U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

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

For the quarterly period ended                  SEPTEMBER 30, 2004
                                 -----------------------------------------------

                                       or

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

For the transition period ended                        to


                        COMMISSION FILE NUMBER: 333-45241

                           ELITE PHARMACEUTICALS, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


DELAWARE                                                         22-3542636
----------------------------------                        ----------------------
(State or other jurisdiction                                  (I.R.S. Employer
of incorporation or organization)                            Identification No.)


165 LUDLOW AVENUE, NORTHVALE, NEW JERSEY                    07647
-----------------------------------------         ------------------------------
(Address of principal executive offices)                  (Zip Code)



                                 (201)750-2646
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

              (Former name, former address and former fiscal year,
                         if changed since last report)

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

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12, 13 or 15 (d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
                                                                Yes [  ] No [  ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding of the common stock,  $.01 par value,
as of  November  10,  2004:  12,130,926  (exclusive  of 100,000  shares  held in
treasury).


<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES

                                      INDEX

                                                                        Page No.

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

           Consolidated Balance Sheets as of September 30, 2004
           (unaudited) and March 31, 2004                                 1 - 2

           Consolidated Statements of Operations for the
           three and six months ended September 30, 2004 and
           September 30, 2003 (unaudited)                                   3

           Consolidated Statement of Changes in Stockholders' Equity
           for the six months ended September 30, 2004 (unaudited)          4

           Consolidated Statements of Cash Flows for the six months
           ended September 30, 2004 and September 30, 2003 (unaudited)      5

           Notes to Financial Statements                                  6 - 13

Item 2.  Management's Discussion And Analysis of Financial
         Condition And Results Of Operations                             14 - 19

Item 3.  Quantitative And Qualitative Disclosures
         About Market Risk                                                 20

PART II  OTHER INFORMATION                                               20 - 21

Item 2.  Unregistered Equity Securities and Use of Proceeds

Item 6.  Exhibits

SIGNATURES                                                                 22

EXHIBITS


<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                     SEPTEMBER 30,    MARCH 31,
                                                         2004            2004
                                                      (Unaudited)

CURRENT ASSETS:
       Cash and cash equivalents                      $   154,373    $ 2,104,869
       Accounts receivable                                153,250        153,250
       Restricted cash                                     29,534        203,995
       Prepaid expenses and other current assets          143,257        137,892
                                                      -----------    -----------

           Total current assets                           480,414      2,600,006
                                                      -----------    -----------

PROPERTY AND EQUIPMENT, net of accumulated
       depreciation and amortization                    4,283,056      4,090,250
                                                      -----------    -----------

INTANGIBLE ASSETS - net of accumulated amortization        89,926        102,196
                                                      -----------    -----------


OTHER ASSETS:
       Deferred lease payments                             41,013             --
       Deposit on equipment                                    --        398,580
       Restricted cash - debt service reserve             300,000        300,000
       Restricted cash - note payable                          --        225,000
       EDA bond offering costs, net of
           accumulated amortization of
           $63,758 and $60,458, respectively              130,802        137,402
                                                      -----------    -----------

           Total other assets                             471,815      1,060,982
                                                      -----------    -----------

           Total assets                               $ 5,325,211    $ 7,853,434
                                                      ===========    ===========


















                 The accompanying notes are an integral part of
                     the consolidated financial statements.


                                      -1-
<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                    SEPTEMBER 30,    MARCH 31,
                                                        2004            2004
                                                    (Unaudited)

CURRENT LIABILITIES:
       Current portion - note payable               $    119,344    $    75,000
       Current portion of EDA bonds                      165,000        150,000
       Accounts payable and accrued expenses             946,142      1,085,242
                                                    ------------    -----------
           Total current liabilities                   1,230,486      1,310,242
                                                    ------------    -----------

LONG TERM LIABILITIES:
       Note payable - net of current portion             253,326        150,000
       EDA bonds - net of current portion              2,180,000      2,345,000
                                                    ------------    -----------
           Total long-term liabilities                 2,433,326      2,495,000
                                                    ------------    -----------

           Total liabilities                           3,663,812      3,805,242
                                                    ------------    -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
       Preferred stock - 01 par value;
           Authorized - 5,000,000 and 0 shares at
           September 30, 2004 and March 31, 2004,
           respectively Issued and outstanding - 0
           shares at September 30, 2004 and March
           31, 2004

       Common stock - $.01 par value;
           Authorized - 65,000,000 and 25,000,000
           shares respectively at September 30,
           2004 and March 31, 2004 Issued and
           outstanding - 12,230,926 and 12,204,426
           shares, respectively                          122,309        122,044
       Additional paid-in capital                     40,315,493     39,338,140

       Accumulated deficit                           (38,469,562)   (35,105,151)
                                                    ------------    -----------
                                                       1,968,240      4,355,033
       Treasury stock, at cost (100,000 shares)         (306,841)      (306,841)
                                                    ------------    -----------
           Total stockholders' equity                  1,661,399      4,048,192
                                                    ------------    -----------

           Total liabilities and stockholders'
                 equity                             $  5,325,211    $ 7,853,434
                                                    ============    ===========











                 The accompanying notes are an integral part of
                     the consolidated financial statements.


                                      -2-
<PAGE>

                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                             SEPTEMBER 30,                      SEPTEMBER 30,
                                                             --------------                     -------------
                                                         2004              2003             2004              2003
                                                         -----             -----            -----             ----
                                                      (Unaudited)       (Unaudited)      (Unaudited)       (Unaudited)
<S>                                                    <C>               <C>              <C>              <C>
REVENUES                                               $   151,450       $        --      $   151,450      $        --
                                                       -----------       -----------      -----------      -----------

COST OF OPERATIONS:
       Research and development                            565,390           456,583        1,211,619          944,065
       General and administrative                          641,146           735,503        1,049,718        1,149,059
       Depreciation and amortization                       120,360            89,610          225,720          179,220
                                                       -----------       -----------      -----------      -----------
                                                         1,326,896         1,281,696        2,487,057        2,272,344
                                                       -----------       -----------      -----------      -----------

LOSS FROM OPERATIONS                                    (1,175,446)        (1281,696)      (2,335,607)      (2,272,344)
                                                       -----------       -----------      -----------      -----------

OTHER INCOME (EXPENSES):
       Interest income                                       2,667             4,800            5,711           10,185
       Interest expense                                    (62,396)          (54,176)        (114,197)        (107,684)
       Charge relating to issuance of stock options        (50,944)          (48,682)        (280,576)      (1,051,165)
       Charge relating to issuance of stock warrants      (241,010)               --         (241,010)              --
       Charge relating to repricing of stock options            --                --         (397,732)
       Charge relating to warrant exchange offer                --          (172,324)              --         (172,324)
                                                       -----------       -----------      -----------      -----------
                                                          (351,683)         (270,382)      (1,027,804)      (1,320,988)
                                                       -----------       -----------      -----------      -----------

LOSS BEFORE PROVISION FOR INCOME TAXES                  (1,527,129)       (1,552,078)      (3,363,411)      (3,593,332)
                                                       -----------       -----------      -----------      -----------

PROVISION FOR INCOME TAXES                                      --             1,000            1,000            1,000
                                                       -----------       -----------      -----------      -----------

NET LOSS                                               $(1,527,129)      $(1,553,078)     $(3,364,411)     $(3,594,332)
                                                       ===========       ===========      ===========      ===========

BASIC AND DILUTED LOSS PER COMMON SHARE                $      (.13)      $      (.15)     $      (.28)     $      (.34)
                                                       ===========       ===========      ===========      ===========

WEIGHTED AVERAGE NUMBER OF
       COMMON SHARES OUTSTANDING                        12,230,926        10,559,426       12,217,748       10,551,967
                                                       ===========       ===========      ===========      ===========
</TABLE>


                 The accompanying notes are an integral part of
                     the consolidated financial statements.


                                      -3-
<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                     FOR SIX MONTHS ENDED SEPTEMBER 30, 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                         COMMON STOCK            ADDITIONAL
                                 ---------------------------      PAID-IN        TREASURY       ACCUMULATED    STOCKHOLDERS'
                                   SHARES           AMOUNT        CAPITAL         STOCK          DEFICIT         EQUITY
                                 ----------       ----------     -----------     ---------     ------------    -------------
<S>                              <C>              <C>            <C>             <C>           <C>              <C>
BALANCE AT
  MARCH 31, 2004 (Audited)       12,204,426       $  122,044     $39,338,140     $(306,841)    $(35,105,151)    $ 4,048,192

Six months ended
  September 30, 2004 (unaudited)         --               --              --            --               --              --

Shares issued in connection
  with consulting agreement          26,500              265          58,035            --               --          58,300

Charge related to issuance of
  stock options                          --               --         280,576            --               --         280,576

Charge related to issuance of
  stock warrants                         --               --         241,010            --               --         241,010

Charge related to repricing of
  stock options                          --               --         397,732            --               --         397,732

Net loss for six months ended
  September 30, 2004                     --               --              --            --       (3,364,411)     (3,364,411)
                                 ----------       ----------     -----------     ---------     ------------     -----------
BALANCE AT
 SEPTEMBER 30, 2004 (Unaudited)  12,230,926       $  122,309     $40,315,493     $(306,841)    $(38,469,562)    $ 1,661,399
                                 ==========       ==========     ===========     =========     ============     ===========
</TABLE>


                 The accompanying notes are an integral part of
                     the consolidated financial statements.


                                      -4-
<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                       SIX MONTHS ENDED
                                                                                         SEPTEMBER 30,
                                                                                 -----------------------------
                                                                                    2004              2003
                                                                                    ----              ----
                                                                                 (UNAUDITED)       (UNAUDITED)
<S>                                                                              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                                   $ (3,364,411)    $ (3,594,332)
      Adjustments to reconcile net loss to cash used in operating activities:
         Depreciation and amortization                                                225,720          179,220
         Charge related to issuance of stock options                                  280,576        1,051,165
         Charge related to issuance of stock warrants                                 241,010               --
         Charge related to repricing of stock options                                 397,732               --
         Charge related to modification of warrant exchange offer                          --          172,324
         Charges related to issuance of common stock                                   58,300               --
         Changes in assets and liabilities:
            Accounts and accrued interest receivable                                       --            4,681
            Prepaid expenses and other current assets                                  (5,365)          85,205
            Accounts payable, accrued expenses and other current liabilities         (139,100)         287,757
                                                                                 ------------     ------------

NET CASH USED IN OPERATING ACTIVITIES                                              (2,305,538)      (1,813,980)
                                                                                 ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchase of equipment                                                          (399,656)              --
      Deposit on equipment                                                            398,580               --
      Restricted cash                                                                 399,461          (70,087)
                                                                                 ------------     ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                   398,385          (70,087)
                                                                                 ------------     ------------
CASH FLOWS FROM  FINANCING ACTIVITIES:
      Proceeds from issuance of common stock and warrants                                  --           30,000
      Proceeds from equipment loan                                                    400,000               --
      Principal bank note payments                                                   (252,330)         (37,500)
      Principal repayments of NJEDA Bonds                                            (150,000)        (140,000)
      Deferred lease payments                                                         (41,013)              --
                                                                                 ------------     ------------

NET CASH USED IN FINANCING ACTIVITIES                                                 (43,334)        (147,500)
                                                                                 ------------     ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                            (1,950,496)      (1,891,393)

CASH AND CASH EQUIVALENTS - beginning of period                                     2,104,869        3,264,081
                                                                                 ------------     ------------

CASH AND CASH EQUIVALENTS - end of period                                        $    154,373     $  1,372,688
                                                                                 ------------     ------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
      Cash paid for interest                                                     $    115,166     $    108,000
      Cash paid for income taxes                                                        1,000            1,000
</TABLE>


                 The accompanying notes are an integral part of
                     the consolidated financial statements.


                                      -5-
<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)

NOTE 1     -    BASIS OF PRESENTATION

                The information in this Form 10-Q Report includes the results of
                operations of Elite  Pharmaceuticals,  Inc. and its consolidated
                subsidiaries   (collectively   the   "Company")   including  its
                wholly-owned  subsidiaries,  Elite  Laboratories,  Inc.  ("Elite
                Labs"),  Elite Research Ltd.  ("ERL") and Elite  Research,  Inc.
                ("ERI"), for the three and six month periods ended September 30,
                2004  and  September  30,  2003.  On  September  30,  2002,  the
                "Company"   acquired  from  Elan   Corporation,   plc  and  Elan
                International  Services,  Ltd. (together  "Elan"),  Elan's 19.9%
                interest in Elite Research Ltd.  ("ERL),  a joint venture formed
                between  the Company  and Elan in which the  Company's  interest
                originally was 80.1%.  On December 31, 2002, the Company entered
                into an agreement of merger whereby ERL (a Bermuda  corporation)
                was merged into a new Delaware Corporation,  ERI, a wholly owned
                subsidiary of the Company. As a result of the merger, ERI became
                the  owner of all of the  assets  and  liabilities  of ERL.  The
                merger was  accounted  for as a tax-free  reorganization.  As of
                September 30, 2004, the financial statements of all entities are
                consolidated  and  all  significant  intercompany  accounts  are
                eliminated  upon  consolidation.   The  accompanying   unaudited
                consolidated financial statements have been prepared pursuant to
                rules and regulations of the Securities and Exchange Commission.
                Accordingly,  they do not  include  all of the  information  and
                footnotes required by accounting  principles  generally accepted
                in  the  United   States  of  America  for  complete   financial
                statements.  In  the  opinion  of  management,  all  adjustments
                (consisting of normal recurring accruals)  considered  necessary
                for a fair presentation of the consolidated  financial position,
                results  of  operations  and cash flows of the  Company  for the
                periods presented have been included.

                The   financial   results  for  the  interim   periods  are  not
                necessarily  indicative  of the results to be  expected  for the
                full year or future interim periods.

                The  accompanying   consolidated  financial  statements  of  the
                Company  have  been  prepared  in  accordance   with  accounting
                principles  generally  accepted for interim financial  statement
                presentation   and  should  be  read  in  conjunction  with  the
                consolidated  financial  statements  and notes  included  in the
                Company's  Annual  Report on Form 10-K for the year ended  March
                31, 2004.  There have been no changes in significant  accounting
                policies since March 31, 2004.

                The Company does not anticipate being profitable for fiscal year
                2005;  therefore  a current  provision  for  income  tax was not
                established  for the six months ended  September 30, 2004.  Only
                the  minimum   corporation  tax  liability  required  for  state
                purposes is reflected.

NOTE 2   -      STOCKHOLDERS' EQUITY

                                At the adjourned  Annual Meeting of Stockholders
                held on July 21, 2004, the shareholders approved the adoption of
                an amendment to the Certificate of Incorporation  increasing the
                number of authorized  shares of capital stock from 25,000,000 of
                Common Stock to 65,000,000  shares of Common Stock and 5,000,000
                shares of Preferred Stock.

                COMMON STOCK TRANSACTION

                On July 6, 2004,  the  Company  issued  26,500  shares of Common
                Stock and agreed to pay  $10,000 per month to a  corporation  in
                consideration  for  the  rendering  for a  six-month  period  of
                investor   relation   consulting    services,    including   the
                distribution of the Company's  press releases,  the provision of
                related strategic advice and the inclusion of the Company on the
                consultant's  website.  The Company agreed to provide the holder
                with "piggy-back" registration rights.


                                      -6-
<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)

NOTE 2    -     STOCKHOLDERS' EQUITY (Continued)

                PRIVATE PLACEMENT

                The Company  completed in December  2003 a private  placement of
                1,645,000  shares  of its  common  stock  at  $2.00  per  share,
                increasing  the  Company's  outstanding  shares  to  12,104,426,
                exclusive of 100,000  treasury  shares.  The offering was exempt
                from  registration  pursuant to Section  4(2) and  Regulation  D
                under the Securities Act of 1933, as amended. In connection with
                the offering,  the Company paid a cash  commission of $75,000 to
                First Montauk  Group Inc., as Placement  Agent and issued to the
                agent a five year warrant to purchase 50,000 shares of Company's
                common  stock  at  a  price  of  $2.00  per  share.  Legal  fees
                approximating $36,000 were also incurred in connection with this
                private placement.

                TREASURY STOCK TRANSACTIONS

                The  Company  purchased  prior to March  31,  2003,  in the open
                market, 100,000 shares of common stock for a total consideration
                of  $306,841  pursuant  to the  authorization  by the  Board  of
                Directors on June 27, 2002.

                WARRANTS AND OPTIONS

                On July 20,  2004,  the  Company  issued  five-year  warrants to
                purchase  50,000  shares of Common Stock at a price of $3.00 per
                share to an  individual  in  consideration  of his  agreement to
                render financial consulting services.

                On July 8, 2004,  Elite Labs, to finance the purchase of certain
                machinery and equipment,  borrowed $400,000 and designees of the
                lender  received 50,000  warrants which vested  immediately,  to
                purchase an aggregate of 50,000 shares of the  Company's  common
                stock at $4.20  per  share.  If the loan is  repaid  within  six
                months,  the 15,000  warrants  will be forfeited  and the lender
                will be entitled to a $10,000 prepayment penalty.

                On June 3, 2004,  the  Company  granted  five-year  warrants  to
                purchase  100,000 shares of Common Stock at a price of $2.50 per
                share to a Company as  consideration  for  financial  consulting
                services.

                The per share weighted-average fair value of the above mentioned
                warrants  ranged  from  $.83 -  $1.50  using  the  Black-Scholes
                warrant  pricing  model  with  the  following   weighted-average
                assumptions:  no dividend yield;  expected  volatility of 80.34;
                risk free interest rate of 3.0% and expected lives of 10 years.

                In June 2004,  the  stockholders  of the  Company  approved  the
                adoption by the Board of Directors of the  Company's  2004 Stock
                Option  Plan (the  "2004  Plan").  The Plan  reserves  1,500,000
                shares of Common  Stock for grant by the Board of  Directors  of
                incentive or nonqualified stock options to officers,  employees,
                or directors of and consultants to the Company.


                                      -7-
<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)

NOTE 2    -     STOCKHOLDERS' EQUITY (Continued)

                WARRANTS AND OPTIONS (Continued)

                On June  22,  2004,  the  Company  granted  120,000  options  to
                Directors (all fully vested) and 123,300 options to employees to
                purchase an  aggregate  of 243,300  shares of Common  Stock at a
                price of $2.34 per share under its 2004 Stock Option Plan, which
                was  approved  on that  date by the  stockholders.  The  120,000
                options  granted  under the 2004 Plan to members of the Board of
                Directors  expire ten years from the date of  issuance;  have an
                exercise price of $2.34 per share and are fully vested.  The per
                share  weighted-average  fair value of the  options  amounted to
                $1.91 using the  Black-Scholes  options  pricing  model with the
                following  weighted-average   assumptions:  no  dividend  yield;
                expected  volatility of 76.69%; risk free interest rate of 4.0%;
                and expected lives of ten years.  The Company has taken a charge
                of $229,632 for the six-months  ended September 30, 2004,  which
                represents the fair value of the vested  options,  utilizing the
                Black-Scholes options pricing model on the grant date.

                The  options   granted  to  employees  were  in  replacement  of
                previously  granted options  containing  exercise prices greater
                than $2.34 per share. On the same date the stockholders approved
                amendments   made  previously  by  the  Board  of  Directors  to
                outstanding  warrants  and options  including  the  repricing of
                options to purchase  420,000 shares of which options to purchase
                330,000   shares  were  held  by   Directors   of  the  Company.
                Accordingly,  during the six months  ended  September  30,  2004
                options with  respect to an  aggregate  of 543,300  options were
                repriced  (treating the options  granted in lieu of  outstanding
                options as  repriced  options).  The new options  have  exercise
                prices  between $2.21 and $2.34 per share.  162,300  options are
                vested and 381,000  options are in various  stages of three year
                vesting  periods.  The  options  expire  ten years  from date of
                issuance.  The per share  weighted-average fair value of options
                repriced during the six months ended September 30, 2004,  ranged
                from $1.51 - $1.91 using the Black-Scholes options pricing model
                with the  following  weighted-average  assumptions:  no dividend
                yield; expected volatility of 76.69%; risk-free interest rate of
                4.0%; and expected  lives of ten years.  The Company has taken a
                charge of $397,732 for the six months ended  September  30, 2004
                which represents the fair value of the options vested, utilizing
                the Black-Scholes options pricing model on each grant date.

                The following table  illustrates the effect on net loss and loss
                per  share  as  if  the  Company  had  applied  the  fair  value
                recognition  provisions of SFAS No. 123 to all  outstanding  and
                unvested awards in each period presented:
<TABLE>
<CAPTION>

                                              THREE MONTHS ENDED SEPTEMBER         SIX MONTHS ENDED SEPTEMBER
                                              ----------------------------         --------------------------
                                                  2004              2003             2004             2003
                                                  ----              ----             ----             ----

<S>                                           <C>            <C>                 <C>              <C>
Net loss as reported                          $ (1,527,129)  $  (1,553,078)      $(3,364,411)     $(3,594,332)

Add: Stock-based compensation
expense included in reported net loss,
net of related tax effects                         291,954          48,682           919,318        1,051,165

Deduct: Total stock-based
compensation expense determined
under fair value method for all awards
net of related tax effects                        (305,711)       (268,884)         (946,832)      (1,491,570)
                                              ------------   -------------       -----------      -----------

Pro-forma net loss                              (1,540,886)     (1,773,280)       (3,391,925)      (4,034,737)

Loss per share as reported                            (.13)          (0.15)             (.28)           (0.34)
Pro-forma loss per share                              (.13)          (0.17)             (.28)           (0.38)
</TABLE>


                                      -8-
<PAGE>


                At September 30, 2004, Elite had outstanding  2,477,050  options
                with exercise  prices ranging from $1.00 to $10.00 and 2,854,239
                warrants with exercise prices ranging from $2.00 to $5.00;  each
                option and warrant  representing the right to purchase one share
                of common stock.


                                      -9-
<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)

NOTE 3    -     COMMITMENTS AND CONTINGENCIES

                CLASS A WARRANT EXCHANGE OFFER

                On October 23,  2002,  the  Company  entered  into a  Settlement
                Agreement  with  various  parties  in  order  to  end a  Consent
                Solicitation  contest and various  litigation  initiated  by the
                Company.   The  Agreement  provided,   among  other  things,  an
                agreement to commence an exchange offer (the  "Exchange  Offer")
                whereby  holders of the Company's Class A Warrants which expired
                on November 30, 2002 (the "Old Warrants") had the opportunity to
                exchange  those  warrants for New Warrants (the "New  Warrants")
                upon  payment to the  Company of $.10 per share of common  stock
                issuable  upon the  exercise of the old  warrants.  In September
                2003 the Company issued New Warrants to the record holders as of
                November 30, 2002 of the Old Warrants without requiring any cash
                payment.

                Each New Warrants is  exercisable  for the same number of shares
                of common  stock as the Old  Warrants  at an  exercise  price of
                $5.00 per share,  and  expires on  November  30,  2005.  The New
                Warrants are not  transferable  except  pursuant to operation of
                law.

                During the year  ended  March 31,  2003,  the  Company  expensed
                $242,338  relating to the Exchange Offer,  which  represents the
                fair value of the New Warrants,.  The per share weighted-average
                fair value of each  warrant on the date of grant was $1.10 using
                the  Black-Scholes  option  pricing  model  with  the  following
                weighted-average   assumptions:   no  dividend  yield;  expected
                volatility  of 73.77%;  risk-free  interest  rate of 2.88%;  and
                expected  lives of 3 years.  The  elimination  of the  $0.10 per
                share fee resulted in an  additional  charge of $172,324  during
                the year ended March 31, 2004.

                For the year ended  March 31, 2003 the  Company  incurred  legal
                fees and other costs  amounting to  approximately  $100,000,  in
                connection  with the Exchange  Offer,  which has been charged to
                additional paid-in capital.

                LITIGATION WITH ATUL M. MEHTA

                The Company had an employment agreement ("Employment Agreement")
                with its former President/CEO, Dr. Atul M. Mehta ("Mehta").

                On June 3, 2003,  Mehta resigned from all positions that he held
                with  the  Company,   while   reserving  his  rights  under  his
                Employment  Agreement  and under  common  law.  On July 3, 2003,
                Mehta instituted  litigation  against the Company and one of its
                directors in the Superior Court of New Jersey,  alleging,  among
                other  things,  the  breach  of  his  Employment  Agreement  and
                defamation,  and  claiming  that he is  entitled  to receive his
                salary through June 6, 2006.

                On April 21, 2004, the Company settled the litigation. Under the
                settlement  agreement,  Mehta  relinquished  any  rights  to the
                Company's  patents  and  intellectual  properties  and agreed to
                certain  non-disclosure  and  certain  limited   non-competition
                covenants.  The Company paid Mehta $400,000 and certain  expense
                reimbursements in accordance with the settlement agreement,  and
                received a short-term option for the Company or its designees to
                acquire  all of the  shares of the common  stock of the  Company
                held by Mehta and his affiliates at $2.00 per share. The Company
                paid  $100,000  into escrow which was released to Mehta  because
                the option was not exercised in full. As part of the settlement,
                the  Company  extended  expiration  dates of certain  options to
                purchase  770,000  shares of common stock held by Mehta and also
                provided him with certain  "piggyback"  registration rights with
                respect  to  shares  underlying  his  options.   Subject  to  an
                agreement  dated  October  7, 2004,  the  770,000  options  were
                modified (see Note 4) and the Company's  obligation to reimburse
                or pay  benefits and expenses to be incurred by Mehta during the
                two year period from April 21, 2004 was capped at $50,000.


                                      -10-
<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)

NOTE 3     -    COMMITMENTS AND CONTINGENCIES (Continued)

                REFERRAL AGREEMENT

                In January 2002, the Company  entered into a Referral  Agreement
                with one of its directors  (Referring Party) whereby the Company
                will pay the Referring Party a fee based upon payments  received
                by  the  Company  from  sales  of  products,  development  fees,
                licensing fees and royalties generated as a direct result of the
                Referring  Party  identifying  customers for the Company.  These
                amounts  are to be reduced  by the cost of goods  sold  directly
                incurred in the manufacturing or development of products as well
                as any  direct  expenses  associated  with  these  efforts.  The
                Referral Agreement has no expiration date.

                The Company  committed to pay the Referring Party a referral fee
                each year as follows:

                PERCENTAGE OF REFERRAL             REFERRAL BASE
                         BASE                 FROM                  TO
                         ----             ----------           ----------
                          5%              $        0           $1,000,000
                          4%               1,000,000            2,000,000
                          3%               2,000,000            3,000,000
                          2%               3,000,000            4,000,000
                          1%               4,000,000            5,000,000

                As of September  30, 2004,  no payments were required to be made
                under this agreement.

                COLLABORATIVE AGREEMENTS

                On December  18,  2003,  the  Company  and Pivotal  Development,
                L.L.C. entered into an agreement to develop a controlled release
                product utilizing Elite's proprietary drug delivery  technology.
                The  product is a generic  equivalent  to a drug  losing  patent
                exclusivity  with  addressable  market revenues of approximately
                $150 million per year.  The agreement also provides an option to
                develop a controlled release NDA product.

                Under the collaboration  agreement,  Pivotal Development will be
                responsible for taking the Elite  formulation  through  clinical
                development  and  the  FDA  regulatory  approval  process.   The
                partners will seek a license during the development cycle from a
                pharmaceutical  company which has the  resources to  effectively
                market the product and share the cost of  defending  the product
                against any lawsuits.

                Elite and Pivotal will bear costs in their  respective  areas of
                responsibility.  In  addition  Pivotal is to pay Elite  $750,000
                upon attainment of certain milestones outlined in the agreement.

                In June 2001, the Company entered into two separate and distinct
                development and license  agreements with another  pharmaceutical
                company   ("partner").   The  Company  is  developing  two  drug
                compounds  for the partner in exchange for certain  payments and
                royalties.  The Company also  reserves the right to  manufacture
                the compounds. The Company received $250,000 under one agreement
                and $300,000 under the other agreement, all of which were earned
                as of March 31, 2002. The Company is currently  proceeding  with
                development  and  formulation  for both products as specified in
                the development  agreements.  There were no amounts earned under
                the agreements in the six months ended September 30, 2003 or the
                six months ended September 30, 2004.


                                      -11-
<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)

NOTE 3    -     COMMITMENTS AND CONTINGENCIES (Continued)

                COLLABORATIVE AGREEMENTS (Continued)

                On September 13, 2002, the Company, entered into a manufacturing
                agreement with Ethypharm S.A. ("Ethypharm").  Under the terms of
                this agreement, the Company initiated the manufacturing of a new
                prescription drug product for Ethypharm. The Company received an
                upfront  manufacturing fee for the first phase of the technology
                transfer and billed an additional  amount upon the completion of
                the first phase of manufacturing.

                The Company is entitled  to receive  additional  fees in advance
                for the final phase of the  manufacturing.  In addition,  if and
                when FDA approval is obtained and if requested by Ethypharm, the
                Company will  manufacture  commercial  batches of the product on
                terms to be agreed upon.

                The Company  billed and earned  revenues of $280,000,  under the
                Ethypharm  agreement,  all of which was billed and earned during
                the  year  ended  March  31,  2003,  in   accordance   with  the
                substantive milestone method of revenue recognition.  Under this
                method,  the  milestone  payments are  considered to be payments
                received  for  the  accomplishment  of a  discrete,  substantive
                earnings  event.   Accordingly,   the  non-refundable  milestone
                payments are  recognized in full when the milestone is achieved.
                There were no amounts  earned in the three and six month periods
                ended September 30, 2004 and 2003.

                In  addition  to  milestone  payments,  the  Company  billed and
                recognized  $75,000 in  additional  revenues  as a result of the
                manufacturing and delivery of additional batches during the year
                ended March 31, 2003.  No such revenues were earned in the three
                and six month periods ended  September  30,2003 or the three and
                six month periods ended September 30, 2004.

                EMPLOYMENT AGREEMENT

                On July 23,  2003,  the Company  appointed  Bernard  Berk as its
                Chief  Executive  Officer  and  President  and  entered  into an
                employment   agreement  with  him.  The  initial  term  of  this
                agreement is three years. Pursuant to the agreement:

                -         Mr.  Berk is  entitled  to  receive  a base  salary of
                $200,000 per annum,  subject to increase to $330,140 if and when
                the Company  consummates a Strategic  Transaction (as defined in
                the employment agreement);

                -         The Company confirmed its grant to Mr. Berk on June 3,
                2003 of  options to  purchase  300,000  shares of the  Company's
                common  stock at $2.01  per  share.  All of  these  options  are
                vested.

                -         The Company  granted  Mr. Berk  options to purchase an
                additional  300,000 shares of its common stock, with an exercise
                price equal to $2.15,  the closing price of the Company's common
                stock on the date of grant.  These options will vest solely upon
                consummation of a Strategic Transaction.


                                      -12-
<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)

NOTE 3    -     COMMITMENTS AND CONTINGENCIES (Continued)

              EMPLOYMENT AGREEMENT (Continued)

                - Mr. Berk will be entitled to receive  severance in  accordance
                with the employment  agreement if he is terminated without cause
                or  because  of  his  death  or  permanent  disability  or if he
                terminates  his  employment  for good reason or as a result of a
                "change of control" as defined. The severance will be payable in
                accordance with the terms of his employment agreement.

                On May 14, 2004,  the  Company's  Board of  Directors  appointed
                Bernard  Berk  to the  position  of  Chairman  of the  Board  of
                Directors.

                CONSULTING AGREEMENTS

                On July 3, 2003,  the Company  entered  into an  agreement  with
                Leerink  Swann & Company to provide a  Valuation  and a Fairness
                Opinion  in  order  for  the  Company  to  complete  a  proposed
                acquisition for which the Company paid a non-refundable retainer
                fee of $50,000.  If and when the Board of  Directors  requests a
                Fairness Opinion,  Leerink's  compensation is to be $50,000.  No
                amounts were  expensed in the three and six month  periods ended
                September 30, 2004 and 2003

                The Company  entered into one year  consulting  agreements  with
                each of Saggi Capital Corp. and Bridge Ventures Inc. on November
                4, 2003.  The  consultant's  services will  include,  but not be
                limited to, advice with respect to overall  strategic  planning,
                financing  opportunities,  acquisition  policy,  commercial  and
                investment  banking  relationships and stockholder  matters.  In
                consideration of the consultant's agreement to provide services,
                the Company  agrees to pay each  consultant  $75,000  payable in
                monthly  installments  of $6,250 and issued to each consultant a
                warrant to purchase 100,000 shares of the Company's common stock
                at a price of $2.00 per share.

                On June 3,  2004,  the  Company  agreed to  engage a company  to
                provide consulting services and issued in connection therewith a
                five-year  warrant to purchase 100,000 shares of Common Stock at
                a price of $2.50 per share.

                On July 20, 2004,  the Company agreed to engage an individual to
                provide financial  consulting  services and issued in connection
                therewith  a  three-year  warrant to purchase  50,000  shares of
                common stock at a price of $3.00 per share.

                For the three and six month  periods  ended  September 30, 2004,
                consulting  expenses  under  these  agreements  amounted  to  an
                aggregate of $45,000 and $90,000,  respectively.  No  consulting
                expense was incurred for the three and six month  periods  ended
                September 30, 2003.


                                      -13-
<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)

NOTE 4    -     SUBSEQUENT EVENTS

                In October  2004,  the  Company  completed  a private  placement
                through Indigo  Securities LLC, the Placement Agent. The Company
                sold for aggregate  gross  proceeds of $6,600,000 in the private
                placement  516,558 shares of series A Preferred Stock, par value
                $0.01 per share ("Preferred  Shares") convertible into 5,165,580
                shares of Common Stock. The Preferred Shares were accompanied by
                warrants to purchase an aggregate of 5,165,580  shares of Common
                Stock at exercise  prices ranging from $1.54 to $1.84 per share.
                It paid  commissions  aggregating  $633,510 and issued five year
                warrants  to  purchase  494,931  shares of  Common  Stock to the
                Placement  Agent.  The Company also paid legal fees and expenses
                of the Agent's counsel of $75,000 and legal fees and expenses of
                one  counsel  for the  Investors  in the  private  placement  of
                $25,000.

                Each Preferred  Share is  convertible  into ten shares of Common
                Stock. The purchaser of the Preferred  Shares (the  "INVESTORS")
                received  for each  Preferred  Share  acquired  two Common Stock
                Purchase  Warrants,  one exercisable on or prior to December 31,
                2005  ("SHORT-TERM  WARRANTS")  and the other  exercisable on or
                prior to the  fifth  anniversary  of the  date  upon  which  the
                registration  statement  described  below is declared  effective
                ("LONG-TERM  WARRANTS").  Each warrant  represents  the right to
                purchase five shares of Common Stock.

                The private placement was effected in three tranches.  The first
                tranche  involved  the  sale  on  October  6,  2004  of  379,122
                Preferred Shares at a price of $12.30 per share convertible into
                an aggregate of 3,791,220 shares of Common Stock  accompanied by
                Short-Term  Warrants and Long-Term Warrants to purchase at $1.54
                per share an aggregate of 3,791,220  shares of Common Stock. The
                second tranche  involved the sale on October 12, 2004 of 119,286
                Preferred Shares at a price of $14.00 per share convertible into
                1,192,860  shares of Common Stock  accompanied by Short-Term and
                Long-Term  Warrants to purchase an aggregate of 1,192,860 shares
                of Common Stock at a price of $1.75 per share. The third tranche
                involved the sale on October 26, 2004 of 18,150 Preferred Shares
                at a price of $14.70 per share convertible in to 181, 500 shares
                of Common Stock accompanied by Short Term and Long Term Warrants
                to  purchase  at a price of $1.84  per  share  an  aggregate  of
                181,500 shares of Common Stock.

                Pursuant to the Placement Agent Agreement, the Company issued to
                the Placement  Agent and its designees in the first,  second and
                third  tranches  warrants to purchase  357,495  shares of Common
                Stock at $1.23 per share, warrants to purchase 119,286 shares of
                Common  Stock at a price of $1.40 per  share,  and  warrants  to
                purchase  18,150  shares of Common Stock at a price of $1.47 per
                share, respectively.

                Holders  of  the  Preferred   Shares  are  provided  demand  and
                piggy-back  registration  rights at the Company's  expense.  The
                Company also has agreed to register  under the Securities Act of
                1933 (the "ACT") for resale the shares of Common Stock  issuable
                upon  conversion of the Preferred  Shares,  upon exercise of the
                warrants  (including  the  Placement  Agent's  warrants)  and as
                payment of dividends on the  Preferred  Shares within 90 days of
                the  closing of each  tranche of the private  placement,  with a
                penalty  of 2% of the  purchase  price  for  each 30 day  period
                during which the  registration  statement  has not been declared
                effective  after  such 90 day  period  (PRO  RATA for a  partial
                month),  but not to exceed an  aggregate  of 16% of the purchase
                price.

                Each of the purchasers of the Preferred  Shares has  represented
                that the  purchaser is an  "accredited  investor" and has agreed
                that the securities  issued in the private placement are to bear
                a restrictive  legend against resale without  registration under
                the  Act.  The  Preferred  Shares  and  warrants  were  sold  by
                Registrant pursuant to the exemption from registration  afforded
                by Section 4(2) of the Act and Registration D thereunder.


                                      -14-
<PAGE>


                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)

NOTE 4     -    SUBSEQUENT EVENTS (Continued)

                One of the  purchasers  of the  Preferred  Shares  at a price of
                $12.30  per share  was Dr.  Charan  Behl,  the  Company's  Chief
                Scientific  Advisor,  who purchased  20,000 Preferred Shares and
                received  warrants to purchase  200,000  shares of Common Stock.
                Payment  consisted  of  $16,675  in cash and the  release of the
                Company's  obligation  of  $229,325  due to Dr.  Charan Behl for
                consulting  fees for services  rendered  through  September  30,
                2004.

                The Company entered into an agreement dated October 7, 2004 with
                Dr. Atul Mehta ("Mehta")  pursuant to which outstanding  options
                to purchase 770,000 shares of Common Stock granted in connection
                with the litigation settlement were amended to terminate 100,000
                options,  and extend the  expiration  dates of the other options
                from June 13, 2005 to December  31, 2007 and reduce the exercise
                price of 170,000  options  from  $10.00 to $2.34 per share.  The
                agreement  also provided  that the Company's  obligation to bear
                Mehta's  legal and other  expenses  for the two year period from
                the litigation settlement will not exceed $50,000.


                                      -15-
<PAGE>


                           ELITE PHARMACEUTICALS, INC.
                                     PART I.

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

        THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2004 COMPARED TO
            THE THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2003

         The following  discussion  and analysis  should be read in  conjunction
with the Consolidated  Financial  Statements,  the related Notes to Consolidated
Financial  Statements  and  Management's  Discussion  and  Analysis of Financial
Condition and Results of Operations  included in the Company's  Annual Report on
Form 10-K for the  fiscal  year  ended  March  31,  2004  (the  "10-K")  and the
Unaudited  Consolidated  Financial  Statements and related Notes to Consolidated
Financial  Statements  included in Item 1 of Part I of this Quarterly  Report on
Form 10-Q.

         The   Company   has   included  in  this   Quarterly   Report   certain
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995 concerning the Company's business,  operations and
financial condition.  "Forward-looking statements" consist of all non-historical
information,   and  the  analysis  of  historical  information,   including  the
references in this  Quarterly  Report to future revenue  growth,  future expense
growth, future credit exposure,  earnings before interest,  taxes,  depreciation
and amortization, future profitability,  anticipated cash resources, anticipated
capital expenditures,  capital requirements,  and the Company's plans for future
periods. In addition, the words "could", "expects", "anticipates",  "objective",
"plan",  "may affect",  "may depend",  "believes",  "estimates",  "projects" and
similar  words and phrases are also  intended to identify  such  forward-looking
statements.

         Actual  results  could differ  materially  from those  projected in the
Company's forward-looking statements due to numerous known and unknown risks and
uncertainties,   including,  among  other  things,  unanticipated  technological
difficulties,  the  volatile  and  competitive  environment  for  drug  delivery
products,  changes in  domestic  and  foreign  economic,  market and  regulatory
conditions, the inherent uncertainty of financial estimates and projections, the
uncertainties involved in certain legal proceedings,  instabilities arising from
terrorist actions and responses thereto, and other  considerations  described as
"Risk Factors" in other filings by the Company with the SEC including the Annual
Report on Form 10-K. Such factors may also cause  substantial  volatility in the
market price of the Company's Common Stock. All such forward-looking  statements
are current only as of the date on which such  statements were made. The Company
does not  undertake  any  obligation  to  publicly  update  any  forward-looking
statement to reflect  events or  circumstances  after the date on which any such
statement is made or to reflect the occurrence of unanticipated events.

OVERVIEW

         The Company is involved in the  development of controlled drug delivery
systems and  products.  Its products are in varying  stages of  development  and
testing. In addition, from time to time, the Company has also conducted research
and development  projects on behalf of other  pharmaceutical  companies although
these activities have generated only limited revenue to date.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         Management's  discussion addresses the Company's consolidated financial
statements,  which have been prepared in accordance with  accounting  principles
generally  accepted in the United States of America.  The  preparation  of these
financial  statements requires management to make estimates and assumptions that
affect the  reported  amounts  of assets  and  liabilities,  the  disclosure  of
contingent  assets and  liabilities at the date of financial  statements and the
reported  amounts of revenues and expenses  during the reporting  period.  On an
ongoing basis, management evaluates its estimates and judgment,  including those
related to long-lived  assets,  intangible  assets,  income taxes,  equity-based
compensation,  and contingencies and litigation.  Management bases its estimates
and  judgments on  historical  experience  and on various other factors that are
believed to be reasonable under the circumstances, the results of which form the
basis for making  judgments  about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.


                                      -16-
<PAGE>


                           ELITE PHARMACEUTICALS, INC.
                                     PART I.

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

        THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2004 COMPARED TO
            THE THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2003

                                   (CONTINUED)

         Management believes the following critical accounting  policies,  among
others,  affect  its  more  significant  judgments  and  estimates  used  in the
preparation of its consolidated financial statements.

         The Company's most critical accounting policies include the recognition
of revenue upon  completion  of certain  phases of projects  under  research and
development  contracts.  Revenues  from  these  contracts  are  recognized  when
management determines the Company has completed its obligation under each phase.
The Company  also  assesses a need for an  allowance  to reduce its deferred tax
assets to the amount that it believes  are more likely than not to be  realized.
Management  estimates its net operating  losses will probably not be utilized in
the near future,  and has not  recognized  a tax benefit from this  deferred tax
asset. If management  anticipated the Company being  profitable,  a deferred tax
benefit would be  recognized  and such  estimate  would  increase net income and
earnings  per share  accordingly.  The Company  assesses the  recoverability  of
long-lived   assets  and  intangible   assets  whenever  events  or  changes  in
circumstances  indicate  that  the  carrying  value  of the  assets  may  not be
recoverable.  Management  estimates  the  Company's  patents  and  property  and
equipment  are not  impaired.  If these  assets were  considered  impaired,  the
Company would  recognize an impairment  loss which would  increase the Company's
net loss and net loss per share  accordingly.  The Company assesses its exposure
to current  commitments  and  contingencies  by advice of counsel.  It should be
noted that  actual  results  may differ  from these  estimates  under  different
assumptions or conditions.

         During the fiscal year ended  March 31,  2003,  the Company  elected to
prospectively recognize the fair value of stock options granted to employees and
members of the Board of  Directors,  effective as of the beginning of the fiscal
year. The prospective method allowed by the Financial Accounting Standards Board
effects the Company's  results of operations for the three and six month periods
ended  September  30, 2004 and 2003 as options were  granted or repriced  during
these periods which either vested  immediately or vest over three to five years.
The Company does not know the future effect of options and warrants which may be
granted to  employees  and  members  of the Board of  Directors.  The  Financial
Accounting   Standards  Board  provided  three   transition   alternatives   for
recognizing  stock-based  compensation  cost  using the fair  value  method.  If
management did not elect the  prospective  method during the three and six month
periods ended September 30, 2004 and 2003, net loss and net loss per share would
have been decreased.  However,  the two other methods would have required either
greater  compensation  cost  to be  recognized  as  an  expense  or  retroactive
restatement of previously reported net loss.

RESULTS OF CONSOLIDATED OPERATIONS

THREE MONTHS ENDED  SEPTEMBER 30, 2004 COMPARED TO THREE MONTHS ENDED  SEPTEMBER
30, 2003

         No revenues were generated  during the three months ended September 30,
2003.  Revenues  for the three months ended  September  30, 2004 were  $151,450,
which consisted of a non-refundable $150,000 payment received from Purdue Pharma
granting it the right to evaluate  certain  abuse  resistance  drug  formulation
technology  of  the  Company.  As  a  result  of  inadequate  funds  to  conduct
significant  research and development  and the  resignations in June 2003 of the
Company's  principal  scientific  officers  the  Company  was unable to generate
additional  revenues under its existing customer contracts or to secure revenues
from other sources during the three months ended September 30, 2004.


                                      -17-
<PAGE>


                           ELITE PHARMACEUTICALS, INC.
                                     PART I.

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

        THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2004 COMPARED TO
            THE THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2003

                                   (CONTINUED)

THREE MONTHS ENDED  SEPTEMBER 30, 2004 COMPARED TO THREE MONTHS ENDED  SEPTEMBER
30, 2003 (continued)

         General  and  administrative   expenses  for  the  three  months  ended
September 30, 2004 were  $641,146,  a decrease of $94,357 or 12.8% from $735,503
for the comparable period of the prior year,  substantially due to the reduction
in operating economics.

         Research and development costs for the three months ended September 30,
2004 were  $565,390,  an increase of  $108,107  or 23.8% from  $456,583  for the
comparable  period  of  the  prior  year,  substantially  due  to  increases  in
consulting fees, lab and manufacturing supplies and raw materials.

         The increase in net expense of $81,301 to $351,683 for the three months
ended  September  30, 2004 from  $270,382 for the three  months ended  September
30,2003 was primarily the result of increases in charges related to the issuance
of stock warrants in 2004 of $241,010,  partially  offset by the $172,324 charge
related to warrant exchange offer in 2003.

         The  Company's  net loss for the three months ended  September 30, 2004
was $1,527,129  compared to $1,553,078  for the  comparable  period of the prior
year.  The  decrease in the net loss was  primarily  due to the  revenues in the
current year.

SIX MONTHS ENDED  SEPTEMBER 30, 2004 COMPARED TO SIX MONTHS ENDED  SEPTEMBER 30,
2003

         The Company  had no revenues  for the six months  ended  September  30,
2003. Revenues for the six months ended September 30, 2004 were $151,450,  which
consisted of a non-refundable  $150,000 payment received from Purdue Pharma L.P.
granting it the right to evaluate  certain  abuse  resistance  drug  formulation
technology  of the Company.  The Company was unable to generate  any  additional
revenues  under  its  existing  customer  contracts  for  the six  months  ended
September 30, 2004 and 2003 due to inadequate  funds and the  resignation of the
Company's principal scientific officers in 2003.

         General and administrative  expenses for the six months ended September
30, 2004 were $1,049,178,  a decrease of $99,341 or 8.6% from $1,149,059 for the
comparable  period of the prior  year,  substantially  due to the  reduction  in
operating economies.

         Research and  development  costs for the six months ended September 30,
2004 were  $1,211,619,  an  increase of  $267,554  or  approximately  28.3% from
$944,065 for the  comparable  period of the prior year,  primarily the result of
increased research and development wages, consulting fees, lab and manufacturing
supplies and raw materials.

         Other  expenses  for the six  months  ended  September  30,  2004  were
$1,027,804,  a decrease of $293,184,  or approximately 22.2% from $1,320,988 for
the  comparable  period of the prior  year,  due to  reductions  of  $770,589 in
charges related to the issuance of stock options and a charge related to warrant
exchange  offer of $172,324  in 2003,  offset  partially  by  increased  charges
relating to issuance of stock warrants and charges  relating to the repricing of
stock options in the amounts of $241,010 and $397,732, respectively.

         The Company's net loss for the six months ended  September 30, 2004 was
$3,364,411  compared to $3,594,332 for the comparable  period of the prior year,
primarily due to the revenues generated in the current year.


                                      -18-
<PAGE>


                           ELITE PHARMACEUTICALS, INC.
                                     PART I.

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

        THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2004 COMPARED TO
            THE THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2003

                                   (CONTINUED)

MATERIAL CHANGES IN FINANCIAL CONDITION

         The Company's  working capital (total current assets less total current
liabilities), which was $1,289,764 as of March 31, 2004, decreased to a negative
of  ($750,072)  as of  September  30, 2004.  The decrease in working  capital is
primarily due to the $3,364,411 net loss from operations.

         The  Company   experienced   negative  cash  flow  from  operations  of
($2,305,538)  for the six months ended September 30, 2004,  primarily due to the
Company's  net loss from  operations,  partially  offset by non-cash  charges of
$977,618,  which  included,  but were not limited to, the charges of $397,732 in
connection with the repricing of stock options,  $280,576 in connection with the
issuance of stock options, and $241,010 in connection with the issuance of stock
warrants.

         The Company recently completed a Good  Manufacturing  Practices ("GMP")
batch for a product  currently  licensed with a  pharmaceutical  company under a
development and license  agreement  entered into June 2001. The Company received
$30,000 in  November  2003 under the  Agreement  and  expects  to  complete  two
additional  GMP  batches  in the near  future  under the terms of the  licensing
agreement.  The  Company  expects  to  manufacture  the  product  with  revenues
projected to be  generated in the third  quarter of its fiscal year ending March
31,  2005.  The Company also  anticipates  the earning of  additional  milestone
payments under the Agreement subject to completion of the GMP batches.

         The  Company   recently   entered  into  an   agreement   with  Pivotal
Development,  L.L.C. pursuant to which the Company is to receive an aggregate of
$750,000 upon attaining certain milestones. The Company anticipates that some of
the milestones  will be achieved  commencing in the quarter ending  December 31,
2004.

         No assurance can be given that the Company will  consummate  any of the
transactions discussed above.

LIQUIDITY AND CAPITAL RESOURCES

         For the six months  ended  September  30,  2004,  the Company  recorded
negative cash flow and financed its operations  primarily through utilization of
its existing cash.  The Company had negative  working  capital of  approximately
($.75) million at September 30, 2004 compared with positive  working  capital of
$1.3million at March 31, 2004.  Cash and cash  equivalents at September 30, 2004
were $.2 million,  a decrease of $1.9 million from the $2.1 million at March 31,
2004.

         Net cash used in operating  activities  was  $2,305,538  during the six
months ended September 30, 2004, compared to $1,813,980 for the six months ended
September 30, 2003. Net cash used in operating  activities during the six months
ended  September 30, 2004 included the net loss of $3,364,411  offset in part by
non-cash  charges of  $1,203,338  consisting  of  $977,618  in stock  option and
warrant  charges,  and  $225,720  in  depreciation  expense.  Net  cash  used in
operating  activities  during the six months ended  September  30, 2003 resulted
primarily  from a net loss of  $3,594,332,  offset in part by  certain  non-cash
expenses consisting of, but not limited to depreciation  expense of $179,220 and
charges related to issuance of stock options of $1,051,165.


                                      -19-
<PAGE>


                           ELITE PHARMACEUTICALS, INC.
                                     PART I.

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

        THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2004 COMPARED TO
            THE THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2003

                                   (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (Continued)

         Revenues  generated  for the six months ended  September  30, 2004 were
$151,450.  In order to  conserve  cash for the next twelve  months,  the Company
intends to reduce costs by  continuing  the  reduction of the number of products
under active development to six.

         The  Company   purchased   machinery   and   equipment   amounting   to
approximately  $400,000  in the six  months  ending  September  30,  2004.  This
equipment  was fully  financed.  No  capital  expenditures  were made in the six
months ended September 30, 2003.


                                      -20-
<PAGE>



                           ELITE PHARMACEUTICALS, INC.
                                     PART I.

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

        THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2004 COMPARED TO
            THE THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2003

                                   (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (Continued)

         The Company had  outstanding,  as of September 30, 2004,  $2,345,000 in
aggregate  amount of bonds. The bonds bear interest at a rate of 7.75% per annum
and are due on various dates between 2005 and thereafter.  The bonds are secured
by a first lien on the Company's facility in Northvale,  New Jersey. Pursuant to
the terms of the bonds,  several  restricted cash accounts have been established
for the payment of bond principal and interest.  Bond proceeds were utilized for
the  refinancing  of the land and  building  the  Company  currently  owns,  the
purchase of certain  manufacturing  equipment and related building  improvements
and the  maintenance of a $300,000 debt service  reserve.  All of the restricted
cash,  other than the debt service  reserve,  is expected to be expended  within
twelve months and is therefore  categorized  as a current asset on the Company's
consolidated  balance sheet as of September  30, 2004.  Pursuant to the terms of
the bond  indenture  agreement  pursuant  to which the bonds  were  issued,  the
Company is required to observe certain covenants,  including  covenants relating
to the  incurrence  of  additional  indebtedness,  the granting of liens and the
maintenance of certain financial covenants. As of September 30, 2004 the Company
was in compliance with the covenants contained in the bond indenture agreement.

         On July 8, 2004, Elite Labs entered into a loan and financing agreement
in order to finance the purchase of certain machinery and equipment.  Elite Labs
borrowed $400,000 payable in 36 monthly installments of $13,671,each,  including
principal  and  interest  at 14% per  annum.  The first  four and the last three
months of  scheduled  payments are being held by the lender and were and will be
applied to the principal  balance when due. The loan is secured by two pieces of
equipment and the guaranty of the Company.  In addition,  the Company  issued to
designees of the lender 50,000  warrants,  which vest  immediately,  to purchase
50,000 shares of the Company's  common stock at $4.20 per share.  If the loan is
repaid within six months, 15,000 warrants will be forfeited, but the lender will
be  entitled  to a $10,000  prepayment  penalty.  A charge for the cost of these
warrants is reflected in the quarter ending September 30, 2004.

         The  Company  from  time  to time  will  consider  potential  strategic
transactions  including  acquisitions,  strategic alliances,  joint ventures and
licensing arrangements with other pharmaceutical companies. The Company retained
an investment banking firm to assist with its efforts. There can be no assurance
that any such transaction will be available or consummated in the future.

         In October 2004,  the Company  effected a private  placement of 516,558
shares of its Series A Preferred Stock for gross proceeds of $6,600,000,  before
payment of commission of $623,520 and other  expenses The Company  believes that
the net proceeds will provide  sufficient cash to fund the Company's  operations
and capital requirements through at least September 30, 2005.


                                      -21-
<PAGE>



ITEM 3.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                The Company had no  investments  in marketable  securities as of
                September  30,  2004  or  assets  and   liabilities   which  are
                denominated  in a currency  other  than U.S.  dollars or involve
                commodity price risks.

PART II.        OTHER INFORMATION

Item 2.         UNREGISTERED EQUITY SECURITIES AND USE OF PROCEEDS

         Since  March 31,  2004,  the Company  issued or granted  the  following
warrants or options:

         On June 3, 2004,  the Company  granted  five year  warrants to purchase
100,000  shares  of Common  Stock at a price of $2.50  per share to D. H.  Blair
Investment Banking Corp. as consideration for financial consulting services.

         On July 6, 2004,  the Company  issued  26,500 shares of Common Stock to
CEOcast,  Inc. in partial  consideration for rendering during a six-month period
investor  relation  consulting  services  and agreed to provide  the holder with
"piggy-back" registration rights.

         On July 7, 2004,  the Company issued three year warrants to purchase an
aggregate  of 50,000  shares  of  Common  Stock at a price of $4.20 per share to
designees of a lender in  connection  with the  refinancing  of the  outstanding
equipment  loan, with the provision that warrants to purchase 15,000 shares will
be  cancelled  in the event of the  repayment in full of the new loan within six
months,  in which  event  the  Company  is to pay  $10,000  to the  lender  as a
prepayment penalty.

         On July 20, 2004, the Company issued to Jason Lyons five-year  warrants
to  purchase  50,000  shares  of  Common  Stock at a price of $3.00 per share in
consideration of his agreement to render financial consulting services.

         CEOcast,  Inc.  and each of the  warrant  holders  has  agreed  that no
transfer of the shares,  warrants or any shares  acquired  upon  exercise of the
warrants will be made unless such transfer is registered under the Act or exempt
from registration under the Act.

         In the opinion of the Company, the issuance of the foregoing securities
were exempt  from  registration  under the Act by virtue of Section  4(2) of the
Act.

Item 6.         EXHIBITS

                (a) Exhibits:

                    10.1   Form of  Warrant  issued  to D. H.  Blair  Investment
                           Banking Corp.

                    10.2   Form of Warrant  issued to  designees  of lender with
                           respect  to  financing  of  equipment  loan  filed as
                           Exhibit 10.2 to Registrant's quarterly report on Form
                           10-Q for the three  months  ended  June 30,  2004 and
                           incorporated herein by reference thereto.

                    10.3   Form of  Warrant  issued  to  Jason  Lyons  filed  as
                           Exhibit 10.3 to Registrant's quarterly report on Form
                           10-Q for the three  months  ended  June 30,  2004 and
                           incorporated herein by reference thereto.

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

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

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


                                      -22-
<PAGE>


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


                                      -23-
<PAGE>


                                   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.


Date:    November 11, 2004     By: /s/Bernard Berk

                                   ----------------------------
                                   Bernard Berk
                                   Chief Executive Officer
                                   (Principal Executive Officer)

Date:    November 11, 2004     By:  /s/Mark I. Gittelman

                                   ----------------------------
                                   Mark I. Gittelman
                                   Chief Financial Officer and Treasurer
                                   (Principal Financial and Accounting Officer)