<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         March 31, 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
               April 30, 2004      was approximately    58,028,543   .
         -------------------------                   ----------------

<PAGE>


                                EXPLANATORY NOTE
                                ----------------

This amendment is being filed to reflect the restatement of the Company's
condensed financial statements, as discussed in Note 11 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.











                                       i

<PAGE>


                            IMPAX LABORATORIES, INC.

                              INDEX TO FORM 10-Q/A

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004


<TABLE>
<CAPTION>
                          PART I. FINANCIAL INFORMATION


                                                                                                                         PAGE
                                                                                                                         ----
Item 1.  Financial Statements:

<S>                                                                                                                      <C>
         Condensed Balance Sheets as of March 31, 2004 (as restated) and December 31, 2003 (unaudited) ............         1

         Condensed Statements of Income for the Three Months Ended March 31, 2004 (as restated)
         and 2003 (unaudited) .....................................................................................         2

         Condensed Statements of Cash Flows for the Three Months Ended March 31, 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....................        12

Item 3.  Quantitative and Qualitative Disclosures About Market Risk................................................        19

Item 4.  Controls and Procedures...................................................................................        19

                    PART II. OTHER INFORMATION AND SIGNATURES

Item 1.  Legal Proceedings.........................................................................................        20

Item 2.  Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.........................        24

Item 6.  Exhibits and Reports on Form 8-K..........................................................................        25

Signatures     ....................................................................................................        27

Certifications ....................................................................................................        28
</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>
                                                                                         MARCH 31,         DECEMBER 31,
                                                                                           2004                2003
                                                                                      --------------       ------------
                                                                                      (AS RESTATED -
                                                                                       SEE NOTE 11)
<S>                                                                                   <C>                  <C>
ASSETS

Current assets:
                  Cash and cash equivalents                                             $  19,491           $  15,505
                  Accounts receivable, net                                                 20,533               9,885
                  Inventory                                                                30,148              28,479
                  Prepaid expenses and other assets                                         1,704               1,427
                                                                                        ---------           ---------
                                       Total current assets                                71,876              55,296
Restricted cash                                                                            10,000              10,000
Property, plant and equipment, net                                                         39,231              38,132
Investments and other assets                                                                1,371               1,325
Goodwill, net                                                                              27,574              27,574
Intangibles, net                                                                              283                 379
                                                                                        ---------           ---------
                                       Total assets                                     $ 150,335           $ 132,706
                                                                                        =========           =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
                  Current portion of long-term debt                                     $   1,166           $   1,068
                  Accounts payable                                                         33,590              22,783
                  Revolving line of credit                                                  6,953               7,642
                  Accrued expenses and deferred revenues                                   13,933              10,872
                                                                                        ---------           ---------
                                       Total current liabilities                           55,642              42,365
Refundable deposit from Teva                                                                   --               5,000
Long term debt                                                                              8,489               8,854
Deferred revenues and other liabilities                                                     2,895               2,879
                                                                                        ---------           ---------
                                       Total liabilities                                   67,026              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 March 31, 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, 75,000,000 shares authorized and
             57,961,990 and 55,307,136 shares issued and outstanding
             at March 31, 2004, and December 31, 2003, respectively                           580                 553
         Additional paid-in capital                                                       182,062             170,104
         Accumulated deficit                                                              (99,333)           (104,549)
                                                                                        ---------           ---------
                                       Total stockholders' equity                          83,309              66,108
                                                                                        ---------           ---------
                                       Total liabilities and stockholders' equity       $ 150,335           $ 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
                                                                                                 March 31,
                                                                                            ------------------
                                                                                  (As restated -
                                                                                   see Note 11)
                                                                                  -------------          -------------
                                                                                      2004                   2003
<S>                                                                                   <C>                    <C>
Net sales                                                                          $    31,514            $    11,066

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

Other revenues                                                                             531                    359
                                                                                   -----------            -----------

Total revenues                                                                          34,545                 11,425

Cost of sales                                                                           18,550                  8,147
                                                                                   -----------            -----------

Gross margin                                                                            15,995                  3,278

Research and development                                                                 4,884                  3,547

Reimbursements from Teva                                                                   (11)                  (132)
                                                                                   -----------            -----------

Research and development, net                                                            4,873                  3,415

Patent litigation                                                                        1,620                    208

Selling expenses                                                                           726                    568

General and administrative expenses                                                      3,351                  2,122

Other operating income (expense), net                                                        7                     11
                                                                                   -----------            -----------

Net income (loss) from operations                                                        5,432                 (3,024)

Interest income                                                                             56                     42

Interest expense                                                                          (272)                  (231)
                                                                                   -----------            -----------

Net income (loss) before provision for income taxes                                      5,216                 (3,213)

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

Net income (loss)                                                                  $     5,216            $    (3,213)
                                                                                   ===========            ===========

Earnings per share:
              Basic                                                                $      0.09            $     (0.07)
                                                                                   -----------            -----------
              Diluted                                                              $      0.08            $     (0.07)
                                                                                   -----------            -----------

Weighted average common shares outstanding:
              Basic                                                                 56,978,095             47,876,830
                                                                                   -----------            -----------
              Diluted                                                               61,481,932             47,876,830
                                                                                   -----------            -----------
</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>
                                                                                           THREE MONTHS ENDED
                                                                                                MARCH 31,
                                                                                           ------------------
                                                                                      2004                   2003
                                                                                  --------------        --------------
                                                                                  (AS RESTATED -
                                                                                   SEE NOTE 11)

<S>                                                                                  <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss)                                                                $   5,216              $  (3,213)
    Adjustments to reconcile net loss to net cash used by operating activities:
        Depreciation and amortization                                                    1,022                    885
        Reversal of refundable deposit from Teva                                        (2,500)                    --
        Non-cash compensation charge (warrants and options)                                 --                    119
        Change in assets and liabilities:
             Accounts receivable                                                       (10,648)                   790
             Inventory                                                                  (1,669)                (2,310)
             Prepaid expenses and other assets                                            (323)                    50
             Accounts payable                                                           10,807                  2,164
             Other liabilities                                                           3,077                    644
                                                                                     ---------              ---------

                Net cash provided by (used in) operating activities                      4,982                   (871)
                                                                                     ---------              ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment                                                 (2,025)                  (698)
                                                                                     ---------              ---------
                Net cash used in investing activities                                   (2,025)                  (698)
                                                                                     ---------              ---------


CASH FLOWS FROM  FINANCING ACTIVITIES:
    Revolving line of credit borrowings (repayments)                                      (689)                 1,826
    Additions to long-term debt                                                             --                    896
    Repayment of long-term debt                                                           (267)                  (163)
    Proceeds from issuance of common stock (upon exercise of
        stock options and warrants and under ESPP)                                       1,985                     15
                                                                                     ---------              ---------
    Net cash provided by financing activities                                            1,029                  2,574
                                                                                     ---------              ---------
    Net increase in cash and cash equivalents                                            3,986                  1,005
                                                                                     ---------              ---------
    Cash and cash equivalents, beginning of the quarter                              $  15,505              $  10,219
                                                                                     ---------              ---------
    Cash and cash equivalents, end of the quarter                                    $  19,491              $  11,224
                                                                                     =========              =========

    Cash paid for interest                                                           $     273              $     232
                                                                                     =========              =========
    Cash paid for income taxes                                                       $      --              $      --
                                                                                     =========              =========
</TABLE>



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.



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

                                       3

<PAGE>


                          NOTES TO FINANCIAL STATEMENTS
                               THREE MONTHS ENDED
                        MARCH 31, 2004 AND MARCH 31, 2003


NOTE 1. The 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 months ended March 31, 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
March 31, 2004, the Company is marketing thirty-three generic pharmaceuticals,
which represent dosage variations of fourteen different pharmaceutical
compounds, and has seventeen applications under review with the Food and Drug
Administration (FDA), including five tentatively approved, addressing
approximately $5.4 billion in U.S. product sales in the twelve months ended
February 29, 2004, according to NDCHealth. Thirteen of these pending filings
were filed under Paragraph IV of the Hatch-Waxman Amendments. The Company has
approximately twenty-seven 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 $14.5
billion in the twelve months ended February 29, 2004, according to NDCHealth.

Except for the three months ended March 31, 2004, we have experienced operating
losses and negative cash flow from operations and our future profitability
continues to be uncertain. As of March 31, 2004, our accumulated deficit was
$99,333,000 and we had outstanding indebtedness in an aggregate principal amount
of $16,608,000. To remain operational, we must, among other things:

     o    obtain FDA approval 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, will constitute a material use of our cash resources.

On April 5, 2004, the Company completed a convertible senior subordinated
debenture offering of $95,000,000 for net proceeds of $91,675,000. The proceeds
of the debentures will be used for general corporate purposes, including working
capital requirements, manufacturing of our products, and research and
development.

To date, the Company has funded its research and development and other operating
activities through equity and 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 revises and
clarifies portions of Topic 13 of the Staff Accounting Bulletin to be consistent
with current accounting and auditing guidance and SEC rules and regulations.

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 EITF No. 00-21 for multiple element arrangements.

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 this 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 three months ended March 31, 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
terms of the contract, 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 100 mg and 150 mg
products. Effective with the three months ended March 31, 2004, 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. Additionally, the amount of revenue that IMPAX
earns is based on a reimbursement of manufacturing costs plus a fixed gross
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

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
                                                                                               March 31,
                                                                                               ---------
                                                                                      2004                    2003
                                                                                   -----------            -----------
<S>                                                                                <C>                    <C>
Numerator:
      Net income(loss)                                                             $     5,216            $    (3,213)
                                                                                   ===========            ===========

Denominator:
      Basic weighted average common shares outstanding                              56,978,095             47,876,830
      Effect of dilutive options and warrants                                        4,503,837                     --
                                                                                   -----------            -----------
Fully diluted weighted average common shares outstanding                            61,481,932             47,876,830
                                                                                   ===========            ===========

Basic earnings per share                                                           $      0.09            $     (0.07)
                                                                                   ===========            ===========

Fully diluted earnings per share                                                   $      0.08            $     (0.07)
                                                                                   ===========            ===========
</TABLE>

                                       5

<PAGE>

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. As of March 31, 2004 there were no
stock options or warrants excluded from the fully diluted earnings per share
calculation because all options and warrants exercise price were less than the
average market price of common shares.

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 income per share would have been decreased to the
pro forma amounts indicated below (in thousands, except per share amounts):

                                                   Three Months Ended
                                                        March 31,
                                                        ---------
                                              2004                  2003
                                            --------              --------

Net income (loss), as reported              $  5,216              $ (3,213)
Add: Stock-based employee compensation
included in reported net income,
net of related tax effects                         -                     -

Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects                      (959)                 (862)
                                            --------              --------

Pro forma net income (loss)                 $  4,257              $ (4,075)
                                            ========              ========

Earnings per share:
         Basic - as reported                $   0.09              $  (0.07)
                                            --------              --------
         Basic - pro forma                  $   0.07              $  (0.09)
                                            --------              --------

         Diluted - as reported              $   0.08              $  (0.07)
                                            --------              --------
         Diluted - pro forma                $   0.07              $  (0.09)
                                            --------              --------

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
three months ended March 31, 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% and 2.69%; the stock volatility for the three months ended March 31,
2004 and 2003 was 79.48% and 69%, respectively. The weighted average fair value
of options for March 31, 2004 and 2003 was $14.12 and $1.96, 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.

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.

                                       6

<PAGE>

The issuance and sale of the debentures resulted in net proceeds to the Company
of approximately $91,675,000. 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 represented a 30%
premium over our stock price at the time the debentures were issued). The
conversion price is subject to adjustment in certain events 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 connection with the offering of the debentures, we are required to file a
shelf registration statement by July 5, 2004 with the Securities and Exchange
Commission covering resales of the debentures and of the common stock issuable
upon conversion of the debentures. The S-3 must be declared effective by the SEC
by October 4, 2004.

NOTE 3. Recent Accounting Pronouncements

In November 2002, the EITF reached a consensus on Issue No. 00-21, "Revenue
Arrangements with Multiple Deliverables." EITF Issue No. 00-21 provides guidance
on how to account for arrangements that involve the delivery or performance of
multiple products, services, and/or rights to use assets. The provisions of EITF
Issue No. 00-21 applies to revenue arrangements entered into in fiscal periods
beginning after June 15, 2003. We implemented the provisions of EITF Issue No.
00-21 in revenue recognition of certain strategic agreements. The Company
reviews all of the terms of its strategic alliances and follows the guidance
from this Issue for all multiple element arrangements.

In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS
No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure,
amendment of FASB Statement No. 123." This statement provides additional
transition guidance for those entities that elect to voluntarily adopt the
provisions of SFAS No. 123, "Accounting for Stock Based Compensation."
Furthermore, SFAS No. 148 mandates new disclosures in both interim and year-end
financial statements within the Company's Significant Accounting Policies
footnote. The Company has elected not to adopt the recognition provisions of
SFAS No. 123, as amended by SFAS No. 148. However, the Company has adopted the
disclosure provisions and has included this information in Note 1 to the
Company's financial statements.

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.

                                       7

<PAGE>

In February 2004, the FASB issued revised FASB Staff Position ("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 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 three months ended March 31, 2004 and 2003, the employer 401-K match
was $24,352 and $21,347, respectively.

In January 2004, the FASB issued FASB Staff Position FAS 106-1 to provide
temporary guidance concerning the Medicare Prescription Drug Improvement and
Modernization Act of 2003. The provisions of this pronouncement did not have a
material impact on the Company's financial condition or results of operations.

NOTE 4. Our gross receivables and related deductions activity for the three
months ended March 31, 2004 and 2003, and the year ended December 31, 2003 was:

                                         Three Months Ended       Year Ended
                                         ------------------       ----------
                                       March 31,      March 31,   December 31,
         (in $000s)
                                         2004            2003         2003
                                       --------        -------      --------
        Gross accounts receivable      $ 27,334        $ 8,828      $ 17,091
        Less:  Accrued rebates           (3,010)        (1,585)       (2,700)
        Less:  Accrued chargebacks       (3,505)        (1,137)       (4,101)
        Less:  Other deductions            (286)          (372)         (405)
                                       --------        -------      --------
        Net accounts receivable        $ 20,533        $ 5,734      $  9,885
                                       --------        -------      --------

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

Net accounts receivable balance at March 31, 2004 includes $13,509,000 due from
Teva.

Chargebacks and Rebates Accrual activity for the three months ended March 31,
2004 and 2003, and the year ended December 31, 2003 was:

<TABLE>
<CAPTION>
                               CHARGEBACKS ACCRUAL
                               -------------------
                                                                    Three Months Ended       Year Ended
                                                                    ------------------       -----------
   (in $000s)                                                    March 31,       March 31,   December 31,

                                                                   2004            2003          2003
                                                                 --------        --------      --------
<S>                                                              <C>             <C>           <C>
   Beginning Balance                                             $  4,101        $  1,373      $  1,373
   Add:  Provision related to sales made in current period          2,148           1,314        10,571
   Less:  Credits issued during the current period                 (2,744)         (1,550)       (7,843)
                                                                 --------        --------      --------
   Ending Balance                                                $  3,505        $  1,137      $  4,101
                                                                 --------        --------      --------
</TABLE>

                                       8

<PAGE>

<TABLE>
<CAPTION>
                                 REBATES ACCRUAL
                                 ---------------
                                                                    Three Months Ended       Year Ended
                                                                    ------------------       ----------
(in $000s)                                                       March 31,       March 31,   December 31,
                                                                   2004            2003          2003
                                                                 ---------       ---------   ------------
<S>                                                              <C>             <C>           <C>
Beginning Balance                                                $  2,700        $  1,525      $  1,525
Add:  Provision related to sales made in current period             1,120           1,062         6,680
Less:  Credits issued during the current period                      (810)         (1,002)       (5,505)
                                                                 --------        --------      --------
Ending Balance                                                   $  3,010        $  1,585      $  2,700
                                                                 --------        --------      --------
</TABLE>

NOTE 5.  Our inventory consists of the following:

<TABLE>
<CAPTION>
                                                                                 March 31,   December 31,
   (in $000s)                                                                      2004          2003
                                                                                 --------    ------------

<S>                                                                              <C>           <C>
Raw materials .............................................                      $ 16,387      $  9,671
Work in process ...........................................                         2,011         5,303
Finished goods ............................................                        11,750        13,505
                                                                                 --------      --------
                                                                                 $ 30,148      $ 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 March 31, 2004, the Company's total inventory of $30,148,000 included
$4,495,000 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            $  3,876
                                        Work in process                --
                                        Finished goods                619
                                                                 --------
                                             Total               $  4,495
                                                                 --------

NOTE 6.  Intangibles consist of the following:
<TABLE>
<CAPTION>
                                                               Estimated         March 31,    December 31,
   (in $000s)                                                 useful life          2004          2003
                                                                (years)          ---------    ------------
                                                              -----------
<S>                                                           <C>                <C>          <C>
Product rights and licenses .................................    3 - 8           $  2,691      $  2,691

Less:  Accumulated amortization .............................                      (2,408)       (2,312)
                                                                                 --------      --------
                                                                                 $    283      $    379
                                                                                 ========      ========
</TABLE>

Amortization expense was $96,000 for the three months ended March 31, 2004.
Expected amortization expense for 2004 will be approximately $379,000.

NOTE 7.  ACCRUED EXPENSES AND DEFERRED REVENUE

<TABLE>
<CAPTION>
                                                                 March 31,     December 31,
        (in $000's)                                                2004           2003
                                                                 --------      -----------

<S>                                                              <C>             <C>
        Sales returns                                            $  5,769        $  4,121
        Deferred revenues                                           1,821           1,751
        Accrued salaries and payroll expenses                       2,875           1,649
        Patent infringement and other legal expenses                1,623           1,327
        Accrued Medicaid rebates                                      586             613
        Accrued royalty and gross profit sharing expense              457             559
        Other accruals                                                537             469
        Accrued shelf stock reserve                                   175             232
        Accrued professional fees                                      90             151
                                                                 --------        --------
                                                                 $ 13,933        $ 10,872
                                                                 ========        ========
</TABLE>

                                        9

<PAGE>

NOTE 8.  RETURNS ACCRUAL

<TABLE>
<CAPTION>
                                 RETURNS ACCRUAL
                                 ---------------
                                                                    Three Months Ended        Year Ended
                                                                    ------------------        ----------
   (in $000s)                                                    March 31,       March 31,    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          2,570             132         2,276
   Less:  Credits issued during the current period                   (922)           (132)       (1,255)
                                                                 --------        --------      --------
   Ending Balance                                                $  5,769        $  3,100      $  4,121
                                                                 --------        --------      --------
</TABLE>

The returns accrual balance at March 31, 2004 includes $789,000 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.

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 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 have
reached their limit of liability. 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.

                                       10

<PAGE>

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 March 31, 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 March 31, 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.  CHANGES IN SECURITIES

As part of the strategic alliance agreement that we entered into with a
subsidiary of Teva Pharmaceutical Industries Ltd. (Teva) in June 2001, we
received $22.0 million from Teva which assisted in the construction and
improvement of our Hayward, California facilities and the development of the
twelve products specified in our strategic alliance agreement. The $22.0 million
was reflected on the balance sheet as a refundable deposit. The refundable
deposit was provided in the form of a loan. Pursuant to the agreement, accrued
and future interest on the refundable deposit was forgiven during 2002 as a
result of our receipt of tentative or final approvals for at least three of our
products. In addition, Teva forgave portions of this loan as we achieved certain
milestones relating to the development and launch dates of the products
described in our strategic alliance agreement. In addition, by requiring us to
repay only 50% of the portion of the loan related to certain missed milestones,
Teva chose to continue to have exclusive marketing rights for those products. At
our option, we could repay Teva any amounts we owed it as part of the loan in
cash or in shares of our common stock. The price of the common stock for
purposes of repaying any amounts owed under the loan was the average closing
sale price of our common stock measured over a ten-trading-day period ending two
days prior to repayment.

In September 2003, we issued 888,918 shares of common stock to Teva, paying
$13.5 million of the original $22.0 million refundable deposit. In December
2003, Teva exercised its option to retain marketing exclusivity for certain
products and, accordingly, reduced the refundable deposit by $3.5 million to
$5.0 million. In January 2004, Teva's exercise of the marketing exclusivity
option for certain products reduced the refundable deposit to $2.5 million. On
January 15, 2004, we satisfied the remaining $2.5 million refundable deposit
obligation to Teva by issuing 160,751 shares of our common stock to Teva. These
shares were issued to Teva without registration under the Securities Act of
1933, as amended, in reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.

On January 30, 2004, the holders of the Series 2 Preferred Stock converted their
entire 75,000 preferred shares into 1,500,000 shares of common stock.

NOTE 11.  RESTATEMENT OF CONDENSED FINANCIAL STATEMENTS

Subsequent to the issuance of its condensed financial statements for the three
months ended March 31, 2004, the Company determined that, based on information
provided by Teva, its strategic partner, 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 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 months ended
March 31, 2004 have been restated from the amounts previously reported.

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

                                       11

<PAGE>

                            IMPAX LABORATORIES, INC.
                         CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)
             (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                            Three Months Ended
                                                                               March 31, 2004
                                                                     ------------------------------------
                                                                     As Previously
                                                                        Reported              As Restated
                                                                     -------------            -----------
<S>                                                                  <C>                      <C>
Net sales                                                              $  35,822                $ 31,514
Total revenues                                                            38,853                  34,545
Gross margin                                                              20,303                  15,995
Net income (loss) from operations                                          9,740                   5,432
Income (loss) before provision for income taxes                            9,524                   5,216
Provision for income taxes                                                   476                      --
Net income (loss)                                                      $   9,048                $  5,216
Earnings per share:
              Basic                                                    $    0.16                $   0.09
              Diluted                                                  $    0.15                $   0.08
</TABLE>


                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)
             (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>

                                                                                 March 31, 2004
                                                                     -----------------------------------
                                                                     As Previously
                                                                        Reported             As Restated
                                                                     -------------           -----------
<S>                                                                  <C>                     <C>
Accounts receivable, net                                               $  24,052               $  20,533
Total current assets                                                      75,395                  71,876
Total assets                                                             153,854                 150,535
Accrued expenses and deferred revenues                                    13,620                  13,933
Total current liabilities                                                 55,329                  55,642
Total liabilities                                                         66,713                  67,026
Accumulated deficit                                                      (95,501)                (99,333)
Total stockholders' equity                                                87,141                  83,309
Total liabilities and stockholders' equity                               153,854                 150,335
</TABLE>


                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
             (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                              Three Months Ended
                                                                                   March 31,
                                                                      ----------------------------------
                                                                      As Previously
                                                                        Reported             As Restated
                                                                      -------------          -----------
<S>                                                                   <C>                    <C>
Cash flows from operating activities:
     Net income (loss)                                                 $   9,048               $   5,216
Change in assets and liabilities:
    Accounts receivable                                                  (14,167)                (10,648)
    Other liabilities                                                      2,764                   3,077

</TABLE>

WE HAVE RECLASSIFIED PATENT LITIGATION EXPENSE FROM RESEARCH AND DEVELOPMENT
EXPENSE FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND MARCH 31, 2003.




                                       12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

To the extent any statements made in this report contain information that is not
historical, these statements are forward-looking in nature and express the
beliefs, expectations or opinions of management. For example, words such as
"may," "will," "should," "estimates," "predicts" "potential," "continue,"
"strategy," "believes," "anticipates," "plans," "expects," "intends," and
similar expressions are intended to identify forward-looking statements. Such
statements are based on current expectations and involve a number of known and
unknown risks and uncertainties that could cause IMPAX's future results,
performance, or achievements to differ significantly from the results,
performance, or achievements expressed or implied by such forward-looking
statements. Such risks and uncertainties include, but are not limited to,
IMPAX's ability to obtain sufficient capital to fund its operations, the
difficulty of predicting FDA filings and approvals, consumer acceptance and
demand for new pharmaceutical products, the impact of competitive products and
pricing, IMPAX's ability to successfully develop, test and commercialize
pharmaceutical products, IMPAX's limited manufacturing capability may require it
to build additional capacity, IMPAX's ability to develop an effective sales
organization to market and sell future brand name products, IMPAX's reliance on
key strategic alliances, the uncertainty of patent litigation, the availability
of raw materials, the regulatory environment, decreases in healthcare
reimbursements could limit IMPAX's ability to sell products or decrease its
revenues, dependence on patent and other protection for innovative products,
exposure to product liability claims, fluctuations in operating results,
terrorist attacks, the location of its Corporate Headquarters in an earthquake
zone, future dilution in ownership as a result of terms of outstanding and
future issuances of securities, the volatility of IMPAX's stock price, control
of IMPAX is concentrated in its directors and executive officers who own
approximately 28% of its stock, and other risks detailed from time to time in
IMPAX's filings with the Securities and Exchange Commission. Forward-looking
statements speak only as to the date on which they are made, and IMPAX
undertakes no obligation to update publicly or revise any forward-looking
statement, regardless of whether new information becomes available, future
developments occur, or otherwise.

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 month period ended March 31, 2004 as described in Note
11 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 March 31, 2004, the Company markets
thirty-three generic pharmaceuticals, which represent dosage variations of
fourteen different pharmaceutical compounds, and have seventeen applications
pending at the FDA, including five tentatively approved, that address
approximately $5.4 billion in U.S. product sales for the twelve months ended
February 29, 2004, according to NDCHealth. Thirteen of these pending filings
were made under Paragraph IV of the Hatch-Waxman Amendments. We have
approximately twenty-seven other products in various stages of development for
which applications have not yet been filed. These products are generic versions
of pharmaceutical products that had U.S. sales of approximately $14.5 billion
for the twelve months ended February 29, 2004, according to NDCHealth.


<PAGE>

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 revises and
clarifies portions of Topic 13 of the Staff Accounting Bulletin to be consistent
with current accounting and auditing guidance and SEC rules and regulations.

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.


                                       13
<PAGE>

The Company reviews all of the terms of its strategic alliances and follows the
guidance from EITF No. 00-21 for multiple element arrangements.

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 this 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 three months ended March 31, 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
terms of the contract, 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 100 mg and 150 mg
products. Effective with the three months ended March 31, 2004, 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. Additionally, the amount of revenue that IMPAX
earns is based on a reimbursement of manufacturing costs plus a fixed gross
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.

RESULTS OF OPERATIONS

Except for the three months ended March 31, 2004, we have incurred net losses in
each quarter since our inception. We had an accumulated deficit of $99,333,000
at March 31, 2004.


THREE MONTHS ENDED MARCH 31, 2004, COMPARED TO THREE MONTHS ENDED MARCH 31, 2003

OVERVIEW

The net income for the three months ended March 31, 2004, was $5,216,000 as
compared to a net loss of $3,213,000 for the three months ended March 31, 2003.

REVENUES

Revenues for the first quarter of 2004 were a record $34,545,000, up more than
202% compared with revenues of $11,425,000 in the prior year's first quarter.
The year-over-year increase for the first quarter was primarily due to shipments
of our generic versions of Wellbutrin(R) SR (Bupropion Hydrochloride) 100 mg and
150 mg Controlled Release Tablets, both of which were approved by the FDA during
the quarter and represented approximately 57% of total revenues. During the
quarter, upon approval from the FDA, we also commenced shipments of
Demeclocycline Hydrochloride (Declomycin(R)) 150 mg and 300 mg Tablets.

The Company generated $3,031,000 of other revenues in the 2004 period, as
compared to $359,000 in the 2003 period. Other revenue for the 2004 period
consisted of $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


                                       14
<PAGE>


products. The balance of $531,000 of other revenue represents revenues
recognized pursuant to strategic agreements with Schering-Plough, Wyeth, and
Novartis. The following table summarizes the activity in net revenues for the
three months ended March 31, 2004 and 2003:
<TABLE>
<CAPTION>
                                                                                         2004                  2003
                                                                                         ----                  ----
<S>                                                                                   <C>                   <C>
         Product sales                                                                $ 38,033              $   14,153
         Less:
            Rebates                                                                     (1,120)                 (1,062)
            Chargebacks                                                                 (2,148)                 (1,314)
            Product return reserve                                                      (2,570)                   (132)
            Other credits                                                                 (681)                   (579)
                                                                                      --------               ---------
                 Net sales                                                              31,514                  11,066
         Revenue from reversal of refundable deposit from Teva                           2,500                      -
         Other Revenues                                                                    531                     359
                                                                                      --------               ---------
         Total Revenues                                                               $ 34,545               $  11,425
                                                                                      ========               =========
</TABLE>

The rebates, chargebacks, returns and other credits decreased for the three
months ended March 31, 2004 to approximately 17% of product sales as compared to
approximately 22% for the comparable period in 2003. This decrease was due to
Bupropion Hydrochloride 100 mg and 150 mg Controlled Release Tablets and sales
of Loratadine and Pseudoephedrine Sulfate (5mg/120mg) 12-hour Extended Release
Tablets which are exempt from rebates, chargebacks and other credits as per the
agreements with Schering-Plough, Wyeth, and Novartis. The increase in the
reserve for sales returns was primarily due to returns for LIPRAM products, and
products marketed by Rx Partners.

COST OF SALES

The cost of sales for the three months ended March 31, 2004, was $18,550,000 as
compared to $8,147,000 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, primarily from Bupropion Hydrochloride 100 mg and 150
mg Controlled Release Tablets.

GROSS MARGIN

Gross margin for the three months ended March 31, 2004 was $15,995,000 as
compared to $3,278,000 for the same period in 2003. The gross margin improvement
was primarily due to higher net product sales, such as Bupropion Hydrochloride
100 mg and 150 mg Controlled Release Tablets and Demeclocycline Hydrochloride
150 and 300 mg Tablets and higher revenue from strategic alliances, which
include amortization of deferred revenue for up-front and milestone payments of
$531,000, as compared to $359,000 in 2003. In addition, $2,500,000 of other
revenues represented the reversal of a portion of the refundable deposit from
Teva under the strategic alliance agreement for its exercise of the exclusivity
option for certain products.

RESEARCH AND DEVELOPMENT EXPENSES

The research and development expenses for the three months ended March 31, 2004
were $4,884,000 less reimbursements of $11,000 by a subsidiary of Teva
Pharmaceutical Industries, Ltd. under the Strategic Alliance Agreement signed in
June 2001, as compared to $3,547,000 less reimbursements of $132,000 for the
same period in 2003. The higher research and development expenditures in 2004 as
compared to 2003 were attributable to higher legal expenses related to higher
personnel costs, Active Pharmaceutical Ingredient (API) costs, clinical studies,
and new product introduction costs.

PATENT LITIGATION EXPENSES

The patent litigation expenses for the three months were $1,620,000 as compared
to $208,000 for the prior period in 2003. The year-to-year increase for the
three months was primarily due to 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 three months ended March 31, 2004 were $726,000 as
compared to $568,000 for the same period in 2003. The increase in selling
expenses as compared to 2003 was primarily due to higher personnel costs.



                                       15
<PAGE>

GENERAL AND ADMINISTRATIVE EXPENSES

The general and administrative expenses for the three months ended March 31,
2004 were $3,351,000 as compared to $2,122,000 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 March 31, 2004 was $56,000 as
compared to $42,000 for the same period in 2003, primarily due to higher average
cash equivalents for the quarter.

INTEREST EXPENSE

Interest expense for the three months ended March 31, 2004 was $272,000 as
compared to $231,000 for the same period in 2003. The interest expense for 2004
relates primarily to the two Cathay Bank loans, and the revolving credit
facility and term loan agreement with Wachovia Bank N.A. The following table
summarizes the activity for the three months ended March 31, 2004 and 2003:

                                                   2004               2003
              (in $000s)                          ------             ------
              Interest expense                    $  272             $  231
                                                  ------             ------
                   Total interest expense         $  272             $  231
                                                  ======             ======
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.

NET INCOME

The net income for the three months ended March 31, 2004, was $5,216,000 as
compared to a net loss of $3,213,000 for the same period in 2003. The net income
for the three months ended March 31, 2004 was due primarily to the introduction
of the Bupropion 100 mg and 150 mg products marketed by Teva, and Demeclocycline
Hydrochloride 150 and 300 mg. Tablets. In addition, the other revenues of
$3,031,000 contributed to the profitability for the quarter.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2004, we had $19,491,000 in cash and cash equivalents. Only
$200,000 of the account balances are insured by the Federal Depository Insurance
Company (FDIC). The balance of the Company's cash equivalents are held in U.S.
Treasury securities, which are not insured by the FDIC.

We generated cash in excess of our working capital requirements for the three
months ended March 31, 2004. Our cash flows provided by operations were a
positive amount of $4,982,000, as compared to a negative amount of $871,000 in
the prior year. This increase was primarily related to the change,
year-over-year, in net income, partially offset by increases in working capital
account balances. In addition, the remaining balance of the refundable deposit
was satisfied by issuing 160,751 shares of common stock to Teva and by Teva's
exercise of the exclusivity option for certain products. As of March 31, 2004,
to our knowledge, Teva owns 2,511,752 shares of IMPAX common stock, or
approximately 4.3% of the outstanding stock.

The net cash provided by financing activities for the three months ended March
31, 2004, was approximately $1,029,000 consisting of the $1,985,000 net proceeds
from issuance of common stock upon exercise of stock options and warrants, and
net repayments of $956,000 primarily from the Wachovia credit facility.

Our capital expenditures for the three months ended March 31, 2004 were
$2,025,000 as compared to $698,000 for the same period in 2003.

In December 2003, the Company transferred the $25 million Loan and Security
Agreement from Congress Financial Corporation to Wachovia Bank, N.A., thereby


                                       16
<PAGE>


securing lower interest and less restrictive borrowing terms. The revolving loan
is collateralized by eligible accounts receivable and inventory, subject to
sublimits and other terms, and the term loan is collateralized by machinery and
equipment, with a 60-month amortization. In addition, a $10 million restricted
cash account was established as collateral for this credit facility, to be
reduced based on meeting certain cumulative positive cash flow targets. 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 March 31, 2004, we borrowed approximately $6,953,000 against the
revolving credit line and $3,085,000 against the term loan. The borrowing
availability under the revolving credit line changes daily based on eligible
accounts receivable and inventory. The revolving credit facility and the term
loan agreement have two financial covenants: one related to Adjusted Excess
Availability, and the other one related to Capital Expenditures limits. At March
31, 2004, both financial covenants were met.

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, will constitute a material use of our cash resources.

On April 5, 2004, the Company completed a convertible senior subordinated
debenture offering of $95,000,000 for net proceeds of $91,675,000. The proceeds
of the debentures will be used for general corporate purposes, including working
capital requirements, manufacturing of our products, and research and
development.

To date, we have 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
and our strategic agreement with Teva prohibit the payment of dividends without
the other party's consent.

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2002, the EITF reached a consensus on Issue No. 00-21, "Revenue
Arrangements with Multiple Deliverables." EITF Issue No. 00-21 provides guidance
on how to account for arrangements that involve the delivery or performance of
multiple products, services, and/or rights to use assets. The provisions of EITF
Issue No. 00-21 applies to revenue arrangements entered into in fiscal periods
beginning after June 15, 2003. We implemented the provisions of EITF Issue No.
00-21 in revenue recognition of certain strategic agreements. The Company
reviews all of the terms of its strategic alliances and follows the guidance
from this Issue for all multiple element arrangements.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure, amendment of FASB Statement No. 123."
This statement provides additional transition guidance for those entities that
elect to voluntarily adopt the provisions of SFAS No. 123, "Accounting for Stock
Based Compensation." Furthermore, SFAS No. 148 mandates new disclosures in both
interim and year-end financial statements within the Company's Significant
Accounting Policies footnote. The Company has elected not to adopt the
recognition provisions of SFAS No. 123, as amended by SFAS No. 148. However, the
Company has adopted the disclosure provisions and has included this information
in Note 1 to the Company's financial statements.

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


                                       17
<PAGE>


Interpretation do not have a material impact on the Company's financial
condition or results of operations.

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 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 three months ended March 31, 2004 and 2003, the employer 401-K match
was $24,352 and $21,347, respectively.

In January 2004, the FASB issued FASB Staff Position FAS 106-1 to provide
temporary guidance concerning the Medicare Prescription Drug Improvement and
Modernization Act of 2003. The provisions of this pronouncement did not have a
material impact on the Company's financial condition or results of operations.


MAJOR OPERATIONAL HIGHLIGHT FOR THE THREE MONTHS ENDED MARCH 31, 2004

o    On January 28, 2004, IMPAX Laboratories, Inc. announced that the U.S. Food
     and Drug Administration (FDA) has 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 has 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
     $1.4 billion in the twelve months ended February 29, 2004.

o    On January 29, 2004, IMPAX Laboratories, Inc. 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 Abbreviated New Drug Applications (ANDAs) for Wellbutrin
     SR(R) (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.

o    On February 27, 2004, IMPAX Laboratories, Inc. announced that the U.S. Food
     and Drug Administration (FDA) has granted tentative approval to the
     Company's Abbreviated New Drug Application 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 $452 million in the twelve months ended February 29, 2004.

o    On March 5, 2004, IMPAX Laboratories, Inc. announced that the U.S. Food and
     Drug Administration (FDA) has granted final approval to the Company's
     Abbreviated New Drug Application 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 $21 million for the twelve months ended February
     29, 2004. The Company is working with its marketing partner toward the
     commercial launch of this product.

o    On March 8, 2004, IMPAX Laboratories, Inc. announced that the U.S. Food and
     Drug Administration (FDA) has granted tentative approval to the Company's
     Abbreviated New Drug Application (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 $620 million for the twelve
     months ended February 29, 2004.


                                       18
<PAGE>


o    On March 22, 2004, IMPAX Laboratories, Inc. announced that the U.S. Food
     and Drug Administration (FDA) has granted final marketing approval to the
     Company's Abbreviated New Drug Application (ANDA) for its generic version
     of Wellbutrin(R) 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 Laboratories, Inc. announced that the U.S. Food
     and Drug Administration (FDA) has granted final marketing approval to the
     Company's Abbreviated New Drug Application (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 $24
     million for the twelve months ended February 29, 2004. IMPAX's Global
     Pharmaceuticals division began marketing the product immediately.

o    On March 30, 2004, IMPAX Laboratories, Inc. announced the pricing of its
     private offering of $95 million aggregate principal amount of 1.250%
     convertible senior subordinated debentures due 2024, to qualified
     institutional buyers pursuant to Rule 144A under the Securities Act of
     1933, as amended. (For additional details, please see Note 2.)

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's cash and cash equivalents includes U.S. government and short term
commercial paper stated at cost which approximates market value. The primary
objective of the Company's investment activities is to preserve principal while,
at the same time, 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 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 March 31, 2004. The Company's debt instruments at March 31,
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 $16.6 million at March 31,
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 March 31, 2004, the Company restated its condensed financial statements as
described in Note 11. 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


                                       19
<PAGE>


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.

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 awarding
costs and attorney fees. There is no claim for damages.

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


                                       20
<PAGE>


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.

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 will be
completed by July 12, 2004. Any rebuttal reports by AstraZeneca will be required
to be produced by August 6, 2004. The parties have not submitted their joint
schedule for expert depositions to the Special Master and the Special Master has
not issued an order regarding expert depositions. Depositions of the parties'
experts are expected to occur thereafter and to be completed by mid-December
2004. Motions for Summary Judgment and responses must be filed and fully briefed
by November 18, 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 scheduling order, any further Motions for Summary Judgment must be
filed by early Fall, and they will be heard by the trial court after briefing is
completed in November 2004. IMPAX may file Motions for Summary Judgment,
including a Motion for Summary Judgment of Non-Infringement, following the close
of all discovery. 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. Trial will commence as
soon as practicable thereafter. 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.

GLAXOSMITHKLINE (GLAXO) V. IMPAX: THE BUPROPION CASES

Glaxo filed a Complaint (Case No. 00-04403) against IMPAX in the U.S. District
Court for the Northern District of California on November 3, 2000 alleging
infringement of U.S. Patent No. 5,427,798 covering Wellbutrin SR and Zyban. On
November 7, 2000, IMPAX filed its Answer to the Complaint which included
defenses to the infringement claim, and counterclaimed for patent invalidity.
Glaxo has filed suit against Andrx, Watson, Eon (only with regard to Wellbutrin
SR) and Excel for similar ANDA filings.

IMPAX filed a Summary Judgment Motion, based upon prosecution history estoppel
grounds. The parties completed the briefing on this issue and oral argument was
held on November 19, 2001. At the request of the Court, in July 2002, both sides
submitted briefs on the impact of the recent Supreme Court decision in Festo v.
Shoketsu Kinzoku Kogyo Kabushi Co., et al. (which we refer to as the Festo
decision) to the pending Motion for Summary Judgment. IMPAX brought an
additional Motion for Summary Judgment in early August 2002, requesting that the
court apply another court's decision which limited the scope of the Glaxo `798
patent.

On August 21, 2002, IMPAX's Motions for Summary Judgment were granted. Glaxo has
appealed this decision to the Court of Appeals for the Federal Circuit and that
appeal was fully briefed on January 22, 2003. Oral argument was heard on June 2,
2003 and the District Court's decision in favor of IMPAX was affirmed by the
Court of Appeals on January 29, 2004. Glaxo has filed a request for rehearing or
rehearing en banc.


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Previously, Glaxo had decided to settle its Bupropion Hydrochloride 100 mg and
150 mg Extended Release Tablets litigation with Watson Pharmaceuticals on terms
that are confidential.

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. No trial date has been set.

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 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. IMPAX is currently awaiting a
decision on these motions.

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. 4,861,598,
4,970,075 and 5,266,331; 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. IMPAX had disputed jurisdiction of the New York courts and
brought an action for a Declaratory Judgment of Patent Invalidity in Delaware.
The New York court denied IMPAX's Motion to Dismiss and the Delaware action was
dismissed.

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 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. There can be no assurances that such
ruling will not be challenged or, if sustained upon challenge, that the rulings
in IMPAX's cases will be consistent with such rulings.

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



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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
issue 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.

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 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.
Discovery in the consolidated cases closes in June 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 seeks to
dismiss each count of Solvay's complaint. Oral argument on that Motion was heard
on November 7, 2003. 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.





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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.

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
(the "Product") 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. The U.S. District Court
for the Northern District of California has ordered a mediation on June 20,
2004.

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. A tentative
court date has been scheduled for October 11, 2005.

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. 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.

However, 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 carry $20 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.



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

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 $91,675,000. 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 represented a 30%
premium over our stock price at the time the debentures were issued). The
conversion price is subject to adjustment in certain events 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 connection with the offering of the debentures, we are required to file a
shelf registration statement with the Securities and Exchange Commission
covering resales of the debentures and of the common stock issuable upon
conversion of the debentures.

STRATEGIC ALLIANCE AGREEMENT WITH TEVA

As part of the strategic alliance agreement that we entered into with a
subsidiary of Teva Pharmaceutical Industries Ltd. (Teva) in June 2001, we
received $22.0 million from Teva which assisted in the construction and
improvement of our Hayward, California facilities and the development of the
twelve products specified in our strategic alliance agreement. The $22.0 million
was reflected on the balance sheet as a refundable deposit. The refundable
deposit was provided in the form of a loan. Pursuant to the agreement, accrued
and future interest on the refundable deposit was forgiven during 2002 as a
result of our receipt of tentative or final approvals for at least three of our
products. In addition, Teva forgave portions of this loan as we achieved certain
milestones relating to the development and launch dates of the products
described in our strategic alliance agreement. In addition, by requiring us to
repay only 50% of the portion of the loan related to certain missed milestones,
Teva chose to continue to have exclusive marketing rights for those products. At
our option, we could repay Teva any amounts we owed it as part of the loan in
cash or in shares of our common stock. The price of the common stock for
purposes of repaying any amounts owed under the loan was the average closing
sale price of our common stock measured over a ten-trading-day period ending two
days prior to repayment.

In September 2003, we issued 888,918 shares of common stock to Teva, paying
$13.5 million of the original $22.0 million refundable deposit. In December
2003, Teva exercised its option to retain marketing exclusivity for certain
products and, accordingly, reduced the refundable deposit by $3.5 million to
$5.0 million. In January 2004, Teva's exercise of the marketing exclusivity
option for certain products reduced the refundable deposit to $2.5 million. On
January 15, 2004, we satisfied the remaining $2.5 million refundable deposit
obligation to Teva by issuing 160,751 shares of our common stock to Teva. These
shares were issued to Teva without registration under the Securities Act of
1933, as amended, in reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.




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ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)    Exhibits

                  o   4.1  - Registration Rights Agreement between Impax
                             Laboratories, Inc., as Issuer, and Citigroup Global
                             Markets Inc., as representative of the Initial
                             Purchasers, dated as of April 5, 2004.

                  o   4.2  - Indenture, between Impax Laboratories, Inc. and
                             Wachovia Bank, National Association, as Trustee,
                             dated as of April 5, 2004.

                  o   10.1 - Purchase Agreement between Impax Laboratories,
                             Inc., Citigroup Global Markets, Inc., Wachovia
                             Capital Markets, LLC and First Albany Capital Inc.
                             (the "Initial Purchasers") dated March 30, 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 January 6, 2004,  the Company filed a report on Form
                      8-K (Item 9) announcing  that Chairman  Charles Hsiao,
                      Ph.D., will be leading a new venture: Impax  Technologies.
                      Dr. Hsiao is relinquishing his position of Co-CEO
                      but will remain as  Chairman.  Barry R.  Edwards has been
                      elected as sole Chief  Executive  Officer  effective
                      January 1, 2004.

                  o   On January 28, 2004, the Company filed a report on Form
                      8-K (Item 9) announcing that the U.S. Food and Drug
                      Administration (FDA) has granted final approval to the
                      Company's ANDA for its generic version of Wellbutrin SR
                      100 mg Controlled Release Tablets.

                  o   On January 29, 2004, the Company filed a report on Form
                      8-K (Item 9) announcing 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 ANDAs for
                      Wellbutrin SR 100 mg and 150 mg, and for Zyban 150 mg.

                  o   On February  17, 2004,  the Company  filed a report on
                      Form 8-K (Items 9 and 12)  announcing  earnings for the
                      quarter and the year ended December 31, 2003.

                  o   On March 5, 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 its generic version of
                      Claritin(R)-D 24-Hour Extended Release Tablets.

                  o   On March 22, 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 Wellbutrin(R) SR 150 mg Controlled Release
                      Tablets.

                  o   On March 23, 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 Declomycin(R) 150 and 300 mg Tablets.

                  o   On March 30, 2004, the Company filed a report on Form 8-K
                      (Item 9) announcing its intention to offer in a private
                      placement, subject to market and other conditions, $75
                      million aggregate principal amount of convertible senior
                      subordinated debentures, due 2024, to qualified
                      institutional buyers pursuant to Rule 144A under the SEC
                      Act of 1933, as amended. In addition, the Company granted
                      initial purchasers an option to purchase up to an
                      additional $11,250,000 of the debentures.

                  o   On March 31, 2004, the Company filed a report on Form 8-K
                      (Item 9) announcing the pricing of its private offering of
                      $82 million aggregate principal amount of 1.250%
                      convertible senior subordinated debentures due 2024.


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                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



IMPAX LABORATORIES, INC.



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



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













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