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, 2005
                                 -----------------------------------------------

                                       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 of             (I.R.S. Employer Identification No.)
incorporation or organization)



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,  2005:  18,172,835  (exclusive  of 100,000  shares  held in
treasury).

<PAGE>

                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES



                                      INDEX


<TABLE>
<CAPTION>
                                                                                                  Page No.
<S>                                                                                                 <C>
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

           Consolidated Balance Sheets as of September 30, 2005 (unaudited) and
           March 31, 2005                                                                          1 - 2

           Consolidated Statements of Operations for the three and six months
           ended September 30, 2005 and September 30, 2004 (unaudited)                               3

           Consolidated Statement of Changes in Stockholders' Equity
           for the six months ended September 30, 2005 (unaudited)                                   4

           Consolidated Statements of Cash Flows for the six months
           ended September 30, 2005 and September 30, 2004 (unaudited)                               5

           Notes to Consolidated Financial Statements                                              6 - 12

Item 2. Management's Discussion And Analysis of Financial
        Condition And Results Of Operations                                                       13 - 17

Item 3. Quantitative And Qualitative Disclosures
        About Market Risk                                                                           17

Item 4. Controls and Procedures                                                                     17


PART II OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K                                                            17


SIGNATURES                                                                                          20
</TABLE>




<PAGE>

                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                                    SEPTEMBER 30,          MARCH 31,
                                                                                                        2005                 2005
                                                                                                     (Unaudited)           (Audited)
<S>                                                                                                   <C>                 <C>
CURRENT ASSETS:
   Cash and cash equivalents                                                                          $1,856,262          $3,902,003
   Accounts receivable, net of allowance for doubtful accounts of
       $153,250 and $153,250, respectively                                                                    --             142,113
   Current portion of restricted cash - debt service and project fund                                  1,259,235             113,425
   Prepaid expenses and other current assets                                                             380,592             346,905
                                                                                                      ----------          ----------

       Total current assets                                                                            3,496,089           4,504,446
                                                                                                      ----------          ----------


PROPERTY AND EQUIPMENT, net of accumulated
   depreciation and amortization                                                                       4,139,010           4,194,436
                                                                                                      ----------          ----------


INTANGIBLE ASSETS - net of accumulated amortization                                                      70,324              81,184
                                                                                                      ----------          ----------


OTHER ASSETS:
   Deferred charges                                                                                           --              41,013
   Security deposit                                                                                        6,980                  --
   Restricted cash - debt service                                                                        415,500             300,000
   EDA bond offering costs, net of accumulated amortization
       of  $1,000 and $73,648, respectively                                                              353,452             124,212
                                                                                                      ----------          ----------

       Total other assets                                                                                775,932             465,225
                                                                                                      ----------          ----------

       Total assets                                                                                   $8,481,355          $9,245,292
                                                                                                      ==========          ==========
</TABLE>





               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

<TABLE>
<CAPTION>
                                                                                                SEPTEMBER 30,            MARCH 31,
                                                                                                    2005                   2005
                                                                                                (Unaudited)
<S>                                                                                             <C>                    <C>
CURRENT LIABILITIES:
   Current portion - note payable                                                               $         --           $    127,946
   Current portion of EDA bonds                                                                      175,000                165,000
   Accounts payable and accrued expenses                                                           1,043,303                882,917
                                                                                                ------------           ------------
       Total current liabilities                                                                   1,218,303              1,175,863
                                                                                                ------------           ------------

LONG TERM LIABILITIES:
   Note payable - net of current portion                                                                  --                187,128
   EDA bonds - net of current portion                                                              3,980,000              2,180,000
                                                                                                ------------           ------------
       Total long-term liabilities                                                                 3,980,000              2,367,128
                                                                                                ------------           ------------

       Total liabilities                                                                           5,198,303              3,542,991
                                                                                                ------------           ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred Stock -- $.01 par value;
        Authorized 4,483,442 shares
        None issued and outstanding                                                                       --                     --
   Common Stock - $.01 par value;
       Authorized - 65,000,000 shares
       Issued and outstanding - 18,251,974  shares and 18,022,183
       shares at September 30, 2005 and March 31, 2005,
       respectively                                                                                  182,520                180,222
   Additional paid-in capital                                                                     47,531,860             47,006,379

   Accumulated deficit                                                                           (44,124,487)           (41,177,459)
                                                                                                ------------           ------------
                                                                                                   3,589,893              6,009,142
   Treasury stock, at cost (100,000 shares)                                                         (306,841)              (306,841)
                                                                                                ------------           ------------
       Total stockholders' equity                                                                  3,283,052              5,702,301
                                                                                                ------------           ------------


       Total liabilities and stockholders' equity                                               $  8,481,355           $  9,245,292
                                                                                                ============           ============
</TABLE>





               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,
                                                                    -------------                           -------------
                                                              2005                2004                2005                2004
                                                              ----                ----                ----                ----
                                                           (Unaudited)         (Unaudited)         (Unaudited)         (Unaudited)
<S>                                                        <C>                 <C>                 <C>                 <C>
REVENUES                                                   $    272,162        $    151,450        $    386,943        $    151,450
                                                           ------------        ------------        ------------        ------------
COST OF OPERATIONS:
   Research and development                                     999,340             565,390           1,738,327           1,211,619
   General and administrative                                   434,685             641,146             861,215           1,049,718
   Depreciation and amortization                                215,362             120,360             309,112             225,720
                                                           ------------        ------------        ------------        ------------
                                                              1,649,387           1,326,896           2,908,654           2,487,057
                                                           ------------        ------------        ------------        ------------

LOSS FROM OPERATIONS                                         (1,377,225)         (1,175,446)         (2,521,711)         (2,335,607)
                                                           ------------        ------------        ------------        ------------

OTHER INCOME (EXPENSES):
   Interest income                                               16,636               2,667              36,466               5,711
   Interest expense                                             (73,381)            (62,396)           (129,506)           (114,197)
   Non-cash compensation through issuance
       of stock options and warrants                           (286,727)           (291,954)           (331,277)           (919,318)
                                                           ------------        ------------        ------------        ------------
                                                               (343,472)           (351,683)           (424,317)         (1,027,804)
                                                           ------------        ------------        ------------        ------------

LOSS BEFORE PROVISION FOR INCOME TAXES                       (1,720,697)         (1,527,129)         (2,946,028)         (3,363,411)
                                                           ------------        ------------        ------------        ------------

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

NET LOSS                                                   $ (1,720,697)       $ (1,527,129)       $ (2,947,028)       $ (3,364,411)
                                                           ============        ============        ============        ============

BASIC AND DILUTED LOSS PER COMMON SHARE                    $       (.09)       $       (.13)       $       (.16)       $       (.28)
                                                           ============        ============        ============        ============

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING                                 18,179,080          12,230,926          18,130,468          12,217,748
                                                           ============        ============        ============        ============
</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

<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, 2005 (Audited)                18,022,183  $  180,222   $47,006,379    $(306,841)   $(41,177,459)   $ 5,702,301

Six months ended September 30, 2005
(unaudited)

Exercise of stock options                              20,000         200        39,800           --              --         40,000

Exercise of stock warrants                            209,791       2,098       154,404           --              --        156,502

Non-cash compensation through the issuance
of stock options and warrants                              --          --       331,277           --              --        331,277

Net loss for six months ended September 30,
2005                                                       --          --            --           --      (2,947,028)    (2,947,028)
                                                 ------------  ----------   -----------    ---------    ------------    -----------

BALANCE AT SEPTEMBER 30, 2005                      18,251,974  $  182,520   $47,531,860    $(306,841)   $(44,124,487)   $ 3,283,052
(Unaudited)                                      ============  ==========   ===========    =========    ============    ===========
</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,
                                                                                                             -------------
                                                                                                      2005                 2004
                                                                                                      ----                 ----
                                                                                                   (UNAUDITED)          (UNAUDITED)
<S>                                                                                                <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                                        $(2,947,028)         $(3,364,411)
   Adjustments to reconcile net loss to cash used in operating activities:
      Depreciation and amortization                                                                    309,112              225,720
      Charges related to issuance of common stock                                                           --               58,300
      Non-cash compensation                                                                            331,277              919,318
      Changes in assets and liabilities:
         Accounts and accrued interest receivable                                                      142,113                   --
         Prepaid expenses and other current assets                                                     (33,687)              (5,365)
         Security deposit                                                                               (6,980)                  --
         Accounts payable, accrued expenses and other current liabilities                              160,386             (139,100)
                                                                                                   -----------          -----------

NET CASH USED IN OPERATING ACTIVITIES                                                               (2,044,807)          (2,305,538)
                                                                                                   -----------          -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of equipment                                                                             (117,613)            (399,656)
   Payment of deposit for manufacturing equipment                                                           --              398,580
   Deposits to restricted cash                                                                      (1,674,735)                  --
   Release of restricted cash                                                                          413,425              399,461
                                                                                                   -----------          -----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                                 (1,378,923)             398,385
                                                                                                   -----------          -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Principal equipment  note payments                                                                 (274,061)                  --
   Principal bank note payments                                                                             --             (252,330)
   Proceeds from equipment loan                                                                             --              400,000
   Principal repayments of NJEDA Bonds                                                              (2,345,000)            (150,000)
   Proceeds - NJEDA Tax Exempt Bonds                                                                 4,155,000                   --
   Payment - EDA Bond Offering Costs                                                                  (354,452)                  --
   Deferred lease payments                                                                                  --              (41,013)
   Proceeds from exercise of stock options                                                              40,000                   --
   Proceeds from exercise of stock warrants                                                            156,502                   --
                                                                                                   -----------          -----------

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                                  1,377,989              (43,334)
                                                                                                   -----------          -----------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                                             (2,045,741)          (1,950,496)

CASH AND CASH EQUIVALENTS - beginning of period                                                      3,902,003            2,104,869
                                                                                                   -----------          -----------

CASH AND CASH EQUIVALENTS - end of period                                                          $ 1,856,262          $   154,373
                                                                                                   -----------          -----------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid for interest                                                                          $    92,937          $   115,166
   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, 2005 AND 2004
                                   (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") and Elite Research,  Inc. ("ERI"),  for the three and six
                months ended  September  30, 2005 and  September 30, 2004. As of
                September 30, 2005, 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, 2005.  There have been no changes in significant  accounting
                policies since March 31, 2005.

                The Company does not anticipate being profitable for fiscal year
                2006;  therefore  a current  provision  for  income  tax was not
                established  for the three or six  months  ended  September  30,
                2005. Only the minimum  corporation  tax liability  required for
                state purposes is reflected.

NOTE 2   -      EDA REFINANCING

                On  August  31,  2005,  the  Company  successfully  completed  a
                refinancing  through the issuance of the  tax-exempt  bonds (the
                "Bonds") by the New Jersey Economic Development Authority (the "
                Authority").   The   refinancing   involved  the   borrowing  of
                $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,  are to be used (i) to redeem the outstanding  tax-exempt
                Bonds  originally  issued by the Authority on September 2, 1999,
                (ii) refinance  other former  equipment  financing and (iii) for
                the purchase of certain  equipment to be used in the manufacture
                of pharmaceutical products.

                Interest is payable  semiannually  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 $415,500 Debt Service Reserve Fund
                consisting  of  $366,000  from the Series A Bonds  proceeds  and
                $49,500 from the Series B proceeds. $1,259,235 is deposited in a
                short-term  restricted  cash account to fund the future purchase
                of  manufacturing  equipment  and  development  of the Company's
                facility.

                                       6
<PAGE>

                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                   (UNAUDITED)


NOTE 3   -      STOCKHOLDERS' EQUITY

                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. Stockholders at the Annual
                Meeting  held on April 15,  2005  ratified  the  issuance of the
                warrants.

                On July 8, 2004,  a  subsidiary,  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.

                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 financial consultant.

                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.

                The expiration date of the Company's Series B and Series C Stock
                Purchase  Warrants to purchase an aggregate of 2,402,181  shares
                of Common Stock is November 30, 2005.

                The  stockholders  of the Company  approved  the adoption by the
                Board of Directors of the Company's  2004 Stock Option Plan (the
                "2004  Plan") in June 2004 and an amendment to the Plan on April
                15, 2005.  The Plan, as amended,  reserves  4,000,000  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.

                On July 14,  2005,  the  Company  granted  under its 2004  Stock
                Option  Plan,  ten (10) year  options to  purchase at a price of
                $2.80 per share an aggregate  of 152,200  shares of Common Stock
                to  employees  of  the  Company.   Vesting  periods  range  from
                immediate to a period of five years from date of grant.

                On the same date,  the Company  granted ten (10) year options to
                purchase  20,000  shares of Common Stock at a price of $2.80 per
                share to its Chief Financial Officer.  The option will vest over
                a three-year period.

                On August 24, 2005, the Company granted ten (10) year options to
                purchase in the  aggregate  2,000 shares at a price of $2.81 per
                share to  employees  of the Company  under the 2004 Stock Option
                Plan vesting over a three year period.

                                       7
<PAGE>

                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                   (UNAUDITED)


NOTE 3   -      STOCKHOLDERS' EQUITY (Continued)

                WARRANTS AND OPTIONS (continued)

                The stock options to purchase an aggregate of 174,200  shares of
                Common  Stock at prices  ranging  from  $2.80 to $2.81 vest over
                periods   from   immediate   to  five   years.   The  per  share
                weighted-average value of the options ranged from $2.52 to $2.53
                using the Black-Scholes options pricing model with the following
                weighted-average   assumptions:   no  dividend  yield;  expected
                volatility  of 97.84%,  risk free interest of 4.18% and expected
                lives of ten years.

                On August 30,  2005,  the Company  granted  under its 2004 Stock
                Option Plan options to purchase an  aggregate of 120,000  shares
                of Common Stock to the Directors.  The 120,000  options  granted
                under the 2004 Plan to the  Directors  expire ten years from the
                issuance,  have an  exercise  price of $2.75  per share and vest
                over a three year period.  The per share  weighted-average  fair
                value  of the  120,000  options  amounted  to  $2.48  using  the
                Black-Scholes  options pricing model with the following weighted
                average assumptions:  no dividend yield;  expected volatility of
                97.84%;  risk free interest rate of 4.18%; and expected lives of
                ten years.

                On September 2, 2005,  the Chief  Executive  Officer  waived his
                rights to 75,000 of 300,000  options  granted to him on July 23,
                2003. The Company  determined that the remaining 225,000 options
                are fully vested.

                On September 2, 2005,  the Company  granted under its 2004 Stock
                Option Plan to the Chief Executive Officer ten (10) year options
                to purchase an  additional  600,000  shares of Common Stock at a
                price  of  $2.69  per  share  with  100,000  options  to vest on
                September 2, 2006,  100,000 options to vest on September 2, 2007
                and the remaining 400,000 options to vest as follows:

                (a)     50,000 options upon the closing of each product  license
                        or  product  sales  transaction  in  which  the  Company
                        receives  an  aggregate  of at least  $5,000,000  in net
                        cash;

                (b)     10,000  options  upon  filing  with  FDA  of  either  an
                        abbreviated new drug application (an "ANDA") or new drug
                        application (an "NDA"); and

                (c)     40,000  options upon  approval by the FDA of any ANDA or
                        NDA for a product not previously approved by the FDA.

                The  Company,  in  May  2005,  revoked  180,000  of  outstanding
                unexercised  options  granted  prior to the adoption of the 2004
                Stock  Option  Plan  originally  earmarked  to  members  of  the
                abandoned Scientific Advisory Board.

                The Company  took a charge of $331,277  for the six months ended
                September  30,  2005   ($286,727  for  the  three  months  ended
                September  30,  2005),  which  represents  the fair value of the
                vested  options,  utilizing the  Black-Scholes  options  pricing
                model on the grant date.

                                       8
<PAGE>

                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                   (UNAUDITED)


NOTE 3   -      STOCKHOLDERS' EQUITY (Continued)

                WARRANTS AND OPTIONS  (continued)

                On June 22,  2004,  the  Company  granted  under  the 2004  Plan
                120,000 options to Directors 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.  The options granted to employees were
                in replacement  of options  containing  exercise  prices greater
                than $2.34 per share  granted  prior to the adoption of the 2004
                Plan. 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 options as repriced 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  took 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 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  took 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 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:

                                       9
<PAGE>

                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

NOTE 3    -     STOCKHOLDERS' EQUITY

                WARRANTS AND OPTIONS  (continued)

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED SEPTEMBER           SIX MONTHS ENDED SEPTEMBER
                                                                ----------------------------           --------------------------
                                                                   2005               2004               2005               2004
                                                                   ----               ----               ----               ----
<S>                                                            <C>                <C>                <C>                <C>
Net loss as reported                                           $(1,720,697)       $(1,527,129)       $(2,947,028)       $(3,364,411)

Add: Stock-based compensation
expense included in reported net loss,
net of related tax effects                                         286,727            291,954            331,277            919,318

Deduct: Total stock-based
compensation expense determined
under fair value method for all awards
net of related tax effects                                         277,370)          (305,711)          (331,156)          (946,832)
                                                               -----------        -----------        -----------        -----------

Pro-forma net loss                                              (1,711,340)        (1,540,886)        (2,946,907)        (3,391,925)

Loss per share as reported                                            (.09)              (.13)              (.16)              (.28)
Pro-forma loss per share                                              (.09)              (.13)              (.16)              (.28)
</TABLE>

                At September 30, 2005, Elite had outstanding  2,896,250  options
                with exercise  prices  ranging from $1.50 to $2.81 and 7,735,023
                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.

NOTE 4   -      COMMITMENTS AND CONTINGENCIES

                COLLABORATIVE AGREEMENTS

                On June 21, 2005, the Company and Intelli  PharmaCeutics  Corp.,
                entered   into   an   agreement   for   the    development   and
                commercialization  of a  controlled  released  generic  drug for
                certain gastric diseases by the parties. The Company is to share
                in the profits, if any, from the sales of the drug.

                On June 22, 2005, the Company and Pliva, Inc.  ("Pliva") entered
                into a Product Development and License Agreement,  providing for
                the  development  and license of a controlled  released  generic
                anti-infective drug formulated by the Company. The Company is to
                manufacture  and Pliva is to market  and sell the  product.  The
                development  costs are to be paid by Pliva and the  Company  and
                the profits are to be shared equally. Pliva is to make milestone
                payments to the Company.

                On  March  30,  2005,  the  Company   entered  into  a  product,
                development,   manufacturing  and  distribution  agreement  with
                Harris Pharmaceutical, Inc. ("Harris") and Tish Technologies LLC
                ("Tish")   with   respect  to  a  controlled   release   generic
                anti-infective  drug.  The product is a generic  equivalent to a
                branded  drug.   The   agreement   provides  for  (i)  the  drug
                development  by Elite with costs of  development to be shared by
                Elite and Harris,  (ii) the  manufacture of the product by Elite
                and its sale to Harris  for  distribution,  and (iii) Tish to be
                responsible for any requisite submissions to the FDA relating to
                the product. Elite is to share in the profits, if any, generated
                from the sale of the product.

                The aforementioned agreements are in their infancy stages.

                                       10
<PAGE>

                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                   (UNAUDITED)


NOTE 4   -      COMMITMENTS AND CONTINGENCIES (Continued)

                COLLABORATIVE AGREEMENTS (continued)

                In May, 2004, Elite granted Purdue Pharma,  L.P.  ("Purdue") the
                right to evaluate  certain  abuse  resistance  drug  formulation
                technology  of  the  Company  and  an  option  to  negotiate  an
                exclusive  license  to  develop  and   commercialize   Oxycodone
                products  under the Company's  technology  pursuant to which the
                Company  received  $150,000,  which was  recognized  as  revenue
                during the six months ended  September  30, 2004.  The agreement
                expired  pursuant  to its own  terms  and the  Company  will not
                receive any further revenue with respect to such agreement.

                CONSULTING AGREEMENTS

                The Company  entered into one year  consulting  agreements  with
                each of Saggi Capital Corp. and Bridge Ventures Inc. on November
                4, 2003  which have been  extended  through  the  period  ending
                November  4, 2005.  Each of the  consultant's  services  include
                advice with  respect to overall  strategic  planning,  financing
                opportunities,  acquisition  policy,  commercial  and investment
                banking  relationships and stockholder matters. The Company pays
                each   consultant   a  fee  of  $75,000  per  annum  in  monthly
                installments of $6,250. In addition,  the Company issued to each
                consultant a five (5) year 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 issue a five-year warrant
                to purchase  100,000  shares of Common Stock at a price of $2.50
                per share to a company  in  consideration  of its  agreement  to
                provide consulting services.

                On July 20,  2004,  the  Company  issued  to an  individual,  in
                consideration of his agreement to provide  financial  consulting
                services,  a  three-year  warrant to purchase  50,000  shares of
                Common  Stock at a price of $3.00 per share.  The  issuance  was
                ratified by stockholders on April 15, 2005.

                For  the  three  and  six  months  ended   September  30,  2005,
                consulting  expenses  under  these  agreements  amounted  to  an
                aggregate  of $15,000 and $60,000,  respectively.  For the three
                and six months ended  September  30, 2004,  consulting  expenses
                under these  agreements  amounted to an aggregate of $45,000 and
                $90,000, respectively.

                EMPLOYMENT AGREEMENT

                On  September 2, 2005,  the Company  entered into an amended and
                restated  Employment  Agreement with Bernard J. Berk,  providing
                for  Mr.  Berk to  continue  to  serve  as the  Company's  Chief
                Executive  Officer  through  August  31,  2009.  The  Employment
                Agreement also provides for an annual bonus as determined by the
                Compensation Committee of the Company's Board of Directors.

                Pursuant to the agreement:

                -       Mr. Berk waived his rights to 75,000 of 300,000  options
                        granted to him on July 23, 2003. The Company  determined
                        that the remaining 225,000 options are fully vested.

                                       11
<PAGE>

                  ELITE PHARMACEUTICALS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

NOTE 4   -      COMMITMENTS AND CONTINGENCIES (Continued)

                EMPLOYMENT AGREEMENT (Continued)

                -       Mr.  Berk's  salary  was  increased  to  $330,140.  Such
                        increase  became  effective  May 1, 2005 and will accrue
                        but not be payable until November 1, 2005.

                -       Mr.  Berk was  granted  under the  Company's  2004 Stock
                        Option Plan, ten year options to purchase 600,000 shares
                        of  Common  Stock at  $2.69,  the fair  market  value of
                        Common  Stock as of the time of grant.  See Note 3 as to
                        the vesting of these options.

                -       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 in the employment agreement).  The severance
                        will be  payable  in  accordance  with the  terms of his
                        employment agreement.

                LEASE

                On July 15, 2005, the Company entered into a lease for two years
                commencing on July 1, 2005 for part of a one-story warehouse for
                the  storage of  finished  and raw  material  of  pharmaceutical
                products  and  equipment.  The lease has a renewal  option for a
                five-year period.

                Future minimum lease  payments for the periods ending  September
                30, are:

                                        2006             $27,923
                                        2007             $20,942


                                       12
<PAGE>


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

        THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2005 COMPARED TO
      THE THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 30, 2004 (UNAUDITED)

         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,  2005  (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 results of development agreements with pharmaceutical companies,
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 its 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 a specialty  pharmaceutical  company principally engaged
in the  development  and manufacture of oral  controlled-release  products.  The
Company develops  controlled  release products using proprietary  technology and
licenses these products.  The Company's  strategy  includes  developing  generic
versions of  controlled  release drug  products  with high barriers to entry and
assisting  partner companies in the life cycle management of products to improve
off-patent  drug  products.  The  Company's  technology is applicable to develop
delayed, sustained or targeted release pellets, capsules,  tablets, granules and
powders.  The Company has one product  currently being sold  commercially  and a
pipeline of six drug products under  development in the  therapeutic  areas that
include cardiovascular,  pain management, allergy and infection. The addressable
market for the Company's pipeline of products exceeds $6 billion.  The Company's
current  facility  in  Northvale,  New Jersey  also is a GMP and DEA  registered
facility for research, development, and manufacturing.

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.

                                       13
<PAGE>

         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 being profitable,  a deferred tax benefit would
be  recognized  and such  estimate  would reduce net loss and net loss 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.  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
affects the Company's  results of operations for the three and six month periods
ended  September  30, 2005 and 2004 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, 2005 and 2004, 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, 2005 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2004

         Revenues  consisted of manufacturing  fees of $254,392 and royalties of
$17,770,  for the  three  months  ended  September  30,  2005 as  compared  with
$151,450,  which  primarily  consisted  of  a  non-refundable  $150,000  payment
received  from  Purdue  Pharma  L.P.  for the right to  evaluate  certain  abuse
resistance drug formulation technology of the Company over the comparable period
of the prior year.

         General  and  administrative   expenses  for  the  three  months  ended
September  30, 2005 were  $434,685,  a decrease of  $206,461,  or  approximately
32.2%,  from $641,146 for the comparable  period of the prior year. The decrease
was substantially  due to reductions in consulting and legal fees  approximating
$130,000  and amounts paid and accrued in  settlements  of  litigation  totaling
$100,000, offset by increased allocated salaries of $20,000.

         Research and development costs for the three months ended September 30,
2005 were  $999,340,  an increase of  $433,950,  or  approximately  76.7%,  from
$565,390 for the  comparable  period of the prior year,  primarily the result of
increases in wages, raw materials,  laboratory and manufacturing  supplies.  The
costs  associated  with the  manufacturing  of  batches  of  Lodrane  24(R) have
contributed to this increase.

         We are unable to provide a break-down of the specific costs  associated
with the research and development of each product on which we devoted  resources
because  a  significant  portion  of the  costs are  generally  associated  with
salaries,  laboratory supplies, laboratory and manufacturing expenses, utilities
and similar expenses.  We have not historically  allocated these expenses to any
particular  product.  In addition,  we cannot estimate the additional  costs and
expenses that may be incurred in order to potentially  complete the  development
of any product, nor can we estimate the amount of time that might be involved in
such development because of the uncertainties associated with the development of
controlled release drug delivery products as described in this report.

         Depreciation  and amortization for the three months ended September 30,
2005  increased  by $95,002  to  $215,362  from  $120,360  for the year  earlier
comparable  period due to the full write-off of financing costs  associated with
the  redemption  of the tax exempt Bonds  originally  issued by the Authority on
September 2, 1999, offset by the

                                       14
<PAGE>

reduction in  amortization  and  depreciation  of certain  assets which had been
fully depreciated and amortized.

         Other  expenses  for the three  months  ended  September  30, 2005 were
$343,472,  a decrease of $8,211,  or  approximately  2.3%,  from the  comparable
period of the prior year. The decrease was primarily due to a decrease of $5,227
in charges related to issuance of stock options. Additional interest income, due
to higher  compensating  balances as a result of the private  placement  and EDA
refinancing,  was somewhat offset by increased  interest expense  resulting from
the equipment financing.

         As a result  of the  foregoing,  the  Company's  net loss for the three
months ended September 30, 2005 increased to $1,720,697 from $1,527,129 or 12.7%
from the comparable period of the prior year.

SIX MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO SIX MONTHS ENDED
SEPTEMBER 30, 2004

         The Company's revenues for the six months ended September 30, 2005 were
$386,943, consisting of manufacturing fees of $369,173 and royalties of $17,770.
Revenues  for the six months  ended  September  30,  2004 were  $151,450,  which
primarily  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.

         General and administrative  expenses for the six months ended September
30, 2005 were $861,215,  a decrease of $188,503 or 18.0% from $1,049,718 for the
comparable period of the prior year,  substantially due to reductions in amounts
paid and accrued in settlements of litigation,  consulting and legal fees offset
by modest increases in salaries and accounting fees.

         Research and  development  costs for the six months ended September 30,
2005 were  $1,738,327,  an increase of  $526,708,  or  approximately  43.5% from
$1,211,619 for the comparable period of the prior year,  primarily the result of
increased wages, lab and manufacturing  supplies and raw materials,  largely due
to the manufacturing of commercial batches of Lodrane 24(R).

         Other  expenses  for the six  months  ended  September  30,  2005  were
$424,317, a decrease of $603,487, or approximately 58.7% from $1,027,804 for the
comparable period of the prior year, due primarily to a reduction of $588,041 in
non-cash compensation through issuance of stock options and warrants,  including
a charge of $397,732  during the six months ended  September 30, 2004 related to
repricing  of  stock  options.  Additional  interest  income  was due to  higher
compensating  balances as a result of a private  placement and EDA  refinancing,
somewhat offset by an increase in interest expense  resulting from the equipment
financing.

         The Company's net loss for the six months ended  September 30, 2005 was
$2,947,028  compared to $3,364,411 for the comparable  period of the prior year,
primarily due to the revenues  generated and reduction in other  expenses in the
current year.

MATERIAL CHANGES IN FINANCIAL CONDITION

         The Company's  working capital (total current assets less total current
liabilities),  decreased to $2,277,786 as of September 30, 2005 from  $3,328,583
as of  March  31,  2005,  primarily  due to the  net  loss  of  $2,521,711  from
operations. Cash was used to fund the net loss.

         The  Company   experienced   negative  cash  flow  from  operations  of
$2,044,807  for the six months ended  September  30, 2005,  primarily due to the
Company's net loss from operations offset by non-cash charges of $640,389, which
included  $331,277 in connection with the issuance of stock options and $309,112
of depreciation and amortization.

         On November 15, 2004,  Elite's  partner,  ECR,  launched Lodrane 24(R),
once a day allergy product,  utilizing  Elite's  extended release  technology to
provide for once daily dosing.  Under its agreement with ECR, Elite is currently
manufacturing  commercial batches of Lodrane 24(R) in exchange for manufacturing
margin and  royalties on product  revenues.  Royalty  income  earned for the six
months ended  September 30, 2005 was $17,770.  The Company expects the royalties
to provide additional cash to help fund its operations.

         On March 30, 2005,  the Company  entered  into a product,  development,
manufacturing  and  distribution  agreement  with  Harris  Pharmaceutical,  Inc.
("Harris")  and Tish  Technologies  LLC  ("Tish")  with  respect to a controlled
release generic  anti-infective  drug. The product is a generic  equivalent to a
branded drug which the Company estimates

                                       15
<PAGE>

has  addressable  market  revenues of  approximately  $80 million per year.  The
agreement  provides for (1) the  development  of the drug by Elite with costs of
development to be shared by Elite and Harris,  (2) the  manufacture by Elite and
its sale to  Harris  for  distribution  and (3) Tish to be  responsible  for any
requisite  submissions to the FDA relating to the product.  Elite is to share in
the profits generated from the sale of the product.

         On June 21, 2005, the Company and  IntelliPharmaCeutics  Corp., entered
into an agreement  for the  development  and  commercialization  of a controlled
released generic drug for certain  anti-infective  diseases by the parties.  The
Company  estimates  that the  product had an  addressable  market in the U.S. of
approximately  $4 billion in 2004.  The Company is to share in the  profits,  if
any, from the sales of the drug.

         On June 22, 2005, the Company and Pliva, Inc.  ("Pliva") entered into a
Product  Development  and License  Agreement  providing for the  development and
license of a controlled  released generic  anti-infective drug formulated by the
Company.  The Company  estimates that the product had an estimated U.S.  generic
market size of approximately  $90 million in 2004. The Company is to manufacture
and Pliva will market and sell the product. Under the agreement,  the partner is
to make milestone payments to the Company.  The development costs are to be paid
by Pliva and the Company, and the profits are to be shared equally.

         No assurance can be given that the Company will  consummate  any of the
transactions contemplated above or that they will generate any material revenues
for the Company.

LIQUIDITY AND CAPITAL RESOURCES

         For the six months  ended  September  30,  2005,  the Company  recorded
negative cash flow and financed its operations  primarily through utilization of
its existing cash. As of September 30, 2005, the Company had approximately  $1.9
million of cash and cash equivalents,  an increase of approximately $1.7 million
from  the $.2  million  at  September  30,  2004  and  had  working  capital  of
approximately $2.3 million.

         Net cash used in operating  activities  was  $2,044,807  during the six
months ended September 30, 2005, compared to $2,305,538 for the six months ended
September 30, 2004. Net cash used in operating  activities during the six months
ended  September 30, 2005  included the  Company's  net loss of  $2,947,028  and
increases  in  prepaid  expenses  and other  current  assets,  offset in part by
non-cash   charges  of  $331,277  in  stock  option   charges  and  $309,112  in
depreciation and  amortization  expense.  Net cash used in operating  activities
during the six months ended  September  30, 2004 included the Company's net loss
of $3,364,411 offset in part by non-cash charges of $919,318 in stock option and
warrant charges and $225,720 in depreciation and amortization expense.

         Investing  activities used net cash of $1,378,923 during the six months
ended  September  30,  2005,  which  resulted  primarily  from  an  increase  in
restricted  cash  requirements as a result of the EDA  refinancing.  For the six
months ended  September 30, 2004,  restricted  cash decreased due to a principal
and interest payment on its outstanding EDA Bonds.

         During the six months ended  September 30, 2005,  financing  activities
provided  net cash of  $1,377,989  derived  from  proceeds of $196,502  from the
exercise of stock options and warrants and net proceeds of  $1,455,548  from the
refinancing  of EDA Bonds , offset by $274,061 used to repay  indebtedness.  For
the  six  months  ended   September  30,  2004,   $43,334  were  used  to  repay
indebtedness.

         The Company's  capital  expenditures  in the six months ended September
30, 2005 were $117,613.  Capital  expenditures in the six months ended September
30, 2004 amounted to $399,656, which was financed through an equipment loan.

            The Company  anticipates  that its capital  expenditures  for the 12
months  ending  September 30, 2006 will be limited to  expenditures  that can be
funded  entirely by  development  contracts  that  include  provisions  for such
funding. The Company refinanced its current EDA Bonds to enable it to expand its
manufacturing  facility  with the net proceeds.  While the Company's  cash as of
September  30,  2005 may  prove  adequate  to  finance  its  operations  through
September 30, 2006, no assurance can be given that additional  funds will not be
required. Accordingly, the Company may seek additional funds through the sale of
additional  debt or  equity.  No  assurance  can be given that any  offering  if
undertaken will be successfully concluded or that if concluded the proceeds will
be material.

         The Company had  outstanding,  as of September  30, 2005,  bonds in the
aggregate  amount of  $4,155,000,  consisting  of  $3,660,000 of 6.5% tax exempt
Bonds with an outside maturing of September 1, 2030 and $495,000 of 9%

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<PAGE>

Bonds with an outside  maturity of September 1, 2012. 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
redemption  of  previously  issued tax exempt bonds  issued by the  Authority in
September  1999  and to  refinance  equipment  financing,  as  well  as  provide
approximately $1,000,000 of capital for the purchase of additional equipment for
the  manufacture  and  development at the Company's  facility of  pharmaceutical
products and the  maintenance  of a $415,500  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, 2005. Pursuant to the
terms of the  related  bond  indenture  agreement,  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, 2005,  the Company was in compliance
with the bond covenants.

         On July 8, 2004, Elite Labs entered into a loan and financing agreement
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  were held by the lender and were  applied to the  principal
balance  when due.  The loan was  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 vested immediately,  to purchase 50,000 shares of
the Company's  Common Stock at $4.20 per share. A charge of $41,252 for the cost
of these  warrants  was  reflected in the six months  ended  September  30,2004.
Proceeds  from the  refinancing  of the Company's EDA Bonds were used to pay-off
this loan.

         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.

         As of September 30, 2005, the Company's  principal  source of liquidity
was approximately $1,856,262 of cash and cash equivalents.  The Company also may
have access to funds  through  the  exercise of  outstanding  stock  options and
warrants in addition to funds that may be generated  from the potential  sale of
New Jersey tax losses.  There can be no assurance that proceeds from the sale of
tax losses and from the  exercise,  if any, of  outstanding  warrants or options
will be material.

ITEM 3.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company had no investments in marketable securities as of September
30, 2005 or assets and  liabilities  which are  denominated  in a currency other
than U.S. dollars or involve commodity price risks.

ITEM 4.         CONTROLS AND PROCEDURES

         As of the  end of the  period  covered  by  this  report,  based  on an
evaluation of the Company's  disclosure  controls and  procedures (as defined in
Rules  13a-15(e) and 15d-15(e) under the Securities  Exchange Act of 1934),  the
Chief  Executive and Chief Financial  Officer of the Company  concluded that the
Company's  disclosure  controls  and  procedures  are  effective  to ensure that
information  required to be disclosed by the Company in its Exchange Act reports
is recorded,  processed,  summarized  and reported  within the  applicable  time
periods specified by the SEC's rules and forms.

         There was no change in the Company's  internal  controls over financial
reporting that occurred  during the fiscal quarter ended September 30, 2005 that
materially  affected or is reasonably  likely to materially affect the Company's
internal controls over financial reporting.

PART II.        OTHER INFORMATION

ITEM 6.         EXHIBITS AND REPORTS ON FORM 8-K

         (a)    Exhibits:

         10.1   Product Development,  Manufacturing and Distribution  Agreement,
                dated as of March 30, 2005, by and among Harris  Pharmaceutical,
                Inc.,  Tish  Technologies,  LLC and Elite Labs,  incorporated by
                reference to exhibit 10.1 to the Form 8-K filed April 5, 2005 as
                amended by Form 8-K/A

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<PAGE>

                filed July 20,  2005,  as amended by Form 8-K/A filed August 23,
                2005, as amended by Form 8-K/A filed September 27, 2005.*

         10.2   Product Development and Commercialization Agreement, dated as of
                June 21, 2005, by and among  Intellepharmaceutics  Corp.,  Elite
                Labs and the Company,  incorporate  by reference to exhibit 10.1
                to the Form 8-K filed  June 27,  2005,  as amended by Form 8-K/A
                filed September 7, 2005.*

         10.3   Product Development and License Agreement,  dated as of June 22,
                2005,  between  Pliva,  Inc.  and Elite  Labs,  incorporated  by
                reference  to exhibit  10.1 to the Form 8-K filed June 28, 2005,
                as amended by Form 8-K/A filed September 6, 2005.*

         10.4   Loan Agreement,  by and between New Jersey Economic  Development
                Authority  and  the  Company,  dated  as  of  August  15,  2005,
                incorporated  by reference to exhibit 10.1 to the Form 8-K filed
                September 6, 2005.

         10.5   Copy of Series A Note, incorporated by reference to exhibit 10.2
                to the Form 8-K filed September 6, 2005.

         10.6   Copy of Series B Note, incorporated by reference to exhibit 10.3
                to the Form 8-K filed September 6, 2005.

         10.7   Mortgage  from  Company  to  New  Jersey  Economic   Development
                Authority, incorporated by reference to exhibit 10.4 to the Form
                8-K filed September 6, 2005.

         10.8   Indenture between New Jersey Economic Development  Authority and
                the Bank of New York as  Trustee,  dated as of August 15,  2005,
                incorporated  by reference to exhibit 10.5 to the Form 8-K filed
                September 6, 2005.

         10.9   Amended and Restated Employment Agreement, dated as of September
                2,  2005,   by  and  between  the  Company  and  Bernard   Berk,
                incorporated  by reference to exhibit 10.1 to the Form 8-K filed
                September 9, 2005.

         10.10  Amendment,  dated as of  September  2, 2005,  by and between the
                Company and Bernard Berk, to the Stock Option  Agreement,  dated
                as of July 23, 2003,  incorporated  by reference to exhibit 10.2
                to the Form 8-K filed September 9, 2005.

         10.11  Stock Option  Agreement,  dated as of September 2, 2005,  by and
                between the Company and Bernard Berk,  incorporated by reference
                to exhibit 10.3 to the Form 8-K filed September 9, 2005.

         10.12  Stock Option  Agreement,  dated as of September 2, 2005,  by and
                between the Company and Bernard Berk,  incorporated by reference
                to exhibit 10.4 to the Form 8-K filed September 9, 2005.

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

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

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

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

*  The  Company  has  requested  confidential  treatment  with  respect  to  the
referenced  exhibits.  In the event that the Securities and Exchange  Commission
should  deny such  request in whole or in part,  such  exhibit  or the  relevant
portions  thereof shall be filed by amendment to applicable  Current  Reports on
Form 8K.

         (b)    Reports on Form 8-K.

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<PAGE>

                Since June 30, 2005  Company has filed  current  reports on Form
                8-K with the Securities and Exchange Commission:

                Form 8-K/A filed  September  27, 2005  related to Form 8-K filed
                April 5,  2005,  Form 8-K/A  filed July 20,  2005 and Form 8-K/A
                filed August 23, 2005, relating to items 1.01 and 9.01.

                Form 8-K filed  September 6, 2005 and Form 8-K/A filed September
                7, 2005 relating to items 2.03 and 9.01.

                Form 8-K/A  filed  September  6, 2005  related to Form 8-K filed
                June 28, 2005 relating to items 1.01 and 9.01.

                Form 8-K/A  filed  September  7, 2005  related to Form 8-K filed
                June 27, 2005 relating to items 1.01 and 9.01.

                Form 8-K filed  September 9, 2005  relating to items 1.01,  3.02
                and 9.01.

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<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, 2005           By: /s/ Bernard Berk

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


Date:   November 11, 2005           By: /s/ Mark I. Gittelman

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

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