<PAGE>

                United States Securities and Exchange Commission
                             Washington, D.C. 20549


                                   FORM 10-Q/A

                                 Amendment No. 1

       (Mark One)

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

                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2004
                                                 -------------
                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

                         SECURITIES EXCHANGE ACT OF 1934

          For the transition period from ____________ to _____________

                         Commission file number 0-27354
                                                -------
                            Impax Laboratories, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                                    65-0403311
----------------------------------                  -------------------
 (State or other jurisdiction of                     (I.R.S. Employer
 incorporation or organization)                     Identification No.)

  30831 Huntwood Avenue - Hayward, California             94544
----------------------------------------------         ------------
   (Address of principal executive offices)             (Zip code)

        Registrant's telephone number including area code (510) 476-2000
                                                          --------------

         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
                                -----        -----

        Indicate by check mark whether registrant is an accelerated filer
                (as defined in Rule 12b-2 of the Act.) Yes   X   No
                                                           -----    -----


     The number of shares outstanding of the registrant's common stock as of

July 30, 2004 was approximately 58,464,926.
------------                    ----------

<PAGE>


                                EXPLANATORY NOTE


This amendment is being filed to reflect the restatement of the Company's
condensed financial statements, as discussed in Note 14 thereto, and other
information related to such restated financial statements. Except for Items 1, 2
and 4 of Part I, no other information included in the original report on Form
1O-Q is amended by this Form 10-Q/A.

Items not being amended are presented for the convenience of the reader only.
This report continues to be presented as of the date of the original Quarterly
Report on Form 10-Q and the Company has not updated the disclosure in this
report to a later date. Therefore, this amendment should be read together with
other documents that the Company has filed with the Securities and Exchange
Commission subsequent to the filing of the original Quarterly Report on Form
10-Q. Information in such reports and documents updates and supersedes certain
information contained in this amendment.




<PAGE>


                            IMPAX LABORATORIES, INC.

                              INDEX TO FORM 10-Q/A

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004



                          PART I. FINANCIAL INFORMATION

<TABLE>
<CAPTION>

                                                                                                                         PAGE

<S>          <C>                                                                                                          <C>
Item 1.  Financial Statements:

         Condensed Balance Sheets as of June 30, 2004 (as restated) and December 31, 2003 (unaudited) .............         1

         Condensed Statements of Income for the Three Months and Six Months
         Ended June 30, 2004 (as restated) and 2003 (unaudited) ...................................................         2

         Condensed Statements of Cash Flows for the Six Months Ended June 30, 2004 (as restated)
         and 2003 (unaudited) .....................................................................................         3

         Notes to Financial Statements (unaudited) ................................................................         4

Item 2.  Management's Discussions and Analysis of Financial Condition and Results of Operations....................        13

Item 3.  Quantitative and Qualitative Disclosures About Market Risk................................................        23

Item 4.  Controls and Procedures...................................................................................        24


                    PART II. OTHER INFORMATION AND SIGNATURES


Item 1.  Legal Proceedings.........................................................................................        25

Item 2.  Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.........................        30

Item 4.  Submission of Matters to a Vote of Security Holders.......................................................        30

Item 6.  Exhibits and Reports on Form 8-K..........................................................................        31

Signatures     ....................................................................................................        32

Certifications ....................................................................................................        33

</TABLE>



                                       i

<PAGE>



PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                            IMPAX LABORATORIES, INC.
                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>

                                                                                                      JUNE 30,          DECEMBER 31,
                                                                                                        2004                2003
                                                                                                      --------          -----------
                                                                                                   (AS RESTATED -
ASSETS                                                                                              SEE NOTE 14)

<S>                                                                                                     <C>                 <C>
Current assets:
                  Cash and cash equivalents                                                        $    53,312          $   15,505
                  Short term investments                                                                45,244                  --
                  Accounts receivable, net                                                              19,821               9,885
                  Inventory                                                                             37,102              28,479
                  Prepaid expenses and other assets                                                      2,692               1,427
                                                                                                   -----------          ----------
                                       Total current assets                                            158,171              55,296
Restricted cash                                                                                             --              10,000
Property, plant and equipment, net                                                                      42,511              38,132
Investments and other assets                                                                             3,844               1,325
Goodwill, net                                                                                           27,574              27,574
Intangibles, net                                                                                           187                 379
                                                                                                   -----------          ----------
                                       Total assets                                                $   232,287          $  132,706
                                                                                                   ===========          ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
                  Current portion of long-term debt                                                $       915          $    1,068
                  Accounts payable                                                                      22,312              22,783
                  Revolving line of credit                                                               5,000               7,642
                  Accrued expenses and deferred revenues                                                13,283              10,872
                                                                                                   -----------          ----------
                                       Total current liabilities                                        41,510              42,365
Convertible senior subordinated debentures                                                              95,000                  --
Refundable deposit from Teva                                                                                --               5,000
Long term debt                                                                                           7,507               8,854
Deferred revenues and other liabilities                                                                  2,768               2,879
                                                                                                   -----------          ----------
                                       Total liabilities                                               146,785              59,098
                                                                                                   -----------          ----------

Commitments and Contingencies
Mandatorily  redeemable convertible Preferred Stock: Series 2 mandatory
             redeemable convertible Preferred Stock, $0.01 par value 0 shares
             outstanding at June 30, 2004, and 75,000 shares outstanding at
             December 31, 2003, redeemable at $100 per share                                                --               7,500

Stockholders' equity:
         Common stock, $0.01 par value, 90,000,000 shares authorized and
             58,463,237 and 55,307,136 shares issued and outstanding
             at June 30, 2004, and December 31, 2003, respectively                                         584                 553
         Additional paid-in capital                                                                    183,930             170,104
         Accumulated deficit                                                                           (99,012)           (104,549)
                                                                                                   -----------          ----------
                                       Total stockholders' equity                                       85,502              66,108
                                                                                                   -----------          ----------
                                       Total liabilities and stockholders' equity                  $   232,287          $  132,706
                                                                                                   ===========          ==========
</TABLE>

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


                                       1

<PAGE>


                            IMPAX LABORATORIES, INC.
                         CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)
             (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                              Three Months Ended                         Six Months Ended
                                                                   June 30,                                  June 30,
                                                          ------------------------------         --------------------------------
                                                              2004               2003                 2004               2003
                                                          ------------        ----------         ------------          ----------
                                                          (As restated -                         (As restated -
                                                           see Note 14)                           see Note 14)

<S>                                                      <C>                 <C>                   <C>                 <C>
Net sales                                                $    30,023         $    13,460           $   61,537          $  24,526

Revenue from reversal of
   refundable deposit from Teva                                   --                  --                2,500                 --

Other revenues                                                   541                 607                1,072                966
                                                         -----------          ----------           ----------          ---------
Total revenues                                                30,564              14,067               65,109             25,492
                                                         -----------          ----------           ----------          ---------
Cost of sales                                                 18,537               9,321               37,087             17,468
                                                         -----------          ----------           ----------          ---------

Gross margin                                                  12,027               4,746               28,022              8,024

Research and development                                       5,439               3,560               10,323              7,107

Reimbursements from Teva                                         (78)                (22)                 (89)              (154)
                                                         -----------          ----------           ----------          ---------

Research and development, net                                  5,361               3,538               10,234              6,953

Patent litigation expenses                                     2,228                 787                3,848                995

Selling expenses                                                 711                 438                1,437              1,006

General and administrative expenses                            3,117               2,083                6,468              4,205

Other operating income (expense), net                              4                  10                   11                 21
                                                         -----------          ----------           ----------          ---------

Net income (loss) from operations                                614              (2,090)               6,046             (5,114)

Interest income                                                  271                  70                  327                112

Interest expense                                                (564)               (264)                (836)              (495)
                                                         -----------          ----------           ----------          ---------

Net income (loss) before provision for income taxes      $       321        $     (2,284)             $ 5,537    $        (5,497)
                                                         -----------          ----------           ----------          ---------

Provision for income taxes                                        --                  --                   --                 --
                                                         -----------          ----------           ----------          ---------

Net income (loss)                                        $       321         $    (2,284)           $   5,537         $   (5,497)
                                                         -----------          ----------           ----------          ---------

Earnings per share:
         Basic                                           $      0.01         $     (0.05)           $    0.10         $    (0.11)
                                                         -----------          ----------           ----------          ---------
         Diluted                                         $      0.01         $     (0.05)           $    0.09         $    (0.11)
                                                         -----------          ----------           ----------          ---------

Weighted average common shares outstanding:
         Basic                                            58,152,703          50,608,445           57,543,768         49,250,049
                                                         ===========         ===========           ==========         ==========
         Diluted                                          62,417,454          50,608,445           61,808,519         49,250,049
                                                         ===========         ===========           ==========         ==========
</TABLE>

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


                                       2
<PAGE>


                            IMPAX LABORATORIES, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>

                                                                                                     SIX MONTHS ENDED
                                                                                                         JUNE 30,
                                                                                          ---------------------------------------
                                                                                               2004                     2003
                                                                                          ------------               ------------
                                                                                          (AS RESTATED -
                                                                                           SEE NOTE 14)

<S>                                                                                          <C>                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income / (loss)                                                                      $  5,537                 $ (5,497)
    Adjustments to reconcile net income (loss) to net cash used by operating activities:
        Depreciation and amortization                                                           2,082                    1,782
        Reversal of refundable deposit from Teva                                               (2,500)                      --
        Non-cash compensation charge (options)                                                     87                      429
        Change in assets and liabilities:
             Accounts receivable                                                               (9,936)                  (2,060)
             Inventory                                                                         (8,623)                  (4,564)
             Prepaid expenses and other assets                                                   (172)                    (127)
             Accounts payable                                                                    (471)                   2,853
             Other liabilities                                                                  2,300                     (981)
                                                                                             --------                 --------
                Net cash provided by (used in) operating activities                           (11,696)                  (8,165)
                                                                                             --------                 --------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of short term investments                                                        (45,244)                 (13,920)
    Purchases of property and equipment                                                        (6,269)                  (1,125)
                                                                                             --------                 --------
                Net cash (used in) provided by investing activities                           (51,513)                 (15,045)
                                                                                             --------                 --------
CASH FLOWS FROM  FINANCING ACTIVITIES:
    Revolving line of credit borrowings (repayments)                                           (2,642)                   1,779
    Additions to long-term debt                                                                    --                      896
    Repayment of long-term debt                                                                (1,501)                    (412)
    Proceeds from convertible debentures                                                       95,000                       --
    Capitalized Financing Costs                                                                (3,612)                      --
    Proceeds from sale of common stock                                                             --                   23,324
    Reversal of Restricted Cash                                                                10,000                       --
    Proceeds from issuance of common stock (upon exercise of
        stock options and warrants)                                                             3,771                      277
                                                                                             --------                 --------
    Net cash provided by financing activities                                                 101,016                   25,864
                                                                                             --------                 --------
    Net increase in cash and cash equivalents                                                  37,807                    2,654
                                                                                             --------                 --------
    Cash and cash equivalents, beginning of the period                                       $ 15,505                 $ 10,219
                                                                                             ========                 ========
    Cash and cash equivalents, end of the quarter                                            $ 53,312                 $ 12,873
                                                                                             ========                 ========
    Cash paid for interest                                                                   $    266                 $    497
                                                                                             ========                 ========
    Cash paid for income taxes                                                               $     --                 $     --
                                                                                             ========                 ========

</TABLE>

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

                                       3

Supplemental disclosure of non-cash financing activities:
In January 2004, the Company issued 160,751 shares of our common stock to
Teva to satisfy the remaining $2.5 million refundable deposit to Teva. Also, in
January 2004, the holders of the Series 2 Preferred Stock converted their
entire 75,000 preferred shares into 1,500,000 shares of common stock.
<PAGE>


                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                SIX MONTHS ENDED
                         JUNE 30, 2004 AND JUNE 30, 2003
                                   (UNAUDITED)

NOTE 1. These condensed financial statements included herein have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted pursuant
to such rules and regulations; however, the Company believes that the
disclosures are adequate to make the information presented not misleading. These
condensed financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's latest Annual Report
on Form 10-K. The results of operations for the three and six months ended June
30, 2004 are not necessarily indicative of the results of operations expected
for the year ending December 31, 2004.

Impax Laboratories, Inc. ("IMPAX," "we," "us," or "the Company") focuses on the
development, manufacturing, and marketing of specialty pharmaceutical products
utilizing its own formulation expertise and drug delivery technologies. As of
June 30, 2004, the Company is marketing thirty-three generic pharmaceuticals,
which represent dosage variations of fourteen different pharmaceutical
compounds, and has fourteen applications under review with the Food and Drug
Administration (FDA), including five tentatively approved. Eleven of these
pending filings were filed under Paragraph IV of the Hatch-Waxman Amendments.
The Company has approximately twenty-four other products in various stages of
development for which applications have not yet been filed.

Except for the six months ended June 30, 2004, we have experienced operating
losses and our future profitability continues to be uncertain. We have also
experienced negative cash flow from operations. As of June 30, 2004, our
accumulated deficit was $99,012,000 and we had outstanding indebtedness in an
aggregate principal amount of $108,422,000. To remain operational, we must,
among other things:

      o     obtain FDA approvals for our products;

      o     prevail in patent infringement litigation in which we are involved;

      o     successfully launch our new products; and

      o     comply with the many complex governmental regulations that deal with
            virtually every aspect of our business activities.

We expect to incur significant operating expenses, particularly for research and
development, for the foreseeable future in order to execute our business plan.
We, therefore, anticipate that such operating expenses, as well as planned
capital expenditures for the next twelve months, of $18 to $22 million,
primarily in plant capacity expansion, will constitute a material use of our
cash resources.

To date, the Company has primarily funded its research and development and other
operating activities through equity, debt financings and strategic alliances.

CRITICAL ACCOUNTING POLICY RELATED TO REVENUE RECOGNITION

The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
("SAB") 101 issued by the SEC in December 1999. We recognize revenue from the
sale of products when the shipment of products is received and accepted by the
customer. Provisions for estimated discounts, rebates, chargebacks, returns and
other adjustments are provided for in the period the related sales are recorded.
In December 2003, the SAB 104 was issued by the SEC. This bulletin clarifies
portions of Topic 13 of the Staff Accounting Bulletin to be consistent with
current accounting and auditing guidance and SEC rules and regulations, and
revises accounting guidance contained in SAB101 related to multiple element
revenue arrangements of Emerging Issues Task Force (EITF) No. 00-21 superseded
as a result of the issuance.

Emerging Issues Task Force (EITF) No. 00-21 supplemented SAB 101 for accounting
for multiple element arrangements. The Company has entered into several
strategic alliances that involve the delivery of multiple products and services
over an extended period of time. In multiple element arrangements, the Company
must determine whether any or all of the elements of the arrangement can be
separated from one another. If separation is possible, revenue is recognized for
each deliverable when the revenue recognition criteria for the specific
deliverable is achieved. If separation is not possible, revenue recognition is
required to be spread over an extended period.

                                       4
<PAGE>

Under EITF No. 00-21, in an arrangement with multiple elements, the delivered
item should be considered a separate unit of accounting if all of the following
criteria are met:

      1)    the delivered item has value to the customer on a standalone basis;
      2)    there is objective and reliable evidence of the fair value of the
            undelivered item; and
      3)    if the arrangement included a general right of return, or whether
            delivery or performance of the undelivered item is considered
            probable.

The Company reviews all of the terms of its strategic alliances and follows the
guidance from SAB104 and EITF No. 00-21 for multiple element arrangements.
Upfront and milestone payments from these strategic alliances are deferred and
recognized over the life of the agreements as the Company fulfills its
contractual obligation to manufacture and supplies products during this period.
In addition, in some agreements, the Company receives and records royalty
revenue based on a percentage of the strategic partner's total sales to their
customers of the products supplied by IMPAX.

In June 2001, the Company entered into a Strategic Alliance Agreement with a
subsidiary of Teva for twelve controlled-release generic pharmaceutical
products. The agreement granted Teva exclusive U.S. prescription marketing
rights for these products for a period of ten years from the date of Teva's
first sale of the products. Under the terms of the agreement, Teva has sole and
exclusive right to determine all terms and conditions of sale to its customers,
including pricing, discounts, allowances, price adjustments, returns and
rebates.

Revenues from product sales for these products under our strategic alliance are
recognized at the time title and risk of loss transfers to Teva's customers.
During the six months ended June 30, 2004, the Company commenced shipping its
Bupropion Hydrochloride 100 mg and 150 mg Controlled Release Tablets. Teva ships
the Bupropion products to its customers and reports the results on a monthly
basis. Teva provides to IMPAX a financial report detailing its gross sales less
applicable chargebacks, rebates and other credits to arrive at net sales, cost
of sales information and gross margins for the Bupropion products. The Company
is endeavoring to take steps under the Strategic Alliance Agreement to ensure
that all such adjustments granted by its strategic partner in the future are
reported to the Company on a timely basis. The information on the financial
report is used by IMPAX to record its monthly revenue for the Bupropion
products. These steps include, but are not limited to, regular discussions with
Teva management regarding their monthly financial reports to IMPAX on our
products marketed by Teva via monthly teleconferences and quarterly meetings.
These discussions will cover all the areas of revenue recognition for these
products, including but not limited to, sales credits, product returns and
internal controls over Teva's financial reporting to IMPAX. Our procedures will
include a review of applicable documentation for IMPAX revenue sharing. The
Audit Committee of the Company's Board of Directors may take additional steps as
deemed necessary. Under the contract terms, the Company has the option to
perform an annual audit with our strategic partner. We began estimating returns
for prescription products marketed by our strategic partners, such as Teva,
called "Rx Partners," based on our internal returns analysis and historical
industry statistics. The amount of revenue that IMPAX earns is based on
reimbursement of manufacturing costs and or a fixed margin percentage.

Under the July 2003 Exclusivity Transfer Agreement with Andrx and Teva
pertaining to the Bupropion Hydrochloride products, Andrx is entitled to certain
payments for the sales of the 150 mg strength for a 180-day period from the
product launch date. These payments are made directly by Teva to Andrx.

EARNINGS PER SHARE (EPS)

Basic earnings per share is computed by dividing net income by the weighted
average common shares outstanding. Diluted earnings per share is based on the
treasury stock method and is computed by dividing net income by the weighted
average number of common shares and weighted average dilutive potential common
shares outstanding, assuming the exercise of all in-the-money stock options. A
reconciliation of the numerators and denominators of basic and diluted earnings
per share consisted of the following (in thousands, except per share amounts):
<TABLE>
<CAPTION>

                                                             Three Months Ended                         Six Months Ended
                                                                  June 30,                                  June 30,
                                                     ------------------------------------        -------------------------------
                                                         2004                   2003                 2004               2003
                                                     ------------            ------------        -------------      ------------
<S>                                                  <C>                      <C>                  <C>               <C>
Numerator:
     Net income(loss)                                $       321              $    (2,284)         $     5,537       $    (5,497)
                                                     ===========              ===========          ===========       ===========
Denominator:
     Basic weighted average common shares
        outstanding                                   58,152,703               50,608,445           57,543,768        49,250,049
                                                     ===========              ===========          ===========       ===========
     Effect of dilutive options and warrants           4,264,751                       --            4,264,751                --
                                                     -----------              -----------          -----------       -----------
     Fully diluted weighted average common shares
        outstanding                                   62,417,454               50,608,445           61,808,519        49,250,049
                                                     ===========              ===========          ===========       ===========
Basic earnings per share                             $      0.01              $     (0.05)         $      0.10       $     (0.11)
                                                     ===========              ===========          ===========       ===========
Fully diluted earnings per share                     $      0.01              $     (0.05)         $      0.09       $     (0.11)
                                                     ===========              ===========          ===========       ===========
</TABLE>

Included in the computation of fully diluted earnings per share are outstanding
stock options and warrants with an exercise price less than the average market
price of the common shares for the period.

                                       5
<PAGE>

Excluded from the computation of diluted earnings per share are outstanding
common stock options with an exercise price greater than the average market
price of the common shares for the period reported. For the three month period
ended June 30, 2004, excluded from the computation of diluted earnings per share
were stock options to purchase 969,389 common shares. For the six month period
ended June 30, 2003, excluded from the computation of diluted earnings per share
were stock options to purchase 969,389 common shares.


The effect of approximately 3.4 million shares related to the assumed conversion
of the $95 million convertible senior subordinated debentures has been excluded
from the computation of diluted earnings per share for the three and six months
ended June 30, 2004 as none of the conditions that would permit conversion have
been satisfied.

STOCK-BASED EMPLOYEE COMPENSATION

The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees." Compensation cost for stock options,
if any, is measured as the excess of the quoted market price of the stock at the
date of grant over the amount an employee must pay to acquire the stock. The
Company has adopted the disclosure only provisions of SFAS No. 123, "Accounting
for Stock-Based Compensation" and SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - An Amendment to FASB Statement No.
123."

Had compensation cost for the Company's Plans been determined based on the fair
value at the grant dates for the awards under a method prescribed by SFAS No.
123, the Company's income and earnings per share would have been decreased to
the pro forma amounts indicated below (in thousands, except per share amounts):
<TABLE>
<CAPTION>

                                                             Three Months Ended                         Six Months Ended
                                                                  June 30,                                   June 30,
                                                      ------------------------------             -----------------------------
                                                         2004                2003                  2004                 2003
                                                      --------             ---------             ---------            --------
<S>                                                   <C>                  <C>                   <C>                  <C>
Net income (loss), as reported                        $   321              $(2,284)              $  5,537             $ (5,497)
Add: Stock-based employee compensation
included in reported net income,
net of related tax effects                                 87                   --                     87                   --

Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects                             (1,990)                (946)                (2,999)              (1,808)
                                                      -------              -------               --------             --------
Pro forma net income (loss)                           $(1,582)             $(3,230)              $  2,625             $ (7,305)
                                                      =======              =======               ========             ========

Earnings per share:
         Basic - as reported                          $  0.01              $ (0.05)              $   0.10             $ (0.11)
                                                      =======              =======               ========             ========
         Basic - pro forma                            $ (0.03)             $ (0.06)              $   0.05             $ (0.15)
                                                      =======              =======               ========             ========

         Diluted - as reported                        $  0.01              $ (0.05)              $   0.09             $  (0.11)
                                                      =======              =======               ========             ========
         Diluted - pro forma                          $ (0.03)             $ (0.06)              $   0.04             $  (0.15)
                                                      =======              =======               ========             ========
</TABLE>

The Company calculated the fair value of each option grant on the date of the
grant using Black-Scholes pricing method with the following assumptions: for the
six months ended June 30, 2004 and 2003, the dividend yield was 0% and 0%; the
weighted average expected option term was five years; risk-free interest rate
was 3.5% and 2.8%; the stock volatility for the six months ended June 30, 2004
and 2003 was 78% and 69%, respectively. The weighted average fair value of
options for June 30, 2004 and 2003 was $14.17 and $2.87, respectively.

The Company reports both basic earnings per share, which is based on the
weighted-average number of common shares outstanding, and diluted earnings per
share, which is based on the weighted-average number of common shares
outstanding and all dilutive potential common shares outstanding.



                                       6
<PAGE>

NOTE 2.   Convertible Senior Subordinated Debentures

On April 5, 2004, the Company issued and sold $95.0 million in aggregate
principal amount of its 1.250% convertible senior subordinated debentures due
2024. The debentures were sold by the Company to Citigroup Global Markets Inc.,
Wachovia Capital Markets, LLC and First Albany Capital Inc., as initial
purchasers, in a private placement exempt from registration under the Securities
Act of 1933, as amended (the "Securities Act"). We have been advised by the
initial purchasers that they have resold, and/or intend in the future to resell,
the debentures to "qualified institutional buyers" (as defined in Rule 144A
promulgated under the Securities Act) in transactions exempt from the
registration requirements of the Securities Act in reliance on Rule 144A.

The issuance and sale of the debentures resulted in net proceeds to the Company
of approximately $91,388,000. These proceeds are being used for general
corporate purposes, including working capital requirements, manufacturing of our
products and research and development.

The debentures bear interest at the rate of 1.250% per year. Interest on the
debentures is payable on April 1 and October 1 of each year, beginning on
October 1, 2004. The debentures are convertible by holders into shares of our
common stock at a conversion price of $28.08 per share (which are subject to
adjustment upon certain events, but represented a 30% premium over our stock
price at the time the debentures were issued). The debentures are convertible by
holders into shares of our common stock if: (1) the price of our common stock
reaches a specific threshold; (2) the trading price for the debentures falls
below certain thresholds; (3) the debentures have been called for redemption; or
(4) certain corporate transactions occur.

The debentures mature on April 1, 2024, unless earlier redeemed, repurchased or
converted. Before April 5, 2007, we may redeem some or all of the debentures if
the price of our common stock reaches a specific threshold, at a redemption
price that includes an additional payment on the redeemed debentures equal to
$230.77 per $1,000 principal amount of debentures, less the amount of any
interest actually paid or accrued and unpaid on the debentures. On and after
April 5, 2007, the Company may redeem some or all of the debentures at certain
specified redemption prices.

The debentures are the Company's unsecured obligations and are subordinated in
right of payment to all of the Company's existing and future senior
indebtedness. On April 1, 2009, April 1, 2014, and April 1, 2019, and under
certain circumstances, holders of the debentures will have the right to require
us to repurchase all or any part of their debentures at a repurchase price equal
to 100% of the principal amount of the debentures, plus accrued and unpaid
interest and liquidated damages, if any, to, but excluding the repurchase date.

In June 2004, the FASB discussed EITF 04-08, The Effect of Contingently
Convertible Debt on Diluted Earnings Per Share. The EITF task force has proposed
that companies count the shares that could be issued upon conversion of
securities like the Company's debentures when calculating fully diluted per
share earnings. Had EITF 04-08 been effective as of June 30, 2004, the Company's
income and earnings per share would have been as indicated below:
<TABLE>
<CAPTION>

                                                                 Three Months Ended                     Six Months Ended
                                                                      June 30,                              June 30,
                                                        ----------------------------------    --------------------------------
                                                             2004                 2003             2004              2003
                                                        ------------           -----------    --------------     -------------
<S>                                                     <C>                    <C>              <C>                <C>
Numerator:
     Net income (loss) plus interest expense            $       618            $    (2,284)     $     5,834        $    (5,497)
                                                        ===========            ===========      ===========        ===========
Denominator:
     Basic weighted average common shares
        outstanding                                      58,152,703             50,608,445       57,543,768         49,250,049
                                                        ===========            ===========      ===========        ===========
     Effect of dilutive options and warrants              4,264,751                     --        4,264,751                 --
                                                        -----------            -----------      -----------        -----------
     Fully diluted weighted average common shares
        outstanding                                      62,417,454             50,608,445       61,808,519         49,250,049
                                                        ===========            ===========      ===========        ===========
Convertible debenture shares as converted                 3,383,188                     --        3,383,188                 --
                                                        -----------            -----------      -----------        -----------
Fully  diluted   weighted  average  common  shares
outstanding including converted shares pro-forma         65,800,642                     --       65,191,707                 --
                                                        ===========            ===========      ===========        ===========

Basic earnings per share                                $      0.01            $     (0.05)     $      0.10        $     (0.11)
                                                        ===========            ===========      ===========        ===========
Fully diluted earnings per share                        $      0.01            $     (0.05)     $      0.09        $     (0.11)
                                                        ===========            ===========      ===========        ===========
Fully diluted earnings per share include
converted shares - pro forma                            $      0.01                    N/A      $      0.09                N/A
                                                        ===========            ===========      ===========        ===========

</TABLE>


In connection with the offering of the debentures, we filed a shelf registration
statement on June 14, 2004 with the Securities and Exchange Commission (SEC)
covering resales of the debentures and of the common stock issuable upon
conversion of the debentures. If the registration statement on Form S-3 is not
declared effective by the SEC by October 4, 2004, then the interest rate payable
on the debentures will be subject to increase.



                                       7
<PAGE>

NOTE 3.  Recent Accounting Pronouncements

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 applies immediately to variable interest
entities created after January 31, 2003, and to variable interest entities in
which an enterprise obtains an interest after that date. It applies in the first
fiscal year or interim period beginning after June 15, 2003, to variable
interest entities in which an enterprise holds a variable interest that it
acquired before February 1, 2003. FIN 46 applies to public enterprises as of the
beginning of the applicable interim or annual period. On October 8, 2003, the
FASB decided to defer FIN 46 until the first reporting period ending after
December 15, 2003. The provisions of this Interpretation did not have a material
impact on the Company's financial condition or results of operations.

In December 2003, the FASB issued FIN No. 46R, Consolidation of Variable
Interest Entities, clarifying the application of Accounting Research Bulletin
No. 51, Consolidated Financial Statements, to certain entities in which equity
investors do not have the characteristics of a controlling financial interest or
do not have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support. The provisions of this
Interpretation do not have a material impact on the Company's financial
condition or results of operations.

In December 2003, the FASB revised SFAS 132, "Employers' Disclosure About
Pensions and Other Post Retirement Benefits." This Statement does not change the
measurement or recognition of those plans required by FASB 87, "Employers'
Accounting for Pensions," and No. 106, "Employers' Accounting for Post
Retirement Benefits Other than Pensions." This Statement retains the disclosure
requirements contained in FASB No. 132, "Employers' Disclosure about Pensions
and Other Post Retirement Plans." The provisions of this Statement do not have a
material impact on the Company's financial condition or results of operations.
During the six months ended June 30, 2004 and 2003, the employer 401-K match was
$218,000 and $150,000, respectively.

In February 2004, the FASB issued revised FASB Staff Positions ("FSP")
pertaining to FIN 46(R). The revised FSPs replace certain previously issued FIN
46 FSP for entities to which FIN 46(R) is applicable. This revision to FIN 46
did not have a material impact on the Company's financial condition or results
of operation.

In February 2004, the FASB revised SFAS 133, Accounting for Derivative
Instruments and Hedging Activities for Implementation issue E2L, A1J, and C6.
The revisions to SFAS 133 did not have a material impact on the Company's
financial condition or results of operation.

In June 2004, the FASB discussed EITF 04-08, The Effect of Contingently
Convertible Debt on Diluted Earnings Per Share. The EITF task force has proposed
that companies count the shares that could be issued upon conversion of
securities like the Company's debentures when calculating fully diluted per
share earnings. This EITF is not yet effective. However, we disclosed in Note 2
the potential effect of this EITF on the Company's fully diluted EPS
calculation.

NOTE 4. Our gross receivables and related deductions activity for the six months
ended June 30, 2004 and 2003, and the year ended December 31, 2003 was:
<TABLE>
<CAPTION>

                                                                                  Six Months Ended
                                                                         ---------------------------------      Year Ended
                                                                          June 30,                June 30,      December 31,
           (in $000s)                                                       2004                    2003           2003
                                                                         ---------              ----------      -----------
<S>                                                                      <C>                    <C>             <C>
          Gross accounts receivable                                      $  28,225              $  12,329       $ 17,091
          Less:  Accrued rebates                                            (3,632)                (2,165)        (2,700)
          Less:  Accrued chargebacks                                        (4,543)                (1,200)        (4,101)
          Less:  Other deductions                                             (229)                  (380)          (405)
                                                                         ---------              ---------       --------
          Net accounts receivable                                        $  19,821              $   8,584       $  9,885
                                                                         ---------              ---------       --------
</TABLE>

Other deductions include allowance for disputable items, doubtful accounts, and
cash discounts.


Net accounts receivable balance at June 30, 2004 includes $5,022,000 due from
Teva as compared to zero at December 31, 2003.



                                       8
<PAGE>

Chargebacks and Rebates Accrual activity for the six months ended June 30, 2004
and 2003, and the year ended December 31, 2003 was:

                               CHARGEBACKS ACCRUAL
<TABLE>
<CAPTION>

                                                                                  Six Months Ended
                                                                         ---------------------------------      Year Ended
                                                                          June 30,                June 30,      December 31,
           (in $000s)                                                       2004                    2003           2003
                                                                         ---------              ----------      -----------
<S>                                                                      <C>                    <C>             <C>
   Beginning Balance                                                    $    4,101              $    1,373       $    1,373
   Add:  Provision related to sales made in current period                   5,962                   3,354           10,571
   Less:  Credits issued during the current period                          (5,520)                 (3,527)          (7,843)
                                                                        ----------              ----------       ----------
   Ending Balance                                                       $    4,543              $    1,200       $    4,101
                                                                        ----------              ----------       ----------
</TABLE>


                                                         REBATES ACCRUAL
<TABLE>
<CAPTION>

                                                                                  Six Months Ended
                                                                         ---------------------------------      Year Ended
                                                                          June 30,                June 30,      December 31,
           (in $000s)                                                       2004                    2003           2003
                                                                         ---------              ----------      -----------
<S>                                                                      <C>                    <C>             <C>
Beginning Balance                                                      $    2,700              $    1,525         $   1,525
Add:  Provision related to sales made in current period                     3,326                   2,803             6,680
Less:  Credits issued during the current period                            (2,394)                 (2,163)           (5,505)
                                                                       ----------              ----------         ---------
Ending Balance                                                         $    3,632              $    2,165         $   2,700
                                                                       ----------              ----------         ---------
NOTE 5.  Our inventory consists of the following:

</TABLE>

<TABLE>
<CAPTION>

                                                                                                  June 30,        December 31,
   (in $000s)                                                                                       2004              2003
                                                                                                ----------        ------------
<S>                                                                                             <C>                 <C>
Raw materials .........................................................                         $  22,247           $  9,671
Work in process .......................................................                             4,256              5,303
Finished goods ........................................................                            10,599             13,505
                                                                                                ---------           --------
                                                                                                $  37,102           $ 28,479
                                                                                                =========           ========
</TABLE>

The Company, as most companies in the generic pharmaceutical industry, may build
inventories of certain ANDA related products that have not yet received FDA
approval and/or satisfactory resolution of patent infringement litigation, when
it believes that such action is appropriate to increase its commercial
opportunity.

As of June 30, 2004, the Company's total inventory of $37,102,000 included
$5,343,000 in inventories relating to products pending launch while IMPAX awaits
receipt of FDA marketing approval and/or satisfactory resolution of patent
infringement litigation, as follows:


                        (in $000s)
                        Raw materials                       $  5,343
                        Work in process                           --
                        Finished goods                            --
                                                            --------
                             Total                          $  5,343
                                                            --------

                                       9
<PAGE>


NOTE 6.  Intangibles consist of the following:
<TABLE>
<CAPTION>

                                                                           Estimated
                                                                          useful life             June 30,       December 31,
                                                                            (years)                 2004             2003
   (in $000s)                                                             -----------            ---------       ------------

<S>                                                                          <C>                 <C>               <C>
Product rights and licenses .....................................            3 - 8               $   2,691         $  2,691

Less:  Accumulated amortization .............................                                       (2,504)          (2,312)
                                                                                                 ---------         --------
                                                                                                 $     187         $    379
                                                                                                 =========         ========

</TABLE>

Amortization expense was $96,000 for the three months and $192,000 for the six
months ended June 30, 2004, respectively. Expected amortization expense for 2004
will be approximately $379,000.

NOTE 7.  ACCRUED EXPENSES AND DEFERRED REVENUE
<TABLE>
<CAPTION>

                                                                             June 30,                     December 31,
         (in $000's)                                                           2004                           2003
                                                                           ----------                    -------------
<S>                                                                        <C>                            <C>
         Sales returns                                                     $   6,257                      $   4,121
         Deferred revenues                                                     1,905                          1,751
         Accrued salaries and payroll expenses                                 2,037                          1,649
         Legal and professional fees                                           1,314                          1,478
         Accrued Medicaid rebates                                                550                            613
         Accrued royalty and gross profit sharing expense                        462                            559
         Accrued shelf stock reserve                                             281                            232
         Accrued interest                                                        310                             --
         Other accruals                                                          167                            469
                                                                           ---------                      ---------
                                                                           $  13,283                      $  10,872
                                                                           =========                      =========
</TABLE>

NOTE 8.  RETURNS ACCRUAL

                                 RETURNS ACCRUAL
<TABLE>
<CAPTION>

                                                                               Six Months Ended
                                                                       ---------------------------------             Year Ended
   (in $000s)                                                           June 30,                June 30,            December 31,
                                                                          2004                    2003                   2003
                                                                       ----------             ----------            ------------
<S>                                                                    <C>                    <C>                   <C>
   Beginning Balance                                                   $    4,121             $    3,100            $    3,100
   Add:  Provision related to sales made in current period                  3,872                    320                 2,276
   Less:  Credits issued during the current period                         (1,736)                  (320)               (1,255)
                                                                       ----------             ----------             ---------
   Ending Balance                                                      $    6,257             $    3,100             $   4,121
                                                                       ----------             ----------             ---------

</TABLE>

The returns accrual balance at June 30, 2004 includes $1,070,000 for products
marketed through Rx Partners, such as Teva, as compared to zero dollars at
December 31, 2003.

NOTE 9.  COMMITMENTS AND CONTINGENCIES

Patent Litigation

There has been substantial litigation in the pharmaceutical, biological, and
biotechnology industries with respect to the manufacture, use, and sale of new
products that are the subject of conflicting patent rights. One or more patents
cover most of the brand name controlled-release products for which we are
developing generic versions. Under the Hatch-Waxman Amendments, when a drug
developer files an ANDA for a generic drug, and the developer believes that an
unexpired patent which has been listed with the FDA as covering that brand name
product will not be infringed by the developer's product or is invalid or
unenforceable, the developer must so certify to the FDA. That certification must
also be provided to the patent holder, who may challenge the developer's
certification of non-infringement, invalidity or unenforceability by filing a
suit for patent infringement within 45 days of the patent holder's receipt of
such certification. If the patent holder files suit, the FDA can review and
approve the ANDA, but is prevented from granting final marketing approval of the
product until a final judgment in the action has been rendered, or 30 months
from the date the certification was received, whichever is sooner. Should a
patent holder commence a lawsuit with respect to an alleged patent infringement
by us, the uncertainties inherent in patent litigation make the outcome of such
litigation difficult to predict. The delay in obtaining FDA approval to market
our product candidates as a result of litigation, as well as the expense of such
litigation, whether or not we are successful, could have a material adverse
effect on our results of operations and financial position. In addition, there
can be no assurance that any patent litigation will be resolved prior to the
30-month period. As a result, even if the FDA were to approve a product upon
expiration of the 30-month period, we may not commence marketing that product if
patent litigation is still pending.

                                       10
<PAGE>

Lawsuits have been filed against us in connection with fourteen of our Paragraph
IV filings. The outcome of such litigation is difficult to predict because of
the uncertainties inherent in patent litigation.

As part of our patent litigation strategy, we obtained two policies covering up
to $7 million of patent infringement liability insurance from American
International Specialty Line Company ("AISLIC"), an affiliate of AIG
International. This litigation insurance covered us against the costs associated
with patent infringement claims made against us relating to seven of the ANDAs
we filed under Paragraph IV of the Hatch-Waxman Amendments. Both policies have
reached their limit of liability and the company has collected all monies from
AISLIC. As of September 30, 2004, IMPAX does not have any accounts receivable
due from AISLIC. While Teva has agreed to pay 45% to 50% of the attorneys' fees
and costs (in excess of the $7 million covered by our insurance policies)
related to the twelve products covered by our strategic alliance agreement with
Teva, we will be responsible for the remaining expenses and costs for these
products, and all of the costs associated with patent litigation for our other
products and our future products.

We do not believe that this type of litigation insurance will be available on
acceptable terms for our current or future ANDAs. In those cases, our policy is
to record such expenses as incurred.

Although the outcome and costs of the asserted and unasserted claims is
difficult to predict because of the uncertainties inherent in patent litigation,
management does not expect the Company's ultimate liability for such matters to
have a material adverse effect on its financial condition, results of
operations, or cash flows.

FIN  45

In November 2002, the FASB issued FIN No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." Guarantees and claims arise during the ordinary course
of business from relationships with suppliers, customers, and strategic partners
when the Company undertakes an obligation to guarantee the performance of others
through the delivery of cash or other assets if specified triggering events
occur. Non-performance under a contract by the guaranteed party triggers the
obligation of the Company. As of June 30, 2004, all indemnifications included in
agreements as of that date are excluded from the scope of FIN No. 45 as they
relate primarily to our own future performance and do not require any contingent
payments.

As of June 30, 2004, our total contractual commitments on loans, operating
leases, and royalty agreements have not materially changed since December 31,
2003, as disclosed in our Report Form 10-K.

NOTE 10.   LOAN AGREEMENTS WITH PIDA AND DRPA

In April 2004, the Company terminated the loan agreements with Pennsylvania
Industrial Development Authority (PIDA) and Delaware River Port Authority (DRPA)
and repaid the remaining balances totaling approximately $992,000.

NOTE 11.  LOAN AND SECURITY AGREEMENT WITH WACHOVIA BANK N.A.

In June 2004, the $25 million Loan and Security Agreement with Wachovia
Bank N.A. was amended, as follows:
     o  The cash collateral requirement of $10,000,000 was removed.
     o  The Adjusted Excess Availability Covenant was removed.
     o  IMPAX will maintain at Wachovia Bank cash and investments in an
        amount not less than $25,000,000.
     o  If the amount of cash and investments decline below $25,000,000, then
        the Cash Collateral requirement of $10,000,000 and Adjusted Excess
        Availability Covenant will be re-established.
     o  If the Company reports negative free cash flow in any quarter, then
        reserves in the amount of the negative free cash flow will be reported
        on the Borrowing Base.
     o  The maximum aggregate Capital Expenditures during any fiscal year in the
        amount of $8,000,000 was amended to permit a maximum cumulative
        aggregated amount of $45,000,000 for fiscal years 2004 and 2005.



                                       11
<PAGE>

NOTE 12.  INCOME TAXES

On a quarterly basis, the Company evaluates its projected full year taxable
income and related book-to-tax timing difference and the use of NOL
carryforwards. The Company estimates that it is not subject to current year
income taxes. We evaluate the realizability of deferred tax assets on an annual
and quarterly basis or if there is a significant change in circumstance that may
cause a change in our judgment about the realizability of our deferred tax
assets. At December 31, 2003, the Company had a net operating loss-carryforward
totaling approximately $94,600,000, which expires from 2009 through 2023.

NOTE 13.  SUBSEQUENT EVENTS

On July 12, 2004, the Company announced that it has signed a series of
agreements with Leiner Health Products, LLC for the supply and distribution of
the Company's Loratadine Orally Disintegrating Tablets (ODT) and Loratadine and
Pseudoephedrine Sulfate Extended Release Tablets 24 hour products. Both of these
products are indicated for the relief of symptoms of seasonal allergic rhinitis
(hay fever). These products will be manufactured by IMPAX and marketed by Leiner
as over the counter (OTC) store brand equivalents to both Claritin(R)
Reditabs(R) and Claritin-D(R) 24-hour respectively.

NOTE 14.  RESTATEMENT OF CONDENSED FINANCIAL STATEMENTS

Subsequent to the issuance of its condensed financial statements for the three
and six months ended June 30, 2004, the Company determined that i) customer
credits on sales of bupropion were not recorded in the proper periods, ii) the
sales returns reserve was not properly recorded, and iii) sales invoices were
prepared by Teva were incorrectly prepared. The impact of correcting these
errors and reducing taxable income caused the previous tax provision to be
reversed. As a result, the accompanying condensed financial statements for the
three and six months ended June 30, 2004 have been restated from the amounts
previously reported.

A summary of the effects of the restatement is as follows:

                            IMPAX LABORATORIES, INC.
                         CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)
             (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                Three Months Ended                                 Six Months Ended
                                                   June 30, 2004                                     June 30, 2004
                                           ------------------------------                     ---------------------------
                                            As Previously                                     As Previously
                                              Reported       As Restated                         Reported     As Restated
                                           -------------     -----------                      -------------   -----------
<S>                                              <C>            <C>                               <C>            <C>
Net sales                                        $30,304         $30,023                           $66,126       $61,537
Total revenues                                    30,845          30,564                            69,698        65,109
Gross margin                                      12,308          12,027                            32,611        28,022
Net income (loss) from operations                    895             614                            10,635         6,046
Net income (loss) before provision
for income taxes                                     602             321                            10,126         5,537
Provision for income taxes                            30              --                               506            --
Net income (loss)                                $   572         $   321                           $ 9,620       $ 5,537
Earnings per share:
   Basic                                         $  0.01         $  0.01                           $  0.17       $  0.10
   Diluted                                       $  0.01         $  0.01                           $  0.16       $  0.09
</TABLE>

                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)
             (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                      June 30,
                                                                                       2004
                                                                       ------------------------------------
                                                                       As Previously
                                                                         Reported             As Restated
                                                                       -------------          ------------
<S>                                                                    <C>                    <C>
Accounts receivable                                                    $  23,340              $   19,821
Total current assets                                                     161,690                 158,171
Total assets                                                             235,806                 232,287
Accrued expenses and deferred revenues                                    12,719                  13,283
Total current liabilities                                                 40,946                  41,510
Total liabilities                                                        146,221                 146,785
Accumulated deficit                                                      (94,929)                (99,012)
Total stockholders' equity                                                89,585                  85,502
Total liabilities and stockholders' equity                               235,806                 232,287
</TABLE>

                                       12
<PAGE>


                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
             (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                  Six Months Ended
                                                                                      June 30,
                                                                       ------------------------------------
                                                                       As Previously
                                                                         Reported              As Restated
                                                                       --------------          ------------
<S>                                                                         <C>                    <C>
Cash flows from operating activities:
     Net income (loss)                                                  $   9,620              $   5,537
Change in assets and liabilities:
    Accounts receivable                                                   (13,455)                (9,936)
    Other liabilities                                                       1,736                  2,300
</TABLE>
We have reclassified Patent Opinion expense from Patent Litigation expense to
Research and Development for the three months and six months period ending June
30, 2004 and June 30, 2003.

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

This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements include statements
about our business strategies, our expected financial position and operating
results, the projected size of our markets and our financing plans and similar
matters. The words "believe," "expect," "intend," "anticipate," "plan," "may,"
"will," "could," "should," "estimate," "potential," "opportunity," "future,"
"project," "forecast," and similar expressions, as they relate to us, our
management and our industry are intended to identify forward-looking statements.
We have based these forward-looking statements largely on our current
expectations and projections about future events and financial trends affecting
the financial condition of our business. These forward-looking statements
involve known and unknown risks and uncertainties. Our actual results could
differ materially from the results discussed in the forward-looking statements.
You should not place undue reliance on our forward-looking statements. Further,
any forward-looking statement speaks only as of the date on which it is made,
and we undertake no obligation to update or revise any forward-looking
statements for any reason, whether as a result of new information, future
developments or otherwise.

Many factors could cause or contribute to a material change from the results
discussed in the forward-looking statements. Such factors include, in no
particular order:

      o     our ability to successfully develop and commercialize additional
            products;
      o     changes in the degree of competition for our products;
      o     the difficulty of predicting U.S. Food and Drug Administration (FDA)
            and other regulatory authority approvals;
      o     our reliance on strategic alliances and the success of such
            strategic alliances;
      o     the inability to acquire sufficient supplies of raw materials;
      o     litigation and/or threats of litigation;
      o     changes in our growth rates or the growth rates of our competitors;
      o     legislative and FDA actions with respect to the government
            regulation of pharmaceutical products;
      o     public concern as to the safety of our products;
      o     changes in health care policy in the United States;
      o     conditions in the financial markets in general or in general
            economic conditions;
      o     our inability to raise additional capital when needed;
      o     the impact of competition from brand-name companies that sell their
            own generic products or successfully extend the exclusivity period
            of their branded products;
      o     the difficulty in predicting the timing and outcome of legal
            proceedings, including patent-related matters such as patent
            infringement cases and patent challenge settlements;
      o     court and FDA decisions on exclusivity periods under the
            Hatch-Waxman Amendments;
      o     our dependence on revenues from significant customers;
      o     our dependence on revenues from significant products; and
      o     the increasing cost of insurance and the availability of product
            liability insurance coverage.



                                       13
<PAGE>
The accompanying management's discussion and analysis of financial condition and
results of operations gives effect to the restatement of the condensed financial
statements for the three and six month periods ended June 30, 2004 as described
in Note 14 to the condensed financial statements.

GENERAL

Impax Laboratories, Inc. was formed through a business combination on December
14, 1999 between Impax Pharmaceuticals, Inc., a privately held drug delivery
company, and Global Pharmaceutical Corporation, a generic pharmaceutical
company. Impax Pharmaceuticals, Inc. merged with and into Global, with Impax
stockholders receiving 3.3358 shares of Global common stock for each share of
Impax Pharmaceuticals, Inc. At the conclusion of the merger, Impax
Pharmaceuticals, Inc. stockholders held over 70% of the combined company. For
accounting purposes, the merger has been treated as a recapitalization of Impax
Pharmaceuticals, Inc. with Impax Pharmaceuticals, Inc. deemed the acquirer of
Global in a reverse acquisition. As a reverse acquisition, our historical
operating results prior to the merger are those of Impax Pharmaceuticals, Inc.
and only include the operating results of Global after the merger. In connection
with the merger, the surviving company changed its name to Impax Laboratories,
Inc.

We are a technology based, specialty pharmaceutical company applying formulation
and development expertise, as well as our drug delivery technology, to the
development of controlled-release and niche generics, in addition to the
development of branded products. As of June 30, 2004, the Company is marketing
thirty-three generic pharmaceuticals, which represent dosage variations of
fourteen different pharmaceutical compounds, and has fourteen applications under
review with the Food and Drug Administration (FDA), including five tentatively
approved, addressing approximately $5.2 billion in U.S. product sales in the
twelve months ended April 30, 2004, according to NDCHealth. Eleven of these
pending filings were filed under Paragraph IV of the Hatch-Waxman Amendments.
The Company has approximately twenty-four other products in various stages of
development for which applications have not yet been filed. These other products
are generic versions of pharmaceutical products that had U.S. sales of
approximately $14.6 billion in the twelve months ended April 30, 2004, according
to NDCHealth.

CRITICAL ACCOUNTING POLICIES

Revenue Recognition
The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
("SAB") 101 issued by the SEC in December 1999. We recognize revenue from the
sale of products when the shipment of products is received and accepted by the
customer. Provisions for estimated discounts, rebates, chargebacks, returns and
other adjustments are provided for in the period the related sales are recorded.
In December 2003, the SAB 104 was issued by the SEC. This bulletin clarifies
portions of Topic 13 of the Staff Accounting Bulletin to be consistent with
current accounting and auditing guidance and SEC rules and regulations and
revises accounting guidance contained in SAB101 related to multiple element
revenue arrangements of Emerging Issues Task Force (EITF) No. 00-21 superseded
as a result of the issuance.

Emerging Issues Task Force (EITF) No. 00-21 supplemented SAB 101 for accounting
for multiple element arrangements. The Company has entered into several
strategic alliances that involve the delivery of multiple products and services
over an extended period of time. In multiple element arrangements, the Company
must determine whether any or all of the elements of the arrangement can be
separated from one another. If separation is possible, revenue is recognized for
each deliverable when the revenue recognition criteria for the specific
deliverable is achieved. If separation is not possible, revenue recognition is
required to be spread over an extended period.

Under EITF No. 00-21, in an arrangement with multiple elements, the delivered
item should be considered a separate unit of accounting if all of the following
criteria are met:

      1)    the delivered item has value to the customer on a standalone basis;
      2)    there is objective and reliable evidence of the fair value of the
            undelivered item; and
      3)    if the arrangement included a general right of return, or whether
            delivery or performance of the undelivered item is considered
            probable.

The Company reviews all of the terms of its strategic alliances and follows the
guidance from SAB104 AND EITF No. 00-21 for multiple element arrangements.
Upfront and milestone payments from these strategic alliances are deferred and
recognized over the life of the agreements as the Company fulfills its
contractual obligation to manufacture and supplies products during this period.
In addition, in some agreements, the Company receives and records royalty
revenue based on a percentage of the strategic partner's total sales to their
customers of the products supplied by IMPAX.

In June 2001, the Company entered into a Strategic Alliance Agreement with a
subsidiary of Teva for twelve controlled-release generic pharmaceutical
products. The agreement granted Teva exclusive U.S. prescription marketing
rights for these products for a period of ten years from the date of Teva's
first sale of the products. Under the terms of the agreement, Teva has sole and
exclusive right to determine all terms and conditions of sale to its customers,
including pricing, discounts, allowances, price adjustments, returns and
rebates.
<PAGE>

Revenues from product sales for these products under our strategic alliance are
recognized at the time title and risk of loss transfers to Teva's customers.
During the six months ended June 30, 2004, the Company commenced shipping its
Bupropion Hydrochloride 100 mg and 150 mg Controlled Release Tablets. Teva ships
the Bupropion products to its customers and reports the results on a monthly
basis. Teva provides to IMPAX a financial report detailing its gross sales less
applicable chargebacks, rebates and other credits to arrive at net sales, cost
of sales information and gross margins for the Bupropion products. The Company
is endeavoring to take steps under the Strategic Alliance Agreement to ensure
that all such adjustments granted by its strategic partner in the future are
reported to the Company on a timely basis. These steps include, but are not
limited to, regular discussions with Teva management regarding their monthly
financial reports to IMPAX on our products marketed by Teva via monthly
teleconferences and quarterly meetings. These discussions will cover all the
areas of revenue recognition for these products, including but not limited to,
sales credits, product returns and internal controls over Teva's financial
reporting to IMPAX. Our procedures will include a review of applicable
documentation for IMPAX revenue sharing. The Audit Committee of the Company's
Board of Directors may take additional steps as deemed necessary. Under the
contract terms, the Company has the option to perform an annual audit with our
strategic partner. The information on the financial report is used by IMPAX to
record its monthly revenue for the Bupropion products. We began estimating
returns for prescription products marketed by our strategic partners, such as
Teva, called "Rx Partners," based on our internal returns analysis and
historical industry statistics. The amounts of revenue that IMPAX earns is based
on reimbursement of manufacturing costs and on a fixed gross margin percentage.

The Company believes it is important for the users of its financial statements
to understand the key components, which reduce gross sales to net sales.

                                       14
<PAGE>

Returns Reserve
The Company estimates future product returns at the time of sale. Product
returns by wholesalers principally relate to the return of expired products. For
product return reserves, we consider volume and mix of product in the
marketplace, historical return rates, and the competitive environment, all of
which require us to use estimates and assumptions. IMPAX introduces a number of
new products each year. As a result, the Company has been able to monitor
historical return rates for new products. Based on our historical data, since we
are in one business segment, we have found that generic pharmaceutical product
returns are alike and that new product returns have similar characteristics to
existing products. Usually, new products are AB rated (products that
demonstrated bioequivalence with innovator products), have 24 month expiration
dating, and are marketed to the same customers, i.e., wholesalers, warehousing
chains, distributors, etc. The AB rated products are substitutable by the
pharmacist for the innovator products. The non-AB rated products, such as the
LIPRAM product family, generally, may not be substituted by the pharmacist as
they are therapeutic alternatives, not generic substitutes. Any change to a
patient's prescription to an alternative product requires the patient's
physician approval for the substitution. We are monitoring returns by product
and, where applicable, we establish specific product return reserves and/or
adjust our estimates of the future return rates based on various business and
competitive assumptions.

The sales return reserve is calculated using an historical lag period (that is,
the time between when the product is sold and when it is ultimately returned as
determined from the Company's system generated lag period report) and return
rates, adjusted by estimates of the future return rates based on various
assumptions which may include changes to internal policies and procedures,
changes in business practices and commercial terms with customers, competitive
position of each product, amount of inventory in the pipeline, the introduction
of new products, and changes in market sales information.

Our returned goods policy requires prior authorization for the return, with
corresponding credits being issued at the original invoice prices, less amounts
previously granted to the customer for rebates and chargebacks. Products
eligible for return must be expired and returned within one year following the
expiration date of the product. Prior to 2002, we required returns of products
within six months of expiration date. Because of the lengths of the lag period
and volatility that may occur from quarter to quarter, we are currently using a
rolling 22-month calculation to estimate our product return rate.

We began estimating returns for products marketed by our Rx Partners based on
our internal returns analysis and historical industry statistics.

The Company believes that its estimated returns reserves were adequate at each
balance sheet date since they were formed based on the information that was
known and available, which were supported by the Company's historical experience
when similar events occurred in the past, and management's overall knowledge of
and experience in the generic pharmaceutical industry. In estimating its returns
reserve, the Company looks to returns after the balance sheet date, but prior to
filing its financial statements to ensure that any unusual trends are
considered.

Rebates and Chargebacks
Generally, sales rebates are calculated at the point of sale, based on
pre-existing written customer agreements by product and accrued on a monthly
basis. However, we do estimate additional rebates for specific purposes, i.e.,
new pharmacy store openings.

The vast majority of chargebacks are also calculated at the point of sale as the
difference between list price and contract price by product (with the
wholesalers) and accrued on a monthly basis. There are additional chargebacks
that are estimated at the point of sale to the wholesaler as the difference
between the wholesalers' contract price and the Company's contract price with
retail pharmacies and buying groups.

Shelf-Stock Reserve
A reserve is estimated at the point of sale for certain products for which it is
probable that shelf-stock credits to customers for inventory remaining on their
shelves following a decrease in the market price of these products will be
granted. When estimating this reserve, we consider the competitive products, the
estimated decline in market prices, and the amount of inventory in the pipeline.

Inventory
Our inventories are valued at the lower of cost or market. Costs are determined
using a standard cost method, first-in, first-out (FIFO) flow of goods. Costs
include materials, labor, quality control and production overhead. We review and
adjust inventory for short-dated product and inventory commitments under supply
agreements based on projections of future sales and market conditions. The
Company, as do most companies in the generic pharmaceutical industry, may build
inventories of certain ANDA-related products that have not yet received FDA
approval and/or satisfactory resolution of patent infringement litigation, when
it believes that such action is appropriate to increase its commercial
opportunity. If our inventory is greater than estimated shipments to our
customers, there may be an inventory write-down. Therefore, the Company's
management must make significant estimates relating to inventory.



                                       15
<PAGE>

Impaired Assets
The Company evaluates the carrying value of long-lived assets to be held and
used, including definite lived intangible assets, on an annual basis, when
events or changes in circumstances indicate that the carrying value may not be
recoverable. The carrying value of a long-lived asset is considered impaired
when the total projected undiscounted cash flows from such asset is separately
identifiable and is less than its carrying value. In that event, a loss is
recognized based on the amount by which the carrying value exceeds the fair
value of the long-lived asset. Fair value is determined primarily using the
projected cash flows discounted at a rate commensurate with the risk involved.
Losses on long-lived assets to be disposed of are determined in a similar
manner. As the Company's assumptions related to assets to be held and used are
subject to change, additional write-downs may be required in the future.

Goodwill
Prior to the adoption of Statement of Financial Accounting Standards ("SFAS")
No. 142, "Goodwill and Other Intangible Assets," we amortized goodwill on a
straight-line basis over its estimated useful life. The Company adopted the
provisions of SFAS No. 142, effective January 1, 2002; no impairment was noted.
Under the provisions of SFAS No. 142, the Company performs the annual review for
impairment at the reporting unit level, which the Company has determined to be
consistent with its business segment, that is, the entire Company.

Effective January 1, 2002, we evaluated the recoverability and measured the
possible impairment of our goodwill under SFAS 142. The impairment test is a
two-step process that begins with the estimation of the fair value of the
reporting unit. The first step screens for potential impairment and the second
step measures the amount of the impairment, if any. Our estimate of fair value
considers publicly available information regarding the market capitalization of
our Company, as well as (i) publicly available information regarding comparable
publicly-traded companies in the generic pharmaceutical industry, (ii) the
financial projections and future prospects of our business, including its growth
opportunities and likely operational improvements, and (iii) comparable sales
prices, if available.

As part of the first step to assess potential impairment, we compare our
estimate of fair value for the Company to the book value of our consolidated net
assets. If the book value of our net assets is greater than our estimate of fair
value, we would then proceed to the second step to measure the impairment, if
any.

The second step compares the implied fair value of goodwill with its carrying
value. The implied fair value is determined by allocating the fair value of the
reporting unit to all of the assets and liabilities of that unit as if the
reporting unit had been acquired in a business combination, and the fair value
of the reporting unit was the purchase price paid to acquire the reporting unit.
The excess of the fair value of the reporting unit over the amounts assigned to
its assets and liabilities is the implied fair value of goodwill. If the
carrying amount of the reporting unit goodwill is greater than its implied fair
value, an impairment loss will be recognized in the amount of the excess.

On a quarterly basis, we perform a review of our business to determine if events
or changes in circumstances have occurred which could have a material adverse
effect on the fair value of the Company and its goodwill. If such events or
changes in circumstances were deemed to have occurred, we would consult with one
or more valuation specialists in estimating the impact on our estimate of fair
value. We believe the estimation methods are reasonable and reflective of common
valuation practices. We perform our annual goodwill impairment test in the
fourth quarter of each year.

RESULTS OF OPERATIONS

Except for the six months ended June 30, 2004, we have incurred net losses in
each quarter since our inception. We had an accumulated deficit of $99,012,000
at June 30, 2004.




                                       16
<PAGE>

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

OVERVIEW

The net income for the three months ended June 30, 2004, was $321,000 as
compared to a net loss of $2,284,000 for the three months ended June 30, 2003.

REVENUES

Revenues for the second quarter of 2004 were $30,564,000, up more than 117%
compared with revenues of $14,067,000 in the prior year's second quarter. The
year-over-year increase for the quarter was primarily due to shipments of our
generic versions of Wellbutrin(R) SR (Bupropion Hydrochloride) 100 mg and 150 mg
Controlled Release Tablets, and Declomycin(R) (Demeclocycline Hydrochloride) 150
mg and 300 mg Tablets, which commenced during the first quarter of 2004;
Zyban(R) (Bupropion Hydrochloride) and Sinemet(R) CR (Carbidopa/Levodopa)
Extended Release Tablets, which commenced during the second quarter of 2004; and
higher over-the-counter (OTC) product revenues. The sequential quarter decline
was due to timing of product shipments and pipeline filling, particularly as
related to the launch of Bupropion Hydrochloride in the first quarter. During
the 2004 second quarter, IMPAX's revenues from sales of Bupropion Hydrochloride
products, through our strategic alliance agreements with Teva and Andrx, were
approximately $7,808,000, compared with $19,562,000 in the first quarter. In
addition, in the first quarter the Company recognized revenue of $2.5 million
from Teva related to the refundable deposit under its strategic alliance
agreement.

The balance of $541,000 of other revenue represents revenues recognized pursuant
to strategic agreements with Schering-Plough, Wyeth, and Novartis. These amounts
represent the amortization of the milestone payments received by the Company
over the life of the agreements. The following table summarizes the activity in
net revenues for the three months ended June 30, 2004 and 2003:

                                                      2004           2003
                                                   ---------      ---------
         (in 000's)

         Product sales                             $ 38,364       $  17,932
         Less:
            Rebates                                  (2,207)         (1,741)
            Chargebacks                              (3,814)         (2,040)
            Product return reserve                   (1,302)           (188)
            Other credits                            (1,018)           (503)
                                                   --------      ----------
                 Net sales                           30,023          13,460
         Other Revenues                                 541             607
                                                   --------      ----------
            Total Revenues                         $ 30,564      $   14,067
                                                   ========      ==========

The rebates, chargebacks, returns and other credits decreased for the three
months ended June 30, 2004 to approximately 22% of product sales as compared to
approximately 25% for the comparable period in 2003. This decrease was due to
Bupropion Hydrochloride 100 mg and 150 mg Controlled Release Tablets and
Loratadine and Pseudoephedrine Sulfate (5mg/120mg) 12-hour Extended Release
Tablets. Loratadine Pseudoephedrine Sulfate 12-hour Extended Release Tablets are
exempt from rebates, chargebacks and other credits as per the agreements with
Schering-Plough, Wyeth, and Novartis. We began estimating returns for products
marketed by Rx Partners, based on our internal returns analysis and historical
industry statistics. The returns accrual balance at June 30, 2004 includes
$1,070,000 for products marketed through Rx Partners, such as Teva, as
compared to zero dollars at December 31, 2003.

Currently, the Company has one reportable operating segment: generic
pharmaceutical business. However, we currently market our products through three
different channels, as follows:

o        Direct sale of prescription (Rx) products, such as LIPRAM,
         Fludrocortisone, Terbutaline, Minocycline, Demeclocycline, Flavoxate,
         Carbidopa/Levodopa and others, through our Global Pharmaceuticals
         division, called "Global";

o        Sale of prescription (Rx) products, such as Bupropion Hydrochloride,
         exclusively, through marketing partners, pursuant to strategic alliance
         agreements, such as Teva, called "Rx Partners;" and

o        Sale of Loratadine OTC products through marketing partners, pursuant to
         strategic alliance agreements, such as Schering, Wyeth, Novartis, and
         Leiner, called "OTC."

The following table summarizes the net sales for the three months ended June 30,
2004 compared to the three months ended June 30, 2003 by marketing channel:

                                                2004                  2003
                                                ----                  ----
         (in 000's)

         Global                              $ 16,649              $  9,709
         Rx Partners                            8,347                     -
         OTC                                    5,027                 3,751
                                             --------              --------
              Total Net Sales                $ 30,023              $ 13,460
                                             ========              ========



                                       17
<PAGE>

The quarter-to-quarter increase of approximately $6.9 million in Global products
were primarily due to new products introduced in 2004 and late 2003, such as
Demeclocycline of approximately $3.6 million, Carbidopa/Levodopa of
approximately $0.8 million, and Flavoxate of approximately $0.9 million, as well
as higher LIPRAM products of approximately $1.2 million.

Rollforward analyses for each significant revenue dilution item are listed on
Note 4.

COST OF SALES

The cost of sales for the three months ended June 30, 2004, was $18,537,000 as
compared to $9,321,000 for the same period in 2003. The overall increase in cost
of sales was primarily due to the increase in cost of materials as a result of
increased product sales.

GROSS MARGIN

Gross margin for the three months ended June 30, 2004 was $12,027,000, or
approximately 39% of total revenues, compared with gross margin of $4,746,000,
or approximately 34% of total revenues, in the prior year's second quarter. The
year-over-year increase in the gross margin percentage was primarily due to the
introduction of new products since last year with higher margins, such as
Bupropion Hydrochloride, Demeclocycline Hydrochloride, Flavoxate, and
Carbidopa/Levodopa. The decrease in the gross margin percentage from the first
quarter of 2004 to the second quarter of 2004 was primarily due to changes in
product mix: higher OTC product revenues that have lower margins and lower
Bupropion Hydrochloride product sales that have higher margins in the second
quarter, and the $2,500,000 first quarter revenue from Teva related to the
refundable deposit.

RESEARCH AND DEVELOPMENT EXPENSES

The research and development expenses for the three months ended June 30, 2004
were $5,439,000 less reimbursements of $78,000 by a subsidiary of Teva
Pharmaceutical Industries, Ltd. under the Strategic Alliance Agreement signed in
June 2001, as compared to $3,560,000 less reimbursements of $22,000 for the same
period in 2003. The research and development expenditures in 2004 as compared to
2003 were attributable to higher personnel costs, biostudies, clinical studies,
and new product introduction costs (technical transfer, scale-up and
validation).

PATENT LITIGATION COSTS

The patent litigation expenses for the three months ended June 30, 2004, were
$2,228,000 as compared to $787,000 for the same period in 2003. The year-to-year
increase for the three months was primarily due to the ongoing Paragraph IV
litigation related to our ANDAs for Omeprazole Capsules and Fenofibrate Tablets
ANDAs.

SELLING EXPENSES

The selling expenses for the three months ended June 30, 2004 were $711,000 as
compared to $438,000 for the same period in 2003. The increase in selling
expenses as compared to 2003 was primarily due to higher personnel costs.

GENERAL AND ADMINISTRATIVE EXPENSES

The general and administrative expenses for the three months ended June 30, 2004
were $3,117,000 as compared to $2,083,000 for the same period in 2003. The
increase in general and administrative expenses as compared to 2003 was
primarily due to higher professional fees, insurance premiums, and personnel
costs.

INTEREST INCOME

Interest income for the three months ended June 30, 2004 was $271,000 as
compared to $70,000 for the same period in 2003, primarily due to higher average
cash equivalents and short-term investments generated from the net proceeds of
the Company's $95 million convertible senior subordinated debentures.

INTEREST EXPENSE

Interest expense for the three months ended June 30, 2004 was $564,000 as
compared to $264,000 for the same period in 2003. The increase in the interest
expense for 2004 was primarily due to the 1.25% interest accrued on the
Company's $95 million convertible senior subordinated debentures.



                                       18
<PAGE>

INCOME TAXES

On a quarterly basis, the Company evaluates its projected full year taxable
income and related book-to-tax timing difference and the use of NOL
carryforwards. The Company estimates that it is not subject to current year
income taxes. We evaluate the realizability of deferred tax assets on an annual
and quarterly basis or if there is a significant change in circumstance that may
cause a change in our judgment about the realizability of our deferred tax
assets. At December 31, 2003, the Company had a net operating loss-carryforwards
totaling approximately $94,600,000, which expire from 2009 through 2023.

NET INCOME

The net income for the three months ended June 30, 2004, was $321,000 as
compared to a net loss of $2,284,000 for the same period in 2003, primarily due
to higher sales, partially offset by higher research and development, selling,
and general administrative expenses.


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

OVERVIEW

The net income for the six months ended June 30, 2004, was $5,537,000 as
compared to a net loss of $5,497,000 for the six months ended June 30, 2003.

REVENUES

Revenues for the six months ended June 30, 2004 were $65,109,000, up more than
155% compared with revenues of $25,492,000 in the comparable period of the
previous year. The year-over-year increase for the six months was primarily due
to shipments of our generic versions of Wellbutrin(R) SR (Bupropion
Hydrochloride) 100 mg and 150 mg Controlled Release Tablets, and Declomycin(R)
(Demeclocycline Hydrochloride) 150 mg and 300 mg Tablets, which commenced during
the first quarter of 2004, and Zyban(R) (Bupropion Hydrochloride) and Sinemet(R)
CR (Carbidopa/Levodopa) Extended Release Tablets, which commenced during the
second quarter of 2004.

The Company generated $3,572,000 of other revenues in the 2004 period compared
to $966,000 in the 2003 period. Other revenue for the 2004 period included
$2,500,000 from Teva, which represented the reversal of a portion of the
refundable deposit for its exercise of the exclusivity option for certain
products.

The balance of $1,072,000 of other revenue represents revenues recognized
pursuant to strategic agreements with Schering-Plough, Wyeth, and Novartis.
These amounts represent the amortization of the milestone payments received by
the Company, over the life of the agreement. The following table summarizes the
activity in net revenues for the six months ended June 30, 2004 and 2003:

<TABLE>
<CAPTION>
                                                                                         2004            2003
                                                                                      ---------        --------

<S>                                                                                   <C>              <C>
         Product sales                                                                $ 76,397         $32,085
         Less:
            Rebates                                                                     (3,326)         (2,803)
            Chargebacks                                                                 (5,962)         (3,354)
            Product return reserve                                                      (3,872)           (320)
            Other credits                                                               (1,700)         (1,082)
                                                                                      --------         -------
                 Net sales                                                              61,537          24,526
         Revenue from reversal of refundable deposit from Teva                           2,500              --
         Other Revenues                                                                  1,072             966
                                                                                      --------         -------
         Total Revenues                                                               $ 65,109         $25,492
                                                                                      ========         =======
</TABLE>

The rebates, chargebacks, returns and other credits decreased for the six months
ended June 30, 2004 to approximately 19% of product sales as compared to
approximately 24% for the comparable period in 2003. This decrease was due to
Bupropion Hydrochloride 100 mg and 150 mg Controlled Release Tablets and
Loratadine and Pseudoephedrine Sulfate (5mg/120mg) 12-hour Extended Release
Tablets. Loratadine and Pseudoephedrine Sulfate 12-hour Extended Release Tablets
are exempt from rebates, chargebacks and other credits as per the agreements
with Schering-Plough, Wyeth, and Novartis.

The product sales reported by Teva to IMPAX are net of rebates, chargebacks and
other credits pursuant to the June 2001 Strategic Alliance Agreement. We began
estimating returns for products marketed by Rx Partners, based on our internal
returns analysis and historical industry statistics. The reserve for sales
returns for products marketed by Rx Partners was $1,070,000 at June 30, 2004.

                                       19
<PAGE>

The following table summarizes the net sales for the six months ended June 30,
2004 as compared to the six months ended June 30, 2003 by marketing channel:

                                                      2004           2003
                                                   ---------       --------
         (in 000's)

         Global                                    $ 25,835       $ 16,865
         Rx Partners                                 27,912             --
         OTC                                          7,790          7,661
                                                   --------       --------
              Total Net Sales                      $ 61,537       $ 24,526
                                                   ========       ========

The increase in Global products of approximately $9 million in the first six
months of 2004 as compared to the same period in 2003 was primarily due to new
products introduced in 2004 and late 2003, such as Demeclocycline of
approximately $4.9 million, Flavoxate of approximately $1.4 million,
Carbidopa/Levodopa of approximately $0.8 million, and higher sales of previously
introduced products, such as Orphenadrine, of approximately $0.8 million, and
LIPRAM products of approximately $0.8 million.

COST OF SALES

The cost of sales for the six months ended June 30, 2004, was $37,087,000 as
compared to $17,468,000 for the same period in 2003. The overall increase in
cost of sales was primarily due to the increase in cost of materials as a result
of increased product sales.

GROSS MARGIN

Gross margin for the six months ended June 30, 2004 was $28,022,000, or
approximately 43% of total revenues, as compared to $8,024,000, or approximately
31% of total revenues, for the same period in 2003. The year-over-year increase
in the gross margin percentage was primarily due to the introduction of new
products since last year with higher margins, such as Bupropion Hydrochloride,
Demeclocycline Hydrochloride, Flavoxate, and Carbidopa/Levodopa, and the
$2,500,000 revenue from Teva related to the refundable deposit.

RESEARCH AND DEVELOPMENT EXPENSES

The research and development expenses for the six months ended June 30, 2004
were $10,323,000 less reimbursements of $89,000 by a subsidiary of Teva
Pharmaceutical Industries, Ltd. under the Strategic Alliance Agreement signed in
June 2001, as compared to $7,107,000 less reimbursements of $154,000 for the
same period in 2003. The higher research and development expenditures in 2004 as
compared to 2003 were attributable to higher personnel costs, biostudies,
clinical studies, and new product introduction costs.

PATENT LITIGATION EXPENSES

The patent litigation expenses for the six months ended June 30, 2004 were
$3,848,000 as compared to $995,000 for the same period in 2003. The year-to-year
increase for the six months was primarily due to the ongoing Paragraph IV
litigation related to our ANDAs for Omeprazole Capsules, Fenofibrate Tablets and
Fexofenadine and Pseudoephedrine Tablets.

SELLING EXPENSES

The selling expenses for the six months ended June 30, 2004 were $1,437,000 as
compared to $1,006,000 for the same period in 2003. The increase in selling
expenses as compared to 2003 was primarily due to higher personnel costs.

GENERAL AND ADMINISTRATIVE EXPENSES

The general and administrative expenses for the six months ended June 30, 2004
were $6,468,000 as compared to $4,205,000 for the same period in 2003. The
increase in general and administrative expenses as compared to 2003 was
primarily due to higher professional fees, insurance premiums, and personnel
costs.

INTEREST INCOME

Interest income for the six months ended June 30, 2004 was $327,000 as compared
to $112,000 for the same period in 2003, primarily due to higher average cash
equivalents and short-term investments generated from the net proceeds of the
Company's $95 million convertible senior subordinated debentures.



                                       20
<PAGE>

INTEREST EXPENSE

Interest expense for the six months ended June 30, 2004 was $836,000 as compared
to $495,000 for the same period in 2003. The increase in interest expense for
2004 was primarily due to the 1.25% interest accrued on the Company's $95
million convertible senior subordinated debentures.

INCOME TAXES

On a quarterly basis, the Company evaluates its projected full year taxable
income and related book-to-tax timing difference and the use of NOL
carryforwards. The Company estimates that it is not subject to current year
income taxes. We evaluate the realizability of deferred tax assets on an annual
and quarterly basis or if there is a significant change in circumstance that may
cause a change in our judgment about the realizability of our deferred tax
assets. At December 31, 2003, the Company had a net operating loss-carryforwards
totaling approximately $94,600,000, which expire from 2009 through 2023.

NET INCOME

The net income for the six months ended June 30, 2004, was $5,537,000 as
compared to a net loss of $5,497,000 for the same period in 2003, primarily due
to higher sales, partially offset by higher research and development, selling,
and general administrative expenses.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2004, we had $98,556,000 in cash, cash equivalents and short-term
investments. Only $200,000 of the account balances are insured by the Federal
Depository Insurance Company (FDIC). The balance of the Company's cash
equivalents and the short-term investments are held in U.S. Treasury securities
and high-grade commercial paper, which are not insured by the FDIC.

The net cash provided by financing activities for the six months ended June 30,
2004, was approximately $101,016,000, consisting primarily of the $95,000,000
proceeds, less capitalized costs of $3,612,000, from the Company's convertible
senior subordinated debentures offering completed in April 2004, and proceeds of
$3,771,000 from issuance of common stock upon the exercise of options and
warrants.

In April 2004, the Company terminated the loan agreements with PIDA and DRPA and
repaid the remaining balances totaling approximately $992,000.

For the six months ended June 30, 2004, significant uses of cash from operating
activities included, primarily, the increase in accounts receivable balance of
$9,936,000 and inventory buildup of $8,623,000, partially offset by favorable
cash flow from operations, (excluding depreciation and amortization) of
$7,619,000. During the three months ended June 30, 2004, we repaid our partners,
Teva and Andrx, approximately $11.8 million for their portion of funding the
inventory buildup for the Bupropion Hydrochloride products.

Our capital expenditures for the six months ended June 30, 2004 were $6,269,000
as compared to $1,125,000 for the same period in 2003. The net cash used in
investing activities included $45,244,000 for the purchase of the short term
investments in U.S. Treasury securities and high-grade commercial paper.

In December 2003, the Company transferred the $25 million Loan and Security
Agreement from Congress Financial Corporation to Wachovia Bank, N.A., thereby
securing lower interest and less restrictive borrowing terms. The interest rates
for the revolving loans are prime rate plus 0.75%, or eurodollar rate plus
2.75%, at our option, based on excess availability. The term loan has an
interest rate of prime rate plus 1.5%, or eurodollar rate plus 4%, at our
option. As of June 30, 2004, we borrowed approximately $5,000,000 against the
revolving credit line and $2,880,000 against the term loan. In April 2004, the
$25 million loan and security agreement was amended, as follows: (1) the cash
collateral requirement of $10 million was removed; (2) the adjusted excess
availability covenant was removed; (3) the maximum permitted capital expenditure
amount was aggregated to $45,000,000 for the years 2004 and 2005, and (4) as a
condition of items (1) and (2) above, IMPAX is required to maintain a minimum
cash balance at Wachovia of $25,000,000.

We have no interest rate or derivative financial instruments nor material
foreign exchange risks. We are also not party to any off-balance-sheet
arrangements, other than operating leases.

We expect to incur significant operating expenses, particularly research and
development, for the foreseeable future in order to execute our business plan.
We, therefore, anticipate that such operating expenses, as well as planned
capital expenditures for the next twelve months ranging from $18 to $22 million,
primarily in plant capacity expansion, will constitute a material use of our
cash resources.



                                       21
<PAGE>

To date, we have primarily funded our research and development and other
operating activities through equity and debt financing, and strategic alliances.

We have not paid any cash dividends on our common stock and we do not plan to
pay any such cash dividends in the foreseeable future. We plan to retain any
earnings for the operation and expansion of our business. Our loan agreements
prohibit the payment of dividends without the other party's consent.

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 applies immediately to variable interest
entities created after January 31, 2003, and to variable interest entities in
which an enterprise obtains an interest after that date. It applies in the first
fiscal year or interim period beginning after June 15, 2003, to variable
interest entities in which an enterprise holds a variable interest that it
acquired before February 1, 2003. FIN 46 applies to public enterprises as of the
beginning of the applicable interim or annual period. On October 8, 2003, the
FASB decided to defer FIN 46 until the first reporting period ending after
December 15, 2003. The provisions of this Interpretation did not have a material
impact on the Company's financial condition or results of operations.

In December 2003, the FASB issued FIN No. 46R, Consolidation of Variable
Interest Entities, clarifying the application of Accounting Research Bulletin
No. 51, Consolidated Financial Statements, to certain entities in which equity
investors do not have the characteristics of a controlling financial interest or
do not have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support. The provisions of this
Interpretation do not have a material impact on the Company's financial
condition or results of operations.

In December 2003, the FASB revised SFAS 132, "Employers' Disclosure About
Pensions and Other Post Retirement Benefits." This Statement does not change the
measurement or recognition of those plans required by FASB 87, "Employers'
Accounting for Pensions," and No. 106, "Employers' Accounting for Post
Retirement Benefits Other than Pensions." This Statement retains the disclosure
requirements contained in FASB No. 132, "Employers' Disclosure about Pensions
and Other Post Retirement Plans." The provisions of this Statement do not have a
material impact on the Company's financial condition or results of operations.
During the six months ended June 30, 2004 and 2003, the employer 401-K match was
$218,000 and $150,000, respectively.

In February 2004, the FASB issued revised FSP pertaining to FIN 46(R). The
revised FSPs replace certain previously issued FIN 46 FSP for entities to which
FIN 46(R) is applicable. This revision to FIN 46 did not have a material impact
on the Company's financial condition or results of operation.

In February 2004, the FASB revised SFAS 133, Accounting for Derivative
Instruments and Hedging Activities for Implementation issue E2L, A1J, and C6.
The revisions to SFAS 133 did not have a material impact on the Company's
financial condition or results of operation.

In June 2004, the FASB discussed EITF 04-08, The Effect of Contingently
Convertible Debt on Diluted Earnings Per Share. The EITF task force has proposed
that companies count the shares that could be issued upon conversion of
securities like the Company's debentures when calculating fully diluted per
share earnings. This EITF is not yet effective. However, we disclosed in Note 2
the potential effect of this EITF on the Company's fully diluted EPS
calculation.

MAJOR OPERATIONAL HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2004

o    On January 28, 2004, IMPAX announced that the U.S. Food and Drug
     Administration (FDA) granted final approval to the Company's Abbreviated
     New Drug Application (ANDA) for its generic version of Wellbutrin(R) SR
     (Bupropion Hydrochloride) 100 mg Controlled Release Tablets and granted
     tentative approval to the Company's generic version of Wellbutrin SR 150 mg
     Controlled Release Tablets. GlaxoSmithKline markets Wellbutrin SR for the
     treatment of depression. According to NDCHealth, U.S. sales of these dosage
     forms of Wellbutrin SR Tablets were approximately $1.2 billion in the
     twelve months ended June 30, 2004.

o    On January 29, 2004, IMPAX announced that the Court of Appeals for the
     Federal Circuit in Washington, D.C. upheld a lower court decision that
     ruled against certain claims by GlaxoSmithKline in regards to the Company's
     ANDA for Wellbutrin SR (Bupropion Hydrochloride) 100 mg and 150 mg and for
     Zyban(R) (Bupropion Hydrochloride) 150 mg. GlaxoSmithKline markets
     Wellbutrin SR for the treatment of depression and Zyban for smoking
     cessation.



                                       22
<PAGE>

o    On February 27, 2004, IMPAX announced that the FDA granted tentative
     approval to the Company's ANDA for its generic version of Allegra(R)-D
     (Fexofenadine Hydrochloride and Pseudoephedrine Hydrochloride 60mg/120mg)
     Extended Release Tablets. Aventis Pharmaceuticals markets Allegra-D for the
     treatment of the symptoms associated with seasonal allergic rhinitis.
     According to NDCHealth, U.S. sales of Allegra-D were approximately $438
     million in the twelve months ended June 30, 2004.

o    On March 5, 2004, IMPAX announced that the FDA granted final approval to
     the Company's ANDA for a generic version of Claritin(R)-D 24-Hour
     (Loratadine and Pseudoephedrine Sulfate, 10mg/240mg) Extended Release
     Tablets. Schering-Plough Corporation markets Claritin-D 24-Hour as an
     over-the-counter (OTC) drug for the relief of symptoms of seasonal allergic
     rhinitis (hay fever). According to NDCHealth, U.S. sales of Claritin-D
     24-Hour were $7 million for the twelve months ended June 30, 2004.

o    On March 8, 2004, IMPAX announced that the FDA granted tentative approval
     to the Company's ANDA for its generic version of Tricor(R) (Fenofibrate)
     Tablets. Tricor Tablets are marketed by Abbott Laboratories, Inc. to assist
     patients in managing their cholesterol levels. The drug is indicated for
     use in reducing elevated LDL cholesterol, total cholesterol, triglycerides
     and Apo B and increasing HDL cholesterol in patients with primary
     hypercholesterolemia or mixed lipidemia. The drug has also been approved as
     adjunctive therapy for the treatment of hypertriglyceridemia, a disorder
     characterized by elevated levels of very low density lipoprotein (VLDL) in
     the plasma. According to NDCHealth, U.S. sales of Tricor Tablets were
     approximately $684 million for the twelve months ended June 30, 2004.

o    On March 22, 2004, IMPAX announced that the FDA granted final marketing
     approval to the Company's ANDA for its generic version of Wellbutrin SR
     (Bupropion Hydrochloride) 150 mg Controlled Release Tablets. The FDA had
     previously granted final approval for the Company's application for the 100
     mg strength. GlaxoSmithKline markets Wellbutrin SR for the treatment of
     depression. Both products were shipped to our marketing partner, Teva.

o    On March 23, 2004, IMPAX announced that the FDA granted final marketing
     approval to the Company's ANDA for its generic version of Declomycin(R)
     (Demeclocycline Hydrochloride) 150 and 300 mg. Tablets. ESP Pharma markets
     Declomycin for the treatment of various infections. According to NDCHealth,
     U.S. sales of Declomycin were approximately $30 million for the twelve
     months ended June 30, 2004.

o    On May 17, 2004, IMPAX announced that the FDA granted final approval to the
     Company's ANDA for Carbidopa/Levodopa Extended Release Tablets, its generic
     version of Sinemet(R) CR tablets. Bristol-Myers Squibb markets Merck &
     Co.'s Sinemet CR exclusively in the U.S. for the treatment of Parkinsonism.
     According to NDCHealth, U.S. prescription sales of Sinemet CR and the one
     currently marketed generic equivalent were $123 million in the twelve
     months ended June 30, 2004.

o    On May 27, 2004, IMPAX announced that the FDA granted final marketing
     approval to the Company's ANDA for its generic version of Zyban, Bupropion
     Hydrochloride 150 mg Controlled Release Tablets. GlaxoSmithKline markets
     Zyban for smoking cessation. According to NDCHealth, U.S. sales of Zyban
     were approximately $59 million in the twelve months ended June 30, 2004.

o    On May 28, 2004, IMPAX announced that the FDA granted final marketing
     approval to the Company's ANDA for its generic version of Proamatine(R),
     Midodrine Hydrochloride 2.5 and 5 mg Tablets. Shire Pharmaceuticals Group
     plc markets Proamatine for treatment of symptomatic orthostatic
     hypotension. According to NDCHealth, U.S. market sales of Proamatine 2.5 mg
     and 5 mg and the two other marketed generic versions were approximately $48
     million in the twelve months ended June 30, 2004.

o    On June 18, 2004, IMPAX announced that the FDA granted IMPAX a second tier
     180-day exclusivity related to its pending ANDA for a generic version of
     Glucophage XR(R), Metformin HCl Extended Release Tablets, 500mg. IMPAX has
     selectively waived its rights to this exclusivity to Teva Pharmaceuticals
     USA Inc. and will be sharing in the profits of Teva's Metformin HCl
     Extended Release Tablets as provided for in the Strategic Alliance
     Agreement between IMPAX and Teva signed in June 2001. On August 2, 2004,
     the FDA granted final marketing approval to the Company's ANDA for its
     generic version of Glucophage XR, Metformin HCl Extended Release Tablets,
     500 mg. Bristol-Myers Squibb markets Glucophage XR for the improvement of
     glycemic control in patients with type 2 diabetes. According to NDCHealth,
     U.S. market sales of Glucophage XR 500 mg and other marketed generic
     versions were approximately $376 million in the twelve months ended June
     30, 2004.



                                       23
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's cash and cash equivalents includes U.S. government and short-term
high-grade commercial paper stated at cost which approximates market value. The
primary objective of the Company's investment activities is to preserve
principal and maximize yields without significantly increasing risk. To achieve
this objective, the Company maintains its portfolio in a variety of high credit
quality securities, including U.S. Government securities, treasury bills, and
short-term high-grade commercial paper. One hundred percent of the Company's
portfolio matures in less than one year. The carrying value of the portfolio
approximates the market value at June 30, 2004. The Company's debt instruments
at June 30, 2004, are subject to fixed and variable interest rates and principal
payments. We believe that the fair value of our fixed and variable rate
long-term debt approximates their carrying value of approximately $108 million
at June 30, 2004. While changes in market interest rates may affect the fair
value of our fixed and variable rate long-term debt, we believe the effect, if
any, of reasonably possible near-term changes in the fair value of such debt on
the Company's financial statements will not be material.

We have no interest rate or derivative financial instruments nor material
foreign exchange risks. We are also not party to any off-balance-sheet
arrangements, other than operating leases.

ITEM 4.  CONTROLS AND PROCEDURES

The Company, under the supervision and with the participation of our management,
including our principal executive officer and our principal financial officer,
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Exchange Act Rule 13a-15(e)), as of the end of the period covered by
this report. Based on this evaluation, including consideration of the
restatement discussed below, our principal executive officer and our principal
financial officer concluded that our disclosure controls and procedures are
effective in reaching a reasonable level of assurance that information required
to be disclosed by us in the reports that we file or submit under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized, and
reported within the time period specified in the Securities and Exchange
Commission's rules and forms.

The principal executive officer and principal financial officer also conducted
an evaluation of internal control over financial reporting ("Internal Control")
to determine whether any changes in Internal Controls occurred during the
quarter that have materially affected, or which are reasonably likely to
materially affect, Internal Controls. Based on this evaluation, there has been
no such change during the quarter covered by this report.

A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been
detected. The Company conducts periodic evaluations of its internal controls to
enhance, where necessary, its procedures and controls. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected.

Subsequent to issuance of the condensed financial statements for the quarter
ended June 30, 2004, the Company restated its condensed financial statements as
described in Note 14. The Company determined that a material weakness existed in
its internal controls. The company is endeavoring to take steps to correct the
deficiency that gave rise to this restatement. These steps include, but are not
limited to, regular discussions with Teva management regarding their monthly
financial reports to IMPAX on our products marketed by Teva via monthly
teleconferences and quarterly meetings. These discussions will cover all the
areas of revenue recognition for these products, including but not limited to,
sales credits, product returns and internal controls over Teva's financial
reporting to IMPAX. Our procedures will include a review of applicable
documentation for IMPAX revenue sharing. The Audit Committee of the Company's
Board of Directors may take additional steps as deemed necessary. The Company is
endeavoring to take steps under the strategic alliance agreement to ensure that
all such adjustments granted by its strategic partner in the future are reported
to the Company on a timely basis. Under the contract terms, the Company has the
option to perform an annual audit with our strategic partner. The Company has
disclosed and discussed this with its Audit Committee. For more information
concerning the restatement, see Note 11 in the Notes to Financial Statements
contained in the Company's Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 2004 and Note 14 in the Notes to Financial Statements contained in the
Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 2004.



                                       24
<PAGE>

PART II  - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

PATENT LITIGATION

There has been substantial litigation in the pharmaceutical, biological, and
biotechnology industries with respect to the manufacture, use, and sale of new
products that are the subject of conflicting patent rights. One or more patents
cover most of the brand name controlled-release products for which we are
developing generic versions. Under the Hatch-Waxman Amendments, when a drug
developer files an ANDA for a generic drug, and the developer believes that an
unexpired patent which has been listed with the FDA as covering that brand name
product will not be infringed by the developer's product or is invalid or
unenforceable, the developer must so certify to the FDA. That certification must
also be provided to the patent holder, who may challenge the developer's
certification of non-infringement, invalidity or unenforceability by filing a
suit for patent infringement within 45 days of the patent holder's receipt of
such certification. If the patent holder files suit, the FDA can review and
approve the ANDA, but is prevented from granting final marketing approval of the
product until a final judgment in the action has been rendered, or 30 months
from the date the certification was received, whichever is sooner. Should a
patent holder commence a lawsuit with respect to an alleged patent infringement
by us, the uncertainties inherent in patent litigation make the outcome of such
litigation difficult to predict. The delay in obtaining FDA approval to market
our product candidates as a result of litigation, as well as the expense of such
litigation, whether or not we are successful, could have a material adverse
effect on our results of operations and financial position. In addition, there
can be no assurance that any patent litigation will be resolved prior to the
30-month period. As a result, even if the FDA were to approve a product upon
expiration of the 30-month period, we may not commence marketing that product if
patent litigation is still pending.

Lawsuits have been filed against us in connection with fourteen of our Paragraph
IV filings. The outcome of such litigation is difficult to predict because of
the uncertainties inherent in patent litigation.

ASTRAZENECA AB ET AL. V. IMPAX:  THE OMEPRAZOLE CASES

In May 2000, AstraZeneca AB and four of its related companies filed suit against
IMPAX in the U.S. District Court in Wilmington, Delaware claiming that IMPAX's
submission of an ANDA for Omeprazole Delayed Release Capsules, 10 mg and 20 mg,
constitutes infringement of six U.S. patents relating to AstraZeneca's Prilosec
product. The action seeks an order enjoining IMPAX from marketing Omeprazole
Delayed Release Capsules, 10 mg and 20 mg until February 4, 2014, and
reimbursement for costs and attorney fees associated with this litigation.

In February 2001, AstraZeneca and the same related companies filed the same suit
against IMPAX in the same federal court in Delaware for infringement, based upon
IMPAX's amendment to its ANDA adding 40 mg strength Omeprazole Delayed Release
Capsules.

AstraZeneca filed essentially the same lawsuits against nine other generic
pharmaceutical companies (Andrx, Genpharm, Cheminor, Kremers, LEK, Eon, Mylan,
Apotex, and Zenith). Due to the number of these cases, a multidistrict
litigation proceeding, In re Omeprazole 10 mg, 20 mg, and 40 mg Delayed Released
Capsules Patent Litigation, MDL-1291, has been established to coordinate
pre-trial proceedings. Both lawsuits filed by AstraZeneca against IMPAX have
been transferred to the multidistrict litigation.

Early in the multidistrict litigation, the trial court ruled that one of the six
patents-in-suit was not infringed by the sale of a generic omeprazole product
and that certain other patents were invalid. These rulings effectively
eliminated four patents from the trial of these infringement cases, although
AstraZeneca may appeal these rulings as part of the overall appeal process in
the case.

On October 11, 2002, after a trial involving Andrx, Genpharm, Cheminor, and
Kremers, the trial judge handling the multidistrict litigation ruled on
AstraZeneca's complaints that three of these four defendants (First Wave
Defendants) infringed the remaining patents-in-suit. The trial judge ruled that
three of the First Wave defendants, Andrx, Genpharm, and Cheminor, infringed the
remaining two patents asserted by AstraZeneca in its complaints, and that those
patents are valid until 2007. In the same ruling, the trial court ruled that the
remaining First Wave Defendant, Kremers, did not infringe either of the
remaining two patents. This defendant's formulation differed from the
formulation used by the other First Wave Defendants in several respects. In
mid-December 2003, the U.S. Court of Appeals for the Federal Circuit affirmed
the October 2002 ruling in all respects. Subsequent petitions for rehearing have
been denied.

The formulation that IMPAX would employ in manufacturing its generic equivalent
of omeprazole has not been publicly announced. IMPAX's formulation has elements
that resemble those of other First Wave Defendants, but it also has elements
that differ. Although the ruling by the trial court in the multidistrict
litigation has a significant effect on the course of AstraZeneca's litigation
against IMPAX, application of the trial court's opinion is not certain. IMPAX
believes that it has defenses to AstraZeneca's claims of infringement, but the
opinion rendered by the trial court in the First Wave cases makes the outcome of
AstraZeneca's litigation against IMPAX uncertain.

Two of the remaining six defendants (Second Wave Defendants) filed Motions for
Summary Judgment of Non-Infringement, based upon the October 2002 ruling. The
trial court has deferred ruling on those motions until discovery is completed.

                                       25
<PAGE>

In December 2003, the trial court entered a new scheduling order governing
pre-trial proceedings relating to the Second Wave Defendants, including IMPAX.
The schedule for completion of the litigation in the Second Wave, including
AstraZeneca's litigation against IMPAX, now provides that all fact discovery
(with certain exceptions) is complete. AstraZeneca's expert reports on issues as
to which it bears the burden of proof, including issues of alleged infringement,
were produced on February 17, 2004. IMPAX's responsive expert reports were
produced on July 12, 2004.

Under the December 2003 scheduling order, Astra's reply reports would have been
due on August 6, 2004, and expert depositions would have commenced shortly
thereafter. Following receipt of IMPAX's six expert reports on July 12, 2004, as
well as 17 other reports produced by four other defendants, Astra requested a
further modification of the scheduling order. Astra's request for a three-month
extension of the time for its reply reports was denied, but the Court granted
Astra an additional five-week period to respond to the defendants' rebuttal
reports on non-infringement. The schedule for expert depositions must be
re-established. Nevertheless, expert depositions will be conducted between
September 14, 2004, when reply reports are now due, and the end of 2004. Given
the delays which have thus far occurred in the litigation and the number of
experts already designated by the parties, it is uncertain whether the expert
depositions can be completed in the time allotted by the present schedule.

Under the December 2003 schedule, Motions for Summary Judgment may not be filed,
as of right, until October 19, 2004. IMPAX has recently requested permission to
file an earlier motion for summary judgment on one aspect of the case. Other
defendants have also requested permission to file early motions for summary
judgment on other aspects of the litigation.

IMPAX may file additional Motions for Summary Judgment, including other Motions
for Summary Judgment of Non-Infringement, following the close of all discovery
or after October 19, 2004, whichever comes first. If the case is not resolved by
summary judgment, the case involving IMPAX will be returned to the U.S. District
Court in Delaware for trial. It is likely, given the proceedings in the First
Wave cases, that the case against IMPAX will be transferred back to New York for
a consolidated trial before the same judge who decided the First Wave cases.
IMPAX believes, however, that any trial that might be scheduled in the case will
commence in the first half of 2005.

If IMPAX does not file a Motion for Summary Judgment, or if such a Motion is
denied, the court will schedule a date for trial. IMPAX intends to vigorously
defend the action brought by AstraZeneca.

In August 2003, the court issued an order dismissing four of the
patents-in-suit, three with prejudice. On September 30, 2003, as a result of the
court's dismissal, AstraZeneca served each of the Second Wave Defendants,
including IMPAX, with an amended complaint. In October 2003, IMPAX filed an
answer to the amended complaint in which we asserted a new counterclaim with
antitrust allegations. The counterclaim will be severed, and proceedings
relating to it will be stayed until after trial of the patent infringement case.

AVENTIS PHARMACEUTICALS INC., ET AL. V. IMPAX:  THE FEXOFENADINE CASES

On March 25, 2002, Aventis Pharmaceuticals Inc., Merrell Pharmaceuticals Inc.,
and Carderm Capital L.P. (collectively referred to as Aventis) sued IMPAX in the
U.S. District Court for the District of New Jersey (Civil Action No. 02-CV-1322)
alleging that IMPAX's proposed fexofenadine and pseudoephedrine hydrochloride
tablets, containing 60 mg of fexofenadine and 120 mg of pseudoephedrine
hydrochloride, infringe U.S. Patent Nos. 6,039,974; 6,037,353; 5,738,872;
6,187,791; 5,855,912; and 6,113,942. On November 7, 2002, Aventis filed an
amended complaint, which added an allegation that IMPAX's Fexofenadine and
Pseudoephedrine Hydrochloride 60 mg/120 mg Extended Release Tablet product
infringes U.S. Patent No. 6,399,632. Aventis seeks an injunction preventing
IMPAX from marketing its Fexofenadine and Pseudoephedrine Hydrochloride 60
mg/120 mg Extended Release Tablet product until the patents-in-suit have
expired, and an award of damages for any commercial manufacture, use, or sale of
IMPAX's Fexofenadine and Pseudoephedrine Hydrochloride 60 mg/120 mg Extended
Release Tablet product, together with costs and attorneys' fees.

Fact discovery in this action is scheduled to close on October 29, 2004. IMPAX
believes that it has defenses to the claims made by Aventis based on
noninfringement and invalidity. A tentative trial date has been scheduled for
October 2005.

Aventis has also filed a suit against Barr Laboratories, Inc., Mylan
Pharmaceuticals, Inc., Dr. Reddy's Pharmaceuticals and Teva Pharmaceuticals USA,
Inc. in New Jersey asserting the same patent infringement against these
defendants' proposed Fexofenadine and Pseudoephedrine or Fexofenadine products.
The IMPAX case has been consolidated for trial with the Barr, Mylan, Dr. Reddy
and Teva cases.

On March 25, 2004, Aventis and AMR filed a complaint and first amended complaint
against IMPAX and Ranbaxy, alleging infringement of two additional patents
relating to the process for making the active pharmaceutical ingredient,
fexofenadine hydrochloride. These patents, United States Patent Nos. 5,581,011
and 5,750,703, are owned by AMR and exclusively licensed to Aventis.

                                       26
<PAGE>

On July 23, 2003, IMPAX filed Summary Judgment motions for non-infringement of
U.S. Patent Nos. 6,039,974, 6,113,942, and 5,855,912; and for non-infringement
and invalidity of U.S. Patent No. 5,738,872. Opposition papers were filed on
August 11, 2003. Reply papers were filed on September 24, 2003. On October 24,
2003, IMPAX filed a brief discussing the impact of the recent Festo decision on
their Motions for Summary Judgment of non-infringement. Oral argument for the
Summary Judgment Motion regarding the `912, `942, and `974 patents was heard on
November 3, 2003. Oral argument for the Summary Judgment Motion regarding the
`872 patent was heard on December 8, 2003. On June 29, 2004, the court granted
the Company's Motions for Summary Judgment of Non-infringement of the `912 and
`942 patents and denied the Company's Motion for Summary Judgment of
Non-infringement of the `974 patent. At the same time, the court ordered that a
ruling on the Company's motion for Summary Judgment for the Non-infringement of
the `872 patent is reserved pending a Markman hearing to be held on September 9,
2004 to assist the court in construing the patent's product-by-process claims.

PURDUE PHARMA L.P. ET AL. V IMPAX: THE OXYCODONE CASES

On April 11, 2002, Purdue Pharma and related companies filed a complaint in the
U.S. District Court for the Southern District of New York alleging that IMPAX's
submission of ANDA No. 76-318 for 80 mg OxyContin Tablets infringes three
patents owned by Purdue. The Purdue patents are U.S. Patent Nos. 5,508,042,
5,549,912 and 5,656,295; all directed to controlled release opioid formulations.
On September 19, 2002, Purdue filed a second Infringement Complaint regarding
IMPAX's 40 mg OxyContin generic product. On October 9, 2002, Purdue filed a
third Infringement Complaint regarding IMPAX's 10 mg and 20 mg OxyContin generic
products. IMPAX filed its answer and counterclaims in each case on October 3,
2003. On November 25, 2003, Purdue submitted their reply to our counterclaims.
Purdue is seeking, among other things, a court order preventing IMPAX from
manufacturing, using or selling any drug product that infringes the subject
Purdue patents.

Purdue previously sued Boehringer Ingelheim/Roxane, Endo and Teva on the same
patents. One or more of these defendants may resolve the invalidity issues
surrounding the Purdue patents prior to when IMPAX's case goes to trial. The
Boehringer Ingelheim/Roxane suit is stayed. The Endo action was tried in June
2003 and post trial briefs have been filed. In January 2004, the judge in the
Endo action ruled that the three patents in suit, the same patents that Purdue
had asserted against IMPAX, are unenforceable because they were inequitably
procured and enjoined their enforcement. Purdue has appealed that ruling to the
Court of Appeals for the Federal Circuit.

IMPAX V. AVENTIS PHARMACEUTICALS, INC.:  THE RILUZOLE CASE

In June 2002, IMPAX filed suit against Aventis Pharmaceuticals, Inc. in the U.S.
District Court in Wilmington, Delaware, seeking a declaration that the filing of
an ANDA to engage in a commercial manufacture and/or sale of Riluzole 50 mg
Tablets for treatment of patients with amyotrophic lateral scleroses (ALS) does
not infringe claims of Aventis' U.S. Patent No. 5,527,814 (`814 patent) and a
declaration that this patent is invalid.

In response to IMPAX's complaint, Aventis filed counterclaims for direct
infringement and inducement of infringement of the `814 patent. In December
2002, the district court granted Aventis' Motion for Preliminary Injunction and
enjoined IMPAX from infringing, contributory infringing, or inducing any other
person to infringe Claims 1, 4 or 5 of the `814 patent by selling, offering for
sale, distributing, marketing or exporting from the United States any
pharmaceutical product or compound containing riluzole or salt thereof for the
treatment of ALS.

The trial was completed on October 30, 2003, and post-trial briefing was
completed in December 2003. IMPAX is pursuing its assertions that claims of the
`814 patent are invalid in view of prior art and are unenforceable in view of
inequitable conduct committed during the prosecution of the patent before the
United States Patent and Trademark Office (USPTO).

On January 30, 2004, the court denied IMPAX's Motion for Summary Judgment on
inequitable conduct and, on February 5, 2004, the court denied IMPAX's Motion
for Summary Judgment on non-infringement of certain claims. The court has not
issued its trial rulings and did not rule on the third pre-trial Motion for
Summary Judgment based on invalidity of the patent-in-suit.

If IMPAX is not ultimately successful in proving invalidity or unenforceability,
there is a substantial likelihood that the court will enter a permanent
injunction enjoining IMPAX from marketing Riluzole 50 mg Tablets for the
treatment of ALS in the United States until the expiration of the `814 patent
(June 18, 2013). If IMPAX is ultimately successful in proving either defense,
the preliminary injunction would be set aside and IMPAX would be permitted to
market its Riluzole 50 mg Tablet product for the treatment of ALS in the United
States.

                                       27
<PAGE>

ABBOTT LABORATORIES V. IMPAX:  THE FENOFIBRATE TABLET CASES

In January 2003, Abbott Laboratories and Fournier Industrie et Sante and a
related company filed suit against IMPAX in the U.S. District Court in
Wilmington, Delaware claiming that IMPAX's submission of an ANDA for Fenofibrate
Tablets, 160 mg, constitutes infringement of two U.S. patents owned by Fournier
and exclusively licensed to Abbott, relating to Abbott's Tricor tablet product.

In March 2003, Abbott and Fournier filed a second action against IMPAX in the
same court making the same claims against IMPAX's 54 mg Fenofibrate Tablets.
These cases were consolidated in April 2003.

In September 2003, Abbott and Fournier filed a third action against IMPAX in the
U.S. District Court in Wilmington, Delaware, claiming that IMPAX's submission of
its ANDA for 54 mg and 160 mg Fenofibrate Tablets constitutes infringement of a
third patent recently issued to Fournier and exclusively licensed to Abbott.
This action was also consolidated with the two previously consolidated actions
in December 2003. In January 2004, Abbott and Fournier filed a fourth action
relating to IMPAX's 54 mg and 160 mg Fenofibrate Tablets based upon a claim of
infringement of a fourth patent. All four cases were consolidated in March 2004.
Fact and expert discovery in the consolidated cases closes in November 2004 and
the trial is currently set for June 2005. IMPAX has responded to all four
complaints by asserting that its proposed generic Fenofibrate Tablet products do
not infringe the patents-in-suit and by asserting that the patents-in-suit are
invalid.

All four actions seek an injunction preventing IMPAX from marketing its
Fenofibrate Tablet products until the expiration of the patents (January 9,
2018) and an award of damages for any commercial manufacture, use, or sale of
IMPAX's Fenofibrate Tablet product, together with costs and attorney fees.

SOLVAY PHARMACEUTICALS V. IMPAX:  THE CREON CASE

On April 11, 2003, Solvay Pharmaceuticals, Inc., manufacturer of the Creon line
pancreatic enzyme products, brought suit against IMPAX in the U.S. District
Court for the District of Minnesota claiming that IMPAX has engaged in false
advertising, unfair competition, and unfair trade practices under federal and
Minnesota law in connection with the Company's marketing and sale of its Lipram
products. The suit seeks actual and consequential damages, including treble
damages, attorneys' fees, injunctive relief and declaratory judgments that would
prohibit the substitution of Lipram for prescriptions of Creon. On June 6, 2003,
IMPAX filed a Motion for Dismissal of Plaintiff's Complaint, which sought to
dismiss each count of Solvay's complaint. On January 9, 2004, the U.S. District
Court issued a ruling on IMPAX's Motion for Dismissal, dismissing two of the
counts set forth in the Complaint, including the count which sought a
declaratory judgment that Lipram may not lawfully be substituted for
prescriptions of Creon. On January 26, 2004, IMPAX filed its Answer to the
Complaint and Counterclaim alleging that Solvay wrongfully interfered with
IMPAX's business relationships. On February 17, 2004, Solvay filed its Reply to
IMPAX's Counterclaim. On February 24, 2004, the Rule 16 Scheduling Conference
was held and, on February 25, 2004, the Court issued a Scheduling Order setting
the deadline for discovery on January 14, 2005, and a trial date for July 1,
2005. Fact discovery is currently ongoing in this case. IMPAX believes it has
defenses to Solvay's allegations and intends to pursue these defenses
vigorously.

ALZA CORPORATION V. IMPAX:  THE OXYBUTYNIN CASE

On September 4, 2003, Alza Corporation ("Alza") filed a lawsuit against IMPAX in
the U.S. District Court for the Northern District of California alleging patent
infringement of one patent related to IMPAX's filing of an ANDA for a generic
version of Ditropan XL (Oxybutynin Chloride) Tablets, 5 mg, 10 mg, and 15 mg.
Alza seeks an injunction, a declaration of infringement, attorney's fees and
costs. On October 24, 2003, IMPAX filed its Answer to the Complaint, which
included defenses to the infringement claim, and counterclaimed for patent
non-infringement and invalidity. Discovery is on-going and trial is currently
set for November 2005.

On October 24, 2003, IMPAX filed a lawsuit against Alza in the U.S. District
Court for the Northern District of California seeking a declaratory judgment
that four Alza patents relating to IMPAX's filing of an ANDA for a generic
version of Ditropan XL (Oxybutynin Chloride) Tablets, 5 mg, 10 mg, and 15 mg are
invalid and/or not infringed by the commercial manufacture, use, offer for sale,
sale, or importation of the IMPAX product. On November 17, 2003, Alza moved to
dismiss the Company's complaint for lack of subject matter jurisdiction based on
Alza's argument that there is no case or controversy between the parties with
respect to these four patents. On April 19, 2004, the Court denied Alza's
motion. On May 18, 2004, the Court ordered the entry of a stipulation of
dismissal based on a covenant not to sue issued by Alza to the Company with
respect to the four Alza patents in the case.

SHIRE LABORATORIES INC. V IMPAX:   THE ADDERALL CASE

On December 29, 2003, Shire Laboratories, Inc., a subsidiary of Shire
Pharmaceuticals Group, PLC, filed a lawsuit against IMPAX in the U.S. District
Court for the District of Delaware alleging patent infringement on U.S. Patent
Nos. 6,322,819 and 6,605,300 related to filing of an ANDA to market a generic
version of Adderall 30 mg capsules. IMPAX filed its answer on January 20, 2004,
denying infringement and contesting the validity of both patents. All discovery
is expected to be completed by March 2005. A tentative court date has been
scheduled for October 11, 2005.

                                       28
<PAGE>

OTHER LITIGATION

STATE OF CALIFORNIA V. IMPAX

On August 7, 2003, IMPAX received an Accusation from the Department of Justice,
Bureau of Narcotic Enforcement, State of California ("BNE"), alleging that IMPAX
failed to maintain adequate controls to safeguard precursors from theft or loss
regarding our pseudoephedrine product in January 2003. IMPAX contested the
allegations in the Accusation and entered into discussions with the State of
California, Department of Justice, to bring resolution to this matter. IMPAX has
implemented a number of remedial measures aimed at improving the security and
accountability of precursor substances used by IMPAX and regulated by the
California Department of Justice, Bureau of Narcotic Enforcement. In March 2004,
following a theft of pseudoephedrine from IMPAX's facilities, the BNE filed an
Amended Accusation, again alleging that IMPAX failed to maintain adequate
controls to safeguard precursors from theft or loss regarding our
pseudoephedrine product. In May 2004, a Notice of Hearing was received from BNE,
which set the hearing of this matter, should one be necessary, for October 18
and October 19, 2004. IMPAX is continuing its discussions with the State of
California, Department of Justice, and hopes to resolve this matter without the
need for a formal hearing.

Other than the legal proceedings described above, we are not aware of any other
material pending or threatened legal actions, private or governmental, against
us. However, as we file additional applications with the FDA that contain
Paragraph IV certifications and develop new products, it is likely we will
become involved in additional litigation related to those filings or products.

INSURANCE

As part of our patent litigation strategy, we had obtained two policies covering
up to $7 million of patent infringement liability insurance from American
International Specialty Line Company ("AISLIC"), an affiliate of AIG
International. This litigation insurance covered us against the costs associated
with patent infringement claims made against us relating to seven of the ANDAs
we filed under Paragraph IV of the Hatch-Waxman Amendments. Both policies had
reached their limits of liability. While Teva has agreed to pay 45% to 50% of
the attorneys' fees and costs (in excess of the $7 million expected to be
covered by our insurance policies for six products) related to the twelve
products covered by our strategic alliance agreement with them, we will be
responsible for the remaining expenses and costs for these products, and all of
the costs associated with patent litigation for our other products and our
future products.

We do not believe that this type of litigation insurance will be available to us
on acceptable terms for our other current or future ANDAs. In those cases, our
policy is to record such expenses as incurred.

Product liability claims by customers constitute a risk to all pharmaceutical
manufacturers. We currently carry $80 million of product liability insurance for
our own manufactured products. This insurance may not be adequate to cover any
product liability claims to which we may become subject.

ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
SECURITIES

On May 17, 2004, we filed an amendment to our Restated Certificate of
Incorporation, as amended, with the Secretary of State of the State of Delaware,
which amendment increased the number of our authorized shares of common stock
from 75,000,000 to 90,000,000. Our board will generally be able to issue
additional shares of common stock without the approval of our stockholders.
These future issuances will dilute the ownership interests of our stockholders.

1.250% CONVERTIBLE SENIOR SUBORDINATED DEBENTURES

On April 5, 2004, the Company issued and sold $95.0 million in aggregate
principal amount of its 1.250% convertible senior subordinated debentures due
2024. The debentures were sold by the Company to Citigroup Global Markets Inc.,
Wachovia Capital Markets, LLC and First Albany Capital Inc., as initial
purchasers, in a private placement exempt from registration under the Securities
Act of 1933, as amended (the "Securities Act"). We have been advised by the
initial purchasers that they have resold, and/or intend in the future to resell,
the debentures to "qualified institutional buyers" (as defined in Rule 144A
promulgated under the Securities Act) in transactions exempt from the
registration requirements of the Securities Act in reliance on Rule 144A.

The issuance and sale of the debentures resulted in net proceeds to the Company
of approximately $91,388,000. These proceeds are being used for general
corporate purposes, including working capital requirements, manufacturing of our
products and research and development.

The debentures bear interest at the rate of 1.250% per year. Interest on the
debentures is payable on April 1 and October 1 of each year, beginning on
October 1, 2004. The debentures are convertible by holders into shares of our
common stock at a conversion price of $28.08 per share (which is subject to
adjustment upon certain events, but represented a 30% premium over our stock
price at the time the debentures were issued). The debentures are convertible by
holders into shares of our common stock if: (1) the price of our common stock
reaches a specific threshold; (2) the trading price for the debentures falls
below certain thresholds; (3) the debentures have been called for redemption; or
(4) certain corporate transactions occur.



                                       29
<PAGE>

The debentures mature on April 1, 2024, unless earlier redeemed, repurchased or
converted. Before April 5, 2007, we may redeem some or all of the debentures if
the price of our common stock reaches a specific threshold, at a redemption
price that includes an additional payment on the redeemed debentures equal to
$230.77 per $1,000 principal amount of debentures, less the amount of any
interest actually paid or accrued and unpaid on the debentures. On and after
April 5, 2007, the Company may redeem some or all of the debentures at certain
specified redemption prices.

The debentures are the Company's unsecured obligations and are subordinated in
right of payment to all of the Company's existing and future senior
indebtedness. On April 1, 2009, April 1, 2014, and April 1, 2019, and under
certain circumstances, holders of the debentures will have the right to require
us to repurchase all or any part of their debentures at a repurchase price equal
to 100% of the principal amount of the debentures, plus accrued and unpaid
interest and liquidated damages, if any, to, but excluding the repurchase date.

In connection with the offering of the debentures, we filed a Form S-3
registration statement with the SEC in June 2004. The registration statement has
not yet been declared effective by the SEC. If the registration statement on
Form S-3 is not declared effective by the SEC by October 4, 2004, then the
interest rate payable on the debentures will be subject to increase.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Company's Annual Meeting of Stockholders held on May 17, 2004, the
following actions were approved, by the votes indicated:

a) Ten directors were elected:
<TABLE>
<CAPTION>

<S>                                              <C>                                   <C>
    Leslie Z. Benet, Ph.D.                       43,846,077 For                        732,889  Withhold authority
    Robert L. Burr                               43,735,232 For                        843,734  Withhold authority
    Barry R. Edwards                             44,288,225 For                        290,741  Withhold authority
    David J. Edwards                             43,791,680 For                        787,286  Withhold authority
    Nigel Fleming, Ph.D.                         43,823,169 For                        755,797  Withhold authority
    Charles Hsiao, Ph.D.                         44,186,440 For                        392,526  Withhold authority
    Larry Hsu, Ph.D.                             44,287,092 For                        291,874  Withhold authority
    Michael Markbreiter                          44,204,397 For                        374,569  Withhold authority
    Oh Kim Sun                                   44,405,446 For                        173,520  Withhold authority
    Peter R. Terreri                             44,402,145 For                        176,821  Withhold authority
</TABLE>

b)  The proposed increase in the authorized shares of the Company's common stock
    from 75,000,000 to 90,000,000, was approved as follows:

    43,025,827 For        1,510,097 Against              10,041 Abstaining

c)  The appointment of Deloitte & Touche LLP as the Company's independent
    accountants for the fiscal year ending December 31, 2004 was ratified, as
    follows:

    44,013,036 For          556,763 Against               9,167 Abstaining



                                       30
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)    Exhibits

             o   3.18  -  Certificate of Amendment of Restated Certificate
                          of Incorporation of Impax Laboratories, Inc.
                          dated as of May 17, 2004.

             o   10.65 -  Second Amendment to Loan and Security Agreement
                          between Wachovia Bank and Impax Laboratories, Inc.
                          dated June 23, 2004.

             o   10.66 -  Amendment to the Development, License and Supply
                          Agreement between Wyeth Consumer Healthcare Division
                          and Impax Laboratories, Inc. dated as of July 9, 2004.

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

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

             o   32.1  -  Certifications pursuant to Section 906 of the
                          Sarbanes-Oxley Act of 2002.

     (b)    Reports

             o   On May 5, 2004,  the  Company  furnished  a report on Form 8-K
                 (Items 9, 12)  announcing  earnings  for the first quarter
                 ended March 31, 2004.

             o   On May 17, 2004, the Company filed a report on Form 8-K
                 (Item 9) announcing that the FDA had granted final
                 approval to the Company's ANDA for Carbidopa/Levodopa
                 Extended Release Tablets.

             o   On May 27, 2004, the Company filed a report on Form 8-K
                 (Item 9) announcing that the FDA had granted final
                 marketing approval to the Company's ANDA for its generic
                 version of Zyban(R) 150 mg Controlled Release Tablets.

             o   On May 28, 2004, the Company filed a report on Form 8-K
                 (Item 9) announcing that the FDA had granted final
                 marketing approval to the Company's ANDA for its generic
                 version of Promatine 2.5 mg and 5 mg Tablets.




                                       31
<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.



 IMPAX LABORATORIES, INC.



 By:         /s/   BARRY R. EDWARDS                      November 16, 2004
     ------------------------------------------          -----------------
              Chief Executive Officer
          (Principal Executive Officer)



 By:       /s/   CORNEL C. SPIEGLER                      November 16, 2004
     ------------------------------------------          -----------------
               Chief Financial Officer
    (Principal Financial and Accounting Officer)




                                       32