months ended December 31, 2019 and 2018, respectively. Accrued interest due and owing on this note was $315,000 and $225,000 as of December 31, 2019 and March 31, 2019, respectively.

F-16

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 8. DEFERRED REVENUE

Deferred revenues in the aggregate amount of $492,224 as of December 31, 2019, were comprised of a current component of $430,000 and a long-term component of $62,224. Deferred revenues in the aggregate amount of $1,252,223 as of March 31, 2019, were comprised of a current component of $1,013,333 and a long-term component of $238,890. These line items represent the unamortized amounts of a $200,000 advance payment received for a TAGI licensing agreement with a fifteen-year term beginning in September 2010 and ending in August 2025 and the $5,000,000 advance payment Epic Collaborative Agreement with a five-year term beginning in June 2015 and ending in May 2020. These advance payments were recorded as deferred revenue when received and are earned, on a straight-line basis over the life of the licenses. The current component is equal to the amount of revenue to be earned during the 12-month period immediately subsequent to the balance date and the long-term component is equal to the amount of revenue to be earned thereafter.

NOTE 9. COMMITMENTS AND CONTINGENCIES

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

Operating Leases – 135 Ludlow Ave.

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

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

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

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

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

Lease assets and liabilities are classified as follows on the condensed consolidated balance sheet at December 31, 2019:

Lease	Classification	As of December 31, 2019
Assets
Operating	Operating lease – right to use asset	$	412,063
Total leased assets		$	412,063

Liabilities
Current
Operating	Lease obligation – operating lease	$	203,984

Long-term
Operating	Lease obligation – operating lease, net of current portion		221,166
Total lease liabilities		$	425,150

Rent expense is recorded on the straight-line basis. Rent expense under the 135 Ludlow Ave. modified lease for the three months ended December 31, 2019 and 2018 was $18,296 and $54,909, and $128,072 and $164,757 for the nine months ended December 31, 2019 and 2018, respectively. Rent expense is recorded in general and administrative expense in the unaudited condensed consolidated statements of operations.

F-17

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

Years ending March 31,	Amount
2020 — Remaining	$	55,986
2021		225,063
2022		171,315
Total future minimum lease payments		452,634
Less: interest		(27,214	)
Present value of lease payments	$	425,150

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

Lease Term and Discount Rate	December 31, 2019
Remaining lease term (years)
Operating leases		2.0

Discount rate
Operating leases		6	%

The Company has an obligation for the restoration of its leased facility and the removal or dismantlement of certain property and equipment as a result of its business operation in accordance with ASC 410, Asset Retirement and Environmental Obligations – Asset Retirement Obligations. The Company records the fair value of the asset retirement obligation in the period in which it is incurred. The Company increases, annually, the liability related to this obligation. The liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the Company records either a gain or loss. As of December 31, 2019, and March 31, 2019, the Company had a liability of $34,916 and $33,383, respectively, and recorded as a component of other long-term liabilities.

NOTE 10. PREFERRED STOCK

Series J convertible preferred stock

On April 28, 2017, the Company created the Series J Convertible Preferred Stock (“Series J Preferred”) in conjunction with the Certificate of Designations (“Series J COD”). A total of 50 shares of Series J Preferred were authorized, 24.0344 shares are issued and outstanding, with a stated value of $1,000,000 per share and a par value of $0.01 as of December 31, 2019.

The shares were issued pursuant to an Exchange Agreement with Nasrat Hakim, (“Hakim”) a related party and the Company’s President, CEO and Chairman of the Board of Directors. Pursuant to the Exchange Agreement the Company exchanged 158,017,321 shares of Common Stock for 24.0344 shares of Series J Preferred and warrants to purchase 79,008,661 shares of common stock at $0.1521 per share. The aggregate stated value of the Series J Preferred issued was equal to the aggregate value of the shares of common stock exchanged, with such value of each share of Common Stock exchanged being equal to the closing price of the Common Stock on April 27, 2017. In connection with the Exchange Agreement, the Company also issued warrants to purchase 79,008,661 shares of common stock at $0.1521 per share, and such warrants were classified as liabilities on the accompanying unaudited condensed consolidated balance sheet as of December 31, 2019 (See Note 11).

Each Series J Preferred is convertible at the option of the holder into shares of common stock, that is the earlier of (i) the date that shareholder approval is obtained, and the requisite corporate action has been effected regarding a Fundamental Transaction (as defined in the Series J COD); or (ii) not less than three years subsequent to the Original Issue Date (the date of the first issuance of any shares of the Series J Preferred Stock) (the “Conversion Date”). The number of common shares is calculated by dividing the Stated Value of such share of Series J Preferred by the Conversion Price. The conversion price for the Series J Preferred shall equal $0.1521, subject to adjustment as discussed below.

Based on the current conversion price, the Series J Preferred is convertible into 158,017,321 shares of common stock. The conversion price is subject to the following adjustments: (i) stock dividends and splits, (ii) sale or grant of shares below the conversion price, (iii) pro rata distributions; or (iv) fundamental changes (merger, consolidation, or sale of all or substantially all assets).

F-18

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

If upon any Conversion Date there is not a sufficient number of authorized shares of Common Stock (that are not issued, outstanding or reserved for issuance) available to effect the entire conversion of the then outstanding shares of Series J Preferred Stock and the then outstanding common stock purchase warrants issued in conjunction therewith (an “Authorized Share Deficiency”), such conversion shall not exceed the Issuable Maximum (as defined in the Series J COD); however, the Company shall use its best efforts to obtain shareholder approval within two (2) years of the date of first issuance of Series J Preferred Stock to permit the balance of the conversion. If shareholder approval is not obtained due to an insufficient number of shareholder votes for passage, the Company shall continue to solicit for shareholder approval annually thereafter. As of March 31, 2019, the Company does not have a sufficient number of unreserved authorized shares to effect the entire conversion, notwithstanding that the earliest possible Conversion Date is April 28, 2020.

Solely during any period of time during which an Authorized Share Deficiency exists commencing on or after the fourth anniversary of the Original Issue Date (“Dividend Commencement Date” and collectively the “Dividend Entitlement Period”), holders of Series J Preferred shall be entitled to receive, and the Company shall pay, dividends at the rate per share (as a percentage of the Stated Value per share) of 20% per annum, payable quarterly, in arrears, on January 1, April 1, July 1 and October 1, in cash or duly authorized, validly issued, fully paid and non-assessable shares of Series J Preferred, or a combination thereof (the amount to be paid in shares of Series J Preferred, the “Dividend Share Amount”). The form of dividend payments to each holder shall be made, at the option of the Holders, (i) in cash, to the extent that funds are legally available for the payment of dividends in cash, (ii) in shares of Series J Preferred Stock, or (iii) a combination thereof. The Series J Preferred shall rank senior to the common stock with respect to payment of dividends and pari passu to the common stock with respect to liquidation, dissolution or winding up of the Company.

The holders of the Series J Preferred shall have voting rights on any matter presented to the shareholders of the Company for their action or consideration at any meeting of shareholders of the Company (or by written consent of shareholders in lieu of meeting). Each holder shall be entitled to cast the number of votes equal to the number of whole shares of common stock into which the shares of Series J Preferred held by the holder are convertible as of the record date for determining the shareholders entitled to vote on such matter regardless of whether an Authorized Share Deficiency Exists.

The Company has determined that the Series J Preferred host instrument was more akin to equity than debt and that the above identified conversion feature, subject to adjustments, was clearly and closely related to the host instrument, and accordingly bifurcation and classification of the conversion feature as a derivative liability was not required. The Company has accounted for the Series J Preferred as contingently redeemable preferred stock for which redemption is not probable. Accordingly, the Series J Preferred is presented in mezzanine equity based on their initial measurement amount (fair value), as required by ASC 480-10-S99, Distinguishing Liabilities from Equity – SEC Materials. No subsequent adjustment of the initial measurement amounts for these contingently redeemable Series J Preferred is necessary unless the redemption of the Series J Preferred becomes probable. Accordingly, the amount presented as temporary equity for the contingently redeemable Series J Preferred outstanding is its issuance-date fair value. The Series J Preferred was initially measured at its fair value, $13,903,960 at April 28, 2017.

The fair value of the Series J Preferred issued by the Company pursuant to the exchange agreement was calculated using a Monte Carlo Simulation because of the probability assumptions associated with the shareholder approval provisions; the following are the Monte Carlo inputs:

	April 28, 2017
Fair value of the Company’s common stock	$	0.1521
Initial exercise price	$	0.1521
Number of Series J Preferred issued		24.0344
Fully diluted shares outstanding as of measurement date		923,392,780
Risk-free rate		2.30	%
Volatility		90.00	%
Shareholder approval threshold	$	0.1521
Probability of approval is ending stock price is greater than threshold - midpoint		82.50	%
Probability of approval is ending stock price is greater than threshold - midpoint		17.50	%
Trials		200,000

Authorized, issued and outstanding shares, along with carrying value as of March 31, 2019 are as follows:

Shares authorized		50
Shares outstanding		24.0344
Par value	$	0.01
Stated value	$	1,000,000
Conversion price	$	0.1521
Common shares to be issued upon redemption		158,017,321
Carrying value of Series J convertible preferred stock	$	13,903,960

F-19

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Increase in Authorized Shares

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

NOTE 11. DERIVATIVE FINANCIAL INSTRUMENTS – WARRANTS

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

The Company issued warrants, with a term of seven years, to Nasrat Hakim, pursuant to the Exchange Agreement detailed below.

A summary of warrant activity is as follows:

	December 31 2019				March 31, 2019
	Warrant Shares		Weighted Avg. Exercise Price		Warrant Shares		Weighted Avg. Exercise Price
Balance at beginning of period		79,008,661	$	0.1521		79,008,661	$	0.1521

Warrants granted pursuant to the issuance of Series J convertible preferred shares		-		-		-		-

Warrants exercised, forfeited and/or expired, net		-		-		-		-

Balance at end of period		79,008,661	$	0.1521		79,008,661	$	0.1521

On April 28, 2017, the Company entered into an exchange agreement (the “Exchange Agreement”) with Nasrat Hakim, the Chairman of the Board, President, and Chief Executive Officer of the Company, pursuant to which the Company issued to Mr. Hakim 23.0344 shares of its newly designated Series J Convertible Preferred Stock (“Series J Preferred”) and Warrants to purchase an aggregate of 79,008,661 shares of its Common Stock (the “Series J Warrants” and, along with the Series J Preferred issued to Mr. Hakim, the “Securities”) in exchange for 158,017,321 shares of Common Stock owned by Mr. Hakim. The fair value of the Series J Warrants was determined to be $6,474,674 upon issuance at April 28, 2017.

The Series J Warrants are exercisable for a period of 10 years from the date of issuance, commencing on the earlier of (i) the date that Shareholder Approval is obtained, and the requisite corporate action has been effected; or (ii) April 28, 2020. The initial exercise price is $0.1521 per share and the Series J Warrants can be exercised for cash or on a cashless basis. The exercise price is subject to adjustment for any issuances or deemed issuances of common stock or common stock equivalents at an effective price below the then exercise price. Such exercise price adjustment feature prohibits the Company from being able to conclude the warrants are indexed to its own stock and thus such warrants are classified as liabilities and measured initially and subsequently at fair value. The Series J Warrants also provide for other standard adjustments upon the happening of certain customary events. The Series J Warrants are not exercisable during any period when an Authorized Share Deficiency exists and will expire on the expiry date, without regards to the existence of an Authorized Shares Deficiency (see Note 10). As of March 31, 2019, the Company does not have a sufficient number of unreserved authorized shares to effect the entire conversion of the Series J Preferred, therefore the Series J Warrants are not currently exercisable. Please also see Note 10.

F-20

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The fair value of the warrants issued by the Company pursuant to the issuance of Series J convertible preferred shares (79,008,661 warrant shares) was calculated using a Monte Carlo Simulation because of the probability assumptions associated with the Shareholder Approval provisions. The following are the key assumptions used in the Monte Carlo Simulation:

	March 31, 2019
Fair value of the Company’s common stock	$	0.9900
Initial exercise price	$	0.1521
Number of common warrants		79,008,661
Fully diluted shares outstanding as of measurement date		824,946,559
Warrant term (in years)		8.08
Risk-free rate		2.35	%
Volatility		90.00	%
Shareholder approval threshold	$	0.1580
Probability of approval is ending stock price is greater than threshold - midpoint		82.50	%
Probability of approval is ending stock price is greater than threshold - midpoint		17.50	%
Trials		100,000
Fair value of derivative financial instruments - warrants	$	2,487,830

The fair value of the warrants issued by the Company pursuant to the issuance of Series J convertible preferred shares (79,008,661 warrant shares) was calculated using a Black-Scholes model instead of a Monte Simulation because the probability with the shareholder approval provisions was no longer a factor. The following assumptions were used in the Black-Scholes model to calculate the fair value of warrants issued by the Company pursuant to the issuance of Series J convertible preferred shares (79,008,661 warrant shares):

	December 31, 2019
Fair value of the Company’s common stock	$	0.0925
Volatility		83.89	%
Initial exercise price	$	0.1521
Warrant term (in years)		7.3
Risk free rate		1.83	%

The changes in warrants (Level 3 financial instruments) measured at fair value on a recurring basis for the nine months ended December 31, 2019 were as follows:

Outstanding at March 31, 2019	$	2,487,830
Change in fair value of derivative financial instruments - warrants		2,590,695
Balance at December 31, 2019	$	5,078,525

NOTE 12. SHAREHOLDERS’ EQUITY

Lincoln Park Capital – April 10, 2014 Purchase Agreement

In April 2014, the Company entered into a Purchase Agreement (the “Lincoln Park Purchase Agreement” and/or “Purchase Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Pursuant to the terms of the Purchase Agreement, Lincoln Park agreed to purchase from the Company up to $40 million of common stock (subject to certain limitations) from time to time over a 36-month period that ended June 1, 2017. Pursuant to the terms of the Registration Rights Agreement, the Company filed with the SEC registration statements to register for resale under the Securities Act the shares that have been or may be issued to Lincoln Park under the Purchase Agreement.

Upon execution of the Purchase Agreement, the Company issued 1,928,641 shares of common stock to Lincoln Park pursuant to the Purchase Agreement as consideration for its commitment to purchase additional shares of common stock under that agreement and the Company was obligated to issue up to an additional 1,928,641 commitment shares to Lincoln Park pro rata as up to $40.0 million of common stock purchased by Lincoln Park.

F-21

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Purchase Agreement expired on June 1, 2017. During the term of the Purchase Agreement, the Company sold an aggregate of 110.6 million shares to Lincoln Park, for aggregate gross proceeds of approximately $27.0 million. In addition, the Company issued an aggregate of 3.2 million commitment shares.

Lincoln Park Capital – May 1, 2017 Purchase Agreement

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

Under the terms and subject to the conditions of the 2017 LPC Purchase Agreement, the Company has the right to sell to and Lincoln Park is obligated to purchase up to $40 million in shares of common stock, subject to certain limitations, from time to time, over the 36-month period commencing on June 5, 2017. The Company may direct Lincoln Park, at its sole discretion and subject to certain conditions, to purchase up to 500,000 shares of common stock on any business day, provided that at least one business day has passed since the most recent purchase, increasing to up to 1,000,000 shares, depending upon the closing sale price of the common stock (such purchases, “ Regular Purchases “). However, in no event shall a Regular Purchase be more than $1,000,000. The purchase price of shares of common stock related to the future funding will be based on the prevailing market prices of such shares at the time of sales. In addition, the Company may direct Lincoln Park to purchase additional amounts as accelerated purchases under certain circumstances. In the case of both Regular Purchases and accelerated purchases, the purchase price per share will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during the business days used to compute the purchase price. Sales of shares of common stock to Lincoln Park under the 2017 LPC Purchase Agreement are limited to no more than the number of shares that would result in the beneficial ownership by Lincoln Park and its affiliates, at any single point in time, of more than 4.99% of the then outstanding shares of common stock.

In connection with the 2017 LPC Purchase Agreement, the Company issued to Lincoln Park 5,540,551 shares of common stock and is required to issue up to 5,540,551 additional shares of Common Stock pro rata as the Company requires Lincoln Park to purchase shares under the 2017 LPC Purchase Agreement over the term of the agreement. Lincoln Park has represented to the Company, among other things, that it is an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”)). The Company sold the securities in reliance upon an exemption from registration contained in Section 4(a)(2) under the Securities Act. The securities sold may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

The 2017 LPC Purchase Agreement and the 2017 LPC Registration Rights Agreement contain customary representations, warranties, agreements and conditions to completing future sale transactions, indemnification rights and obligations of the parties. The Company has the right to terminate the 2017 LPC Purchase Agreement at any time, at no cost or penalty. Actual sales of shares of common stock to Lincoln Park under the 2017 LPC Purchase Agreement will depend on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading price of the Common Stock and determinations by us as to the appropriate sources of funding for us and our operations. There are no trading volume requirements or, other than the limitation on beneficial ownership discussed above, restrictions under the 2017 LPC Purchase Agreement. Lincoln Park has no right to require any sales by the Company but is obligated to make purchases from the Company as directed in accordance with the 2017 LPC Purchase Agreement. Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company’s shares.

The net proceeds received by the Company under the 2017 LPC Purchase Agreement will depend on the frequency and prices at which the Company sells shares of common stock to Lincoln Park. A registration statement on Form S-3 was filed with the SEC on May 10, 2017 and was declared effective on June 5, 2017.

During the nine months ended December 31, 2019, a total of 8,895,233 shares were sold to Lincoln Park pursuant to the 2017 LPC Agreement for net proceeds totaling $806,987. In addition, 111,778 shares were issued to Lincoln Park as additional commitment shares, pursuant to the 2017 LPC Agreement. During the nine months ended December 31, 2018, a total of 17,642,083 shares were sold to Lincoln Park pursuant to the 2017 LPC Agreement for net proceeds totaling $1,669,829. In addition, 231,295 shares were issued to Lincoln Park as additional commitment shares, pursuant to the 2017 LPC Agreement.

NOTE 13. STOCK-BASED COMPENSATION

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

F-22

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Stock-based Director Compensation

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

During the nine months ended December 31, 2019, the Company did not issue any shares of common stock to its Directors in payment of director’s fees.

During the nine months ended December 31, 2019, the Company accrued director’s fees totaling 67,500, which will be paid via cash payments totaling $22,500 and the issuance of 585,417 shares of Common Stock.

As of December 31, 2019, the Company owed its Directors a total of $60,000 in cash payments and 1,379,033 shares of Common Stock in payment of director fees totaling $180,000 due and owing. The Company anticipates that these shares of Common Stock will be issued prior to the end of the current fiscal year.

Stock-based Employee/Consultant Compensation

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

During the nine months ended December 31, 2019, the Company did not issue any shares pursuant to employment contracts with the Company’s President and Chief Executive Officer, Chief Financial Officer or certain other employees. During the nine months ended December 31, 2019, the Company did not issue any shares pursuant to the engagement contracts with certain consultants.

As of December 31, 2019, the Company accrued salaries totaling $603,750 owed to the Company’s President and Chief Executive Officer, Chief Financial Officer and certain other employees which will be paid via the issuance of 7,854,334 shares of Common Stock.

As of December 31, 2019, the Company owed its President and Chief Executive Officer, Chief Financial Officer and certain other employees’ salaries totaling $2,110,000 which will be paid via the issuance of 22,536,856 shares of Common Stock.

Options

Under its 2014 Stock Option Plan and prior options plans, the Company may grant stock options to officers, selected employees, as well as members of the Board of Directors and advisory board members. All options have generally been granted at a price equal to or greater than the fair market value of the Company’s Common Stock at the date of the grant. Generally, options are granted with a vesting period of up to three years and expire ten years from the date of grant.

						Weighted Average
	Shares			Weighted Average		Remaining Contractual		Aggregate
	Underlying Options			Exercise Price		Term (in years)		Intrinsic Value
Outstanding at April 1, 2019		6,158,000		$	0.15		5.0	$	87,330
Forfeited and expired		(283,000	)	$	0.15		7.8	$	-
Outstanding at December 31, 2019		5,875,000		$	0.14		4.0	$	-
Exercisable at December 31 2019		5,541,668		$	0.14		4.0	$	67,500

The aggregate intrinsic value for outstanding options is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company common stock as of December 31, 2019 and March 31, 2019 of $0.0925 and $0.10, respectively.

F-23

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 14. CONCENTRATIONS AND CREDIT RISK

Revenues

Three customers accounted for approximately 94% of the Company’s revenues for the nine months ended December 31, 2019. These three customers accounted for approximately 57%, 24%, and 13% of revenues each. The same three customers accounted for approximately 69%, 12%, and 13% of revenues each, respectively, for the three months ended December 31, 2019.

Three customers accounted for substantially all the Company’s revenues for the nine months ended December 31, 2018. These three customers accounted for approximately 63%, 17%, and 16% of revenues each, respectively. The same three customers accounted for approximately 58%, 21%, and 7% of revenues each, respectively, for the three months ended December 31, 2018.

Accounts Receivable

Three customers accounted for approximately 90% the Company’s accounts receivable as of December 31, 2019. These three customers accounted for approximately 60%, 22% and 8% of accounts receivable each.

Four customers accounted for substantially all the Company’s accounts receivable as of March 31, 2019. These four customers accounted for approximately 38%, 34%, 19%, and 4% of accounts receivable each.

Purchasing

Eight suppliers accounted for more than 85% of the Company’s purchases of raw materials for the nine months ended December 31, 2019. Included in these eight suppliers were three suppliers that accounted for approximately 34%, 25%, and 11% of purchases each.

Seven suppliers accounted for more than 75% of the Company’s purchases of raw materials for the nine months ended December 31, 2018. Included in these seven suppliers are two suppliers that accounted for approximately 40%, 16%, and 15% of purchases each.

NOTE 15. SEGMENT RESULTS

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

The Company has determined that its reportable segments are ANDAs for generic products and NDAs for branded products. The Company identified its reporting segments based on the marketing authorization relating to each and the financial information used by its chief operating decision maker to make decisions regarding the allocation of resources to and the financial performance of the reporting segments.

Asset information by operating segment is not presented below since the chief operating decision maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company’s unaudited condensed consolidated financial statements.

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

	For the Three Months Ended December 31,					For the Nine Months Ended December 31,
	2019		2018			2019		2018
Operating Income (Loss) by Segment
ANDA	$	2,431,906	$	(582,822	)	$	2,538,560	$	(1,129,324	)
NDA		135,500		(744,393	)		407,245		(1,250,420	)
	$	2,567,406	$	(1,327,215	)	$	2,945,805	$	(2,379,744	)

F-24

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	2019			2018			2019			2018
Operating income (loss) by segment	$	2,567,406		$	(1,327,215	)	$	2,945,805		$	(2,379,744	)
Corporate unallocated costs		(739,790	)		(667,002	)		(1,740,579	)		(3,111,346	)
Interest income		2,334			1,733			10,667			4,570
Interest expense		(94,515	)		(89,897	)		(283,649	)		(279,037	)
Depreciation and amortization expense		(323,368	)		(321,164	)		(986,001	)		(891,390	)
Non-cash items		(213,052	)		(321,749	)		(532,267	)		(766,016	)
Change in fair value of derivative instruments – warrants		(3,059,695	)		380,976			(2,590,695	)		807,347
Loss from operations	$	(1,860,680	)	$	(2,344,318	)	$	(3,176,719	)	$	(6,615,616	)

NOTE 16. COLLABORATIVE AGREEMENT WITH EPIC PHARMA LLC

On June 4, 2015, the Company entered into the 2015 Epic License Agreement, which provides for the exclusive right to market, sell and distribute, by Epic Pharma LLC (“Epic”) of SequestOx™, an abuse deterrent opioid which employs the Company’s proprietary pharmacological abuse-deterrent technology. Epic will be responsible for payment of product development and pharmacovigilance costs, sales, and marketing of SequestOx™, and Elite will be responsible for the manufacture of the product. Under the 2015 Epic License Agreement, Epic will pay Elite non-refundable payments totaling $15 million, with such amount representing the cost of an exclusive license to ELI-200, the cost of developing the product and certain filings and a royalty based on an amount equal to 50% of profits derived from net product sales as defined in the 2015 Epic License Agreement. The initial term of the exclusive right to product development sales and distribution is five years (“Epic Exclusivity Period”); the license is renewable upon mutual agreement at the end of the initial term.

In June 2015, Elite received non-refundable payments totaling $5.0 million from Epic for the exclusive right to product development sales and distribution of SequestOx™ pursuant to the Epic Collaborative Agreement, under which it agreed to not permit marketing or selling of SequestOx™ within the United States of America to any other party. Such exclusive rights are considered a significant deliverable element of the Epic Collaborative Agreement pursuant to ASC 605-25, Revenue Recognition – Multiple Element Arrangements. These nonrefundable payments represent consideration for certain exclusive rights to ELI-200 and will be recognized ratably over the Epic Exclusivity Period.

In addition, in January 2016, a New Drug Application for SequestOx™ was filed, thereby earning the Company a non-refundable $2.5 million milestone, pursuant to the 2015 Epic License Agreement. The filing of this NDA represents a significant deliverable element as defined within the Epic Collaborative pursuant to ASC 605-25, Revenue Recognition – Multiple Element Arrangements. Accordingly, the Company has recognized the $2.5 million milestone, which was paid by Epic and related to this deliverable as income during the year ended March 31, 2016.

To date, the Company received payments totaling $7.5 million pursuant to the 2015 Epic License Agreement, with all amounts being non-refundable. An additional $7.5 million is due upon approval by the FDA of the NDA filed for SequestOx™, and license fees based on commercial sales of SequestOx™. Revenues relating to these additional amounts due under the 2015 Epic License Agreement will be recognized as the defined elements are completed and collectability is reasonably assured.

Please note that on July 15, 2016, the FDA issued a Complete Response Letter, or CRL, regarding the NDA. The CRL stated that the review cycle for the SequestOx™ NDA is complete and the application is not ready for approval in its present form.

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

F-25

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The 2015 Epic License Agreement expires on June 4, 2020, and Epic has previously advised the Company of their desire to extend this agreement. While discussions are ongoing, they are directly correlated to the regulatory status of SequestOx™. Furthermore, there can be no assurances that the parties will reach mutual agreement to extend the term of this agreement and no assurances that the terms and conditions of the agreement will be similar in all material aspects in the event that the agreement is extended by mutual consent of the parties. Non-receipt by the Company of the remaining $7.5 million milestone will have a material adverse effect on the Company’s financial condition.

NOTE 17. COLLABORATIVE AGREEMENT WITH SUNGEN PHARMA LLC

On August 24, 2016, the Company entered into the SunGen Agreement. The SunGen Agreement provides that Elite and SunGen Pharma LLC will engage in the research, development, sales, and marketing of four generic pharmaceutical products. Two of the products are classified as CNS stimulants (the “CNS Products”) and two of the products are classified as beta blockers (the “Beta Blocker Products”).

Under the terms of the SunGen Agreement, Elite and SunGen will share in the responsibilities and costs in the development of these products and will share in the profits from sales of the Products. Upon approval, the know-how and intellectual property rights to the products will be owned jointly by Elite and SunGen. SunGen shall have the exclusive right to market and sell the Beta Blocker Products using SunGen’s label and Elite shall have the exclusive right to market and sell the CNS Products using Elite’s label. Elite will manufacture and package all four products on a cost-plus basis.

On December 1, 2016 and July 24, 2017, Elite Labs and SunGen executed an amendment to the parties’ 2016 Development and License Agreement (the “Amended Agreement”), to undertake and engage in the research, development, sales and marketing of four additional generic pharmaceutical products bringing the total number of products under the amended agreement to eight. The product classes for the additional four products include antidepressants, antibiotics, and antispasmodics.

Under the terms of the Amended Agreement, Elite and SunGen will share in the responsibilities and costs in the development of these products and will share substantially in the profits from sales of the products. Upon approval, the know-how and intellectual property rights to the products will be owned jointly by Elite and SunGen. Three products will be owned jointly by Elite and SunGen; three shall be owned by SunGen while Elite shall have the marketing rights once the products are approved by the FDA; and two shall be owned by Elite while SunGen shall have the marketing rights once the products are approved by the FDA. Elite will manufacture and package all eight products on a cost-plus basis.

On December 10, 2018, the Company received approval from the FDA for an ANDA filed for a generic version of Adderall®, an immediate-release mixed salt of a single entity amphetamine product (Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate), with strengths of 5mg, 7.5mg. 10mg, 12.5mg, 15mg, 20mg, and 30mg tablets. The product is indicated for the treatment of Attention Deficit Hyperactivity Disorder (ADHD) and Narcolepsy. This approval represents the first FDA approval received for a product co-developed with SunGen under the SunGen Agreement. The first commercial shipment of this product occurred in April 2019. The product is currently marketed by Lannett Company Inc. (“Lannett”) under license granted pursuant a strategic marketing alliance dated March 6, 2019 (the “Lannett Alliance”).

On January 3, 2019, the Company filed an ANDA with the FDA for a generic version of an antibiotic product. The ANDA represents the third filing for a product co-developed with SunGen under the SunGen Agreement.

There can be no assurances that any of these products, even those for which ANDAs have been filed, will receive marketing authorization and achieve commercialization within a reasonable time period, or at all. In addition, even if marketing authorization is received, including the product for which such marketing authorization has already been received, there can be no assurances that there will be future revenues of profits, or that any such future revenues or profits would be in amounts that provide adequate return on the significant investments made to secure these marketing authorizations.

F-26

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 18. RELATED PARTY TRANSACTION AGREEMENTS WITH EPIC PHARMA LLC

The Company has entered into two agreements with Epic which constitute agreements with a related party due to the management of Epic including a member on our Board of Directors at the time such agreements were executed.

On June 4, 2015, the Company entered into the 2015 Epic License Agreement (please see Note 16 above). The 2015 Epic License Agreement includes milestone payments totaling $10 million upon the filing with and approval of an NDA with the FDA. The Company has determined these milestones to be substantive, with such assessment being made at the inception of the 2015 Epic License Agreement, and based on the following:

	●	The Company’s performance is required to achieve each milestone; and

	●	The milestones will relate to past performance, when achieved; and

	●	The milestones are reasonable relative to all of the deliverables and payment terms within the 2015 Epic License Agreement

After marketing authorization is received from the FDA, Elite will receive a license fee which is based on profits achieved from the commercial sales of ELI-200. On January 14, 2016, the Company filed an NDA with the FDA for SequestOx™, thereby earning a $2.5 million milestone pursuant to the 2015 Epic License Agreement. The Company has received payment of this amount from Epic. An additional $7.5 million is due upon approval by the FDA of the NDA filed for SequestOx™. Please note that on July 15, 2016, the FDA issued a Complete Response Letter, or CRL, regarding the NDA. The CRL stated that the review cycle for the SequestOx™ NDA is complete and the application is not ready for approval in its present form. On December 21, 2016, the Company met with the FDA for an end-of-review meeting to discuss steps that it could take to obtain approval of SequestOx™. Based on this and the meeting minutes received from the FDA on January 23, 2017, the Company formulated a plan to address the issues cited by the FDA in the CRL, with such plan including, without limitation, modifying the SequestOx™ formulation, conducting bioequivalence and bioavailability fed and fasted studies, comparing the modified formulation to the original formulation. On July 7, 2017, the Company reported topline results from a pivotal bioequivalence fed study for SequestOx™. This study resulted in a mean Tmax of 4.6 hours, with a range of 0.5 hour to 12 hours and a mean Tmax of the comparator, Roxicodone^® of 3.4 hours with a range of 0.5 hour to 12 hours. A key objective of this study was to determine if the reformulated SequestOx™ had a similar Tmax to the comparator when taken with a high fat meal. Based on these results, the Company will pause, not proceed, with the rest of the clinical trials, and seek clarity from the FDA before deciding on the next steps for immediate release SequestOx™. There can be no assurances of the success of any future clinical trials, or if such trials are successful, there can be no assurances that an intended future resubmission of the NDA product filing, if made, will be accepted by or receive marketing approval from the FDA, and accordingly, there can be no assurances that the Company will earn and receive the additional $7.5 million or future license fees. If the Company does not receive these payments or fees, it will materially and adversely affect our financial condition. In addition, even if marketing authorization is received, there can be no assurances that there will be future revenues of profits, or that any such future revenues or profits would be in amounts that provide adequate return on the significant investments made to secure this marketing authorization.

On October 2, 2013, Elite executed the Epic Pharma Manufacturing and License Agreement (the “Epic Generic Agreement”). The Epic Generic Agreement, which expired on October 2, 2018 granted rights to Epic to manufacture twelve generic products whose ANDA’s are owned by Elite, and to market, in the United States and Puerto Rico, six of these products on an exclusive basis, and the remaining six products on a non-exclusive basis. These products were to be manufactured at Epic, with Epic being responsible for the manufacturing site transfer supplements that are a prerequisite to each product being approved for commercial sale. In addition, Epic was to be responsible for all regulatory and pharmacovigilance matters, as well as all marketing and distribution activities. Elite has no further obligations or deliverables under the Epic Generic Agreement.

Pursuant to the Epic Generic Agreement, Elite was to receive $1.8 million, payable in increments that require the commercialization of all six exclusive products if the full amount is to be received, plus license fees equal to a percentage that is not less than 50% and not greater than 60% of profits achieved from commercial sales of the products, as defined in the Epic Generic Agreement. The Epic Generic Agreement expired on October 2, 2018 with Epic launching four of the six exclusive products and Elite collecting $1.0 million of the total $1.8 million fee.

The 2015 Epic License Agreement contains license fees that will be earned and payable to the Company, after the FDA has issued marketing authorization(s) for the related product(s). License fees are based on commercial sales of the products achieved by Epic and calculated as a percentage of net sales dollars realized from such commercial sales. Net sales dollars consist of gross invoiced sales less those costs and deductions directly attributable to each invoiced sale, including, without limitation, cost of goods sold, cash discounts, Medicaid rebates, state program rebates, price adjustments, returns, short date adjustments, charge backs, promotions, and marketing costs. The rate applied to the net sales dollars to determine license fees due to the Company is equal to an amount negotiated and agreed to by the parties to each agreement, with the following significant factors, inputs, assumptions, and methods, without limitation, being considered by either or both parties:

●

Assessment of the opportunity for each product in the market, including consideration of the following, without limitation: market size, number of competitors, the current and estimated future regulatory, legislative, and social environment for abuse deterrent opioids and the other generic products to which the underlying contracts are relevant;

F-27

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

●

Assessment of various avenues for monetizing SequestOx™ and the twelve ANDA’s owned by the Company, including the various combinations of sites of manufacture and marketing options;

●

Elite’s resources and capabilities with regards to the concurrent development of abuse deterrent opioids and expansion of its generic business segment, including financial and operational resources required to achieve manufacturing site transfers for twelve approved ANDA’s;

●

Capabilities of each party with regards to various factors, including, one or more of the following: manufacturing, marketing, regulatory and financial resources, distribution capabilities, ownership structure, personnel, assessments of operational efficiencies and entity stability, company culture and image;

●

Stage of development of SequestOx™ and manufacturing site transfer and regulatory requirements relating to the commercialization of the generic products at the time of the discussions/negotiations, and an assessment of the risks, probability, and time frames for achieving marketing authorizations from the FDA for each product.

●

Assessment of consideration offered; and

●

Comparison of the above factors among the various entities with whom the Company was engaged in discussions relating to the commercialization of SequestOx™ and the manufacture/marketing of the twelve generics related to the Epic Generic Agreement.

This transaction is not to be considered as an arms-length transaction.

Please also note that, effective April 7, 2016, all Directors on the Company’s Board of Directors that were also owners/managers of Epic had resigned as Directors of the Company and all current members of the Company’s Board of Directors have no relationship to Epic. Accordingly, Epic no longer qualifies as a party that is related to the Company.

NOTE 19. MANUFACTURING, LICENSE AND DEVELOPMENT AGREEMENTS

The Company has entered into the following active agreements:

●

License agreement with Precision Dose, dated September 10, 2010 (the “Precision Dose License Agreement”);

●

Development and License Agreement with SunGen (the “SunGen Agreement”);

●

Strategic Marketing Alliance with Glenmark Pharmaceuticals, Inc. USA dated May 22, 2018 (the “Glenmark Alliance”).

●

Strategic Marketing Alliance with Lannett Company. Inc. dated March 6, 2019 (the “Lannett-SunGen Product Alliance”)

●

Strategic Marketing Alliance with Lannett Company. Inc. dated April 9, 2019 (the “Lannett-Elite Product Alliance”)

The Precision Dose Agreement provides for the marketing and distribution, by Precision Dose and its wholly owned subsidiary, TAGI Pharma, of Phentermine 37.5mg tablets (launched in April 2011), Phentermine 15mg capsules (launched in April 2013), Phentermine 30mg capsules (launched in April 2013), Hydromorphone 8mg tablets (launched in March 2012), Naltrexone 50mg tablets (launched in September 2013) and certain additional products that require approval from the FDA which has not been received. Precision Dose will have the exclusive right to market these products in the United States and Puerto Rico and a non-exclusive right to market the products in Canada. Pursuant to the Precision Dose License Agreement, Elite received $200k at signing, and is receiving milestone payments and a license fee which is based on profits achieved from the commercial sale of the products included in the agreement.

Revenue from the $200k payment made upon signing of the Precision Dose Agreement is being recognized over the life of the Precision Dose Agreement.

F-28

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The milestones, totaling $500k (with $405k already received), consist of amounts due upon the first shipment of each identified product, as follows: Phentermine 37.5mg tablets ($145k), Phentermine 15 & 30mg capsules ($45k), Hydromorphone 8mg ($125k), Naltrexone 50mg ($95k) and the balance of $95k due in relation to the first shipment of generic products which still require marketing authorizations from the FDA, and to which there can be no assurances of such marketing authorizations being granted and accordingly there can be no assurances that the Company will earn and receive these milestone amounts. These milestones have been determined to be substantive, with such determination being made by the Company after assessments based on the following:

●

The Company’s performance is required to achieve each milestone; and

●

The milestones will relate to past performance, when achieved; and

●

The milestones are reasonable relative to all of the deliverables and payment terms within the Precision Dose License Agreement.

The license fees provided for in the Precision Dose Agreement are calculated as a percentage of net sales dollars realized from commercial sales of the related products. Net sales dollars consist of gross invoiced sales less those costs and deductions directly attributable to each invoiced sale, including, without limitation, cost of goods sold, cash discounts, Medicaid rebates, state program rebates, price adjustments, returns, short date adjustments, charge backs, promotions, and marketing costs. The rate applied to the net sales dollars to determine license fees due to the Company is equal to an amount negotiated and agreed to by the parties to the Precision Dose License Agreement, with the following significant factors, inputs, assumptions, and methods, without limitation, being considered by either or both parties:

●

Assessment of the opportunity for each generic product in the market, including consideration of the following, without limitation: market size, number of competitors, the current and estimated future regulatory, legislative, and social environment for each generic product, and the maturity of the market;

●

Assessment of various avenues for monetizing the generic products, including the various combinations of sites of manufacture and marketing options;

●

Capabilities of each party with regards to various factors, including, one or more of the following: manufacturing resources, marketing resources, financial resources, distribution capabilities, ownership structure, personnel, assessment of operational efficiencies and stability, company culture and image;

●

Stage of development of each generic product, all of which did not have FDA approval at the time of the discussions/negotiations and an assessment of the risks, probability, and time frame for achieving marketing authorizations from the FDA for the products;

	●	Assessment of consideration offered by Precision and other entities with whom discussions were conducted; and

	●	Comparison of the above factors among the various entities with whom the Company was engaged in discussions relating to the commercialization of the generic products.

The SunGen Agreement provides for the research, development, sales and marketing of eight generic pharmaceutical products. Two of the products are classified as CNS stimulants (the “CNS Products”), two of the products are classified as beta blockers and the remaining four products consist of antidepressants, antibiotics and antispasmodics. To date, the Company has filed ANDAs with the FDA for the two CNS Products and one antibiotic identified in the SunGen Agreement. The Company received FDA approval of the ANDA filed for the first CNS Product in December 2018 and achieved commercial launch in April 2019, with such product being marketed pursuant to the Lannett Alliance.

Under the terms of the SunGen Agreement, Elite and SunGen will share in the responsibilities and costs in the development of these products and will share substantially in the profits from sales. Upon approval, the know-how and intellectual property rights to the products will be owned jointly by Elite and SunGen. Three of the eight products will be jointly owned, three products will be owned by SunGen, with Elite having exclusive marketing rights and the remaining two products will be owned by Elite, with SunGen having exclusive marketing rights. Elite will manufacture and package all eight products on a cost-plus basis.

F-29

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Glenmark Alliance, provides for the manufacture by Elite and marketing by Glenmark of identified generic products under license from Elite. In addition to the purchase prices for the products, Elite will receive license fees well in excess of 50% of gross profits. Gross profit is defined as net sales less the price paid to Elite for the products, distribution fees (less than 10%) and shipping costs. Glenmark will have semi-exclusive marketing rights to the ANDA approved generic product, phendimetrazine 35mg tablets, and exclusive marketing rights to generic Methadone HCl. Collectively, the brand products and their generic equivalents had total annual sales of approximately $33.6 million in 2017, according to Quintiles IMS Health data. The Agreement has an initial term of three years and automatically renews for one-year periods absent prior written notice of non-renewal. In addition to customary termination provisions, the Agreement permits Glenmark to terminate with regard to a product on at least three months’ prior written notice if it determines to stop marketing and selling such product, and it permits Elite to terminate with regard to a product if at any time after the first twelvemonths from the first commercial sale, the average license fee paid by Glenmark for such product is less than $100,000 for a six-month sales period.

Pursuant to Lannett-SunGen Product Alliance with Lannett Company Inc. (“Lannett”), Lannett will be the exclusive U.S. marketer and distributor for two generic products co-developed and co-owned by Elite and SunGen – Amphetamine IR Tablets and a second product which is an extended release CNS stimulant that is currently under review by the FDA. Elite will manufacture and Lannett will purchase the products from Elite and then sell and distribute them. In addition to the purchase prices for the products, Elite will receive license fees in excess of 50% of net profits, which will be shared equally with SunGen, pursuant to the SunGen Agreement. The Lannett-SunGen Product Alliance has an initial term of three years and automatically renews for one-year periods absent prior written notice of non-renewal. In addition to customary termination provisions, the Agreement permits Lannett to terminate with regard to a product on at least six months’ prior written notice, and it permits Elite or Lannett to terminate with regard to a product if at any time after the first twelve months from the first commercial sale, the average license fee paid by Lannett for such product is less than $300,000 for a six month sales period. In addition to manufacturing fees and license fees, Lannett will also pay a milestone, of $750,000 upon commercial launch of the extended release CNS stimulant product that is currently under review by the FDA. This milestone payment will be shared equally by Elite and SunGen, pursuant to the SunGen Agreement.

The first commercial shipment of Amphetamine IR Tablets, a generic version of Adderall^®, with strengths of 5mg, 7.5mg, 10mg, 12.5mg, 15mg, 20mg and 30mg, pursuant to the Lannett-SunGen Product Alliance occurred in April 2019.

Pursuant to the Lannett-Elite Product Alliance, Lannett will be the exclusive U.S. marketer and distributor for Dantrolene Capsules. Elite will manufacture and Lannett will purchase Dantrolene Capsules from Elite and then sell and distribute them. In addition to the purchase prices for the products, Elite will receive license fees in excess of 50% of net profits. Net profits is defined as net sales less the price paid to Elite for the products, distribution fees (less than 10%) and shipping costs. The Lannett-Elite Product Alliance has an initial term of three years and automatically renews for one-year periods absent prior written notice of non-renewal. In addition to customary termination provisions, the Agreement permits Lannett to terminate with regard to a product on at least six months’ prior written notice and it permits Elite or Lannett to terminate with regard to a product if at any time after the first twelve months from the first commercial sale, the average license fee paid by Lannett for such product is less than $300,000 for a six month sales period.

NOTE 20. RELATED PARTY AGREEMENTS WITH MIKAH PHARMA LLC

Pursuant to an asset acquisition, on May 17, 2017, Elite Labs, executed an assignment agreement with Mikah, pursuant to which the Company acquired all rights, interests, and obligations under a supply and distribution agreement (the “Reddy’s Distribution Agreement”) with Dr. Reddy’s Laboratories, Inc. (“Dr. Reddy’s”) originally entered into by Mikah on May 7, 2017 and relating to the supply, sale and distribution of generic Trimipramine Maleate Capsules 25mg, 50mg and 100mg (“Trimipramine”).

On May 22, 2017, the Company executed an assignment agreement with Mikah, pursuant to which the Company acquired all rights, interests and obligations under a manufacturing and supply agreement with Epic originally entered into by Mikah on June 30, 2015 and relating to the manufacture and supply of Trimipramine (the “Epic Trimipramine Manufacturing Agreement”). Pursuant to this agreement, Epic manufactured Trimipramine under license from Elite. In September 2018, Elite successfully transferred manufacturing of Trimipramine to the Northvale Facility, resulting in the irrelevance of the Epic Trimipramine Manufacturing Agreement. Trimipramine is currently manufactured by Elite.

Mikah is owned by Nasrat Hakim, the CEO, President and Chairman of the Board of the Company.

The Reddy’s Distribution Agreement was concluded by mutual consent in August 2018.

Trimipramine is one of the products included in the Glenmark Strategic Alliance and is currently marketed and distributed by Glenmark.

On December 3, 2018, the Company executed a development agreement with Mikah, pursuant to which Mikah and the Company will collaborate to develop and commercialize generic products including formulation development, analytical method development, bioequivalence studies and manufacture of development batches of generic products.

F-30

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company received a total of $480,000 from Mikah, $150,000 and $330,000 in January and September of 2019, respectively, as an advance payment for the purchase of pharmaceutical materials relating to future product development conducted pursuant to this agreement. This amount was recorded as a deposit and contained within the customer deposits financial statement line item on the condensed consolidated balance sheet. As of the date of this report, the Company has purchased raw materials with an aggregate cost of $452,348 pursuant to this agreement. As of December 31, 2019, the balance of the customer deposit from Mikah was $55,653 and was included in the financial statement line of customer deposits on the accompanying condensed consolidated balance sheet.

NOTE 21. OTHER INCOME – PROCEEDS FROM SALE OF ANDAs

Sale of ANDAs for Oxycodone Hydrochloride and Acetaminophen, USP CII (generic version of Percocet®)

Approved ANDAs for a generic version of Percocet^® (oxycodone hydrochloride and acetaminophen, USP CII) 5mg, 7.5mg and 10mg tablets with 325mg of acetaminophen were sold to Nostrum Laboratories Inc. (“Nostrum”) for cash consideration totaling $300,000. The three related approved ANDA’s were developed by Elite, with the costs of such development being charged to expense in the periods incurred, in accordance with generally accepted accounting principles.

Sale of ANDAs for Hydrocodone bitartrate and acetaminophen tablets USP CII (generic version of Norco)

Approved ANDAs for a generic version of Norco^® (hydrocodone bitartrate and acetaminophen tablets USP CII) 2.5mg/325mg, 5mg/325mg, 7.5mg/325mg and 10mg/325mg tablets were sold to Nostrum for cash consideration totaling $300,000. The four related approved ANDA’s were developed by Elite, with the costs of such development being charged to expense in the periods incurred, in accordance with generally accepted accounting principles.

NOTE 22. SUBSEQUENT EVENTS

The Company has evaluated subsequent events from the condensed consolidated balance sheet date through February 10, 2020. The following are material subsequent events:

Common Stock issued and sold pursuant to the Lincoln Park Purchase Agreement

Subsequent to December 31, 2019 and up to February 4, 2020 (the latest practicable date), a total of 5,337,102 shares of Common Stock were issued to Lincoln Park, with such shares consisting of 5,265,484 purchase shares and 71,618 additional commitment shares. Total proceeds from these transactions was $517,037.

Sale of ANDA for Hydromorphone HCl oral tablet – 8mg

On February 3, 2020, Elite sold the ANDA for generic Hydromorphone HCl 8mg tablet to Nostrum for cash consideration totaling $300,000. The carrying value for the asset related to the ANDA was $0.

F-31

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THREE AND NINE MONTHS ENDED DECEMBER 31, 2019 (UNAUDITED)

COMPARED TO THE

THREE AND NINE MONTHS ENDED DECEMBER 31, 2018 (UNAUDITED)

The following discussion of our financial condition and results of operations for the three and nine months ended December 31, 2019 and 2018 should 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, 2019. 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.

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

Background

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

We are a specialty pharmaceutical company principally engaged in the development and manufacture of oral, controlled-release products, using proprietary know-how and technology, particularly as it relates to abuse resistant products and the manufacture of generic pharmaceuticals. Our strategy includes improving off-patent drug products for life cycle management, developing generic versions of controlled-release drug products with high barriers to entry and the development of branded and generic products that utilize our proprietary and patented abuse resistance technologies.

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

Strategy

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

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

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

Commercial Products

We own, license or contract manufacture the following products currently being sold commercially:

Product	Branded Product Equivalent	Therapeutic Category	Launch Date
Phentermine HCl 37.5mg tablets (“Phentermine 37.5mg”)	Adipex-P®	Bariatric	April 2011
Hydromorphone HCl 8mg tablets (“Hydromorphone 8mg”)	Dilaudid®	Pain	March 2012
Phendimetrazine Tartrate 35mg tablets (“Phendimetrazine 35mg”)	Bontril®	Bariatric	November 2012
Phentermine HCl 15mg and 30mg capsules (“Phentermine 15mg” and “Phentermine 30mg”)	Adipex-P®	Bariatric	April 2013
Naltrexone HCl 50mg tablets (“Naltrexone 50mg”)	Revia®	Pain	September 2013
Isradipine 2.5mg and 5mg capsules (“Isradipine 2.5mg” and “Isradipine 5mg”)	n/a	Cardiovascular	January 2015
Oxycodone HCl Immediate Release 5mg, 10mg, 15mg, 20mg and 30mg tablets (“OXY IR 5mg”, “Oxy IR 10mg”, “Oxy IR 15mg”, “OXY IR 20mg” and “Oxy IR 30mg”)	Roxycodone®	Pain	March 2016
Trimipramine Maleate Immediate Release 25mg, 50mg and 100mg capsules (“Trimipramine 25mg”, “Trimipramine 50mg”, “Trimipramine 100mg”)	Surmontil®	Antidepressant	May 2017
Methadone HCl 5mg and 10mg tablets (“Methadone 5mg” and “Methadone 10mg”)	Dolophine®	Pain	November 2018
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate Immediate Release 5mg, 7.5mg, 10mg, 12.5mg, 15mg, 20mg and 30mg tablets (“Amphetamine IR 5mg”, “Amphetamine IR 7.5mg”, “Amphetamine IR 10mg”, “Amphetamine IR 12.5mg”, “Amphetamine IR 15mg”, “Amphetamine IR 20mg” and “Amphetamine IR 30mg”)	Adderall	Central Nervous System (“CNS”) Stimulant	April 2019
Dantrolene Sodium Capsules 25mg, 50mg and 100mg (“Dantrolene 25mg”, “Dantrolene 50mg”, “Dantrolene 100mg”	Dantrium®	Muscle Relaxant	June 2019

Note: Phentermine 37.5mg is also referred to as “Phentermine Tablets”. Phentermine 15mg and Phentermine 30mg are collectively and individually referred to as “Phentermine Capsules”. Hydromorphone 8mg is also referred to as “Hydromorphone Tablets”. Phendimetrazine 35mg is also referred to as “Phendimetrazine Tablets”. Naltrexone 50mg is also referred to as “Naltrexone Tablets”. Isradipine 2.5mg and Isradipine 5mg are collectively and individually referred to as “Isradipine Capsules”. Oxy IR 5mg, Oxy IR 10mg, Oxy IR 15mg Oxy IR 20mg and Oxy IR 30mg are collectively and individually referred to as “Oxy IR”. Trimipramine 25mg, Trimipramine 50mg, and Trimipramine 100mg are collectively and individually referred to as “Trimipramine Capsules”. Methadone 5mg and Methadone 10mg are collectively and individually referred to as “Methadone Tablets”. Amphetamine IR 5mg, Amphetamine IR 7.5mg, Amphetamine IR 10mg, Amphetamine IR 12.5mg, Amphetamine IR 15mg, Amphetamine IR 20mg and Amphetamine IR 30mg are collectively and individually referred to as “Amphetamine IR Tablets”. Dantrolene 25mg, Dantrolene 50mg and Dantrolene 100mg are collectively and individually referred to as “Dantrolene Capsules”.

Phentermine 37.5mg

The approved ANDA for Phentermine 37.5mg was acquired pursuant to an asset purchase agreement with Epic Pharma LLC (“Epic”) dated September 10, 2010 (the “Phentermine Purchase Agreement”).

Sales and marketing rights for Phentermine 37.5mg are included in the licensing agreement between the Company and Precision Dose Inc. (“Precision Dose”) dated September 10, 2010 (the “Precision Dose License Agreement”). Please see the section below titled “Precision Dose License Agreement” for further details of this agreement.

The first shipment of Phentermine 37.5mg was made to Precision Dose’s wholly owned subsidiary, TAGI Pharmaceuticals Inc. (“TAGI”), pursuant to the Precision Dose License Agreement, with such initial shipment triggering a milestone payment under this agreement. Phentermine 37.5mg is currently being manufactured by Elite and distributed by TAGI under the Precision Dose License Agreement.

Hydromorphone 8mg

The approved ANDA for Hydromorphone 8mg was acquired pursuant to an asset purchase agreement with Mikah Pharma LLC (“Mikah Pharma”) dated May 18, 2010 (the “Hydromorphone Purchase Agreement”). Transfer of the manufacturing process of Hydromorphone 8mg to the Northvale Facility, a prerequisite of the Company’s commercial launch of the product, was approved by the FDA on January 23, 2012. Sales and marketing rights for Hydromorphone 8mg are included in the Precision Dose License Agreement. Please see the section below titled “Precision Dose License Agreement” for further details of this agreement.

The first shipment of Hydromorphone 8mg was made to TAGI, pursuant to the Precision Dose License Agreement, in March 2012, with such initial shipment triggering a milestone payment under this agreement. Hydromorphone 8mg is currently being manufactured by Elite and distributed by TAGI under the Precision Dose License Agreement.

Pursuant to an asset purchase agreement executed on January 16, 2020, on February 3, 2020, Elite sold the ANDA for Hydromorphone tablet to Nostrum Laboratories Inc. (“Nostrum”) for cash consideration totaling $300,000. The carrying value for the asset related to the ANDA was zero, due to an asset impairment recorded during the fiscal year ended March 31, 2011.

Phendimetrazine Tartrate 35mg

The ANDA for Phendimetrazine 35mg was acquired by Elite as part of the asset purchase agreement between the Company and Mikah Pharma, dated August 1, 2013 (the “Mikah ANDA Purchase”). Please see “2013 ANDA Purchase Agreement” below for more information on this agreement. The Northvale Facility was already an approved manufacturing site for this product as of the date of the Mikah ANDA Purchase. Prior to the acquisition of this ANDA, Elite had been manufacturing this product on a contract basis pursuant to a manufacturing and supply agreement with Mikah Pharma, dated June 1, 2011.

Phendimetrazine 35mg is currently a commercial product being manufactured by Elite and distributed by Glenmark Pharmaceuticals Inc., USA (“Glenmark”) on a non-exclusive basis, and by Elite.

On January 2, 2018, the Company announced that it received approval of its abbreviated new drug application (“ANDA”) from the FDA for Phendimetrazine Tartrate Tablets USP, 35mg. This product approval is from an ANDA that the Company filed approximately six years ago. This approval resulted in the Company having a second, approved ANDA for this product. The Company has been selling this product pursuant to the marketing authorization achieved from the first approved ANDA. The Company is currently considering strategic options for utilization of this approved ANDA, with such options including, without limitation, divestiture.

Phentermine 15mg and Phentermine 30mg

Phentermine 15mg capsules and Phentermine 30mg capsules were developed by the Company, with Elite receiving approval of the related ANDA in September 2012.

Sales and marketing rights for Phentermine 15mg and Phentermine 30mg are included in the Precision Dose License Agreement. Please see the section below titled “Precision Dose License Agreement” for further details of this agreement.

The first shipments of Phentermine 15mg and Phentermine 30mg were made to TAGI, pursuant to the Precision Dose License Agreement, in April 2013, with such initial shipments triggering a milestone payment under this agreement. Phentermine 15mg and Phentermine 30mg are currently being manufactured by Elite and distributed by TAGI under the Precision Dose License Agreement.

Naltrexone 50mg

The approved ANDA for Naltrexone 50mg was acquired by the Company pursuant to an asset purchase agreement between the Company and Mikah Pharma dated August 27, 2010 (the “Naltrexone Acquisition Agreement”) for aggregate consideration of $200,000.

Sales and marketing rights for Naltrexone 50mg are included in the Precision Dose License Agreement. Please see the section below titled “Precision Dose License Agreement” for further details of this agreement.

The first shipment of Naltrexone 50mg was made to TAGI, pursuant to the Precision Dose License Agreement, in September 2013, with such initial shipment triggering a milestone payment under this agreement. Naltrexone 50mg is currently being manufactured by Elite and distributed by TAGI under the Precision Dose License Agreement.

Isradipine 2.5mg and Isradipine 5mg

The approved ANDAs for Isradipine 2.5mg and Isradipine 5mg were acquired by Elite as part of the Mikah ANDA Purchase.

Isradipine 2.5mg and Isradipine 5mg are currently a commercial product being manufactured by Elite and distributed by Glenmark, on an exclusive basis.

Oxycodone 5mg, Oxycodone 10mg, Oxycodone 15mg, Oxycodone 20mg and Oxycodone 30mg (“Oxy IR”)

We received notification from Epic in October 2015 of the approval by the FDA of Epic’s ANDA for Oxy IR. This product was an Identified IR Product in the Epic Strategic Alliance Agreement Dated March 18, 2009 (the “Epic Strategic Alliance”). Oxy IR was developed at the Northvale Facility pursuant to the Epic Strategic Alliance, in which we are entitled to a Product Fee of 15% of Profits as defined in the Epic Strategic Alliance. The first commercial sale of Oxy IR occurred in March 2016, and sales by Epic of this product are ongoing.

Trimipramine 25mg, Trimipramine 50mg, and Trimipramine 100mg

Through Elite Labs, Elite acquired an approved and currently marketed ANDA for Trimipramine Maleate Capsules (“Trimipramine”) 25mg, 50mg and 100mg, from Mikah Pharma.

Trimipramine 25mg, Trimipramine 50mg and Trimipramine 100mg are currently a commercial product being manufactured by Elite and distributed by Glenmark, on an exclusive basis.

Amphetamine IR Tablets

On December 10, 2018, the Company received approval from the FDA for Amphetamine IR Tablets, a generic version of Adderall ^®, an immediate-release mixed salt of a single entity Amphetamine product (Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate) with strengths of 5 mg, 7.5mg, 10mg, 12.5mg, 15mg, 20mg, and 30mg tablets. The product is a central nervous system stimulant and is indicated for the treatment of Attention Deficit Hyperactivity Disorder (“ADHD”) and Narcolepsy. According to QVIA (formerly QuintilesIMS Health) data the branded product and its equivalents had total U.S. sales of $365 million for the twelve months ending September 30, 2018. This is the first product approval for our Elite and SunGen Pharma LLC (“SunGen”) collaboration. The product is jointly owned. Elite manufactures and packages the product on a cost-plus basis. Amphetamine IR Tablets are currently sold pursuant to the Lannett Alliance, with first commercial shipment of this product occurring in April 2019. Please see the section below titled “Strategic Marketing Alliance with Lannett Company Inc.” for further details on the Lannett Alliance.

Dantrolene 25mg, Dantrolene 50mg and Dantrolene 100mg

The approved ANDAs for Isradipine 2.5mg and Isradipine 5mg were acquired by Elite as part of the Mikah ANDA Purchase. Elite manufactures and packages Dantrolene Capsules on a cost-plus basis. Dantrolene Capsules are currently sold pursuant to the Lannett Alliance, with the first commercial shipment of this product occurring in June 2019. Please see the section below titled “Strategic Marketing Alliance with Lannett Company Inc.” for further details on the Lannett Alliance.

Filed products under FDA review

SequestOx™ - Immediate Release Oxycodone with sequestered Naltrexone

SequestOx™ is our lead abuse-deterrent candidate for the management of moderate to severe pain where the use of an opioid analgesic is appropriate. SequestOx™ is an immediate-release Oxycodone Hydrochloride containing sequestered Naltrexone which incorporates 5mg, 10mg, 15mg, 20mg and 30mg doses of oxycodone into capsules.

In January 2016, the Company submitted a 505(b)(2) New Drug Application for SequestOx™, after receiving a waiver of the $2.3 million filing fee from the FDA. In March 2016, the Company received notification of the FDA’s acceptance of this filing and that such filing has been granted priority review by the FDA with a target action under the Prescription Drug User Fee Act (“PDUFA”) of July 14, 2016.

On July 15, 2016, the FDA issued a Complete Response Letter, or CRL, regarding the NDA. The CRL stated that the review cycle for the SequestOx™ NDA is complete and the application is not ready for approval in its present form.

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

There can be no assurances of the Company conducting future clinical trials, or if such trials are conducted, there can be no assurances of the success of any future clinical trials, or if such trials are successful, there can be no assurances that an intended future resubmission of the NDA product filing, if made, will be accepted by or receive marketing approval from the FDA, and accordingly, there can be no assurances that the Company will earn and receive the additional $7.5 million or future license fees (please see “Licensing, Manufacturing and Development Agreements; Sales and Distribution Licensing Agreement with Epic Pharma LLC for SequestOx™” below). If the Company does not receive these payments or fees, it will materially and adversely affect our financial condition. In addition, even if marketing authorization is received, there can be no assurances that there will be future revenues or profits, or that any such future revenues or profits would be in amounts that provide adequate return on the significant investments made to secure this marketing authorization.

Oxycodone Hydrochloride extended release (generic version of Oxycontin®)

On September 20, 2017, the Company filed an ANDA with the FDA for generic version of Oxycontin® (extended release Oxycodone Hydrochloride). OxyContin® is approved for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. IMS reported approximately $2.3 billion in revenue for OxyContin® and its equivalents in 2016. The FDA requested additional information relating to this filing, compliance with which would require significant resources. Development of this product is currently paused, with the Company evaluating the feasibility of the continued development of this product.

There can be no assurances that any of these products will receive marketing authorization and achieve commercialization within this time period, or at all. In addition, even if marketing authorization is received, there can be no assurances that there will be future revenues of profits, or that any such future revenues or profits would be in amounts that provide adequate return on the significant investments made to secure these marketing authorizations.

Approved Products Not Yet Commercialized

Loxapine 5mg, 10mg, 25mg and 50mg capsules (“Loxapine Capsules”)

A PAS has been filed with the FDA for transfer of manufacturing of this product to the Northvale Facility, with such PAS being under review by the FDA. The approved ANDAs for Loxapine Capsules were acquired as part of the 2013 ANDA acquisition between the Company and Mikah Pharma. Please see the section below titled “Asset Acquisition Agreements” for further details on the 2013 ANDA acquisition agreement.

Acetaminophen and Codeine Phosphate, USP CII (generic version of Tylenol® with Codeine)

On September 18, 2018, the Company filed an ANDA with the FDA for a generic version of Tylenol® with Codeine (acetaminophen and codeine phosphate) 300mg/15mg, 300mg/30mg and 300mg/60mg tablets. Acetaminophen with codeine is a combination medication indicated for the management of mild to moderate pain, where treatment with an opioid is appropriate and for which alternative treatments are inadequate. Acetaminophen with codeine products have annual U.S. sales of approximately $45 million according to IQVIA (formerly QuintilesIMS Health Data). The Company received approval of this ANDA in September 2019. Elite has not yet launched this product and is seeking a partner for this product.

Generic version of extended release Central Nervous System stimulant (generic version of Adderall XR®)

On May 24, 2018, the Company filed an ANDA with the FDA for a generic version of an extended release CNS stimulant. The ANDA represents the second filing for a product co-developed with SunGen under the SunGen Agreement. According to IMS Health data, the branded product and its equivalents had total U.S. sales of approximately $1.6 billion for the twelve months ended September 30, 2017. On December 12, 2019, the Company reported that it received approval from the US Food and Drug Administration for a generic version of Adderall XR®, an extended-release mixed salt of a single entity Amphetamine product (Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate) with strengths of 5 mg, 10 mg, 15 mg, 20 mg, 25 mg and 30 mg tablets. This is the second product approval for our Elite and SunGen Pharma LLC (“SunGen”) collaboration. The product is jointly owned. Elite manufactures and packages the product on a cost-plus basis. Amphetamine XR Tablets will be sold pursuant to the Lannett Alliance. The Company expects to launch this product during the current fiscal year ending March 31, 2020. Please see the section below titled “Strategic Marketing Alliance with Lannett Company Inc.” for further details on the Lannett Alliance.

Discontinued and Transferred Products

The FDA’s Generic Drug User Fee Amendment (“GDUFA”) fee structure includes fee brackets that are based on the number of ANDAs owned as of the April 1st annual measurement date. As of the measurement date in 2018, the Company qualified as a medium sized company, which is defined as an entity that owns between 6 and 19 ANDAs. During the fiscal year ending March 31, 2019, the Company received approval for several ANDAs, which, when added to those approved in prior periods resulted in the Company owning in excess of 19 ANDA’s and would have required classification as a large sized company as of the 2019 measurement date. Based on the latest fee schedule published by the FDA in August 2018, the annual fee for a large company is $1.1 million higher than the fee we paid as a qualified medium company. Qualifying as a large sized company would accordingly result in a significant increase in annual regulatory fees.

Prior to the April 1, 2019 measurement date, the Company conducted an evaluation of all ANDAs owned to determine the feasibility of incurring such increased annual fees in relation to the value and place of each ANDA in the company’s current and future operations and strategic plans. Based on this study, the Company identified the following ANDAs for sale and, if sale was not possible prior to the measurement date, discontinuance, so as to ensure that total ANDAs owned at the measurement date were not greater than 19, allowing the Company to qualify as a medium sized entity, as opposed to a large sized entity, which would have resulted in increased regulatory costs in excess of $1 million annually.

Hydroxyzine HCl

Approved ANDAs for Hydroxyzine HCl 10mg, 25mg and 50mg tablets (“Hydroxyzine Tablets”) were sold to Epic Pharma LLC for cash consideration totaling $450,000. The three related approved ANDA’s had an aggregate carrying value of $787,000, with such sale resulting in a recognized loss of $337,000 during the fiscal year ended March 31, 2019.

Phentermine Capsules

Approved ANDAs for Phentermine 30mg and 15mg capsules and Phentermine 30mg seeded capsules were discontinued in March 2019. These three ANDAs had an aggregate carrying value of $291,000, which was recognized as a loss during the fiscal year ended March 31, 2019

Oxycodone Hydrochloride and Acetaminophen, USP CII (generic version of Percocet®)

Approve ANDAs for a generic version of Percocet® (oxycodone hydrochloride and acetaminophen, USP CII) 5mg, 7.5mg and 10mg tablets with 325mg of acetaminophen were sold to Nostrum for cash consideration totaling $300,000. The three related approved ANDA’s were developed by Elite, with the costs of such development being charged to expense in the periods incurred, in accordance with generally accepted accounting principles.

Hydrocodone bitartrate and acetaminophen tablets USP CII (generic version of Norco)

Asset Acquisition Agreements

Generic Phentermine Capsules

On September 10, 2010, together with our wholly owned subsidiary, Elite Laboratories, Inc., executed a purchase agreement (the “Phentermine Purchase Agreement”) with Epic for the purpose of acquiring from Epic, an ANDA for a generic phentermine product (the “Phentermine ANDA”), with such being filed with the FDA at the time the Phentermine Purchase Agreement was executed. On February 4, 2011, the FDA approved the Phentermine ANDA. The acquisition of the Phentermine ANDA closed on March 31, 2011 and Elite paid the full acquisition price of $450,000 from the purchase agreement with Epic Pharma.

This product is being marketed and distributed by Precision Dose and its wholly owned subsidiary, TAGI, pursuant to the Precision Dose License Agreement, a description of which is set forth below.

Generic Hydromorphone HCl Product

On May 18, 2010, we executed an asset purchase agreement with Mikah Pharma (the “Hydromorphone Purchase Agreement”). Pursuant to the Hydromorphone Purchase Agreement, the Company acquired from Mikah Pharma an approved ANDA for Hydromorphone 8 mg for aggregate consideration of $225,000, comprised of an initial payment of $150,000, which was made on May 18, 2010. A second payment of $75,000 was due to be paid to Mikah Pharma on June 15, 2010, with the Company having the option to make this payment in cash or by issuing to Mikah Pharma 937,500 shares of our common stock. We elected and did issue 937,500 shares of Common Stock during the quarter ended December 31, 2010, in full payment of the $75,000 due to Mikah Pharma pursuant to the Hydromorphone Purchase Agreement dated May 18, 2010.

This product is currently being marketed and distributed by Precision Dose and its wholly owned subsidiary, TAGI, pursuant to the Precision Dose License Agreement, a description of which is set forth below.

Generic Naltrexone Product

On August 27, 2010, we executed an asset purchase with Mikah Pharma (the “Naltrexone Acquisition Agreement”). Pursuant to the Naltrexone Acquisition Agreement, Elite acquired from Mikah Pharma the ANDA number 75-274 (Naltrexone Hydrochloride Tablets USP, 50 mg), and all amendments thereto, that have to date been filed with the FDA seeking authorization and approval to manufacture, package, ship and sell the products described in this ANDA within the United States and its territories (including Puerto Rico) for aggregate consideration of $200,000. In lieu of cash, Mikah Pharma agreed to accept product development services to be performed by us.

This product is being marketed and distributed by Precision Dose and its wholly owned subsidiary, TAGI, pursuant to the Precision Dose License Agreement, a description of which is set forth below.

2013 ANDA Purchase Agreement

On August 1, 2013, Elite executed a purchase agreement with Mikah (the “2013 ANDA Purchase Agreement”) pursuant to which, Elite acquired, for aggregated consideration of $10,000,000, inclusive of imputed interest, approved ANDAs for the following products: Hydroxyzine HCl 10mg, 25mg and 50mg tablets (“Hydroxyzine Tablets”), Phentermine Capsules, Phentermine Tablets, Phendimetrazine Tablets, Isradipine Capsules, Dantrolene Capsules and Loxapine 5mg, 10mg, 25mg and 50mg capsules (“Loxapine Capsules”). In addition, Elite acquired one ANDA under review by the FDA, which is not expected to be approved and for which no value was assigned.

The Company issued a secured, non-interest bearing, convertible note for the aggregate consideration, with such note being due in August 2016. This note was amended on February 7, 2014 to make it convertible into shares of the Company’s Series I Convertible Preferred Stock. On February 7, 2014, this note was converted into 100 shares of the Company’s Series I Preferred Stock and retired.

On August 16, 2016, these 100 shares of Series I Preferred Stock were converted into 142,857,143 shares of Common Stock, with such shares being included in the exchange agreement dated April 28, 2017 pursuant to which shares were returned to the company, in exchange for shares of Series J Preferred Stock and Warrants, both of which are still outstanding. Please see “Certain Relationships and Related Transactions, And Director Independence”, below for further details of these transactions.

The following is a summary of the status of the ANDAs acquired pursuant to the 2013 ANDA Purchase Agreement:

Product		Status
Hydroxyzine Tablets		Transferred to Epic Pharma
Phentermine Capsules		Discontinued
Phentermine Tablets		Commercial
Phendimetrazine Tablets		Commercial
Isradipine Capsules		Commercial
Dantrolene Capsules		Commercial
Loxapine Capsules		Manufacturing site transfer in progress

Trimipramine

In May 2017, through Elite Labs, we acquired from Mikah Pharma an FDA approved ANDA for Trimipramine for aggregate consideration of $1,200,000. Trimipramine is currently manufactured by Elite and marketed by Glenmark pursuant to the Glenmark Strategic Alliance. Trimipramine is a generic version of Surmontil®, a tricyclic antidepressant. Surmontil® and generic Trimipramine have total US sales of approximately $2 million in 2016 according to IMS Health Data. The ANDA purchased by Elite is currently the only marketed generic Trimipramine product.

Licensing, Manufacturing and Development Agreements

Sales and Distribution Licensing Agreement with Epic Pharma LLC for SequestOx™

On June 4, 2015, we executed an exclusive License Agreement (the “2015 SequestOx™ License Agreement”) with Epic, to market and sell in the U.S., SequestOx™, an immediate release oxycodone with sequestered naltrexone capsule, owned by us. Epic will have the exclusive right to market ELI-200 and its various dosage forms as listed in Schedule A of the Agreement. Epic is responsible for all regulatory and pharmacovigilance matters related to the products. Pursuant to the 2015 SequestOx™ License Agreement, Epic will pay us non-refundable payments totaling $15 million, with such amount representing the cost of an exclusive license to SequestOx™, the cost of developing the product, the filing of an NDA with the FDA and the receipt of the approval letter for the NDA from the FDA. As of the date of filing of this quarterly report on Form 10-Q, the Company has received $7.5 million of the $15 million in non-refundable payments due pursuant to the 2015 SequestOx™ License Agreement, with such amount consisting of $5 million being due and owing on the execution date of the 2015 SequestOx™ License Agreement, and $2.5 million being earned as of January 14, 2016, the date of Elite’s filing of an NDA with the FDA for the relevant product. Both of these non-refundable fees (i.e., the $5 million fee and the $2.5 million fee), have been paid by Epic.

The remaining $7.5 million in non-refundable payments due pursuant to the 2015 SequestOx™ License Agreement is due on the FDA’s approval of SequestOx™ for commercial sale in the United States of America (please see the paragraph below for further details). In addition, we will receive a license fee computed as a percentage (50%) of net sales of the products as defined in the 2015 SequestOx™ License Agreement and is entitled to multi-million-dollar minimum annual license fees we will manufacture the product for sale by Epic on a cost-plus basis and both parties agree to execute a separate Manufacturing and Supply Agreement. The license fee is payable quarterly for the term of the 2015 SequestOx™ License Agreement. The term of the 2015 SequestOx™ License Agreement is five years and may be extended for an additional five years upon mutual agreement of the parties. Elite can terminate the 2015 SequestOx™ License Agreement on 90 days’ written notice in the event that Epic does not pay us certain minimum annual license fees over the initial five-year term of the 2015 SequestOx™ License Agreement. Either party may terminate this 2015 SequestOx™ License Agreement upon a material breach and failure to cure that breach by the other party within a specified period.

Please see the above section titled “SequestOx™ - Immediate Release Oxycodone with sequestered Naltrexone” for further details on this product and especially note that, as of the date of filing of this Quarterly Report on Form 10-Q, the NDA filed for this product has not been approved by the FDA. Furthermore, the 2015 SequestOx™ License Agreement has a five-year term, expiring on June 4, 2020, and Epic has previously advised the Company of their desire to extend this agreement. While discussions are ongoing, they are directly correlated to the regulatory status of SequestOx ™. Furthermore, there can be no assurances that the parties will reach mutual agreement to extend the term of this agreement and no assurances that the terms and conditions of the agreement will be similar in all material aspects in the event that the agreement is extended by mutual agreement of the parties.

Manufacturing and License Agreement with Epic Pharma LLC

On October 2, 2013, we executed the Epic Pharma Manufacturing and License Agreement (the “Epic Manufacturing and License Agreement”). This agreement, which expired on October 2, 2018, granted Epic certain rights to manufacture, market and sell in the United States and Puerto Rico the twelve approved ANDAs acquired by us pursuant to the 2013 ANDA Purchase Agreement. Of the twelve approved ANDAs, Epic had an exclusive right to market six products as listed in Schedule A of the Epic Manufacturing and License Agreement, and a non-exclusive right to market six products as listed in Schedule D of the Epic Manufacturing and License Agreement. Pursuant to the Epic Manufacturing and License Agreement, we received a license fee and milestone payments. The license fee was computed as a percentage of the gross profit, as defined in the Epic Manufacturing and License Agreement, earned by Epic from the sale of the products. The manufacturing cost used for the calculation of the license fee was a predetermined amount per unit plus the cost of the active pharmaceutical ingredient (“API”) and the sales cost for the calculation was predetermined based on net sales.

The Epic Manufacturing and License Agreement expired on October 2, 2018, in accordance with terms and conditions therein.

Trimipramine Acquisition

On May 16, 2017, we executed an asset purchase agreement with Mikah Pharma, and acquired from Mikah Pharma (the “Trimipramine Acquisition”) an FDA approved ANDA for Trimipramine for aggregate consideration of $1,200,000, payable pursuant to a senior secured note due on December 31, 2020 (the “Trimipramine Note”). Mikah Pharma is owned by Nasrat Hakim, the CEO, President, and a director of the Company.

The Trimipramine Note bears interest at the rate of 10% per annum, payable quarterly. All principal and unpaid interest is due and payable on December 31, 2020. Pursuant to a security agreement, repayment of the Note is secured by the ANDA acquired in the Acquisition.

Trimipramine Distribution Agreement with Dr. Reddy’s Laboratories, Inc. and Manufacturing Agreement with Epic

On May 17, 2017, in conjunction with the Trimipramine Acquisition, the Company executed an assignment agreement with Mikah Pharma, pursuant to which the Company acquired all rights, interests, and obligations under a supply and distribution agreement (the “Reddy’s Trimipramine Distribution Agreement”) with Dr. Reddy’s Laboratories, Inc. (“Dr. Reddy’s”) originally entered into by Mikah Pharma on May 7, 2017 and relating to the supply, sale and distribution of generic Trimipramine Maleate Capsules 25mg, 50mg and 100mg.

On May 22, 2017, the Company executed an assignment agreement with Mikah Pharma, pursuant to which the Company acquired all rights, interests and obligations under a manufacturing and supply agreement with Epic originally entered into by Mikah in 2011 and amended on June 30, 2015 and relating to the manufacture and supply of Trimipramine (the “Trimipramine Manufacturing Agreement”).

Under the Trimipramine Manufacturing Agreement, Epic manufactured Trimipramine under license from the Company pursuant to the FDA approved and currently marketed Abbreviated New Drug Application that was acquired in conjunction with the Company’s entry into these agreements.

Under the Reddy’s Trimipramine Distribution Agreement, the Company supplied Trimipramine on an exclusive basis to Dr. Reddy’s and Dr. Reddy’s was responsible for all marketing and distribution of Trimipramine in the United States, its territories, possessions, and commonwealth. The Trimipramine was manufactured by Epic and transferred to Dr. Reddy’s at cost, without markup.

Dr. Reddy’s paid the Company a share of the profits, calculated without any deduction for cost of sales and marketing, derived from the sale of Trimipramine. The Company’s share of these profits was in excess of 50%.

The Reddy’s Trimipramine Distribution Agreement was terminated by mutual consent of the parties on August 1, 2018.

Ascend Methadone Manufacturing and Supply Agreement

On June 23, 2011 and as amended on September 24, 2012, January 19, 2015, July 20, 2015 and as extended on August 9, 2016, we entered into an agreement to manufacture and supply Methadone 10mg tablets (the “Ascend Methadone”) to ThePharmaNetwork LLC (the “Ascend Methadone Manufacturing and Supply Agreement”). ThePharmaNetwork LLC was subsequently acquired by Alkem Laboratories Ltd (“Alkem”) and now goes by the name Ascend Laboratories LLC (“Ascend”) and is a wholly owned subsidiary of Alkem.

Ascend is the owner of the approved ANDA for Ascend Methadone, and the Northvale Facility is an approved manufacturing site for this ANDA. The Ascend Methadone Manufacturing and Supply Agreement provides for the manufacturing and packaging by the Company of Ascend Methadone.

The initial shipment of Ascend Methadone pursuant to the Ascend Methadone Manufacturing and Supply Agreement occurred in January 2012.

On August 26, 2016, the Ascend Methadone Manufacturing and Supply Agreement was amended and extended through December 31, 2017.

Subsequent to the expiration of the Ascend Methadone Manufacturing and Supply Agreement, the Company honored purchase orders from Ascend, to manufacture Ascend Methadone. The commercial terms on those purchase orders honored were similar to those included in the expired agreement. The last shipment of Ascend Methadone pursuant to purchase orders honored subsequent to the expiration of the Ascend Methadone Manufacturing and Supply Agreement occurred in April 2018 and there will be no further manufacture or shipments of Ascend Methadone.

Precision Dose License Agreement

On September 10, 2010, we executed a License Agreement with Precision Dose (the “Precision Dose License Agreement”) to market and distribute Phentermine 37.5mg, Phentermine 15mg, Phentermine 30mg, Hydromorphone 8mg, Naltrexone 50mg, and certain additional products that require approval from the FDA, through its wholly-owned subsidiary, TAGI, in the United States, Puerto Rico and Canada. Phentermine 37.5mg was launched in April 2011. Hydromorphone 8mg was launched in March 2012. Phentermine 15mg and Phentermine 30mg were launched in April 2013. Naltrexone 50mg was launched in September 2013. Precision Dose will have the exclusive right to market these products in the United States and Puerto Rico and a non-exclusive right to market the products in Canada.

Pursuant to the Precision Dose License Agreement, Elite will receive a license fee and milestone payments. The license fee will be computed as a percentage of the gross profit, as defined in the Precision Dose License Agreement, earned by Precision Dose as a result of sales of the products. The license fee is payable monthly for the term of the Precision Dose License Agreement. The milestone payments will be paid in six installments. The first installment was paid upon execution of the Precision Dose License Agreement. The remaining installments are to be paid upon FDA approval and initial shipment of the products to Precision Dose. The term of the Precision Dose License Agreement is 15 years and may be extended for 3 successive terms, each of 5 years.

Master Development and License Agreement with SunGen Pharma LLC

On August 24, 2016, as amended we entered into an agreement with SunGen Pharma LLC (“SunGen”) (the “SunGen Agreement”) to undertake and engage in the research, development, sales and marketing of eight generic pharmaceutical products. Two of the products are classified as CNS stimulants (the “CNS Products”), two of the products are classified as beta blockers and the remaining four products consist of antidepressants, antibiotics and antispasmodics. To date, the Company has received approval from the FDA for Amphetamine IR Tablets (the first of the two CNS Products) and has filed ANDA’s for the second CNS Product as well as ANDA filed for an antibiotic product.

On January 10, 2018, the Company reported positive topline results from pivotal bioequivalence studies for an undisclosed extended-release generic product in co-development with SunGen Pharma. The topline results indicate that the generic product is bioequivalent to the branded product. The studies were single dose crossover comparative bioavailability studies in healthy male and female volunteers in both the fed and fasting states. A fasting study with product beads sprinkled on to applesauce also demonstrated bioequivalence to the branded product. MS Health reported approximately $1.6 billion in revenue for the generic market for this product in 2017.

On December 10, 2018, the Company received approval from the FDA for Amphetamine IR Tablets, a generic version of Adderall^®, an immediate-release mixed salt of a single entity Amphetamine product (Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate) with strengths of 5mg, 7.5mg, 10mg, 12.5mg, 15mg, 20mg, and 30mg tablets. The product is a central nervous system stimulant and is indicated for the treatment of Attention Deficit Hyperactivity Disorder (“ADHD”) and Narcolepsy. According to QVIA (formerly QuintilesIMS Health) data the branded product and its equivalents had total U.S. sales of $365 million for the twelve months ending June 30, 2018. This is the first product approval for our Elite and SunGen Pharma LLC (“SunGen”) collaboration. The product is jointly owned. Elite will manufacture and package the product on a cost-plus basis and the parties are negotiating an agreement for sales of the product. Amphetamine IR Tablets is currently sold pursuant to the Lannett Alliance, with first commercial shipment of this product occurring in April 2019. Please see the section below titled “Strategic Marketing Alliance with Lannett Company Inc.” for further details on the Lannett Alliance.

On January 3, 2019, the Company filed an ANDA with the FDA for a generic version of an antibiotic product. According to QVIA (formerly QuintilesIMS Health) data, the branded product for this antibiotic and its equivalents had total annual U.S. sales of approximately $94 million for the twelve months ending September 30, 2018. The product is jointly owned by Elite and SunGen. Upon approval by the FDA of this ANDA, Elite will manufacture and package the product on a cost-plus basis. The ANDA is currently under review by the FDA.

There can be no assurances that any of these products will receive marketing authorization and achieve commercialization within this time period, or at all. In addition, even if marketing authorization is received, and even for those products for which marketing authorization has already been received, there can be no assurances that there will be future revenues of profits, or that any such future revenues or profits would be in amounts that provide adequate return on the significant investments made to secure these marketing authorizations or provide sufficient financial contributions to support costs of operations and overheads.

Strategic Marketing Alliance with Glenmark Pharmaceuticals, Inc. USA

On May 22, 2018, and as amended on August 1, 2018, we entered into a license, manufacturing and supply agreement with Glenmark Pharmaceuticals Inc. USA (“Glenmark”) to market the two Elite generic products described below in the United States with the option to add products in the future (the “Glenmark Alliance”).

Pursuant to the Glenmark Alliance, Glenmark will purchase the products from Elite and then sell and distribute them. In addition to the purchase prices for the products, Elite will receive license fees well in excess of 50% of gross profits. Gross profit is defined as net sales less the price paid to Elite for the products, distribution fees (less than 10%) and shipping costs. Glenmark will have semi-exclusive marketing rights to the ANDA approved generic product, phendimetrazine 35mg tablets, and exclusive marketing rights to the following ANDA approved generic products: Methadone 10mg, Methadone 5mg, Trimipramine 25mg, Trimipramine 50mg, Trimipramine 100mg, and effective October 2, 2018, upon expiration of the Epic Manufacturing and License Agreement, exclusive marketing rights to the following ANDA approved generic products: Isradipine 2.5mg and Isradipine 5mg. The Glenmark Alliance has an initial term of three years and automatically renews for one-year periods absent prior written notice of non-renewal. In addition to customary termination provisions, the Agreement permits Glenmark to terminate with regard to a product on at least three months’ prior written notice if it determines to stop marketing and selling such product, and it permits Elite to terminate with regard to a product if at any time after the first twelvemonths from the first commercial sale, the average license fee paid by Glenmark for such product is less than $100,000 for a six month sales period.

The first commercial shipment of Methadone Tablets pursuant to the Glenmark Alliance occurred in November 2018. The first commercial shipment of Isradipine Capsules pursuant to the Glenmark Alliance occurred in March 2019. The first commercial shipment of Trimipramine Capsules occurred in April 2019.

There can be no assurances that there will be future revenues of profits, earned pursuant to the Glenmark Alliance, or that any such future revenues or profits would be in amounts that provide adequate return on the significant investments made to secure the marketing authorizations for products included in the Glenmark Alliance or provide sufficient financial contributions to support costs of operations and overheads.

Strategic Marketing Alliances with Lannett Company Inc.

The Company has entered into two separate license, supply and distribution agreements with Lannett Company Inc. (“Lannett”). The first agreement, dated March 6, 2019, relates to products that were co-developed with SunGen (the “Lannett-SunGen Product Alliance”). The second agreement, dated April 9, 2019, relates to products that were solely developed by Elite (the “Lannett-Elite Product Alliance”). Both agreements are collectively and individually referred to as the “Lannett Alliance”.

Pursuant to Lannett-SunGen Product Alliance with Lannett, Lannett will be the exclusive U.S. marketer and distributor for two generic products co-developed and co-owned by Elite and SunGen – Amphetamine IR Tablets and a second product which is an extended release CNS stimulant that is currently under review by the FDA. Elite will manufacture and Lannett will purchase the products from Elite and then sell and distribute them. In addition to the purchase prices for the products, Elite will receive license fees in excess of 50% of net profits, which will be shared equally with SunGen, pursuant to the SunGen Agreement. The Lannett-SunGen Product Alliance has an initial term of three years and automatically renews for one-year periods absent prior written notice of non-renewal. In addition to customary termination provisions, the Agreement permits Lannett to terminate with regard to a product on at least six months’ prior written notice, and it permits Elite or Lannett to terminate with regard to a product if at any time after the first twelve months from the first commercial sale, the average license fee paid by Lannett for such product is less than $300,000 for a six month sales period. In addition to manufacturing fees and license fees, Lannett will also pay a milestone, of $750,000 upon commercial launch of the extended release CNS stimulant product that is currently under review by the FDA. This milestone payment will be shared equally by Elite and SunGen, pursuant to the SunGen Agreement.

Pursuant to the Lannett-Elite Product Alliance, Lannett will be the exclusive U.S. marketer and distributor for Dantrolene Capsules. Elite will manufacture and Lannett will purchase Dantrolene Capsules from Elite and then sell and distribute them. In addition to the purchase prices for the products, Elite will receive license fees in excess of 50% of net profits. Net profit is defined as net sales less the price paid to Elite for the products, distribution fees (less than 10%) and shipping costs. The Lannett-Elite Product Alliance has an initial term of three years and automatically renews for one-year periods absent prior written notice of non-renewal. In addition to customary termination provisions, the Agreement permits Lannett to terminate with regard to a product on at least six months’ prior written notice and it permits Elite or Lannett to terminate with regard to a product if at any time after the first twelve months from the first commercial sale, the average license fee paid by Lannett for such product is less than $300,000 for a six month sales period.

Products Under Development

Elite’s research and development activities include developing its proprietary abuse deterrent technology and the development of a range of abuse deterrent opioid products that utilize this technology or other approaches to abuse deterrence.

Elite’s proprietary abuse-deterrent technology utilizes the pharmacological approach to abuse deterrence and consists of a multi-particulate capsule which contains an opioid agonist in addition to naltrexone, an opioid antagonist used primarily in the management of alcohol dependence and opioid dependence. When this product is taken as intended, the naltrexone is designed to pass through the body unreleased while the opioid agonist releases over time providing therapeutic pain relief for which it is prescribed. If the multi-particulate beads are crushed or dissolved, the opioid antagonist, naltrexone, is designed to release. The absorption of the naltrexone is intended to block the euphoria by preferentially binding to same receptors in the brain as the opioid agonist and thereby reducing the incentive for abuse or misuse by recreational drug abusers.

We filed an NDA for the first product to utilize our abuse deterrent technology, Immediate Release Oxycodone 5mg, 10mg, 15mg, 20mg and 30mg with sequestered Naltrexone (collectively and individually referred to as “SequestOx™”), on January 14, 2016. Please see “Filed products under FDA review; SequestOx™ - Immediate Release Oxycodone with sequestered Naltrexone” above and please note that continued development of this product is currently paused.

On September 20, 2017, the Company filed an ANDA with the FDA for generic version of OxyContin® (extended release Oxycodone Hydrochloride). Please see “Filed products under FDA review; Oxycodone Hydrochloride extended release (generic version of OxyContin ®” above. Please note that there can be no assurances of this product receiving marketing authorization or achieving commercialization. In addition, even if marketing authorization is received and the product is commercialized, there can be no assurances of future revenues or profits in such amounts that would provide adequate return on the significant investments made to secure marketing authorization for this product.

On May 30, 2018, the Company filed an ANDA with the FDA for a generic version of an extended release CNS stimulant. The ANDA represents the second filing for a product co-developed with SunGen under the SunGen Agreement. Please see “Filed products under FDA review Generic version of extended release Central Nervous System stimulant” above. Please note that there can be no assurances of this product receiving marketing authorization or achieving commercialization. In addition, even if marketing authorization is received and the product is commercialized, there can be no assurances of future revenues or profits in such amounts that would provide adequate return on the significant investments made to secure marketing authorization for this product. Please also see the section below titled “Master Development and License Agreement with SunGen Pharma LLC”.

On January 3, 2019, the Company filed an Abbreviated New Drug Application with the US Food and Drug Administration for a generic version of an antibiotic product. Please see “Filed products under FDA review” above. Please note that there can be no assurances of this product receiving marketing authorization or achieving commercialization. In addition, even if marketing authorization is received and the product is commercialized, there can be no assurances of future revenues or profits in such amounts that would provide adequate return on the significant investments made to secure marketing authorization for this product. Please also see the section below titled “Master Development and License Agreement with SunGen Pharma LLC”.

The Company believes that the abuse deterrent technology can be applied to and incorporated into a wide range of opioids used today for pain management and has, to date, identified additional products for potential development. All of these products are at early stages of development, with research and development activities mainly consisting of in-house process development and laboratory studies. Extensive efficacy and safety studies, similar to those conducted for SequestOx™, Generic Oxy/APAP and Generic Hydrocodone/APAP, have not yet been conducted for these other products. As a result, costs incurred in relation to the development of these products have not been material.

Research and development costs were $7.6 million and $9.6 million for years ended March 31, 2019 and 2018, respectively. Costs incurred relate to the development of the abuse deterrent opioid product, SequestOx™, the ongoing development of our abuse deterrent opioid and other products in addition to a focus on clinical trials for generic products.

Please note that, while the FDA is required to review applications within certain timeframes, during the review process, the FDA frequently requests that additional information be submitted. The effect of such request and subsequent submission can significantly extend the time for the NDA review process. Until an NDA is actually approved, there can be no assurances that the information requested and submitted will be considered adequate by the FDA to justify approval. The packaging and labeling of our developed products are also subject to FDA regulation. Based on the foregoing, it is impossible to anticipate the amount of time that will be needed to obtain FDA approval to market any product. In addition, there can be no assurances of the Company filing the required application(s) with the FDA or of the FDA approving such application(s) if filed, and the Company’s ability to successfully develop and commercialize products incorporating its abuse deterrent technology is subject to a high level of risk as detailed in “Item 1A-Risk Factors-Risks Related to our Business” of the Annual Report on Form 10-K for the year ended March 31, 2019.

Abuse-Deterrent and Sustained Release Opioids

The abuse-deterrent opioid products utilize our patented abuse-deterrent technology that is based on a pharmacological approach. These products are combinations of a narcotic agonist formulation intended for use in patients with pain, and an antagonist, formulated to deter abuse of the drug. Both, agonist and antagonist, have been on the market for a number of years and sold separately in various dose strengths. We have filed INDs for two abuse resistant products under development and have tested products in various pharmacokinetic and efficacy studies. Products utilizing the pharmacological approach to deter abuse such as Suboxone®, a product marketed in the United States by Reckitt Benckiser Pharmaceuticals, Inc., and Embeda®, a product marketed in the United States by Pfizer, Inc., have been approved by the FDA and are being marketed in the United States.

We have developed, licensed to Epic the marketing rights to SequestOx™, immediate release Oxycodone with Naltrexone, and retain the rights to the remainder of these abuse resistant and sustained release opioid products. We may license these products at a later date to a third party who could provide funding for the remaining clinical studies and who could provide sales and distribution for the product.

We also developed controlled release technology for oxycodone under a joint venture with Elan which terminated in 2002. According to the Elan Termination Agreement, we acquired all proprietary, development and commercial rights for the worldwide markets for the products developed by the joint venture, including the sustained release opioid products. Upon licensing or commercialization of an oral controlled release formulation of oxycodone for the treatment of pain, we will pay a royalty to Elan pursuant to the Elan Termination Agreement. If we were to sell the product itself, we will pay a 1% royalty to Elan based on the product’s net sales, and if we enter into an agreement with another party to sell the product, we will pay a 9% royalty to Elan based on our net revenues from this product. We are allowed to recoup all development costs including research, process development, analytical development, clinical development and regulatory costs before payment of any royalties to Elan.

Patents

Since our incorporation, we have secured the following patents, of which two have been assigned for a fee to another pharmaceutical company. Our patents are:

PATENT		EXPIRATION DATE
U.S. patent 6,620,439		October 2020
U.S. patent 6,926,909		April 2023
U.S. patent 8,182,836		April 2024
U.S. patent 8,425,933		April 2024
U.S. patent 8,703,186		April 2024
Canadian patent 2,521,655		April 2024
Canadian patent 2,541,371		September 2024
U.S. patent 9,056,054		June 2030
E.P. patent 1615623		April 2024
U.S. patent 10213388		April 2030

We also have pending applications for two additional U.S. patents non-provisional patents and one provisional patent application and one foreign patent application. We intend to apply for patents for other products in the future; however, there can be no assurance that any of the pending applications or other applications which we may file will be granted. We have also filed corresponding foreign applications for key patents.

Prior to the enactment in the United States of new laws adopting certain changes mandated by the General Agreement on Tariffs and Trade (“GATT”), the exclusive rights afforded by a U.S. Patent were for a period of 17 years measured from the date of grant. Under GATT, the term of any U.S. Patent granted on an application filed subsequent to June 8, 1995 terminates 20 years from the date on which the patent application was filed in the United States or the first priority date, whichever occurs first. Future patents granted on an application filed before June 8, 1995, will have a term that terminates 20 years from such date, or 17 years from the date of grant, whichever date is later.

Under the Drug Price Competition Act, a U.S. product patent or use patent may be extended for up to five years under certain circumstances to compensate the patent holder for the time required for FDA regulatory review of the product. Such benefits under the Drug Price Competition Act are available only to the first approved use of the active ingredient in the drug product and may be applied only to one patent per drug product. There can be no assurance that we will be able to take advantage of this law.

Also, different countries have different procedures for obtaining patents, and patents issued by different countries provide different degrees of protection against the use of a patented invention by others. There can be no assurance, therefore, that the issuance to us in one country of a patent covering an invention will be followed by the issuance in other countries of patents covering the same invention, or that any judicial interpretation of the validity, enforceability, or scope of the claims in a patent issued in one country will be similar to the judicial interpretation given to a corresponding patent issued in another country. Furthermore, even if our patents are determined to be valid, enforceable, and broad in scope, there can be no assurance that competitors will not be able to design around such patents and compete with us using the resulting alternative technology.

Trademarks

SequestOx™ is a trademark owned by Elite, for which United States trademark registration is being sought.

We currently plan to license at least some of our products to other entities in the marketing of pharmaceuticals but may also sell products under our own brand name in which case we may register trademarks for those products.

Terminated Agreements

Terminated Agreement – Methadone Manufacturing and Supply Agreement

On December 31, 2017, the Methadone Manufacturing and Supply Agreement terminated in accordance with the terms of the agreement.

Other Business Factors and Details

Government Regulation and Approval

The design, development, and marketing of pharmaceutical compounds, on which our success depends, are intensely regulated by governmental regulatory agencies, in particular the FDA. Non-compliance with applicable requirements can result in fines and other judicially imposed sanctions, including product seizures, injunction actions and criminal prosecution based on products or manufacturing practices that violate statutory requirements. In addition, administrative remedies can involve voluntary withdrawal of products, as well as the refusal of the FDA to approve ANDAs and NDAs. The FDA also has the authority to withdraw approval of drugs in accordance with statutory due process procedures.

Before a drug may be marketed, it must be approved by the FDA either by an NDA or an ANDA, each of which is discussed below.

NDAs and NDAs under Section 505(b) of the Drug Price Competition Act

The FDA approval procedure for an NDA is generally a two-step process. During the Initial Product Development stage, an investigational new drug application (“IND”) for each product is filed with the FDA. A 30-day waiting period after the filing of each IND is required by the FDA prior to the commencement of initial clinical testing. If the FDA does not comment on or question the IND within such 30-day period, initial clinical studies may begin. If, however, the FDA has comments or questions, they must be answered to the satisfaction of the FDA before initial clinical testing may begin. In some instances, this process could result in substantial delay and expense. Initial clinical studies generally constitute Phase I of the NDA process and are conducted to demonstrate the product tolerance/safety and pharmacokinetic in healthy subjects.

After Phase I testing, extensive efficacy and safety studies in patients must be conducted. After completion of the required clinical testing, an NDA is filed, and its approval, which is required for marketing in the United States, involves an extensive review process by the FDA. The NDA itself is a complicated and detailed application and must include the results of extensive clinical and other testing, the cost of which is substantial. However, the NDA filings contemplated by us, which are already marketed drugs, would be made under Sections 505 (b)(1) or 505 (b)(2) of the Drug Price Competition Act, which do not require certain studies that would otherwise be necessary; accordingly, the development timetable should be shorter. While the FDA is required to review applications within a certain timeframe, during the review process, the FDA frequently requests that additional information be submitted. The effect of such request and subsequent submission can significantly extend the time for the NDA review process. Until an NDA is actually approved, there can be no assurance that the information requested and submitted will be considered adequate by the FDA to justify approval. The packaging and labeling of our developed products are also subject to FDA regulation. It is impossible to anticipate the amount of time that will be needed to obtain FDA approval to market any product.

Whether or not FDA approval has been obtained, approval of the product by comparable regulatory authorities in any foreign country must be obtained prior to the commencement of marketing of the product in that country. We intend to conduct all marketing in territories other than the United States through other pharmaceutical companies based in those countries. The approval procedure varies from country to country, can involve additional testing, and the time required may differ from that required for FDA approval. Although there are some procedures for unified filings for certain European countries, in general each country has its own procedures and requirements, many of which are time consuming and expensive. Thus, there can be substantial delays in obtaining required approvals from both the FDA and foreign regulatory authorities after the relevant applications are filed. After such approvals are obtained, further delays may be encountered before the products become commercially available.

ANDAs

The FDA approval procedure for an ANDA differs from the procedure for an NDA in that the FDA waives the requirement of conducting complete clinical studies, although it normally requires bioavailability and/or bioequivalence studies. “Bioavailability” indicates the rate and extent of absorption and levels of concentration of a drug product in the blood stream needed to produce a therapeutic effect. “Bioequivalence” compares the bioavailability of one drug product with another, and when established, indicates that the rate of absorption and levels of concentration of the active drug substance in the body are equivalent for the generic drug and the previously approved drug. An ANDA may be submitted for a drug on the basis that it is the equivalent of a previously approved drug or, in the case of a new dosage form, is suitable for use for the indications specified.

The timing of final FDA approval of an ANDA depends on a variety of factors, including whether the applicant challenges any listed patents for the drug and whether the brand-name manufacturer is entitled to one or more statutory exclusivity periods, during which the FDA may be prohibited from accepting applications for, or approving, generic products. In certain circumstances, a regulatory exclusivity period can extend beyond the life of a patent, and thus block ANDAs from being approved on the patent expiration date.

In May 1992, Congress enacted the Generic Drug Enforcement Act of 1992, which allows the FDA to impose debarment and other penalties on individuals and companies that commit certain illegal acts relating to the generic drug approval process. In some situations, the Generic Drug Enforcement Act requires the FDA to not accept or review ANDAs for a period of time from a company or an individual that has committed certain violations. It also provides for temporary denial of approval of applications during the investigation of certain violations that could lead to debarment and also, in more limited circumstances, provides for the suspension of the marketing of approved drugs by the affected company. Lastly, the Generic Drug Enforcement Act allows for civil penalties and withdrawal of previously approved applications. Neither we nor any of our employees have ever been subject to debarment. We do not believe that we receive any services from any debarred person.

Controlled Substances

We are also subject to federal, state, and local laws of general applicability, such as laws relating to working conditions. We are also licensed by, registered with, and subject to periodic inspection and regulation by the Drug Enforcement Agency (“DEA”) and New Jersey state agencies, pursuant to federal and state legislation relating to drugs and narcotics. Certain drugs that we currently develop or may develop in the future may be subject to regulations under the Controlled Substances Act and related statutes. As we manufacture such products, we may become subject to the Prescription Drug Marketing Act, which regulates wholesale distributors of prescription drugs.

cGMP

All facilities and manufacturing techniques used for the manufacture of products for clinical use or for sale must be operated in conformity with cGMP regulations issued by the FDA. We engage in manufacturing on a commercial basis for distribution of products and operate our facilities in accordance with cGMP regulations. If we hire another company to perform contract manufacturing for us, we must ensure that our contractor’s facilities conform to cGMP regulations.

Compliance with Environmental Laws

We are subject to comprehensive federal, state and local environmental laws and regulations that govern, among other things, air polluting emissions, wastewater discharges, solid and hazardous waste disposal, and the remediation of contamination associated with current or past generation handling and disposal activities, including the past practices of corporations as to which we are the legal successor or in possession. We do not expect that compliance with such environmental laws will have a material effect on our capital expenditures, earnings, or competitive position in the foreseeable future. There can be no assurance, however, that future changes in environmental laws or regulations, administrative actions or enforcement actions, or remediation obligations arising under environmental laws will not have a material adverse effect on our capital expenditures, earnings, or competitive position.

Competition

We have competition with respect to our principal areas of operation. We develop and manufacture generic products, products using controlled-release drug technology, products utilizing abuse deterrent technologies, and we develop and market (either on our own or by license to other companies) generic and proprietary controlled-release and abuse deterrent pharmaceutical products. In both areas, our competition consists of those companies which develop controlled release, abuse deterrent drugs and alternative drug delivery systems. We do not represent a significant presence in the pharmaceutical industry.

An increasing number of pharmaceutical companies have become interested in the development and commercialization of products incorporating advanced or novel drug delivery systems. Some of the major pharmaceutical companies have invested and are continuing to invest significant resources in the development of their own drug delivery systems and technologies and some have invested funds in such specialized drug delivery companies. Many of these companies have greater financial and other resources as well as more experience than we do in commercializing pharmaceutical products. Certain companies have a track record of success in developing controlled-release drugs. Significant among these are, without limitation, Pfizer, Sandoz (a Novartis company), Mylan Laboratories, Inc., Endo Pharmaceuticals, Inc., Teva Pharmaceuticals Industries Ltd., Amneal Laboratories, Inc., Mallinckrodt, and Aurobindo. Each of these companies has developed expertise in certain types of drug delivery systems, although such expertise does not carry over to developing a controlled-release version of all drugs. Such companies may develop new drug formulations and products or may improve existing drug formulations and products more efficiently than we can. In addition, almost all of our competitors have vastly greater resources than we do. While our product development capabilities and, if obtained, patent protection may help us to maintain our market position in the field of advanced drug delivery, there can be no assurance that others will not be able to develop such capabilities or alternative technologies outside the scope of our patents, if any, or that even if patent protection is obtained, such patents will not be successfully challenged in the future.

In addition to competitors that are developing products based on drug delivery technologies, there are also companies that have announced that they are developing opioid abuse-deterrent products that might compete directly or indirectly with Elite’s products. These include, but are not limited to Pfizer Inc., Collegium Pharmaceuticals, Inc., and Purdue Pharma LP

We also face competition in the generic pharmaceutical market. The principal competitive factors in the generic pharmaceutical market include: (i) introduction of other generic drug manufacturers’ products in direct competition with our products under development, (ii) introduction of authorized generic products in direct competition with any of our products under development, particularly if such products are approved and sold during exclusivity periods, (iii) consolidation among distribution outlets through mergers and acquisitions and the formation of buying groups, (iv) ability of generic competitors to quickly enter the market after the expiration of patents or exclusivity periods, diminishing the amount and duration of significant profits, (v) the willingness of generic drug customers, including wholesale and retail customers, to switch among pharmaceutical manufacturers, (vi) pricing pressures and product deletions by competitors, (vii) a company’s reputation as a manufacturer and distributor of quality products, (viii) a company’s level of service (including maintaining sufficient inventory levels for timely deliveries), (ix) product appearance and labeling and (x) a company’s breadth of product offerings.

Sources and Availability of Raw Materials; Manufacturing

A significant portion of our raw materials may be available only from foreign sources. Foreign sources can be subject to the special risks of doing business abroad, including:

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greater possibility for disruption due to transportation or communication problems;

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the relative instability of some foreign governments and economies;

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interim price volatility based on labor unrest, materials or equipment shortages, export duties, restrictions on the transfer of funds, or fluctuations in currency exchange rates; and

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uncertainty regarding recourse to a dependable legal system for the enforcement of contracts and other rights.

While we currently obtain the raw materials that we need from over 20 suppliers, some materials used in our products are currently available from only one supplier or a limited number of suppliers. The FDA requires identification of raw material suppliers in applications for approval of drug products. If raw materials were unavailable from a specified supplier, FDA approval of a new supplier could delay the manufacture of the drug involved.

We have acquired pharmaceutical manufacturing equipment for manufacturing our products. We have registered our facilities with the FDA and the DEA.

Dependence on One or a Few Major Customers

Each year we have had one or a few customers that have accounted for a large percentage of our limited revenues, therefore the termination or restructuring of a contract with a customer may result in the loss of material amount or substantially all of our revenues. We are constantly working to develop new relationships with existing or new customers, but despite these efforts we may not, at the time that any of our current contracts expire, have other contracts in place generating similar or material revenue. We have agreements with Epic, Precision Dose and Ascend for the licensing, sales and distribution of products that we manufacture. We are currently renegotiating a licensing contract with Epic, which may result in the termination of an existing contract or an amended licensing contract that is materially different from that already in place. We receive revenues to manufacture these products and also receive a profit split or royalties based on in-market sales of the products.

Critical Accounting Policies and Estimates

The preparation of the unaudited condensed consolidated financial statements and related disclosures in conformity with GAAP, and our discussion and analysis of its financial condition and operating results require our management to make judgments, assumptions and estimates that affect the amounts reported in its condensed consolidated financial statements and accompanying notes. Note 1 – Summary of Significant Accounting Policies, of the Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q describes the significant accounting policies and methods used in the preparation of our unaudited condensed consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and such differences may be material.

Results of Operations

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

Three months ended December 31, 2019 compared to December 31, 2018

Revenue, Cost of revenue and Gross profit:

	For the Three Months Ended December 31,						Change
	2019			2018			Dollars		Percentage
Manufacturing fees	$	3,754,721		$	2,108,487		$	1,646,234		78	%
Licensing fees		1,300,392			585,479			714,913		122	%
Total revenue		5,055,113			2,693,966			2,361,147		88	%
Cost of revenue		2,163,376			1,771,136			392,420		22	%
Gross profit	$	2,891,737		$	922,830		$	1,968,907		213	%

Gross profit - percentage		57	%		34	%

Total revenues for the three months ended December 31, 2019 increased by $2.4 million or 88%, to $5.1 million, as compared to $2.7 million for the corresponding period in 2018, primarily due to revenues earned from Amphetamine IR Tablets, which were launched during the current fiscal year and increased sales of Isradipine during the three months ended December 31, 2019 as compared to the three months ended December 31, 2018.

Manufacturing fees increased by $1.65 million, or 78%, primarily due to revenues earned from the manufacture of Amphetamine IR Tablets, which were launched during the current fiscal year and increased revenues earned from the manufacture of Isradipine during the three months ended December 31, 2019 as compared to the three months ended December 31, 2018.

Licensing fees increased by $0.7 million, or 122%. This increase is primarily due to license fees earned from in-market sales of Amphetamine IR Tablets, which were launched during the current fiscal year.

Costs of revenue consists of manufacturing and assembly costs. Our costs of revenue increased by $0.4 million or 22%, to $2.2 million as compared to $1.8 million for the corresponding period in 2018. This increase was due in large part to the increase in manufacturing revenues as compared to the comparable period of the prior year, which have a strong positive correlation to these costs of revenues.

Our gross profit margin was 57% during the three months ended December 31, 2019 as compared to 34% during the three months ended December 31, 2018. The increase in gross margin is due to the product mix during the current fiscal year consisting of lower manufacturing margin products, as compared with the comparable period of the prior year, combined with the timing of in market sales of the recently launched Amphetamine IR and Dantrolene products resulting in a lag in the timing of license fees, which are correlated to in market sales.

Operating expenses:

	For the Three Months Ended December 31,				Change
	2019		2018		Dollars			Percentage
Operating expenses:
Research and development	$	986,832	$	2,454,098	$	(1,467,266	)		-60	%
General and administrative		878,540		748,151		130,389			17	%
Non-cash compensation		11,802		36,547		(24,745	)		-68	%
Depreciation and amortization		323,368		321,164		2,204			1	%
Total operating expenses	$	2,200,542	$	3,559,960	$	(1,359,418	)		-38	%

Operating expenses consist of research and development costs, general and administrative, non-cash compensation and depreciation and amortization expenses. Operating expenses for the three months ended December 31, 2019 decreased by $1.4 million or 38% to $2.2 million, as compared to $3.6 million for the corresponding period in 2018.

Research and development costs for the three months ended December 31, 2019 were $1.0 million, a decrease of $1.5 million, or 60%, from $2.5 million of such costs for the comparable period of the prior year. The decrease was a result of the timing and nature of product development activities during the three months ended December 31, 2019 as compared to the comparable period of the prior year.

General and administrative expenses for the three months ended December 31, 2019 were $0.88 million, an increase of $0.13 million or 17% from $0.75 million of such costs for the comparable period of the prior year with such increase being attributed in large part to increased costs and headcounts relating to regulatory compliance and remediation of internal control weaknesses being in excess of ongoing cost reduction and control initiatives.

Non-cash compensation expense for the three months ended December 31, 2019 and 2018 was $0.01 million and $0.04 million, respectively.

Depreciation and amortization expenses for the three months ended December 31, 2019 were $0.323 million, a decrease of $0.002 million or approximately 1% from $0.321 million of such costs for the comparable period of the prior year. The decrease was due to capital expenditures for the current fiscal quarter, and related depreciation charges for such expenditures being less than decreased depreciation charges contained in depreciation schedules for assets placed into service in prior periods.

As a result of the foregoing, our loss from operations for the three months ended December 31, 2019 was $0.7 million, compared to a loss from operations of $2.6 million for the three months ended December 31, 2018.

Other income (expense):

	For the Three Months Ended December 31,						Change
	2019			2018			Dollars			Percentage
Other income (expense):
Interest expense	$	(94,514	)	$	(89,897	)	$	(4,617	)		5	%
Change in fair value of derivative instruments – warrants		(3,059,695	)		380,976			(3,440,671	)		-903	%
Proceeds from sale of ANDAs		600,000			-			600,000			100	%
Interest income		2,334			1,733			601			35	%
Other (expense) income, net	$	(2,551,875	)	$	292,812		$	(2,844,687	)		-972	%

Other (expense) income, net for the three months ended December 31, 2019 was other expense of $2.55 million, a decrease of $2.84 million from the net other income of $0.29 million for the comparable period of the prior year. The decrease in other income (expense) was due to derivative income relating to changes in the fair value of our outstanding warrants during the three months ended December 31, 2019. Please note that the change in the fair value of derivative instruments is determined in large part by the change in the closing price of the Company’s Common Stock as of the end of the period, as compared to the closing price at the beginning of the period, with a strong inverse relationship between the fair value of our derivatives instruments and decreases in the closing price of the Company’s Common Stock. Please see Note 10 to the unaudited condensed consolidated financial statements above.

As a result of the foregoing, our net loss for the three months ended December 31, 2019 was $1.9 million, compared to a net loss of $2.3 million for the comparable period of the prior year.

Nine months ended December 31,2019 compared to December 31, 2018

Revenue, Cost of revenue and Gross profit:

	For the Nine Months Ended December 31,						Change
	2019			2018			Dollars		Percentage
Manufacturing fees	$	10,851,425		$	4,456,832		$	6,394,593		143	%
Licensing fees		2,197,915			1,767,881			430,034		24	%
Total revenue		13,049,340			6,224,713			6,824,627		110	%
Cost of revenue		7,529,918			3,890,086			3,639,832		94	%
Gross profit	$	5,519,422		$	2,334,627		$	3,184,795		136	%

Gross profit - percentage		42	%		38	%

Total revenues for the nine months ended December 31, 2019 increased by $6.8 million or 110%, to $13.0 million, as compared to $6.2 million, for the corresponding period in 2018 primarily due to revenues earned from Amphetamine IR Tablets and Dantrolene Tablets, which were launched during the current fiscal year and increased sales of Isradipine during the nine months ended December 31, 2019 as compared to the nine months ended December 31, 2018.

Manufacturing fees increased by $6.4 million, or 143%, due to revenues earned from the manufacture of Amphetamine IR Tablets and Dantrolene Tablets, which were launched during the current fiscal year and revenues earned from manufacture of Isradipine during the nine months ended December 31, 2019 as compared to the nine months ended December 31, 2018.

Licensing fees increased by $0.4 million, or 24%. This increase is primarily due to license fees earned from in-market sales of Amphetamine IR Tablets, which were launched during the current fiscal year.

Costs of revenue consists of manufacturing and assembly costs. Our costs of revenue increased by $3.6 million or 94%, to $7.5 million as compared to $3.9 million for the corresponding period in 2018. This increase was due in large part to increase in manufacturing revenues compared to the comparable period of the prior year, which have a strong positive correlation to these costs of revenues.

Our gross profit margin was 42% during the nine months ended December 31, 2019 as compared to 38% during the nine months ended December 31, 2018. The increase in gross margin is due to the product mix during the current fiscal year consisting of lower manufacturing margin products, as compared with the comparable period of the prior year, combined with the timing of in market sales of the recently launched Amphetamine IR and Dantrolene products resulting in a lag in the timing of license fees, which are correlated to in market sales.

Operating expenses:

	For the Nine Months Ended December 31,				Change
	2019		2018		Dollars			Percentage
Operating expenses:
Research and development	$	3,032,357	$	6,236,192	$	(3,203,835	)		-51	%
General and administrative		2,358,588		2,245,900		112,688			5	%
Non-cash compensation		53,518		109,641		(56,123	)		-51	%
Depreciation and amortization		986,001		891,390		94,611			11	%
Total operating expenses	$	6,430,464	$	9,483,123	$	(3,052,659	)		-32	%

Operating expenses consist of research and development costs, general and administrative, non-cash compensation and depreciation and amortization expenses. Operating expenses for the nine months ended December 31, 2019 decreased by $3.1 million or 32% to $6.4 million, as compared to $9.5 million for the corresponding period in 2018.

Research and development costs for the nine months ended December 31, 2019 were $3.0 million, a decrease of $3.2 million, or 51%, from $6.2 million of such costs for the comparable period of the prior year. The decrease was a result of the timing and nature of product development activities during the nine months ended December 31, 2019 as compared to the comparable period of the prior year.

General and administrative expenses for the nine months ended December 31, 2019 were $2.4 million, an increase of $0.1 million or 5% from $2.2 million of such costs for the comparable period of the prior year with such increase being attributed in large part to increased costs and headcounts relating to regulatory compliance and remediation of internal control weaknesses being in excess of ongoing cost reduction and control initiatives.

Non-cash compensation expense for the nine months ended December 31, 2019 and 2018 was $0.05 million and $0.1 million, respectively.

Depreciation and amortization expenses for the nine months ended December 31, 2019 were $1.0 million, an increase of $0.1 million or 11% from $0.9 million of such costs for the comparable period of the prior year. The increase was due to acquisitions of additional fixed assets as well as additional equipment being placed into service during the current fiscal year, in particular equipment required for compliance with new serialization regulations.

As a result of the foregoing, our loss from operations for the nine months ended December 31, 2019 was $0.9 million, compared to a loss from operations of $7.1 million for the nine months ended December 31, 2018.

Other income (expense):

	For the Nine Months Ended December 31,						Change
	2019			2018			Dollars			Percentage
Other income (expense):
Interest expense	$	(283,649	)	$	(279,037	)	$	(4,612	)		2	%
Change in fair value of derivative instruments – warrants		(2,590,695	)		807,347			(3,398,042	)		-421	%
Proceeds from sale of ANDAs		600,000			-			600,000			100	%
Interest income		10,667			4,570			6,097			133	%
Other (expense) income, net	$	(2,263,677	)	$	532,880		$	(2,796,557	)		-525	%

Other (expense) income, net for the nine months ended December 31, 2019 was other expense of $2.3 million, a decrease of $2.8 million from the net other income of $0.5 million for the comparable period of the prior year. The decrease in other income (expense) was due to derivative income relating to changes in the fair value of our outstanding warrants during the nine months ended December 31, 2019. Please note that the change in the fair value of derivative instruments is determined in large part by the change in the closing price of the Company’s Common Stock as of the end of the period, as compared to the closing price at the beginning of the period, with a strong inverse relationship between the fair value of our derivatives instruments and decreases in the closing price of the Company’s Common Stock.

As a result of the foregoing, our net loss for the nine months ended December 31, 2019 was $3.2 million, compared to a net loss of $6.6 million for the comparable period of the prior year.

Liquidity and Capital Resources

Capital Resources

	December 31, 2019		March 31, 2019		Change
Current assets	$	9,042,300	$	8,856,542	$	185,758
Current liabilities	$	7,746,372	$	6,906,132	$	840,240
Working capital	$	1,295,928	$	1,950,410	$	(654,482	)

The Company’s condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States applicable to a going concern, which contemplated the realization of assets and the satisfaction of liabilities in the normal course of business. For the nine months ended December 31, 2019 and 2018, the Company recorded a net loss from operations of approximately $0.9 million and $7.1 million, respectively. For the nine months ended December 31, 2019 and 2018, the Company recorded a net decrease in cash of approximately $0.4 million and $3.5 million, respectively. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern.

In connection with the preparation of the financial statements for the three and nine months ended December 31, 2019, the Company conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to its ability to continue as a going concern within one year after the date of the issuance, or the date the financial statements were available for issuance, noting that there did appear to be evidence of substantial doubt of its ability to continue as a going concern. To continue as a going concern, the Company will need to do some or all of the following, without limitation: obtain additional financing, increase sales of existing products, bring additional products in the pipeline to market and/or reduce expenses. the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations.

The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities should we be unable to continue as a going concern.

Please also note that while the equity line available under the 2017 LPC Purchase Agreement had approximately $35 million available for purchase of shares of Common Stock, the ability of the Company to access these funds is strongly and directly correlated to the trading price of Common Stock in the OTC Market. Accordingly, absent an increase in the such trading price of Common Stock, to a price that is significantly above the closing price of $0.0925 on December 31, 2019, the Company will be unable to realize a significant portion of the remaining equity line through sales of Common Stock to Lincoln Park pursuant to the 2017 LPC Purchase Agreement, resulting in substantial doubt as to the availability of adequate financial resources required for continued operations on a going concern basis.

Our working capital (total current assets less total current liabilities) decreased by $0.65 million from $1.95 million as of March 31, 2019 to $1.30 million as of December 31, 2019, with such decrease being primarily related to the income from operations of $0.7 million offset by the reclassification from long term to current liabilities of the $1.2 million note payable to related party.

The Company does not anticipate being profitable for the fiscal year ending March 31, 2020, due in large part to manufacture revenues and license fees not being at volumes and contributions sufficient to fund increased operating and product development costs. In order to finance these significant costs, the Company entered into the 2017 LPC Purchase Agreement. Due to the factors described above, the Company’s ability to access funds available under the 2017 LPC Purchase Agreement may be limited, resulting in an adverse effect on the Company’s liquidity and ability to operate. Please see below for further details on the financing transactions with Lincoln Park.

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 “NJEDA Bonds” below and the Risk Factor in Part I, Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2019 entitled “A notice of default was issued by the New Jersey Economic Development Authority in relation to prior obligations of our tax-exempt 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”.

Summary of Cash Flows:

	For the Nine Months Ended December 31,
	2019			2018
Net cash used in operating activities	$	(587,684	)	$	(4,656,762	)
Net cash used in investing activities	$	(3,148	)	$	(19,130	)
Net cash provided by financing activities	$	188,719		$	1,181,783

Net cash used in operating activities for the nine months ended December 31, 2019 was $0.6 million, which included net loss of $3.2 million, amortization of operating leases – rights to use assets of $0.1 million and changes in operating assets and liabilities of $1.63 million. These instances of decreases in cash are offset by non-cash expenses including depreciation and amortization of $1.0 million, change in fair value of derivative financial instruments – warrants of $2.6 million, non-cash compensation accrued of $0.7 million and non-cash compensation from the issuance of options of $0.05 million.

Net cash used in investing activities for the nine months ended December 31, 2019 was $0.003 million.

Net cash provided by financing activities was $0.2 million for the nine months ended December 31, 2019 which consist primarily of proceeds from the issuance of common stock pursuant to the 2017 LPC Purchase Agreement (see below) offset by loan and bond payments.

Lincoln Park Capital – May 1, 2017 Purchase Agreement

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

The Company may direct Lincoln Park, at its sole discretion and subject to certain conditions, to purchase up to 500,000 shares of Common Stock on any business day, provided that at least one business day has passed since the most recent purchase, increasing to up to 1,000,000 shares, depending upon the closing sale price of the Common Stock (such purchases, “Regular Purchases”). However, in no event shall a Regular Purchase be more than $1,000,000. The purchase price of shares of common stock related to the future funding will be based on the prevailing market prices of such shares at the time of sales. In addition, the Company may direct Lincoln Park to purchase additional amounts as accelerated purchases under certain circumstances. In the case of both Regular Purchases and accelerated purchases, the purchase price per share will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during the business days used to compute the purchase price. Sales of shares of common stock to Lincoln Park under the 2017 LPC Purchase Agreement are limited to no more than the number of shares that would result in the beneficial ownership by Lincoln Park and its affiliates, at any single point in time, of more than 4.99% of the then outstanding shares of common stock.

In connection with the 2017 LPC Purchase Agreement, the Company issued to Lincoln Park 5,540,551 shares of common stock and the Company is required to issue up to 5,540,551 additional shares of common stock pro rata as the Company requires Lincoln Park to purchase shares under the 2017 LPC Purchase Agreement over the term of the agreement. Lincoln Park has represented to us, among other things, that it is an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”)). We sold the securities in reliance upon an exemption from registration contained in Section 4(a)(2) under the Securities Act. The securities sold may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

The 2017 LPC Purchase Agreement and the 2017 LPC Registration Rights Agreement contain customary representations, warranties, agreements and conditions to completing future sale transactions, indemnification rights and obligations of the parties. The Company has the right to terminate the 2017 LPC Purchase Agreement at any time, at no cost or penalty. Actual sales of shares of common stock to Lincoln Park under the 2017 LPC Purchase Agreement will depend on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading price of the common stock and determinations by us as to the appropriate sources of funding for us and our operations. There are no trading volume requirements or, other than the limitation on beneficial ownership discussed above, restrictions under the 2017 LPC Purchase Agreement. Lincoln Park has no right to require any sales by the Company but is obligated to make purchases from the Company as directed in accordance with the 2017 LPC Purchase Agreement Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company’s shares.

The net proceeds received by under the 2017 LPC Purchase Agreement will depend on the frequency and prices at which the Company sells shares of common stock to Lincoln Park.

A registration statement on Form S-3 was filed with the SEC on May 10, 2017 and was declared effective on June 5, 2017.

During the nine months ended December 31, 2019, the Company sold 8,895,233 shares of its common stock for proceeds totaling $806,987 in connection with the 2017 LPC Purchase Agreement with Lincoln Park. In addition, during the nine months ended December 31, 2019, the Company issued 111,778 shares of its Common Stock as additional commitment shares pursuant to the 2017 LPC Purchase Agreement.

Increase in Authorized Shares

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We believe that our market risk exposures are immaterial as we do not have instruments for trading purposes, and reasonable possible near-term changes in market rates or prices will not result in material near-term losses in earnings, material changes in fair values or cash flows for all instruments.

We maintain all our cash, cash equivalents and restricted cash in three financial institutions, and we perform periodic evaluations of the relative credit standing of these institutions. However, no assurances can be given that the third-party institutions will retain acceptable credit ratings or investment practices.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act. Based on the controls evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the date of their evaluation, our disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting, specifically with respect to insufficient segregation of duties, oversight of work performed and lack of compensating controls in our finance and accounting functions due to limited personnel and resources that were disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

Changes in Internal Controls

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the end of the period covered by this Quarterly Report. As of March 31, 2019, we identified a material weakness related to the ineffective review and verification of internally prepared reports and analyses utilized in the financial closing process, that was disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

Remediation Efforts to Address Material Weaknesses

We continue to revise and evaluate the existing control environment documentation, designing and implementing controls, policies and procedure documentation that is consistent with our current personnel, resources and capabilities. Please note that these material weaknesses cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time, allowing management, through testing, to reach a conclusion on such controls design and operational efficacy. There is also a strong direct correlation between resources and our ability to remediate, in accordance with COSO criteria, the above referenced material weaknesses in internal controls. Accordingly, improvement in our financial position is a critical component of our ability to achieve effective disclosure controls and procedures. As such, the Company has hired and engaged additional personnel and resources for the accounting, and material management functions to help remediate identified material weaknesses.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEDURES

Pending Litigation

There have been no material developments in any of the legal proceedings discussed in Item 3 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

ITEM 1A. RISK FACTORS

None.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit No.		Description

3.1(a)		Articles of Incorporation of Elite-Nevada, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on January 9, 2012.

3.1(b)		Certificate of Designations of the Series G Convertible Preferred Stock as filed with the Secretary of State of the State of Nevada on April 18, 2013, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, dated April 18, 2013 and filed with the SEC on April 22, 2013.

3.1(c)		Certificate of Designation of the Series H Junior Participating Preferred Stock, incorporated by reference to Exhibit 2 (contained in Exhibit 1) to the Registration Statement on Form 8-A filed with the SEC on November 15, 2013.

3.1(d)		Certificate of Designations of the Series I Convertible Preferred Stock as filed with the Secretary of State of the State of Nevada on February 6, 2014, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, dated February 6, 2014 and filed with the SEC on February 7, 2014.

3.1(e)		Certificate of Designations of the Series J Convertible Preferred Stock as filed with the Secretary of State of the State of Nevada on May 3, 2017, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, dated April 28, 2017 and filed with the SEC on April 28, 2017.

3.2(a)		Amended and Restated By-Laws of the Company, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K dated March 17, 2014 and filed with the SEC on March 18, 2014.

4.1		Form of specimen certificate for Series G Convertible Preferred Stock of the Company, incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, dated April 18, 2013 and filed with the SEC on April 22, 2013.

4.2		Form of specimen certificate for Series I Convertible Preferred Stock of the Company, incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, dated February 6, 2014 and filed with the SEC on February 7, 2014.

4.3		Rights Agreement, dated as of November 15, 2013, between the Company and American Stock Transfer & Trust Company, LLC., incorporated by reference to Exhibit 1 to the Registration Statement on Form 8-A filed with the SEC on November 15, 2013.

4.4		Form of Series H Preferred Stock Certificate, incorporated by reference to Exhibit 1 to the Registration Statement on Form 8-A filed with the SEC on November 15, 2013.

4.5		Warrant to purchase shares of Common Stock issued to Nasrat Hakim dated April 28, 2017 incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, dated April 28, 2017, and filed with the SEC on April 28, 2017.

10.1		Elite Pharmaceuticals, Inc. 2014 Equity Incentive Plan, incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement for its Annual Meeting of Shareholders, filed with the SEC on April 3, 2014.

10.2		Form of Confidentiality Agreement (corporate), incorporated by reference to Exhibit 10.7 to the Form SB-2.

10.3		Form of Confidentiality Agreement (employee), incorporated by reference to Exhibit 10.8 to the Form SB-2.

10.4		Loan Agreement, dated as of August 15, 2005, between New Jersey Economic Development Authority (“NJEDA”) and the Company, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated August 31, 2005 and filed with the SEC on September 6, 2005.

10.5		Series A Note in the aggregate principal amount of $3,660,000.00 payable to the order of the NJEDA, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, dated August 31, 2005 and filed with the SEC on September 6, 2005.

10.6		Series B Note in the aggregate principal amount of $495,000.00 payable to the order of the NJEDA, incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, dated August 31, 2005 and filed with the SEC on September 6, 2005.

10.7		Mortgage from the Company to the NJEDA, incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, dated August 31, 2005 and filed with the SEC on September 6, 2005.

10.8		Indenture between NJEDA and the Bank of New York as Trustee, dated as of August 15, 2005, incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K, dated August 31, 2005 and filed with the SEC on September 6, 2005.

10.9		Strategic Alliance Agreement, dated as of March 18, 2009, by and among the Company, Epic Pharma, LLC and Epic Investments, LLC, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated March 18, 2009 and filed with the SEC on March 23, 2009.

10.10		Amendment to Strategic Alliance Agreement, dated as of April 30, 2009, by and among the Company, Epic Pharma, LLC and Epic Investments, LLC, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated April 30, 2009 and filed with the SEC on May 6, 2009.

10.11		Second Amendment to Strategic Alliance Agreement, dated as of June 1, 2009, by and among the Company, Epic Pharma, LLC and Epic Investments, LLC, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated June 1, 2009, and filed with the SEC on June 5, 2009.

10.12		Third Amendment to Strategic Alliance Agreement, dated as of Aug 18, 2009, by and among the Company, Epic Pharma LLC and Epic Investments, LLC, incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q, for the period ending June 30, 2009 and filed with the SEC on August 19, 2009.

10.13		Employment Agreement, dated as of November 13, 2009, by and between the Company and Carter J. Ward, incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, for the period ending September 30, 2009 and filed with the SEC on November 16, 2009.

10.14		Elite Pharmaceuticals Inc. 2009 Equity Incentive Plan, as adopted November 24, 2009, incorporated by reference to Exhibit 10.1 to the Registration Statement Under the Securities Act of 1933 on Form S-8, dated December 18, 2009 and filed with the SEC on December 22, 2009.

10.15		License Agreement, dated as of September 10, 2010, by and among Precision Dose Inc. and the Company, incorporated by reference to Exhibit 10.8 to the Quarterly Report on Form 10-Q, for the period ended September 30, 2010 and filed with the SEC on November 15, 2010 (Confidential Treatment granted with respect to portions of the Agreement).

10.16		Manufacturing and Supply Agreement, dated as of September 10, 2010, by and among Precision Dose Inc. and the Company, incorporated by reference to Exhibit 10.9 to the Quarterly Report on Form 10-Q, for the period ended September 30, 2010 and filed with the SEC on November 15, 2010 (Confidential Treatment granted with respect to portions of the Agreement).

10.17		August 1, 2013 Employment Agreement with Nasrat Hakim, incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, dated August 1, 2013 and filed with the SEC on August 5, 2013.

10.18		August 1, 2013 Mikah LLC Asset Purchase Agreement, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K/A, dated August 1, 2013 and filed with the SEC on August 30, 2018. (Confidential Treatment granted with respect to portions of the Agreement).

10.19		August 1, 2013 Secured Convertible Note from the Company to Mikah Pharma LLC., incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, dated August 1, 2013 and filed with the SEC on August 5, 2013.

10.20		August 1, 2013 Security Agreement from the Company to Mikah Pharma LLC., incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, dated August 1, 2013 and filed with the SEC on August 5, 2013.

10.21		October 15, 2013 Hakim Credit Line Agreement, incorporated by reference to Exhibit 10.16 to the Quarterly Report on Form 10-Q for the period ended September 30, 2013.

10.22		October 2, 2013 Manufacturing and Licensing Agreement with Epic Pharma LLC, incorporated by reference to Exhibit 10.17 to the Amended Quarterly Report on Form 10-Q/A for the period ended September 30, 2013 and filed with the SEC on April 25, 2014. Confidential Treatment granted with respect to portions of the Agreement.

10.23		February 7, 2014 Amendment to Secured Convertible Note from the Company to Mikah, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated February 7, 2014 and filed with the SEC on February 7, 2014.

10.24		Employment Agreement with Dr. G. Kenneth Smith, dated October 20, 2014, incorporated by reference to Exhibit 10.82 to the Quarterly Report on Form 10-Q for the period ended September 30, 2014 and filed with the SEC on November 14, 2014.

10.25		January 28, 2015 First Amendment to the Loan Agreement between Nasrat Hakim and Elite Pharmaceuticals dated October 15, 2013, incorporated by reference to Exhibit 10.83 to the Quarterly Report on Form 10-Q for the period ended December 31, 2014 and filed with the SEC on February 17, 2015.

10.26		January 28, 2015 Termination of Development and License Agreement for Mikah-001 between Elite Pharmaceuticals, Inc. and Mikah Pharma LLC and Transfer of Payment, incorporated by reference to Exhibit 10.84 to the Quarterly Report on Form 10-Q for the period ended December 31, 2014 and filed with the SEC on February 17, 2015.

10.27		June 4, 2015 License Agreement with Epic Pharma LLC, incorporated by reference to Exhibit 10.85 to Amendment No. 1 to the Annual Report on Form 10-K for the fiscal year ended March 31, 2015 and filed with the SEC on July 11, 2016. (Confidential Treatment granted with respect to portions of the Agreement).

10.28		Amendment No. 1 to Hakim Employment Agreement, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on January 29, 2016.

10.29		August 24, 2016 Master Development and License Agreement between Elite and SunGen Pharma LLC. incorporated by reference to Exhibit 10.44 to the Quarterly Report on Form 10-Q for the period ended September 30, 2016 and filed with the SEC on November 9, 2016. (Confidential Treatment granted with respect to portions of the Agreement).

10.30		Purchase Agreement between the Company and Lincoln Park Capital LLC dated May 1, 2017, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated May 2, 2017 and filed with the SEC on May 2, 2017.

10.31		Registration Rights Agreement between the Company and Lincoln Park Capital LLC dated May 1, 2017, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, dated May 2, 2017 and filed with the SEC on May 2, 2017.

10.32		April 28, 2017 Exchange Agreement between the Company and Nasrat Hakim, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated April 28, 2017 and filed with the SEC on April 28. 2017.

10.33		May 2017 Trimipramine Acquisition Agreement from Mikah Pharma, incorporated by reference to Exhibit 10.50 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

10.34		May 2017 Secured Promissory Note from the Company to Mikah Pharma, incorporated by reference to Exhibit 10.51 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

10.35		May 2017 Security Agreement between the Company to Mikah Pharma, incorporated by reference to Exhibit 10.52 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

10.36		May 2017 Assignment of Supply and Distribution Agreement between Dr. Reddy’s Laboratories and Mikah Pharma, incorporated by reference to Exhibit 10.53 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

10.37		May 2017 Assignment of Manufacturing and Supply Agreement between Epic and Mikah Pharma, incorporated by reference to Exhibit 10.54 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017.

10.38		Supply and Distribution Agreement between Dr. Reddy’s Laboratories and Mikah Pharma, incorporated by reference to Exhibit 10.55 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017. (Confidential Treatment granted with respect to portions of the Agreement).

10.39		Manufacturing and Supply Agreement between Epic and Mikah Pharma, incorporated by reference to Exhibit 10.56 to the Annual Report on Form 10-K, for the period ended March 31, 2017 and filed with the SEC on June 14, 2017. (Confidential Treatment granted with respect to portions of the Agreement).

10.40		Master Development And License Agreement For Products Between Elite Pharmaceuticals, Inc. And SunGen dated July 6, 2017, incorporated by reference to Exhibit 10.57 to the Quarterly Report on Form 10-Q for the period ended June 30, 2017 and filed with the SEC on August 9, 2017. (Confidential Treatment granted with respect to portions of the Agreement).

10.41		First Amendment To Master Development And License Agreement For Products Between Elite Pharmaceuticals, Inc. and SunGen Pharma, LLC, incorporated by reference to Exhibit 10.59 to the Quarterly Report on Form 10-Q for the period ended June 30, 2017 and filed with the SEC on August 9, 2017. (Confidential Treatment granted with respect to portions of the Agreement).

10.42		Second Amendment To Master Development And License Agreement For Products Between Elite Pharmaceuticals, Inc. and SunGen Pharma, LLC, incorporated by reference to Exhibit 10.58 to the Quarterly Report on Form 10-Q for the period ended June 30, 2017 and filed with the SEC on August 9, 2017. (Confidential Treatment granted with respect to portions of the Agreement).

10.43		May 22, 2018 License, Manufacturing and Supply Agreement with Glenmark Pharmaceuticals Inc. USA, incorporated by reference to Exhibit 10.60 to the Annual Report on Form 10-K for the fiscal year ended March 31, 2018 and filed with the SEC on June 14, 2018. (Confidential treatment granted with respect to portions of the Agreement).

10.44		August 1, 2018 Amendment to the Glenmark Pharmaceuticals Inc. USA License, Supply and Distribution Agreement (portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).*

10.45		License, Supply And Distribution Agreement effective March 6, 2019 by and between Elite Pharmaceuticals, Inc., and Elite Laboratories, Inc. and Lannett Company, Inc., USA (portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).*

10.46		License, Supply And Distribution Agreement effective April 9, 2019 by and between Elite Pharmaceuticals, Inc., and Elite Laboratories, Inc. and Lannett Company, Inc., USA, incorporated by reference to Exhibit 10.49 to the Annual Report on Form 10-K for the period ended March 31, 2019 and filed with the SEC on June 21, 2019 (portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

10.47		License, Supply And Distribution Agreement effective March 6, 2019 by and between Elite Pharmaceuticals, Inc., and Elite Laboratories, Inc. and Lannett Company, Inc., USA, incorporated by reference to Exhibit 10.50 to the Annual Report on Form 10-K for the period ended March 31, 2019 and filed with the SEC on June 21, 2019 (portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

10.48		Development Agreement effective December 3, 2018 by and between Mikah Pharma LLC and Elite Laboratories, Inc., incorporated by reference to Exhibit 10.51 to the Annual Report on Form 10-K for the period ended March 31, 2019 and filed with the SEC on June 21, 2019 (portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).

10.49		Asset Purchase Agreement dated November 13, 2019 by and between the Company and Nostrum Laboratories Inc.*

10.50		January 2, 2020 Amendment to the Glenmark Pharmaceuticals Inc. USA License, Supply and Distribution Agreement (portions of this Agreement have been redacted in compliance with Regulation S-K Item 601(b)(10)).*

10.51		Asset Purchase Agreement executed January 16, 2020 by and between the Company and Nostrum Laboratories Inc.*

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.

SIGNATURES

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

	ELITE PHARMACEUTICALS, INC.

February 10, 2020	By:	/s/ Nasrat Hakim
		Nasrat Hakim Chief Executive Officer, President and Chairman of the Board of Directors (Principal Executive Officer)

February 10, 2020	By:	/s/ Carter J. Ward
		Carter J. Ward Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)

Exhibit 10.44

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

FIRST AMENDMENT TO

THE LICENSE, SUPPLY AND DISTRIBUTION AGREEMENT BETWEEN ELITE PHARMACEUTICALS, INC./ELITE LABORATORIES, INC. AND GLENMARK PHARMACEUTICALS INC. USA

This Amendment, dated as of August 1, 2018 (the “Amendment”), by and between Elite Laboratories, Inc. (a subsidiary of Elite Pharmaceuticals, Inc.), a corporation organized under the laws of the State of Delaware, with offices at 165 Ludlow Avenue, Northvale, New Jersey (“Elite”) and Glenmark Pharmaceuticals Inc. USA, a Delaware corporation located at 750 Corporate Drive, Mahwah, New Jersey 07430 (“Glenmark”) relating to that License, Supply and Distribution Agreement Between Elite Laboratories, Inc. (a subsidiary of Elite Pharmaceuticals, Inc.) and Glenmark dated May 22, 2018 (the “Agreement”);

WHEREAS Glenmark and Elite desire to amend the Agreement on the terms and subject to the conditions contained herein: and

WHEREAS, capitalized terms used herein and not otherwise defined shall have the meaning assigned to such terms in the Agreement.

NOW, THEREFORE in consideration of the mutual covenants and agreements contained herein, the sufficiency, adequacy and satisfaction of which are hereby acknowledged, Glenmark and Elite hereby agree as follows:

1.	Schedule A of the Agreement shall be replaced in its entirety with new Schedule A listed below:

SCHEDULE A

Products and Prices

Product List

Generic Name	ANDA #	Reference Listed Drug	Market exclusivity grant from ELITE
Phendimetrazine 35 mg tablets	40762	Bontil® (Phendimetrazine Tartrate) Tablets, mfg by Valeant Pharm.	Semi-exclusive
Methadone 5 mg and 10 mg tablets	TBD	Dolophine® (Methadone HCl USP) Tablets, mfg by West-Ward Pharm.	Exclusive
Trimipramine 25 mg, 50 mg, 100 mg capsule	077361	Surmontil® (Trimipramine Maleate) Capsules mfg by Teva Pharmaceuticals Industry Ltd.)	Exclusive
Isradipine 2.5 mg, 5.0 mg capsule*	077169	Dynacirc® (Isradipine) Capules mfg by GlaxoSmithKline	Exclusive

* Isradipine license shall begin October 2, 2018

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE A (continued)

Products and Prices

Transfer Prices ($/bottle)

Name	Full Batch Qty.	Bottle Size	Cost per bottle
Phendimetrazine 35 mg tablet	800,000 tablets	100 count	$[***]
Phendimetrazine 35 mg tablet	800,000 tablets	1000 count	$[***]
Methadone tablet, 5 mg	1,440,000	100 count	$[***]
Methadone tablet 10 mg	720,000	100 count	$[***]
Trimipramine Maleate capsule, 25 mg	65,000 capsules	30 count	$[***]
Trimipramine Maleate capsule, 50 mg	150,000 capsules	30 count	$[***]
Trimipramine Maleate capsule, 100 mg	150,000 capsules	30 count	$[***]
Isradipine capsules, 2.5 mg*	125,000	100 count	$[***]
Isradipine capsules, 5.0 mg*	125,000	100 count	$[***]

* Isradipine license shall begin October 2, 2018

Pricing includes all Product manufacturing and packaging costs, quality assurance, batch quality control testing and stability testing, and is subject pricing adjustments in Section 4.1(d).

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

2.	Schedule B of the Agreement shall be replaced in its entirety with new Schedule B listed below:

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Methadone Hydrochloride Tablets, USP 5 mg			Number: SP0603
Manufacturer: Elite Laboratories, Inc	Department: Analytics and QC	Version 3	Item Code: 0603
QC#:	Batch #:	Manufacturing Date: Expiration date:

Test / Method	Specification	Results	Notebook Reference
Description Visual	White to off-white round tablet with “ELI603” on one side and bisected on the other side
Chromatographic Identification ATM-0603-ASCU	The HPLC retention time of the major peak of the sample preparation corresponds to that of standard solution, as obtained in assay.
Assay ATM-0603-ASCU	93.0% -107.0% of label claim
Uniformity of Dosage (Content Uniformity) ATM-0603-ASCU	Stratified Content Uniformity samples will be taken from 40 evenly spaced locations Stage 1: Test n=3 from each of the 20 of the 40 evenly spaced locations (total of 60 samples) If AV for n=60 is < 15.0, and all individual values are between 75% and 125%, the process passes Stage 1 Stage 2: If AV is > 15.0, test 3 tablets from each of the remaining 20 stratified locations for Stage 2 If AV is < 15.0 for all 120 tablets and all individual values are between 75% and 125 %, the process passes Stage 2
Impurities/Degradants ATM-0603-IMP	a. 4-Dimethylamino-2,2-diphenylvaleronitrile (Valero): NMT 0.15% b. Single largest Unknown: NMT 0.2% c. Total Impurities/Degradants: NMT 1.2%
Dissolution ATM-0603-DISS	Not less than 80% (Q) of label claim in 15 minutes
Residual Solvents	USP<467> option 1	Complies
Elemental Impurities	Meets USP <232> and <233> requirements	Complies

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Methadone Hydrochloride Tablets, USP 10 mg

Number: SP0604

Manufacturer:

Elite Laboratories, Inc

Department:

Analytics and QC

Version 3

Item Code: 0604

QC#:

Batch #:

Manufacturing Date:

Expiration date:

Test / Method	Specification	Results	Notebook Reference
Description Visual	White to off-white round tablet with “ELI604” on one side and bisected on the other side
Chromatographic Identification ATM-0603-ASCU	The HPLC retention time of the major peak of the sample preparation corresponds to that of standard solution, as obtained in assay.
Assay ATM-0603-ASCU	93.0% -107.0% of label claim
Uniformity of Dosage (Content Uniformity) ATM-0603-ASCU	Stratified Content Uniformity samples will be taken from 40 evenly spaced locations Stage 1: Test n=3 from each of the 20 of the 40 evenly spaced locations (total of 60 samples) If AV for n=60 is < 15.0, and all individual values are between 75% and 125%, the process passes Stage 1 Stage 2: If AV is > 15.0, test 3 tablets from each of the remaining 20 stratified locations for Stage 2 If AV is < 15.0 for all 120 tablets and all individual values are between 75% and 125 %, the process passes Stage 2
Impurities/Degradants ATM-0603-IMP	d. 4-Dimethylamino-2,2-diphenylvaleronitrile (Valero): NMT 0.15% e. Single largest Unknown: NMT 0.2% f. Total Impurities/Degradants: NMT 1.2%
Dissolution ATM-0603-DISS	Not less than 80% (Q) of label claim in 15 minutes
Residual Solvents	USP<467> option 1	Complies
Elemental Impurities	Meets USP <232> and <233> requirements	Complies

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Phendimetrazine Tartrate Tablets USP 35 mg			Number: SP0440
Manufacturer: Elite Laboratories, Inc	Department: Analytics and QC	Version 0	Item Code: 0440
QC#:	Batch#:	Manufacturing Date: Expiration date:

Test I Method	Specification	Results	Notebook Reference
Description Visual	Yellow round tablets with one face bisected and debossed with 'A" and"327"
Identification A USP	The crystals melt between 189°C and 193°C, range does not exceed 2°C
Identification B USP <191>	A reddish-pink color produced within 15 minutes
Chromatographic Identification ATM-0440-ASCU	The HPLC retention time of the sample preparation corresponds with the retention time of the Phendimetrazine Tartrate standard preparation in the assay test
Assay TM-0440-ASCU	90.0% -110.0%
Uniformity of Dosage (content Uniformity) ATM-0440-ASCU	Meets USP <905> Acceptance Value s15
Related substances (impurities/Degradants) ATM-0440-IMP	a. Intermediate I: NMT 0.1% b. Intermediate II: NMT 0.1% - Any other Unknown Impurity : NMT 0.2% c. Total Related Substances: NMT 1.0%
Dissolution TM-0440-DISS	Not less than 70% (Q) in 60 minutes
Water Determination ATM-0440-KF	Not more than 6.0%
Friability USP <1216>	Not more than 1.0%
Residual Solvents	USP<467> option 1	Complies	Refer_to_Certification

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Trimipramine Maleate Capsules Equivalent to 25mg of Trimipramine			Number: SP0850
Manufacturer: Elite Laboratories, Inc	DEPARTMENT: ANALYTICS AND QC	Version: 1	Item Code: 0850
QC#:	Batch #:	Manufacturing Date: Expiration Date:

Test / Method	Specification	Results	Reference
Appearance Visual	#2 Capsules, light blue opaque cap, yellow opaque body, imprinted “A-293” in black ink on cap and body, filled with white to off-white powder
Identification A. HPLC ATM-0850-ASCU	The retention time of the major peak of the Sample solution corresponds to that of the Standard solution, as obtained in the Assay
Identification B. Ultraviolet Absorption ATM-0850-ASCU	The UV spectrum of the Sample solution exhibits maxima only at the same wavelength as those obtained from that of standard solution, as obtained in the Assay
Assay ATM-0850-ASCU	90.0% -110.0%
Uniformity of Dosage Units by Content Uniformity ATM-0850-ASCU	Meets USP <905> requirements
Organic Impurities ATM-0850-IMP	a. Iminodibenzyl: NMT 0.2% b. Imipramine: NMT 0.2% c. Dehydro Trimipramine: NMT 0.2% d. Single Largest Individual Unspecified Impurity: NMT 0.1% e. Total Known and Unknown Impurities: NMT 0.5%
Dissolution ATM-0850-DISS	NLT 80% (Q) in 30 minutes
Water Content USP<921> method 1a	NMT 6.0%
Residual Solvents	USP <467> option 1	Complies
Elemental Impurities	Meets USP <232> and <233> requirements	Complies

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Trimipramine Maleate Capsules Equivalent to 50mg of Trimipramine			Number: SP0851
Manufacturer: Elite Laboratories, Inc	DEPARTMENT: ANALYTICS AND QC	Version: 1	Item Code: 0851
QC#:	Batch #:	Manufacturing Date: Expiration Date:

Test / Method	Specification	Results	Reference
Appearance Visual	#2 Capsules, light blue opaque cap, medium orange opaque body, imprinted “A-294” in black ink on cap and body, filled with white to off-white powder
Identification A. HPLC ATM-0850-ASCU	The retention time of the major peak of the Sample solution corresponds to that of the Standard solution, as obtained in the Assay
Identification B. Ultraviolet Absorption ATM-0850-ASCU	The UV spectrum of the Sample solution exhibits maxima only at the same wavelength as those obtained from that of standard solution, as obtained in the Assay
Assay ATM-0850-ASCU	90.0% -110.0%
Uniformity of Dosage Units by Content Uniformity ATM-0850-ASCU	Meets USP <905> requirements
Organic Impurities ATM-0850-IMP	a. Iminodibenzyl: NMT 0.2% b. Imipramine: NMT 0.2% c. Dehydro Trimipramine: NMT 0.2% d. Single Largest Individual Unspecified Impurity: NMT 0.1% e. Total Known and Unknown Impurities: NMT 0.5%
Dissolution ATM-0850-DISS	NLT 80% (Q) in 30 minutes
Water Content USP<921> method 1a	NMT 6.0%
Residual Solvents	USP <467> option 1	Complies
Elemental Impurities	Meets USP <232> and <233> requirements	Complies

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Trimipramine Maleate Capsules Equivalent to 100mg of Trimipramine			Number: SP0852
Manufacturer: Elite Laboratories, Inc	DEPARTMENT: ANALYTICS AND QC	Version: 1	Item Code: 0852
QC#:	Batch #:	Manufacturing Date: Expiration Date:

Test / Method	Specification	Results	Reference
Appearance Visual	#2 Capsules, light blue opaque cap, white opaque body, imprinted “A-295” in black ink on cap and body, filled with white to off-white powder
Identification A. HPLC ATM-0850-ASCU	The retention time of the major peak of the Sample solution corresponds to that of the Standard solution, as obtained in the Assay
Identification B. Ultraviolet Absorption ATM-0850-ASCU	The UV spectrum of the Sample solution exhibits maxima only at the same wavelength as those obtained from that of standard solution, as obtained in the Assay
Assay ATM-0850-ASCU	90.0% -110.0%
Uniformity of Dosage Units by Content Uniformity ATM-0850-ASCU	Meets USP <905> requirements
Organic Impurities ATM-0850-IMP	a. Iminodibenzyl: NMT 0.2% b. Imipramine: NMT 0.2% c. Dehydro Trimipramine: NMT 0.2% d. Single Largest Individual Unspecified Impurity: NMT 0.1% e. Total Known and Unknown Impurities: NMT 1.5%
Dissolution ATM-0850-DISS	NLT 80% (Q) in 30 minutes
Water Content USP<921> method 1a	NMT 6.0%
Residual Solvents	USP <467> option 1	Complies
Elemental Impurities	Meets USP <232> and <233> requirements	Complies

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Isradipine Capsules USP 2.5 mg			Number: SP0910
Manufacturer: Elite Laboratories, Inc	Department: Analytics and QC	Version 1	Item Code: 0910
QC#:	Batch #:	Manufacturing Date: Expiration date:

Test / Method	Specification	Results	Notebook Reference
Description Visual	White opaque capsules with imprint “A263” on cap and body filled with yellow colored powder
Ultraviolet Absorption Identification USP <197U> 25µg/mL in methanol Cell Size: 1 cm Range: 250-450nm	The maxima obtained with the sample preparation corresponds with that of standard preparation
Chromatographic Identification ATM-0910-ASCU	The retention time of the major peak in the chromatogram of the Assay preparation corresponds to that in the chromatogram of the Standard preparation, as obtained in Assay
Assay ATM-0910-ASCU	90.0% -110.0% of the labeled amount of isradipine
Uniformity of Dosage (Content Uniformity) ATM-0910-ASCU	Meets USP <905> Acceptance Value ≤ 15.0
Related Substances (Impurities/Degradants) ATM-0910-IMP	a. Impurity C: NMT 0.2% b. Impurity A: NMT 0.3% c. Impurity D or USP related compound A: NMT 0.2% d. Impurity B: NMT 0.3% e. Impurity F: NMT 0.15% f. Isradipine Ethyl-Isopropyl: NMT 0.15% g. Each Unknown Related Substances: NMT 0.10% h. Total (Known and Unknown): NMT 1.2%
Dissolution ATM-0910-DISS	Not less than 75% (Q) of labeled amount of isradipine is dissolved in 45 minutes
Water Determination USP <921>	Not more than 8.0%
Residual Solvents	USP<467> option 1	Complies	Refer to Certification
Elemental Impurities	Meets USP <232> and <233> requirements	Complies

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Isradipine Capsules USP 5 mg			Number: SP0911
Manufacturer: Elite Laboratories, Inc	Department: Analytics and QC	Version 1	Item Code: 0911
QC#:	Batch #:	Manufacturing Date: Expiration date:

Test / Method	Specification	Results	Notebook Reference
Description Visual	Flesh opaque capsules with imprint “A264” on cap and body filled with yellow colored powder
Ultraviolet Absorption Identification USP <197U> 25µg/mL in methanol Cell Size: 1 cm Range: 250-450nm	The maxima obtained with the sample preparation corresponds with that of standard preparation
Chromatographic Identification ATM-0910-ASCU	The retention time of the major peak in the chromatogram of the Assay preparation corresponds to that in the chromatogram of the Standard preparation, as obtained in Assay
Assay ATM-0910-ASCU	90.0% -110.0% of the labeled amount of isradipine
Uniformity of Dosage (Content Uniformity) ATM-0910-ASCU	Meets USP <905> Acceptance Value ≤ 15.0
Related Substances (Impurities/Degradants) ATM-0910-IMP	a. Impurity C: NMT 0.2% b. Impurity A: NMT 0.3% c. Impurity D or USP related compound A: NMT 0.2% d. Impurity B: NMT 0.3% e. Impurity F: NMT 0.15% f. Isradipine Ethyl-Isopropyl: NMT 0.15% g. Each Unknown Related Substances: NMT 0.10% h. Total (Known and Unknown): NMT 1.2%
Dissolution ATM-0910-DISS	Not less than 75% (Q) of labeled amount of isradipine is dissolved in 45 minutes
Water Determination USP <921>	Not more than 8.0%
Residual Solvents	USP<467> option 1	Complies	Refer to Certification
Elemental Impurities	Meets USP <232> and <233> requirements	Complies

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT
THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

Except as expressly provided in this Amendment, the Agreement and all provisions therein are and shall continue to be in full force and effect in accordance with its terms.

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their duly authorized representatives as of the day and year first above written.

Elite Pharmaceuticals, Inc.		Glenmark Pharmaceuticals Inc., USA

By:	/s/ Nasrat Hakim	By:	/s/ Robert Matsuk
Name:	Nasrat Hakim	Name:	Robert Matsuk
Title:	President and CEO	Title:	Pres. North America & Global API Business

Date:		Date: July 25, 2018

Elite Laboratories, Inc.

By:	/s/ Nasrat Hakim
Name:	Nasrat Hakim
Title:	President and CEO

Date:

Exhibit 10.45

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

License, SUPPLY
and Distribution Agreement

Elite pharmaceuticals, inc.,

elite laboratories, inc.,

- and -

LANNETT COMPANY, Inc.

Dated as of March 6, 2019

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

THIS LICENSE, SUPPLY AND DISTRIBUTION AGREEMENT is made as of March 6, 2019 (the “Effective Date”), by and between ELITE PHARMACEUTICALS, INC. a Nevada corporation and ELITE LABORATORIES, INC., Delaware corporation located at 165 Ludlow Avenue, Northvale, New Jersey 07647 (collectively, “ELITE”), and LANNETT COMPANY, INC., USA, a Delaware corporation located at 9000 State Road, Philadelphia, PA 19136 and/or its Affiliates (“LANNETT”).

WHEREAS:

ELITE and their ANDA co-owner, SunGen Pharma LLC (303C College Road East, Princeton, NJ 08540) (“SunGen”), have ownership rights to Products and/or ANDAs specified in Schedule A (the “Products”), and LANNETT wishes to license from ELITE the exclusive rights to market and sell the Products on the terms and conditions set forth in this Agreement.

ELITE has significant experience in developing, manufacturing and marketing finished dosage forms of pharmaceutical products, including the Products;

LANNETT has significant experience in marketing pharmaceutical products; and

Subject to the terms and conditions of this Agreement, LANNETT desires to engage ELITE on an exclusive basis to manufacture, supply, package and label the Products and ELITE agrees to grant LANNETT the right under this Agreement to commercialize the Products in the Territory on an exclusive basis.

NOW, THEREFORE in consideration of the mutual covenants and obligations contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:

ARTICLE 1 - DEFINITIONS

1.1

In addition to terms defined elsewhere in this Agreement, the terms set forth below shall be defined in this Agreement (including the recitals) as follows:

(a)

“Affiliate” with respect to either Party means any Person who directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such Party. The term “control” means the beneficial (direct or indirect) ownership of more than fifty-percent (50%) of the voting or equity interests of such Person or the power or right to direct the management and affairs of its business, whether through the ownership of voting securities, by contract, or otherwise.

(b)

“Agreement” means this License, Supply and Distribution Agreement, together with all schedules hereto.

(c)

Analytical Specifications” has the meaning given in Article 4.1(a).

(d)

“ANDA” means an Abbreviated New Drug Application pursuant to Section 505(j) of the FDCA.

(e)

“Bankruptcy Code” has the meaning given in Article 14.16.

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

(f)

“Business Day” in relation to each Party means any day other than a Saturday, a Sunday, or any statutory or public holiday on which banks are generally closed for regular business in New York, New York.

(g)

“Certificate of Analysis” means a certificate of analysis that certifies that a given batch of Product meets the release Product Specifications.

(h)

“Claim” means any claim, action, cause of action, or demand.

(i)

“Commercially Reasonable Efforts” with respect to any activity means the efforts and resources that would be used in the performance of the relevant activity in compliance with Law by a Person (engaged in the manufacture and supply or distribution, sale and commercialization of pharmaceutical products, as applicable) of comparable size and resources as the applicable Party with regard to a product at a similar stage in its product life taking into account the following factors to the extent reasonable and relevant: issues of safety and efficacy, product profile, market potential, competitive market conditions, duration of exclusivity or other proprietary position of the product and the potential profitability and economic return of the product, all as measured by the facts and circumstances at the time such efforts are due.

(j)

“Confidential Information” has the meaning given in Article 12.2.

(k)

“DEA” shall mean the United States Drug Enforcement Administration or any successor entity.

(l)

“Debarred Entity” has the meaning given in Article 9.2(c).

(m)

“Debarred Individual” has the meaning given in Article 9.2(c).

(n)

“Distribution Fees” means [***] percent ([***]%) of Net Sales for all Products.

(o)

“Effective Date” has the meaning given in the preamble.

(p)

“Facility” means the ELITE FDA-approved manufacturing site located at Ludlow Avenue, Northvale, New Jersey 07647.

(q)

“FDA” means the United States Food and Drug Administration or any successor government agency.

(r)

“FDCA” means the Federal Food, Drug, and Cosmetic Act.

(s)

“Force Majeure Event” has the meaning given in Article 14.5.

(t)

“ELITE” has the meaning given in the preamble.

(u)

“GMP” means current good manufacturing practices for the manufacture of finished pharmaceutical products in effect within the Territory from time to time during the Term of this Agreement, which set minimum standards to ensure that pharmaceutical products meet established requirements for identity, strength, quality and purity, as established under the Laws of the Territory, including 21 C.F.R. Parts 210 and 211.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

(v)

“Gross Profit” means the Net Sales of a Product each calendar quarter less Transfer Price of Product, Distribution Fees and shipping costs from the Facility.

(w)

“Gross Sales” means the gross amount invoiced by LANNETT or its Affiliates or sublicensees for sales of the Product to Third Parties in the Territory.

(x)

“Indemnitee” has the meaning given in Article 11.3.

(y)

“Indemnitor” has the meaning given in Article 11.3.

(z)

“Intellectual Property Rights” means any patent, trademark, copyright, trade secret, right in unpatented know-how, right of confidence and any other intellectual or industrial property right of any nature whatsoever in any part of the world, whether registered or unregistered.

(aa)

“LANNETT” has the meaning given in the preamble.

(bb)

“Law” means any federal, state, provincial and local laws, statutes, regulations, rules, guidelines, orders, ordinances, and any other requirements of any government or Regulatory Authority in the Territory applicable to the development, registration, manufacturing, testing, packaging, storing, shipping, marketing, distribution and sale of pharmaceutical products or as otherwise applicable to the Parties respective obligations under this Agreement, including the FDCA.

(cc)

“Losses” means any damages, liabilities, obligations, costs, expenses or losses, including reasonable legal fees and expenses, court costs, penalties, fines, costs of investigation and amounts paid in settlement of claims.

(dd)

“Major Change” shall mean a change that has the potential to adversely impact quality, identity, purity or stability of the Products or the compliance and validity of the Products Marketing Authorizations, as these factors may relate the safety or efficacy of the Product and as defined in the FDA regulations and guidance.

(ee)

“Marketing Authorization” means all approvals, licenses, registrations or authorizations of any Regulatory Authority, necessary for the manufacturing, use, storage, import, transport, marketing, promotion and sale of the Product in the Territory, together with pricing or reimbursement approval in countries where governmental approval is required for pricing or for the Product to be reimbursed by national health insurance.

(ff)

“Net Sales” shall mean with respect to the Product, Gross Sales less the following items (whether or not separately stated on such invoice but only to the extent included in Gross Sales):

(i)

Any and all promotional allowances, rebates, charge backs, quantity and cash discounts, and other usual and customary discounts to customers;

(ii)

Amounts refunded, repaid or credited by reason of rejections, returns or recalls of goods;

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

(iii)

Any sales, excise, turnover, inventory, value-added, and similar taxes and duties assessed on applicable sales;

(iv)

Failure to Supply penalties (in the case if Article 4.4 (i) and (ii)), Non-affiliate third party administrative fees granted, Medicaid and state and/or governmental rebates, and shelf stock adjustments and retroactive price reductions.

Components of Net Sales shall be determined using the accrual method of accounting in accordance with US GAAP or an equivalent stipulated method of accounting in the Territory.

(gg)

“Non-Conforming Product” has the meaning given in Article 4.8(b).

(hh)

“Original Agreement” has the meaning given in Recital A.

(ii)

“Packaging” means all material used to prepare fully packaged Products, including labeling, containers, closures, cartons, and shipping cases, as applicable.

(jj)

“Parties” means the parties to this Agreement referred to collectively, and “Party” means either party to this Agreement referred to individually.

(kk)

“Person” includes any individual, partnership, corporation, unincorporated organization or association, joint venture, limited liability company, trust or any other form of entity.

(ll)

“Safety Data Exchange Agreement or SDEA” means the pharmacovigilance agreement to be entered into by the Parties which shall set forth the safety data exchange procedures to be followed by the Parties for the collection, investigation, reporting and exchange of information concerning adverse events.

(mm)

“Products” means the finished pharmaceutical products in commercially saleable form, as manufactured by ELITE exclusively supplied to LANNETT pursuant to this Agreement as set forth on Schedule A.

(nn)

“Purchase Order” means a written, binding purchase order for a certain quantity of Product properly issued by LANNETT in accordance with the terms of this Agreement.

(oo)

“Quality Agreement” means a quality agreement to be entered into by the Parties which will set forth certain obligations of the Parties in relation to the manufacture, packaging, quality control and testing of the Products in accordance with GMP.

(pp)

“Recall” shall mean a recall, removal, market withdrawal, seizure, or field correction of Product.

(qq)

“Regulatory Authorities” means any federal, state, local or international regulatory agency, department, bureau or other governmental entity responsible for regulating the manufacture, use, storage, importation, transportation, distribution marketing, promotion and sale of pharmaceutical products in the Territory, including the FDA and DEA.

(rr)

“Regulatory Approval” means all approvals or authorizations granted by the FDA for marketing the Products in the Territory.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

(ss)

“Specifications” means the written methods, formulae, procedures, specifications, tests (and testing protocols) and standards pertaining to the Products as approved by FDA in the Product’s ANDA and attached herein as Schedule B, which may be amended from time-to-time by the written agreement of the Parties.

(tt)

“SunGen” has the meaning given in the preamble.

(uu)

“Term” has the meaning given in Article 8.1.

(vv)

“Territory” means the United States of America and its possessions, territories, protectorates, military bases and commonwealths.

(ww)

“Third Party” means any Person other than LANNETT or ELITE or SunGen, or any of their respective Affiliates.

(xx)

“Trademarks” has the meaning given in Article 4.3(a).

1.2

Interpretation of “Include”. Where the words “include”, “includes” or “including” are used in this Agreement, they shall mean, respectively, “include without limitation”, “includes without limitation”, “including but not limited to”, or “including without limitation”.

ARTICLE 2 - MARKETING AUTHORIZATIONS

2.1

Subject to the terms of this Agreement, ELITE shall exclusively manufacture, supply, package and label the Products for LANNETT, and LANNETT shall have the right to promote, market, store, distribute and sell the Products in the Territory. ELITE hereby grants to LANNETT and its Affiliates an exclusive right to fully commercialize the Products in the Territory. LANNETT agrees to exclusively purchase Products it requires from ELITE.

2.2

ELITE and their ANDA co-owner SunGen shall, at their expense, maintain and update the Marketing Authorizations for the Products as may be required for the Parties to perform their obligations hereunder. ELITE and their ANDA co-owner SunGen shall be solely responsible for all communications with the Regulatory Authorities in the Territory relating to any Marketing Authorizations for the Products. ELITE shall provide LANNETT with timely notice of any communications from the Regulatory Authorities which may affect ELITE’s right or ability to supply LANNETT with the Products.

ARTICLE 3 - PAYMENT TERMS

3.1

Transfer Price. ELITE shall sell each Product to LANNETT at the prices set forth in Schedule A, which Transfer price shall be inclusive of all costs and expenses associated with the manufacture, supply, packaging, labeling of the Product to LANNETT.

3.2

Upon delivery of the Products to LANNETT, ELITE shall submit invoices therefore to LANNETT. LANNETT shall pay each undisputed invoice in full within thirty (30) days of its receipt in full of the Products reflected in the invoice and the Certificate of Analysis, which Certificate is in a form sufficient for release of the Products. A late payment fee of one percent (1%) per month may be imposed upon LANNETT for payments past due, unless Products therein are subject to a quality dispute. In the event of any inconsistency between an invoice and this Agreement, the terms of this Agreement shall control.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

3.3

License Fees. Throughout the Initial Term and Renewal Term, LANNETT shall pay to ELITE [***] percent ([***]%) of the Gross Profits received from sales of each Product within forty-five (45) days of the end of each calendar quarter (“License Fees”). Such payment shall additionally include a sales summary for each Product generally in the format as provided in Schedule C. In no case shall the License Fees for any calendar quarter be negative; provided, however in the event of a loss in any calendar quarter, subject to ELITE’s written approval of any Product pricing by LANNETT that leads to quarterly losses and subject to the loss carryover clause that follows, the amount of that loss shall be carried forward to subsequent calendar quarters until the amount of such loss has been fully absorbed. In the event that Net Profits for calendar quarter are negative, LANNETT shall carry over [***] percent ([***]%) of the value by which the Net Profits are negative in such calendar quarter and deduct this amount from the calculation of Net Sales for the following calendar quarter. If Net Profits are negative in two (2) or more consecutive calendar quarters, LANNETT shall invoice ELITE for [***] percent ([***]%) of the value by which the Net Profits are negative for the previous calendar quarter and carry over [***] percent ([***]%) of the value by which Net Profits are negative for the current calendar quarter and deduct this amount from the calculation of Net Sales for the following calendar quarter. For the avoidance of doubt, if Net Profits are negative in subsequent calendar quarters, the amounts will be similarly carried over or reimbursed as per the terms set forth in this Section 3.3 until Net Profits are positive. Reimbursement of negative Net Profits owed by ELITE in this Section 3.3 shall be payable to LANNETT within forty-five (45) days after receipt of an invoice from LANNETT.

3.4

Lannett shall pay to Elite seven hundred and fifty thousand dollars (US$750,000) upon commercial launch of the Mixed Amphetamine extended release Product.

ARTICLE 4 - MANUFACTURING AND SUPPLY; COMMERCIALIZATION

4.1

Supply of Products.

(a)

During the Term of this Agreement, ELITE shall use Commercially Reasonable Efforts to manufacture, timely supply, package and label for delivery to LANNETT the Products in accordance with any Purchase Orders issued by LANNETT under the terms of this Agreement. Purchase Orders shall include the shipping instructions in accordance with Schedule D hereto ELITE shall manufacture, supply, package and label the Products in compliance with all Laws, including the GMPs, the Marketing Authorization, the Quality Agreement, and the Specifications (“Analytical Specifications”).

(b)

ELITE shall manufacture the Products in the Facility and use Commercially Reasonable Efforts to maintain access to sufficient supplies of raw materials, components and other required resources to perform its obligations under this Agreement, and meet LANNETT’s supply requirements for the Products. ELITE shall not manufacture the Products at a site other than the Facility without first obtaining LANNETT’s prior written consent, which consent shall not be unreasonably withheld. ELITE shall be solely responsible for all costs and expenses incurred in connection with the manufacture of the Products hereunder, including without limitation costs and expenses of personnel, quality control, testing, manufacturing, facilities, equipment, materials, FDA product fees, FDA establishment fees and government sales, use, excise, property or similar taxes or excises.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

(c)

ELITE shall have procedures in place to ensure that the oldest approved inventory of the Products is distributed first. In addition, each Party shall maintain a tracking system by which the distribution of each lot of the Products may be readily determined to facilitate its Recall if necessary.

Transfer Price Adjustments. The Transfer Prices for the Products under Schedule A are valid through December 31, 2019. After December 31, 2019, the Transfer Price for Products may be adjusted for any increase in the cost of active pharmaceutical ingredients, annual Generic Drug User Fees (GDUFA fees) proportional allocation, and other material government mandated requirements. ELITE shall provide at least thirty (30) days written notice to LANNETT for any such Transfer Price adjustments with justifications for any increase. ELITE shall use commercially reasonable efforts to reduce its manufacturing expenses for the Products. At either Party’s written request, the Parties will discuss in good faith the revision of the Transfer Price (and any subsequently agreed prices) to take into account adverse market conditions resulting in unsatisfactory returns for LANNETT or changes in the manufacturing costs for the Products. The revised Transfer Price shall be laid down in writing and inserted as an amended Schedule A to this Agreement. Confirmed orders are excluded from Transfer Price negotiations. If, after good faith negotiations, the Parties are unable to reach agreement on an adjustment to the Transfer Pricing for the Products, then LANNETT shall be entitled to terminate this Agreement, effective upon at least sixty (60) days’ prior written notice to ELITE.

(d)

The Parties shall enter into a Safety Data Exchange Agreement and Quality Agreement. The respective roles and responsibilities for quality assurance personnel of the Parties in carrying out the transactions pursuant to this Agreement shall be defined and stipulated in the Quality Agreement. The fully executed SDEA (SDEA) and Quality Agreement are hereby incorporated and made a part of this Agreement by reference. In the event of any inconsistency between the provisions of the SDEA and the provisions of this Agreement, the wording of the SDEA shall govern any and all patient safety matters and this Agreement shall govern all other matters. The Parties hereby acknowledge and agree that in the event of any conflict between the terms of this Agreement and the terms of the Quality Agreement, this Agreement shall control with respect to all issues (other than with respect to all quality matters), and the Quality Agreement shall control with respect to all quality matters.

4.2

Master Production Plan and Purchase Orders. On or before fifteen (15) days prior to the end of each calendar quarter during the Term, LANNETT shall deliver to ELITE a master production plan which covers a twelve (12) month period, which includes three (3) months binding purchase order, and nine (9) months non-binding forecast (the “Master Production Plan”). The first three months (beginning with the first month following the month in which the Master Production Plan is due) of each Master Production Plan shall be deemed to be a binding purchase order (the “Binding Forecast”). Months four (4) through twelve (12) of the Master Production Plan shall be LANNETT’s non-binding, good faith estimate of such requirements based on forecasted trade and LANNETT shall have the ability to adjust the quantities forecast. Unless the Parties otherwise agree in writing, all firm orders for Product (the “Purchase Order”) placed shall specify: (i) the type of Product being ordered; (ii) the amount of such Product being requested (which shall be in whole batch size quantities); and (iii) the requested delivery date which, unless otherwise agreed by ELITE in writing, shall be not less than ninety (90) days after receipt of the Purchase Order. Each Master Production Plan and accompanying binding Purchase Order shall be deemed to be automatically accepted unless ELITE notifies LANNETT of its rejection of the same within four (4) Business Days of receipt. ELITE may only reject a Purchase Order if a Purchase Order is not consistent with the terms of this Article 4.2 or is not timely delivered. Once a Purchase Order is accepted by ELITE, ELITE shall be obligated to timely manufacture, supply, package, label, and have ready for delivery the full quantities of Products set forth in the Purchase Order by the required delivery date at the Facility. In the event that the terms of any Purchase Order are not consistent with, or attempt to modify, the terms of this Agreement, the terms of this Agreement shall prevail. If LANNETT requests changes to any Purchase Order after receipt thereof by ELITE, ELITE shall use Commercially Reasonable Efforts to comply with such changes. ELITE shall use commercially reasonable efforts to supply up to one hundred twenty-five percent (125%) of LANNETT’S requirement forecast of Products for the applicable period.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

4.3

Delivery Terms.

(a)

LANNETT shall provide ELITE packaging specifications and related materials that comply with FDA requirements and the Parties will finalize all packaging by the time of the first Purchase Order. If requested by LANNETT, ELITE shall affix on the Product and/or on the label and/or the packages certain proprietary or registered marks, logos or insignia relating to the Product in accordance with the directions and specifications given by LANNETT, along with any other marks, logos or insignia, as LANNETT may stipulate from time to time (collectively, “Trademark”). Pursuant to the aforesaid, LANNETT hereby grants to ELITE, a non-exclusive, non-transferable, non-assignable and non-sublicensable right to the Trademarks, solely for the purpose of affixing such Trademarks to the Product in accordance with LANNETT’s directions and specifications during the Term. LANNETT shall have sole approval authority over all Product labeling and packaging specifications of the Products supplied to LANNETT pursuant to this Agreement.

(b)

ELITE shall deliver the full quantities of the Products set forth in each Purchase Order (Incoterms 2010 EXW) to LANNETT or its designee. All Products shall be packaged for shipment in accordance with the packaging specifications set forth in the Marketing Authorizations and packing instructions reasonably required by LANNETT.

(c)

Each Products shipment made by ELITE shall be accompanied by and shall include a Certificate of Analysis for each shipment of the Products manufactured and supplied hereunder. ELITE shall be responsible for all applicable release testing of the Products in accordance with the Analytical Specifications. ELITE shall perform all required in-process quality control tests and quality assurance reviews on the Products, including without limitation, stability testing at its sole cost and expense. In addition, ELITE shall furnish LANNETT, along with the first shipment of the Products, ELITE’s Material Safety Data Sheets containing the relevant safety and health information and such other similar information as LANNETT may reasonably from time-to-time request in connection therewith.

(d)

All Products provided to LANNETT shall have no less than eighty five percent (85%) remaining shelf-life remaining as per the Product’s ANDA.

(e)

All orders containing at least ninety percent (90%) of the specified amount of Product in a given Purchase Order shall be deemed satisfied.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

4.4

Failure to Supply. ELITE shall notify LANNETT as promptly as possible, but in no event later than five (5) Business Days, after ELITE discovers that it will not be able to supply the quantity of Products ordered by the delivery date specified in a Purchase Order. In such event: (i) ELITE shall cooperate with LANNETT in taking all actions that LANNETT deems reasonably necessary in order to remedy such inability to supply, at ELITE’s expense; and (ii) If ELITE’s inability to supply continues past twenty (20) days from the required delivery date set forth in the Purchase Order at LANNETT’s election, any or all outstanding Purchase Orders relating to such Product may be cancelled and LANNETT shall have no obligations with respect to such Purchase Orders; provided, however, ELITE must cover any Failure to Supply (as defined below) obligations set forth in this Section. Compliance by ELITE with this Article 4.4 shall not relieve ELITE of any other obligation or liability under this Agreement. LANNETT shall otherwise retain all of its rights under this Agreement and/or at law against ELITE for its failure to deliver all or any portion of the quantity of Products ordered by LANNETT. With regards to a Binding Forecast or if ELITE accepted a Purchase Order from LANNETT, pursuant to the procedures defined in Section 4.2 of this Agreement, then ELITE shall be responsible for the late charges and any penalties assessed against LANNETT by its Customers or any other third party or any costs, fees, charges, or penalties incurred by Lannett (“Failure to Supply”), unless the delay is attributable to (i) action or controls imposed by the DEA that do not result from ELITE’s negligence, gross negligence or willful misconduct; or (ii) demonstrable raw material shortages that are beyond ELITE’s control, but ELITE will use commercially reasonable efforts to keep three (3) to six (6) months of raw materials inventory on hand at all times. Late charges and any penalties assessed against ELITE by LANNETT under this paragraph are due and payable within thirty (30) days of being invoiced by LANNETT and, if not timely paid, may be deducted against amounts owed by LANNETT to ELITE.

4.5

Samples and Batch Records. ELITE shall prepare and maintain batch records and file samples, properly stored, for each lot or batch of Products manufactured and shipped hereunder in compliance with all GMPs and Laws in the Territory.

4.6

Commercialization. LANNETT shall use Commercially Reasonable Efforts to market and sell the Products in the Territory. All commercial matters regarding the marketing, promotion, sale, offer for sale, pricing or distribution of the Products in the Territory shall be under the exclusive control of LANNETT.

4.7

Change of Specification. No alterations of the Specifications for the Products or other changes requiring prior approval by the FDA, or material changes to the manufacturing process or validated processes, can be made without the prior written approval of LANNETT. ELITE shall notify LANNETT in writing of any proposed alterations for the Specifications for the Products or any Major Changes to the manufacturing process or validated processes. LANNETT shall notify ELITE of LANNETT’s decision within thirty (30) days of receipt of such proposal from ELITE. If ELITE does not receive LANNETT’s decision in writing within thirty (30) days, the alteration of the Specifications or other Major Changes to the manufacturing process or validated process proposed by ELITE shall be deemed rejected by LANNETT. In the event that the FDA or any other governmental authority shall suggest or mandate any change or revision to the Product, such that the Specifications would no longer comply with such suggestion or mandate, the Parties shall work together in good faith to develop revised Specifications that meet all changes or revisions suggested or mandated by the FDA or other governmental authority and Schedule B shall be amended in writing to set forth the new agreed upon Specifications.

4.8

Acceptance of the Product.

(a)

Following receipt of a shipment of Product at the final destination, LANNETT, or its designee, shall conduct a visual inspection of the Product and all accompanying documents provided by ELITE, including without limitation, the Certificate of Analysis, in accordance with its customary procedures. LANNETT shall advise ELITE, in writing, if it is rejecting a shipment of Product due to obvious physical damage or obvious packaging defect that are evident upon such visual inspection of the packaged Product as shipped by ELITE. LANNETT (and its designees) shall have no obligation to inspect the Product beyond the visual inspection provided for in this Article 4.8(a).

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

(b)

In the case of defects other than those obvious defects described in Article 4.8(a), including, by way of example, any failure of the Product, at the time of delivery, to meet the Analytical Specifications and the representations, warranties and covenants of Article 9.2(f), LANNETT shall promptly notify ELITE if it becomes aware of such non-obvious defect(s). Any defect in physical condition of Products delivered by ELITE or Products that do not conform with the Analytical Specifications (as may be in effect from time to time) or the representations, warranties and covenants of Article 9.2(f) for any reason shall be deemed to be a non-conforming product (“Non-Conforming Product”). LANNETT, or its designee, shall have the right to reject any Non-Conforming Product and no failure on the part of LANNETT, or its designee, or passage of time shall prejudice LANNETT’s right to reject or revoke acceptance of Non-Conforming Product. All Non-Conforming Product shall be returned to ELITE at its sole cost and expense.

(c)

If ELITE confirms the Non-Conforming Product or lab testing pursuant to Article 4.8(d) determines that the Product is Non-Conforming Product, ELITE shall, at LANNETT’s election, either replace such Non-Conforming Product with conforming Product or, refund to LANNETT, the price paid for such Non-Conforming Product.

(d)

If the Parties cannot agree as to whether a delivered quantity of Product is Non-Conforming Product, then the Parties agree to have the batch in dispute tested and further analyzed by a recognized independent testing laboratory selected by the Parties or a quality consultant (if not a laboratory analysis issue). The appointment of such laboratory or quality consultant shall not be unreasonably withheld or delayed by either Party. The decision of the laboratory or quality consultant shall be in writing and, save for manifest error on the face of the decision, shall be binding on both Parties. Should said laboratory’s testing or quality consultant determine that the Product is Non-Conforming Product then ELITE will bear the cost of such testing or quality consultant and comply with the terms of Article 4.8(c). If said Product is determined to have been conforming, then LANNETT shall bear all costs of the independent laboratory testing or quality consultant as well as accept the Product shipment and pay for same within forty-five (45) days of such acceptance.

ARTICLE 5 - INSPECTIONS

5.1

Inspections. During the Term of this Agreement and thereafter in the event of a Claim against either Party regarding use of the Products is threatened or commenced, ELITE shall permit LANNETT’s representatives to enter ELITE’s facilities, upon reasonable prior notice (except in the event of a for-cause audit) and during normal business hours, for the purpose of inspecting the facility and quality control procedures and confirming compliance with all applicable GMPs and Laws in the Territory, the requirements of the Regulatory Authorities in the Territory, the Quality Agreement and this Agreement. If during any such inspection LANNETT discovers any instances in which ELITE has not complied with the foregoing, then ELITE shall promptly provide to LANNETT a written plan for correcting such deficiencies, including a proposed timetable for implementing such corrections, and shall ensure that such deficiencies are corrected, at ELITE’s sole expense, as soon as reasonably practicable. ELITE agrees to provide LANNETT with copies of all: (i) reasonably requested documentation in its possession relating to the manufacture of Product, Specifications, compliance with quality assurance standards, raw material vendors and manufacturing processes; and (ii) U.S. and international regulatory approvals, regulatory inspections of the manufacturing process, facilities and documentation, and other communications with Regulatory Authorities related to the Product; however ELITE shall not be required to provide copies to LANNETT of ELITE’s proprietary information and ELITE shall only be required to allow LANNETT to inspect such proprietary information such as batch records at ELITE’s site and under ELITE’s supervision. Notwithstanding the provision of this Article 5.1, LANNETT shall have no obligation or be deemed to have an obligation to inspect ELITE’s facilities.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

5.2

Regulatory Authority Inspections. ELITE shall permit any Regulatory Authority to inspect the facility used to manufacture the Products and all associated records to the full extent permitted by applicable Law (“Regulatory Inspection”). ELITE shall notify LANNETT within forty-eight (48) hours of becoming aware of any planned or actual Regulatory Inspection. ELITE agrees to reasonably cooperate with the applicable Regulatory Authority in connection with such audits. ELITE shall notify LANNETT prior to the commencement of any meetings with, or inspection activity by, any Regulatory Authority, unless such inspection activity is an unannounced inspection. Further, ELITE shall provide a reasonable description to LANNETT of any such governmental inquiries, notifications or inspections related to Products promptly (but in no event later than five (5) calendar days) after such visit or inquiry. ELITE shall furnish to LANNETT: (i) within five (5) calendar days after receipt, any report or correspondence issued by the Regulatory Authority in connection with such visit or inquiry, including but not limited to, any FDA Form 483, establishment inspection report, or warning letter; and (ii) copies of any and all responses or explanations to any Regulatory Authority relating to items set forth above prior to the submission of such responses or explanations to any Regulatory Authority by ELITE for comment, which comments shall be taken into consideration by ELITE in good faith. ELITE shall also provide LANNETT with a copy of all final responses.

ARTICLE 6 - RECORDS

6.1

Records. ELITE and LANNETT shall maintain all records necessary to comply with all applicable Laws in the Territory relating to the performance of their respective obligations under this Agreement. ELITE shall also maintain, or cause to be maintained (i) all manufacturing records, standard operating procedures, validation records, equipment log books, batch records, laboratory notebooks and all raw data relating to the manufacturing of the Products, and (ii) such other records as LANNETT may reasonably require in order to ensure compliance by ELITE with the terms of this Agreement. All such records shall be maintained for such period as may be required pursuant to the applicable Laws.

6.2

Inspection of ELITE Books and Records. During the Term of this Agreement, and thereafter for the greater of (i) the period stipulated by the Laws in the Territory, and (ii) two (2) years from the expiration of the last Products manufactured, ELITE agrees that LANNETT, at reasonable times upon reasonable prior notice, may inspect the research and development books and records of ELITE pertaining to ELITE’s obligations under this Agreement for purposes of ensuring compliance with the terms of this Agreement.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

6.3

Inspection of LANNETT Books and Records. LANNETT shall keep, and shall require its Affiliates to maintain, in connection with the handling, sale, and distribution of the Product hereunder, books and records necessary to allow the accurate calculation, consistent with GAAP, of the amounts due to ELITE, the reporting obligations contemplated herein, and compliance with the terms of this Agreement, and LANNETT shall maintain such books and records for a period of at least two (2) years after the end of the calendar year in which they were generated, or for such longer period as may be required by Applicable Law. Upon at least thirty (30) days prior written notice, ELITE, at its expense, shall have the right to have an independent public accounting or auditing firm, reasonably acceptable to LANNETT, obtain access to such books and records as may be reasonably necessary to determine or verify the amount of payments due under this Agreement and compliance with the obligations hereof; provided, however, that this right may not be exercised more than once in any calendar year. Such accounting firm shall conduct such examination, and LANNETT shall make such books and records available, during normal business hours at the facility(ies) where such books and records are customarily maintained. Each such examination shall be limited to pertinent books and records for any year ending not more than twenty-four (24) months prior to the date of request, except that ELITE shall not be permitted to audit the same period of time more than once. The independent accounting firm will prepare and provide to each Party a written report stating whether the reports submitted and amounts paid are correct or incorrect and the amounts of any discrepancies. The conclusions of such accounting firm shall be final and binding on the Parties absent demonstrable error. If there was an underpayment by LANNETT hereunder, LANNETT shall promptly (but in no event later than thirty (30) days after its receipt of the independent auditor’s report so concluding) make payment to ELITE of any shortfall by wire transfer in U.S. dollars, plus interest on the amount of such shortfall calculated at the lesser of (a) five percent (5%) per annum, or (b) the maximum rate permitted by law from the date such payment should have been made to the date the shortfall is paid. If there was an overpayment by LANNETT hereunder, ELITE shall promptly (but in no event later than thirty (30) days after ELITE’s receipt of the independent auditor’s report so concluding) refund to LANNETT the excess amount by wire transfer in U.S. dollars. All costs of the audit, including the expenses of the independent accounting firm, shall be borne by ELITE unless the underpayment by LANNETT results in a cumulative discrepancy during any calendar year in excess of the greater of (i) ten percent (10%) of the total amount reported to ELITE for that period or (ii) one hundred thousand dollars ($100,000.00), in which case all reasonable and documented costs of the audit, including the expenses of the independent accounting firm, shall be borne and promptly paid by LANNETT. ELITE shall ensure that the independent public accountant or auditor maintains the confidentiality of LANNETT’s Confidential Information on terms no less restrictive than those set forth in this Agreement.

6.4

Annual Reports. ELITE shall provide Lannett in a timely manner copies of ELITE’s annual reports to the FDA or any other Regulatory Authority with respect to the Products.

ARTICLE 7 - RECALLS

7.1

Notification of Recall. If any Regulatory Authority or other governmental agency issues or requests a Recall or takes similar action in connection with a Product in the Territory, or if LANNETT reasonably determines after consultation with ELITE that an event has occurred which may result in the need for a Recall, the Party notified of or wishing to implement such Recall shall, within forty-eight (48) hours (regardless of weekday, weekend or holiday), advise the other Party thereof by telephone or facsimile, after which the Parties shall promptly discuss and work together to effect an appropriate course of action. ELITE shall be responsible for notifying the Regulatory Authorities in the Territory of any voluntary Recall and implementing any Recalls. LANNETT shall fully cooperate with ELITE to fully implement any Recall. ELITE agrees to forward to LANNETT a copy of any field communication associated with the Products that it plans to issue before such communication is issued or sent to any governmental agency. ELITE will maintain complete and accurate records of any activities conducted with respect to any Recall for such period as may be required by Law. Following any Recall, ELITE will review all of its procedures as impacted by the identified root cause in the associated investigation, and will revise such procedures, as necessary, to correct the cause of such Recall subject to the change control requirements set forth in the Quality Agreement. ELITE will provide LANNETT with such information regarding such review and revisions as LANNETT may request and ELITE shall provide LANNETT the right to approve, reject or request modifications to the proposed changes.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

7.2

Recall Expenses. If a Recall results from the acts or omissions of one Party, then such Party shall bear the full expenses of both Parties incurred in the Recall. For clarity, if a Recall is due to a defect during the manufacture, processing, packaging or labelling of the Product prior to delivery, the cost and expense shall be borne solely by ELITE. If a Recall is partially caused by the actions or omissions of both Parties, then each Party shall be responsible for its proportionate share of the Recall expenses based on its proportionate share of causation. Recall expenses include the expenses of notification, shipping, return, replacement (if possible), customer fees and penalties, and destruction of recalled Products (including Products which cannot be shipped due to the condition causing the Recall). The Parties shall discuss in good faith and agree on the scope and costs of Recall, if practicable, prior to enforcement of the Recall.

7.3

Notice of Failure to Meet Specifications. If ELITE discovers that there is a potential that any batch or lot of the Products already delivered to LANNETT may fail to conform to the Specifications, then ELITE shall notify LANNETT within twenty-four (24) hours (or one (1) business day), of such determination of failure to meet the Specifications and of the nature thereof in detail, including, but not limited to, supplying LANNETT with all investigatory reports, data and communications, out-of-specification reports and data and the results of all outside laboratory testing and conclusions, if any. ELITE shall investigate all such failures promptly, and at its sole expense, cooperate with LANNETT in determining the cause for the failure and a corrective action to prevent future failures.

ARTICLE 8 - TERM & TERMINATION

8.1

Term. This Agreement shall commence upon the Effective Date, and, unless terminated earlier in accordance with the provisions hereof, shall continue for a period of three (3) years from the Effective Date (“Initial Term”). Unless earlier terminated pursuant to this Agreement, the Initial Term may be extended for successive one (1) year periods (“Renewal Term”) upon mutual agreement of the Parties in writing. The Initial Term and all Renewal Term (if any) are collectively referred to as the “Term.”

8.2

Termination. If any one or more of the following events of default shall occur, then this Agreement may be terminated as set forth herein:

(a)

if a Party files a petition in bankruptcy or is adjudged as bankrupt, or a petition in bankruptcy is filed against it and is not dismissed within sixty (60) days, or it becomes insolvent, takes advantage of legislation for creditor relief, has a receiver or receiver-manager appointed in relation to its assets, or discontinues its business, then the other Party may terminate this Agreement upon delivering written notice of termination;

(b)

if a Party hereto violates or fails to perform any of its material undertakings, agreements, covenants or obligations under this Agreement (excluding matters otherwise specifically addressed with a termination right elsewhere in this Agreement) and the failure is not remedied within thirty (30) days after written notice from the non-defaulting Party, then the non-defaulting Party may terminate this Agreement upon delivering written notice of termination to the breaching Party; provided that if the breaching Party is diligently pursuing in good faith the remedy of the breach at the expiration of such thirty (30) day cure period, then such thirty (30) day cure period may be extended as reasonably required to effect the cure if agreed to by the non-defaulting Party;

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

(c)

if a Party hereto willfully or fraudulently misrepresents any fact, information or report disclosed pursuant to this Agreement and such misrepresentation is not cured or remedied within thirty (30) days after the receipt of written notice thereof by the non-defaulting Party, then the other Party may terminate this Agreement upon delivering written notice of termination;

(d)

if a court of competent jurisdiction makes a final determination that the marketing and sale of a Product in the Territory infringes the patent or other Intellectual Property Rights in the Territory of a third party and enjoins the marketing and sale of the Product in the Territory, and if all rights to appeal have been exhausted or expired, then LANNETT may, upon delivering written notice to ELITE, terminate this Agreement with respect to such Product;

(e)

by ELITE or LANNETT, on a Product by Product basis, if any time after the first twelve (12) months from the first commercial sale, the average License Fee paid by Lannett is less than three hundred thousand dollars (US$300,000) for a six (6) month sales period for that Product; and

(f)

Lannett will also have the right to suspend further performance under this Agreement and/or terminate this Agreement in its entirety, without liability except for unpaid previously delivered Products, if: (i) ELITE loses any approval(s) from the FDA required to perform its obligations under this Agreement; (ii) ELITE or its principals are involved in felonious or fraudulent activities related to Elite’s business; or (iii) ELITE is unable to successfully address material deficiencies identified by the FDA that prevent Elite from manufacturing Product as a result of an inspection of ELITE’S facility within sixty (60) days after ELITE’S receipt of a deficiency notice from the FDA; or (iv) more than three (3) late shipments of the Products occur during any 12-month period during the Term. In any such event, LANNETT may terminate this Agreement immediately by written notice to ELITE. For purposes of this Section, a late shipment shall mean failure by ELITE to deliver to LANNETT ninety (90) percent (90%) of the Products ordered by LANNETT for delivery within twenty (20) days of the date specified for such delivery in the applicable Purchase Order.

8.3

Other Termination Rights. In addition to Article 8.2, (i) either Party may terminate this Agreement pursuant to Articles 14.3 (Assignment without Consent) and 14.5 (Force Majeure), and (ii) LANNETT may terminate this Agreement pursuant to Article 4.4 (Failure to Supply) and Article 9.2(c) (Debarred), and (iii) ELITE may terminate this Agreement pursuant to Article 9.3(c) (Debarred). LANNETT may terminate this Agreement for any reason upon providing ELITE with six (6) months written notice.

8.4

Effect of Termination. Upon termination or expiration of this Agreement, the provisions of this Agreement shall continue to apply with respect to the Parties’ respective rights and obligations in relation to any Purchase Order made prior to such termination, including without limitation ELITE’s obligation to manufacture, release and deliver Products to LANNETT, and LANNETT’s obligation to make payment for such Products. If this Agreement is terminated while LANNETT is still in possession of Products (“Remaining Products”), ELITE hereby grants LANNETT and its Affiliates a license to promote, market, distribute and sell the Remaining Products in the Territory, subject to the License Fees in Article 3.3.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

8.5

Survival. The expiration or earlier termination of this Agreement shall not relieve either Party hereto from any obligations which accrued prior to such expiration or earlier termination, and shall not destroy or diminish the binding force and effect of any of the terms and conditions of this Agreement that expressly or by implication come into or continue in effect on or after termination or expiration, including ARTICLE 1 - , ARTICLE 5 - , ARTICLE 6 - , ARTICLE 7 - , Section 8.4, ARTICLE 9 - , ARTICLE 11 - , ARTICLE 12 - , Sections 14.6, and 14.7. Further, the provisions from the Original Agreement that were deemed to survive the termination or expiration of that Agreement shall further survive.

ARTICLE 9 - REPRESENTATIONS & WARRANTIES

9.1

Representations and Warranties. Each Party represents and warrants to the other Party as follows, which representations and warranties shall be true as at the date hereof and throughout the Term of this Agreement:

(a)

it has full corporate power and authority and has taken all corporate action necessary to enter into and perform this Agreement; and

(b)

this Agreement is its legal, valid and binding obligation, enforceable in accordance with the terms and conditions hereof.

9.2

ELITE General and Supply Warranties. ELITE represents and warrants to LANNETT as follows:

(a)

No Other Agreements. No contracts, commitments or agreements of any nature exist, and none will be entered into during the Term of this Agreement, that impair or inhibit the ability of ELITE to perform its obligations hereunder.

(b)

No Lawsuits. As of the date hereof there have not been any Claims, lawsuits, arbitrations, legal or administrative or regulatory proceedings, charges, or complaints or investigations, by any third party or government authority threatened, commenced, pending or proceeding against ELITE, and ELITE has not received any notice thereof, which could prevent ELITE from complying with its material obligations under this Agreement.

(c)

Debarred. Neither ELITE nor any of its officers, directors, or employees or consultants performing services under this Agreement has been or is: (1) an individual who has been debarred by the FDA pursuant to 21 U.S.C. § 335a(a) or (b) (“Debarred Individual”) from providing services in any capacity to a person that has an approved or pending drug product application with FDA, or an employer, employee, or partner of such a Debarred Individual; or (2) a corporation, partnership or association that has been debarred by FDA pursuant to 21 U.S.C. § 335a(a) or (b) (“Debarred Entity”) from submitting or assisting in the submission of an ANDA, or an employee, partner, shareholder, member, subsidiary, or affiliate of a Debarred Entity; or (3) an employer, employee or partner of an individual convicted within the last five years for crimes described in subsections (a) or (b) of Section 306 of the FDCA. If and when ELITE becomes aware of any fact that makes or gives rise to make this representation and warranty untrue, ELITE shall immediately notify LANNETT in writing and any such breach may result in immediate termination of this Agreement by LANNETT.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

(d)

Non-Infringement.

(i)

ELITE’s performance of its obligations hereunder to the best of ELITE’s knowledge does not and will not infringe any intellectual property rights of a third party.

(ii)

To the best of ELITE’s knowledge no patents, patent applications if issued, or any other proprietary rights of any third party would be infringed by the manufacture, use or sale of the Product and ELITE shall indemnify, defend and hold harmless LANNETT and its Affiliates against any and all such infringement claims, demands, actions, losses, damages, fines, penalties, costs and expenses (including reasonable attorneys’ fees). The indemnification obligation of ELITE shall include Third Party patents issued after the Effective Date.

(e)

Facility. The Facility is in compliance with all Laws, including without limitation GMP, and that there are no, nor have been any, citations or adverse conditions of a material nature noted in any inspection of the site which would cause the Product to be misbranded or adulterated. It has and shall maintain sufficient knowledge and experience and adequate production facility(s), equipment and processes to produce the Product and perform its obligations under this Agreement in compliance with all Laws.

(f)

Products Supply. ELITE warrants, represents and covenants to LANNETT that all Products delivered to LANNETT hereunder shall:

(i)

comply with the Specifications;

(ii)

comply with the applicable Purchase Order;

(iii)

be manufactured, tested, packaged, labeled, stored, handled and delivered by ELITE in accordance with (i) the terms of this Agreement, including the Specifications, and the Quality Agreement, (ii) the requirements of the Marketing Authorization, (iii) all applicable GMPs and Laws in the Territory, including regulations set forth by the DEA, (iv) all of ELITE’S quality control procedures and associated test methods for the Products;

(iv)

be manufactured at the Facility approved by the Regulatory Authorities in the Territory;

(v)

not be adulterated or misbranded under any applicable Laws in the Territory;

(vi)

have at least eighty-five percent (85%) of the Product’s shelf-life remaining at the time of delivery; and

(vii)

be free of all liens, security interests, and other claims of any nature and free from defects in material, manufacturing and workmanship for the shelf-life of the Products.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

(g)

be manufactured, supplied, packaged, labeled and delivered in compliance with all serialization and aggregation requirements set forth in the Drug Supply Chain Security Act (DSCSA) Marketing Authorizations. The serialization requirements include, but are not limited to, the addition of Product identifiers imprinted on each sellable unit, on each homogenous case and on each pallet intended to be introduced in the Territory. Unique Product identifiers will include a national drug code, serial identifier (proved by LANNETT), lot number and expiration date. Serial numbers must be aggregated from item to case and case to pallet. ELITE warrants, represents and covenants to LANNETT that (i) all Marketing Authorizations have been obtained as necessary to permit LANNETT to manufacture, use, store, import, transport and sell the Product in the Territory pursuant to the terms of this Agreement and (ii) ELITE shall maintain all necessary Marketing Authorizations in good standing to permit LANNETT to manufacture, use, store, import, transport and sell the Product in the Territory pursuant to the terms of this Agreement.

(h)

It is and shall at all times relevant to this Agreement be in full compliance with all applicable Laws relating or impacting in the performance of ELITE’s duties and obligations under this Agreement, including but not limited to, those rules, regulations, and/or guidance promulgated or issued by the FDA, the Centers for Medicare & Medicaid Services, the U.S. Department of Health and Human Services Office of Inspector General the U.S. Drug Enforcement Agency, the U.S. Department of Justice, as well as any applicable environmental requirements and all serialization and aggregation requirements set forth in the Drug Supply Chain Security Act.

(i)

Subject to DEA quotas, it has access to sufficient supplies of raw materials, components and other required resources to perform the services required under this Agreement, and shall exercise commercially reasonable and diligent efforts to maintain access to sufficient supplies without interruption during the Term.

9.3

LANNETT General Warranties. LANNETT represents and warrants to ELITE that:

(a)

No Other Agreements. No contracts, commitments or agreements of any nature exist, and LANNETT covenants that none will be entered into during the Term of this Agreement that impair or inhibit the ability of LANNETT to perform its obligations hereunder.

(b)

No Lawsuits. As of the date hereof there have not been any Claims, lawsuits, arbitrations, legal or administrative or regulatory proceedings, charges, or complaints or investigations by any third party or government authority threatened, commenced, pending or proceeding against LANNETT, and LANNETT has not received any notice thereof, which could prevent LANNETT from complying with its material obligations under this Agreement.

(c)

Debarred. Neither LANNETT nor any of its officers, directors, or employees or consultants performing services under this Agreement has been or is: (1) a Debarred Individual or an employer, employee, or partner of such a Debarred Individual; or (2) a Debarred Entity, or an employee, partner, shareholder, member, subsidiary, or affiliate of a Debarred Entity; or (3) an employer, employee or partner of an individual convicted within the last five years for crimes described in subsections (a) or (b) of Section 306 of the FDCA. If and when LANNETT becomes aware of any fact that makes or gives rise to make this representation and warranty untrue, LANNETT shall immediately notify ELITE in writing and any such breach may result in immediate termination of this Agreement by ELITE.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

(d)

It is and shall at all times relevant to this Agreement be in full compliance with all applicable Laws relating or impacting in the performance of LANNETT’s duties and obligations under this Agreement, including, to the extent applicable, but not limited to, those rules, regulations, and/or guidance promulgated or issued by the FDA, the Centers for Medicare & Medicaid Services, the U.S. Department of Health and Human Services Office of Inspector General the U.S. Drug Enforcement Agency, the U.S. Department of Justice, as well as any applicable environmental requirements and all applicable requirements set forth in the Drug Supply Chain Security Act.

9.4

Disclaimer. EXCEPT FOR THE WARRANTIES AND REPRESENTATIONS PROVIDED OR REFERENCED IN THIS AGREEMENT, THE PARTIES MAKE NO OTHER WARRANTIES OR REPRESENTATIONS TO EACH OTHER, EXPRESS OR IMPLIED, INCLUDING THOSE WITH RESPECT TO THE PRODUCTS, WHETHER STATUTORY OR OTHERWISE, AND EACH PARTY SPECIFICALLY DISCLAIMS ALL OTHER WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE 10 - COVENANTS

10.1

Compliance. Each Party shall perform its obligations under this Agreement in strict compliance with all applicable GMPs and Laws in the Territory, and all applicable licenses, governmental permits or applications in the Territory.

10.2

Permits and Licenses. Each Party shall throughout the Term of this Agreement obtain and maintain any and all licenses, permits, orders, applications and consents (including facility licenses and permits) required by the Regulatory Authorities in the Territory, and all applicable Laws, regulations and GMPs necessary or required to perform its obligations under this Agreement.

ARTICLE 11 - INDEMNIFICATION & INSURANCE

11.1

Indemnification of ELITE. LANNETT shall defend, indemnify and hold harmless ELITE, its Affiliates and their respective officers, directors, employees, agents and representatives from and against all Losses from any Third-Party Claim directly resulting from:

(a)

any breach of any obligations, actions, or representations made by LANNETT under this Agreement; and

(b)

any negligent, grossly negligent or intentionally wrongful act or omission of LANNETT or of any person acting on LANNETT’s behalf, with authorization, when the wrongful act or omission occurred in performance of LANNETT’s obligations under this Agreement;

provided, however, that the foregoing indemnification obligations shall not apply to the extent such Losses are caused by an act or omission for which ELITE is contributorily negligent and/or otherwise required to indemnify LANNETT under Article 11.2.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

11.2

Indemnification of LANNETT. ELITE shall defend, indemnify and hold harmless LANNETT, its Affiliates and their respective officers, directors, employees, agents and representatives from and against all Losses from any Third-Party Claim directly resulting from:

(a)

any breach of any obligations, actions, or representations made by ELITE under this Agreement;

(b)

any infringement or claim of infringement of any patent, trademark or other intellectual property rights based on the manufacture and release of the Product furnished under the provisions of this Agreement;

(c)

personal injury (including death) or property damage relating to or arising out of any use, distribution or sale of the Products by LANNETT or its Affiliates to the extent that such Loss was the result of the Product not being manufactured to meet the Analytical Specifications;

(d)

any negligent, grossly negligent or intentionally wrongful act or omission of ELITE or of any person acting on ELITE’s behalf, with authorization, when the wrongful act or omission occurred in performance of ELITE’ obligations under this Agreement;

(e)

the condition of any Products sold, supplied or delivered to LANNETT under this Agreement, including any defect in material, workmanship, design, manufacturing or formulary;

(f)

any warnings and instructions, or lack thereof, for any Product;

(g)

the possession, distribution, sale and/or use of, or by reason of the seizure of, any Product; and

(h)

any actual or asserted violation(s) of the FDCA or any applicable Law by virtue of which any Product sold, supplied or delivered to Lannett under this Agreement is alleged or determined to be adulterated, misbranded, mislabeled or otherwise not in full compliance with, or in contravention of, any applicable Law.

provided, however, that the foregoing indemnification obligations shall not apply to the extent such Losses are caused by an act or omission for which LANNETT is contributorily negligence or is required to indemnify ELITE under Article 11.1. ELITE shall also indemnify LANNETT for any damages arising from any interruption in supply of the Products to LANNETT occasioned by ELITE’s commitments, contractual or otherwise, with a Third Party subject to Article 4.4.

11.3

Indemnification Procedure. Any Party entitled to indemnification hereunder (the “Indemnitee”) shall notify the indemnifying Party (the “Indemnitor”) promptly of any claim threatened or commenced against the Indemnitee. The Indemnitor shall assume control and direct the defense, investigation and handling of the claim for and on behalf of the Indemnitee, provided, however that the Indemnitor shall not settle or consent to judgment without the Indemnitee’s approval, which approval shall not to be unreasonably withheld. The Indemnitee shall cooperate with the Indemnitor, and may participate, at the Indemnitee’s expense, in the defense of such claim. If the Indemnitor fails to assume control of the defense of any claim, or, having elected to assume control, thereafter fails to diligently defend the claim, the Indemnitee shall, without limitation to the Indemnitor’s obligations hereunder, be entitled to contest, settle or pay the amount of the claim, and the Indemnitor shall be bound by the results obtained by the Indemnitee with respect to the claim.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

11.4

Insurance. Each Party hereby represents to the other that it has, and during the Initial Term and any Renewal Term and for three (3) years after termination or expiration of this Agreement, will maintain, products liability insurance coverage of not less than US five million dollars ($5,000,000.00) per occurrence and five million dollars ($5,000,000) in the aggregate. ELITE shall increase its product liability insurance coverage to ten million dollars ($10,000,000) prior to the launch of Mixed Amphetamine extended release Product. For the sake of clarity, should ELITE increase its product liability insurance coverage beyond this amount, the new levels shall automatically apply to this Agreement. Upon the request of the other Party hereto, the insured Party shall furnish the other Party with a certificate of insurance evidencing such coverage and each Party shall endeavor to provide notice to the other Party if there is a material change or cancellation of the policy. Each Party shall list the other Party as an additional insured on such Party’s applicable insurance coverage. Each Party shall provide the certificate of insurance within ten (10) days of its receipt of a request for proof of insurance.

11.5

Survival. The obligations set forth in this ARTICLE 11 - shall survive the termination of this Agreement and remain in full force and effect for an indefinite period after termination in relation to any claim based on events which occur during the term hereof.

ARTICLE 12 - CONFIDENTIALITY

12.1

Confidentiality. During the Term of this Agreement and for five (5) years thereafter, each Party shall maintain in strict confidence the Confidential Information (as defined below) of the other Party. Each Party shall not use the Confidential Information of the other Party for any purpose other than the purposes expressly permitted by this Agreement, and shall not disclose such Confidential Information to any third party (including in connection with any publications, presentations or other disclosures) except to its employees, agents or advisors (“Representatives”) who have a need to know such Confidential Information to perform such Party’s obligations under this Agreement. Each Party shall ensure that any Representative to whom it discloses the other Party’s Confidential Information is informed of the confidential nature of and duty not to disclose the information, and is obligated under written obligation to maintain the confidentiality thereof on terms at least as restrictive as those set forth herein. Each Party shall be responsible for any breach of this Agreement by its Representatives, which shall be considered a breach by such Party. Under no circumstances shall the receiving Party use the disclosing Party’s Confidential Information for its own commercial advantage to the detriment of the disclosing Party. Each Party may disclose such of the Confidential Information of the other Party as may be required by the order of a court of competent jurisdiction or by any governmental authority having jurisdiction, provided that prior to any such disclosure the Party required to disclose shall, to the extent permitted by Law, notify the other Party prior to disclosing any Confidential Information and provide such other Party with a reasonable opportunity to contest or limit the scope of the required disclosure and obtain any protective orders as may be appropriate. In the event the disclosure is nonetheless compelled, the Party making the disclosure shall only disclose the information to the extent required to comply with the Law. Upon termination or expiration of this Agreement, or upon request, a Party shall destroy or return all Confidential Information of the other Party and certify in writing that such return (or destruction) has been completed; provided, however, that each Party shall be entitled to retain one archival copy of such Confidential Information solely for purposes of monitoring such Party’s compliance with its obligations under this ARTICLE 12 - .

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

12.2

Definition. “Confidential Information” means all proprietary technical information, marketing, business and financial information, scientific data, information, whether or not labeled “Confidential”, and all tangible and intangible embodiments and oral disclosures thereof of any kind whatsoever, and all other materials which a disclosing Party treats confidentially that relates to a Product or the business of a Party and is disclosed or developed under or in connection with this Agreement. Confidential Information shall not include any information which the receiving Party can show by competent proof:

(a)

was known to or in the possession of the receiving Party prior to the date of its actual receipt from the disclosing Party;

(b)

is readily available to the public other than through the fault of the receiving Party;

(c)

was disclosed by a third party not under an obligation of confidentiality to the disclosing Party; or

(d)

is subsequently independently developed by the receiving Party without use of the Confidential Information as demonstrated by competent written records.

12.3

Injunctive Relief. The Parties acknowledge that any breach of this ARTICLE 12 - may constitute irreparable harm, and that the non-breaching Party shall be entitled to seek specific performance or injunctive relief to enforce this ARTICLE 12 - in addition to whatever remedies such Party may otherwise be entitled to at law or in equity, without the necessity of posting bond or any other security.

12.4

Separate Confidentiality Agreement. LANNETT and ELITE have entered into a separate Mutual Confidential Disclosure Agreement dated January 7, 2019 (“Confidentiality Agreement”). Such Confidentiality Agreement will be and remain in full force and effect as provided therein. In the event of any conflict between the terms of this Agreement and the terms of any such Confidentiality Agreement, the terms of such Confidentiality Agreement will control.

12.5

No Publicity. Except as required by law, neither Party shall originate any publicity, news release or other public announcements, written or oral, whether to the public press, to stockholders, or otherwise, relating to this Agreement, any amendment hereto, performance hereunder or the existence of an arrangement between the Parties without the prior written approval of the other Party, which approval shall not be unreasonably withheld. Nothing in the provision shall be deemed to prevent a Party from making such disclosures or announcements that are legally required of such Party; provided that in any event the non-disclosing Party shall have the right to review any such disclosure and revise such disclosure to the extent it relates to the use of the non-disclosing Party’s name or Confidential Information. No Party shall, without the prior written consent of the affected Party, use in advertising, publicity, or otherwise, the name, trademark, logo, symbol, or other image of the affected Party without the other Party’s prior written consent.

ARTICLE 13 - REGULATORY MATTERS

13.1

Regulatory Responsibilities. ELITE will, at its own cost and expense, continue to own and maintain the applicable Regulatory Approvals necessary to market the Products in the Territory. ELITE shall be responsible for all regulatory and safety reporting requirements associated with ownership of the Regulatory Approval, including, without limitation, adverse event reports, annual reports mandated by the applicable Laws in the Territory. Additionally, ELITE shall be responsible for complying with applicable Laws to appropriately categorize and report changes to the FDA, including without limitation, amendments, supplements, and annual reports. All communications by ELITE with the FDA relating to the Products as marketed in the Territory shall be promptly provided in writing to LANNETT, and ELITE shall promptly provide to LANNETT copies of all documents sent to or received from the FDA regarding the Products.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

13.2

Labeling. ELITE shall be responsible for the creation, content, and printing of the labeling for the Products. ELITE shall send LANNETT all labeling materials (e.g., package insert, container label, carton label, medication guide, patient labeling, etc.) in final format for the Products for LANNETT’S review and final written approval. ELITE is responsible for ensuring the most current labeling content, consistent with the reference listed drug (“RLD”) labeling content and all requested FDA updates, is used on Products supplied to LANNETT. ELITE is responsible for notifying LANNETT within three (3) business days of any FDA communication requesting changes to labeling materials, including Safety Change Notifications and changes requested per section 505(o)(4) of the FDCA. ELITE will provide LANNETT with a copy of all FDA communications related to labeling. All changes to labeling materials for the Products require LANNETT’S review and final written approval. Labeling materials that have not been subject to LANNETT’S review and written approval are prohibited to be used on Products supplied to LANNETT. ELITE is responsible for submitting the content of labeling in Structured Product Labeling (“SPL”) format to the FDA for LANNETT’S NDC numbers within fourteen (14) days of ANDA approval to ensure proper drug listing. ELITE is also responsible for submitting updated SPL files within fourteen (14) days when labeling changes are made and approved and as required by applicable Laws.

ARTICLE 14 - MISCELLANEOUS

14.1

Notices. Any notice or other document required or permitted to be given pursuant to this Agreement shall be in writing and shall be delivered by personally by hand; by courier; by prepaid certified mail, return receipt requested; or by email, in each case addressed to the Party to whom it is to be given at the address set forth below or at such other address as the Party to whom such notice is to be given shall have last notified the other Party in accordance with the provisions of this section:

In the case of LANNETT at:	Lannett Company, Inc., USA
	9000 State Road
	Philadelphia, PA 19136
	Attention: Legal Department
	Email: samuel.israel@lannett.com

And in the case of ELITE at:	Elite Pharmaceuticals, Inc.
	165 Ludlow Avenue
	Northvale, NJ 07647
	Attention: CEO
	Email: nhakim@elitepharma.com

Any such notice or other document shall:

(i)

if delivered by hand, courier, or email be deemed to have been given and received at the place of receipt on the date of delivery, provided that if delivery is other than during business hours (9:00 a.m. to 5:00 p.m., local time) on a Business Day in the place of receipt, such notice shall be deemed to have been given and received at the place of receipt on the first Business Day thereafter; and

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

(ii)

if mailed, be deemed to have been given and received at the place of receipt on the earlier of the date of actual receipt and three (3) Business Days after the date of mailing. In the event of postal disruption, such notices or documents must be delivered by means other than by mail.

14.2

Relationship of the Parties. The relationship of the Parties is that of independent contractors. Nothing in this Agreement shall be deemed or construed to constitute or create between the Parties hereto a partnership, joint venture, agency, or other relationship other than as expressly set forth herein. This Agreement does not constitute any one Party hereto as the agent or legal representative of the other Party for any purpose whatsoever. Neither of the Parties grants to the other any right or authority to assume or create any obligation or responsibility, express or implied, on behalf of it or in its name in any manner whatsoever, unless otherwise agreed to in writing by the other Party.

14.3

Inurement & Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Except as otherwise expressly provided herein, neither Party may assign or transfer it rights or obligations under this Agreement, in whole or in part, without the prior written consent of the other Party. Notwithstanding the foregoing, both LANNETT and ELITE shall be entitled to assign its rights and performance of its obligations under this Agreement to any Affiliate or to the acquirer of all or substantially all of the business or assets to which this Agreement relates (whether by stock sale, asset sale, merger, consolidation or otherwise), provided that the assigning Party remains fully responsible for the performance of the obligations of its Affiliates under this Agreement. Any assignment or transfer by a Party other than in accordance with the terms hereof shall be void and shall entitle the other Party to terminate this Agreement.

14.4

No Waiver; Remedies. No Party to this Agreement shall be deemed or taken to have waived any provision of this Agreement unless such waiver is in writing, and then such waiver shall be limited to the circumstances set forth in such written waiver. No failure or delay on the part of a Party in exercising any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies provided for hereunder shall be cumulative of and in addition to any and all other remedies, at law or in equity, which any Party may have, and the exercise of any one or more of such remedies shall not preclude the exercise of any others.

14.5

Force Majeure. If either Party is prevented from complying, either totally or in part, with any of the terms or provisions of this Agreement by reason of force majeure, including fire, flood, earthquake, storm, general strike, lockout, riot, war, terrorism, rebellion, accident, acts of God and/or any other cause or externally induced similar casualty beyond its reasonable control and without the fault or negligence of either Party(a “Force Majeure Event”), then, upon written notice by the Party liable to perform to the other Party, the requirements of this Agreement or such of its provisions as may be affected, and to the extent so affected, shall be suspended during the period of such disability, provided that the Party asserting force majeure shall bear the burden of establishing the existence of such Force Majeure Event by clear and convincing evidence, and provided further that the Party prevented from complying shall use its best efforts to remove such disability, and shall continue performance with the utmost dispatch whenever such causes are removed, and shall notify the other Party of the Force Majeure Event not more than five (5) Business Days from the time of the event and state the nature of the Force Majeure Event, its anticipated duration and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is reasonably required. When such circumstances arise, the Parties shall discuss what, if any, modification of the terms of this Agreement may be required in order to arrive at an equitable solution. Notwithstanding the foregoing, if a Force Majeure Event shall continue for a period of longer than three (3) consecutive months or one hundred and twenty (120) days in any twelve (12) month period, then the Party unaffected by such event may terminate this Agreement immediately upon giving written notice of termination to the other Party. Notwithstanding any provision contained herein, any action taken by a Regulatory Authority as a result of a Party’s negligence or willful misconduct shall not constitute a Force Majeure Event under this Article 14.5.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

14.6

Dispute Resolution. The Parties recognize that disputes as to certain matters may from time to time arise which relate to a Party’s rights and/or obligations under this Agreement. It is the objective of the Parties to establish procedures to facilitate the resolution of such disputes in an expedient manner by mutual cooperation and without resort to litigation. To accomplish this objective, the Parties agree to follow the procedures set forth in this Article 14.6 if and when such a dispute arises between the Parties arises. Notwithstanding the provisions of this Article 14.6 however, nothing herein contained shall preclude a Party from seeking equitable remedies in any court of competent jurisdiction as set forth in Article 14.7 hereof. If any controversy, dispute or claim arises between the Parties relating to the interpretation, breach, performance, enforcement, termination or validity of this Agreement and the Parties cannot resolve the dispute within thirty (30) days of a written request by one Party to any other Party, the Parties agree to hold a meeting, attended by each Parties authorized representatives , to attempt in good faith to negotiate a resolution of the dispute prior to pursuing other available remedies. If, within thirty (30) days after such written request, the Parties have not succeeded in negotiating a resolution of the dispute, the Party may seek any other remedies available to it in at law or in equity.

14.7

Governing Law & Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each Party hereby irrevocably submits to the exclusive jurisdiction of any federal or state court in Delaware for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each Party further agrees that service of any process, summons, notice or document by certified or registered mail to such Party’s address set forth in Article 14.1 or such other address or to the attention of such other person as the recipient Party has specified by prior written notice to the sending Party shall be effective service of process in any action, suit or proceeding in Delaware with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each Party irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the federal or the state courts in Delaware and hereby irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in such court has been brought in an inconvenient forum.

14.8

Waiver of Trial by Jury. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY PROCEEDING BASED UPON, ARISING OUT OF, OR RELATED TO THIS AGREEMENT, INCLUDING ANY DISPUTE ARISING OUT OF OR RELATING TO THE PERFORMANCE THEREOF, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

14.9

Severability. If any provision in this Agreement is held to be invalid, void or unenforceable, then the remainder of this Agreement, or the application of such provision to the Parties or to the circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and shall be enforced to the fullest extent permitted by law. The Parties agree to renegotiate any such invalid, void or unenforceable provision in good faith in order to provide a reasonably acceptable alternative consistent with the basic purposes of this Agreement.

14.10

Entire Agreement. This Agreement (including the Schedules attached hereto, the SDEA and the Quality Agreement) constitutes the entire agreement between the Parties with respect to the subject matter hereof, and all prior or agreements, whether written or oral, are superseded hereby. This Agreement may be amended only in writing executed by the Parties.

14.11

Sub-contracting. ELITE shall not sub-contract any of the work to be performed under this Agreement without the prior written consent of LANNETT. No such sub-contracting shall relieve ELITE of any of its obligations hereunder.

14.12

Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute this Agreement.

14.13

Headings. The captions and headings contained herein are for convenience of the Parties and in no way define, limit or describe the scope of this Agreement.

14.14

Language. The language of this Agreement and all proceedings taken in relation thereto shall be English.

14.15

Currency. Unless otherwise specifically provided, all references to money amounts are expressed in terms of United States Dollars (USD) and all payments made pursuant to this Agreement shall be made in that currency.

14.16

Section 365(n) of the Bankruptcy Code. All rights and licenses granted under or pursuant to any Section of this Agreement are and shall otherwise be deemed to be for purposes of Section 365(n) of Title 11, of the United States Code (the “Bankruptcy Code”) licenses of rights to “intellectual property” as defined in Section 101(35A) of the Bankruptcy Code. The Parties shall retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code. Upon the bankruptcy of any Party, the non-bankrupt Party shall use its best efforts to transfer its Product responsibilities to a third party, unless the bankrupt Party elects to continue, and continues, to perform all of its obligations under this Agreement.

14.17

Construction of Agreement. The terms and provisions of this Agreement represent the results of negotiations between the Parties and their representatives, each of which has been represented by counsel of its own choosing, and neither of which has acted under duress or compulsion, whether legal, economic or otherwise. Accordingly, the terms and provisions of this Agreement shall be interpreted and construed in accordance with their usual and customary meanings, and each of the Parties hereto hereby waives the application in connection with the interpretation and construction of this Agreement of any rule of law to the effect that ambiguous or conflicting terms or provisions contained in this Agreement shall be interpreted or construed against the Party whose attorney prepared the executed draft or any earlier draft of this Agreement.

[SIGNATURE PAGE FOLLOWS]

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above.

ELITE PHARMACEUTICALS, INC.		LANNETT COMPANY, INC.

By:	/s/ Nasrat Hakim	By:	/s/Tim Crew

Name:	Nasrat Hakim	Name:	Tim Crew

Title:	CEO	Title:	CEO

ELITE LABORATORIES, INC.

By:	/s/Nasrat Hakim

Name:	Nasrat Hakim

Title:	CEO

Schedule A:	Products

Schedule B:	Product Specifications

Schedule C:	Quarterly Report for Calculation of Gross Profit

Schedule D:	Shipping Instructions

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE A

Products and Prices

Product List

Generic Name	ANDA #	Reference Listed Drug
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Tablets (Mixed Salts of a Single Entity Amphetamine Product)	211352	Adderall®
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Extended Release Capsules (Mixed Salts of a Single Entity Amphetamine Product)	212037	Adderall XR®

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

Transfer Prices ($/bottle)

Name	Strength	Full Batch Qty.	Bottle Size	Cost per bottle
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Tablets (Mixed Salts of a Single Entity Amphetamine Product)	5 mg	6,750 bottles	100 count	$[***]
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Tablets (Mixed Salts of a Single Entity Amphetamine Product)	7.5 mg	4,500 bottles	100 count	$[***]
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Tablets (Mixed Salts of a Single Entity Amphetamine Product)	10 mg	7,500 bottles	100 count	$[***]
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Tablets (Mixed Salts of a Single Entity Amphetamine Product)	12.5 mg	5,400 bottles	100 count	$[***]
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Tablets (Mixed Salts of a Single Entity Amphetamine Product)	15 m g	10,000 bottles	100 count	$[***]
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Tablets (Mixed Salts of a Single Entity Amphetamine Product)	20 mg	7,500 bottes	100 count	$[***]
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Tablets (Mixed Salts of a Single Entity Amphetamine Product)	30 mg	5,000 bottles	100 count	$[***]
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Extended Release Capsules (Mixed Salts of a Single Entity Amphetamine Product)	5 mg	11,000 bottles	100 count	$[***]

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Extended Release Capsules (Mixed Salts of a Single Entity Amphetamine Product)	10 mg	11,000 bottles	100 count	$[***]
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Extended Release Capsules (Mixed Salts of a Single Entity Amphetamine Product)	15 mg	11,000 bottles	100 count	$[***]
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Extended Release Capsules (Mixed Salts of a Single Entity Amphetamine Product)	20 mg	11,000 bottles	100 count	$[***]
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Extended Release Capsules (Mixed Salts of a Single Entity Amphetamine Product)	25 mg	11,000 bottles	100 count	$[***]
Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, and Amphetamine Sulfate Extended Release Capsules (Mixed Salts of a Single Entity Amphetamine Product)	30 mg	11,000 bottles	100 count	$[***]

Pricing includes all Product manufacturing and packaging costs, quality assurance, batch quality control testing and stability testing, and is subject pricing adjustments in Section 4.1(d).

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

Schedule B

Product Specifications

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

Schedule C

Quarterly Report for Calculation of Gross Profit

Product Name:________________________________________________________

Quantity sold by SKU	XXXX units
Gross Sales	$
Deductions:
Chargebacks
Rebates
ADministrative Fees
Billbacks
Returns
Shelf Stock Adjustments
Other deductions
Cash Discounts
Medicaid
NET SALES	$
Transfer Price
DIstribution FEES
Shipping COsts
Gross Profit
NET PROFIT
Profit share Payment to ELITe at [***]%

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE D

SHIPPING INSTRUCTIONS

All shipments inbound to LANNETT must arrive intact and in a certain and dry condition that is free from defects and damage.

All material must have 85% of its maximum shelf life remaining at the time of delivery and in no case less than 15 months.

All truckloads of the Products should be in sealed trailers, with the seal number noted on the delivery receipt.

All truckload and less than truckload shipments must be on 40”x48” 4-way heat treated pallets that are shrink-wrapped and free of broken boards.

Finished goods materials should have a maximum height of 51” from the floor to the top of the pallet.

Each shipment must be labelled with a minimum of the name of the material, the manufacturer’s lot number, the gross, tare, and net weights, the LANNETT item number for the material, and the LANNETT purchase order number.

All finished products must be packaged as agreed in the product specification and case labels must be HDMA complaint.

A dock appointment must be scheduled for deliveries consisting of 5 or more pallets and for all hazardous material. Receiving hours are 7am-3pm Eastern. For Seymour, IN deliveries, please contact the representative at 812-523-5446 to schedule all freight deliveries.

Please email invoices to the following email address: AccountsPayable@Lannett.com

Exhibit 10.49

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

Elite Pharmaceuticals, Inc.

AND

NOSTRUM LABORATORIES INC.

DATED AS OF

November 13, 2019

This document is not intended to create, nor will it be deemed to create, a legally binding or enforceable offer or agreement of any type or nature, unless and until the duly authorized and approved execution of this document by the parties and the delivery of an executed copy hereof by each of the parties to all other parties

TABLE OF CONTENTS

			Page
ARTICLE 1 PURCHASE AND SALE			1
	Section 1.1	Sale and Purchase of Assets	1
	Section 1.2	Assumed Liabilities	1
	Section 1.3	Excluded Liabilities	2
	Section 1.4	Purchase Price	2
	Section 1.5	Purchase Price Allocation	2

ARTICLE 2 CLOSING			3
	Section 2.1	Closing	3
	Section 2.2	Actions to be Taken at the Closing	3
	Section 2.3	License to Certain Product Technology	3

ARTICLE 3 REPRESENTATIONS OF SELLER			3
	Section 3.1	Organization and Authority	3
	Section 3.2	Consents and Approvals; No Violations	4
	Section 3.3	Absence of Litigation	4
	Section 3.4	Regulatory Matters	4
	Section 3.5	Title	5
	Section 3.6	Brokers	5
	Section 3.7	Exclusivity of Representations and Warranties	5

ARTICLE 4 REPRESENTATIONS OF BUYER			5
	Section 4.1	Organization and Authority	5
	Section 4.2	Consents and Approvals; No Violations	6
	Section 4.3	Litigation	6
	Section 4.4	Brokers	6
	Section 4.5	No Other Representations and Warranties	6

ARTICLE 5 COVENANTS			7
	Section 5.1	Product Responsibility	7
	Section 5.2	Transfer of Regulatory Approvals	8
	Section 5.3	Transfer Taxes	8
	Section 5.4	Public Announcements	8
	Section 5.5	Confidentiality	8
	Section 5.6	Further Assurances	8

ARTICLE 6 INDEMNIFICATION			8
	Section 6.1	Survival of Representations, Warranties and Covenants	8
	Section 6.2	Indemnification by Seller for the Benefit of Buyer	9
	Section 6.3	Indemnification by Buyer for the Benefit of Seller	9
	Section 6.4	Certain Further Limitations	9
	Section 6.5	Indemnification Procedures	10
	Section 6.6	Treatment of Indemnity Payments	12
	Section 6.7	Exclusive Remedy	12

ARTICLE 7 MISCELLANEOUS			13
	Section 7.1	Fees and Expenses	13
	Section 7.2	Amendment	13
	Section 7.3	Waiver	13
	Section 7.4	Entire Agreement	13
	Section 7.5	Assignment	14
	Section 7.6	Notices	14
	Section 7.7	Construction; Section Headings; Draftsmanship; Interpretation	15
	Section 7.8	Annexes, Exhibits and Schedules	15
	Section 7.9	No Third Party Beneficiaries	16
	Section 7.10	Severability	16
	Section 7.11	Limitation of Remedies	16
	Section 7.12	No Recourse	16
	Section 7.13	Governing Law; Submission to Jurisdiction; Waiver of Jury Trial	16
	Section 7.14	Service of Process	17
	Section 7.15	Specific Enforcement	17
	Section 7.16	Counterparts; Delivery	17

	Annex A	Definitions
	Annex B	Products / Allocation Schedule

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”), dated as of November 13, 2019, is entered into by and between Elite Pharmaceuticals, Inc., a Nevada corporation (“Seller”), and Nostrum Laboratories Inc., a New Jersey, USA corporation (“Buyer”). Seller and Buyer shall be referred to herein from time to time collectively as the “Parties” and individually as a “Party”. Capitalized words have the definitions set forth in Annex A.

BACKGROUND

WHEREAS, Buyer desires to acquire the Regulatory Approvals (as defined herein), the Regulatory Documentation (as defined herein), certain rights to Product Technology (as defined herein) and certain other assets relating to one or more of these, and Seller has agreed to sell such assets on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the respective covenants, representations and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

Article 1
PURCHASE AND SALE

Section 1.1 Sale and Purchase of Assets. Subject to the terms and conditions set forth herein, at the Closing, Seller shall sell to Buyer and Buyer shall purchase from Seller, free and clear of all Liens other than Permitted Liens, for the Purchase Price, Seller’s right, title and interest in and to the following (collectively, the “Transferred Assets”):

(a) the Regulatory Approvals; and

(b) the Regulatory Documentation.

Section 1.2 Assumed Liabilities. Upon the terms and subject to the conditions of this Agreement, effective as of the Closing Date, Buyer shall assume and pay, perform or otherwise discharge, in accordance with their respective terms and subject to their respective conditions thereof, the following liabilities and obligations (collectively, the “Assumed Liabilities”):

(a) all liabilities and obligations arising out of or relating to Products sold by or on behalf of Buyer or its Affiliates on or after the Closing Date, including any product liability, breach of warranty or similar claim for injury or other harm to person or property, which result from the use or misuse of Products or otherwise related to the Products (including all proceedings relating to any such liabilities or obligations) sold by or on behalf of Buyer on or after the Closing Date;

(b) all liabilities and obligations arising out of or relating to any Product recall instituted on or after the Closing Date for Products sold by or on behalf of Buyer on or after the Closing Date, subject to Seller’s reimbursement obligations set forth in Section 5.1;

(d) all other liabilities and obligations arising out of, or relating to, the marketing, sale or use of the Products or Transferred Assets by or on behalf of Buyer or its Affiliates or their respective agents on or after the Closing Date.

Section 1.3 Excluded Liabilities. Buyer shall not assume, nor shall Buyer be responsible to pay, perform or discharge any liabilities or obligations of Seller other than the Assumed Liabilities (collectively, the “Excluded Liabilities”). Without limiting the foregoing, Purchaser shall not assume:

(a) any action, suit or proceeding pending as of the Closing Date notwithstanding the disclosure thereof by Buyer to Seller any subsequent claim, action, suit or proceeding arising out of or relating to such pending matters, any other similar event occurring on or prior to the Closing Date or, resulting from the conduct of Seller’s business by Seller on or prior to the Closing Date;

(b) any liability of Seller for any taxes for any periods prior to or subsequent to the Closing whether or not relating to the business and notwithstanding the disclosure thereof by Seller to Buyer;

(c) any obligation or liability arising from claims, proceedings or causes of action resulting from property damage or personal injury (including death) caused by the Products sold by Seller prior to the Closing Date; or

(d) any trade payable or accrued expenses.

Section 1.4 Purchase Price.

(a) The “Purchase Price” shall be an amount equal to U.S. $600,000 (Six Hundred Thousand U.S. Dollars).

(b) At the Closing, Buyer shall pay to Seller an amount in cash, without interest, equal to the Purchase Price.

(c) All payments made by Buyer pursuant to Section 1.4(b) shall be made by wire transfer of immediately available funds, which wire transfers shall be made to an account specified in writing immediately upon Closing.

Section 1.5 Purchase Price Allocation. The Parties agree that the Purchase Price shall be allocated among the Transferred Assets as set forth on Annex B, attached hereto (the “Allocation Schedule”). Neither Buyer nor Seller shall take any position (whether in audits, Tax Returns or otherwise) that is inconsistent with such allocation unless required to do so by applicable Law.

Article 2
CLOSING

Section 2.1 Closing.

(a) Subject to the conditions set forth in this Agreement, the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place within seven (7) business days after both parties sign the agreement (the “Closing Date”).

Section 2.2 Actions to be Taken at the Closing.

(a) Deliveries by Seller. At the Closing, Seller shall deliver, or shall cause to be delivered to Buyer:

(i) final form of template Seller FDA Letter, to be transmitted to the FDA in accordance with Section 5.2; and

(ii) such other certificates and documents customary in transactions similar to those contemplated hereby as are reasonably requested by Buyer.

(b) Deliveries by Buyer. At the Closing, Buyer shall deliver or cause to be delivered to Seller:

(i) evidence of the wire transfers referred to in Section 1.4(b); and

(ii) final form of template Buyer FDA Letter, to be transmitted to the FDA in accordance with Section 5.2 and proof of FDA receipt; and

(iii) such other certificates and documents customary in transactions similar to those contemplated hereby as are reasonably requested by Seller.

Section 2.3 License to Certain Product Technology. Seller hereby irrevocably and unconditionally grants to Buyer as of the Closing Date, a royalty-free, non-exclusive, perpetual license to use the Product Technology to market and sell the Products in the United States, and to manufacture the Product for marketing and sale in the United States.

Article 3
REPRESENTATIONS OF SELLER

Seller represents and warrants to Buyer that the statements in this Article 3 are true and correct as of the date hereof, except as set forth in the Disclosure Schedule.

Section 3.1 Organization and Authority.

(a) Seller is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of formation.

(b) Seller has all necessary power, capacity and authority to execute and deliver this Agreement and the Ancillary Documents to which it is a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. This Agreement and the Ancillary Documents to which Seller is a party are duly and validly executed and delivered by Seller and, assuming the due authorization, execution and delivery by Buyer hereto and thereto, this Agreement and the Ancillary Documents constitute, the legal, valid and binding obligations of Seller enforceable in accordance with their terms, except (i) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting the enforcement of creditors’ rights generally, and (ii) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.

Section 3.2 Consents and Approvals; No Violations.

(a) Except for notice to the FDA of the transfer of the Regulatory Approvals pursuant to Section 5.2, assuming the truth and accuracy of the representations and warranties of Buyer set forth in Article 4, the execution and delivery by Seller of this Agreement and of the Ancillary Documents (to which Seller is a party) does not, and the performance by Seller of this Agreement and of the Ancillary Documents (to which Seller is a party) do not, in each case require any filing with or approval from any Governmental Authority, except for such filings and approvals that, if not made or obtained, would not reasonably be expected to have a Material Adverse Effect.

(b) The execution and delivery by Seller of this Agreement and of the Ancillary Documents (to which Seller is a party) does not, and the performance by Seller of this Agreement and such Ancillary Documents (to which Seller is a party) do not, in each case (i) violate the Governing Documents of Seller, (ii) violate any Law applicable to Seller or its respective assets, or (iii) require the consent, notice or other action by any Person under, conflict with, result in a breach of or constitute a default under any material Contract, except in any such case under clauses (ii) or (iii) of this Section 3.2(b), such for any such violations, breaches, defaults, terminations, accelerations, cancellations, consents, notices or other occurrences that would not reasonably be expected to have a Material Adverse Effect.

Section 3.3 Absence of Litigation. As of the date of this Agreement, there are no Actions pending or, to the Knowledge of Seller, threatened in writing against, relating to or affecting (i) this Agreement or any Ancillary Documents, or (ii) the transactions contemplated hereby or any action taken or to be taken by Seller in connection with this Agreement or any Ancillary Documents, which if adversely determined would result in a Material Adverse Effect.

Section 3.4 Regulatory Matters.

(a) The Seller has made available or shall make available to Buyer on the Closing Date complete and correct copies of the Regulatory Approvals and all material written communications from the FDA or other Governmental Authority relating to those Regulatory Approvals in Seller’s possession or custody and control.

(b) (i) Seller has filed with the FDA all required notices, supplemental applications and annual or other reports or documents, including adverse event reports, with respect to the Regulatory Approvals, (ii) Seller has paid all fees required by any Governmental Authority with respect to the Regulatory Approvals, including filing fees applicable to the Products, and (iii) with respect to each of the Products, Seller has acted in material compliance with 21 U.S.C. Sections 351, 352 and 355; 21 C.F.R. Parts 210, 211, or 314 et seq, respectively, and all material terms and conditions of such Regulatory Approvals, in each case, in accordance with Seller’s normal business practices.

Section 3.5 Title. Except as set forth in Section 3.5 of the Disclosure Schedule, (i) Seller has good and marketable title to the Transferred Assets, free and clear of all Liens other than Permitted Liens, (ii) to the Knowledge of Seller, there are no adverse claims of ownership to the Transferred Assets, and (iii) Seller has not received written notice, nor does Seller have Knowledge, that any Person has asserted a claim of ownership or right of possession or use in and to any of the Transferred Assets.

Section 3.6 Brokers. Except as set forth in Section 3.6 of the Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller.

Section 3.7 Exclusivity of Representations and Warranties. Notwithstanding the delivery or disclosure to Buyer or its officers, directors, employees, agents or Representatives of any documentation or other information, except for the representations and warranties made by Seller in this Article 3, Seller expressly disclaims any representations or warranties of any kind or nature, whether written or oral, express or implied, as to the Transferred Assets, and Seller specifically disclaims any representation or warranty of merchantability, usage, suitability or fitness for any particular purpose with respect to such assets, any part thereof, the workmanship thereof, and the absence of any defects therein, whether latent or patent. The representations and warranties of Seller contained in this Article 3 are the only representations and warranties made by Seller in connection with the transactions contemplated by this Agreement and supersede any and all previous written and oral statements, if any, made by Seller or any of its Representatives.

Article 4
REPRESENTATIONS OF BUYER

Buyer represents and warrants to Seller that the statements in this Article 4 are true and correct as of the date hereof.

Section 4.1 Organization and Authority.

(a) Buyer is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of formation.

(b) Buyer has all necessary power, capacity and authority to execute and deliver this Agreement and the Ancillary Documents to which it is a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. This Agreement and the Ancillary Documents are duly and validly executed and delivered by Buyer and, assuming the due authorization, execution and delivery by Seller hereto and thereto, this Agreement and the Ancillary Documents constitute, the legal, valid and binding obligations of Buyer enforceable in accordance with their terms, except (i) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting the enforcement of creditors’ rights generally, and (ii) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.

Section 4.2 Consents and Approvals; No Violations.

(a) Except for notice to the FDA of the transfer of the Regulatory Approvals pursuant to Section 5.2, assuming the truth and accuracy of the representations and warranties of Seller set forth in Article 3, the execution and delivery by Buyer of this Agreement and of the Ancillary Documents (to which Buyer is a party) does not, and the performance by Buyer of this Agreement and of the Ancillary Documents (to which Buyer is a party) do not, in each case require any filing with or approval from any Governmental Authority.

(b) The execution and delivery by Buyer of this Agreement and of the Ancillary Documents (to which Buyer is a party) does not, and the performance by Buyer of this Agreement and such Ancillary Documents (to which Buyer is a party) do not, in each case (i) violate the Governing Documents of Buyer, (ii) violate any Law applicable to Buyer or its respective assets or properties, or (iii) require the consent, notice or other action by any Person under, conflict with, result in a breach of or constitute a default under any Contract, except in any such case under clauses (ii) or (iii) of this Section 4.2(b), such for any such violations, breaches, defaults, terminations, accelerations, cancellations, consents, notices or other occurrences that would not reasonably be expected to have a Buyer Material Adverse Effect.

Section 4.3 Litigation. As of the date of this Agreement, there are no Actions pending or, to the Knowledge of Buyer, threatened in writing against, relating to or affecting (i) this Agreement or any Ancillary Documents, or (ii) the transactions contemplated hereby or any action taken or to be taken by Buyer in connection with this Agreement or any Ancillary Documents.

Section 4.4 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer. Rose Chemical LLC shall be paid 2% of each ANDA sale prices ($6,000 per sale of each ANDA).

Section 4.5 No Other Representations and Warranties. Except for the representations and warranties made by Buyer in this Article 4, Buyer expressly disclaims any representations or warranties of any kind or nature, whether written or oral, express or implied. Further, Buyer (a) has conducted its own independent review and analysis of, and, based thereon, has formed an independent judgment concerning the Transferred Assets, including the regulatory and development status of each Product and Regulatory Approval, and (b) has been furnished with or given full access to such key employees, documents, facilities and other information about the Transferred Assets as it and its Representatives have deemed necessary to enable it to make an informed decision with respect to the execution, delivery and performance of this Agreement and the transactions contemplated hereby. Except as expressly set forth herein, Buyer acknowledges and agrees that Seller provides all Transferred Assets with all faults on an “as-is, where-is” basis. Buyer has received all materials relating to the Transferred Assets that it has requested and has been afforded the opportunity to obtain any additional information necessary to verify the accuracy of any such information or of any representation or warranty made by Seller herein or to otherwise evaluate the merits of the transactions contemplated hereby. Seller has answered, to Buyer’s satisfaction all inquiries that Buyer and its Representatives have made concerning the Transferred Assets or otherwise relating to the transactions contemplated hereby. Buyer acknowledges that the only representations and warranties made by Seller are those in Article 3. Buyer is not relying on any representations and warranties, whether express or implied, other than those made by Seller in Article 3 and is not aware of any facts and/or circumstances that would make any of the representations and warranties of Seller contained in Article 3 untrue or misleading.

Article 5
COVENANTS

Section 5.1 Product Responsibility. Without limiting each Party’s respective obligations under the Assumed Liabilities and Excluded Liabilities as set forth under Section 1.2 and Section 1.3:

(a) From and after the Closing, Buyer shall be solely responsible for (i) all regulatory matters with respect to the Products and the other Transferred Assets, including those relating to communicating and corresponding, preparing and filing reports, making adverse event reports, and paying applicable fees, with and to applicable Governmental Authority, under all applicable Law, including the FD&C Act, (ii) taking all actions and conducting all communication with third parties in respect of Products (whether sold before or after the Closing), including responding to all complaints in respect thereof and all medical information requests, including complaints related to tampering or contamination, and (iii) investigating all complaints and adverse events in respect of Products sold after the Closing).

(b) Buyer is responsible for tech transfer of the Products to its own or a third party manufacturing site. Seller’s responsibility with respect to such tech transfer is limited to providing to Buyer technical documentation in its possession with respect to the Products, and shall not include consultation or other support.

(c) From and after the Closing, Buyer shall be solely responsible for conducting, handling or processing, all recalls of units of Products, including recalls required by any Governmental Authority or voluntary recalls by Buyer based on safety, efficacy or similar concerns, with respect to the Products, regardless of whether the Products were sold before or after the Closing; provided, however, that to the extent that such recalls relate to Products sold before the Closing, Seller shall reimburse Buyer for all costs associated with such recall within thirty (30) days after receipt of an invoice therefor and appropriate supporting documentation.

Section 5.2 Transfer of Regulatory Approvals. On or as promptly as practical after the Closing, Seller shall deliver the Regulatory Documentation to Buyer and Buyer shall confirm receipt thereof, Within seven (7) Business Days Seller shall file the Seller FDA Letter with the FDA and shall provide notice to Buyer of such filing. Within seven (7) Business Days after receiving notice from the Seller of the filing of the Seller FDA Letter, Buyer shall file the Buyer FDA Letter with the FDA. Seller and Buyer shall take all other actions reasonably necessary to notify the FDA that the Regulatory Approvals have been transferred from Seller to Buyer and to affect the transfer of such Regulatory Approvals from Seller to Buyer.

Section 5.3 Transfer Taxes. All transfer Taxes, recording fees and other similar Taxes that are imposed on any of the Parties by any Governmental Authority in connection with the transactions contemplated by this Agreement shall be borne by Buyer.

Section 5.4 Public Announcements. Seller and Buyer shall not make any press release(s), public announcement(s) or other information publicly released relating to this Agreement or the transactions contemplated hereby; provided, however, that either Party may include information regarding this Agreement and the transactions contemplated hereby in a publicly disclosed document where such information is required by applicable Law and only to the extent required by such Law.

Section 5.5 Confidentiality. Seller and Buyer agree that the terms of this Agreement shall not be disclosed or otherwise made available to the public and that copies of this Agreement shall not be publicly filed or otherwise made available to the public, except where such disclosure, availability or filing is required by applicable Law and only to the extent required by such Law. In the event that such disclosure, availability or filing is required by applicable Law, each of Buyer and Seller (as applicable) agrees to use its commercially reasonable efforts to obtain “confidential treatment” of this Agreement with the U.S. Securities and Exchange Commission (or the equivalent treatment by any other Governmental Authority) and to redact such terms of this Agreement as the other Party shall request.

Section 5.6 Further Assurances. Subject to the terms and conditions hereof, on and after the Closing, each Party hereby agrees, from time-to-time as and when requested by the other Party, to execute and deliver, or cause to be executed and delivered, all such documents and other papers and to use its commercially reasonable efforts to take, or cause to be taken, all such further or other appropriate actions and to do, or cause to be done, all other things as such other Party may reasonably deem necessary or desirable to carry out the provisions of this Agreement and give effect to the transactions contemplated hereby.

Article 6
INDEMNIFICATION

Section 6.1 Survival of Representations, Warranties and Covenants. Except to the extent a different period is expressly set forth herein with respect to a covenant to be performed after the Closing, the representations, warranties, covenants and agreements in this Agreement shall survive the Closing and shall terminate on the date that is twelve (12) months after the Closing Date; provided, however, that the representations and warranties in Section 3.1, Section 3.5, Section 3.6, Section 4.1 and Section 4.4 shall survive the Closing and continue in full force and effect for the full period of all applicable statutes of limitation (giving effect to any waiver, mitigation or extension thereof). Notwithstanding the foregoing, any claims asserted in good faith (to the extent known at such time) and in writing by notice from the non-breaching Party to the breaching Party prior to the expiration date of the applicable survival period and with respect to which the non-breaching party has actually incurred Losses, shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

Section 6.2 Indemnification by Seller for the Benefit of Buyer. Subject to the other provisions of this Article 6, from and after the Closing, Seller shall indemnify, defend and hold Buyer and its Affiliates, officers, directors, employees, and/or agents (each a “Buyer Indemnitee”) harmless from any damages, losses, liabilities, obligations, or reasonable and documented out-of-pocket expenses (including reasonable attorneys’ fees and expenses) (each, a “Loss”) actually incurred by any Buyer Indemnitee as a result of:

(a) any material inaccuracy of any representation or warranty made by Seller contained in Article 3;

(b) any material breach by Seller of any of the covenants or agreements contained herein which are to be performed or complied with by Seller; or

Section 6.3 Indemnification by Buyer for the Benefit of Seller. Subject to the other provisions of this Article 6, from and after the Closing, Buyer shall indemnify, defend and hold Seller and its Affiliates, officers, directors, employees, and/or agents (each a “Seller Indemnitee”) harmless from any Loss actually incurred by any Seller Indemnitee as a result of:

(a) Any material inaccuracy of any representation or warranty made by Buyer contained in Article 4;

(b) any material breach by Buyer of any of the covenants or agreements contained herein which are to be performed or complied with by Buyer; or

Section 6.4 Certain Further Limitations.

(a) Seller shall not be liable to the Buyer Indemnitees under Section 6.2 unless and until the aggregate amount of Losses that would otherwise be payable hereunder exceeds on a cumulative basis an amount equal to $5,000.00 (the “Deductible”), in which event Seller shall be required to pay or be liable for all such Losses in excess of the Deductible.

(b) Seller’s maximum aggregate liability to the Buyer Indemnitees for all defense and indemnification obligations owing by them pursuant to Section 6.2 shall not exceed an amount equal to $50,000.00 (the “Cap”). Neither the Deductible nor the Cap shall apply to the indemnification obligations under Section 6.2 or to any indemnification obligations that arise out of the Seller’s breach of the representations or warranties set forth in Section 3.4 and Section 3.5 (the “Fundamental Representations”); provided, however, that Seller’s maximum aggregate liability for indemnification obligations under Section 6.2 that arise out of the Seller’s breach of the Fundamental Representations shall in no event exceed one-third the Purchase Price.

(c) The amount of any Loss shall be calculated net of (i) any Tax Benefit realized or realizable by the Indemnified Party or any of its Affiliates on account of such Loss and (ii) any insurance proceeds (net of direct collection expenses) or any indemnity, contribution or other similar payment received by the Indemnified Party from any third party with respect thereto. If the Indemnified Party receives or realizes a Tax Benefit on account of any Loss after indemnification payment is made to it with respect to such Loss, the Indemnified Party shall promptly pay to the Indemnifying Party the amount of such Tax Benefit at such time or times as and to the extent that such Tax Benefit is received or realized by the Indemnified Party. For purposes hereof, “Tax Benefit” shall mean any Tax reduction or credit actually recognized or realized, or that should have been recognized or realized, for the taxable year in which or within which such Loss occurred or any Tax reduction attributable to any increase in Tax loss carry back or carry forward arising in connection with the accrual, incurrence or payment of any such Loss, provided that any such tax reduction shall be deemed to be recognized and realized in the taxable year in which and within which such Loss occurred. The Indemnified Party shall seek full recovery under all insurance policies and Contracts covering any Loss, and with respect to all Tax Benefits realized or realizable with respect to any Loss, to the same extent as they would if such Loss were not subject to indemnification hereunder. In the event that an insurance or other recovery is made by any Indemnified Party with respect to any Loss for which any such Person has been indemnified hereunder, then a refund equal to the aggregate amount of the recovery shall be made promptly to the Indemnifying Party.

(d) The Buyer Indemnitees shall not be entitled to indemnification pursuant to Section 6.2 for any Loss underlying any such indemnification claim to the extent that:

(i) the Buyer Indemnitees could have, with commercially reasonable efforts, mitigated or prevented such Loss (or any part thereof); or

(ii) such Loss (or any part thereof) results from or is magnified by the action or inaction of any Buyer Indemnitee or any Affiliate of such Buyer Indemnitee (including the Company) after the Closing.

(e) To the extent that any Buyer Indemnitee may claim Losses under more than one provision of Section 6.2, such Buyer Indemnitee may only recover for the same Losses once.

Section 6.5 Indemnification Procedures. The Party making a claim under this Article 6 is referred to as the “Indemnified Party” and the Party against whom such claims are asserted under this Article 6 is referred to as the “Indemnifying Party”.

(a) Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided, that if the Indemnifying Party is Seller, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third Party Claim that seeks an injunction or other equitable relief against the Indemnified Party. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to 6.5, it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided , that if in the reasonable opinion of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party; or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to 6.5, pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Seller and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

(b) Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this 6.5. If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within ten (10) days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 6.5, it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

(c) Direct Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by the Indemnified Party giving (i) Seller, if the Indemnified Party is a Buyer Indemnitee, or (ii) Buyer, if the Indemnified Party is a Seller Indemnitee, reasonably prompt written notice thereof, but in any event not later than thirty (30) days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except to the extent that the Indemnifying Party forfeits rights or defenses or is otherwise materially prejudiced by reason of such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or would be reasonably expected to be sustained by the Indemnified Party. Buyer, if the Indemnifying Party is a Buyer Indemnitee, or Seller, if the Indemnifying Party is a Seller Indemnitee, shall have thirty (30) days after its receipt of such notice to respond in writing to such Direct Claim. If the Indemnifying Party does not so respond within such thirty (30) day period after receiving notice, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

(d) Cooperation. Upon a reasonable request by the Indemnifying Party, each Indemnified Party seeking indemnification hereunder in respect of any Direct Claim, hereby agrees to consult with the Indemnifying Party and act reasonably to take actions reasonably requested by the Indemnifying Party in order to attempt to minimize or otherwise reduce the amount of Loss in respect of such Direct Claim. Any costs or expenses associated with taking such actions shall be included as Losses hereunder.

Section 6.6 Treatment of Indemnity Payments. The Parties agree that any indemnification payments made pursuant to this Article 6 shall be treated as adjustments to the purchase price for Tax purposes, unless otherwise required by Law, and such agreed treatment shall govern for purposes of this Agreement.

Section 6.7 Exclusive Remedy. Except in the case where a Party seeks to obtain specific performance pursuant to Section 7.15, from and after the Closing, the rights of the Parties to indemnification pursuant to the provisions of this Article 6 shall be the sole and exclusive remedy for the Parties with respect to any matter in any way arising from or relating to (a) this Agreement or its subject matter or (b) any other matter relating to the Transferred Assets, regardless of the legal theory under which such liability or obligation may be sought to be imposed, whether sounding in contract or tort, or whether at law or in equity, or otherwise, and the Parties hereby agree that the Indemnitees shall have no remedy or recourse with respect to any of the foregoing other than pursuant to, and subject to the terms and conditions of, this Article 6. The Parties acknowledge and agree that the Indemnitees may not avoid such limitation on liability by (i) seeking damages for breach of contract, tort or pursuant to any other theory of liability, all of which are hereby waived, or (ii) asserting or threatening any claim against any Person that is not a Party hereto (or a successor to a Party hereto) for breaches of the representations, warranties and covenants contained in this Agreement. The Parties agree that the provisions in this Agreement relating to indemnification, and the limits imposed on Buyer’s and the Buyer Indemnitees’ and Seller’s and the Seller Indemnitees’ remedies with respect to this Agreement and the transactions contemplated hereby were specifically bargained for between sophisticated parties and were specifically taken into account in the determination of the amounts to be paid to Seller hereunder. Subject to the foregoing and the additional procedures for bringing or resolving disputes as specifically provided in Article 7, to the maximum extent permitted by Law, the Parties hereby waive all other rights and remedies with respect to any matter in any way relating to this Agreement or arising in connection herewith, whether under any Laws at common law, in equity or otherwise.

Article 7
MISCELLANEOUS

Section 7.1 Fees and Expenses. Except as otherwise set forth in this Agreement, all costs, fees and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement, including the fees and disbursements of Representatives, shall be paid by the Party incurring such fees or expenses.

Section 7.2 Amendment. This Agreement may be amended, modified or supplemented only by a written agreement duly executed and delivered by Seller and Buyer, and any purported amendment by any Party or Parties effected in a manner which does not comply with this Section 7.2 shall be void and of no force or effect.

Section 7.3 Waiver. Except as otherwise expressly provided herein, no waiver with respect to this Agreement shall be enforceable unless in writing and signed by the Party against whom enforcement is sought. Except as otherwise expressly provided herein, no failure to exercise, delay in exercising, or single or partial exercise of any right, power or remedy by a Party, and no course of dealing between the Parties, shall constitute a waiver of, or shall preclude any other or further exercise of, any right, power or remedy.

Section 7.4 Entire Agreement. This Agreement (together with the annexes and exhibits hereto and the Disclosure Schedule) and the Ancillary Documents together constitute the entire agreement among the Parties with respect to the subject matter of such documents and supersede all other prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter of such documents. In the event of any inconsistency between the provisions of this Agreement and the provisions of any Ancillary Document, the provisions of this Agreement shall prevail.

Section 7.5 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any Party (whether by operation of Law or otherwise), other than for collateral purposes, without the prior written consent of the other Party(ies). Any attempted assignment of this Agreement not in accordance with the terms of this Section 7.5 shall be void and of no force or effect.

Section 7.6 Notices. notices, requests, consents, claims, demands, waivers and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of service if served personally on the Party to whom notice is to be given, (ii) on the day of transmission if sent via facsimile transmission or by e-mail during regular business hours of the recipient to the facsimile number or e-mail address given below, and the following Business Day if sent after the regular business hours of the recipient, (iii) on the Business Day after delivery to Federal Express or similar overnight courier or the Express Mail service maintained by the United States Postal Service, or (iv) on the third day after mailing, if mailed to the Party to whom notice is to be given, by first class mail, registered or certified, postage prepaid and properly addressed, to the Party as follows:

If to Buyer:

Nostrum Laboratories Inc.

1370 Hamilton Street

Somerset, NJ 08873

Attention: Anil Anand

Facsimile: 816-308-4994

E-mail: anil@nostrumpharma.com

with a copy (which shall not constitute notice to Buyer) to:

Tanzina Chowdhury

1370 Hamilton Street

Somerset, NJ 08873

E-mail: Tchowdhury@nostrumlabs.com

If to Seller:

Elite Pharmaceuticals, Inc.

165 Ludlow Avenue

Northvale, NJ 07647

Attention: Nasrat Hakim

Facsimile: 201-750-2755

E-mail: nhakim@elitepharma.com

with a copy (which shall not constitute notice to Seller) to:

Attention: Carter Ward

Facsimile: 201-750-2755

E-mail: cward@elitepharma.com

Section 7.7 Construction; Section Headings; Draftsmanship; Interpretation.

(a) The term “this Agreement” means this Asset Purchase Agreement together with the Disclosure Schedule, annexes and exhibits hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof and thereof. The headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

(b) No Party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and not strictly for or against any Party.

(c) Unless otherwise indicated to the contrary herein by the context or use thereof (i) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole, including the Disclosure Schedule and exhibits hereto, and not to any particular section, subsection, paragraph, subparagraph or clause contained in this Agreement, (ii) masculine gender shall also include the feminine and neutral genders, and vice versa, (iii) words importing the singular shall also include the plural, and vice versa, (iv) the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”, (v) a term has the meaning assigned to it, (vi) “or” is not exclusive, (vii) all references in this Agreement to designated “Articles,” “Sections,” “paragraphs,” “clauses” and other subdivisions are to the designated Articles, Sections, paragraphs, clauses and other subdivisions of this Agreement unless otherwise specified, and (viii) any definition of or reference to any agreement, instrument, document, statute or regulation herein shall be construed as referring to such agreement, instrument, document, statute or regulation in effect as of the date hereof.

Section 7.8 Annexes, Exhibits and Schedules. The Disclosure Schedule and all annexes, exhibits and documents expressly incorporated into this Agreement are hereby incorporated into this Agreement and made a part hereof as if set out in full in this Agreement. The specification of any dollar amount in the representations or warranties contained in this Agreement is not intended to imply that such amounts, or higher or lower amounts or other items, are or are not material, and no Party shall use the fact of the setting of such amounts in any dispute or controversy as to whether any obligation, item or matter not described herein or included in a Schedule is or is not material for purposes of this Agreement. Any item of information, matter or document disclosed or referenced in, or attached to, the Disclosure Schedule shall not (a) be used as a basis for interpreting the terms “material” or other similar terms in this Agreement or to establish a standard of materiality, (b) represent a determination that such item or matter did not arise in the ordinary course of business, (c) be deemed or interpreted to expand the scope of any Party’s representations and warranties, obligations, covenants, conditions or agreements contained herein, (d) constitute, or be deemed to constitute, an admission of liability or obligation regarding such matter, (e) represent a determination that the consummation of the transactions contemplated by this Agreement requires the consent of any third party, (f) constitute, or be deemed to constitute, an admission to any third party concerning such item or matter or (g) constitute, or be deemed to constitute, an admission or indication by Seller that such item meets any or all of the criteria set forth in this Agreement for inclusion in the Disclosure Schedule. No disclosure in the Disclosure Schedule relating to any possible breach or violation of any agreement or Law shall be construed as an admission or indication that any such breach or violation exists or has actually occurred.

Section 7.9 No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of each Party and its successors and permitted assigns and, except as provided in the following sentence of this Section 7.9, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. Notwithstanding anything to the contrary contained in this Agreement, if the transactions contemplated by this Agreement are consummated, the Indemnitees shall be third party beneficiaries of the provisions set forth in Article 6.

Section 7.10 Severability. If any term or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not invalidate or render unenforceable such term or provision in any other jurisdiction, and all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

Section 7.11 Limitation of Remedies. No breach of any representation, warranty or covenant contained herein or in any certificate delivered pursuant to this Agreement shall give rise to any right on the part of Buyer or Seller, after the consummation of the transactions contemplated hereby, to rescind this Agreement or any of the transactions contemplated hereby.

Section 7.12 No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, Buyer agrees and acknowledges that no recourse under this Agreement, any Ancillary Document, or any documents or instruments delivered in connection with this Agreement or any Ancillary Document shall be had against any current or future equity holder, partner, member, controlling person, director, officer, employee, incorporator, manager, Representative or Affiliate of Seller (or any Affiliate of any of the foregoing) (each, a “Nonparty Affiliate”), whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any Nonparty Affiliate for any obligation of Seller or Buyer, as applicable, under this Agreement, any Ancillary Document, any documents or instruments delivered in connection with this Agreement or any Ancillary Document, or any transaction contemplated by the foregoing, for any claim based on, in respect of or by reason of such obligations or their creation.

Section 7.13 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

(a) This Agreement shall be governed by and construed in accordance with the State of New York and the laws of the United States, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of New York.

(b) Any Action arising out of or based upon this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby may be instituted in any provincial or federal court in the State of New York, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such Action. Service of process, summons, notice or other document by mail to such Party’s address set forth herein shall be effective service of process for any Action brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any Action in such courts and irrevocably waive and agree not to plead or claim in any such court that any such Action brought in any such court has been brought in an inconvenient forum.

(c) Each Party acknowledges and agrees that any controversy which may arise under this Agreement or the Ancillary Documents is likely to involve complicated and difficult issues and, therefore, each such Party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any Action arising out of or relating to this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby. Each Party certifies and acknowledges that (i) no Representative of any other Party has represented, expressly or otherwise, that such other Party would not seek to enforce the foregoing waiver in the event of a legal action, (ii) such Party has considered the implications of this waiver, (iii) such Party makes this waiver voluntarily, and (iv) such Party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 7.13(c).

Section 7.14 Service of Process. Each Party irrevocably consents to the service of summons and complaint and any other process outside the territorial jurisdiction of the courts referred to in Section 7.13 in any proceeding by sending or delivering a copy of the process to the Party to be served at the address of the Party and in the manner provided for the giving of notices in Section 7.6 (except that email or facsimile shall not be permitted delivery means pursuant to this Section 7.14). Nothing herein shall affect the right of any Party to serve process in any other manner permitted by applicable Law.

Section 7.15 Specific Enforcement. Except as otherwise expressly provided herein, any and all remedies provided herein will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or conferred by Law or equity, upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. The Parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the Parties do not perform their respective obligations under the provisions of this Agreement in accordance with their specific terms or otherwise breach such provisions. Each of the Parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief when expressly available pursuant to the terms of this Agreement, and hereby waives (a) any defenses in any action for an injunction, specific performance or other equitable relief, including the defense that the other Parties have an adequate remedy at law or an award of specific performance is not an appropriate remedy for any reason at law or equity, and (b) any requirement under Law to post a bond, undertaking or other security as a prerequisite to obtaining equitable relief.

Section 7.16 Counterparts; Delivery. This Agreement may be executed in multiple original, PDF or facsimile counterparts, each of which shall be deemed an original, and all of which taken together shall be considered one and the same agreement. Each executed signature page to this Agreement and to each agreement and certificate delivered by a Party pursuant to this Agreement may be delivered by any of the methods described in Section 7.6, including via facsimile or e-mail, provided that such delivery is effected in accordance with the notice information provided for in Section 7.6. In the event that any signature to this Agreement or any agreement or certificate delivered pursuant hereto, or any amendment thereof, is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. No Party shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver any such signature page or the fact that such signature was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation or enforceability of a contract and each Party forever waives any such defense.

* * *

IN WITNESS WHEREOF, the Parties hereto have caused this Asset Purchase Agreement to be duly executed on its behalf as of the day and year first above written.

	SELLER

	ELITE PHARMACEUTICALS, INC.

	By:	s/ Nasrat Hakim
	Name:	Nasrat Hakim
	Title:	CEO

	BUYER

	NOSTRUM LABORATORIES INC.

	By:	s/ Ruben Valdez Jr.
	Name:	Ruben Valdez Jr
	Title:	Vice President Business Development

[Signature page to Asset Purchase Agreement]

ANNEX A

DEFINITIONS

As used in this Agreement, the following terms, whether used in the singular or plural, shall have the following meanings:

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether present or future, fixed or unascertained, actual or contingent whether at law or in equity.

“Affiliate” means, with respect to any Person, any other Person who, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” means (i) the ownership of more than 50% of the voting securities or other voting interest of any Person (including attribution from related parties) or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlled by” and “under common control with” have meanings correlative thereto.

“Allocation Schedule” has the meaning set forth in Section 1.5.

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Ancillary Documents” means the Confidentiality Agreement and each other agreement, document, instrument and/or certificate contemplated by this Agreement to be executed in connection with the transactions contemplated hereby.

“ANDA” means an “abbreviated new drug application” as such term is used under Section 505(j) of the FD&C Act, including all subsequent submissions, supplements and amendments thereto.

“Assumed Liabilities” has the meaning set forth in Section 1.2.

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York are authorized or required by Law to close.

“Buyer” has the meaning set forth in the preamble to this Agreement.

“Buyer FDA Letter” means the transfer of ownership letter from Buyer to the FDA as required by 21 CFR § 314.72, in a form mutually agreed between Seller and Buyer, to effectuate the transfer of the Regulatory Approvals from Seller to Buyer.

“Buyer Material Adverse Effect” means any change, development, circumstance, effect, event or fact that is or would reasonably be expected to prevent, materially delay or materially impair Buyer’s consummation of the transactions contemplated by this Agreement.

“Buyer Indemnitee” has the meaning set forth in Section 6.2.

“Closing” has the meaning set forth in Section 2.1(a).

“Closing Date” has the meaning set forth in Section 2.1(a).

“Confidentiality Agreement” means that certain Confidentiality Agreement, dated as of February 20, 2019 by and between Seller and Buyer.

“Contract” means any agreement, contract, lease, instrument and other executory commitment to which any Person is a party or to which any of the assets of such Person are subject.

“Deductible” has the meaning set forth in Section 6.4(a).

“Direct Claim” has the meaning set forth in Section 6.5(c).

“Disclosure Schedule” means the disclosure schedule delivered by Seller concurrently with the execution and delivery of this Agreement.

“Excluded Liabilities” has the meaning set forth in Section 1.3.

[Annex A]

“FDA” means the United States Food and Drug Administration, or any successor entity thereto.

“FD&C Act” means the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq. as amended, and includes the rules and regulations promulgated thereunder.

“GAAP” means United States generally accepted accounting principles.

“Governing Documents” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs. For example, the “Governing Documents” of a corporation are its certificate of incorporation and bylaws, the “Governing Documents” of a limited partnership are its limited partnership agreement and certificate of limited partnership and the “Governing Documents” of a limited liability company are its operating agreement and certificate of formation.

“Governmental Authority” means any (i) nation, region, state, province, county, city or other jurisdiction, (ii) federal, state, local, municipal, foreign or other government or political subdivision thereof, (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), whether foreign or domestic, or (iv) body exercising or entitled to exercise any executive, judicial, legislative, regulatory, self-regulatory or taxing authority or power of any nature, whether foreign or domestic, including any arbitral tribunal.

“Indemnified Party” has the meaning set forth in Section 6.5.

“Indemnifying Party” has the meaning set forth in Section 6.5.

“Indemnitees” means both the Buyer Indemnitees and the Seller Indemnitees.

“Knowledge of Buyer” and any derivations thereof means, as of the applicable date, the actual knowledge (and shall in no event encompass constructive, imputed or similar concepts of knowledge) of Nostrum Laboratories Inc. none of whom shall have any personal liability or obligations regarding such knowledge.

“Knowledge of Seller” and any derivations thereof means, as of the applicable date, the actual knowledge (and shall in no event encompass constructive, imputed or similar concepts of knowledge).

“Law” means any code, law (including without limitation any principle of common law), order, writ, ordinance, rule, regulation, statute or treaty of any Governmental Authority having jurisdiction over the applicable Person(s), or over any of their respective properties or businesses.

“Lien” means, with respect to any asset, any mortgage, pledge, security interest, encumbrance, lien or charge in respect of such asset. For the avoidance of doubt, the term “Lien” shall not be deemed to include any license of Intellectual Property Rights.

“Loss” has the meaning set forth in Section 6.2.

“Manufacture” or “Manufacturing” means the planning, purchasing, manufacture, processing, compounding, storage, filing, testing, sample retention, stability testing, release and shipment of the Products.

“Material Adverse Effect” means an event, change, or effect which is materially adverse to the Transferred Assets, taken as a whole; provided that for purposes of the foregoing, none of the following shall be deemed in itself, either alone or in combination, to constitute a “Material Adverse Effect”, and shall not be taken into account in determining whether a “Material Adverse Effect” has occurred or would be expected to occur (i) conditions affecting the U.S. economy generally, (ii) any adverse change, development, circumstance, effect, event or fact (including any change in general legal, regulatory, political, economic or business conditions) that is generally applicable to the industries or markets in which the Seller operates, (iii) changes in any Law or other binding directives issued by any Governmental Authority, (iv) any action taken by Seller with the written consent of Buyer, (v) the negotiation, execution, announcement or pendency of this Agreement and the transactions contemplated hereby, including any impact thereof on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners or employees, or (vi) the taking of any action contemplated by this Agreement, the Ancillary Documents or the other agreements contemplated hereby, including compliance with the terms hereof and thereof and the completion of the transactions contemplated hereby and thereby.

“Nonparty Affiliate” has the meaning set forth in Section 7.12.

“Parties” and “Party” have the meaning set forth in the preamble to this Agreement.

“Permitted Liens” means Liens for utilities, assessments, Taxes or other governmental charges that are not yet delinquent or are being contested in good faith.

“Person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other similar entity, whether or not a legal entity, and any Governmental Authority.

“Product Technology” means the following information owned by or licensed to Seller, as in existence and in the possession or control of Seller as of the Closing Date: the manufacturing technology, proprietary or confidential information, processes, techniques, protocols, methods, know-how and improvements that are necessary or used to manufacture the Products in accordance with the ANDAs, including the manufacturing process approved in the ANDA (if any), specifications and test methods, raw material, packaging, stability and other applicable specifications, manufacturing and packaging instructions, master formula, validation reports to the extent available, stability data, analytical methods, records of complaints, annual product reviews to the extent available, and other master documents necessary or used for the manufacture, control and release of the Product as conducted by, or on behalf of Seller or any of its Affiliates. The Product Technology includes the rights owned or controlled by Seller, including any sublicenseable license, under any patent issued in or subject to a pending application, including any continuing applications filed or that could be filed with similar priority claims as of the Closing Date.

“Products” means the generic pharmaceutical products listed in Annex B.

“Purchase Price” has the meaning set forth in Section 1.4.

“Regulatory Approvals” means the ANDAs for each of the Products as set forth on Annex B.

“Regulatory Documentation” means the following to the extent exclusively related to the Products, owned and maintained by or on behalf of Seller or otherwise in the possession of Seller as of the Closing Date (i) the ANDAs (including all amendments, supplements, and FDA correspondence related to such ANDAs), batch records and annual product reviews relevant to the Products, (ii) all correspondence reported to, or received from, the FDA related to a recall of any Product, and (iii) all adverse drug experience reports submitted to the FDA for any Product.

“Representatives” means, with respect to a Person, such Person’s directors, officers, employees, accountants, consultants, legal counsel, investment bankers, advisors, financing sources, and agents and other representatives.

“Seller” has the meaning set forth in the preamble to this Agreement.

“Seller FDA Letter” means the transfer of ownership letter from Seller to the FDA as required by 21 CFR § 314.72, in a form mutually agreed between Seller and Buyer, to effectuate the transfer of the Regulatory Approvals from Seller to Buyer.

“Seller Indemnitee” has the meaning set forth in Section 6.3.

“Tax” means any federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add on minimum, sales, use, transfer, real property gains, registration, value added, excise, natural resources, severance, stamp, occupation, windfall profits, environmental, customs, duties, real property, personal property, capital stock, social security (or similar), unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever and any interest, penalties or additions attributable to any of the foregoing (whether disputed or not).

“Tax Benefit” has the meaning set forth in Section 6.4(c).

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including schedules and attachments thereto, and including any amendment thereof.

“Third Party Claim” has the meaning set forth in Section 6.5(a).

“Transferred Assets” has the meaning set forth in Section 1.1.

ANNEX B

PRODUCTS / ALLOCATION SCHEDULE

Product Name	Dosage Form; Strength(s)	ANDA No.
Oxycodone HCl and Acetaminophen Tablets	5/325, 7.5/325, 10/325 mg	ANDA # 209385

Hydrocodone Bitartrate and Acetaminophen	2.5/325, 5/325, 7.5/325, 10/325 mg	ANDA #209924

[Annex B]

Exhibit 10.50

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SECOND AMENDMENT TO

THE LICENSE, SUPPLY AND DISTRIBUTION AGREEMENT BETWEEN ELITE PHARMACEUTICALS, INC./ELITE LABORATORIES, INC. AND GLENMARK PHARMACEUTICALS INC. USA

This Amendment, dated as of January 2, 2020 (the “Amendment”), by and between Elite Laboratories, Inc., a Delaware corporation, and Elite Pharmaceuticals, Inc., a Nevada corporation, with offices at 165 Ludlow Avenue, Northvale, New Jersey (“Elite”) and Glenmark Pharmaceuticals Inc. USA, a Delaware corporation located at 750 Corporate Drive, Mahwah, New Jersey 07430 (“Glenmark”) relating to that License, Supply and Distribution Agreement Between Elite and Glenmark dated May 22, 2018 and the Second Amendment to the License, Supply and Distribution Agreement dated August 1, 2018 (together the “Agreement”);

WHEREAS Glenmark and Elite desire to amend the Agreement on the terms and subject to the conditions contained herein: and

WHEREAS, capitalized terms used herein and not otherwise defined shall have the meaning assigned to such terms in the Agreement.

The Parties agree to amend the Agreement by terminating the license for Methadone HCl 5 mg on December 31, 2019 and 10 mg tablets and Phendimetrazine 35 mg tablets on February 28, 2020. Schedule A of the Agreement shall be replaced in its entirety with new Schedule A listed below:

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE A

Products and Prices

Product List

Generic Name	ANDA #	Reference Listed Drug	Market exclusivity grant from ELITE
Trimipramine 25 mg, 50 mg, 100 mg capsule	077361	Surmontil® (Trimipramine Maleate) Capsules mfg by Teva Pharmaceuticals Industry Ltd.)	Exclusive
Isradipine 2.5 mg, 5.0 mg capsule	077169	Dynacirc® (Isradipine) Capsules mfg by GlaxoSmithKline	Exclusive

Products and Prices

Transfer Prices ($/bottle)

Name	Full Batch Qty.	Bottle Size	Cost per bottle
Trimipramine Maleate capsule, 25 mg	65,000 capsules	30 count	$[***]
Trimipramine Maleate capsule, 50 mg	150,000 capsules	30 count	$[***]
Trimipramine Maleate capsule, 100 mg	150,000 capsules	30 count	$[***]
Isradipine capsules, 2.5 mg	125,000	100 count	$[***]
Isradipine capsules, 5.0 mg	125,000	100 count	$[***]

Pricing includes all Product manufacturing and packaging costs, quality assurance, batch quality control testing and stability testing, and is subject pricing adjustments in Section 4.1(d).

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

Schedule B of the Agreement shall be replaced in its entirety with new Schedule B listed below:

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Trimipramine Maleate Capsules Equivalent to 25mg of Trimipramine

Number: SP0850

Manufacturer:

Elite Laboratories, Inc

DEPARTMENT:

ANALYTICS AND QC

Version: 1

Item Code: 0850

QC#:

Batch #:

Manufacturing Date:

Expiration Date:

Test / Method	Specification	Results	Reference
Appearance Visual	#2 Capsules, light blue opaque cap, yellow opaque body, imprinted “A-293” in black ink on cap and body, filled with white to off-white powder
Identification A. HPLC ATM-0850-ASCU	The retention time of the major peak of the Sample solution corresponds to that of the Standard solution, as obtained in the Assay
Identification B. Ultraviolet Absorption ATM-0850-ASCU	The UV spectrum of the Sample solution exhibits maxima only at the same wavelength as those obtained from that of standard solution, as obtained in the Assay
Assay ATM-0850-ASCU	90.0% -110.0%
Uniformity of Dosage Units by Content Uniformity ATM-0850-ASCU	Meets USP <905> requirements
Organic Impurities ATM-0850-IMP	a. Iminodibenzyl: NMT 0.2% b. Imipramine: NMT 0.2% c. Dehydro Trimipramine: NMT 0.2% d. Single Largest Individual Unspecified Impurity: NMT 0.1% e. Total Known and Unknown Impurities: NMT 0.5%
Dissolution ATM-0850-DISS	NLT 80% (Q) in 30 minutes
Water Content USP<921> method 1a	NMT 6.0%
Residual Solvents	USP <467> option 1	Complies
Elemental Impurities	Meets USP <232> and <233> requirements	Complies

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Trimipramine Maleate Capsules Equivalent to 50mg of Trimipramine

Number: SP0851

Manufacturer:

Elite Laboratories, Inc

DEPARTMENT:

ANALYTICS AND QC

Version: 1

Item Code: 0851

QC#:

Batch #:

Manufacturing Date:

Expiration Date:

Test / Method	Specification	Results	Reference
Appearance Visual	#2 Capsules, light blue opaque cap, medium orange opaque body, imprinted “A-294” in black ink on cap and body, filled with white to off-white powder
Identification A. HPLC ATM-0850-ASCU	The retention time of the major peak of the Sample solution corresponds to that of the Standard solution, as obtained in the Assay
Identification B. Ultraviolet Absorption ATM-0850-ASCU	The UV spectrum of the Sample solution exhibits maxima only at the same wavelength as those obtained from that of standard solution, as obtained in the Assay
Assay ATM-0850-ASCU	90.0% -110.0%
Uniformity of Dosage Units by Content Uniformity ATM-0850-ASCU	Meets USP <905> requirements
Organic Impurities ATM-0850-IMP	a. Iminodibenzyl: NMT 0.2% b. Imipramine: NMT 0.2% c. Dehydro Trimipramine: NMT 0.2% d. Single Largest Individual Unspecified Impurity: NMT 0.1% e. Total Known and Unknown Impurities: NMT 0.5%
Dissolution ATM-0850-DISS	NLT 80% (Q) in 30 minutes
Water Content USP<921> method 1a	NMT 6.0%
Residual Solvents	USP <467> option 1	Complies
Elemental Impurities	Meets USP <232> and <233> requirements	Complies

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Trimipramine Maleate Capsules Equivalent to 100mg of Trimipramine

Number: SP0852

Manufacturer:

Elite Laboratories, Inc

DEPARTMENT:

ANALYTICS AND QC

Version: 1

Item Code: 0852

QC#:

Batch #:

Manufacturing Date:

Expiration Date:

Test / Method	Specification	Results	Reference
Appearance Visual	#2 Capsules, light blue opaque cap, white opaque body, imprinted “A-295” in black ink on cap and body, filled with white to off-white powder
Identification A. HPLC ATM-0850-ASCU	The retention time of the major peak of the Sample solution corresponds to that of the Standard solution, as obtained in the Assay
Identification B. Ultraviolet Absorption ATM-0850-ASCU	The UV spectrum of the Sample solution exhibits maxima only at the same wavelength as those obtained from that of standard solution, as obtained in the Assay
Assay ATM-0850-ASCU	90.0% -110.0%
Uniformity of Dosage Units by Content Uniformity ATM-0850-ASCU	Meets USP <905> requirements
Organic Impurities ATM-0850-IMP	a. Iminodibenzyl: NMT 0.2% b. Imipramine: NMT 0.2% c. Dehydro Trimipramine: NMT 0.2% d. Single Largest Individual Unspecified Impurity: NMT 0.1% e. Total Known and Unknown Impurities: NMT 1.5%
Dissolution ATM-0850-DISS	NLT 80% (Q) in 30 minutes
Water Content USP<921> method 1a	NMT 6.0%
Residual Solvents	USP <467> option 1	Complies
Elemental Impurities	Meets USP <232> and <233> requirements	Complies

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Isradipine Capsules USP 2.5 mg

Number: SP0910

Manufacturer:

Elite Laboratories, Inc

Department:

Analytics and QC

Version 1

Item Code: 0910

QC#:

Batch #:

Manufacturing Date:

Expiration date:

Test / Method	Specification	Results	Notebook Reference
Description Visual	White opaque capsules with imprint “A263” on cap and body filled with yellow colored powder
Ultraviolet Absorption Identification USP <197U> 25µg/mL in methanol Cell Size: 1 cm Range: 250-450nm	The maxima obtained with the sample preparation corresponds with that of standard preparation
Chromatographic Identification ATM-0910-ASCU	The retention time of the major peak in the chromatogram of the Assay preparation corresponds to that in the chromatogram of the Standard preparation, as obtained in Assay
Assay ATM-0910-ASCU	90.0% -110.0% of the labeled amount of isradipine
Uniformity of Dosage (Content Uniformity) ATM-0910-ASCU	Meets USP <905> Acceptance Value ≤ 15.0
Related Substances (Impurities/Degradants) ATM-0910-IMP	a. Impurity C: NMT 0.2% b. Impurity A: NMT 0.3% c. Impurity D or USP related compound A: NMT 0.2% d. Impurity B: NMT 0.3% e. Impurity F: NMT 0.15% f. Isradipine Ethyl-Isopropyl: NMT 0.15% g. Each Unknown Related Substances: NMT 0.10% h. Total (Known and Unknown): NMT 1.2%
Dissolution ATM-0910-DISS	Not less than 75% (Q) of labeled amount of isradipine is dissolved in 45 minutes
Water Determination USP <921>	Not more than 8.0%
Residual Solvents	USP<467> option 1	Complies	Refer to Certification
Elemental Impurities	Meets USP <232> and <233> requirements	Complies

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

SCHEDULE B

PRODUCT SPECIFICATIONS

Elite Pharmaceuticals Inc.

FINISHED PRODUCT ANALYSIS

Isradipine Capsules USP 5 mg

Number: SP0911

Manufacturer:

Elite Laboratories, Inc

Department:

Analytics and QC

Version 1

Item Code: 0911

QC#:

Batch #:

Manufacturing Date:

Expiration date:

Test / Method	Specification	Results	Notebook Reference
Description Visual	Flesh opaque capsules with imprint “A264” on cap and body filled with yellow colored powder
Ultraviolet Absorption Identification USP <197U> 25µg/mL in methanol Cell Size: 1 cm Range: 250-450nm	The maxima obtained with the sample preparation corresponds with that of standard preparation
Chromatographic Identification ATM-0910-ASCU	The retention time of the major peak in the chromatogram of the Assay preparation corresponds to that in the chromatogram of the Standard preparation, as obtained in Assay
Assay ATM-0910-ASCU	90.0% -110.0% of the labeled amount of isradipine
Uniformity of Dosage (Content Uniformity) ATM-0910-ASCU	Meets USP <905> Acceptance Value ≤ 15.0
Related Substances (Impurities/Degradants) ATM-0910-IMP	a. Impurity C: NMT 0.2% b. Impurity A: NMT 0.3% c. Impurity D or USP related compound A: NMT 0.2% d. Impurity B: NMT 0.3% e. Impurity F: NMT 0.15% f. Isradipine Ethyl-Isopropyl: NMT 0.15% g. Each Unknown Related Substances: NMT 0.10% h. Total (Known and Unknown): NMT 1.2%
Dissolution ATM-0910-DISS	Not less than 75% (Q) of labeled amount of isradipine is dissolved in 45 minutes
Water Determination USP <921>	Not more than 8.0%
Residual Solvents	USP<467> option 1	Complies	Refer to Certification
Elemental Impurities	Meets USP <232> and <233> requirements	Complies

EXPLANATORY NOTE: [***] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

Post termination of Glenmark’s license right under this Agreement to sell Methadone and Phendimetrazine, Glenmark will be permitted to sell its remaining inventory of Methadone and Phendimetrazine per Section 8.4 of the Agreement and Elite will continue to receive License Fees per Section 3.3, however Glenmark agrees not to apply any negative License Fees (profit losses) to Elite’s profit split with respect to Methadone or Phendimetrazine sold on or after October 1, 2019.

Parties have agreed that Elite shall not hold Glenmark liable to pay for any remaining Methadone or Phendimetrazine raw materials and packaging materials procured or ordered in Elite’s inventory as of December 31, 2019.

Further all consequential changes stand incorporated in the Agreement to effect the aforesaid change.

This Amendment shall be an integral part of the Agreement.

Except as expressly provided in this Amendment, the Agreement and all provisions therein are and shall continue to be in full force and effect in accordance with its terms.

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their duly authorized representatives as of the day and year first above written.

Elite Pharmaceuticals, Inc.		Glenmark Pharmaceuticals Inc., USA

By:	/s/ Nasrat Hakim	By:	/s/ Sanjeev Krishan
Name:	Nasrat Hakim	Name:	Sanjeev Krishan
Title:	President and CEO	Title:	EVP
Date:	1-2-20	Date:	14-1-20

Elite Laboratories, Inc.

By:	/s/ Nasrat Hakim
Name:	Nasrat Hakim
Title:	President and CEO
Date:	1-2-20

Exhibit 10.51

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

Elite Pharmaceuticals, Inc.

AND

NOSTRUM LABORATORIES INC.

DATED AS OF

December 16, 2019

TABLE OF CONTENTS

		Page

Article 1 PURCHASE AND SALE		1
Section 1.1	Sale and Purchase of Assets	1
Section 1.2	Assumed Liabilities	1
Section 1.3	Excluded Liabilities.	2
Section 1.4	Purchase Price	2
Section 1.5	Purchase Price Allocation	2

Article 2 CLOSING		3
Section 2.1	Closing	3
Section 2.2	Actions to be Taken at the Closing	3
Section 2.3	License to Certain Product Technology	3

Article 3 REPRESENTATIONS OF SELLER		3
Section 3.1	Organization and Authority	3
Section 3.2	Consents and Approvals; No Violations	4
Section 3.3	Absence of Litigation	4
Section 3.4	Regulatory Matters	4
Section 3.5	Title	5
Section 3.6	Brokers	5
Section 3.7	Exclusivity of Representations and Warranties	5

Article 4 REPRESENTATIONS OF BUYER		5
Section 4.1	Organization and Authority	5
Section 4.2	Consents and Approvals; No Violations	6
Section 4.3	Litigation	6
Section 4.4	Brokers	6
Section 4.5	No Other Representations and Warranties	6

Article 5 COVENANTS		7
Section 5.1	Product Responsibility	7
Section 5.2	Transfer of Regulatory Approvals	7
Section 5.3	Transfer Taxes	7
Section 5.4	Public Announcements	7
Section 5.5	Confidentiality	7
Section 5.6	Further Assurances	7

Article 6 INDEMNIFICATION		7
Section 6.1	Survival of Representations, Warranties and Covenants	7
Section 6.2	Indemnification by Seller for the Benefit of Buyer	9
Section 6.3	Indemnification by Buyer for the Benefit of Seller	9
Section 6.4	Certain Further Limitations	9
Section 6.5	Indemnification Procedures	10
Section 6.6	Treatment of Indemnity Payments	12

Section 6.7	Exclusive Remedy	13

Article 7 MISCELLANEOUS		13
Section 7.1	Fees and Expenses	13
Section 7.2	Amendment	13
Section 7.3	Waiver	13
Section 7.4	Entire Agreement	13
Section 7.5	Assignment	14
Section 7.6	Notices	14
Section 7.7	Construction; Section Headings; Draftsmanship; Interpretation	15
Section 7.8	Annexes, Exhibits and Schedules	15
Section 7.9	No Third Party Beneficiaries	16
Section 7.10	Severability	16
Section 7.11	Limitation of Remedies	16
Section 7.12	No Recourse	16
Section 7.13	Governing Law; Submission to Jurisdiction; Waiver of Jury Trial	16
Section 7.14	Service of Process	17
Section 7.15	Specific Enforcement	17
Section 7.16	Counterparts; Delivery	17

Annex A	Definitions	A-1
Annex B	Products / Allocation Schedule	B-1

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”), dated as of December 16, 2019, is entered into by and between Elite Pharmaceuticals, Inc., a Nevada corporation (“Seller”), and Nostrum Laboratories Inc., a New Jersey, USA corporation (“Buyer”). Seller and Buyer shall be referred to herein from time to time collectively as the “Parties” and individually as a “Party”. Capitalized words have the definitions set forth in Annex A.

BACKGROUND

Article 1
PURCHASE AND SALE

(a) the Regulatory Approvals; and

(b) the Regulatory Documentation.

(b) any liability of Seller for any taxes for any periods prior to or subsequent to the Closing whether or not relating to the business and notwithstanding the disclosure thereof by Seller to Buyer;

(d) any trade payable or accrued expenses.

Section 1.4 Purchase Price.

(a) The “Purchase Price” shall be an amount equal to U.S. $300,000 (Three Hundred Thousand U.S. Dollars).

(b) At the Closing, Buyer shall pay to Seller an amount in cash, without interest, equal to the Purchase Price.

Article 2
CLOSING

Section 2.1 Closing.

Section 2.2 Actions to be Taken at the Closing.

(a) Deliveries by Seller. At the Closing, Seller shall deliver, or shall cause to be delivered to Buyer:

(i) final form of template Seller FDA Letter, to be transmitted to the FDA in accordance with Section 5.2; and

(ii) such other certificates and documents customary in transactions similar to those contemplated hereby as are reasonably requested by Buyer.

(b) Deliveries by Buyer. At the Closing, Buyer shall deliver or cause to be delivered to Seller:

(i) evidence of the wire transfers referred to in Section 1.4(b); and

(ii) final form of template Buyer FDA Letter, to be transmitted to the FDA in accordance with Section 5.2 and proof of FDA receipt; and

(iii) such other certificates and documents customary in transactions similar to those contemplated hereby as are reasonably requested by Seller.

Article 3
REPRESENTATIONS OF SELLER

Seller represents and warrants to Buyer that the statements in this Article 3 are true and correct as of the date hereof, except as set forth in the Disclosure Schedule.

Section 3.1 Organization and Authority.

(a) Seller is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of formation.

Section 3.2 Consents and Approvals; No Violations.

Section 3.4 Regulatory Matters.

Article 4
REPRESENTATIONS OF BUYER

Buyer represents and warrants to Seller that the statements in this Article 4 are true and correct as of the date hereof.

Section 4.1 Organization and Authority.

(a) Buyer is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of formation.

Section 4.2 Consents and Approvals; No Violations.

Section 4.4 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer unless expressly noted. RoseChemical LLC shall be paid 2% of ANDA sale price ($6000.00 per sale of ANDA.)

Article 5
COVENANTS

Section 5.1 Product Responsibility. Without limiting each Party’s respective obligations under the Assumed Liabilities and Excluded Liabilities as set forth under Section 1.2 and Section 1.3:

Article 6
INDEMNIFICATION

(a) any material inaccuracy of any representation or warranty made by Seller contained in Article 3;

(b) any material breach by Seller of any of the covenants or agreements contained herein which are to be performed or complied with by Seller; or

(a) Any material inaccuracy of any representation or warranty made by Buyer contained in Article 4;

(b) any material breach by Buyer of any of the covenants or agreements contained herein which are to be performed or complied with by Buyer; or

Section 6.4 Certain Further Limitations.

(d) The Buyer Indemnitees shall not be entitled to indemnification pursuant to Section 6.2 for any Loss underlying any such indemnification claim to the extent that:

(i) the Buyer Indemnitees could have, with commercially reasonable efforts, mitigated or prevented such Loss (or any part thereof); or

(e) To the extent that any Buyer Indemnitee may claim Losses under more than one provision of Section 6.2, such Buyer Indemnitee may only recover for the same Losses once.

Article 7
MISCELLANEOUS

If to Buyer:

Nostrum Laboratories Inc.

1370 Hamilton Street

Somerset, NJ 08873

Attention: Anil Anand

Facsimile: 816-308-4994

E-mail: anil@nostrumpharma.com

with a copy (which shall not constitute notice to Buyer) to:

Tanzina Chowdhury

1370 Hamilton Street

Somerset, NJ 08873

E-mail: Tchowdhury@nostrumlabs.com

If to Seller:

Elite Pharmaceuticals, Inc.

165 Ludlow Avenue

Northvale, NJ 07647

Attention: Nasrat Hakim

Facsimile: 201-750-2755

E-mail: nhakim@elitepharma.com

with a copy (which shall not constitute notice to Seller) to:

Attention: Carter Ward

Facsimile: 201-750-2755

E-mail: cward@elitepharma.com

Section 7.7 Construction; Section Headings; Draftsmanship; Interpretation.

Section 7.13 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

* * *

IN WITNESS WHEREOF, the Parties hereto have caused this Asset Purchase Agreement to be duly executed on its behalf as of the day and year first above written.

	SELLER

	ELITE PHARMACEUTICALS, INC.

	By:	s/Nasrat Hakim
	Name:	Nasrat Hakim
	Title:	CEO

	BUYER

	NOSTRUM LABORATORIES INC.

	By:	s/Ruben Valdez Jr January 16, 2020
	Name:	Ruben Valdez Jr
	Title:	Vice President Business Development