美國
證券交易委員會 及交易所
華盛頓特區，20549
表單
（馬克 一）
| 根據1934年證券交易法的第13或第15(d)節，季度報告 |
截至季度結束日期為
或
| 過渡 根據1934年證券交易法第13或15(d)條的報告，適用於過渡期間從 到 |
委員會
檔案編號
(依其章程規定之註冊人的正式名稱)
（註冊地點或其他管轄區的州份 註冊或組織） |
（聯邦國稅局雇主身分識別號碼） 識別號碼） | |
| （總執行辦公室地址） | （郵政編碼） |
申報人的電話號碼，包括區號：
根據該法案第12(b)條紀錄的證券：
| 每個類別的標題 | 交易 標的 |
在哪個交易所上市的名字 | ||
| 場外交易市場OTCQB |
請勾選表示是否登記業者：（1）是否已在1934年證券交易法第13條或第15(d)條要求之規定下，於過去12個月內報告所有應報告的報告（或業者因要分段報告而須報告的較短期間內的報告），及（2）業者在過去90天內是否一直受到此報告要求。 ☒ 否 ☐
請勾選表示：登記人是否已按照第405條規定/ S-T規章〔本章232.405條〕的要求，在過去12個月內（或登記人需要遞交該類文件的較短期間）提交了所有必須提交的互動式資料文件？ ☒ 否 ☐
標示 請勾選選項以顯示是否本登記人是大型加速發行人、加速發行人、非加速發行人、較小型報告公司或新興成長公司。見《交易所法》120億2條中“大型加速發行人”、“加速發行人”、“較小型報告公司”及“新興成長公司”的定義。
| 大型及加速提交者 | ☐ | 加速提交者 | ☐ | |||
| ☒ | 較小的報告公司 | |||||
| 新興成長型公司 | ||||||
若屬新興成長公司，則請在適用於依據第13(a)款擬定的任何新或修訂財務會計準則時，打勾表示註冊人已選擇不使用過度過渡期遵守該準則。 ☐
勾選「是」表示公司是否為外殼公司（依交易所法規120億2定義）。是 ☐ 否
截至2024年11月14日，每一類發行人普通股的流通股數為：
普通股票 - 股份
| 頁碼 | ||
| 第一部分 | 財務信息 | F-1 |
| 項目 1. | 基本報表（未經審核） | F-1 |
| 截至2024年9月30日及2024年3月31日的未經審計的簡明合併資產負債表 | F-1 | |
| 截至2024年及2023年9月30日的三個月和六個月的未經審計的簡明合併營運報表 | F-2 | |
| 截至三個月的未經審計的簡明合併股東權益變動報表 六个月 截至2024年9月30日及2023年9月的月份 | F-3 | |
| 2024年9月30日和2023年的六個月未經核數的簡明綜合現金流量表 | F-5 | |
| 附註：未經查核之縮表合併財務報表注釋。 | F-6 | |
| 項目 2. | 管理層對財務狀況和業績的討論與分析 | 1 |
| 項目 3. | 市場風險的定量和定性披露 | 11 |
| 項目 4. | 內部控制及程序 | 11 |
| 第二部分 | 其他資訊 | 12 |
| 項目 1. | 法律訴訟 | 12 |
| 項目 1A。 | 風險因素 | 12 |
| 項目 2. | 股票權益的未註冊銷售和資金用途 | 12 |
| 項目 3. | 優先證券違約 | 12 |
| 項目 4. | 礦業安全披露 | 12 |
| 項目5。 | 其他資訊 | 12 |
| 項目6。 | 展品 | 13 |
| 簽名 | 14 | |
| i |
第一部分 - 財務資訊
項目 1. 基本報表
精英製藥公司及其子公司
簡明合併資產負債表
(未經審核)
| 2024年 9月30日 | 二○二四年三月三十一日 | |||||||
| 資產 | ||||||||
| 目前 資產: | ||||||||
| 現金 | $ | $ | ||||||
| 應收賬款
扣除預期信用損失準備金後的淨額為$ | ||||||||
| 庫存 | ||||||||
| 預付費用 及其他流動資產 | ||||||||
| 流動資產總額 | ||||||||
| 物業
和設備，扣除累計折舊後為$ | ||||||||
| 無形資產 | ||||||||
| 融資 租賃 - 使用權資產 | ||||||||
| 經營 租賃 - 使用權資產 | ||||||||
| 递延所得税资产 | ||||||||
| 其他 資產: | ||||||||
| 受限 現金 - NJEDA 債券的債務服務 | ||||||||
| 安防 存款 | ||||||||
| 總計 其他資產 | ||||||||
| 總資產 | $ | $ | ||||||
| 負債 及股東權益 | ||||||||
| 流動 負債： | ||||||||
| 應付款項 | $ | $ | ||||||
| 已應計費用 | ||||||||
| 遞延 營業收入，當前部分 | ||||||||
| 債券型 應付，當前部分，扣除債券發行成本 | ||||||||
| 貸款 應付，目前部分 | ||||||||
| 關聯 方貸款應付（附註7） | ||||||||
| 租賃 責任 - 融資租賃，當前部分 | ||||||||
| 租賃 責任 - 營運租賃，目前部分 | ||||||||
| 當期負債總計 | ||||||||
| 長期負債: | ||||||||
| 遞延 營業收入，扣除目前部分 | ||||||||
| 應付債券 ，扣除目前部分及債券發行成本 | ||||||||
| 應付貸款 ，扣除目前部分及貸款成本 | ||||||||
| 租賃 責任 - 融資租賃，扣除目前部分 | ||||||||
| 租賃 責任 - 營運租賃，扣除目前部分 | ||||||||
| 衍生金融工具 - warrants | ||||||||
| 總長期負債 | ||||||||
| 负债合计 | ||||||||
| 股東權益： | ||||||||
| 普通股；面值 $; 授權股份數； 截至2024年9月30日及2024年3月31日發行的股份； 截至2024年9月30日及2024年3月31日的發行在外股份數量 | ||||||||
| 額外實收資本 | ||||||||
| 庫藏股 ; 截至2024年9月30日和2024年3月31日的股份，按成本計算 | ( | ) | ( | ) | ||||
| 累積虧損 | ( | ) | ( | ) | ||||
| 股東權益總額 | ||||||||
| 負債及股東權益總額 | $ | $ | ||||||
附註 附註為此未經審核簡明綜合財務報表之重要組成部分。
| F-1 |
ELITE PHARMACEUTICALS, INC.及其子公司
綜合損益表
(未經審核)
| 截至9月30日止三個月的日期 | 截至9月30日止六個月的日期 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 營業收入: | ||||||||||||||||
| 製造業費用 | $ | $ | $ | $ | ||||||||||||
| 授權費用 | ||||||||||||||||
| 營業收入總額 | ||||||||||||||||
| 製造成本 | ||||||||||||||||
| 毛利淨額 | ||||||||||||||||
| 營業費用： | ||||||||||||||||
| 研究 與發展 | ||||||||||||||||
| 總務及管理 | ||||||||||||||||
| 通過發行期權作為非現金補償 | ||||||||||||||||
| 折舊及攤銷費用 | ||||||||||||||||
| 營業費用總額 | ||||||||||||||||
| 營業收入 從其它獲取 | ||||||||||||||||
| 其他 (支出) 收入: | ||||||||||||||||
| 衍生金融工具公允價值變動-認股權證 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 按股份負債公允價值變動 | ( | ) | ( | ) | ||||||||||||
| 利息費用及債券發行成本攤銷 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 利息收益 | ||||||||||||||||
| 其他 收入 | ||||||||||||||||
| 其他 開支，淨額 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 所得稅前損失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 所得稅（費用）利益 | ( | ) | ( | ) | ||||||||||||
| 歸屬普通股股東的淨（虧損）收入 | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| 基本每股普通股股東應佔淨（虧損）收益 | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| 稀釋每股普通股股東應佔淨（虧損）收益 | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| 基本每股普通股權重平均值 | ||||||||||||||||
| 稀釋每股普通股權重平均值 | ||||||||||||||||
附註 附註為此未經審核簡明綜合財務報表之重要組成部分。
| F-2 |
ELITE PHARMACEUTICALS, INC.及其子公司
股東權益簡明合併財務報表
(未經審核)
| 系列 J優先股 | 普通股 | 額外 實收資本 | 庫藏股 股票 | 累積 | 總計 股東權益 | |||||||||||||||||||||||||||||||
| 股份 | 金額 | 股份 | 金額 | 資本 | 股份 | 金額 | 資本總額 | 股權 | ||||||||||||||||||||||||||||
| 截至2024年3月31日的賬面餘額 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| 淨收入 | — | — | — | |||||||||||||||||||||||||||||||||
| 非現金 薪酬透過發行員工期權 | — | — | — | |||||||||||||||||||||||||||||||||
| 截至2024年6月30日餘額 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| 淨 損失 | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 非現金 薪酬透過發行員工期權 | — | — | — | |||||||||||||||||||||||||||||||||
| 截至2024年9月30日的結餘 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
附註 附註為此未經審核簡明綜合財務報表之重要組成部分。
| F-3 |
ELITE PHARMACEUTICALS, INC.及其子公司
股東權益簡明合併財務報表
(未經審核)
| J系列 J優先股 | 普通股 | 額外 付費 | 庫藏 股 | 累積 | ||||||||||||||||||||||||||||||||
| 股份 | 金額 | 股份 | 金額 | 資本 | 股份 | 金額 | 赤字 | 股本 | ||||||||||||||||||||||||||||
| 截至2023年3月31日的餘額 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
| 淨利潤 | — | — | — | |||||||||||||||||||||||||||||||||
| 通過發放員工期權進行非現金補償 | — | — | — | |||||||||||||||||||||||||||||||||
| 2023年6月30日的股東權益（赤字）餘額 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| 淨利潤 | — | — | — | |||||||||||||||||||||||||||||||||
| 通過發放員工期權進行非現金補償 | — | — | — | |||||||||||||||||||||||||||||||||
| 截至2023年9月30日的餘額 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
附註是這些未經審計的簡明綜合財務報表的組成部分。
| F-4 |
ELITE 製藥公司及附屬公司
簡明綜合現金流量表
(未經審計)
| 截至9月30日的六個月內 | ||||||||
| 2024 | 2023 | |||||||
| 經營活動產生的現金流量： | ||||||||
| 淨（虧損）收入 | $ | ( | ) | $ | ||||
| 調整淨損失（收入）與經營活動提供的（使用的）淨現金之間的差額： | ||||||||
| 折舊和攤銷 | ||||||||
| 應收賬款損失準備 | ||||||||
| 融資租賃的攤銷 - 使用權資產 | ||||||||
| 財務租賃的攤銷 - 使用權資產 | ||||||||
| 債券發行成本的折舊 | ||||||||
| 資產處置損失 | ||||||||
| 衍生金融工具的公允價值變動 - warrants | ||||||||
| 基於股票的負債公允價值變動 | ||||||||
| 遞延所得稅費用 | ( | ) | ||||||
| 通過發行員工期權支付的非現金補償 | ||||||||
| 非現金租賃費用和租賃增值 | ||||||||
| 經營性資產和負債的變化： | ||||||||
| 應收賬款 | ( | ) | ( | ) | ||||
| 庫存 | ( | ) | ( | ) | ||||
| 預付費用及其他流動資產 | ||||||||
| 應付賬款 | ( | ) | ||||||
| 應計費用 | ||||||||
| 遞延收入 | ( | ) | ( | ) | ||||
| 50,260 | ( | ) | ( | ) | ||||
| 經營活動產生的淨現金流量 | ( | ) | ||||||
| 投資活動產生的現金流量： | ||||||||
| 購置固定資產等資產支出 | ( | ) | ||||||
| 收購成本（b） | ( | ) | ||||||
| 處置固定資產所得 | ||||||||
| 投資活動所使用的淨現金 | ( | ) | ||||||
| 籌資活動產生的現金流量： | ||||||||
| 債券本金的支付 | ( | ) | ( | ) | ||||
| 應付關聯方貸款的收入 | ||||||||
| 融資租賃義務的本金支付 | ( | ) | ||||||
| 貸款還款 | ( | ) | ( | ) | ||||
| 籌資活動的淨現金流量(使用)/提供的淨現金流量 | ( | ) | ||||||
| 現金及受限制現金的淨變動 | ||||||||
| 期初現金和限制性現金 | ||||||||
| 現金和受限現金，期末 | $ | $ | ||||||
| Capital Resources | ||||||||
| 支付的利息現金 | $ | $ | ||||||
| 支付的所得稅費用 | $ | $ | ||||||
| 財務總監和高管的保險費用 | $ | $ | ||||||
| 確認融資租賃使用權資產和租賃負債 | $ | $ | ||||||
| 現金和限制性現金的對賬調整 | ||||||||
| 現金 | $ | $ | ||||||
| 受限現金 - NJEDA債券的債務服務 | ||||||||
| 現金和受限現金在現金流量表中顯示 | $ | $ | ||||||
附註是這些未經審計的簡明綜合財務報表的組成部分。
| F-5 |
ELITE 製藥公司及附屬公司
簡明合併財務報表附註
(未經審計)
註釋1。重要會計政策摘要
概要
精英制藥公司（「公司」或「精英」）於1997年10月1日在特拉華州成立，其全資子公司精英實驗室公司（「精英實驗室」）於1990年8月23日在特拉華州成立。2012年1月5日，精英制藥公司根據內華達州的法律進行重新註冊。精英實驗室主要從事仿製藥口服劑型的研究、開發、許可、製造和銷售。公司具備爲第三方及自身製造控制釋放產品的能力，前提是產品候選者獲得批准。這些產品包括涵蓋過敏、減重、注意力缺陷和感染等治療領域的藥物。研究和開發活動旨在開發能夠獲得美國食品和藥物管理局（「FDA」）市場批准的產品，並進而對這些產品進行商業開發。
表述基礎
公司附帶的未經審計的合併基本報表是根據美國通用會計原則（「GAAP」）以及證券交易委員會（SEC）的規則和規定編制的。未經審計的合併基本報表包括公司的帳戶及其全資子公司Elite Labs的帳戶。所有重大關聯公司帳戶和交易均在合併中被消除。根據SEC對中期基本報表的規則和規定，通常在依據GAAP編制的合併基本報表中包含的某些信息或腳註披露已被縮減或省略。因此，它們不包括全面呈現財務狀況、經營成果或現金流所需的所有信息和腳註。管理層認爲，附帶的未經審計的合併基本報表包括爲公平呈現所需的所有調整，這些調整都是正常經常性性質，適用於所提供的期間。附帶的未經審計的合併基本報表應與公司於2024年7月1日向SEC提交的10-K表格一起閱讀。截至2024年9月30日的六個月期間的中期結果不一定代表預期的2025年3月31日結束的財政年度或任何未來期間的結果。
使用估計值
在符合GAAP的基礎上，編制合併財務報表需要管理層做出某些估計和假設。這些估計和假設會影響在合併財務報表日所報告的資產和負債的金額，以及或有資產和負債的披露，同時也會影響報告期內收入和費用的報告金額。這些管理層的估計和假設包括但不限於客戶合同中每個獨立績效義務的獨立銷售價格、遞延佣金的利益期間、無形資產的評估、物業和設備以及可識別的無形資產的使用壽命、基於股票的補償費用以及所得稅。實際結果可能與這些估計有所不同。
運營板塊定義爲公共實體的組成部分，從中可以獲得收入和支出的業務活動，可以獲得與業務單元相關的單獨財務信息，由我們的首席運營決策者（「CODM」）定期評估其表現和分配資源。根據510，我們CODM根據推出的兩個板塊如下：文檔管理和文檔轉換。這些板塊包含已組合的單個業務元件，這些業務元件基於共同的管理、客戶、解決方案、服務流程和其他經濟特徵進行組合。我們目前沒有板塊間的銷售。我們根據毛利潤估計業績。
金融會計準則委員會（「FASB」）會計準則詩編碼280（「ASC 280」），分部報告，建立了關於經營組成部分信息報告的標準。經營組成部分被定義爲企業的組成部分，該部分有可用的單獨財務信息，由首席經營決策者或決策團隊定期評估，以決定如何分配資源並評估績效。
公司的首席運營決策者是首席執行官，他在做出資源分配和評估公司績效的決策時，會審查根據一般公認會計原則（GAAP）編制的各個部門的財務表現和經營結果。
公司已經確定其可報告的業務部門是通過簡化新藥申請（「ANDA」）獲得營銷批准的產品以及通過新藥申請（「NDA」）獲得營銷批准的產品。 ANDA 產品被稱爲仿製藥，而 NDA 產品被稱爲品牌藥品。公司暫停了 NDA 的進一步開發，並未參與業務活動。因此，在截至 2024 年和 2023 年 9 月 30 日的三個月和六個月期間，公司僅在一個運營部門內從事業務活動。
目前 沒有內部部門收入。由於首席運營決策maker不按部門審查此信息，因此不在下文中提供按經營部門劃分的資產信息。報告部門遵循用於編制公司簡明合併基本報表的相同會計政策。有關詳細信息，請參見第13條。
| F-6 |
ELITE 製藥公司及附屬公司
簡明合併財務報表附註
(未經審計)
營業收入 確認
該公司通過製造業-半導體和許可費用以及向藥品分銷商、藥房和其他機構的直接銷售來產生營業收入。 製造費用包括疼痛管理產品的開發、生產一系列獲得批准的ANDA的仿製藥產品，以及配方的製造和新產品的開發。許可費用包括產品的商業化，通過許可證和收取特許權使用費，或與其他藥品公司的許可協議的擴展，包括共同開發項目、合資企業和其他合作。
根據ASC 606規定， 與客戶的合同產生的營業收入 （「ASC 606」），公司在客戶取得約定商品或服務的控制權後確認營業收入，金額應反映爲期望換取這些商品或服務的考慮。公司按照ASC 606規定的五步模型確認營業收入：（i）識別與客戶的合同；（ii）確定合同中的履約義務；（iii）確定交易價格；（iv）將交易價格分配給合同中的履約義務；和（v）在公司履行履約義務時（或之後）確認營業收入。公司只會在可能收到換取轉讓給客戶的商品或服務的對價時，將五步模型應用於合同。在合同簽訂之初，一旦確定合同適用ASC 606，公司評估每個合同中承諾的商品或服務，並確定其中作爲履約義務的項目，評估每個承諾的商品或服務是否是獨立的。然後，公司在滿足（或後續滿足）履約義務時確認分配給各履約義務的交易價格的金額作爲營業收入。爲第三方代收的銷售、增值稅和其他稅款不計入營業收入。
商品和服務的性質
以下是公司根據其生成營業收入的貨物和服務的描述，以及適用的履行義務性質、履行時間和重要付款條款：
a) 製造業費用
該公司具備爲第三方在合同基礎上生產控釋產品的能力，前提是這些產品獲得批准。這些產品包括使用控釋藥物科技的產品。該公司還開發和銷售（無論是自主還是許可給其他公司）仿製和專有的控釋藥品產品。
公司在客戶根據合同的運輸條款獲得對公司產品的控制時確認營業收入，此時績效義務被視爲完成。公司主要負責履行提供產品的承諾，負責確保產品按照相關供應協議生產，並承擔庫存在運輸過程中到商業合作伙伴的風險。營業收入被衡量爲公司預計在將產品轉讓給客戶時將收到的對價金額。
b) 許可證費
公司簽訂許可和開發協議，可能包括多項營業收入產生活動，包括里程碑付款、許可費用、產品銷售和服務。公司根據ASC 606分析其許可和開發協議的每個元素，以判斷適當的營業收入確認。許可協議的條款可能包括向公司支付許可費用、不可退還的預付許可費用、如果達到特定目標則支付的里程碑款，以及/或產品銷售的特許權使用費。
如果合同只包含一個履行義務，則整個交易價格分配給該單個履行義務。 包含多個履行義務的合同需要根據承諾產品或服務的預估相對獨立銷售價格對交易價格進行分配。公司根據履行義務單獨銷售的價格確定獨立銷售價格。如果獨立銷售價格無法通過過去的交易觀察到，則公司根據市場條件和內部批准的與履行義務相關的定價指導估計獨立銷售價格。
公司在一段時間內確認來自不可退還的預付款項的營業收入，通常在向客戶交付知識產權後的某一時間點。 對於那些取決於特定未來事件發生（例如，產品獲得FDA批准時應支付的款項）的里程碑付款，公司判斷這些應被視爲合同中考慮的總代價的組成部分，以可變金額方法。因此，公司評估每個里程碑以判斷實現每個里程碑背後的概率和實質。鑑於未來事件發生的不確定性，公司將在不存在高風險的情況下確認來自里程碑的營業收入，這通常發生在事件的接近或實現時。
| F-7 |
ELITE 製藥公司及附屬公司
簡明合併財務報表附註
(未經審計)
需要重大管理判斷來判斷安排下所需的努力程度，以及公司預計在該安排下完成其履行義務的期限。如果公司無法合理估計其履行義務何時完成或變得微不足道，那麼營業收入的確認將被推遲，直到公司可以合理進行此類估計。然後，營業收入將在剩餘的預估履行期間內使用累計追趕法確認。
在確定合同的交易價格時，如果顧客的付款發生在執行業務顯著之前或之後，則會進行調整，導致產生重大融資成分。根據ASC 606-10-32-18中的實用性簡化規定，如果公司履行合同義務與客戶支付之間的時間不超過一年，則公司不評估是否存在重大融資成分。截至2024年9月30日，公司的合同中沒有包含重大融資成分。
根據ASC 606-10-55-65，特許權使用費在客戶產品的後續銷售發生時確認。
c) 精英品牌下產品的銷售
公司於2023年4月1日開始直接銷售自有品牌的產品。對部分產品的許可協議將繼續有效。然而，在這一過渡過程中，製造業-半導體和許可費用的很大一部分已被向藥房和機構分銷商銷售Elite品牌藥品的收入所取代。
公司在客戶根據合同運輸條款獲得公司產品的控制權時確認營業收入，在此時，績效義務被視爲已完成。公司主要負責履行交付產品的承諾，並在庫存運送至購買方期間承擔損失風險。營業收入的計量是根據從銷售藥品產品所賺取的考慮金額記錄的，淨可實現價值，其中包括按照合同減少的總金額，包括但不限於返點、折扣和方案回扣等。
公司爲批發商提供了針對向各種終端客戶的銷售的退貨費用，包括但不限於醫院、集團採購組織和藥店。退貨費用代表批發商支付的價格與終端客戶爲產品支付的價格之間的差異。公司的退貨費用估算是基於管理層對預期產品退貨、其他折扣以及歷史信息的假設。
營業收入的細分
在以下表格中，營業收入按公司產生的收入類型進行細分。公司在某一時間點確認所有履約義務的收入。在截至2024年9月30日和2023年的六個月中，公司已暫停進一步開發NDA，並未在該業務板塊進行業務活動。因此，在截至2024年9月30日和2023年的六個月中，公司只在一個運營板塊進行業務活動。該表格還包括營業收入的細分與可報告板塊的再對比：
| 截至9月30日三個月的情況 | 截至九月三十日的六個月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| ANDA: | ||||||||||||||||
| 製造業費用 | $ | $ | $ | $ | ||||||||||||
| 許可費 | ||||||||||||||||
| 總營業收入 | $ | $ | $ | $ | ||||||||||||
報告分部選擇信息和每個分部的營業利潤與稅前營業收入的調節見附註13。
受限 現金
截至2024年3月31日和2024年9月30日，公司擁有$
長期資產
公司定期評估長期資產的公允價值，這些資產包括房地產、設備和無形資產，每當事件或環境變化表明其賬面價值可能無法恢復時。
| F-10 |
ELITE 製藥公司及附屬公司
簡明合併財務報表附註
(未經審計)
物業
和設備按成本計價。折舊採用直線法，根據各自
資產的估計使用壽命計提，區間爲 至
在 養老或其他處置資產時，成本及相關的累計折舊將從賬簿中移除，隨之而來的收益或損失（如有）將在收入中確認。
無形資產
本公司將某些費用資本化以獲取無形資產；如果這些資產被確定爲有限使用壽命，則按估計的使用壽命採用直線法攤銷。 無期限無形資產的獲取費用，例如與ANDA相關的費用，將相應地資本化。
公司至少每年（截至3月31日）對其無形資產進行減值測試，並在事件或情況變化時進行測試，以指示可能發生減值。判斷減值因子是否發生需要相當大的判斷力。此類因子可能包括但不限於：公司預期未來現金流的大幅下降；公司股票價格和市值的持續大幅下降；公司部門法律因素或商業環境的重大不利變化；意外的競爭；以及增長速度放緩。
截至2022年12月31日和2023年3月31日，共有未行使權證
在2024年6月17日，公司與Nostrum Laboratories Inc.（「Nostrum」）簽訂了一份資產購買協議（「資產購買協議」），根據該協議，Nostrum有義務（i）將其在批准的仿製藥新藥申請（ANDAs）中對仿製Norco®（氫可酮比特酸鹽和對乙酰氨基酚片，USP CII）、仿製Percocet®（羥考酮鹽酸鹽和對乙酰氨基酚，USP CII）以及仿製Dolophine®（鹽酸美沙酮片）中的所有權轉讓給公司，每個稱爲「產品」；（ii）授予公司一個免版稅、非獨佔的永久許可，以使用製造每個產品所需或在適用的ANDA下製造的製造技術、專有信息、流程、技術、協議、方法、專有知識和改進，作爲交換，金額爲$
以下表格總結了2024年9月30日和2024年3月31日公司的無形資產：
| 2024年9月30日 | ||||||||||||||||||||||
| 預計使用年限 | 總賬面價值 | 增加額 | 減值損失 | 累計攤銷 | 淨賬面價值 | |||||||||||||||||
| 專利申請費用 | * | $ | $ | $ | $ | $ | ||||||||||||||||
| ANDA收購成本 | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||||
| 2024 年 3 月 31 日 | ||||||||||||||||||||||
| 預計使用壽命 | 總賬面金額 | 補充 | 減值損失 | 累計攤銷 | 賬面淨值 | |||||||||||||||||
| 專利申請費用 | * | $ | $ | $ | $ | $ | ||||||||||||||||
| ANDA 的收購成本 | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||||
| * |
| F-11 |
ELITE 製藥公司及附屬公司
簡明合併財務報表附註
(未經審計)
所得稅
收入稅根據資產和負債法覈算。 遞延稅資產和負債應確認爲預計未來的稅後影響，其原因是現有資產和負債的財務報表賬面金額與其相應的稅基之間的差異。 使用通過的稅率衡量遞延稅資產和負債，這些稅率在預計將收回或解決這些暫時差異的年度中生效。 由於會計和稅務目的處理收入項目的確認時間差異，在適用時，將記錄遞延稅資產或負債以反映這些差異對未來納稅的影響。 公司記錄一項減值準備金，以減少未來認爲無法實現的遞延稅資產。
公司認識到對一項不確定的稅收立場所產生的利益，如果根據該立場的技術論點，在納稅機關的審查中，更有可能不被否定，則在提交所得稅申報時應該採取或預期採取該稅收立場。
該 公司在美國境內多個稅務管轄區運營。公司在所有稅務管轄區仍然受到審查，直到適用的法律訴訟時效到期。截至2024年9月30日，關於我們主要稅務管轄區仍然受到審查的稅務年度總結如下：美國 – 聯邦，2020年及以後。公司在截至2024年9月30日的六個月內沒有記錄未確認的稅務立場。
公司遵循 ASC 260， 每股收益這要求在所有擁有複雜資本結構的實體的損益表上展示基本和攤薄（虧損）每股收益（「EPS」），並要求對基本EPS計算的分子和分母與攤薄EPS計算的分子和分母進行調節。在隨附的財務報表中，基本（虧損）每股收益通過將淨利潤除以期內流通的普通股加權平均股數來計算。攤薄淨（虧損）每股收益的計算不包括衍生工具的公允價值變動或會產生反稀釋效應的證券轉換。
由於公司截至2024年9月30日的三個和六個月處於淨虧損狀態，因此將認股權證轉換成warrants的潛在稀釋效應排除在外。 普通股期權轉換成shares等價佔普通股的股票期權轉換成shares common stock 由於這些時期包含的股票期權轉換成shares common stock和warrants轉換成 shares普通股數量未計入計算稀釋每股淨利潤，因爲其納入會產生抗稀釋效應。
| 截至9月30日三個月的情況 | 截至九月三十日的六個月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 分子 | ||||||||||||||||
| 基本淨利潤（虧損） | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| 稀釋工具對淨利潤的影響 | ||||||||||||||||
| 稀釋淨利潤 | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| 分母 | ||||||||||||||||
| 基本普通股權重平均流通股份 | ||||||||||||||||
| 期權和可轉換證券的稀釋效應 | ||||||||||||||||
| 流通普通股帶權平均量 - 稀釋 | ||||||||||||||||
| 每股淨(虧損)收益爲 | ||||||||||||||||
| 基本的 | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| 稀釋的 | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
金融工具的公允價值
ASC 820, 公允價值衡量和披露 （ASC 820）為按照普遍公認的會計原則衡量公平價值提供了框架。
| F-12 |
ELITE PHARMACEUTICALS, INC.及其子公司
財務報表縮表附註
(未經審核)
ASC 820定義公允價值為在計量日期當天，市場參與者之間進行有條不紊交易時，資產賣出所得價格或負債轉讓所支付的價格。ASC 820建立了區分市場參與者假設的公允價值層級，區分了(1)根據從獨立來源獲得的市場數據開發的市場參與者假設(可觀察輸入)和(2)根據在當時情況下提供的最佳資訊開發的實體自身的市場參與者假設(不可觀察輸入)。
公平值層次結構包括三個廣泛的層次，將最高優先順序賦予活躍市場中未調整的報價價格（第1級別），最低優先順序則賦予不可觀察的輸入（第3級別）。根據ASC 820標準，公平值層次的三個層次描述如下:
| ● | 層級 1 - 在可供參考的市場上對於相同資產或負債的未調整報價價格，在計量日期可取得。 | |
| ● | 層級 2 - 在層級1內包含的非報價價格資料，對於資產或負債是可觀察的，無論是直接或間接。層級2的輸入包括相似資產或負債在活躍市場中的報價價格；在市場不活躍中對於相同或相似資產或負債的報價價格；對於資產或負債是可觀察的非報價價格；以及主要由可觀察市場數據通過相關性或其他方式推導或證實的輸入。 | |
| ● | 層級 3 - 對於資產或負債是無法觀察的輸入。 |
定期測量 定期
下表提供了有關公司負債的信息，根據定期基礎上的公平價值衡量，按公平價值層級分類。
| 公平價值計量 | ||||||||||||||||
| 公允價值金額 | 第1級 | 第2級 | Level 3 | |||||||||||||
| 截至2024年3月31日的餘額 | $ | $ | $ | $ | ||||||||||||
| 衍生金融工具（權證）公平價值變動 | ||||||||||||||||
| 截至2024年9月30日的結餘 | $ | $ | $ | $ | ||||||||||||
| 公平價值計量 | ||||||||||||||||
| 公允價值金額 | 第1級 | 第2級 | Level 3 | |||||||||||||
| 截至2023年3月31日之結餘 | $ | $ | $ | $ | ||||||||||||
| 衍生金融工具（權證）公平價值變動 | ||||||||||||||||
| 2023年9月30日的結餘 | $ | $ | $ | $ | ||||||||||||
參見 Note 10，以了解確定公平價值所使用的具體輸入。
公司金融資產和負債的攜帶金額，如現金、應收賬款、預付費用和其他流動資產、應付賬款和應計費用，接近其公平價值，因為這些工具的期限較短。 根據具有類似到期日的當前借款利率，長期負債的攜帶價值和相關方貸款的應付款項接近公平價值。
非金融 資產，按非經常性基礎計量公允價值。
非金融資產，如無形資產和不動產、廠房及設備，只有在確認存在減值損失時才以公允價值核算。本公司在所述期間並未記錄與這些資產相關的減值損失。
最近發布的會計準則
在2023年12月，FASB發布了ASU 2023-09（主題740），即《增加對所得稅披露的改善》，該標準增強了有關所得稅率對帳節調解、支付的本國和外國所得稅等的披露要求，要求按司法管轄區披露細分的所得稅支付、未確認的稅務利益，並修改了其它與所得稅相關的披露。修訂內容適用於2024年12月15日後開始的年度。允許提前適用，應適用前瞻性。公司目前正在評估採納此指南對其簡明綜合財務報表的影響。
| F-13 |
ELITE PHARMACEUTICALS, INC.及其子公司
財務報表縮表附註
(未經審核)
在2023年11月，FASB發佈了ASU 2023-07，"部門報告（主題280）：可報告部門的改進"，旨在通過要求所有公共實體每年和每個中期披露增量部門信息來改善財務報告，以便投資者能夠制定更具決策價值的財務分析。目前，主題280要求公共實體披露其可報告部門的某些信息。主題280還要求在某些情況下披露其他特定部門項目和金額。此ASU中的修訂不更改或刪除這些披露要求，也不改變公共實體識別其運營部門、彙總這些運營部門或應用定量閾值來判斷其可報告部門的方式。此ASU在2023年12月15日之後開始的財年和在2024年12月15日之後開始的財年內的中期期間生效。允許提前採用。公司預計ASU 2023-07的要求對其縮減合併基本報表不會產生重大影響。
管理層 已評估最近發佈的會計公告，並認爲這些公告不會對公司的簡明合併基本報表及相關披露產生重大影響。
注意 2. 庫存
庫存 包括以下內容：
| 2024年9月30日 | 2024年3月31日 | |||||||
| 成品 | $ | $ | ||||||
| 進行中的工作 | ||||||||
| 原材料 | ||||||||
| 庫存 | $ | $ | ||||||
注意 3. 物業及設備，淨值
資產 和設備包括以下內容：
| 2024年9月30日 | 2024年3月31日 | |||||||
| 土地、建築物及其改善 | $ | $ | ||||||
| 實驗室、製造業、倉庫及運輸設備 | ||||||||
| 辦公設備和軟體 | ||||||||
| 傢具和固定裝置 | ||||||||
| 固定資產及設備，毛額 | ||||||||
| 減：累計折舊 | ( | ) | ( | ) | ||||
| 物業及設備（淨額） | $ | $ | ||||||
折舊
費用爲$
注意 4. 應計費用
截至2024年9月30日和2024年3月31日，公司應計費用包括以下內容：
| 2024年9月30日 | 2024年3月31日 | |||||||
| 共同開發利潤分配 | $ | $ | ||||||
| 員工獎金 | ||||||||
| 所得稅 | ||||||||
| 法律和專業費用 | ||||||||
| 審計費用 | ||||||||
| 袍金用 | ||||||||
| 顧問合同費用 | ||||||||
| 應付薪水和費用 | ||||||||
| 其他應計費用 | ||||||||
| Total accrued expenses | $ | $ | ||||||
| F-14 |
精英制藥公司及其子公司
關於簡明合併財務報表的附註
(未經審計)
注意 5. 新澤西經濟發展局債券
在2005年8月，公司通過發行A級和B級稅收豁免債券（「NJEDA債券」和/或「債券」）對1999年的債券發行進行了再融資。2014年7月，公司以面值償還了所有未償還的B級債券，以及所有應付的應計利息。
關於A系列票據，公司需要維持一個債務服務儲備。債務服務儲備在附帶的壓縮合並資產負債表中被歸類爲限制現金。NJEDA債券要求公司在9月1日根據貸款文件中規定的金額進行年度本金支付，並在3月1日和9月1日進行半年度利息支付，金額等於未償本金的應付利息。A系列票據的年利率爲
下表總結了公司的應付債券負債：
| 2024年9月30日 | 2024年3月31日 | |||||||
| 應付債券總額 | ||||||||
| 新澤西經濟發展署債券 - A系列票據 | $ | $ | ||||||
| 減：應付債券的當前部分（在扣除債券發行成本之前） | ( | ) | ( | ) | ||||
| 應付債券的長期部分（在扣除債券發行成本之前） | $ | $ | ||||||
| 債券發行成本 | $ | $ | ||||||
| 減：累計攤銷 | ( | ) | ( | ) | ||||
| 債券型發行成本，淨額 | $ | $ | ||||||
| 應付債券的當前部分 - 減去債券型發行成本 | ||||||||
| 應付債券的當前部分 | $ | $ | ||||||
| 減：在未來12個月內攤銷的債券型發行成本 | ( | ) | ( | ) | ||||
| 應付債券的當前部分，減去債券型發行成本 | $ | $ | ||||||
| 應付債券的開多部分 - 減去債券型發行成本 | ||||||||
| 應付債券的開多部分 | $ | $ | ||||||
| 減：在未來12個月後攤銷的債券型發行成本 | ( | ) | ( | ) | ||||
| 長期債券應付部分，扣除債券發行成本 | $ | $ | ||||||
攤銷
費用爲$
接下來五年的債券到期情況如下：
| 截至3月31日的年份， | 金額 | |||
| 2025年剩餘部分 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 之後 | ||||
| $ | ||||
| F-15 |
精英制藥公司及其子公司
關於簡明合併財務報表的附註
(未經審計)
注意 6. 應付貸款
應付貸款包括以下內容：
| 2024年9月30日 | 2024年3月31日 | |||||||
| 抵押貸款應付款 | $ | $ | ||||||
| 設備和保險融資貸款應付款，介於 | ||||||||
| 減：短期應付款 | ( | ) | ( | ) | ||||
| 長期應付貸款部分 | $ | $ | ||||||
與應付貸款相關的利息費用爲$
貸款 未來五年的本金償還如下：
| 未來的本金餘額 | ||||
| 截至3月31日的年份， | 金額 | |||
| 2025年剩餘部分 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 之後 | ||||
| 剩餘本金總餘額 | $ | |||
注意 7. 關聯方貸款
本
公司已與個人貸方簽訂了抵押借款票據，利率與EWb定期貸款相當，但契約較少（"哈基姆借款票據"）。這些契約包括及時提交稅務申報表和基本報表，以及在哈基姆借款票據的期限內，不得出售、租賃或轉讓公司實質性資產的協議。2023年6月2日，公司與董事會主席兼首席執行官Nasrat Hakim簽署了一份借款票據，根據該票據，公司借入的資金總額爲$
截至2024年9月30日的三個月和六個月期間，Hakim期票的利息費用總計$
截至2023年9月30日的三個月和六個月，利息支出總計$
在2023年6月30日，公司與戴維斯·卡斯基簽訂了一份有抵押的 promissory note（「卡斯基本票」）。
卡斯基本票的本金餘額爲$
For
the three and six months ended September 30, 2024, interest expense on the Caskey Promissory Note totaled $
For
the three and six months ended September 30, 2023, interest expense totaled $
The
interest is included on the Condensed Consolidated Statements of Operations in the line item titled “interest expense and amortization
of debt issuance costs”. As of September 30, 2024, the portion of this interest expense which was accrued and owing to Mr. Caskey
totaled $
For
the three and six months ended September 30, 2023, interest expense on the Caskey Promissory Note totaled $
| F-16 |
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 8. COMMITMENTS AND CONTINGENCIES
Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the 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.
On August 17, 2023, Elite filed a paragraph IV certification with its ANDA to generic Oxycontin and after Elite got acceptance of the ANDA by the FDA on September 19, 2023, Elite sent the patentee and NDA holder a Notice Letter as required under the Hatch-Waxman Act. On November 14, 2023, a patent infringement suit was filed in the District Court of New Jersey by Purdue Pharma. Elite obtained agreement with Purdue to stay the litigation for six months. Elite’s launch of a generic Oxycontin will depend on the approval by the FDA and the outcome of various litigation involving Purdue or the expiry of the patents listed on the Orange Book. As of September 30, 2024, the results of such proceedings cannot be predicted with certainty and are neither probable nor estimable.
Operating Leases
In
October 2020, the Company entered into an operating lease for office space in Pompano Beach, Florida (the “Pompano Office Lease”).
The Pompano Office Lease is for approximately
The Company entered into an operating lease for new office space in North Bay Village, Pompano FL (the “NBV Pompano Office Lease”). The Company takes occupancy on October 1, 2024. The NBV Pompano Office Lease has a term of three years, ending on September 30, 2027.
The
Company entered into a lease agreement for a portion of a one-story warehouse, located at 144 Ludlow Avenue, Northvale, New Jersey (the
“144 Ludlow Ave. lease”). The lease agreement began on January 22, 2024, and has a term of
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 its 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.
Finance Leases
In
November 2023, the Company entered into a finance lease for equipment (the “Waters Equipment Lease”). The Waters Equipment
Lease is related to lab equipment with an acquisition cost of $
In
February 2024, the Company entered into a finance lease for warehouse equipment (the “Warehouse Equipment Lease”). The Warehouse
Equipment Lease is related to warehouse equipment with an acquisition cost of $
In
February 2024, the Company entered into a finance lease for equipment (the “February 2024 Equipment Lease”). The February
2024 Equipment Lease is related to manufacturing equipment with an acquisition cost of $
| F-17 |
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
In
March 2024, the Company entered into three separate finance leases for manufacturing assets (the “March 2024 Equipment Leases”).
The March 2024 Equipment Leases are related to manufacturing equipment and vault installed at the Company’s facility located at
144 Ludlow Avenue, Northvale NJ with an aggregate acquisition cost of $
In July 2024, the Company entered into two separate finance leases for manufacturing assets (the “July 2024 Equipment Leases”). The July 2024 Equipment Leases are related related warehouse and laboratory equipment with an aggregate acquisition cost of $153,745. Each of the separate leases included in the July 2024 Equipment Lease have a term of five years, ending in July 2029. The Company will retain ownership of all related assets at lease terminations.
A
lease is classified as a finance lease if any of the following criteria are met:
Lease assets and liabilities are classified as follows on the condensed consolidated balance sheet:
| Lease | Classification | September 30, 2024 | March 31, 2024 | |||||||
| Assets | ||||||||||
| Finance | Finance lease – right-of-use asset | $ | $ | |||||||
| Operating | Operating lease – right-of-use asset | |||||||||
| Total leased assets | $ | $ | ||||||||
| Liabilities | ||||||||||
| Current | ||||||||||
| Finance | Lease obligation – finance lease | $ | $ | |||||||
| Operating | Lease obligation – operating lease | |||||||||
| Long-term | ||||||||||
| Finance | Lease obligation – finance lease, net of current portion | |||||||||
| Operating | Lease obligation – operating lease, net of current portion | |||||||||
| Total lease liabilities | $ | $ | ||||||||
Rent
expense is recorded on the straight-line basis. Rent expense under the Pompano Office Lease was $
| F-18 |
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The table below shows the future minimum rental payments, exclusive of taxes, insurance and other costs, under the Pompano Office Lease and Waters Equipment Lease:
| Years ending March 31, | Operating Lease Amount | Financing Lease Amount | Total | |||||||||
| Remainder of 2025 | $ | $ | $ | |||||||||
| 2026 | ||||||||||||
| 2027 | ||||||||||||
| 2028 | ||||||||||||
| 2029 | ||||||||||||
| Thereafter | ||||||||||||
| Less: interest | ( | ) | ( | ) | ( | ) | ||||||
| Present value of lease payments | $ | $ | $ | |||||||||
The weighted-average remaining lease term and the weighted-average discount rate of our leases were as follows:
| For the Six Months Ended September 30, | ||||||||
| Lease Term and Discount Rate | 2024 | 2023 | ||||||
| Remaining lease term (years) | ||||||||
| Operating leases | ||||||||
| Finance leases | ||||||||
| Discount rate | ||||||||
| Operating leases | % | % | ||||||
| Finance leases | % | % | ||||||
NOTE 9. 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. A total of shares of Series J Preferred were authorized, shares are issued and outstanding, with
a stated value of $
NOTE 10. 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
The
Company has
On
April 28, 2017, the Company entered into an Exchange Agreement with Hakim, the Chairman of the Board, President, and Chief Executive
Officer of the Company, pursuant to which the Company issued to Hakim shares of its Series J Preferred and warrants to purchase
an aggregate of
The
Series J Warrants are exercisable for a period of
行使價格需根據在行使價格以下的有效價格進行普通股票或普通股票等價物的任何發行或視同發行的情況進行調整。J系列Warrants還規定在發生某些常規事件時進行其他標準調整。
| F-19 |
精英制藥公司及其子公司
關於簡明合併財務報表的附註
(未經審計)
系列J Warrants的公允價值是使用Black-Scholes模型計算的。在Black-Scholes模型中用於計算系列J Warrants公允價值的假設如下：
| 2024年9月30日 | 2024年3月31日 | |||||||
| 公司普通股的公允價值 | $ | $ | ||||||
| 波動性 | % | % | ||||||
| 初始行使價格 | $ | $ | ||||||
| 權證期限（以年計） | ||||||||
| 無風險利率 | % | % | ||||||
定期以公允價值計量的Warrants（第3級金融工具）的變更情況如下：
| 截至2023年3月31日的餘額 | $ | |||
| 衍生金融工具的公允價值變動 - Warrants | ||||
| 截至2024年3月31日的餘額 | $ | |||
| 衍生金融工具的公允價值變動 - Warrants | ||||
| 截至2024年9月30日的餘額 | $ |
公司支付給員工的部分薪酬包括授予購買普通股的期權。
基於股票的 董事薪酬
公司董事薪酬政策於2009年10月制定，並在2016年1月進一步修訂，包括規定部分袍金用應以公司普通股的發行方式支付，而不是現金，這些股票的估值將按季度計算，並等於公司普通股的平均收盤價。
截至2023年9月30日的六個月期間，公司累計了總額爲$的袍金
| 截至2023年4月1日應付的普通股餘額 | $ | |||
| 已授予的股份 | ||||
| 基於股票的負債公允價值變動 | ||||
| 截至2023年9月30日應付的普通股餘額 | $ |
截至2024年9月30日的三個月和六個月期間，存在
基於股票的 員工/顧問薪酬
僱傭 與公司總裁和首席執行官及其他某些員工簽訂的合同，以及與某些顧問簽署的聘用合同，均包括將每位員工薪資或顧問費用的一部分通過發行公司普通股以代替現金支付的條款，所發行股份的估值按季度計算，等於公司普通股的平均收盤價格。
| Balance of common stock owed at April 1, 2023 | $ | |||
| Awarded shares | ||||
| Change in fair value of stock-based liabilities | ||||
| Balance of common stock owed at September 30, 2023 | $ |
During
the three and six months ended September 30, 2024, the Company accrued
| F-20 |
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Options
Under
its 2014 Equity Incentive Plan and its 2024 Equity Incentive Plan, the Company did grant and may grant stock options to officers, selected
employees, as well as members of the Board of Directors and advisory board members. On July 1, 2024 the Company restated the 2014 Equity
Incentive Plan to increase the shares reserved under the option plan by
The fair value of option awards is estimated on the date of grant using the Black-Scholes option-pricing model. The exercise price of each award is generally not less than the per share fair value in effect as of that award date. The determination of fair value using the Black-Scholes model is affected by the Company’s share fair value as well as assumptions regarding a number of complex and subjective variables, including expected price volatility, risk-free interest rate and projected employee share option exercise behaviors. The Company estimates its expected volatility by using a combination of historical share price volatilities of similar companies within our industry. The expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards, since the Company does not have sufficient exercise history to estimate term of its historical option awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.
The grant date fair value of option awards is determined using the Black Scholes option-pricing model. No options were issued the six months ended September 30, 2024 and 2023.
A summary of the activity of Company’s 2024 Equity Incentive plan and prior equity incentive plans for the six months ended September 30, 2024 is as follows:
Shares Underlying Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at March 31, 2024 | $ | $ | ||||||||||||||
| Granted | — | $ | — | |||||||||||||
| Expired and Forfeited | ( | ) | — | $ | — | |||||||||||
| Outstanding at September 30, 2024 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2024 | $ | $ | ||||||||||||||
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’s Common Stock as of September 30, 2024 of $
NOTE 12. CONCENTRATIONS AND CREDIT RISK
Revenues
Three
customers accounted for approximately
Three
customers accounted for approximately
Accounts Receivable
Two
customers accounted for approximately
Two
customers accounted for approximately
Purchasing
Two
suppliers accounted for approximately
One
supplier accounted for approximately
| F-21 |
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 13. SEGMENT RESULTS
FASB ASC 280-10-50 requires use of the “management approach” model for segment reporting. The management approach is based on the way a 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 historically 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. During fiscal years ended March 31, 2024 and 2023, the Company had paused further development of NDAs and has not engaged in business activities in that segment. Accordingly, during the six months ended September 30, 2024 and 2023, the Company has only engaged in business activities in a single operating segment.
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 condensed consolidated financial statements.
The following represents selected information for the Company’s reportable segments:
| For the Three Months Ended September 30, | For the Six Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating Income by Segment | ||||||||||||||||
| ANDA | $ | $ | $ | $ | ||||||||||||
| Operating income by Segment | $ | $ | $ | $ | ||||||||||||
The
Company notes that there was
The table below reconciles the Company’s operating income by segment to income before income taxes as reported in the Company’s condensed consolidated statements of operations:
| For the Three Months Ended September 30, | For the Six Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating income by segment | $ | $ | $ | $ | ||||||||||||
| Corporate unallocated costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Interest expense and amortization of debt issuance costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Depreciation and amortization expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Significant non-cash items | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of derivative instruments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of stock-based liabilities | ( | ) | ( | ) | ||||||||||||
| Other income | ||||||||||||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| F-22 |
ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 14. RELATED PARTY AGREEMENTS
Mikah Pharma, LLC Agreements
In May 2020, Praxgen (formerly known as SunGen Pharma LLC), pursuant to an asset purchase agreement, assigned its rights and obligations under the Praxgen Agreement for Amphetamine IR and Amphetamine ER to Mikah Pharma LLC (“Mikah”). The ANDAs for Amphetamine IR and Amphetamine ER are now registered under Elite’s name. Mikah will now be Elite’s partner with respect to Amphetamine IR and ER and will assume all the rights and obligations for these products from Praxgen. Mikah was founded in 2009 by Nasrat Hakim, a related party and the Company’s President, Chief Executive Officer and Chairman of the Board.
In June 2021, the Company entered into a development and license agreement with Mikah, pursuant to which Mikah will engage in the research, development, sales and licensing of generic pharmaceutical products. In addition, Mikah will collaborate to develop and commercialize generic products including formulation development, analytical method development, manufacturing, sales and marketing of generic products. Initially two generic products were identified for the parties to develop.
As
of September 30, 2024, the Company owes an aggregate of $
NOTE 15. INCOME TAXES
The determination of income tax expense in the accompanying unaudited condensed consolidated statements of income is based on the effective tax rate for the year, adjusted for the impact of any discrete items which are accounted for in the period in which they occur.
The
Company’s income tax (Expense)/Benefit was $(
NOTE 16. SUBSEQUENT EVENTS
Commercial launch of Acetaminophen and Codeine Phosphate Tablets
On October 7, 2024, the Company announced the commercial launch of its generic version of Tylenol® with Codeine (acetaminophen and codeine phosphate) 300mg/15mg, 300mg/30mg and 300mg/60mg tablets. Acetaminophen and Codeine Phosphate tablets are indicated for the management of mild to moderated pain, where treatment with an opioid is appropriate and for which alternative treatments are inadequate. This product is marketed and sold under the Elite Laboratories, Inc. label.
Generic Adderall® receives marketing approval from the Israeli Ministry of Health
On October 10, 2024, the Company announced the Israeli Ministry of Health approval for its 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 10mg, 20mg and 30mg tablets. The Company will supply the product to Dexcel Pharma (Or Akiva, Israel), the Company’s exclusive distributor for the the Israeli market. The product is a central nervous system stimulant indicated for the treatment of Attention Deficit Hyper Activity Disorder (“ADHD”) and Narcolepsy. As of the date of filing of this quarterly report on Form 10-Q, this product has not been commercially launched in Israel.
| F-23 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations for the Six Months Ended September 30, 2024 and 2023 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, 2024. 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, and the manufacture of generic pharmaceuticals. Our strategy includes developing generic versions of controlled-release drug products with high barriers to entry.
We occupy manufacturing, warehouse, laboratory and office space at 135, 144 and 165 Ludlow Avenue in Northvale, NJ (the “Northvale Facility”). The Northvale Facility operates under Current Good Manufacturing Practice and is a United States Drug Enforcement Agency registered facility for research, development, and manufacturing. We are also party to an operating lease for office space at Pompano Beach, Florida (the “Pompano Office Lease”).
Strategy
We focus our efforts on the following areas: (i) manufacturing of a line of generic pharmaceutical products with approved Abbreviated New Drug Applications (“ANDAs”); (ii) development of additional generic pharmaceutical products; (iii) development of the other product candidates in our pipeline including products co-developed with partners; (iv) commercial exploitation of our products either by sales under our own label, license and the collection of royalties, or through the manufacture of our formulations; and (v) development of new products for sale under our own label, 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 generic drug products which require ANDAs as well as 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.
We believe that our business strategy enables us to reduce its risk by having a diverse product portfolio that includes 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.
Recent Developments
On May 20, 2024, the Company reported that it received approval from the FDA for a generic version of Methotrexate Sodium 2.5mg tablets (“Generic Methotrexate”). Methotrexate Sodium belongs to a class of drugs known as antimetabolites and will be sold under the Elite Laboratories Inc. label. Generic Methotrexate was launched commercially on August 27, 2024.
On June 17, 2024, the Company entered into an asset purchase agreement with Nostrum Laboratories Inc. (the “Nostrum Asset Purchase Agreement”), pursuant to which the Company acquired all rights in and to the approved ANDAs as well as royalty free, non-exclusive perpetual licenses to use the manufacturing technology, proprietary information, processes, techniques, protocols, methods, know-how and improvements necessary to manufacture the following products:
| ● | Hydrocodone Bitartrate and Acetaminophen tablets | |
| ● | Oxycodone Hydrochloride and Acetaminophen tablets | |
| ● | Methodone Hydrochloride tablets |
| 1 |
As of the date of filing of this Quarterly report on Form 10-Q, these products have not yet been commercially launched.
On October 7, 2024, the Company announced the commercial launch of Acetaminophen and Codeine Phosphate 300mg/15mg, 300mg/30mg and 300mg/60mg tablets (“APAP Codeine Tablets”). APAP Codeine Tablets are indicated for the management of mild to moderate pain, where treatment with and opioid is appropriate and for which alternate treatments are inadequate. APAP Codeine Tablets are marketed and sold under the Elite Laboratories label.
On October 10, 2024, the Company announced the Israeli Ministry of Health approval of Elite’s generic version of Adderall® , an immediate-release mixed salt of a single entity amphetamine product (Dextroamphetamine Saccharate, Amphetamine Asparate, Dextroamphetamine Sulfate, Amphetamine Sulfate) with strengths of 10mg, 20mg and 30mg tablets. The product is a central nervous system stimulant indicated for the treatment of attention deficit hyper activity disorder (ADHD) and narcolepsy. The Company will supply the product to Dexcel Pharma (Akiva, Israel), the Company’s exclusive distributor for the Israel market. As of the date of filing of this quarterly report on Form 10-Q, these products have not yet been commercially launched.
Commercial Products
We own, license, contract manufacture or have contractual rights to receive royalties from the following products currently approved for commercial sale:
| Product | Branded Product Equivalent |
Therapeutic Category |
Launch Date | |||
| Phentermine HCl 37.5mg tablets (“Phentermine 37.5mg”) | Adipex-P® | Bariatric | April 2011 | |||
| 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 | |||
| Trimipramine Maleate Immediate Release 25mg, 50mg and 100mg capsules (“Trimipramine 25mg”, “Trimipramine 50mg”, “Trimipramine 100mg”) | Surmontil® | Antidepressant | May 2017 | |||
| 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 | |||
| Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate Extended Release 5mg, 10mg, 15mg, 20mg, 25mg, and 30mg capsules (“Amphetamine ER 5mg”, “Amphetamine ER 10mg”, “Amphetamine ER 15mg”, “Amphetamine ER 20mg”, “Amphetamine ER 25mg”, and “Amphetamine ER 30mg”) | Adderall XR® | Central Nervous System (“CNS”) Stimulant | March 2020 | |||
| Loxapine Succinate 5mg, 10mg, 25mg and 50gm capsules (“Loxapine 5mg”, “Loxapine 10mg”, “Loxapine 25mg”, and Loxapine 50mg”) | Loxapine® | Antipsychotic | May 2021 | |||
| Methotrexate Sodium 2.5mg tablets (“Methotrexate 2.5mg”) | Otrexup PF® | Antimetabolite | August 2024 | |||
| Acetaminophen and Codeine Phosphate 300mg/15mg, 300mg/30mg and 300mg/60mg tablets (“APAP Codeine Tablets”). | Tylenol® with Codeine | Pain | October 2024 |
Products Under FDA Review
SequestOx™ - Immediate Release Oxycodone with sequestered Naltrexone
SequestOx™ is our 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 of July 14, 2016.
| 2 |
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 2023. Due to the prohibitive cost of such repeated bio-equivalence studies and the uncertain commercial viability given the regulatory and competitive landscape, the Company has paused development of this product candidate.
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. 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.
Generic Products Filed
Currently the Company has filed the following ANDA’s which have been accepted for review by the FDA:
| ● | Generic dopamine agonist accepted for review in December 2022 | |
| ● | Generic opiate analgesic for pain management accepted for review in September 2023 | |
| ● | Generic central nervous system stimulant accepted for review in December 2023 |
Approved Products Not Yet Commercialized
Doxycycline Hyclate Tablets
The Company received approval in April 2022 from the FDA of an ANDA for a generic version of an antibiotic product. The product is jointly owned by Elite and Praxgen Pharmaceuticals LLC, formerly SunGen Pharma LLC, (“Praxgen”).
Hydrocodone Bitartrate and Acetaminophen Tablets
On June 17, 2024, the Company entered into an asset purchase agreement with Nostrum Laboratories Inc. (the “Nostrum Asset Purchase Agreement”), pursuant to which the Company acquired all rights in and to the approved ANDA to this product and a royalty-free, non-exclusive perpetual license to use the manufacturing technology, proprietary information, processes, techniques, protocols, methods, know-how and improvements necessary or used to manufacture this product.
Oxycodone Hydrochloride and Acetaminophen Tablets
Pursuant to the Nostrum Asset Purchase Agreement, the Company acquired all rights in and to the approved ANDA to this product and a royalty-free, non-exclusive perpetual license to use the manufacturing technology, proprietary information, processes, techniques, protocols, methods, know-how and improvements necessary or used to manufacture this product.
Methadone Hydrochloride Tablets
Pursuant to the Nostrum Asset Purchase Agreement, the Company acquired all rights in and to the approved ANDA to this product and a royalty-free, non-exclusive perpetual license to use the manufacturing technology, proprietary information, processes, techniques, protocols, methods, know-how and improvements necessary or used to manufacture this product.
There can be no assurances in relation to any of the above approved products not yet commercialized, 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 these marketing authorizations.
| 3 |
Discontinued and Transferred Products
As part of standard operating practices, the Company, from time to time, as relevant, conducts evaluations of all ANDAs owned, consisting, without limitation, of ANDAs acquired or approved prior to the fiscal year ended March 31, 2024 (“Fiscal 2024”) and ANDAs acquired or approved during the quarterly period ending September 30, 2024. Such evaluations include, without limitation, costs and benefits relating to each ANDA owned, with such costs including those fees required under the FDA’s Generic Drug User Fee Amendment which is significantly influenced by the number of ANDAs owned, and other costs and benefits taking into consideration various specific market factors for each ANDA. Those ANDAs with a cost/benefit profile not consistent with management criteria for continuation are identified for disposition and effort is made to determine the optimal course of action to achieve disposition of the ANDA.
The Company did not transfer or discontinue any ANDAs during the quarterly period ending September 30, 2024 or Fiscal 2024.
Critical Accounting Estimates
The preparation of the unaudited condensed consolidated financial statements and related disclosures in conformity with GAAP, and our discussion and analysis of the Company’s financial condition and operating results require our management to make judgments, assumptions and estimates that affect the amounts reported in the Company’s unaudited condensed consolidated financial statements and accompanying notes. 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. We have identified below the critical accounting policies, which are assumptions made by management about matters that are highly uncertain and that are of critical importance in the presentation of our financial position, results of operations and cash flows. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation our financial statements.
Revenue Recognition - The Company generates revenue from manufacturing and sales of generic pharmaceuticals bearing either the Elite label, which are sold to pharmaceutical distributors or the label of a licensing partner, which Elite sells directly to such licensing partner, and licensing fees. Revenues earned from the sale of Elite label products are recorded at their net realizable value which consists of gross amounts invoiced reduced by contractual reductions, including, without limitation, chargebacks, discounts and program rebates, as applicable. Licensing fees include the commercialization of products either by license and the collection of royalties, or the expansion of licensing agreements with other pharmaceutical companies, including co-development projects, joint ventures and other collaborations.
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 immediate and controlled-release products marketed under the Elite label, or manufactured on a contract basis for third parties. The Company recognizes revenue when the customer obtains control of the Company’s product based on the contractual shipping terms of the contract, at which time the performance obligation is deemed to be completed. 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.
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.
公司在一段時間內確認來自不可退還的預付款項的營業收入，通常在向客戶交付知識產權後的某一時間點。 對於那些取決於特定未來事件發生（例如，產品獲得FDA批准時應支付的款項）的里程碑付款，公司判斷這些應被視爲合同中考慮的總代價的組成部分，以可變金額方法。因此，公司評估每個里程碑以判斷實現每個里程碑背後的概率和實質。鑑於未來事件發生的不確定性，公司將在不存在高風險的情況下確認來自里程碑的營業收入，這通常發生在事件的接近或實現時。
| 4 |
需要重大 管理判斷來判斷安排所需的努力程度以及公司預計在該安排下完成其履行義務的時間。如果公司無法合理估計其履行義務何時完成或變得微不足道，則營業收入的確認將被推遲，直到公司能夠合理地做出這樣的估計。然後，營業收入將在剩餘的預計履行期間內採用累積追趕法確認。
應收賬款 預計信用損失準備金 – 應收賬款包括客戶應付餘額，扣除預計的信用損失準備金，以及其他合同扣除額，包括但不限於退款、折扣 和計劃返利。在確定可收回性時，會評估歷史趨勢，並定期審查特定客戶問題以確定適當的準備金。
預期信用損失的撥備是基於當前預期信用損失（「CECL」）根據會計標準更新（「ASU」）2016-13，金融工具-信用損失（主題326）測量金融資產的信用損失的未來收集概率，該標準於2023年4月1日被公司採納。在CECL減值模型下，公司通過基於公司的歷史損失率應用老化計劃的損失率方法來確定其撥備。公司還考慮合理且可以支持的當前信息來確定估計的損失率，例如外部預測、宏觀經濟趨勢或其他因素，包括客戶的信用風險和歷史損失經驗。撥備的充分性定期進行評估。賬戶餘額在所有收款手段都已耗盡且餘額被視爲無法收回後被註銷。後續的回收將計入撥備。撥備的變化在發生的期間記爲信用損失的調整。預計在2024年9月30日到2028年9月30日之間將開票的未開票應收款項所產生的預期信用損失包括基於 projected inflation、projected decreases in GDP 和 projected unemployment等因素估算的額外風險溢價。
收入 稅務 - 收入稅根據資產和負債方法進行會計處理。遞延稅資產和負債是基於現有資產和負債的財務報表賬面價值與其各自稅基之間差異所產生的預計未來稅務後果確認的。遞延稅資產和負債是根據那些預計會被回收或清算的臨時差異所在年份已生效的稅率來計量的。在適用的情況下，公司記錄估值準備以減少其認爲未來不可實現的任何遞延稅資產。
公司承認在其申請的所得稅申報中所採取或預期採取的不確定稅務立場的好處，只要該稅務立場在稅務機關的檢查中更有可能被維持，基於該立場的技術優勢。這些稅務利益是根據在最終解決時有超過50%可能性實現的最大利益進行衡量的。
公司在美國的多個稅務管轄區內運營。公司在所有稅務管轄區內均需接受審查，直到適用的限制規定到期。截止到2024年9月30日，我們主要稅務管轄區內仍需接受審查的稅務年度總結爲：美國 – 聯邦，2020年及之後，以及州，2019年及之後。公司沒有在截至2024年9月30日的六個月內記錄未確認的稅務負債。
New Accounting Pronouncements
For a description of recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our financial statements, see “Note 1. Summary of Significant Accounting Polices: Recently Issued Accounting Pronouncements” in Part II, Item 1 of this Form 10-Q.
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 September 30, 2024 compared to the three months ended September 30, 2023
Revenue, Cost of revenue and Gross profit:
| For the Three Months Ended September 30, | Change | |||||||||||||||
| 2024 | 2023 | Dollars | Percentage | |||||||||||||
| Manufacturing fees | $ | 18,225,190 | $ | 13,507,870 | $ | 4,717,320 | 35 | % | ||||||||
| Licensing fees | 655,155 | 649,315 | 5,840 | 1 | % | |||||||||||
| Total revenue | 18,880,345 | 14,157,185 | 4,723,160 | 33 | % | |||||||||||
| Cost of manufacturing | 10,682,917 | 7,710,106 | 2,972,811 | 39 | % | |||||||||||
| Gross profit | $ | 8,197,428 | $ | 6,447,079 | $ | 1,750,349 | 27 | % | ||||||||
| Gross profit - percentage | 43 | % | 46 | % | ||||||||||||
Total revenues for the three months ended September 30, 2024 increased by $4.7 million or 33%, to $18.9 million, as compared to $14.2 million, for the corresponding period of the prior year, , primarily due to increased sales of the Elite label products during the current quarter in comparison to the comparable quarter of the prior fiscal year. The Elite label products were launched during the prior fiscal year and the current fiscal year represents their second year in the market. The additional twelve months of marketing the Elite label products has had a positive impact on sales, when compared to the sales achieved in the comparable period of the prior year.
Manufacturing fees for the three months ended September 30, 2024 revenue increased by $4.7 million, or 35%, primarily due to increased sales of the Elite label products during the current fiscal year in comparison to the comparable quarter of the prior fiscal year. The Elite label products were launched during the prior fiscal year and the current fiscal year represents their second year in the market. The additional twelve months of marketing the Elite label products has had a positive impact on sales, when compared to the sales achieved in the comparable period of the prior year.
Licensing fees revenue for the three months ended September 30, 2024 was relatively unchanged, increasing by less than 1% as compared to licensing fees earned during the comparable period of the prior fiscal year.
Cost of manufacturing consists of manufacturing and assembly costs. Our cost of revenue increased by $3.0 million or 39%, to $10.7 million as compared to $7.7 million for the corresponding period in the prior fiscal year. This increase was due to an increased volume of products sold during the three months ended September 30, 2024, as compared to the comparable period of the prior fiscal year, as noted above.
Our gross profit margin was 43% during the three months ended September 30, 2024 as compared to 46% during the comparable period of the prior fiscal year. The decrease is due to increased labor costs resulting from manufacturing personnel overtime hours incurred to ensure production and supply of our products in response to increased demand. In addition, during the three months ended September 30, 2024, manufacturing fees represented a higher proportion of total revenue, as compared to licensing fees. Manufacturing fees generate lower gross profit margins as compared to licensing fees, due to it having a related cost of manufacturing, which is not associated with licensing fees. The Company is in the process of expanding its manufacturing facilities and capacity to achieve utilization rates that will yield higher volumes at standard labor rates.
| 5 |
Operating expenses:
| For the Three Months Ended September 30, | Change | |||||||||||||||
| 2024 | 2023 | Dollars | Percentage | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 1,966,094 | $ | 2,618,349 | $ | (652,255 | ) | (25 | )% | |||||||
| General and administrative | 2,273,744 | 1,533,208 | 740,536 | 48 | % | |||||||||||
| Non-cash compensation | 52,329 | 42,777 | 9,552 | 22 | % | |||||||||||
| Depreciation and amortization | 420,318 | 327,240 | 93,078 | 28 | % | |||||||||||
| Total operating expenses | $ | 4,712,485 | $ | 4,521,574 | $ | 190,911 | 4 | % | ||||||||
Operating expenses for the three months ended September 30, 2024 increased by $0.2 million, or 4%, to $4.7 million as compared to $4.5 million for the corresponding period in the prior fiscal year, largely due to an increase in general and administrative costs of $0.7 million.
Research and development costs during the three months ended September 30, 2024 were $2.0 million, a decrease of $0.65 million, or 25%, from approximately $2.6 million of such costs for the comparable period of the prior year. The decrease was the result of laboratory resources being allocated more to supporting commercial operations as well as the number, timing and nature of product development activities during the three months ended September 30, 2024, as compared to the comparable period of the prior fiscal year.
General and administrative expenses for the three months ended September 30, 2024 were $2.3 million, an increase of $0.7 million or approximately 48% from the comparable period of the prior fiscal year, largely due to increased human resource costs resulting from increased headcounts as well as increased costs of financial and tax reporting compliance as compared to the comparable period of the prior year.
Non-cash compensation expense for the three months ended September 30, 2024 and 2023 was less than $0.1 million.
Depreciation and amortization expenses from the three months ended September 30, 2024 were $0.4 million, which increased slightly as a result of additional capital expenditures and ASC 842 finance assets acquired, from $0.3 million in such costs for the comparable period of the prior fiscal year.
As a result of the foregoing, our income from operations during the three months ended September 30, 2024 was $3.5 million, compared to income from operations of $1.9 million for the comparable period of the prior fiscal year.
Other income (expense):
| For the Three Months Ended September 30, | Change | |||||||||||||||
| 2024 | 2023 | Dollars | Percentage | |||||||||||||
| Other income (expenses): | ||||||||||||||||
| Change in fair value of derivative financial instruments - warrants | $ | (12,754,735 | ) | $ | (2,468,350 | ) | $ | (10,286,385 | ) | 417 | % | |||||
| Change in fair value of stock-based liabilities | — | (2,066,820 | ) | 2,066,820 | (100 | )% | ||||||||||
| Interest expense and amortization of debt issuance costs | (255,136 | ) | (130,438 | ) | (124,698 | ) | 96 | % | ||||||||
| Interest income | 5,902 | 7,320 | (1,418 | ) | (19 | )% | ||||||||||
| Other expenses, net | $ | (13,003,969 | ) | $ | (4,658,288 | ) | $ | (8,345,681 | ) | 179 | % | |||||
Other income (expenses) for the three months ended September 30, 2024 was a net other (expense) $13.0 million, an increase of $8.3 million from a net other (expense) of $4.7 million for the comparable period of the prior fiscal year. The increase was primarily due to an increase of $10.3 million relating to the change in fair value of derivative financial instruments, offset by a decrease of other expenses of $2.1 million relating to the change in fair value of stock-based liabilities and by a slight increase in other expenses of $0.1 million relating to the interest expense and amortization of debt issuance costs in the current fiscal year as compared to the comparable period of the prior fiscal year. The change in the fair value of derivative instruments and stock-based liabilities is determined in large part by the change in the closing price of the Company’s Common Stock as of the end of the period, as compared to the closing price at the beginning of the period, with a strong inverse relationship between the other income expense recorded from changes in the fair value of our derivatives instruments and stock-based liabilities and changes in the closing price of the Company’s Common Stock. The increase in interest expense associated with the loans payable is due to the Company servicing a larger principal amount of loans payable during the three months ended September 30, 2024 as compared to the comparable period of the prior fiscal year
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As a result of the foregoing, our net loss before income taxes for the three months ended September 30, 2024 was $9.5 million, compared to net loss before income taxes of $2.7 million for the comparable period of the prior fiscal year.
Six months ended September 30, 2024 compared to the six months ended September 30, 2023
Revenue, Cost of revenue and Gross profit:
| For the Six Months Ended September 30, | Change | |||||||||||||||
| 2024 | 2023 | Dollars | Percentage | |||||||||||||
| Manufacturing fees | $ | 36,669,108 | $ | 21,417,107 | $ | 15,252,001 | 71 | % | ||||||||
| Licensing fees | 1,014,300 | 1,720,154 | (705,854 | ) | (41 | )% | ||||||||||
| Total revenue | 37,683,408 | 23,137,261 | 14,546,147 | 63 | % | |||||||||||
| Cost of manufacturing | 21,011,202 | 11,939,627 | 9,071,575 | 76 | % | |||||||||||
| Gross profit | $ | 16,672,206 | $ | 11,197,634 | $ | 5,474,572 | 49 | % | ||||||||
| Gross profit - percentage | 44 | % | 48 | % | ||||||||||||
Total revenues for the six months ended September 30, 2024 increased by $14.5 million or 63%, to $37.7 million, as compared to $23.1 million, for the corresponding period of the prior year due to increased sales of the Elite label products during the current fiscal year in comparison to the comparable quarter of the prior fiscal year. The Elite label products were launched during the prior fiscal year and the current fiscal year represents their second year in the market. The additional twelve months of marketing the Elite label products has had a positive impact on sales, when compared to the sales achieved in the comparable period of the prior year.
Manufacturing fees revenue increased by $15.3 million, or 71%, primarily due to increased sales of the Elite label products during the current fiscal year in comparison to the comparable quarter of the prior fiscal year. The Elite label products were launched during the prior fiscal year and the current fiscal year represents their second year in the market. The additional twelve months of marketing the Elite label products has had a positive impact on sales, when compared to the sales achieved in the comparable period of the prior year.
Licensing fees revenue decreased by $0.7 million, or 41%. This decrease is primarily due to the expiration of the marketing alliance agreements between the Company and Lannett Company, Inc. dated March 6, 2019 and April 9, 2019 (the “Lannett Agreements”) on March 31, 2023. License fees earned during the six months ended September 30, 2023 included residual amounts earned in relation to the expired Lannett Agreements. License fees earned during the six months ended September 30, 2024 did not include such residual amounts.
Cost of manufacturing consists of manufacturing and assembly costs. Our cost of revenue increased by $9.1 million or 76%, to $21.0 million as compared to $11.9 million for the corresponding period in the prior fiscal year. This increase was due to an increased volume of products sold during the six months ended September 30, 2024, as compared to the comparable period of the prior fiscal year, as noted above.
Our gross profit margin was 44% during the six months ended September 30, 2024 as compared to 48% during the comparable period of the prior fiscal year. The decrease is due to increased labor costs resulting from manufacturing personnel overtime hours incurred to ensure production and supply of our products in response to increased demand. In addition, during the six months ended September 30, 2024, manufacturing fees represented a higher proportion of total revenue, as compared to licensing fees. Manufacturing fees generate lower gross profit margins as compared to licensing fees, due to it having a related cost of manufacturing, which is not associated with licensing fees. The Company is in the process of expanding its manufacturing facilities and capacity to achieve utilization rates that will yield higher volumes at standard labor rates.
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Operating expenses:
| For the Six Months Ended September 30, | Change | |||||||||||||||
| 2024 | 2023 | Dollars | Percentage | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 4,129,621 | $ | 3,761,894 | $ | 367,727 | 10 | % | ||||||||
| General and administrative | 4,242,898 | 3,194,912 | 1,047,986 | 33 | % | |||||||||||
| Non-cash compensation | 104,658 | 57,777 | 46,881 | 81 | % | |||||||||||
| Depreciation and amortization | 846,030 | 655,522 | 190,508 | 29 | % | |||||||||||
| Total operating expenses | $ | 9,323,207 | $ | 7,670,105 | $ | 1,653,102 | 22 | % | ||||||||
Operating expenses for the six months ended September 30, 2024 increased by $1.7 million, or 22%, to $9.3 million as compared to $7.7 million for the corresponding period in the prior fiscal year, largely due to an increase in research and development of $0.4 million and general and administrative expenses of $1.0 million.
Research and development costs during the six months ended September 30, 2024 were $4.1 million, an increase of $0.4 million, or 10%, from approximately $3.8 million of such costs for the comparable period of the prior year. The increase was a result of the timing and nature of product development activities during the six months ended September 30, 2024 as compared to the comparable period of the prior fiscal year.
General and administrative expenses for the six months ended September 30, 2024 were $4.2 million as compared to $3.2 million for the corresponding period in the prior fiscal year, an increase of $1.0 million or approximately 33%, largely due to increased human resource costs resulting from increased headcounts as well as increased costs of financial and tax reporting compliance as compared to the comparable period of the prior year.
Non-cash compensation expense for the six months ended September 30, 2024 was $0.1 million as compared to $0.06 million for the comparable period of the prior fiscal year, an increase of $0.05 million or approximately 81%, with such increase being attributed to the issuance to employees of options to purchase Common Stock during the current fiscal year.
Depreciation and amortization expenses from the six months ended September 30, 2024 were $0.8 million, which increased slightly as a result of additional capital expenditures and ASC 842 finance assets acquired, from $0.7 million in such costs for the comparable period of the prior fiscal year.
As a result of the foregoing, our income from operations during the six months ended September 30, 2024 was $7.3 million, compared to income from operations of $3.5 million for the comparable period of the prior fiscal year.
Other income (expense):
| 截至9月30日的六個月 | 變更 | |||||||||||||||
| 2024 | 2023 | 美元 | 百分比 | |||||||||||||
| 其他費用（收入）: | ||||||||||||||||
| 衍生金融工具的公允價值變動 - Warrants | $ | (15,537,648 | ) | $ | (2,657,717 | ) | $ | (12,879,931 | ) | 485 | % | |||||
| 基於股票的負債公允價值變動 | — | (2,066,820 | ) | 2,066,820 | (100 | )% | ||||||||||
| 利息費用和債務發行成本攤銷 | (505,917 | ) | (249,850 | ) | (256,067 | ) | 102 | % | ||||||||
| 利息收入 | 11,292 | 10,836 | 456 | 4 | % | |||||||||||
| 其他收入 | 12,000 | — | 12,000 | 100 | % | |||||||||||
| 其他（費用）收益，淨 | $ | (16,020,273 | ) | $ | (4,963,551 | ) | $ | (11,056,722 | ) | 223 | % | |||||
其他 （費用）截至2024年9月30日的六個月的其他收入爲1600萬美元的淨其他費用，比上年同期的500萬美元淨其他費用增加了1110萬美元。增加的主要原因是與衍生工具公允價值變化相關的其他費用增加了1290萬美元，部分抵消了股票基礎負債公允價值變化減少的210萬美元，這些都在上一個財年結清。衍生工具和股票基礎負債的公允價值變化在很大程度上是由公司普通股在期末的收盤價與期初的收盤價的變化決定的，這之間呈現出強烈的反向關係，即我們所記錄的與衍生工具和股票基礎負債的公允價值變化相關的其他收入費用與公司普通股的收盤價變化之間的關係。與應付貸款相關的利息費用增加是因爲公司在截至2024年9月30日的六個月內服務的貸款本金餘額較上年同期更大。
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As a result of the foregoing, our net loss before income taxes for the six months ended September 30, 2024 was $8.7 million, compared to net loss before income taxes of $1.4 million for the comparable period of the prior fiscal year.
Liquidity and Capital Resources
Capital Resources
| September 30, 2024 | March 31, 2024 | Change | ||||||||||
| Current assets | $ | 45,293,849 | $ | 40,014,189 | $ | 5,279,660 | ||||||
| Current liabilities | $ | 12,853,720 | $ | 13,049,764 | $ | (196,044 | ) | |||||
| Working capital | $ | 32,440,129 | $ | 26,964,425 | $ | 5,475,704 | ||||||
Our working capital (total current assets less total current liabilities) increased by $5.5 million from $27.0 million as of March 31, 2024 to $32.4 million as of September 30, 2024, with such increase being primarily related to the increase in finished goods inventory and accounts receivable, associated with increased customer orders during the six months ended September 30, 2024.
Summary of Cash Flows:
| For the Six Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net cash provided by (used in) operating activities | $ | 4,601,306 | $ | (2,945,753 | ) | |||
| Net cash used in investing activities | $ | (1,645,722 | ) | $ | — | |||
| Net cash (used in) provided by financing activities | $ | (495,592 | ) | $ | 3,777,725 | |||
Net cash provided by operating activities for the six months ended September 30, 2024 was $4.6 million, which included, without limitation, net loss of $10.4 million, increased by the change in the change in fair value of derivative financial instruments - warrants of $15.5 million, deferred tax expenses of $1.3 million, and other non-cash expenses of $1.4 million, and reduced by increases in operating assets and liabilities totaling $3.2 million.
Net cash used in investing activities for the six months ended September 30, 2024 was comprised of purchases of property and equipment of approximately $0.9 million and purchases of intangible assets consisting of ANDA products of approximately $0.9 million.
Net cash used in financing activities was $0.5 million for the six months ended September 30, 2024 compared to net cash provided by financing activities of $3.8 million for the corresponding period of the prior year. Net cash used in financing activities consisted primarily of payments of bond and loan principal totaling $0.3 million and payments on principal on finance lease obligations of $0.2 million. Net cash provided by financing activities of $3.8 million during the prior fiscal year was due to $4.0 million in proceeds from related party loan, offset by $0.2 million in other debt repayments.
Hakim Promissory Note
The Company has entered into a collateralized promissory note with individual lenders with rates comparable to the EWB Term Loan but with fewer restrictive covenants. These covenants include filing timely tax returns and financial statements, and an agreement not to sell, lease, or transfer a substantial portion of the Company’s assets during the term of the note. On June 2, 2023, the Company entered into a Promissory Note with Nasrat Hakim, CEO and Chairman of the Board of Directors, pursuant to which the Company borrowed funds in the aggregate principal amount of $3,000,000 (the “Hakim Promissory Note”). The Hakim Promissory Note has an interest rate of 9% for the first year and 10% for an optional second year and the proceeds were used for working capital and other business purposes. The original maturity date of the Hakim Promissory Note was June 2, 2024, with an optional second year extension. The second year extension of the Hakim Promissory Note was agreed to by both parties, with the maturity date being extended to June 2, 2025.
Caskey Promissory Note
On June 30, 2023, the Company entered into a collateralized promissory note with Davis Caskey (the “Caskey Promissory Note”). The Caskey Promissory Note has a principal balance of $1,000,000 and an interest rate of 9% for the first year and 10% for an optional second year. The Caskey Promissory Note is subject to the same covenants as are contained in the Hakim Promissory Note. The proceeds were used for working capital and other business purposes. The original maturity date of the Caskey Promissory Note was June 30, 2024, with both parties agreeing to the optional second year extension, as provided in the Caskey Promissory Note. The Caskey Promissory Note has a current maturity date of June 30, 2025.
| 9 |
East West Bank
On April 2, 2022, the Company and Elite Labs entered into a Loan and Security Agreement (the “EWB Loan Agreement”) with East West Bank (“EWB”). Pursuant to the EWB Loan Agreement, the Company and Elite Labs received one term loan for a principal amount of $12,000,000 (the “EWB Term Loan”) and a revolving line of credit up to $2,000,000 (the “EWB Revolver,” together with the “EWB Term Loan,” the EWB Loans”), each of which shall be used for working capital. As of March 31, 2023, the principal and interest on the EWB Term Loan has been paid in full by the Company and the EWB Loan Agreement is terminated.
On July 1, 2022, EWB provided a mortgage loan (“EWB Mortgage Loan”) in the amount of $2.55 million for the purchase of the property at 135-137 Ludlow Avenue, which was formerly a lease held by the Company. The EWB Mortgage Loan matures in 10 years and bears interest at a rate of 4.75% fixed for 5 years then adjustable at WSJP plus 0.5% with floor rate of 4.5%. The total transaction costs associated with the EWB Mortgage Loan incurred as of September 30, 2024, were $13,251, which are being amortized on a monthly basis over ten years, beginning in July 2022. The EWB Mortgage Loan contains customary representations, warranties and covenants. These covenants include maintaining a minimum debt coverage ratio of 1.50 to 1.00 tested annually and a minimum trailing 12-month debt coverage ratio of 1.50 to 1.00. As of September 30, 2024, and through the date of filing of this quarterly report on Form 10-Q, the Company is not aware of the existence of any violations of financial covenants included in the EWB Mortgage Loan.
Lincoln Park Capital – July 8, 2020 Purchase Agreement
On July 8, 2020, the Company entered into a purchase agreement (the “2020 LPC Purchase Agreement”), and a registration rights agreement, with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park has committed to purchase up to $25.0 million of the Company’s Common Stock, $0.001 par value per share, from time to time over the term of the 2020 LPC Purchase Agreement, at the Company’s direction. The 2020 LPC Purchase Agreement expired on August 1, 2023.
During the three and six months ended September 30, 2024 and 2023, the Company did not issue any shares of Common Stock to Lincoln Park.
NJEDA Bonds
On August 31, 2005, the Company successfully completed a refinancing of a prior 1999 bond issue through the issuance of new tax-exempt bonds (the “Bonds”). The refinancing involved borrowing $4,155,000, evidenced by a 6.5% Series A Note in the principal amount of $3,660,000 maturing on September 1, 2030 and a 9% Series B Note in the principal amount of $495,000 maturing on September 1, 2012. The net proceeds, after payment of issuance costs, were used (i) to redeem the outstanding tax-exempt Bonds originally issued by the Authority on September 2, 1999, (ii) refinance other equipment financing and (iii) for the purchase of certain equipment to be used in the manufacture of pharmaceutical products. As of March 31, 2016, all of the proceeds were utilized by the Company for such stated purposes.
Interest is payable semi-annually on March 1 and September 1 of each year. The Bonds are collateralized by a first lien on the Company’s facility and equipment acquired with the proceeds of the original and refinanced Bonds. The related Indenture requires the maintenance of a Debt Service Reserve Fund of $366,000 in relation to the Series A Notes.
Bond issue costs of $354,454 were paid from the bond proceeds and are being amortized over the life of the bonds. Amortization of bond issuance costs amounted to $7,089 for the six months ended September 30, 2024.
The NJEDA Bonds require the Company to make an annual principal payment on September 1st of varying amounts as specified in the loan documents and semi-annual interest payments on March 1st and September 1st, equal to interest due on the outstanding principal at the applicable rate for the semi-annual period just ended.
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.
As of the date of filing of this Quarterly Report on Form 10-Q, there are no interest or principal amounts in arrears. The Series B Notes were retired, at par in July 2014.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2024 to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures.
Management’s Report on Internal Control Over Financial Reporting
Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Internal control over financial reporting may not prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are achieved. Further, the design of a control system must be balanced against resource constraints, and therefore the benefits of controls must be considered relative to their costs. Given the inherent limitations in all systems of controls, no evaluation of controls can provide absolute assurance all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also 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; over time, controls may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Accordingly, given the inherent limitations in a cost-effective system of internal control, financial statement misstatements due to error or fraud may occur and may not be detected. Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance of achieving their objectives. We conduct periodic evaluations of our systems of controls to enhance, where necessary, our control policies and procedures.
Management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting. Management has used the framework set forth in the report entitled “Internal Control—Integrated Framework (2013)” published by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate the effectiveness of our internal control over financial reporting. Based on its evaluation, the Company has concluded that due to the material weaknesses in our internal control over financial reporting noted below, our disclosure controls and procedures were not effective as of September 30, 2024 at the reasonable assurance level.
● We were unable to formalize and implement revised controls, policies and procedure documentation to evidence a system of internal controls, including testing of such revised controls, that was consistent with available personnel and resources;
● We failed to maintain effective control activities over our control environment, risk assessment, information technology and monitoring components; and
● We had 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.
Remediation efforts to address material weaknesses in internal controls over financial reporting
We intend to revise the existing control environment documentation, designing and implementing controls, policies and procedure documentation that is consistent with our current personnel, resources and capabilities, with significant focus on controls relating to financial oversight, management, analysis and reporting of operations emanating from the Company’s manufacturing, marketing and distribution of its Elite Laboratory label product line. 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 effectiveness.
Changes in Internal Controls Over Financial Reporting
There have been no changes in our internal controls over financial reporting during the six months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Pending Litigation
Elite filed a paragraph IV certification with its ANDA to generic Oxycontin and after Elite got acceptance of the ANDA by the FDA, Elite sent the patentee and NDA holder a Notice Letter as required under the Hatch-Waxman Act. This was followed by a patent infringement suit filed in the District Court of New Jersey by Purdue Pharma. Elite obtained agreement with Purdue to stay the litigation for six months. Elite’s launch of a generic Oxycontin will depend upon approval by the FDA and on the outcome of various litigations involving Purdue or the expiry of the patents listed on the Orange Book. Elite and Purdue agreed to a stay of the litigation for six months which the court ordered on January 17, 2024. The stay was extended for an additional six months by an order from the court on July 15, 2024. During the additional six months a decision was rendered in the Purdue Pharma L.P. v. Accord Healthcare Inc., Civil Action No. 22-913-WCB (“Accord II”) on September 9, 2024 which according to the order required Elite and Purdue to submit a joint report to the court. On September 26, 2024, the court ordered that proceedings in the Elite case be stayed pending the decision of Case No. 23-1953 in the Court of Appeals for the Federal Circuit (“Accord I”). According to the order Purdue and Elite must submit a joint report within 15 days of the decision.
ITEM 1A. RISK FACTORS
There have been no material changes in the risk factors described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024.
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
During
the fiscal quarter ended September 30, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities
Exchange Act of 1934, as amended)
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ITEM 6. EXHIBITS
| Exhibit No. | Description | |
| 31.1 | Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a)* | |
| 31.2 | Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) and Rule 15d-14(a)* | |
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed herewith. |
| ** | Furnished herewith. |
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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. | ||
| November 14, 2024 | By: | /s/ Nasrat Hakim |
| Nasrat Hakim | ||
| Chief Executive Officer, President and Chairman of the Board of Directors | ||
| (Principal Executive Officer) | ||
| November 14, 2024 | By: | /s/ Carter Ward |
Carter Ward | ||
| Chief Financial Officer | ||
| (Principal Accounting and Financial Officer) | ||
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