EXHIBIT 10.3
SAGGI CAPITAL CORP.

545 Madison Avenue New York New York  10022

CONSULTING AGREEMENT

         THE CONSULTING  AGREEMENT  ("Agreement") is made this 1st day of August
1997,  by and between Saggi Capital Corp.  (the  "Consultant")  whose  principal
place of  business  is 545  Madison  Avenue,  New  York,  New  York,  and  Elite
Laboratories,   Inc.  (Elite),  a  Delaware  corporation  (the  "Client")  whose
principal place of business is 230 W. Passaic Street, Maywood, New Jersey 07607.

W I T N E S S E T H

WHEREAS,  the Consultant is willing and capable of providing various  consulting
and investor  relation  services  for and on behalf of the Client in  connection
with the Client's  interaction with broker dealers,  shareholders and members of
the general public.

WHEREAS,  THE Client wishes to retain the services of the  Consultant to consult
on strategic alliances for the Client pursuant to the terms hereof.

NOW,  THEREFORE,  in consideration of the mutual covenants and agreements herein
contained,  and for other  good and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby acknowledged, it is agreed as follows:

         1. Engagement.  The client hereby retains the Consultant subject to the
provisions of paragraph 4, and Consultant hereby accepts the engagement,  act as
an investor  relations and consultant to the Client.  It is the intention of the
parties to this Agreement that the Consultant will gather all publicly available
information  on the Client and confer with  officers and directors of the Client
in an effort to consolidate the information  obtained into summary for telephonc
dissemination to interested  parties.  The Consultant will then disseminate such
information  about the Client to individuals and registered  representatives  of
broker-dealers  who the  Consultant in its reaosnable  discretion,  believes can
most  effectively  disseminate  such  infomration  to  the  general  pubic.  The
Conulstant will nto provide any investment advice or  recommmendations to any of
its contacts bout the client; rather the Consultant will focus on telephonic and
person-to-person  meetings with  individuals  targeted by the Client for contact
and  familiarization  with information which the Consultant has collected and is
otherwise available to the general public about the Client.

However, the Consultant will be diligent and use its best efforts to perform its
obligations under this Agreement. It is agreed that the consultant will strictly
deserve [sic] all securities regulations and laws, and all other laws.

The  Consultant  hereby agrees to devote such time as is necessary to the Client
to fulfill the obligations set forth in this Paragraph 1. It is expressly agreed
between the parties that the Consultant shall have no fixed or minimum number of
hours  within  which to perform  its  obligations  under this  Agreement.  It is
understood  that the services  rendered under this Agreement will be provided by
Sharon Will or a person directly under her supervision.

         2. Proprietary Information.  In connection with their services pursuant
to this Agreement,  Consultant will obtain certain  information  from the Client
concerning the Client's business,  operations and certain  inventions,  know-how
and technology, which the Client considers proprietary. The Consultant agrees to
treat any such information (herein collectively referred to as the "Confidential
Information")   in  accordance   with  the   provisions  of  this  paragraph  2.
Confidential Information does not include information which (i) is independently
obtained from members of the public to whom the  information  was made available
other  than as a result of a  disclosure  by the  Consultant  or its  directors,
officers, employees, agents or advisors, or (ii) was or becomes available to the
Consultant  on a  non-confidential  basis from a source other than the Client or
its directors,  officers, employees, agent or advisors provided that such source
is not known to the Consultant to be bound by a  confidentiality  agreement with
the Client.

         The Consultant hereby agrees that the Confidential  Information will be
kept confidential by the Consultant,  provided,  however, that any disclosure of
such  Confidential  Information  may be made to which  the  Client  consents  in
writing.

         Upon expiration or termination of this Agreement,  the Consultant shall
promptly  redeliver  to the Client any and all written  material  containing  or
reflecting any of the  Confidential  Information and will not retain any copies,
extracts or other  reproductions  in whole or in part of such written  material.
All documents,  memoranda,  notes and other writings  whatsoever prepared by the
Consultant or its advisor based on the information contained in the Confidential
Information  shall be destroyed,  and such destruction  shall,  upon demand,  be
certified in writing to the Client by an  authorized  officer  supervising  such
destruction.  It is agreed that all  information  and materials  produced by the
Client shall be the sole and exclusive property of the Client. All copyright and
title of said work shall be the  property of the  Client,  free and clear of all
claims thereto by the  Consultant,  and the consultant  shall retain no claim of
authorship therein.

         The  provisions  of this  paragraph  2  shall  survive  expiration  and
termination of this Agreement.

         The Consultant  agrees to perform the work hereunder  diligently and in
the highest  professional  manner and shall provide all  necessary  personnel to
complete the work in the time and manner reasonably set forth by the Client.

         3.     Remuneration.  In consideration for the  services to be provide
to the Client by the Consultant  under this Agreement, the Client hereby agrees
to the  payment of remuneration to the Consultant as follows:

(a) The Client hereby agrees to pay the  Consultant an annual  consulting fee in
the amount between $42,000 and $60,000, payable in equal monthly installments of
between  $3,600 and $5,000 per month for a period of thirty six (36) months from
the date of this Agreement.  Such payment shall be due on the first (1st) day of
each and every month hereafter.

         (b)  Upon  execution  of  this  Agreement,  or as  soon  thereafter  as
possible,  the Client shall cause to be issued to the Consultant pursuant to the
authority  granted  from the  Client's  Board of  Directors  150,000  to 200,000
Warrants  exercisable  for a period of 5 years at $3.00 per share of its  common
stock,  which will be identical  to the  Warrants  purchased by investors in any
subsequent  offering.  The share certificate to be issued shall be issued in the
name  which the  Consultant  provides  to the  Client in the  Consultant's  sole
discretion.  The shares  underlying  the warrants shall be free and clear of all
liens and encumbrances  except it shall bear a legend containing the restrictive
language of Rule 144 of the Securities Act of 1933, as amended.

         (c) The Client  agrees to  reimburse  the  consultant  for all  travel,
entertainment,  mailing,  printing, postage and all other out-of-pocket expenses
directly related to the services to be provided.  Expenses in excess of $100 per
occasion shall be preapproved by the Client. Upon termination of this Agreement,
any continuing  obligation under this paragraph shall cease; however any accrued
but unpaid expenses due to the Consultant under this  subparagraph  shall be due
and payable within ten (10) days from such date.

         4. Term.  It is agreed  between the parties that this  Agreement  shall
expire  on the last day of the  Thirty  Six (36) full  month  from the date here
unless terminated as provided for in paragraph 3(a). The Consultant's obligation
to provide services hereunder shall commence on the date on which the Consultant
receives from the Client the first payment compensation under paragraph 3(a) and
the  Client  has  caused to be issued  the  option  certificate  referred  to in
paragraph 3(b) hereof.

         Notwithstanding  the  foregoing,  this  Agreement  may be terminated by
Client upon a material  breach by  Consultant,  or if  Consultant  or any of its
directors, officers, employees or consultants become the subject of any criminal
prosecution  or any  enforcement  proceeding  by  the  Securities  and  Exchange
Commission or any other state or federal agency.

         5.       Miscellaneous Provisions.

                  (a) This Agreement and the duties and responsibilities creased
         hereby may not be assigned,  transferred or delegated by the Consultant
         without the prior written consent of the Client.

                  (b) This Agreement  shall be  interpreted  and governed by the
         laws of the  State of New  York;  all  clauses  of this  Agreement  are
         distinct and severable and if any clause shall be held illegal or void,
         it  shall  not  affect  the  validity  or  legality  of  the  remaining
         provisions of this Agreement.

                  (c) No  waiver  of any  breach of any  condition  herein  will
         constitute  a waiver of any  subsequent  reach of the same or any other
         condition.

                  (d) The parties  hereto agree to execute such other  documents
         as are  necessary  to  carry  out the  intent  and the  spirit  of this
         Agreement.

                  (e)  Subject  to the other  provisions  hereof,  the terms and
         conditions  of this  Agreement  shall extend to and be binding upon and
         shall inure to the benefit of the successors and assigns of the Parties
         hereto.

         6.  Notices.  All notices,  demands or requests  required or authorized
hereunder  shall  be  deemed  sufficiently  given  if in  writing  and  sent  by
registered or certified mail, return receipt  requested and postage prepaid,  or
by telex, telegram or cable to:

                  Client:           ELITE LABORATORIES, INC.

                                    230 Passaic Street
                                    Maywood, New Jersey  07607

                                    and if to Consultant:

                                    SAGGI CAPITAL CORP.

                                    545 Madison Avenue
                                    New York, NY  10022
                                    Attn:  Sharon Will

         7.  Status of  Parties.  For the  purpose  of this  Agreement,  and the
services, duties and responsibilities created hereunder,  nothing other than the
exercise of warrants  provided for in Paragraph 3 contained  herein shall create
an equity or ownership  interest of one party in the other. It is understood and
agreed between the parties that the  Consultant is an independent  contractor of
the Client for the purposes set forth herein.

         8. Entire Agreement.  This instrument  contains the entire agreement of
the parties  relating to the subject  matter  hereof.  The parties  have made no
agreements,  representations or warranties relating to the subject matter hereof
which are not set forth herein. No modification of this Agreement shall be valid
unless made in writing and signed by the parties hereto.

         9.  Notwithstanding the foregoing,  this Agreement may be terminated by
client upon a material  breach by  consultant,  or if  consultant  or any of its
directors  or officers  become the subject of any  criminal  prosecution  or any
enforcement  proceeding by the Securities  and Exchange  Commission or any other
state or federal agency.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement on
the day and year first above written.

                                            CONSULTANT:

                                            SAGGI CAPITAL CORP.

                                            By:  /s/ Sharon Will

                                            CLIENT:

                                            ELITE LABORATORIES, INC.

                                            By: /s/