SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            SCHEDULE 14A INFORMATION
           Proxy Statement Pursuant to Section 14(a) of the Securities
                              Exchange Act of 1934

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[ ] Confidential for Use of the Commission Only (as permitted by Rule
    14a-6(e)(2))

[ ] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12


                           ELITE PHARMACEUTICALS, INC.
                           ---------------------------
                (Name of Registrant as Specified In Its Charter)
                                       N/A
       (Name of Person(s) Filing Proxy Statement if other than Registrant)


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                       [ELITE PHARMACEUTICALS LETTERHEAD]


May __, 2008

Dear Stockholder:

         You are cordially invited to attend our Annual Meeting of the
Stockholders of Elite Pharmaceuticals, Inc. to be held at 10:00 a.m., June 26,
2008 at the offices of Reitler Brown & Rosenblatt LLC, 800 Third Avenue, 21st
Floor, New York, NY 10022.

         At this meeting you are being asked to (i) elect four directors for a
one year term, (ii) approve and ratify the amendment to our Certificate of
Incorporation to increase the number of authorized shares of common stock, par
value $0.01 per share (the "Common Stock") from 65,000,000 to 150,000,000, (iii)
approve and ratify the amendment to our Certificate of Incorporation to provide
that holders of Common Stock are not entitled to vote on any amendment to our
Certificate of Incorporation (including any Preferred Stock certificate of
designation) that relates solely to the terms of one or more outstanding series
of our preferred stock, par value $0.01 per share (the "Preferred Stock") if the
holders of such affected series are entitled to vote on such amendment, (iv)
ratify certain amendments made to our Certificate of Incorporation which relate
solely to our Series B 8% Convertible Preferred Stock, par value $0.01 per share
(the "Series B Preferred Stock") which were previously approved by a majority of
the holders of the Series B Preferred Stock, (v) approve and ratify the
amendment to our Stock Option Plan to increase the number of shares of Common
Stock reserved under our Stock Option Plan from 7,000,000 to 10,000,000 and (vi)
ratify the appointment of Miller, Ellin & Company, LLP as our independent
auditor. Your Board of Directors recommends that you vote FOR each of these
proposals. You should read with care the attached Proxy Statement, which
contains detailed information about each of these proposals.

         Your vote is important regardless of the number of shares you own.
Accordingly, we urge you to complete, sign, date and return your proxy card
promptly in the enclosed postage-paid envelope. This will not limit your right
to vote in person or attend the meeting.

         Thank you for your continued interest in us. We hope that you will be
able to join us on June 26, 2008.

                                    Very truly yours,


                                    Bernard Berk
                                    PRESIDENT AND CHIEF EXECUTIVE OFFICER



                             YOUR VOTE IS IMPORTANT

In order to assure representation of your shares at the meeting, please
complete, sign, date and return the enclosed proxy card.





                           ELITE PHARMACEUTICALS, INC.

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

                                  June 26, 2008

         NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Elite
Pharmaceuticals, Inc. ("WE" or "US") will be held at the offices of Reitler
Brown & Rosenblatt LLC, 800 Third Avenue, 21st Floor, New York, New York 10022,
on June 26, 2008 at 10:00 a.m., to consider and act upon the following:

1. The election of four directors to serve for a period of one year and
thereafter until their successors shall have been duly elected and shall have
qualified.

2. A proposal to approve and ratify the amendment to our Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
65,000,000 to 150,000,000.

3. A proposal to approve and ratify the amendment to our Certificate of
Incorporation to provide that holders of Common Stock are not entitled to vote
on any amendment to our Certificate of Incorporation (including any Preferred
Stock certificate of designation) that relates solely to the terms of one or
more outstanding series of our Preferred Stock if the holders of such affected
series are entitled to vote on such amendment.

4. A proposal to ratify certain amendments made to our Certificate of
Incorporation which relate solely to our Series B Preferred Stock which were
previously approved by a majority of the holders of the Series B Preferred
Stock.

5. A proposal to approve and ratify an amendment of our Stock Option Plan to
increase the number of shares of Common Stock reserved under the Stock Option
Plan from 7,000,000 to 10,000,000.

6. A proposal to ratify the appointment of Miller, Ellin & Company LLP as our
independent auditor of the financial statements for the year ending March 31,
2008.

7. The transaction of such other business as may properly come before the
meeting or any adjournment thereof that was not known a reasonable time before
the solicitation.

         All stockholders of record at the close of business on April 28, 2008
are entitled to notice of and to vote at this meeting and any adjournments
thereof.

         You are requested to sign and date the enclosed proxy card and return
it in the enclosed envelope.

         Our Annual Report on Form 10-K for the fiscal year ended March 31,
2007, which is not part of the proxy soliciting materials, is enclosed.

By Order of the Board of Directors
Mark I. Gittelman
CHIEF FINANCIAL OFFICER AND SECRETARY

May __, 2008








This Proxy Statement, our Annual Report on Form 10-K for the fiscal year ended
March 31, 2007 and the accompanying proxy card are first being distributed to
shareholders on or about June __, 2008.





            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

         This Proxy Statement contains forward-looking statements within the
meaning of the Federal securities laws. Any statements contained herein that are
not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes," "plans,"
"intends," "expects," "goals" and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain
these words. Actual results may differ materially from those projected in the
forward-looking statements due to various uncertainties and risks, including
without limitation risks associated with the effects of general economic and
market conditions, lessening demand in the information technology market,
successful integration of acquisitions, difficulty managing operations and
difficulty in keeping pace with rapid industry, technological and market
changes, as well as those described in Item 1A of Part I (Risk Factors) of our
Annual Report on Form 10-K for the fiscal year ended March 31, 2007 and any
updates to the Risk Factors set forth in our Quarterly Reports on Form 10-Q
filed since our Annual Report. We disclaim any obligation to update any
forward-looking statements contained herein after the date of this Proxy
Statement.

                           ELITE PHARMACEUTICALS, INC.
                                 PROXY STATEMENT

INFORMATION CONCERNING SOLICITATION AND VOTING

GENERAL

         This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Elite Pharmaceuticals, Inc., a Delaware
corporation ("ELITE", the "COMPANY", "WE", "OUR" or "US"), for our Annual
Meeting of Stockholders to be held on June 26, 2008, and any adjournments
thereof. You are receiving this Proxy Statement because you own shares of the
Company's Common Stock that entitle you to vote at the Annual Meeting of the
Stockholders. By use of proxy, you can vote, whether or not you attend the
meeting. This Proxy Statement describes the matters we would like you to vote on
and provides information on those matters so you can make an informed decision.

         The information included in this Proxy Statement relates to the
proposals to be voted on at the Annual Meeting of the Stockholders, the voting
process, the Company's Board of Directors and committees, the compensation of
directors and certain executive officers and other required information.

PURPOSE

         The purpose of the Annual Meeting is to elect directors and to conduct
the business described in the Notice of the Annual Meeting of Stockholders.

RECORD DATE AND VOTING RIGHTS

         Our common stock, par value $0.01 per share (the "COMMON STOCK"), is
the security entitled to vote at the Annual Meeting. Each share of Common Stock
entitles the holder of record thereof at the close of business on April 28, 2008
to one vote on each of the matters to be voted upon at the Annual Meeting. The
shares of our preferred stock, par value $0.01 per share (the "PREFERRED STOCK")
have no voting rights as to the matters to be considered at the Annual



                                       1


Meeting. As of April 28, 2008, we had outstanding 23,068,780 shares of Common
Stock (excluding 100,000 treasury shares).

         Stockholders vote at the Annual Meeting by casting ballots (in person
or by proxy) which will be tabulated by a person who is appointed by the Board
of Directors before the Annual Meeting to serve as inspector of election at the
Annual Meeting and who has executed and verified an oath of office.

QUORUM; BROKER NON-VOTES AND ABSTENTIONS

         In order to conduct any business at the Annual Meeting, a quorum must
be present in person or represented by valid proxies. A majority of the shares
of Common Stock outstanding on the record date will constitute a quorum for
purposes of the Annual Meeting. Abstentions and broker non-votes are considered
present for purposes of determining the presence of a quorum.

         Abstentions are counted as a vote against for purposes of determining
whether a proposal is approved. Broker non-votes are not counted for purposes of
determining whether a proposal has been approved and thus have no effect on the
outcome.

         Broker non-votes are proxies received from brokers or nominees when the
broker or nominee has neither received instructions from the beneficial owner or
other persons entitled to vote nor has discretionary power to vote on a
particular matter. Brokers only possess discretionary power over matters that
are considered routine, such as the election of directors described in Proposal
1 or the approval of auditors described in Proposal 6. Stockholders are advised
to forward their voting instructions promptly so as to afford brokers sufficient
time to process such instructions.

SOLICITATION

         Solicitation of proxies may be made by our directors, officers and
regular employees by mail, telephone, facsimile transmission or other electronic
media and in person for which they will receive no additional compensation. The
expenses of preparing, printing and assembling the materials used in the
solicitation of proxies on behalf of the Board of Directors will be borne by us.
Upon request, we will reimburse the reasonable fees and expenses of banks,
brokers, custodians, nominees and fiduciaries for forwarding proxy materials to,
and obtaining authority to execute proxies from, beneficial owners for whose
accounts they hold shares of Common Stock. Also, we have retained D.F. King &
Co., Inc. ("D.F. King") to aid in the distribution and solicitation of proxies.
D.F. King will receive a fee of $6,000 as well as reimbursement for certain
expenses incurred by them in connection with their services, all of which will
be paid by us.

VOTING OF PROXIES

         If the enclosed form of proxy is properly signed and returned, the
shares represented thereby will be voted as specified in the proxy. If you do
not specify in the proxy how your shares are to be voted, the shares will be
voted as recommended by the Board of Directors: FOR Proposals 1, 2, 3, 4, 5 and
6.

REVOCATION

         You have the right to revoke your proxy at any time before it is voted
by attending the meeting and voting in person or filing with our Secretary
either a written instrument revoking the



                                       2


proxy or another executed proxy bearing a later date. Stockholders entitled to
vote will not have any dissenters' rights of appraisal in connection with any of
the matters to be voted on at the meeting.

RECOMMENDATIONS OF THE BOARD OF DIRECTORS

         The Board of Directors recommends a vote:

         o    FOR the four nominees listed under "Election of Directors", to
              serve until their successors are elected and qualified (Proposal
              1);

         o    FOR the approval and ratification of the amendment to our
              Certificate of Incorporation to increase the number of authorized
              shares of Common Stock from 65,000,000 to 150,000,000 (Proposal
              2);

         o    FOR the approval and ratification of the amendment to our
              Certificate of Incorporation to provide that holders of Common
              Stock are not entitled to vote on any amendment to our
              Certificate of Incorporation (including any Preferred Stock
              certificate of designation) that relates solely to the terms of
              one or more outstanding series of our Preferred Stock if the
              holders of such affected series are entitled to vote on such
              amendment (Proposal 3);

         o    FOR the ratification of certain amendments made to our Certificate
              of Incorporation which relate solely to our Series B Preferred
              Stock which were previously approved by a majority of the holders
              of the Series B Preferred Stock (Proposal 4);

         o    FOR the approval and ratification of the amendment to our Stock
              Option Plan to increase the number of shares of Common Stock
              reserved under our Stock Option Plan from 7,000,000 to 10,000,000
              (Proposal 5); and

         o    FOR the ratification of the appointment by the Board of Directors
              of Miller, Ellin & Company LLP as our independent auditors of our
              financial statements for the fiscal year ending March 31, 2008
              (Proposal 6).

         Should any nominee named in Proposal 1 be unable to serve or for good
cause will not serve as director, the persons named in the enclosed form of
proxy will vote for such other person as the Board of Directors may recommend.

OTHER BUSINESS

         As of the date of this Proxy Statement, we have no knowledge of any
business other than that described in the Notice of Annual Meeting that will be
presented for consideration at the Annual Meeting. If any other business should
properly come before the Annual Meeting, the persons appointed by the enclosed
form of proxy shall have discretionary authority to vote all such proxies as
they shall decide.

                        BOARD INDEPENDENCE AND COMMITTEES

BOARD INDEPENDENCE

         The Board of Directors has a majority of directors who are
"independent" as defined by Section 121A of the American Stock Exchange Listing
Standards, as amended effective December 1, 2003. The Board of Directors
considers all relevant facts and circumstances in its


                                       3


determination of the independence of all members of the Board of Directors
(including any relationships set forth in this Proxy Statement under the heading
"Certain Related Person Transactions"). Our Board of Directors has affirmatively
determined that none of the following Directors has a material relationship with
us that would interfere with the exercise of his independent judgment (either
directly or as a partner, shareholder or officer of an organization that has a
relationship with us): Dr. Barry Dash, Dr. Melvin Van Woert and Mr. Robert J.
Levenson and therefore are deemed independent.

STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS

         Stockholders and other interested parties may contact the Board of
Directors or the non-management directors as a group at the following address:

         Board of Directors or Outside Directors
         Elite Pharmaceuticals, Inc.
         165 Ludlow Avenue
         Northvale, NJ 07647

         All communications received at the above address will be relayed to the
Board of Directors or the non-management directors, respectively. Communications
regarding accounting, internal accounting controls or auditing matters may also
be reported to the Board of Directors using the above address.

BOARD MEETINGS

         During the fiscal year ended March 31, 2008, our Board of Directors
held eight meetings and acted via written consent on three occasions. No
incumbent director attended fewer than 75% of the meetings of the Board of
Directors during that year.

COMMITTEES OF THE BOARD

         The Board of Directors has an Audit Committee, a Compensation Committee
and a Nominating Committee.

         AUDIT COMMITTEE

         The current members of the Audit Committee are Barry Dash (Chairman of
the Audit Committee), Robert J. Levenson and Melvin Van Woert. The Audit
Committee held four meetings during the fiscal year ended March 31, 2008. A copy
of its written charter (adopted by the Board of Directors) was included as an
appendix to our proxy statement sent to stockholders in connection with the
annual meeting of stockholders held October 11, 2001. The Audit Committee
reviews with management and our auditors our financial statements, the
accounting principles applied in their preparation, the scope of the audit, any
comments made by the auditors on our financial statements and our accounting
controls and procedures, the independence of our auditors, our internal
controls, the other matters set forth in its charter, as adopted by the Board of
Directors, and such other matters as the Audit Committee deems appropriate. The
Audit Committee is directly responsible for the appointment, compensation,
retention and oversight of the work of our independent auditors for the purpose
of preparing or issuing an audit report or performing other audit, review or
attest services for us. We deem the members of our Audit Committee to be
independent and Mr. Levenson to be qualified as an audit committee financial
expert.

                                       4


         NOMINATING COMMITTEE

         The current members of the Nominating Committee are Melvin Van Woert
(Chairman of the Nominating Committee), Bernard Berk and Barry Dash. The
Nominating Committee acted via written consent on one occasion. This committee
does not have a charter. The Nominating Committee assists the Board of Directors
in identifying and recommending qualified Board candidates. The Nominating
Committee identifies Board candidates through numerous sources, including
recommendations from Directors, executive officers and our stockholders. The
Nominating Committee seeks to have available to it qualified candidates from a
broad pool of individuals with a range of talents, experience, backgrounds and
perspectives. The Nominating Committee seeks to identify those individuals most
qualified to serve as Board members and considers many factors with regard to
each candidate, including judgment, integrity, diversity, prior experience, the
interplay of the candidate's experience with the experience of other Board
members, the extent to which the candidate would be desirable as a member of any
committees of the Board of Directors, and the candidate's willingness to devote
substantial time and effort to Board responsibilities. The Nominating Committee
makes recommendations to the Board of Directors with respect to Director
nominees.

         COMPENSATION COMMITTEE

         The current members of the Compensation Committee are Barry Dash
(Chairman of the Compensation Committee), Robert J. Levenson and Melvin Van
Woert. The Compensation Committee held six meetings during the fiscal year ended
March 31, 2008. The Compensation Committee was formed June 26, 2007 and adopted
a charter which is included as APPENDIX A to this Proxy Statement. The
Compensation Committee reviews our compensation practices and policies, reviews
and approves corporate goals and objectives relevant to the chief executive
officer and other executive officer compensation, evaluates chief executive
officer and executive officer performance in light of those goals and objectives
and, either as a committee or together with other independent directors (as
directed by the Board of Directors), determines and approves chief executive
officer and executive officer compensation based on this evaluation, reviews and
approves the terms of the offer letters, employment agreements, severance
agreements, change-in-control agreements, indemnification agreements and other
material agreements between the Company and its Chief Executive Officer and
executive officers, annually reviews and approves perquisites for the chief
executive officer and executive officers, considers and approves the report of
the Compensation Committee for inclusion in the Company's proxy statement, makes
recommendations to the Board of Directors with respect to the Company's employee
benefit plans, administers incentive, deferred compensation and equity based
plans, and has the other responsibilities as set forth in its charter, as
adopted by the Board of Directors, and such other matters as the Compensation
Committee deems appropriate. For more information on the compensation of
directors and officers of the Company, see the "Compensation Discussion and
Analysis" and "Compensation" sections below.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         No members of the Compensation Committee were officers or employees of
the Company or any of its subsidiaries during the year ended March 31, 2008, or
had any relationship otherwise requiring disclosure.


                                       5



                                   PROPOSAL 1
                              ELECTION OF DIRECTORS

         THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
                       EACH OF THE NOMINEES LISTED BELOW.

         Our by-laws provide that the Board of Directors will consist of not
less than three nor more than ten members, the actual number of directors to be
determined by the Board of Directors from time to time. The Board of Directors
has set the number of directors of the Board of Directors as of the Annual
Meeting at four.

         The holders of Common Stock will elect four directors at the Annual
Meeting, each of whom will be elected to serve until the next annual meeting of
stockholders and thereafter until their successors shall have been duly elected
and shall have qualified. Unless a stockholder either indicates "withhold
authority" on his proxy card or indicates on his proxy card that his shares
should not be voted for certain nominees, it is intended that the persons named
in the proxy will vote for the election of the persons named in the table below.

INFORMATION WITH RESPECT TO NOMINEES.

         The table below sets forth the name and age as of the Record Date of
each nominee, and the period during which he has served on our Board of
Directors. Each of the nominees for director has agreed to serve if elected and
has consented to being named in this Proxy Statement.

         NAME                             AGE      DIRECTOR SINCE
         -----                            ---      --------------
         Bernard Berk                     59       2004
         Barry Dash, Ph. D                76       2005
         Robert J. Levenson               66       2007
         Melvin M. Van Woert, M.D.        78       2005


         The principal occupations and employment of each such person during the
past five years is set forth below. In each instance in which dates are not
provided in connection with a nominee's business experience, such nominee has
held the position indicated for at least the past five years.

         MR. BERNARD BERK, President and Chief Executive Officer since June
2003, Director since February 2004 and Member of the Nominating Committee since
June 2004. From 1996 to 2003, Mr. Berk was the President and Chief Executive
Officer of Michael Andrews Corporation, a pharmaceutical management consultant
firm. Mr. Berk was, from 1994 until 1996, President and Chief Executive Officer
of Nale Pharmaceutical Corporation. From 1989 until 1994, he was Senior Vice
President of Sales, Marketing and Business Development of Par Pharmaceuticals,
Inc. Mr. Berk holds a B.S. from New York University.

         DR. BARRY DASH, Director since April 2005, Member of the Audit
Committee since April 2005, Member of the Nominating Committee since April 2005
and Member of the Compensation Committee since June 2007. Dr. Dash has been
since 1995 President and Managing Member of Dash Associates, L.L.C., an
independent consultant to the pharmaceutical and health industries. From 1983 to
1996 he was employed by American Home Products Corporation (now known as Wyeth)
its Whitehall-Robins Healthcare Division, initially as Vice President of
Scientific Affairs, then Senior Vice President of Scientific Affairs and then
Senior Vice President of Advanced


                                       6


Technologies during which time he personally supervised six separate
departments: Medical and Clinical Affairs, Regulatory Affairs, Technical
Affairs, Research and Development, Analytical R&D and Quality Management/Q.C.
Dr. Dash had been employed by the Whitehall Robins Healthcare Division from 1960
to 1976, during which time he served as Director of Product Development
Research, Assistant Vice President of Product Development and Vice President of
Scientific Affairs. Dr. Dash had been employed by J.B. Williams Company (Nabisco
Brands, Inc.) from 1978 to 1982. From 1976 to 1978 he was Vice President,
Director of Laboratories of the Consumer Products Division of American Can
Company. He currently serves on the board of GeoPharma, Inc. (NASDQ: GORX) Dr.
Dash holds a Ph.D. from the University of Florida and M.S. and B.S. degrees from
Columbia University where he was Assistant Professor at the College of
Pharmaceutical Sciences from 1956 to 1960. He is a member of the American
Pharmaceutical Association, the American Association for the Advancement of
Science and the Society of Cosmetic Chemist, American Association of
Pharmaceutical Scientists, Drug Information Association, American Foundation for
Pharmaceutical Education, and Diplomate American Board of Forensic Examiners. He
is the author of scientific publications and patents in the pharmaceutical
field.

         ROBERT J. LEVENSON, Director since 2007, Member of the Audit Committee
since June 2007 and Member of the Compensation Committee since June, 2007. Since
2000, Mr. Levenson has been the Managing Member of the Lenox Capital Group,
L.L.C. Mr. Levenson was previously an Executive Vice President of First Data
Corporation from 1993 to 2000 and a member of its Board of Directors from 1992
to 2003. He was Senior Executive Vice President, Chief Operating Officer, Member
of the Office of the President and Director of Medco Containment Services, Inc.,
a provider of managed care prescription benefits, from October 1990 to December
1992. From 1985 until October 1990, Mr. Levenson was a Group President and
Director of Automatic Data Processing, Inc. (ADP-NYSE). Mr. Levenson was a
Director of Emisphere Technologies, Inc., a biopharmaceutical company, from 1998
to 2005, and has been a director of several other companies, public and private.

         DR. MELVIN VAN WOERT, Director since April 2005, Member of Audit
Committee since April 2005, Member of Nominating Committee since April 2005 and
Member of the Compensation Committee since June 2007. Dr. Van Woert has been
since 1974 a member of the staff of Mount Sinai Medical Center and, since 1978
has also been a Professor in the Department of Neurology and Pharmacology at
Mount Sinai School of Medicine. Dr. Van Woert had been a consultant for
Neuropharmacological Drug Products to the United States Food and Drug
Administration from 1974 to 1980; Associate Editor for Journal of the
Neurological Sciences; Member of the Editorial Board of the Journal of Clinical
Neurpharmacology; and Medical Director of National Organization for Rare
Disorders for which he received in 1993 the Humanitarian Award. Dr. Van Woert's
other awards include the U.S. Public Health Service Award for Exceptional
Achievement in Orphan Products Development and the National Myoclonus Foundation
Award. He has authored and co-authored more than 150 articles appearing in
pharmacological, medical and other professional journals or publications.

         There is no family relationship between the nominees.


                                       7



                                   PROPOSAL 2
          APPROVAL AND RATIFICATION OF AMENDMENT TO THE CERTIFICATE OF
          INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
                  COMMON STOCK FROM 65,000,000 TO 150,000,000

            THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2

         The Company is currently authorized to issue 65,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock. The Company's Board of
Directors, subject to stockholder approval, has adopted an amendment to the
Certificate of Incorporation (the "CHARTER AMENDMENT I") that would increase the
authorized shares of the Common Stock from 65,000,000 shares of Common Stock to
150,000,000 shares of Common Stock. If the Charter Amendment I is approved by
Company's stockholders, ARTICLE FOURTH of the Certificate of Incorporation will
read as follows:

         FOURTH: The total number of shares of all classes of stock which the
         Corporation shall have authority to issue is One Hundred Fifty Five
         Million (155,000,000) shares, consisting of Five Million (5,000,000)
         shares of Preferred Stock, par value $0.01 per share, and One Hundred
         Fifty Million (150,000,000) shares of Common Stock, par value of $0.01
         per share.

         Subject to the provisions of Section 151 of the General Corporation
         Law, the Board of Directors or any authorized committee thereof of the
         Corporation is authorized to issue the shares of Preferred Stock in one
         or more series and determine the number of shares constituting each
         such series, the voting powers of shares of each such series and the
         designations, preferences and relative, participating, optional or
         other special rights, and qualifications, limitations or restrictions
         as set forth in a resolution or resolutions of the Board of Directors.

         On April 28, 2008, the Company had 23,068,780 outstanding shares of
Common Stock, exclusive of 100,000 treasury shares, 3,737,778 shares of Common
Stock reserved for issuance upon conversion of outstanding Series B 8%
Convertible Preferred Stock, par value $0.01 per share (the "SERIES B PREFERRED
STOCK"), 8,218,966 shares of Common Stock reserved for issuance upon conversion
of outstanding Series C 8% Convertible Preferred Stock, par value $0.01 per
share (the "SERIES C PREFERRED STOCK"), 5,543,300 shares of Common Stock
reserved for issuance upon exercise of outstanding options and 9,216,736 shares
of Common Stock reserved for issuance upon exercise of outstanding warrants
leaving only 15,114,440 authorized shares of Common Stock available for future
issuances.

         The Company has not increased its authorized shares of Common Stock
since 2004, at which time its authorized shares of Common Stock were increased
from 25,000,000 shares to 65,000,000 shares.

         The purpose of the proposed increase in the number of authorized shares
of Common Stock is to provide more shares for general corporate purposes,
including raising additional capital, stock issuances under employee stock
option plans, possible future acquisitions and stock dividends and splits. The
Board of Directors believes that an increase in the total number of shares of
authorized Common Stock will help the Company to meet its future needs and give
it greater flexibility in responding quickly to advantageous business
opportunities. In the event that the Board of Directors deems it to be in the
best interest of the Company to issue additional shares of Common Stock or
securities convertible, exercisable or exchangeable for shares of


                                       8


Common Stock and the price per share of Common Stock in such issuance is below
certain dollar amounts set forth in the Company's Certificate of Designations of
Preferences, Rights and Limitations of the Company's Series B Preferred Stock
and Series C Preferred Stock or set forth in the terms of any outstanding
warrants or options which contain anti-dilution protection provisions, the
number of shares of Common Stock as to which such securities may be converted or
exercised shall increase.

         In the absence of a substantial increase in the number of authorized
shares of Common Stock, the Company will be greatly disadvantaged in its ability
to undertake any future fundraising through the sale of Common Stock or
securities convertible, exchangeable or exercisable for shares of Common Stock.
The Company has engaged a placement agent to assist in any future fundraising
but the Company currently does not have any definitive terms with respect to any
plan, commitment, arrangement, understanding or agreement, either oral or
written, regarding the issuance of Common Stock or securities convertible,
exchangeable or exercisable for shares of Common Stock, subsequent to the
increase in the number of available authorized shares of Common Stock.

         The Company's issuance of shares of Common Stock or Preferred Stock,
including the additional shares of Common Stock that will be authorized if the
proposed Charter Amendment I is adopted, may dilute the equity ownership
position of current holders of Common Stock and may be made without stockholder
approval, unless otherwise required by applicable laws or stock exchange
regulations. Under existing American Stock Exchange regulations, and except as
stated below, approval of holders of a majority of the shares of Common Stock
voting would be required for any transaction or series of related transactions
that would result in the issuance by the Company of additional shares (or
securities convertible into shares of Common Stock) (i) if the number of shares
of Common Stock to be issued (including shares issuable upon conversion of
convertible securities issued and issuable upon exercise of warrants, options or
rights issued) is 20% or more of the number of shares outstanding before the
issuance for a price less than the greater of book or market value of the stock;
or (ii) if the issuance would result in a change in control of the Company. The
stockholder approval requirement does not apply to any public offering for cash
or to any bona fide private financing involving a sale of Common Stock for cash
at a purchase price or conversion or exercise price at least as great as both
the book and market value of the Common Stock.

         The additional authorized but unissued shares of the Company's Common
Stock or the issuance of one or more series of Preferred Stock could be used to
make a change in control of the Company more difficult and expensive. Under
certain circumstances, such shares could be used to create impediments to or
frustrate persons seeking to cause a takeover or to gain control of the Company.
Such shares could be sold to purchasers who might side with the Board of
Directors in opposing a takeover bid that the Board of Directors determines not
to be in the best interests of its stockholders. The Charter Amendment I might
also have the effect of discouraging an attempt by another person or entity,
through the acquisition of a substantial number of shares of the Common Stock,
to acquire control of the Company with a view to consummating a merger, sale of
all or part of the Company's assets, or a similar transaction, since the
issuance of new shares could be used to dilute the stock ownership of such
person or entity.

         THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING COMMON STOCK
ENTITLED TO VOTE ON THIS PROPOSAL AT THE ANNUAL MEETING IS REQUIRED TO APPROVE
AND RATIFY THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FROM 65,000,000 TO 150,000,000.

                                       9



                                   PROPOSAL 3
          APPROVAL AND RATIFICATION OF AMENDMENT TO THE CERTIFICATE OF
         INCORPORATION TO PROVIDE THAT HOLDERS OF THE COMPANY'S COMMON
             STOCK ARE NOT ENTITLED TO VOTE ON ANY AMENDMENT TO THE
             CERTIFICATE OF INCORPORATION (INCLUDING ANY PREFERRED
          STOCK CERTIFICATE OF DESIGNATION) THAT RELATES SOLELY TO THE
         TERMS OF ONE OR MORE OUTSTANDING SERIES OF OUR PREFERRED STOCK
         IF THE HOLDERS OF SUCH AFFECTED SERIES ARE ENTITLED TO VOTE ON
                                 SUCH AMENDMENT

            THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3

         The Certificate of Incorporation authorizes the Board of Directors,
without the consent of the holders of Common Stock, to issue the authorized
shares of Preferred Stock in one or more series and determine the number of
shares constituting each such series, the voting powers of shares of each such
series of Preferred Stock and the designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions. The resolution or resolutions of the Board of Directors setting
forth such terms are filed as a certificate of designation for such series of
Preferred Stock and once such certificate of designation is filed and becomes
effective, it has the effect of amending the Company's Certificate of
Incorporation.

         From time to time, particularly in connection with future equity
issuances by the Company, the Company is required to amend the terms of one or
more series of outstanding Preferred Stock. Such an amendment requires the
approval of the required percentage of the holders of Preferred Stock. Under the
Delaware General Corporation Law, unless otherwise provided in the Company's
Certificate of Incorporation, such amendments also require a vote of the holders
of the Company's Common Stock, even though the approval of such holders was not
required to create the series of Preferred Stock or determine the terms of such
Preferred Stock.

         The Company seeks to simplify the process through which amendments to
its Certificate of Incorporation (including any Preferred Stock certificate of
designation) that relate solely to the terms of outstanding Preferred Stock are
effected. Accordingly, this proposed amendment to our Certificate of
Incorporation (the "CHARTER AMENDMENT II") provides that holders of shares of
our Common Stock are not entitled to vote on any amendment to the Certificate of
Incorporation (including any Preferred Stock certificate of designation) that
relates solely to the terms of one or more outstanding series of our Preferred
Stock if the holders of such affected series are entitled, either separately or
together with the holders of one or more other such series, to vote on such
amendment pursuant to the Certificate of Incorporation or the Delaware General
Corporation Law.

         The Company believes that the proposed amendment would not adversely
affect the rights of the holders of the Common Stock because, by virtue of the
terms of the Certificate of Incorporation, the Company is not required to obtain
the prior approval of the holders of the Common Stock in order to create any
series of Preferred Stock or determine the terms of such Preferred Stock.
Further, the Company does not believe that holders of Common Stock rely upon the
right to vote in connection with amendments solely to a series of Preferred
Stock when such holders of Common Stock did not have a right to vote in
connection with the establishment of any of the terms as to which the Company
may seek an amendment. Accordingly, the Company believes there are no potential
negative consequences to the holders of the Common Stock as a result of Charter
Amendment II, other than as currently permitted in connection with the
authorization and issuance of any series of Preferred Stock. As in the case of a
series of newly created Preferred Stock, the amendment of the terms of an
existing series of Preferred Stock may have a potential negative consequence
upon the holders of the Common Stock, such as increases in liquidation
preference, increases or other changes to mandatory dividend provisions,
creation or modification of redemption rights under certain circumstances or the
granting of special voting rights as to which the Company would be required to
comply prior to the taking of certain actions.

         The Company's Board of Directors, subject to stockholder approval, has
adopted the Charter Amendment II which provides that holders of shares of our
Common Stock are not entitled to vote on any amendment to the Certificate of
Incorporation (including any Preferred Stock certificate of designation) that
relates solely to the terms of one or more outstanding series of our Preferred
Stock if the holders of such affected series are entitled, either separately or
together with the holders of one or more other such series, to vote on such
amendment pursuant to the Certificate of Incorporation or the Delaware General
Corporation Law. If the Charter Amendment II is approved by Company's
stockholders, an ARTICLE TENTH will be added to the Certificate of Incorporation
and will read as follows:

         TENTH. Each holder of Common Stock, as such, shall be entitled to one
         vote for each share of Common Stock held of record by such holder on
         all matters on



                                       10



         which stockholders generally are entitled to vote; provided, however,
         that, except as otherwise required by law, holders of Common Stock, as
         such, shall not be entitled to vote on any amendment to this
         Certificate of Incorporation (including any Certificate of Designation
         relating to any series of Preferred Stock) that relates solely to the
         terms of one or more outstanding series of Preferred Stock if the
         holders of such affected series are entitled, either separately or
         together with the holders of one or more other such series, to vote
         thereon pursuant to this Certificate of Incorporation (including any
         Certificate of Designation relating to any series of Preferred Stock)
         or pursuant to the General Corporation Law of the State of Delaware.

         THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING COMMON STOCK
ENTITLED TO VOTE ON THIS PROPOSAL AT THE ANNUAL MEETING IS REQUIRED TO APPROVE
AND RATIFY THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO PROVIDE THAT
HOLDERS OF COMMON STOCK ARE NOT ENTITLED TO VOTE ON ANY AMENDMENT TO THE
CERTIFICATE OF INCORPORATION (INCLUDING ANY PREFERRED STOCK CERTIFICATE OF
DESIGNATION) THAT RELATES SOLELY TO THE TERMS OF ONE OR MORE OUTSTANDING SERIES
OF THE PREFERRED STOCK IF THE HOLDERS OF SUCH AFFECTED SERIES ARE ENTITLED TO
VOTE ON SUCH AMENDMENT.



                                   PROPOSAL 4
               RATIFICATION OF AMENDMENTS MADE TO THE CERTIFICATE
              OF INCORPORATION WHICH RELATE SOLELY TO THE SERIES B
          PREFERRED STOCK WHICH WERE PREVIOUSLY APPROVED BY A MAJORITY
                 OF THE HOLDERS OF THE SERIES B PREFERRED STOCK

            THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 4

         The Company seeks to have the holders of the Common Stock ratify
certain amendments made to the Certificate of Incorporation which relate solely
to the Series B Preferred Stock which were previously approved by a majority of
the holders of the Series B Preferred Stock.

         On April 24, 2007, the Company filed with the Secretary of State of the
State of Delaware (i) a Certificate of Designation of Preferences, Rights and
Limitations of Series C Preferred Stock (the "SERIES C PREFERRED CERTIFICATE")
under which 20,000 shares of our Series C Preferred Stock were authorized and
created and (ii) an Amended Certificate of Designation of Preferences, Rights
and Limitations of Series B Preferred Stock (the "AMENDED SERIES B PREFERRED
CERTIFICATE") to change certain terms of the Series B Preferred Stock contained
in the Certificate of Designation of Preferences, Rights and Limitations of the
Series B Preferred Stock originally filed on March 15, 2006 (the "ORIGINAL
SERIES B PREFERRED CERTIFICATE").

         The amendments effected by the filing of the Amended Series B Preferred
Certificate were as follows: (i) to permit the Series C Preferred Stock to rank
PARI PASSU with the Series B Preferred Stock as to dividends, distributions and
rights upon liquidation, (ii) to provide for voting upon certain matters by the
holders of the Series B Preferred Stock and the Series C Preferred Stock as a
single class of stock and (iii) to extend the date from March 15, 2008 to April
24, 2009 upon which the dividend rate (as a percentage of the stated value per
share of Series B Preferred Stock) payable upon the Series B Preferred Stock
were to increase from 8% to 15%.

         The amendments of the Certificate of Incorporation, contained in the
Amended Series B Certificate, were approved by the Board of Directors and
holders of the requisite


                                       11


percentage of the Series B Preferred Stock. The transactions contemplated by the
issuance of the Series C Preferred Stock were approved by the Board of Directors
and a majority of the holders of the Common Stock at the Company's Annual
Meeting of Stockholders on June 26, 2007. The amendment of the Original Series B
Preferred Certificate was contemplated by the agreement governing the sale of
the Series C Preferred Stock.

         Under the Delaware General Corporation Law, the filing of the Amended
Series B Preferred Certificate acts as an amendment to the Certificate of
Incorporation. The Company requests that the holders of Common Stock ratify the
amendment of the Certificate of Incorporation contained in the Amended Series B
Preferred Certificate, effective as of April 24, 2007. All required approvals
from the holders of Preferred Stock have been obtained.

         THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING COMMON STOCK
ENTITLED TO VOTE ON THIS PROPOSAL AT THE ANNUAL MEETING IS REQUIRED TO RATIFY
CERTAIN AMENDMENTS MADE TO THE CERTIFICATE OF INCORPORATION WHICH RELATE SOLELY
TO THE SERIES B PREFERRED STOCK WHICH WERE PREVIOUSLY APPROVED BY A MAJORITY OF
THE HOLDERS OF THE SERIES B PREFERRED STOCK.

                                   PROPOSAL 5
           APPROVAL AND RATIFICATION OF AMENDMENT TO STOCK OPTION PLAN

            THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 5

         Our 2004 Stock Option Plan (the "STOCK OPTION PLAN") permits us to
grant both incentive stock options ("INCENTIVE STOCK OPTIONS" or "ISOS") within
the meaning of Section 422 of the Internal Revenue Code (the "CODE"), and other
options which do not qualify as Incentive Stock Options (the "NON-QUALIFIED
OPTIONS") to employees, officers, Directors of and consultants to Elite.

         Unless earlier terminated by the Board of Directors, the Stock Option
Plan (but not outstanding options) terminates on March 1, 2014, after which no
further awards may be granted under the Stock Option Plan. The Stock Option Plan
is administered by the full Board of Directors or, at the Board of Director's
discretion, by a committee of the Board of Directors consisting of at least two
persons who are "disinterested persons" defined under Rule 16b-2(c)(ii) under
the Securities Exchange Act of 1934, as amended (the "COMMITTEE").

         Recipients of options under the Stock Option Plan ("OPTIONEES") are
selected by the Board of Directors or the Committee. The Board of Directors or
Committee determines the terms of each option grant including (1) the purchase
price of shares subject to options, (2) the dates on which options become
exercisable and (3) the expiration date of each option (which may not exceed ten
years from the date of grant). The minimum per share purchase price of options
granted under the Stock Option Plan for Incentive Stock Options is the fair
market value (as defined in the Stock Option Plan) or for Nonqualified Options
is 85% of fair market value of one share of the Common Stock on the date the
option is granted.

         Optionees have no voting, dividend or other rights as stockholders with
respect to shares of Common Stock covered by options prior to becoming the
holders of record of such shares. The purchase price upon the exercise of
options may be paid in cash, by certified bank or cashier's check, by tendering
stock held by the Optionee, as well as by cashless exercise either through the
surrender of other shares subject to the option or through a broker. The total
number of shares of Common Stock available under the Stock Option Plan, and the
number of shares and per share


                                       12


exercise price under outstanding options will be appropriately adjusted in the
event of any stock dividend, reorganization, merger or recapitalization or
similar corporate event. Subject to limitations set forth in the Stock Option
Plan, the terms of option agreements will be determined by the Board of
Directors or Committee, and need not be uniform among Optionees.

         The Board of Directors may at any time terminate the Stock Option Plan
or from time to time make such modifications or amendments to the Stock Option
Plan as it may deem advisable and the Board of Directors or Committee may
adjust, reduce, cancel and regrant an unexercised option if the fair market
value declines below the exercise price except as may be required by any
national stock exchange or national market association on which the Common Stock
is then listed. In no event may the Board of Directors without the approval of
stockholders, amend the Stock Option Plan to increase the maximum number of
shares of Common Stock for which options may be granted under the Stock Option
Plan or change the class of persons eligible to receive options under the Stock
Option Plan.

FEDERAL INCOME TAX CONSEQUENCES. The following is a brief discussion of the
Federal income tax consequences of transactions under the Stock Option Plan.
This discussion is not intended to be exhaustive and does not describe state or
local tax consequences.

INCENTIVE OPTIONS

         No taxable income is realized by the Optionee upon the grant or
exercise of an Incentive Option, except as noted below with respect to the
alternative minimum tax. If Common Stock is issued to an Optionee pursuant to
the exercise of an Incentive Option, and if no disqualifying disposition of such
shares is made by such Optionee within two years after the date of grant or
within one year after the transfer of such shares to such Optionee, then (1)
upon sale of such shares, any amount realized in excess of the option price will
be taxed to such Optionee as a long-term capital gain and any loss sustained
will be a long-term capital loss, and (2) no deduction will be allowed to the
Optionee's employer for Federal income tax purposes.

         Except as noted below for corporate "insiders," if the Common Stock
acquired upon the exercise of an Incentive Stock Option is disposed of prior to
the expiration of either holding period described above, generally (1) the
Optionee will realize ordinary income in the year of disposition in an amount
equal to the excess (if any) of the fair market value of such shares at exercise
(or, if less, the amount realized on the disposition of such shares) over the
option price paid for such shares and (2) the Optionee's employer will be
entitled to deduct such amount for Federal income tax purposes if the amount
represents an ordinary and necessary business expense. Any further gain (or
loss) realized by the Optionee will be taxed as short-term or long-term capital
gain (or loss), as the case may be, and will not result in any deduction by the
employer.

         Subject to certain exceptions for disability or death, if an Incentive
Stock Option is exercised more than three months following termination of
employment, the exercise of the Option will generally be taxed as the exercise
of a Non-qualified Option.

         For purposes of determining whether an Optionee is subject to any
alternative minimum tax liability, an Optionee who exercises an Incentive Stock
Option generally would be required to increase his or her alternative minimum
taxable income, and compute the tax basis in the stock so acquired, in the same
manner as if the Optionee had exercised a Non-qualified Option. Each Optionee is
potentially subject to the alternative minimum tax. In substance, a taxpayer is
required to pay the higher of his/her alternative minimum tax liability or
his/her "regular" income tax liability. As a result, a taxpayer has to determine
his potential liability under the alternative minimum tax.

                                       13


NON-QUALIFIED OPTIONS

         With respect to Non-qualified Options: (1) no income is realized by the
Optionee at the time the Option is granted; (2) generally, at exercise, ordinary
income is realized by the Optionee in an amount equal to the difference between
the option price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise, and the Optionee's employer is generally
entitled to a tax deduction in the same amount subject to applicable tax
withholding requirements; and (3) at sale, appreciation (or depreciation) after
the date of exercise is treated as either short-term or long-term capital gain
(or loss) depending on how long the shares have been held.

         Pursuant to Section 409A of the Internal Revenue Code (the "Code"),
Non-qualified Options must be issued at fair market value at the time of the
grant in order to achieve the federal tax consequences described above and to
avoid substantial penalties.

COMPLIANCE WITH SECTION 409A OF THE CODE

         To the extent that the Board of Directors or Committee determines that
any option granted under the Stock Option Plan is subject to Section 409A of the
Code, the award agreement evidencing such option shall incorporate the terms and
conditions required by Section 409A. To the extent applicable, the Stock Option
Plan and award agreements shall be interpreted in accordance with Section 409A.
Notwithstanding any provision of the Stock Option Plan to the contrary, in the
event that, following the effective date of this amendment to the Stock Option
Plan, the Board of Directors or Committee determines that any option may be
subject to Section 409A of the Code, the Board of Directors or Committee may
adopt such amendments to the Stock Option Plan and the applicable award
agreement or adopt other policies and procedures (including amendments, policies
and procedures with retroactive effect), or take any other actions that the
Board of Directors or Committee determines are necessary or appropriate to (a)
exempt the option from Section 409A and/or preserve the intended tax treatment
of the benefits provided with respect to the option or (b) comply with the
requirements of Section 409A of the Code.

SPECIAL RULES APPLICABLE TO CORPORATE INSIDERS

         As a result of the rules under Section 16(b) of the Exchange Act,
"insiders" (as defined in the Securities Exchange Act of 1934), depending upon
the particular exemption from the provisions of Section 16(b) utilized, may not
receive the same tax treatment as set forth above with respect to the grant
and/or exercise of options. Generally, insiders will not be subject to taxation
until the expiration of any period during which they are subject to the
liability provisions of Section 16(b) with respect to any particular option.
Insiders should check with their own tax advisers to ascertain the appropriate
tax treatment for any particular option.

         BENEFITS. Inasmuch as awards to all participants under the Stock Option
Plan will be granted at the sole discretion of the Board of Directors or
Committee, such benefits under the Stock Option Plan are not determinable.

         The Board of Directors, subject to stockholder approval, approved the
increase of the number of shares of Common Stock reserved for issuance under the
Stock Option Plan from 7,000,0000 shares to 10,000,0000 shares.

                                       14


         We believe the increase in the number of shares of Common Stock subject
to the Stock Option Plan will enhance our efforts to attract and retain
individuals with good ability to service the Company, motivate their efforts and
serve the business interests of the Company, while reducing the cash payments
which the Company would otherwise be required to make to accomplish such
purposes.

         THE AFFIRMATIVE VOTE OF A MAJORITY OF VOTES PROPERLY CAST ON THIS
PROPOSAL AT THE ANNUAL MEETING IS REQUIRED TO APPROVE AND RATIFY THE AMENDMENT
TO THE STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
RESERVED FOR ISSUANCE UNDER THE STOCK OPTION PLAN FROM 7,000,000 TO 10,000,000.

                      EQUITY COMPENSATION PLAN INFORMATION

      The following table sets forth certain information regarding Elite's
equity compensation plans as of March 31, 2008.



                                                                                         Number of
                             Number of                                             securities remaining
                             securities                                            available for future
                         to be issued upon              Weighted-average              issuance under
                            exercise of                exercise price per           equity compensation
                        outstanding options,          share of outstanding           plans (excluding
                            warrants and             options, warrants and         securities reflected
Plan Category                  rights                        rights                   in column (a))
---------------          -------------------         ---------------------         ---------------------
                                (a)                           (b)                           (c)
                                                                                       
Equity compensation
   plans approved by
   security holders                4,468,300(1)              $2.18                              2,531,700

Equity compensation
   plans not approved
   by security holders             1,075,000(2)              $2.06                                     --
                         -------------------         ---------------------         ----------------------
Total:                             5,543,300                 $2.16                              2,531,700
                         ===================         =====================         ======================


(1) Stock options issued under the 2004 Stock Option Plan
(2) Represents 1,000,000 non-qualified options issued to Veerappan Subramanian
and 75,000 non-qualified options to The Investor Relations Group.

                                   PROPOSAL 6
                RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

            THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 6

         The Board of Directors, subject to stockholder approval, appointed
Miller, Ellin & Company, LLP ("MILLER ELLIN") as our independent auditors for
our financial statements for the fiscal year ending March 31, 2008. THE
AFFIRMATIVE VOTE OF A MAJORITY OF VOTES PROPERLY CAST ON THIS PROPOSAL AT THE
ANNUAL MEETING IS REQUIRED TO RATIFY SUCH SELECTION.

         Stockholder ratification of the appointment is not required by our
Certificate of Incorporation or By-laws or otherwise. If our stockholders fail
to ratify the appointment, the Board of Directors will reconsider whether to
retain that firm. Even if the appointment is ratified, the Board of Directors in
its discretion may direct the appointment of a different independent accounting
firm if the Board of Directors determines that such a change would be in our
best interests and the best interests of our stockholders.

                                       15


         Miller Ellin has audited our consolidated financial statements since
1997. A representative of that firm is expected to be present at the Annual
Meeting, and will have an opportunity to make a statement to the stockholders
and will be available to respond to appropriate questions.

         The following table presents fees for professional audit services
rendered by Miller Ellin for the audits of our annual financial statements for
the years ended March 31, 2007 and 2006.

                                              2007                       2006
                                              ----                       ----
Audit Fees(1)                                $58,360                   $69,923
Audit-Related Fees                             ---                       ---
Tax Fees                                       ---                       ---
All Other Fees                                 ---                       ---

------------
     (1)  Audit Fees relate to the audit of our financial statements and reviews
          of financial statements included in our quarterly reports on Form
          10-Q.

                             AUDIT COMMITTEE REPORT

         The audit committee's primary responsibilities are to monitor the
integrity of our financial statements and reporting process and systems of
internal controls regarding finance and accounting and to monitor our compliance
with legal and regulatory requirements, including disclosures and procedures.
The committee also has the responsibility to evaluate our independent auditor's
qualifications, independence and performance as well as to evaluate the
performance of the internal audit function.

         Management has the primary responsibility for the financial statements
and the reporting process, including our systems of internal controls. The
independent auditors are responsible for auditing the annual financial
statements prepared by management and expressing an opinion as to whether those
financial statements conform with accounting principles generally accepted in
the United States of America. The audit committee reviewed and discussed the
audited financial statements with management and our independent auditors. The
audit committee has discussed with the independent auditors the matters required
to be discussed by the statement on Auditing Standards No. 61, as amended. In
addition, the audit committee has received the written disclosures and the
letter from the independent accountants required by Independence Standards Board
Standard No. 1, and has discussed with the independent accountant the
independent accountant's independence.

         Based upon the review and discussions described in this report, a
majority of the audit committee recommended to the Board of Directors that the
audited financial statements be included in our Annual Report on Form 10-K for
the fiscal year ended March 31, 2007 that has been filed with the Securities and
Exchange Commission.



                                                             AUDIT COMMITTEE
                                                             Barry Dash
                                                             Melvin Van Woert

         THE AUDIT COMMITTEE REPORT DOES NOT CONSTITUTE SOLICITING MATERIAL, AND
SHALL NOT BE DEEMED TO BE FILED OR INCORPORATED BY REFERENCE INTO ANY OTHER
COMPANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THE AUDIT COMMITTEE REPORT BY REFERENCE THEREIN.

                                       16


                    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                             OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding beneficial
ownership of our Common Stock as of April 28, 2008 by (i) by each person who is
known by us to own beneficially more than 5% of the Common Stock, (ii) by each
of our directors and nominees for director, (iii) by each of the Named Executive
Officers (as defined below) and (iv) by all our directors and executive officers
as a group. On such date, we had 23,068,780 shares of Common Stock outstanding
(exclusive of 100,000 treasury shares). (The 8,410 shares of Series B Preferred
Stock outstanding and the 19,068 shares of Series C Preferred Stock outstanding
are nonvoting and none of the individuals listed below beneficially owns any
shares of Series B Preferred Stock or Series C Preferred Stock other than Barry
Dash who owns 20 shares of Series C Preferred Stock. There are currently no
shares of Series A Preferred Stock outstanding).

         As used in the table below and elsewhere in this proxy statement, the
term beneficial ownership with respect to a security consists of sole or shared
voting power, including the power to vote or direct the vote, and/or sole or
shared investment power, including the power to dispose or direct the
disposition, with respect to the security through any contract, arrangement,
understanding, relationship, or otherwise, including a right to acquire such
power(s) during the 60 days immediately following the Record Date. Except as
otherwise indicated, the stockholders listed in the table have sole voting and
investment powers with respect to the shares indicated.



NAME AND ADDRESS                                                                         COMMON STOCK
                                                                            AMOUNT                  %

                                                                                          
Bernard Berk, Director, President and Chief Executive Officer*              1,734,800(1)        7.07

Barry Dash, Director*                                                       138,207(2)          **

Robert J. Levenson                                                          90,000(3)           **

Melvin Van Woert, Director*                                                 120,000(4)          **

Veerappan Subramanian, Director (5)*                                        2,436,094(6)        9.55

Stuart Apfel, Chief Scientific Officer and Chief Medical Officer*           400,000(7)          1.70

Chris Dick, Executive Vice President of Corporate Development*              885,287(8)          3.70

Mark I. Gittelman, Chief Financial Officer*                                 39,999(9)           **

Dr. Charan Behl(10)*                                                        1,375,000(11)       5.74

Trellus Management Company                                                  3,450,795(12)
Adam Usdan
350 Madison Avenue, 9th Floor
New York, New York  10017

Mark Fain                                                                   1,094,164(13)       4.71
237 Park Avenue, Suite 900
New York, NY 10017


                                       17



                                                                                          
Chad Comiteau                                                               1,114,096(14)       4.79
237 Park Avenue, Suite 900
New York, NY 10017

Davidson Kempner Healthcare International Ltd.                              4,528,328 (15)     16.45
65 East 55th Street, 19th Floor
New York, NY 10022

Elliot Rose Asset Management, LLC                                           1,147,900(16)       4.96
Gary S. Siperstein
10 Weybosset Street, Suite 401,
Providence, RI  02903

All Directors and Officers as a group                                       5,844,387(17)      20.19


     ----------
     *   The address is c/o Elite Pharmaceuticals Inc., 165 Ludlow Avenue,
         Northvale, NJ 07647.
     **  Less than 1%

(1) Includes options to purchase 1,485,000 shares of Common Stock. See "Named
Executive Officers."

(2) Includes options to purchase 120,000 shares of Common Stock, 20 shares of
Series C Preferred Stock convertible into 8,621 shares of Common Stock and
warrants to purchase 2,586 shares of Common Stock.

(3) Represents options to purchase shares of Common Stock.

(4) Represents options to purchase shares of Common Stock.

(5) Dr. Subramanian was acting Chief Scientific Officer from February 9, 2007 to
April 25, 2007. See "Named Executive Officers."

(6) Includes options to purchase 1,000,000 shares of Common Stock which are
owned by Dr. Subramanian and 957,396 shares of Common Stock and warrants to
purchase 478,698 shares of Common Stock which are owned by VGS Pharma, LLC
("VGS"), a wholly-owned subsidiary of Kali Capital, L.P., which is controlled by
Kali Management, LLC ("KALI"), its general partner, and Kali is controlled by
the daughter of Dr. Subramanian, its managing member. Dr. Subramanian disclaims
beneficial ownership of these shares of Common Stock, except to the extent of
his pecuniary interest therein, if any.

(7) Represents options to purchase shares of Common Stock.

(8) Includes options to purchase 850,000 shares of Common Stock and warrants
held by Mr. Dick and Hedy Rogers as joint tenants to purchase 10,479 shares of
Common Stock.

(9) Represents options to purchase shares of Common Stock.

(10) Behl was Executive Vice President and Chief Scientific Officer from March
9, 2006 to February 9, 2007 and has been Head of Technical Affairs since
February 9, 2007. See "Named Executive Officers."

(11) Includes warrants to purchase 130,000 shares of Common Stock and options to
purchase 750,000 shares of Common Stock. See "Named Executive Officers."

(12) Based on information provided by Trellus Management Company, LLC ("TMC")
and Adam Usdan in the Schedule 13G filed February 13, 2007 and also based on
information set forth in Form S-3 filed on May 24, 2007 and information provided
to us by TMC. Includes 862,068 shares of Common Stock issuable upon conversion
of Series C Preferred Stock held in the aggregate by Trellus Partners L.P
("TP"), Trellus Partners II L.P. ("TPI") and Trellus Offshore Fund Limited
("TPOF"), 888,889 shares of Common Stock issuable upon conversion of shares of
Series B Preferred Stock held by TP and 703,063 shares of Common Stock issuable
upon exercise of warrants held in the aggregate by TP, TPI and TPOF. Adam Usdan
is the President of TMC. Adam Usdan and TMC share voting power and dispositive
power over the shares. Notwithstanding the inclusion of the aforementioned
beneficial ownership calculation, pursuant to our Certificate of Designation of
Preferences, Rights and Limitations of Series C 8% Preferred Stock, the Amended
Certificate of Designations of the Series B 8% Convertible Preferred Stock and
the Common


                                       18


Stock Purchase Warrant for the aforementioned warrants, the number of shares of
Common Stock into which the Series C 8% Preferred Stock and Series B 8%
Preferred Stock are convertible and the warrants are exercisable is limited to
that number of shares of Common Stock which would result in the Adam Usdan and
TMC affiliated entities having aggregate beneficial ownership of not more than
9.99% of the total issued and outstanding shares of Common Stock.

(13) Based on information provided by Mark Fain and Chad Comiteau in their
Schedule 13G/A filed February 14, 2008. Mark Fain beneficially owned 1,094,164
shares of Common Stock, which amount includes (i) 168,000 shares beneficially
owned by Mr. Fain over which he has sole voting power and sole dispositive
power; (ii) 33,333 convertible shares beneficially owned by Mr. Fain over which
he has sole voting power and sole dispositive power; (iii) 33,000 shares
beneficially owned by Stratford Management Money Purchase Pension Plan over
which Mr. Fain has shared voting power and shared dispositive power; (iv)
709,831 shares beneficially owed by Stratford Partners, L.P. of which Mr. Fain
is a Managing Member, and over which Mr. Fain has shared voting power and shared
dispositive power; and (v) 150,000 convertible shares beneficially owed by
Stratford Partners, L.P. over which Mr. Fain has shared voting power and shared
dispositive power.

(14) Based on information provided by Mark Fain and Chad Comiteau in their
Schedule 13G/A filed February 14, 2008. Chad Comiteau beneficially owned
1,114,096 shares of Common Stock which amount includes (i) 188,600 shares
beneficially owned by Mr. Comiteau over which he has sole voting power and sole
dispositive power; (ii) 32,665 convertible shares beneficially owned by Mr.
Comiteau over which he has sole voting power and sole dispositive power; (iii)
33,000 shares beneficially owned by Stratford Management Money Purchase Pension
Plan over which he has shared voting power and shared dispositive power; (iv)
709,831 shares beneficially owed by Stratford Partners, L.P. of which Mr.
Comiteau is a Managing Member, and over which Mr. Comiteau has shared voting
power and shared dispositive power; and (v) 150,000 convertible shares
beneficially owed by Stratford Partners, L.P. over which Mr. Comiteau has shared
voting power and shared dispositive power.

(15) Davidson Kempner Healthcare International Ltd. ("DKHI") and its affiliates,
Davidson Kempner Partners ("DKP"), Davidson Kempner Institutional Partners, L.P.
("DKIP"), M.H. Davidson & Co. ("CO"), Davidson Kempner International, Ltd.
("DKIL"), Serena Limited ("Serena"), Davidson Kempner Healthcare Fund LP
("DKHF"), MHD Management Co., Davidson Kempner Advisors Inc., Davidson Kempner
International Advisors, L.L.C., DK Group LLC, DK Management Partners LP, DK
Stillwater GP LLC, Thomas L. Kempner, Jr., Marvin H. Davidson, Stephen M.
Dowicz, Scott E. Davidson, Michael J. Leffell, Timothy I. Levart, Robert J.
Brivio, Jr., Anthony A. Yoseloff, Eric P. Epstein and Avram Z. Friedman jointly
filed a Schedule 13GA on February 14, 2008, reflecting the beneficial ownership,
subject to an ownership limitation, of an aggregate of 7,967 Series C Preferred
Stock convertible into 3,434,052 shares of common stock, 1,030,208 warrants
exercisable into 1,030,208 shares of Common Stock and 64,068 shares of Common
Stock as a result of their voting and dispositive power over 7,967 Series C
Preferred Stock convertible into 3,434,052 shares of Common Stock, 1,030,208
warrants exercisable into 1,030,208 shares of Common Stock and 64,068 shares of
Common stock beneficially owned by DKP, DKIP, DKIL, Serena, CO, DKHF and DKHI.
Notwithstanding the inclusion of the aforementioned beneficial ownership
calculation, pursuant to our Certificate of Designation of Preferences, Rights
and Limitations of Series C Preferred Stock and the Common Stock Purchase
Warrant for the aforementioned warrants, the number of shares of Common Stock
into which the Series C Preferred Stock are convertible and the warrants are
exercisable is limited to that number of shares of Common Stock which would
result in the Davidson Kempner affiliated entities having aggregate beneficial
ownership of not more than 9.99% of the total issued and outstanding shares of
Common Stock. The above information was obtained from such Schedule 13G/A.

(16) Based on Schedule 13G filed January 24, 2008. Gary S. Siperstein has an
ownership interest in Elite Rose Asset Management, LLC.

(17) Includes 20 shares of Series C Preferred Stock convertible into 8,621
shares of Common Stock and options and warrants to purchase an aggregate of
5,306,763 shares of Common Stock.



                                       19



                      COMPENSATION DISCUSSION AND ANALYSIS

                                     SUMMARY

         Our approach to executive compensation, one of the most important and
complex aspects of corporate governance, is influenced by our belief in
rewarding people for consistently strong execution and performance. We believe
that the ability to attract and retain qualified executive officers and other
key employees is essential to our long-term success.

COMPENSATION LINKED TO ATTAINMENT OF PERFORMANCE GOALS

         Our plan to obtain and retain highly skilled employees is to provide
significant incentive compensation opportunities and market competitive
salaries. The plan was intended to link individual employee objectives with
overall company strategies and results, and to reward executive officers and
significant employees for their individual contributions to those strategies and
results. We use compensation and performance data from comparable companies in
the pharmaceutical industry to establish market competitive compensation and
performance standards for our employees. Furthermore, we believe that equity
awards serve to align the interests of our executives with those of our
stockholders. As such, equity is a key component of our compensation program.

ROLE OF THE COMPENSATION COMMITTEE AND ITS ADVISORS

         The Company formed the Compensation Committee in June 2007. Since the
formation of the Compensation Committee all elements of the executives'
compensation are determined by the Compensation Committee, which is comprised
solely of independent non-employee directors. However, the Compensation
Committee's decisions concerning the compensation of the Company's Chief
Executive Officer are subject to ratification by the independent directors of
the Board of Directors. As of March 31, 2008, the members of the Compensation
Committee were Barry Dash, Robert J. Levenson and Melvin Van Woert. The
Committee operates pursuant to a charter included as Appendix A to this Proxy
Statement. Under the Compensation Committee charter, the Compensation Committee
has authority to retain compensation consultants, outside counsel, and other
advisors that the committee deems appropriate, in its sole discretion, to assist
it in discharging its duties, and to approve the terms of retention and fees to
be paid to such consultants. In September, 2007, the Compensation Committee
directly retained an independent compensation consultant, Pearl Meyer & Partners
(PM&P), to assist the Committee in selecting a comparator group of companies for
compensation purposes as well as benchmarking the chief executive officer's
compensation.

         The compensation consultant reported directly and exclusively to the
Compensation Committee and received no other fees from the Company outside its
role as advisor to the Compensation Committee. PM&P periodically interacted with
the Company's Compensation Committee, predominately with its Chairman, Dr. Barry
Dash to gather and review information related to the executive compensation
program, but such work is done only at the direction of the Compensation
Committee. PM&P does not perform any services unrelated to executive and
director compensation for the Company. Accordingly, the Compensation Committee
considers PM&P to be independent from our management.


                                       20



                   NAMED EXECUTIVE OFFICERS AND KEY EMPLOYEES

         The named executive officers and key employees for fiscal year ending
March 31, 2008 are Bernard Berk, President and Chief Executive Officer; Mark I.
Gittelman, Chief Financial Officer; Christopher Dick, Executive Vice President
of Corporate Development; Charan Behl, Chief Scientific Officer until February
9, 2007, Head of Technical Affairs since February 9, 2007; Veerappan
Subramanian, acting Chief Scientific Officer from February 9, 2007 to April 24,
2008; and Stuart Apfel, Chief Medical Officer since January 1, 2008 and Chief
Scientific Officer since April 24, 2008. These individuals are referred to
collectively in this Proxy Statement as the "Named Executive Officers."

         MR. BERK, age 59, was appointed President and Chief Executive Officer
in June 2003 and a Director in February 2004. See "Election of Directors - Board
of Directors' Nominees" for his business background.

         DR. VEERAPPAN SUBRAMANIAN, age 57, was appointed a Director in December
2006 and was acting Chief Scientific Officer from February 9, 2007 to April 24,
2008. Since December 2006, Dr. Subramanian serves as Chief Executive Officer and
Chairman of the Board of Novel Laboratories, Inc. Dr. Subramanian has been a
pharmaceutical executive since 1981 and a pharmaceutical entrepreneur since
1997, when he formed Kali Laboratories, Inc. ("KALI LABS"). Kali Labs was
acquired by Par Pharmaceuticals, Inc. in 2004 and Dr. Subramanian continued to
work as an executive vice president at Par Pharmaceuticals after the
acquisition. Dr. Subramanian ended his relationship with Par Pharmaceuticals in
January 2006. Prior to organizing Kali Labs, Dr. Subramanian served for 6 years
as vice president of scientific affairs for Zenith Laboratories, Inc. Prior to
working with Zenith Laboratories, he was (i) the Director of New Product
Development and Technical Services for Kali Pharma, Inc., (ii) a Senior
Scientist, Commercial Products with Vicks Research Center, (iii) a Research
Pharmacist, Dermatological with Johnson & Johnson and (iv) a Research Pharmacist
in Product Development with E.R. Squibb & Sons. Between 2001 and 2005, Dr.
Subramanian served on the board of Generic Pharmaceutical Industry Association.
Dr. Subramanian has a Ph.D. in Pharmacy (1981) from Rutgers University, a M.S.
in Phamaceutics (1973) from Birla Institute of Technology & Science, and a B.S.
in Pharmacy (1971) from Madurai Medical College.

         DR. STUART APFEL, age 48, was appointed Chief Medical Officer January
3, 2008 and Chief Scientific Officer April 24, 2008. Dr. Apfel is also the
founder and current president of Parallax Clinical Research, a New York-based
consulting firm that provides strategic and practical assistance with clinical
trial protocol design, planning, initiating and management to biotechnology and
small pharmaceutical companies with making the transition from the bench to a
clinical development program, and in this capacity he has served as a consultant
to the Registrant over the past year. From 2004 to 2006, Dr. Apfel was employed
at DOV Pharmaceuticals, Inc. (OTC:DOVP), initially as a director of clinical
research and then as a senior director of clinical research. From 2000 to 2004,
Dr. Apfel was employed at Purdue Pharma L.P. Dr. Apfel initially worked as an
associate director of clinical research at Purdue Pharma L.P. and then was
promoted to a director of clinical research. Dr. Apfel is a board certified
neurologist, and is currently on faculty as Associate Professor of Neurology at
the Albert Einstein College of Medicine and at Downstate Medical School, where
he continues to teach. From 1990 to 2000, he was a full time faculty member in
the departments of Neurology and Neuroscience at Albert Einstein College of
Medicine, where his research focused on the application of neurotrophic factors
to neurologic disease.

                                       21


         MARK I. GITTELMAN, age 48, Chief Financial Officer, Secretary and
Treasurer of the Company, is the President of Gittelman & Co., P.C., an
accounting firm in Clifton, New Jersey. Prior to forming Gittelman & Co., P.C.
in 1984, he worked as a certified public accountant with the international
accounting firm of KPMG Peat Marwick, LLP. Mr. Gittelman holds a B.S. in
accounting from New York University and a Masters of Science in Taxation from
Fairleigh Dickinson University. He is a Certified Public Accountant licensed in
New Jersey and New York, and is a member of the American Institute of Certified
Public Accountants ("AICPA"), and the New Jersey State and New York State
Societies of CPAs. Other than Elite Labs, no company with which Mr. Gittelman
was affiliated in the past was a parent, subsidiary or other affiliate of the
Company.

         CHRIS DICK, age 52, was appointed Executive Vice President of Corporate
Development in March, 2006. Since November 2002, the Company has engaged Mr.
Dick to direct its licensing and business development activities. From 1999 to
2002, Mr. Dick served as Director of Business Development for Elan Drug
Delivery, Inc. responsible for licensing and business development of Elan's
portfolio of drug delivery technologies. From 1997 to 1999, he was Manager of
Business Development and Marketing for EnTec, a drug delivery business unit
within FMC Corporation's Pharmaceutical Division. Prior thereto he held various
other business and technical positions at FMC Corporation, including Manager of
Marketing for its pharmaceutical functional coatings product line. Mr. Dick
holds an M.B.A. from the Stern School of Business, New York University, and a
B.S. and M.S. in Chemical Engineering from Cornell University.

         DR. CHARAN BEHL, age 55, was appointed Head of Technical Affairs in
February 2007 and was Executive Vice President and Chief Scientific Officer of
the Company from March 2006 to February 2007. Dr. Behl has provided the Company
since June 2003 consulting technological services as an independent contractor.
He was from January 1995 to July 1998 Vice President of R&D and from July 1988
to January 2001 Executive Vice President of R&D of Nastech Pharmaceutical
Corporation, Inc. From April 1981 to November 1994, Dr. Behl was employed by
Hoffman La Roche, where he held a number of positions, including research leader
of its Pharmaceutical R&D Department. During his tenure at Roche and Nastech,
Dr. Behl created intellectual property in the area of drug delivery. His patent
portfolio includes over 40 patents issued, pending and in preparation. Dr. Behl
holds a B.S. in Pharmaceutical Sciences from BITS, Pilani, India, an M.S. in
Pharmaceutics from Duquesne University, under the mentorship of Dr. Alvin M.
Galinsky, and a Ph.D. in Pharmaceutical Sciences from the University of
Michigan, under the mentorship of Dr. William I. Higuchi. Dr. Behl was an
Assistant Research Scientist from 1978 to 1981 at the University of Michigan.
Dr. Behl is internationally known for his scientific and professional
activities. He has coauthored over 200 publications, including research
articles, book chapters, and abstracts, and has made numerous presentations at
national and international conferences and workshops. In conjunction with
associates from academia and industry and representatives of the FDA, Dr. Behl
has co-organized several workshops and symposia. He was the founding chair of
Nasal Drug Delivery Focus Group formed in 1995 under the auspices of the
American Association of Pharmaceutical Scientists ("AAPS"), and served as its
Chairman from 1995 to 2001. Dr. Behl is a fellow of the AAPS.

                       OUR EXECUTIVE COMPENSATION PROGRAM

OVERVIEW

         The primary elements of our executive compensation program are base
salary, incentive cash and stock bonus opportunities and equity incentives
typically in the form of stock option


                                       22


grants. Although we provide other types of compensation, these three elements
are the principal means by which we provide the Named Executive Officers with
compensation opportunities.

         The emphasis on the annual bonus opportunity and equity compensation
components of the executive compensation program reflect our belief that a large
portion of an executive's compensation should be performance-based. This
compensation is performance-based because payment is tied to the achievement of
corporate performance goals. To the extent that performance goals are not
achieved, executives will receive a lesser amount of total compensation. We have
entered into employment agreements with four of our Named Executive Officers.
Such employment agreements set forth base salaries, bonuses and stock option
grants. Such stock option grants are predicated on our achievement of corporate
performance goals as set forth in such agreements.

                 ELEMENTS OF OUR EXECUTIVE COMPENSATION PROGRAM

BASE SALARY

         We pay a base salary to certain of the Named Executive Officers. In
general, base salaries for the Named Executive Officers are determined by
evaluating the responsibilities of the executive's position, the executive's
experience and the competitive marketplace. Base salary adjustments are
considered and take into account changes in the executive's responsibilities,
the executive's performance and changes in the competitive marketplace. We
believe that the base salaries of the Named Executive Officers are appropriate
within the context of the compensation elements provided to the executives and
because they are at a level which remains competitive in the marketplace.

BONUSES

         The Board of Directors may authorize us to give discretionary bonuses,
payable in cash or shares of Common Stock, to the Named Executive Officers and
other key employees. Such bonuses are designed to motivate the Named Executive
Officers and other employees to achieve specified corporate, business unit
and/or individual, strategic, operational and other performance objectives.

STOCK OPTIONS

         Stock options constitute performance-based compensation because they
have value to the recipient only if the price of our Common Stock increases.
Stock options for each of the Named Executive Officers generally vest over time,
obtainment of a corporate goal or a combination.

         The grant of stock options at Elite is the centerpiece of our
compensation program and is designed to motivate our Named Executive Officers to
achieve our short-term and long-term corporate goals.

         As the pharmaceutical industry is characterized by a long product
development cycle, including a lengthy research and product-testing period and a
rigorous approval phase involving human testing and governmental regulatory
approval, many of the traditional benchmarking metrics for vesting, such as
product sales, revenues and profits are inappropriate for an early-stage
pharmaceutical company such as Elite. We consider when determining vesting
benchmarks the following which are aligned with our short-term and long-term
corporate goals:

                                       23


     o    clinical trial progress;

     o    achievement of regulatory milestones; and

     o    establishment of key strategic relationships.

RETIREMENT AND DEFERRED COMPENSATION BENEFITS

         We do not presently provide the Named Executive Officers with a defined
benefit pension plan or any supplemental executive retirement plans, nor do we
provide the Named Executive Officers with retiree health benefits. We have
adopted a deferred compensation plan under Section 401(k) of the Code. The plan
provides for employees to defer compensation on a pretax basis subject to
certain limits, however, Elite does not provide a matching contribution to its
participants.

         The retirement and deferred compensation benefits provided to the Named
Executive Officers are not material factors considered in making other
compensation determinations with respect to Named Executive Officers.

PERQUISITES

         As described in more detail below, the perquisites provided to certain
of the Named Executive Officers consist of car and parking allowances and life
insurance premiums. These perquisites represent a small fraction of the total
compensation of each such Named Executive Officer. The value of the perquisites
we provide are taxable to the Named Executive Officers and the incremental cost
to us of providing these perquisites is reflected in the Summary Compensation
Table. The Board of Directors believes that the perquisites provided are
reasonable and appropriate. For more information on perquisites provided to the
Named Executive Officers, please see the "All Other Compensation" column of the
Summary Compensation Table on page 35 of this Proxy Statement and "Agreements
with Named Executive Officers" below.

POST-TERMINATION/ CHANGE OF CONTROL COMPENSATION

         In addition to retirement and deferred compensation benefits described
above, we have arrangements with certain of the Named Executive Officers that
may provide them with compensation following termination of employment. These
arrangements are discussed below under "Agreements with Named Executive
Officers".

TAX IMPLICATIONS OF EXECUTIVE COMPENSATION

         Our aggregate deductions for each Named Executive Officer compensation
are potentially limited by Section 162(m) of the Code to the extent the
aggregate amount paid to an executive officer exceeds $1.0 million, unless it is
paid under a predetermined objective performance plan meeting certain
requirements, or satisfies one of various other exceptions specified in the
Code. At our 2006 Named Executive Officer compensation levels, we did not
believe that Section 162(m) of the Code would be applicable, and accordingly, we
did not consider its impact in determining compensation levels for our Named
Executive Officers in 2007.



                                       24


AGREEMENTS WITH NAMED EXECUTIVE OFFICERS AND KEY EMPLOYEES

BERNARD BERK

         On November 13, 2006, we entered into the Second Amended and Restated
Employment Agreement with Mr. Berk, our president, chief executive officer and
chairman of the Board of Directors (the "BERK AGREEMENT")

         The Berk Agreement provides for a base annual salary of $330,140 (his
current salary) which may at the discretion of the Board of Directors be
increased in light of factors including our existing financial condition and Mr.
Berk's success in implementing our business plan and achieving our strategic
alternatives. Mr. Berk is entitled to an automobile allowance of $800 per month.
The Berk Agreement provides for payment of a discretionary bonus following the
end of each fiscal year of up to 50% of Mr. Berk's then annual base salary. The
amount, if any, of the discretionary bonus will be determined by the
Compensation Committee. Mr. Berk's bonus is to be based on any commercialization
of products, merger or acquisition, business combination or collaborations,
growth in revenues and earnings, additional financings or other strategic
business transaction that inure to the benefit of our stockholders. The bonus,
if any, may be paid in cash or shares of Common Stock, valued at the closing
price of the Common Stock on the immediately preceding trading day. For the year
ended March 31, 2008 Mr. Berk received $165,070 bonus.

         The Berk Agreement provides for the grant of options to purchase up to
300,000 additional shares (the "OPIOID PRODUCT OPTIONS") at a $3.00 exercise
price per share which are to vest in two 150,000 share tranches upon the closing
of an exclusive product license for the United States national market, the
entire European Union Market or the Japan market or a product sale transaction
of all our ownership rights in the United States (only once for each product)
for our first drug developed by us for which the United States Food and Drug
Administration (the "FDA") approval will be sought under a NDA (including a
505(b) (2) application) for oxycodone, hydrocodone, hydromorphone, oxymorphone,
or morphine ("NON-GENERIC OPIOID PRODUCT") as to the first tranche and as to our
second Non-Generic Opioid Drug for the second tranche.

         The Berk Agreement provides for the amendment of the vesting of options
as to 400,000 shares which had been granted on September 2, 2005 to Mr. Berk at
an exercise price of $2.69 per share (the "BERK MILESTONE OPTIONS") with the
Berk Milestone Options to vest (A) as to not more than 125,000 shares and 75,000
shares, respectively, upon the commencement of the first Phase III clinical
trial relating to the first and then the second Non-Generic Opioid Drug
developed by us; (B) 50,000 shares upon the closing of each product license or
product sale transaction (on a product by product basis and only once for each
product) other than Non-Generic Opioid Drugs for which options were granted
above; (C) 10,000 shares upon the filing by us (in our name) with the FDA of
either an ANDA or an NDA (including an application filed with the FDA under
Section 505(b)(2) of the Federal, Food, Drug, and Cosmetic Act, 21 U.S.C.
Section 301 et seq.) (collectively, a "NDA"), for a product not covered by a
previous FDA application; (D) 40,000 shares upon the approval by the FDA of any
ANDA or NDA (filed in our name) for a product not previously approved by the
FDA; (E) 25,000 shares upon the filing of an application for a U.S. patent by us
(in our name); and (F) 25,000 shares upon the granting by the U.S. Patent and
Trademark Office (the "PTO") of a patent to us filed in our name or an approval
of an ANDA or NDA; provided, however the foregoing options terminate upon Mr.
Berk's termination of employment except that options under (D) and (F)
nevertheless vest if the filing was made during the initial term but prior to
termination of Mr. Berk's employment by us without cause and the approval was
made within 540 days of the filing of the ANDA, NDA or patent application.



                                       25


         We also agreed that in the event that, as to Mr. Berk, all of the
options to purchase the full 400,000 Berk Milestone Options have fully vested
during the initial term of the agreement, we will grant under the Stock Option
Plan to Mr. Berk at the end of the first current fiscal year in which the
following event occurs fully vested additional options to purchase the following
shares at the fair market value on the date of grant (the "ADDITIONAL BERK
MILESTONE OPTIONS"): (a) to the extent not previously vested with respect to his
comparable Berk Milestone Options: (i) up to 125,000 shares upon the
commencement of the first Phase III clinical trial relating to the first
Non-Generic Opioid Drug developed by us; and (ii) up to an additional 125,000
shares as to such trial relating to the second Non-Generic Opioid Drug developed
by us, (b) 50,000 shares upon the closing of each product license for the United
States national market or product sale transaction of all ownership rights (on a
product by product basis and only once for each product); (c) 10,000 shares upon
the filing by us (in our name) with the FDA of either an ANDA or NDA for a
product not covered by a previous FDA application for each drug product of us,
other than the Non-Generic Opioid Drugs for which any Opioid Option was granted
under the Berk Agreement; (d) 40,000 shares upon the approval by the FDA of any
ANDA, NDA or 505(b)(2) application filed in our name for a product not
previously approved by the FDA; (e) 25,000 shares in the event of the filing of
an application of an additional U.S. patent by us (filed in our name); and (f)
25,000 shares in the event of the granting by the PTO of the foregoing
additional patent applications to us (filed in our name).

         The Berk Agreement acknowledges that Mr. Berk holds previously granted
incentive stock options to purchase 725,000 shares, of which 300,000 vested
options are exercisable at $2.01 per share, 225,000 vested options are
exercisable at $2.15 per share and 200,000 vested options are exercisable at
$2.69 per share.

         The Berk Agreement allows us at our discretion to grant to Mr. Berk
additional options under the Stock Option Plan and provides Mr. Berk the right
to register at our expense for reoffering shares issued upon exercise of the
options under the Securities Act of 1933, as amended, in certain registration
statements filed by us with respect to offerings of securities by us.

         The Berk Agreement provides that if we terminate his employment due to
his permanent disability, without Cause (as defined in the Berk Agreement) or
Mr. Berk terminates his employment for Good Reason (as defined in the Berk
Agreement), Mr. Berk shall be entitled to the following severance: (i) any
earned but unpaid base salary plus any unpaid reimbursable expenses as of the
effective date of termination of his employment, (ii) the then-current base
salary and reimbursement of the cost to replace the life and disability
insurance coverages afforded to Mr. Berk under our benefit plans with
substantially similar coverages, following the effective date of termination of
his employment, for a period equal to the greater of (x) the remainder of the
then-current term, or (y) two years following the effective date of termination
and (iii) payment by us of premiums for health insurance for the period during
which Mr. Berk is entitled to continued health insurance coverage as specified
in the Comprehensive Omnibus Budget Reconciliation Act. In the event that we
terminate Mr. Berk's employment because of his permanent disability, Mr. Berk is
to be entitled to the severance specified above, less any amounts actually
received by him under any disability insurance coverage provided for and paid by
us. In the event that we terminate Mr. Berk's employment for Cause or Mr. Berk
terminates his employment with us without Good Reason, Mr. Berk shall be
entitled to any earned but unpaid base salary plus any unpaid reimbursable
expenses as of the effective date of termination of his employment.



                                       26


         The Berk Agreement provides that in the event of a change of control in
lieu of any severance that may otherwise be payable to Mr. Berk if he elects to
terminate his employment for any reason within 90 days thereof, or we elect to
terminate his employment within 180 days thereof, other than for Cause, Mr. Berk
will be entitled to the following: (i) any earned but unpaid base salary plus
any unpaid reimbursable expenses as of the effective date of termination of his
employment, (ii) $1,000,000, (iii) the then-current base salary for a period of
12 months following the effective date of termination, (iv) reimbursement of the
cost, for a period of 12 months following the effective date of termination, of
replacing the life and disability insurance coverage afforded to Mr. Berk under
our benefit plans with substantially similar coverage and (v) payment by us of
premiums for health insurance for the period during which Mr. Berk is entitled
to continued health insurance coverage as specified in the Comprehensive Omnibus
Budget Reconciliation Act.

         The Berk Agreement contains his non-solicitation covenant for a period
of one year from termination.

         Mr. Berk is to be reimbursed for expenses (including business, travel
and entertainment) reasonably incurred in the performance of his duties. Mr.
Berk is entitled to participate in such employee benefit and welfare plans and
programs which may be offered to our senior executives, including life
insurance, health and accident insurance, medical plans and programs and profit
sharing and retirement plans.

         The Berk Agreement is for an initial term ending November 13, 2009,
subject to automatic one-year renewals unless terminated by Mr. Berk or us upon
at least 60 days notice prior to the end of the then scheduled expiration date.
We have the right to terminate Mr. Berk's employment in the event of his
inability to perform work due to physical or mental illness or injury for nine
full calendar months during any eight consecutive calendar months.

CHRIS DICK

         On November 13, 2006, we entered into an employment agreement with Mr.
Dick as Executive Vice President of Corporate Development (the "DICK
AGREEMENT"). The Dick Agreement is for an initial term ending November 13, 2009,
subject to automatic one-year renewals unless terminated by the executive or us
upon at least 60 days notice prior to the end of the then scheduled expiration
date. We have the right to terminate Mr. Dick's employment due to disability as
defined in a long-term disability insurance policy reasonably satisfactory to
him or, in the absence of such policy, due to Mr. Dick's inability for 120 days
in any 12 month period to substantially perform his duties as a result of a
physical or mental illness.

         The Dick Agreement provides for an initial base annual salary of
$200,000, a guaranteed bonus of $25,000 payable within 30 calendar days of the
end of each fiscal year during the term and a $700 per month automobile
allowance. The Dick Agreement provides for payment of a discretionary bonus
following the end of each fiscal year of up to 50% of Mr. Dick's then annual
base salary. The amount, if any, of the discretionary bonus will be determined
by the Board of Directors or the Compensation Committee. The discretionary
bonus, if paid to Mr. Dick will be based on the achievement of goals discussed
with the executive in good faith and within a reasonable time following the
commencement of each fiscal year and may be paid in cash or shares of our Common
Stock valued at the average of the closing price per share during the five
trading days immediately preceding the date of issuance of the shares. For the
year ended March 31, 2008 Mr. Dick is to receive a $25,000 bonus.

                                       27


         The Dick Agreement provides for the grant under the Stock Option Plan
of fully-vested options to purchase 250,000 shares of Common Stock at an
exercise price of $2.25 per share. The Dick Agreement also provides for the
grant of options to purchase up to 300,000 shares of Common Stock, at an
exercise price of $2.25 per share, which vest in two 150,000 share tranches upon
the closing of an exclusive product license for the United States national
market, the entire European Union Market or the Japan market or a product sale
transaction of all our ownership rights in the United States (only once for each
product) for our first drug developed by us for which the FDA approval will be
sought under a NDA (including a 505(b) (2) application) for a Non-Generic Opiod
Product as to the first tranche and as to our second Non-Generic Opioid Drug for
the second tranche.

         The Dick Agreement also provides for the grant of options to purchase
up to 200,000 shares of Common Stock at an exercise price of $2.25 per share
(the "DICK MILESTONE OPTIONS") with the Dick Milestone Options to vest (A) as to
not more than 125,000 shares and 75,000 shares, respectively, upon the
commencement of the first Phase III clinical trial relating to the first and
then the second Non-Generic Opioid Drug developed by us; (B) 50,000 shares upon
the closing of each product license or product sale transaction (on a product by
product basis and only once for each product) other than Non-Generic Opioid
Drugs for which options were granted above; (C) 10,000 shares upon the filing by
us (in our name) with the FDA of either an ANDA or an NDA, for a product not
covered by a previous FDA application; (D) 40,000 shares upon the approval by
the FDA of any ANDA or NDA (filed in our name) for a product not previously
approved by the FDA; (E) 25,000 shares upon the filing of an application for a
U.S. patent by us (in our name); and (F) 25,000 shares upon the granting by the
PTO of a patent to us filed in our name or an approval of an ANDA or NDA;
provided, however, that the foregoing options terminate upon the executive's
termination of employment except that options under (D) and (F) nevertheless
vest if the filing was made during the initial term but prior to termination of
Mr. Dick's employment by us without cause and the approval was made within 540
days of the filing of the ANDA, NDA or patent application.

         We also agreed that if all 200,000 Dick Milestone Options have fully
vested during the initial term of the Dick Agreement, we will grant under the
Stock Option Plan to Mr. Dick at the end of the first current fiscal year in
which the following event occurs fully vested additional options to purchase the
following shares at the fair market value on the date of grant (the "ADDITIONAL
DICK MILESTONE OPTIONS"): (a) to the extent not previously vested with respect
to his comparable Dick Milestone Options: (i) up to 125,000 shares upon the
commencement of the first Phase III clinical trial relating to the first
Non-Generic Opioid Drug developed by us; and (ii) up to an additional 125,000
shares as to such trial relating to the second Non-Generic Opioid Drug developed
by us, (b) 50,000 shares upon the closing of each product license for the United
States national market or product sale transaction of all ownership rights (on a
product by product basis and only once for each product); (c) 10,000 shares upon
the filing by us (in our name) with the FDA of either an ANDA or NDA for a
product not covered by a previous FDA application for each drug product of us,
other than the Non-Generic Opioid Drugs for which any Opioid Option was granted
under the Dick Agreement; (d) 40,000 shares upon the approval by the FDA of any
ANDA, NDA or 505(b)(2) application filed in our name for a product not
previously approved by the FDA; (e) 25,000 shares in the event of the filing of
an application of an additional U.S. patent by us (filed in our name); and (f)
25,000 shares in the event of the granting by the PTO of the foregoing
additional patent applications to us (filed in our name).

         The Dick Agreement allows us at our discretion to grant to Mr. Dick
additional options under the Stock Option Plan and provides Mr. Dick the right
to register at our expense for


                                       28


reoffering shares issued upon exercise of the options under the Securities Act
of 1933, as amended, in certain registration statements filed by us with respect
to offerings of securities by us.

         The Dick Agreement provides that in the event we terminate Mr. Dick's
employment for Cause (as defined in the Dick Agreement) or Mr. Dick terminates
employment without Good Reason (as defined in the Dick Agreement), he is to
receive salary through date of termination, reimbursement for expenses incurred
prior to termination, all unvested options will terminate as of the date of
termination and vested options will be governed by the terms of the Stock Option
Plan and the related option agreement. In the event of a termination due to
death, disability or by us without cause or by Mr. Dick for Good Reason, we are
to pay him or his estate subject to his compliance with certain covenants,
including non-competition, non-solicitation, confidentiality and assignment of
intellectual property, his base salary for the longer of the balance of the
initial term or one year from date of termination, continue health insurance
coverage for 12 months from termination and his vested options are to be
exercisable for 90 days from date of termination.

         In the event the employment of Mr. Dick is terminated by us following a
Change of Control of Elite, Mr. Dick will be entitled to the amounts payable as
a result of termination by us without cause plus a lump sum payment of $500,000
and all unvested options shall immediately vest and along with unexercised
vested options be exercisable within 90 days from the date of termination.
Change of Control is defined as the acquisition of Elite pursuant to a merger or
consolidation which results in the reduction to less than 50% of the shares
outstanding upon consummation of the holders of its outstanding shares
immediately prior thereto or sale of substantially all our assets or capital
stock to another person, or the acquisition by a person or a related group in a
single transaction or a series of related transaction of more than 50% of the
combined voting power of Elite's outstanding voting securities.

         Mr. Dick has agreed to a one-year non-competition covenant and a two
year non-solicitation covenant following termination of employment.

         Mr. Dick is to be reimbursed for expenses (including business, travel
and entertainment) reasonably incurred in the performance of his duties,
provided, however that reimbursement of expenses in excess of $2,000 per month
are subject to the approval of our chief executive officer. Mr. Dick is entitled
to participate in such employee benefit and welfare plans and programs, which
may be offered to our senior executives including life insurance, health and
accident insurance, medical plans and programs and profit sharing and retirement
plans.

DR. STUART APFEL

         On January 3, 2008, we entered into an employment agreement with Dr.
Stuart Apfel (the "APFEL AGREEMENT") providing for Dr. Apfel to serve as our
Chief Medical Officer through January 3, 2009. The Apfel Agreement is
automatically renewable for one year periods thereafter unless terminated by Dr.
Apfel or us upon at least 60 days notice prior to the end of the then scheduled
expiration date.

         The Apfel Agreement provides that Dr. Apfel shall be entitled to an
initial base annual salary of $220,000. Dr. Apfel shall be entitled to a
discretionary bonus following the end of each calendar year, commencing with the
calendar year beginning January 1, 2008, of up to 50% of Dr. Apfel's then annual
base salary. The amount, if any, of the discretionary bonus will be determined
by the Board of Directors or the Compensation Committee. The discretionary
bonus,


                                       29


if paid to Dr. Apfel shall be based on the achievement of goals discussed with
the executive in good faith and within a reasonable time following the
commencement of each calendar year and may be paid in cash or shares of the
Common Stock valued at the closing price of the Common Stock on the immediately
preceding trading day, for the relevant calendar year (pro-rated for periods of
less than a full calendar year).

         Pursuant to the terms of the Apfel Agreement, we granted to Dr. Apfel
under the Stock Option Plan fully vested options to purchase 120,000 shares of
Common Stock at an exercise price of $1.75 per share.

         Pursuant to the terms of the Apfel Agreement, we granted to Dr. Apfel
under the Stock Option Plan options to purchase up to 280,000 shares of Common
Stock at an exercise price of $1.75 per share, which will vest and become
exercisable as follows: (A) 80,000 shares upon the successful completion, as
determined by the Board of Directors, of a Company sponsored Phase III clinical
trial of our developmental drug product referred to as ELI-216; (B) 80,000
shares upon the successful completion, as determined by the Board of Directors,
of a Company sponsored Phase III clinical trial of our developmental drug
product referred to as ELI-154; (C) 80,000 shares upon the successful
completion, as determined by the Board of Directors, by us during the term of
the Apfel Agreement of a Company sponsored long-term safety study for ELI-216;
and (D) 40,000 shares upon the closing of an exclusive product license for the
United States national market, or product sale transaction of all of our
ownership rights, for either ELI-216 or ELI-154. Upon the earlier to occur of
(x) January 3, 2017 and (y) the termination of Dr. Apfel's employment hereunder,
all unvested options granted shall automatically terminate and all vested but
unexercised options shall terminate to the extent unexercised within ninety (90)
days of such date and in accordance with the terms of the stock option agreement
by and between Dr. Apfel and us with respect to the options and the Stock Option
Plan. The Apfel Agreement also allows us at our discretion to grant to Dr. Apfel
additional options under the Stock Option Plan. The shares of Common Stock
issuable upon exercise of the options are subject to an effective registration
statement filed with the Securities and Exchange Commission.

         Pursuant to the terms of the Apfel Agreement Dr. Apfel is entitled to a
$420 per month automobile allowance, 15 business days of paid vacation per
calendar year, and reimbursement of expenses (including business, travel and
entertainment) reasonably incurred in the performance of his duties, provided
that reimbursement of expenses in excess of $500 per month are subject to the
approval of the chief executive officer. Dr. Apfel is entitled to participate in
such employee benefit and welfare plans and programs, which may be offered to
our senior executives including life insurance, health and accident insurance,
medical plans and programs and profit sharing and retirement plans. We will
obtain and maintain during the term of the Apfel Agreement a term life insurance
policy in the amount of $500,000 on the life of Dr. Apfel payable to the estate
of Dr. Apfel in the event of Dr. Apfel's death during the term of the Apfel
agreement.

         We have the right to terminate Dr. Apfel's employment due to disability
as defined in a long-term disability insurance policy reasonably satisfactory to
him or, in the absence of such policy, due to his inability for 120 days in any
12 month period to substantially perform his duties as a result of a physical or
mental illness.

         In the event we terminate Dr. Apfel's employment for "Cause" (as such
term is defined in the Apfel Agreement) or due to Dr. Apfel's death or
disability, or Dr. Apfel terminates his employment for any reason other than
"Good Reason" (as defined in the Apfel Agreement), Dr. Apfel or his estate is to
receive salary through date of termination, reimbursement for expenses


                                       30


incurred prior to termination, all unvested options will terminate as of the
date of termination and vested options are to be exercisable for 90 days from
the date of termination.

         In the event of Dr. Apfel's termination by us without Cause or by Dr.
Apfel for Good Reason, we are to pay Dr. Apfel, subject to his compliance with
certain covenants, including non-competition, non-solicitation, confidentiality
and assignment of intellectual property, his base salary for the balance of the
calendar year and any accrued but unused vacation, maintain his benefits during
the balance of the calendar year, and all unvested options will terminate as of
the date of termination and his vested options are to be exercisable for 90 days
from date of termination.

         Pursuant to the Apfel Agreement, Dr. Apfel has agreed to covenants not
to disclose confidential information and assignment of intellectual property.
Additionally, Dr. Apfel has agreed to a two-year non-competition covenant and a
two year non-solicitation covenant following termination of employment.

         Dr. Apfel holds an ownership interest in Parallax Clinical Research, a
New York-based consulting firm that provides strategic and practical assistance
with clinical trial protocol design, planning, initiating and management to
biotechnology and small pharmaceutical companies with making the transition from
the bench to a clinical development program and during the term of the Apfel
Agreement, Dr. Apfel shall continue to devote a portion of his time to Parallax
and provides services, on behalf of Parallax, to its clients, provided that such
time and services do not interfere with the effective performance of his duties
under the Apfel Agreement and such services do not violate any provision of the
Apfel Agreement or any of our policies.

         On April 24, 2008, we appointed Dr. Apfel Chief Scientific Officer.
This appointment does not modify the Apfel Agreement in any way.

DR. CHARAN BEHL

      On November 13, 2006, we entered into an employment agreement with Dr.
Behl as Executive Vice President and Chief Scientific Officer. The employment
agreement with Dr. Behl was subsequently amended and restated on February 9,
2007 (as amended and restated, the "BEHL AGREEMENT"), under which Dr. Behl's
position was changed from Chief Scientific Officer to Head of Technical Affairs
and requiring him to report to our Chief Executive Officer, Chief Scientific
Officer and any additional executive officer designated by the Board of
Directors.

         The Behl Agreement is for an initial term ending November 13, 2009,
subject to automatic one-year renewals unless terminated by Dr. Behl or us upon
at least 60 days notice prior to the end of the then scheduled expiration date.
We have the right to terminate Dr. Behl's employment due to disability as
defined in a long-term disability insurance policy reasonably satisfactory to
him or, in the absence of such policy, due to Dr. Behl's inability for 120 days
in any 12 month period to substantially perform his duties as a result of a
physical or mental illness.

         The Behl Agreement provides for an initial base annual salary of
$250,000, a guaranteed bonus of $25,000 payable within 30 calendar days of the
end of each fiscal year during the term and a $700 per month automobile
allowance. The Behl Agreements provides for payment of a discretionary bonus
following the end of each fiscal year of up to 50% of Dr. Behl's then annual
base salary. The amount, if any, of the discretionary bonus will be determined
by the Board of Directors or the Compensation Committee. The discretionary
bonus, if paid to Dr. Behl, is to be based on the achievement of goals discussed
with the executive in good faith and within a


                                       31


reasonable time following the commencement of each fiscal year and may be paid
in cash or shares of our Common Stock valued at the average of the closing price
per share during the five trading days immediately preceding the date of
issuance of the shares. For the year ended March 31, 2008, Dr. Behl is to
receive a $25,000 bonus.

         The Behl Agreement provides for the grant under the Stock Option Plan
of fully-vested options to purchase 250,000 shares of Common Stock at an
exercise price of $2.25 per share. The Behl Agreement also provides for the
grant of options to purchase up to 300,000 shares of Common Stock at an exercise
price of $2.25 per share which vest in two 150,000 share tranches upon the
closing of an exclusive product license for the United States national market,
the entire European Union Market or the Japan market or a product sale
transaction of all our ownership rights in the United States (only once for each
product) for our first drug developed by us for which the FDA approval will be
sought under a Non-Generic Opiod Product as to the first tranche and as to our
second Non-Generic Opioid Drug for the second tranche.

         The Behl Agreement also provides for the grant of options to purchase
up to 200,000 shares of Common Stock at an exercise price of $2.25 per share
(the "BEHL MILESTONE OPTIONS") with the Behl Milestone Options to vest (A) as to
not more than 125,000 shares and 75,000 shares, respectively, upon the
commencement of the first Phase III clinical trial relating to the first and
then the second Non-Generic Opioid Drug developed by us; (B) 50,000 shares upon
the closing of each product license or product sale transaction (on a product by
product basis and only once for each product) other than Non-Generic Opioid
Drugs for which options were granted above; (C) 10,000 shares upon the filing by
us (in our name) with the FDA of either an ANDA or a NDA for a product not
covered by a previous FDA application; (D) 40,000 shares upon the approval by
the FDA of any ANDA or NDA (filed in our name) for a product not previously
approved by the FDA; (E) 25,000 shares upon the filing of an application for a
U.S. patent by us (in our name); and (F) 25,000 shares upon the granting by the
PTO of a patent to us filed in our name or an approval of an ANDA or NDA;
provided, however, that the foregoing options terminate upon Dr. Behl's
termination of employment except that options under (D) and (F) nevertheless
vest if the filing was made during the initial term but prior to termination of
the executive's employment by us without cause and the approval was made within
540 days of the filing of the ANDA, NDA or patent application.

         We also agreed that if all 200,000 Behl Milestone Options have fully
vested during the initial term of the Behl Agreement, we will grant under the
Stock Option Plan to Dr. Behl at the end of the first current fiscal year in
which the following event occurs fully vested additional options to purchase the
following shares at the fair market value on the date of grant (the "ADDITIONAL
BEHL MILESTONE OPTIONS"): (a) to the extent not previously vested with respect
to his comparable Milestone Options: (i) up to 125,000 shares upon the
commencement of the first Phase III clinical trial relating to the first
Non-Generic Opioid Drug developed by us; and (ii) up to an additional 125,000
shares as to such trial relating to the second Non-Generic Opioid Drug developed
by us, (b) 50,000 shares upon the closing of each product license for the United
States national market or product sale transaction of all ownership rights (on a
product by product basis and only once for each product); (c) 10,000 shares upon
the filing by us (in our name) with the FDA of either an ANDA or NDA for a
product not covered by a previous FDA application for each drug product of us,
other than the Non-Generic Opioid Drugs for which any Opioid Option was granted
under the Behl Agreement; (d) 40,000 shares upon the approval by the FDA of any
ANDA, NDA or 505(b)(2) application filed in our name for a product not
previously approved by the FDA; (e) 25,000 shares in the event of the filing of
an application of an additional U.S. patent


                                       32


by us (filed in our name); and (f) 25,000 shares in the event of the granting by
the PTO of the foregoing additional patent applications to us (filed in our
name).

         The Behl Agreement allows us at our discretion to grant to Dr. Behl
additional options under the Stock Option Plan and provides Dr. Behl the right
to register at our expense for reoffering shares issued upon exercise of the
options under the Securities Act of 1933, as amended, in certain registration
statements filed by us with respect to offerings of securities by us.

         The Behl Agreement provides that in the event we terminate his
employment for Cause (as defined in the Behl Agreement) or Dr. Behl terminates
his employment without Good Reason (as defined in the Behl Agreement), he is to
receive salary through date of termination, reimbursement for expenses incurred
prior to termination, all unvested options will terminate as of the date of
termination and vested options will be governed by the terms of the Stock Option
Plan and the related option agreement. In the event of a termination due to
death, disability or by us without Cause or by Dr. Behl for Good Reason, we are
to pay Dr. Behl or his estate subject to his compliance with certain covenants,
including non-competition, non-solicitation, confidentiality and assignment of
intellectual property, his base salary for the longer of the balance of the
initial term or one year from date of termination, continue health insurance
coverage for 12 months from termination and his vested options are to be
exercisable for 90 days from date of termination. The Behl Agreement provides
that the definition of "Cause" has been amended to include a determination by
the Board of Directors, in its sole discretion, that the employment of Dr. Behl
should terminate, provided that such termination will be effective on the 30th
day after the written notice to Dr. Behl of such determination.

         In the event the employment of Dr. Behl is terminated by us following a
Change of Control of Elite, he will be entitled to the amounts payable as a
result of termination by us without cause plus a lump sum payment of $500,000
and all unvested options shall immediately vest and along with unexercised
vested options be exercisable within 90 days from the date of termination.
Change of Control is defined as the acquisition of Elite pursuant to a merger or
consolidation which results in the reduction to less than 50% of the shares
outstanding upon consummation of the holders of its outstanding shares
immediately prior thereto or sale of substantially all our assets or capital
stock to another person, or the acquisition by a person or a related group in a
single transaction or a series of related transaction of more than 50% of the
combined voting power of Elite's outstanding voting securities.

         Dr. Behl has agreed to a one-year non-competition covenant and a two
year non-solicitation covenant following termination of employment.

         Dr. Behl is to be reimbursed for expenses (including business, travel
and entertainment) reasonably incurred in the performance of his duties,
provided that reimbursement of expenses in excess of $2,000 per month are
subject to the approval of our chief executive officer. Dr. Behl is entitled to
participate in such employee benefit and welfare plans and programs, which may
be offered to our senior executives including life insurance, health and
accident, medical plans and programs and profit sharing and retirement plans.

MR. GITTELMAN

         On February 26, 1998, we entered into an agreement with Gittelman &
Co., P.C., whereby fees are paid to Gittelman & Co., P.C., a firm wholly-owned
by Mark I. Gittelman, our


                                       33


Chief Financial Officer, Secretary and Treasurer, in consideration for services
rendered by the firm as internal accountant and financial and management
consultant to us. The firm's services include the services rendered by Mr.
Gittelman in his capacity as Chief Financial Officer, Secretary and Treasurer.
For the fiscal years ended March 31, 2008, 2007 and 2006, the fees paid by us
under the agreement were $176,206, $151,214 and $154,704, respectively. The
services rendered by the firm to us for the fiscal years ended March 31, 2008,
2007 and 2006 averaged 105, 98 and 103 hours per month, respectively, of which
an average of 25 hours per month were services rendered by Mr. Gittelman in his
capacity as an officer of Elite.

DR. SUBRAMANIAN

         Dr. Subramanian entered into an Advisory Services Agreement with us on
December 6, 2006, the terms of which are summarized under the caption "Certain
Related Person Transactions." On April 24, 2008, Dr. Subramanian resigned as our
acting Chief Scientific Officer.

                                 HEDGING POLICY

         We do not permit the Named Executive Officers to "hedge" ownership by
engaging in short sales or trading in any options contracts involving our
securities.

                        OPTION EXERCISES AND STOCK VESTED

         No options have been exercised by our Named Executive Officers during
fiscal year ended March 31, 2008.

                                PENSION BENEFITS

         We do not provide pension benefits to the Named Executive Officers.

                       NONQUALIFIED DEFERRED COMPENSATION

         We do not have any defined contribution or other plan that provides for
the deferral of compensation on a basis that is not tax-qualified.

            POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

         Please see the discussion under "Compensation Discussion and Analysis -
Agreements with Named Executive Officers."

                          COMPENSATION COMMITTEE REPORT

         The Compensation Committee has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K with
management and, based on such review and discussions, the Board of Directors
recommends that the Compensation Discussion and Analysis be included in this
Proxy Statement.

                                             COMPENSATION COMMITTEE
                                             Barry Dash
                                             Robert J. Levenson
                                             Melvin Van Woert

                                       34


              COMPENSATION OF EXECUTIVE OFFICERS AND KEY EMPLOYEES

SUMMARY COMPENSATION TABLE

         The table below summarizes the compensation information in respect of
the Named Executive Officers for the fiscal years ended March 31, 2008, 2007 and
2006.



                                                                                              CHANGE IN
                                                                                           PENSION VALUE
                                                                                                 AND
                                                                                             NONQUALIFIED
                                                                           NON-EQUITY         DEFERRED
                                                  STOCK      OPTION      INCENTIVE PLAN     COMPENSATION      ALL OTHER
                   YEAR       SALARY     BONUS    AWARDS     AWARDS       COMPENSATION        EARNINGS       COMPENSATION    TOTAL
   NAME AND         (1)                   (2)      (3)         (4)
   PRINCIPAL
   POSITION                     ($)       ($)      ($)         ($)             ($)               ($)             ($)           ($)
----------------  ------   -----------  -------  --------   ---------   -----------------  ----------------  -------------  --------
                                                                                                  
Bernard Berk      2007-08     330,140   165,070        --          --                 --             --         21,260(9)    516,470
  President
  and Chief       2006-07     330,140    63,063        --     574,422                 --             --         21,260(9)    988,885
  Executive
  Officer         2005-06     344,295   150,000        --     379,439                 --             --             --       873,734


Mark. Gittelman   2007-08          --        --        --          --                 --             --             --            --
  Chief
  Financial       2006-07          --        --        --      83,293                 --             --             --        83,293
  Officer
                  2005-06          --        --        --      23,100                 --             --             --        23,100


Christopher Dick  2007-08     200,000    25,000        --          --                 --             --          8,400(9)    233,400
  Executive
  Vice            2006-07     168,750    25,000        --     482,037                 --             --          3,150(10)   678,937
  President of
  Corporate       2005-06     150,000    25,000        --          --                 --             --             --       175,000
  Development


Charan Behl(5)    2007-08     250,000    25,000        --          --                 --             --             --       275,000
  Head of
  Technical       2006-07     344,135    25,000        --     482,037                 --             --             --       851,172
  Affairs
                  2005-06     450,000        --        --          --                 --             --             --       450,000



Veerappan         2007-08          --        --        --          --                 --             --             --            --
  Subramanian(6)
  Former Chief    2006-07          --        --        --   1,114,445                 --             --             --     1,114,445
  Scientific
  Officer         2005-06          --        --        --          --                 --             --             --            --


Stuart Apfel(7)   2007-08      55,000        --        --     354,760                 --             --          1,260(11)   411,020
  Chief
  Medical         2006-07          --        --        --          --                 --             --             --            --
  Officer
  and             2005-06          --        --        --          --                 --             --             --            --
  Chief
  Scientific
  Officer



                                       35


1    The information is provided for each fiscal year which begins on April 1
     and ends on March 31.

2    Bonuses paid to Mr. Berk represent discretionary bonuses and bonuses paid
     to Mr. Dick and Dr. Behl represents guaranteed bonuses.

3    No stock awards were granted to the Named Executive Officers in the fiscal
     years ended March 31, 2008, 2007 and 2006.

4    The amounts reflect the compensation expense in accordance with FAS 123(R)
     of these option awards. The assumptions used to determine the fair value of
     the option awards for fiscal year ended March 31, 2007 are set forth in
     Note 3 of our financial statements included in our Form 10-Q for the
     quarter ended December 31, 2006. The assumptions used to determine the fair
     value of the option awards for fiscal years ended March 31, 2006 and 2005
     are set forth in Note 9 of our audited consolidated financial statements
     included in our Form 10-K for fiscal year ended March 31, 2006. Our Named
     Executive Officers will not realize the value of these awards in cash
     unless and until these awards are exercised and the underlying shares
     subsequently sold.

5    Dr. Behl was Executive Vice President and Chief Scientific Officer from
     March 9, 2006 to February 9, 2007 and has been Head of Technical Affairs
     since February 9, 2007.

6    Dr. Subramanian was acting Chief Scientific Officer from February 9, 2007
     to April 24, 2008.

7    Dr. Apfel has been Chief Medical Officer since January 3, 2008 and Chief
     Scientific Officer since April 24, 2008.

8    Represents $16,345 for auto and parking allowance and $4,915 for life
     insurance premiums.

9    Represents $8,400 for auto and parking allowance.

10   Represents $3,150 for auto and parking allowance.

11   Represents $1,260 for auto and parking allowance.

                           GRANTS OF PLAN-BASED AWARDS

         The following table sets forth information regarding grants of plan
based awards to the Named Executive Officers during the fiscal year ended March
31, 2008.



                                                                                                  ALL OTHER
                                                       ESTIMATED FUTURE PAYMENTS       ALL OTHER    OPTION                   GRANT
                         ESTIMATED POSSIBLE PAYOUTS               UNDER                 STOCK       AWARDS:                DATE FAIR
                         UNDER NON-EQUITY INCENTIVE      EQUITY INCENTIVE PLAN          AWARDS:    NUMBER OF  EXERCISE OF  VALUE OF
                                  PLAN AWARDS                     AWARDS               NUMBER OF  SECURITIES  BASE PRICE   STOCK AND
                         ---------------------------   ---------------------------     SHARES OF  UNDERLYING  OF OPTION     OPTION
                 GRANT   THRESHOLD  TARGET   MAXIMUM   THRESHOLD  TARGET   MAXIMUM     STOCK OR     OPTIONS     AWARDS      AWARDS
NAME             DATE       ($)       ($)      ($)        (#)       (#)      (#)       UNITS (#)      (#)       ($/SH)       (1)
-------          ------- ---------  ------   -------   ---------  ------   -------     ---------  ----------  -----------  ---------
                                                                                                               
Stuart Apfel     1/03/08                                                                            120,000      $1.75     106,428
  Chief
  Medical        1/03/08                                                                            280,000      $1.75     248,332
  Officer and
  Chief
  Scientific
  Officer


1    The amounts reflect the compensation expense in accordance with FAS 123(R)
     of these option awards. The assumptions used to determine the fair value of
     the option awards for fiscal year ended March 31, 2008 are set forth as
     follows: The per share weighted average of the above mentioned stock
     options was .8869 using the Black-Scholes options pricing model with the
     following weighted average assumptions: no dividend yield; expected
     volatility of 33%; risk free interest rate of 4.00% and expected lives of
     ten (10) years. Our Named Executive Officers will not realize the value of
     these awards in cash unless and until these awards are exercised and the
     underlying shares subsequently sold.


                                       36


                  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

         The following table sets forth information concerning stock options and
stock awards held by the Named Executive Officers as of March 31, 2008.




                                          OPTION AWARDS
                 -----------------------------------------------------------------------

                                                    EQUITY
                                                 INCENTIVE PLAN
                                                     AWARDS
                  NUMBER OF      NUMBER OF         NUMBER OF
                 SECURITIES      SECURITIES        SECURITIES
                 UNDERLYING      UNDERLYING        UNDERLYING
                 UNEXERCISED     UNEXERCISED       UNEXERCISED    OPTION
                   OPTIONS         OPTIONS          UNEARNED     EXERCISE       OPTION
                     (#)             (#)             OPTIONS       PRICE      EXPIRATION
NAME             EXERCISABLE    UNEXERCISABLE          (#)          ($)          DATE
------           -----------    -------------     -------------  ---------   ------------
                                                                 
Bernard Berk       300,000(1)             --              --       $2.01        06/03/13
  President        225,000(2)             --              --       $2.15        07/22/13
  and Chief         30,000(3)             --              --       $2.34        06/22/14
  Executive         10,000(4)             --              --       $2.75        08/30/15
  Officer           10,000(4)             --              --       $2.75        08/30/15
                           --      10,000(4)              --       $2.75        08/30/15
                   100,000(5)             --              --       $2.69        09/02/15
                           --     100,000(5)              --       $2.69        09/02/15
                           --             --      400,000(6)       $2.69        09/02/15
                           --             --      150,000(7)       $3.00        11/13/16
                           --             --      150,000(8)       $3.00        11/13/16


Mark.               10,000(9)             --              --       $2.34        03/08/14
Gittelman            6,666(10)            --              --       $2.80        07/14/15
  Chief              6,667(10)            --              --       $2.80        07/14/15
  Financial                --      6,667(10)              --       $2.80        07/14/15
  Officer           23,333(11)            --              --       $2.26        05/03/16
                           --     23,333(11)              --       $2.26        05/03/16
                           --     23,334(11)              --       $2.26        05/03/16


Christopher         10,000(12)            --              --       $2.34        10/31/12
Dick                10,000(12)            --              --       $2.34        10/31/12
  Executive         10,000(12)            --              --       $2.34        10/31/12
  Vice              10,000(13)            --              --       $2.21        06/13/13
  President         10,000(13)            --              --       $2.21        06/13/13
  of                10,000(13)            --              --       $2.21        06/13/13
  Corporate         40,000(14)            --              --       $2.80        07/14/15
  Development      250,000(15)            --              --       $2.25        11/13/16
                           --             --      150,000(7)       $2.25        11/13/16
                           --             --      150,000(8)       $2.25        11/13/16
                           --             --      200,000(6)       $2.25        11/13/16

Charan Behl        250,000(15)            --              --       $2.25        11/13/16
  Head of                                 --      150,000(7)       $2.25        11/13/16
  Technical                 --            --      150,000(8)       $2.25        11/13/16
  Affairs                   --            --      200,000(6)       $2.25        11/13/16

Veerappan          250,000(16)            --              --       $2.13        12/16/16
Subramanian        250,000(16)            --              --       $2.13        12/16/16
  Former           250,000(16)            --              --       $2.13        12/16/16
  Chief            250,000(16)            --              --       $2.13        12/16/16
  Scientific
  Officer


Stuart Apfel       120,000(17)                                     $1.75         1/03/18
  Chief                                           280,000(18)      $1.75         1/03/18
  Medical
  Officer
  and
  Chief
  Scientific
  Officer





                                   STOCK AWARDS
                 ----------------------------------------------------------------
                                                  EQUITY
                                              INCENTIVE PLAN   EQUITY INCENTIVE
                                                   AWARDS:       PLAN AWARDS:
                                                 NUMBER OF        MARKET OR
                 NUMBER OF    MARKET VALUE        UNEARNED      PAYOUT VALUE OF
                  SHARES OR    OF SHARES OR    SHARES, UNITS       UNEARNED
                  UNITS OF       UNITS OF        OR OTHER       SHARES, UNITS OR
                 STOCK HELD     STOCK HELD      RIGHTS THAT     OTHER RIGHTS
                 THAT HAVE      THAT HAVE         HAVE NOT       THAT HAVE NOT
                 NOT VESTED     NOT VESTED         VESTED           VESTED
NAME                (#)            ($)               (#)              ($)
------          -------------  -------------   --------------  ------------------
                                                             
Bernard Berk           --             --             --                  --
  President            --             --             --                  --
  and Chief            --             --             --                  --
  Executive            --             --             --                  --
  Officer              --             --             --                  --
                       --             --             --                  --
                       --             --             --                  --
                       --             --             --                  --
                       --             --             --                  --
                       --             --             --                  --
                       --             --             --                  --


Mark.                  --             --             --                  --
Gittelman              --             --             --                  --
  Chief                --             --             --                  --
  Financial            --             --             --                  --
  Officer              --             --             --                  --
                       --             --             --                  --
                       --             --             --                  --


Christopher            --             --             --                  --
Dick                   --             --             --                  --
  Executive            --             --             --                  --
  Vice                 --             --             --                  --
  President            --             --             --                  --
  of                   --             --             --                  --
  Corporate            --             --             --                  --
  Development          --             --             --                  --
                       --             --             --                  --
                       --             --             --                  --
                       --             --             --                  --

Charan Behl            --             --             --                  --
  Head of              --             --             --                  --
  Technical            --             --             --                  --
  Affairs              --             --             --                  --

Veerappan              --             --             --                  --
Subramanian            --             --             --                  --
  Former               --             --             --                  --
  Chief                --             --             --                  --
  Scientific
  Officer


Stuart Apfel
  Chief
  Medical
  Officer
  and
  Chief
  Scientific
  Officer              --             --             --                  --


                                       37


1    These options vested as of June 3, 2003.

2    These options vested as of September 2, 2005

3    These options vested on June 22, 2004.

4    These options vest in annual increments over a three year period on August
     30, 2006, August 30, 2007 and August 30, 2008, respectively.

5    These options vested in annual increments over a two year period on
     September 2, 2006 and September 2, 2007, respectively.

6    These options vest as follows: (i) upon the commencement of the first Phase
     III clinical trial relating to the first "Non-Generic Opioid Drug"
     developed by us as to 125,000 options and relating to the second
     "Non-Generic Opioid Drug" developed by the company as to 75,000 options;
     (ii) 50,000 shares of Common Stock shall vest and become immediately
     exercisable in full only upon the closing of an exclusive product license
     for the United States national market or product sale transaction of all of
     our ownership rights (on a product by product basis and only once for each
     individual product) for each Company drug product, other than the
     "Non-Generic Opioid Drugs" for which the "Non-Generic Opioid Drug" options
     were granted; (iii) 10,000 options upon the filing by us (in our name) with
     the United States Food and Drug Administration (the "FDA") of either an
     abbreviated new drug application (an "ANDA") or a new drug application (a
     "NDA") (including a NDA filed with the FDA, for a product not covered by a
     previous FDA application); (iv) 40,000 options upon the approval by the FDA
     of any ANDA or NDA (filed in our name) for a product not previously
     approved by the FDA; (v) 25,000 options upon filing of an application for
     U.S. patent by us (filed in our name); and (vi) 25,000 options upon the
     granting by U.S. Patent and Trademark Office of a patent to us (filed in
     our name).

7    These options vest upon the closing of an exclusive product license for the
     first of the United States national market, the entire European Union
     market or the Japan market or product sale transaction of all of our
     ownership rights in the United States (only once for each individual
     product) for our first Non-Generic Opioid Drug.

8    These options vest upon the closing of an exclusive product license for the
     United States national market, the entire European Union market or the
     Japan market or product sale transaction of all of our ownership rights in
     the United States (only once for each individual product) for our second
     Non-Generic Opioid Drug.

9    These options vested on June 22, 2004.

10   These options vest in annual increments over a three year period on July
     14, 2006, July 14, 2007 and July 14, 2008, respectively.

 11   These options vest in annual increments over a three year period on May 3,
     2007, May 3, 2008 and May 3, 2009, respectively.

12   These options vested on November 1, 2003, 2004 and 2005, respectively.

13   These options vested on June 13, 2004, 2005 and 2006, respectively.

14   These options vested on July 14, 2005.

15   These options vested on November 13, 2006.

16   These options vested as follows: (i) 250,000 on December 6, 2006, (ii)
     250,000 on May 6, 2007, (iii) 250,000 on December 6, 2007 and (iv) 250,000
     on our acceptance of the initial business plan of Novel Laboratories, Inc.
     ("Novel").

17   These options vested on January 3, 2008.

                                       38


18   These options vest as follows: (i) 80,000 shares upon the successful
     completion, as determined by the Board, of a Company sponsored Phase III
     clinical trial of the Company's developmental drug product referred to as
     ELI-216; (ii) 80,000 shares upon the successful completion, as determined
     by the Board, of a Company sponsored Phase III clinical trial of the
     Company's developmental drug product referred to as ELI-154; (iii) 80,000
     shares upon the successful completion, as determined by the Board, by the
     Company during the term of the Employment Agreement of a Company sponsored
     long-term safety study for the Company's developmental drug product
     referred to as ELI-216; and (iv) 40,000 shares upon the closing of an
     exclusive product license for the United States national market, or product
     sale transaction of all of the Company's ownership rights, for either
     ELI-216 or ELI-154.

                              DIRECTOR COMPENSATION

         The following table sets forth director compensation for the year ended
March 31, 2008:



                                                                                 CHANGE IN PENSION
                                                                                    VALUE AND
                                                                                   NONQUALIFIED
                    FEES PAID OR                               NON EQUITY           DEFERRED
                      EARNED IN    STOCK        OPTION       INCENTIVE PLAN        COMPENSATION         ALL OTHER
                         CASH      AWARDS       AWARDS        COMPENSATION          EARNINGS          COMPENSATION        TOTAL
NAME                      ($)        ($)          ($)              ($)                 ($)                 ($)             ($)
------              ------------   -------     ---------     --------------      -----------------    ------------    -------------
                                                                                                    
Bernard Berk              6,000      ---             ---           ---                   ---               ---            6,000
Barry Dash               12,000                50,616(1)           ---                   ---               ---           62,616
Robert J. Levenson       12,000      ---       50,616(1)           ---                   ---               ---           62,616
Melvin Van Woert         12,000      ---       50,616(1)           ---                   ---               ---           62,616
Veerappan Subramanian     2,000      ---             ---           ---                   ---               ---            2,000


(1) Represents 90,000 options of which 30,000 vest during the period commencing
on January 24, 2008 and ending June 26, 2008; 30,000 vest during the period
commencing on June 27, 2008 and ending on June 26, 2009 and 30,000 vest during
the period commencing on June 27, 2009 and ending on June 26, 2010; provided,
however that the options shall fully vest upon the director's death, disability,
retirement as a director or removal as a director without cause at the request
of the Board of Directors.

FEE COMPENSATION

         Prior to January 1, 2008, each Director received $2,000 per each
meeting such Director attends. As of January 1, 2008, the Company's policy
regarding director fees has been revised as follows: (i) Directors who are
employees or consultants of the Company (and/or any of its subsidiaries) receive
no additional remuneration for serving as directors or members of committees of
the Board; (ii) all Directors are entitled to reimbursement for out-of-pocket
expenses incurred by them in connection with their attendance at the Board or
committee meetings; (iii) Directors who are not employees or consultants of the
Company (and/or any of its subsidiaries) receive $15,000 annual retainer fee for
their service on the Board and all committees; (iv) Directors who are not
employees or consultants of the Company (and/or any of its subsidiaries) receive
a per board meeting fee of $1,000 for each board meeting and a per committee
meeting fee of $1,000 for each committee meeting attended by such Director;
provided that the chairperson of the committee conducting such meeting shall (in
place of the $1,000 meeting fee) receive a per committee meeting fee of $1,500
for each committee meeting attended; and (v) for purposes of the compensation
schedule set forth above, (x) a meeting shall only constitute a meeting of the
Board or a committee entitling a participant to a meeting fee if such meeting
extends to at least sixty (60) minutes (including the time of any reconvened
portion of a meeting after an adjournment), (y) a meeting shall include all
meetings attended in-person (whether at the Company's offices or at any other
location) or via telephone conference, and (z) only one fee may be payable to
Director and/or committee member per calendar day. Except as described in this
section, non-employee Directors do not receive any additional compensation for
their services on the Board of Directors.


                                       39


EQUITY COMPENSATION

         Members of the Board of Directors during the fiscal years ended March
31, 2007 and 2008 did not receive any options or equity compensation for serving
as directors other than the grant of 90,000 options to each of the independent
directors in January, 2008.

OTHER

         The Company has entered into indemnification agreements with each of
its directors to indemnify them to the fullest extent permitted under Delaware
General Corporation Law.

            REVIEW AND APPROVAL OF TRANSACTIONS WITH RELATED PERSONS

         All related person transactions are reviewed and, as appropriate, may
be approved or ratified by the Board of Directors. If a Director is involved in
the transaction, he or she may not participate in any review, approval or
ratification of such transaction. Related person transactions are approved by
the Board of Directors only if, based on all of the facts and circumstances,
they are in, or not inconsistent with, our best interests and the best interests
of our stockholders, as the Board of Directors determines in good faith. The
Board of Directors takes into account, among other factors it deems appropriate,
whether the transaction is on terms generally available to an unaffiliated
third-party under the same or similar circumstances and the extent of the
related person's interest in the transaction. The Board of Directors may also
impose such conditions as it deems necessary and appropriate on us or the
related person in connection with the transaction.

         In the case of a transaction presented to the Board of Directors for
ratification, the Board of Directors may ratify the transaction or determine
whether rescission of the transaction is appropriate.

                       CERTAIN RELATED PERSON TRANSACTIONS

TRANSACTIONS WITH DR. SUBRAMANIAN AND VGS PHARMA LLC

         On December 6, 2006, we entered into a Strategic Alliance Agreement
with Dr. Subramanian and VGS Pharma, LLC, a Delaware limited liability company
("VGS"), under which (i) Dr. Subramanian was appointed to our Board of
Directors, (ii) VGS made a $2,000,000 equity investment in Elite, (iii) we
engaged Dr. Subramanian to serve as our strategic advisor on the research,
development and commercialization of our existing pipeline and (iv) we, together
with VGS formed Novel Laboratories Inc., a Delaware corporation ("NOVEL"), as a
separate specialty pharmaceutical company for the research, development,
manufacturing, licensing and acquisition of specialty generic pharmaceuticals.
VGS is wholly-owned subsidiary of Kali Capital, L.P., which is controlled by
Kali Management, LLC ("KALI"), its general partner, and Kali is controlled by
Anu Subramanian, its managing member and daughter of Dr. Subramanian.

         The specialty pharmaceutical product initiative of the strategic
alliance between Elite and Dr. Subramanian is to be conducted by Novel, of which
we acquired 49% and VGS acquired 51% of its Class A Voting Common Stock for
$9,800 and $10,200 respectively. Pursuant to the Alliance Agreement, VGS
acquired for $2,000,000: (i) 957,396 shares of our Common Stock at approximately
$2.089 per share and (ii) a five year Warrant to purchase 478,698 shares of our
Common Stock, for cash, at an exercise price of $3.00 per share, subject to
adjustment upon the occurrence of certain events.


                                       40


         We contributed $5,000,000 to Novel. During the three months ended
December 31, 2007, we elected not to fund our remaining contributions to Novel
upon the terms set forth in the Alliance Agreement because (i) we had reached
agreement with the FDA under a Special Protocol Assessment on the Phase III
clinical trial of ELI-216, Elite's Abuse Deterrent Oxycodone product and
determined that our funds would be better used to support the clinical trials
for ELI-216 and (ii) we determined we would utilize our rights to participate in
future equity investment in Novel rather than invest at the valuation set forth
under the Alliance Agreement in order to maintain our 49% interest in the Class
A Voting Common Stock of Novel.

         We and VGS negotiated alternative structures that would permit
investments by us at valuations which differed from those set forth in the
Alliance Agreement, however we were unable to agree upon an alternative
acceptable to both parties. Accordingly, upon our determination not to fund our
remaining contributions to Novel at the valuation set forth in the Alliance
Agreement, VGS exercised its rights under the Stockholders Agreement to purchase
from us shares of Class A Voting Common Stock of Novel proportionate to the
amount of remaining contributions which were not funded by us. As a result, our
remaining ownership interest in Class A Voting Common Stock of Novel is
approximately 10% of the outstanding shares of Class A Voting Common Stock of
Novel.

         Pursuant to an advisory agreement, Dr. Subramanian had agreed to
provide advisory services to us, including but not limited to, assisting in the
implementation of current and new drug product development projects of Elite and
assisting in the recruitment of additional R&D staff members. As an inducement
to enter into the agreement, we granted Dr. Subramanian a non-qualified stock
option to purchase up to 1,750,000 shares of Common Stock (the "OPTION SHARES")
at a price of $2.13 per share of which 1,000,000 options have vested and 750,000
unvested options have terminated.

TRANSACTIONS WITH MARK GITTELMAN AND GITTELMAN & CO. P.C.

         For a description of the agreement between Elite and Gittelman & Co.,
P.C., please see "Compensation Discussion Analysis - Agreements with Named
Executive Officers and Key Employees". Mark Gittelman, our chief financial
officer is the principal of Gittelman & Co., P.C.

TRANSACTIONS WITH DR. APFEL

         From January 8, 2007 December 31, 2007, Dr. Apfel provided consulting
services to us through Parallex Clinical Research, which included, without
limitation, assistance in development and execution of our regulatory and
clinical program with respect to our abuse resistance opioid products. Parallex
Clinical Research received $52,843 as consulting fees for his services.

             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         To our knowledge, there was no person who, at any time during the
fiscal year ended March 31, 2008, was a director, officer or beneficial owner of
more than 10% of any class of our equity securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934, who failed to file on a
timely basis the reports required by Section 16(a) of the Securities Exchange
Act of 1934. Dr. Barry Dash filed one late Form 4 since the fiscal year ended
March 31, 2008.

                                       41


                              STOCKHOLDER PROPOSALS

         The deadline for submitting a stockholder proposal under Rule 14a-8 of
the Securities Exchange Act ("Rule 14a-8) for inclusion in our proxy statement
and form of proxy for the next annual meeting of stockholders is October 26,
2008. Stockholders wishing to submit proposals outside of Rule 14a-8 must do so
no later than December 13, 2008 to be eligible for presentation at the next
annual meeting of stockholders.

         Any proposal should be addressed to Mark I. Gittelman, Secretary, Elite
Pharmaceuticals, Inc., 165 Ludlow Avenue, Northvale, New Jersey 07647 and should
be sent by certified mail, return receipt requested.

                         HOUSEHOLDING OF PROXY MATERIALS

         The SEC has adopted rules that permit companies and intermediaries
(e.g., brokers) to satisfy the delivery requirements for proxy statements and
annual reports with respect to two or more stockholders sharing the same address
by delivering a single proxy statement addressed to those stockholders. This
process, which is commonly referred to as "householding," potentially means
extra convenience for stockholders and cost savings for companies.

         Some brokers and other nominee record holders may be participating in
the practice of "householding" proxy statements and annual reports. A single
proxy statement will be delivered to multiple stockholders sharing an address
unless contrary instructions have been received from the affected stockholders.
Once you have received notice from your broker that they will be "householding"
communications to your address, "householding" will continue until you are
notified otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in "householding" and would prefer to receive a
separate proxy statement and annual report, please notify your broker or direct
your written request to Elite Pharmaceuticals, Inc., Attn: Mark Gittelman,
Secretary, 165 Ludlow Avenue, Northvale, New Jersey 07647. Stockholders who
currently receive multiple copies of the proxy statement at their address and
would like to request "householding" of their communications should contact
their broker.

                       WHERE YOU CAN FIND MORE INFORMATION

         We file reports, proxy statements and other information with the SEC
under the Securities Exchange Act of 1934, as amended. The SEC maintains an
Internet world wide web site that provides access, without charge, to reports,
proxy statements and other information about issuers, like Elite, who file
electronically with the SEC. The address of that site is http://www.sec.gov.

         You also may obtain copies of these materials by mail from the Public
Reference Section of the Securities and Exchange Commission, 100 F Street, N.E.,
Room 1580 Washington, D.C, 20549, at prescribed rates. These materials are also
available from the SEC in person at any one of its public reference rooms.
Please call the SEC at l-800-SEC-0330 for further information on its public
reference rooms. You may read and copy this information at the following
location of the SEC:

                              Public Reference Room
                               100 F Street, N.E.
                                    Room 1580
                             Washington, D.C. 20549

                                       42


         You can also obtain, without charge, reports, proxy statements and
other information, including without limitation, any information we may
incorporate by reference herein, about the Company, by contacting: Elite
Pharmaceuticals, Inc., 165 Ludlow Avenue, Northvale, New Jersey 07647, Attn:
Corporate Secretary, telephone: (201) 750-2646, facsimile: (201) 750-2755.

                                  OTHER MATTERS

         A copy of our Annual Report on Form 10K for the fiscal year ended March
31, 2007, including financial statements, accompanies this proxy statement. We
are incorporating by reference from this Annual Report the financial statements
and supplementary data, the management discussion and analysis of financial
condition and results of operation and quantitative and qualitative disclosures
about market risk.

May __, 2008                        By Order of the Board of Directors
                                    Mark I. Gittelman, Secretary



                                       43




                                   APPENDIX A

                           ELITE PHARMACEUTICALS, INC.
                CHARTER AND POWERS OF THE COMPENSATION COMMITTEE


STATEMENT OF POLICY

     The Compensation Committee of the Board of Directors (the "Compensation
Committee") of Elite Pharmaceuticals, Inc. (the "Company") shall provide
assistance to the Board of Directors in discharging the Board of Directors'
responsibilities relating to management organization, performance, compensation
and succession.

ORGANIZATION

     The members of the Compensation Committee shall be appointed by the Board
of Directors from time to time upon a determination by the Board of Directors
that the nominees meet all required qualifications for Compensation Committee
membership. The Board may designate one of the Committee members as the Chair of
this Committee. Members of the Compensation Committee may be removed by the
Board of Directors. The Compensation Committee has the authority to retain and
terminate advisors to assist in discharging its duties, including the authority
to approve such advisors' fees and retention terms. A majority in number of the
members of the Compensation Committee shall be a quorum to transact business.

COMMITTEE AUTHORITY AND RESPONSIBILITIES

         In discharging its responsibilities for management organization,
performance, compensation and succession, the Compensation Committee shall have
direct responsibility to:

         1. Hold such regular meetings as may be necessary and such special
         meetings as may be called by the Chairman of the Compensation
         Committee.

         2. Consider and authorize the compensation philosophy for the Company's
         personnel.

         3. Review and approve corporate goals and objectives relevant to chief
         executive officer and executive officer compensation, evaluate chief
         executive officer and executive officer performance in light of those
         goals and objectives and, either as a committee or together with other
         independent directors (as directed by the Board of Directors),
         determine and approve chief executive officer and executive officer
         compensation based on this evaluation.

         4. Review and approve the terms of the offer letters, employment
         agreements, severance agreements, change-in-control agreements,
         indemnification agreements and other material agreements between the
         Company and its Chief Executive Officer and executive officers.

         5. Annually review and approve perquisites for the chief executive
         officer and executive officers.



         6. Consider and approve the report of the Compensation Committee for
         inclusion in the Company's proxy statement.

         7. Make recommendations to the Board of Directors with respect to the
         Company's employee benefit plans.

         8. Administer incentive, deferred compensation and equity based plans.

         9. Annually review and update this Charter for consideration by the
         Board of Directors.

         10. Annually evaluate performance and function of the Compensation
         Committee.

         11. Report the matters considered and actions taken by the Compensation
         Committee to the Board of Directors.

         12. Maintain minutes or other records of meetings and activities of the
         Compensation Committee.

         13. Review the powers of the Compensation Committee annually and
         reporting and making recommendations to the Board of Directors on these
         responsibilities.

         Nothing in this Charter shall be construed as precluding discussions of
chief executive officer and executive officer compensation with the Board of
Directors generally, as it is not the intent of this Charter to impair
communication among members of the Board of Directors.

Effective: July 11, 2007





                           ELITE PHARMACEUTICALS, INC.
                    PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
                                  June 26, 2008

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

         The undersigned hereby appoints Bernard Berk and Mark I. Gittelman, and
each of them, with full power of substitution, to vote, as a holder of the
Common Stock, par value $0.01 per share ("Common Stock"), of Elite
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), all the shares of
Common Stock which the undersigned is entitled to vote, through the execution of
a proxy with respect to the Annual Meeting of Stockholders of the Company (the
"Annual Meeting"), to be held at the offices of Reitler Brown & Rosenblatt LLC,
800 Third Avenue, 21st Floor, New York, NY 10022, on June 26, 2008 at 10:00 a.m.
EST, and any and all adjournments or postponements thereof, and authorizes and
instructs said proxies to vote in the manner directed below.

THE BOARD OF DIRECTORS RECOMMENDS THE VOTE FOR THE ELECTION OF THE NOMINEES FOR
DIRECTORS NAMED BELOW AND PROPOSALS 2, 3, 4, 5 AND 6.

1. Election of Directors: Bernard Berk, Barry Dash, Melvin Van Woert, and Robert
J. Levenson

            FOR all Nominees |_|       WITHHOLD for all Nominees |_|

If you do not wish your shares voted FOR a nominee, draw a line through that
person's name above.

2. Proposal to approve and ratify the amendment to the Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
65,000,000 to 150,000,000.

                FOR |_|      AGAINST |_|     ABSTAIN |_|

3. Proposal to approve and ratify the amendment to the Certificate of
Incorporation to provide that holders of Common Stock are not entitled to vote
on any amendment to the Company's Certificate of Incorporation (including any
Preferred Stock certificate of designation) that relates solely to the terms of
one or more outstanding series of the Company's Preferred Stock if the holders
of such affected series are entitled to vote on such amendment.

                FOR |_|      AGAINST |_|     ABSTAIN |_|

4. Proposal to ratify certain amendments made to the Company's Certificate of
Incorporation which relate solely to the Company's Series B Preferred Stock
which were previously approved by a majority of the holders of the Series B
Preferred Stock.

                FOR |_|      AGAINST |_|     ABSTAIN |_|

5. Proposal to approve and ratify the amendment to the Stock Option Plan to
increase the number of shares of Common Stock reserved under the Stock Option
Plan from 7,000,000 to 10,000,000.

                FOR |_|      AGAINST |_|     ABSTAIN |_|

6. Proposal to ratify the appointment of the independent auditors.

                FOR |_|      AGAINST |_|     ABSTAIN |_|

7. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before such meeting or adjournment or postponement
thereof.

         THIS PROXY IS CONTINUED ON THE REVERSE SIDE, PLEASE VOTE, SIGN AND DATE
ON REVERSE SIDE AND RETURN PROMPTLY.






BACK OF CARD

         PROPERLY EXECUTED AND RETURNED PROXY CARDS WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTIONS TO THE
CONTRARY ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF EACH OF THE
NAMED NOMINEES AS DIRECTORS AND PROPOSALS 2, 3, 4, 5 AND 6 AS DESCRIBED ON THE
REVERSE SIDE OF THIS CARD.

         You may revoke this proxy at any time before it is voted by (i) filing
a revocation with the Secretary of the Company, (ii) submitting a duly executed
proxy bearing a later date or time than the date or time of the proxy being
revoked; or (iii) attending the Annual Meeting and voting in person. A
stockholder's attendance at the Annual Meeting will not by itself revoke a proxy
given by the stockholder.

(Please sign exactly as the name appears below. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign with full corporate name
by president or other authorized officer. If a partnership, please sign in the
partnership name by authorized person.)




Dated:
        ----------------------------         -----------------------------------
                                                         Signature


----------------------------------------
PLEASE COMPLETE, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
----------------------------------------

                                              ----------------------------------
                                              Signature, if held by joint owners